1.1 	A bill for an act
1.2 	relating to financing and operation of state and local government; making policy, 
1.3 	technical, administrative, enforcement, collection, refund, appeal, abatement, 
1.4 	and other changes to income, franchise, property, sales and use, deed, health 
1.5 	care provider, cigarette and tobacco products, liquor, estate, aggregate removal, 
1.6 	occupation, and production taxes, the property tax refund, and other taxes and 
1.7 	tax-related provisions; providing for administration of certain fees, aids, tax 
1.8 	titles, and tax sales; modifying accelerated sales tax requirements; conforming 
1.9 	provisions to changes in the Internal Revenue Code; providing income tax 
1.10 	credits; modifying and authorizing sales tax exemptions; modifying and 
1.11 	authorizing local government sales taxes; modifying certain levies; changing 
1.12 	ballots for referendum revenue; changing and providing property tax exemptions; 
1.13 	providing for aids and payments to local governments; modifying international 
1.14 	economic development zone authority; authorizing distributions of tax proceeds; 
1.15 	providing terms and conditions related to the issuance of obligations; defining 
1.16 	terms; providing for authorization of interfund loans; modifying the priorities for 
1.17 	allocating bond issuance authority; changing and imposing powers, duties, and 
1.18 	requirements on certain local governments and authorities and state departments 
1.19 	or agencies; providing for issuance of obligations by local governments and 
1.20 	other public authorities, and use of the proceeds of the debt; changing tax 
1.21 	increment financing and abatement provisions, and providing authorities to 
1.22 	certain districts; providing for allocation and transfers of funds; appropriating 
1.23 	money; amending Minnesota Statutes 2004, sections 103E.635, subdivision 
1.24 	7; 116A.20, subdivision 3; 116J.993, subdivision 3; 144F.01, subdivision 4; 
1.25 	162.18, subdivision 1; 162.181, subdivision 1; 216B.2424, subdivision 5; 
1.26 	272.02, subdivisions 45, 54, 55, by adding a subdivision; 272.029, subdivision 
1.27 	2; 273.032; 273.11, by adding a subdivision; 273.124, subdivision 12; 273.13, 
1.28 	subdivision 23; 273.1384, subdivision 2; 273.1398, subdivision 3; 281.23, 
1.29 	subdivision 9; 289A.60, subdivision 15; 290.06, by adding a subdivision; 
1.30 	290.091, subdivision 3; 290.17, subdivision 1; 295.50, subdivision 4; 295.53, 
1.31 	subdivision 3; 297A.61, subdivisions 12, 17, by adding subdivisions; 297A.63; 
1.32 	297A.668, subdivision 6; 297A.669, subdivision 11; 297A.67, subdivisions 4, 
1.33 	5, 14, 27; 297A.70, subdivisions 2, 3, 4, 7, 13, 14, 15; 297A.71, by adding a 
1.34 	subdivision; 297A.99, subdivision 7; 297F.01, by adding a subdivision; 297F.09, 
1.35 	subdivision 10; 297G.01, subdivision 7, by adding a subdivision; 297G.09, 
1.36 	subdivision 9; 298.001, by adding a subdivision; 298.01, subdivisions 3a, 3b, 4a, 
1.37 	4b, by adding a subdivision; 298.227; 298.28, subdivisions 6, 8; 298.2961, by 
1.38 	adding a subdivision; 298.75, by adding a subdivision; 373.45, subdivision 1; 
2.1 	469.035; 469.103, subdivision 2; 469.175, subdivision 4; 469.176, subdivision 1; 
2.2 	469.1763, subdivisions 3, 4; 469.1771, subdivision 2a; 469.1813, subdivisions 
2.3 	1, 6b, 8, 9, by adding a subdivision; 469.312, subdivision 5; 473.39, by adding 
2.4 	a subdivision; 474A.062; 475.58, subdivision 1; 477A.013, subdivision 9; 
2.5 	477A.014, subdivision 1; 645.44, by adding a subdivision; Minnesota Statutes 
2.6 	2005 Supplement, sections 115B.49, subdivision 4; 126C.17, subdivision 9; 
2.7 	270C.01, subdivision 4; 270C.304; 270C.33, subdivision 4; 270C.57, subdivision 
2.8 	3; 270C.67, subdivision 1, by adding a subdivision; 270C.722, subdivision 2; 
2.9 	271.12; 272.02, subdivisions 53, 83; 273.13, subdivisions 22, 25; 273.1384, 
2.10 	subdivision 1; 284.07; 289A.02, subdivision 7; 289A.121, subdivision 5; 
2.11 	289A.20, subdivision 4; 290.01, subdivisions 19, 19a, 19c, 31; 290.0675, 
2.12 	subdivision 1; 290.0922, subdivisions 2, 3; 290A.03, subdivision 15; 291.005, 
2.13 	subdivision 1; 297A.61, subdivision 3; 297A.67, subdivision 6; 297A.68, 
2.14 	subdivisions 37, 38, 41; 297A.72, subdivision 2; 297A.75, subdivisions 1, 2, 3; 
2.15 	297A.815, subdivision 1; 298.01, subdivisions 3, 4; 298.2961, subdivision 4; 
2.16 	469.175, subdivisions 2, 5; 469.1763, subdivisions 2, 6; 469.177, subdivision 1; 
2.17 	469.178, subdivision 7; 469.1813, subdivision 6; 469.322; 469.323, subdivision 
2.18 	2; 469.327; 477A.011, subdivision 36;  Laws 1996, chapter 471, article 2, 
2.19 	section 29, subdivisions 1, 4; Laws 2005, chapter 152, article 1, section 39, 
2.20 	subdivision 1; Laws 2001, First Special Session chapter 5, article 3, section 8, 
2.21 	as amended; Laws 2005, First Special Session chapter 3, article 5, sections 3; 
2.22 	14; 38, subdivision 2; 43, subdivision 3; 44, subdivision 1; article 10, section 
2.23 	23; proposing coding for new law in Minnesota Statutes, chapters 287; 290; 
2.24 	469; repealing Minnesota Statutes 2004, sections 297A.68, subdivisions 15, 18; 
2.25 	298.01, subdivisions 3c, 3d, 4d, 4e; Laws 1998, chapter 389, article 11, section 
2.26 	18; Minnesota Rules, parts 8130.0400, subpart 3; 8130.4800, subparts 1, 3, 4, 5, 
2.27 	6, 7, 8; 8130.5100; 8130.5400; 8130.5800, subpart 6.
2.28 	 BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA:

2.29 	ARTICLE 1
2.30 	INCOME AND FRANCHISE TAXES

2.31 	Section 1. Minnesota Statutes 2004, section 290.06, is amended by adding a 
2.32 	subdivision to read:
2.33 		Subd. 36.Bovine testing credit. (a) An owner of cattle in Minnesota may take a 
2.34 	credit against the tax due under this chapter for an amount equal to one-half the expenses 
2.35 	incurred during the taxable year to conduct tuberculosis testing on those cattle. 
2.36 	(b) If the amount of credit which the taxpayer is eligible to receive under this 
2.37 	subdivision exceeds the taxpayer's tax liability under this chapter, the commissioner of 
2.38 	revenue shall refund the excess to the taxpayer.
2.39 	(c) The amount necessary to pay claims for the refund provided in this subdivision is 
2.40 	appropriated from the general fund to the commissioner of revenue.

2.41 	EFFECTIVE DATE. This section is effective for taxable years beginning after 
2.42 	December 31, 2005.

2.43 	Sec. 2. [290.0677] MILITARY SERVICE CREDIT.
3.1 		Subdivision 1.Credit allowed.  (a) An individual is allowed a credit against the tax 
3.2 	due under this chapter equal to $59 for each month or portion thereof that the individual 
3.3 	was in active military service in a designated area after September 11, 2001,  while a 
3.4 	Minnesota domiciliary. 
3.5 	(b) For active service performed after September 11, 2001, and before December 31, 
3.6 	2006, the individual may claim the credit in the taxable year beginning after December 31, 
3.7 	2005, and before January 1, 2007. 
3.8 	(c) For active service performed after December 31, 2006, the individual may claim 
3.9 	the credit for the taxable year in which the active service was performed. 
3.10 	(d) If a Minnesota domiciliary is killed while performing active military service in 
3.11 	a designated area, the individual's surviving spouse or dependent child may take 
3.12 	the credit in the taxable year of the death.  If a Minnesota domiciliary was killed while 
3.13 	performing active military service in a designated area between September 11, 2001, and 
3.14 	December 31, 2006, the individual's surviving spouse or dependent child may claim 
3.15 	this credit in the taxable year beginning after December 31, 2005, and before January 
3.16 	1, 2007. 
3.17 		Subd. 2.Definitions. (a) For purposes of this section the following terms have 
3.18 	the meanings given. 
3.19 	(b) "Designated area" means a: 
3.20 	(1) combat zone designated by Executive Order from the President of the United 
3.21 	States; 
3.22 	(2) qualified hazardous duty area, designated in Public Law; or 
3.23 	(3) location certified by the U. S. Department of Defense as eligible for combat zone 
3.24 	tax benefits due to the location's direct support of military operations. 
3.25 	(c) "Active military service" means active duty service in any of the United States 
3.26 	Armed Forces, the National Guard, or reserves.
3.27 		Subd. 3.Credit refundable. If the amount of credit which the individual is eligible 
3.28 	to receive under this section exceeds the individual's tax liability under this chapter, the 
3.29 	commissioner shall refund the excess to the individual.
3.30 		Subd. 4.Appropriation. An amount sufficient to pay the refunds required by this 
3.31 	section is appropriated to the commissioner from the general fund. 

3.32 	EFFECTIVE DATE. This section is effective for taxable years beginning after 
3.33 	December 31, 2005.

3.34 	Sec. 3. Minnesota Statutes 2004, section 290.091, subdivision 3, is amended to read:
4.1 		Subd. 3.Exemption amount. (a) For purposes of computing the alternative 
4.2 	minimum tax, the exemption amount is:
4.3 	(1) for taxable years beginning before January 1, 2006, the exemption determined 
4.4 	under section 55(d) of the Internal Revenue Code, as amended through December 31, 
4.5 	1992; and
4.6 	(2) for taxable years beginning after December 31, 2005, $60,000 for married 
4.7 	couples filing joint returns, $30,000 for married individuals filing separate returns, estates, 
4.8 	and trusts, and $45,000 for unmarried individuals.
4.9 	(b) The exemption amount determined under this subdivision is subject to the phase 
4.10 	out under section 55(d)(3) of the Internal Revenue Code, except that alternative minimum 
4.11 	taxable income as determined under this section must be substituted in the computation 
4.12 	of the phase out under section 55(d)(3).
4.13 	(c) For taxable years beginning after December 31, 2006, the exemption amount 
4.14 	under paragraph (a), clause (2), must be adjusted for inflation. The commissioner shall 
4.15 	make the inflation adjustments in accordance with section 1(f) of the Internal Revenue 
4.16 	Code except that for the purposes of this subdivision the percentage increase must be 
4.17 	determined from the year starting September 1, 2005, and ending August 31, 2006, as the 
4.18 	base year for adjusting for inflation for the tax year beginning after December 31, 2006. 
4.19 	The determination of the commissioner under this subdivision is not a rule under the 
4.20 	Administrative Procedure Act.

4.21 	EFFECTIVE DATE. This section is effective for taxable years beginning after 
4.22 	December 31, 2005.

4.23 	Sec. 4. Minnesota Statutes 2004, section 290.17, subdivision 1, is amended to read:
4.24 		Subdivision 1.Scope of allocation rules. (a) The income of resident individuals 
4.25 	is not subject to allocation outside this state. The allocation rules apply to nonresident 
4.26 	individuals, estates, trusts, nonresident partners of partnerships, nonresident shareholders 
4.27 	of corporations treated as "S" corporations under section  290.9725, and all corporations 
4.28 	not having such an election in effect. If a partnership or corporation would not otherwise 
4.29 	be subject to the allocation rules, but conducts a trade or business that is part of a 
4.30 	unitary business involving another legal entity that is subject to the allocation rules, the 
4.31 	partnership or corporation is subject to the allocation rules. 
4.32 	(b) Expenses, losses, and other deductions (referred to collectively in this paragraph 
4.33 	as "deductions") must be allocated along with the item or class of gross income to which 
4.34 	they are definitely related for purposes of assignment under this section or apportionment 
4.35 	under section  290.191,  290.20, or  290.36. Deductions not definitely related to any item 
5.1 	or class of gross income are assigned under subdivision 2, paragraph (e), are assigned to 
5.2 	the taxpayer's domicile. 
5.3 	(c) In the case of an individual who is a resident for only part of a taxable year, 
5.4 	the individual's income, gains, losses, and deductions from the distributive share of a 
5.5 	partnership, S corporation, trust, or estate are not subject to allocation outside this state 
5.6 	to the extent of the distributive share multiplied by a ratio, the numerator of which is 
5.7 	the number of days the individual was a resident of this state during the tax year of the 
5.8 	partnership, S corporation, trust, or estate, and the denominator of which is the number of 
5.9 	days in the taxable year of the partnership, S corporation, trust, or estate.

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

5.11 	ARTICLE 2
5.12 	FEDERAL UPDATE

5.13 	Section 1. Minnesota Statutes 2005 Supplement, section 289A.02, subdivision 7, 
5.14 	is amended to read:
5.15 		Subd. 7.Internal Revenue Code. Unless specifically defined otherwise, "Internal 
5.16 	Revenue Code" means the Internal Revenue Code of 1986, as amended through April 
5.17 	15, 2005 May 18, 2006.

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

5.19 	Sec. 2. Minnesota Statutes 2005 Supplement, section 290.01, subdivision 19, is 
5.20 	amended to read:
5.21 		Subd. 19.Net income. The term "net income" means the federal taxable income, 
5.22 	as defined in section 63 of the Internal Revenue Code of 1986, as amended through the 
5.23 	date named in this subdivision, incorporating the federal effective dates of changes to the 
5.24 	Internal Revenue Code and any elections made by the taxpayer in accordance with the 
5.25 	Internal Revenue Code in determining federal taxable income for federal income tax 
5.26 	purposes, and with the modifications provided in subdivisions 19a to 19f.
5.27 	In the case of a regulated investment company or a fund thereof, as defined in section 
5.28 	851(a) or 851(g) of the Internal Revenue Code, federal taxable income means investment 
5.29 	company taxable income as defined in section 852(b)(2) of the Internal Revenue Code, 
5.30 	except that:
5.31 	(1) the exclusion of net capital gain provided in section 852(b)(2)(A) of the Internal 
5.32 	Revenue Code does not apply;
6.1 	(2) the deduction for dividends paid under section 852(b)(2)(D) of the Internal 
6.2 	Revenue Code must be applied by allowing a deduction for capital gain dividends and 
6.3 	exempt-interest dividends as defined in sections 852(b)(3)(C) and 852(b)(5) of the Internal 
6.4 	Revenue Code; and
6.5 	(3) the deduction for dividends paid must also be applied in the amount of any 
6.6 	undistributed capital gains which the regulated investment company elects to have treated 
6.7 	as provided in section 852(b)(3)(D) of the Internal Revenue Code.
6.8 	The net income of a real estate investment trust as defined and limited by section 
6.9 	856(a), (b), and (c) of the Internal Revenue Code means the real estate investment trust 
6.10 	taxable income as defined in section 857(b)(2) of the Internal Revenue Code.
6.11 	The net income of a designated settlement fund as defined in section 468B(d) of 
6.12 	the Internal Revenue Code means the gross income as defined in section 468B(b) of the 
6.13 	Internal Revenue Code.
6.14 	The Internal Revenue Code of 1986, as amended through April 15, 2005 May 18, 
6.15 	2006, shall be in effect for taxable years beginning after December 31, 1996.
6.16 	Except as otherwise provided, references to the Internal Revenue Code in 
6.17 	subdivisions 19 to 19f mean the code in effect for purposes of determining net income for 
6.18 	the applicable year.

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

6.20 	Sec. 3. Minnesota Statutes 2005 Supplement, section 290.01, subdivision 19a, is 
6.21 	amended to read:
6.22 		Subd. 19a.Additions to federal taxable income. For individuals, estates, and 
6.23 	trusts, there shall be added to federal taxable income:
6.24 	(1)(i) interest income on obligations of any state other than Minnesota or a political 
6.25 	or governmental subdivision, municipality, or governmental agency or instrumentality 
6.26 	of any state other than Minnesota exempt from federal income taxes under the Internal 
6.27 	Revenue Code or any other federal statute; and
6.28 	(ii) exempt-interest dividends as defined in section 852(b)(5) of the Internal Revenue 
6.29 	Code, except the portion of the exempt-interest dividends derived from interest income 
6.30 	on obligations of the state of Minnesota or its political or governmental subdivisions, 
6.31 	municipalities, governmental agencies or instrumentalities, but only if the portion of the 
6.32 	exempt-interest dividends from such Minnesota sources paid to all shareholders represents 
6.33 	95 percent or more of the exempt-interest dividends that are paid by the regulated 
6.34 	investment company as defined in section 851(a) of the Internal Revenue Code, or the 
7.1 	fund of the regulated investment company as defined in section 851(g) of the Internal 
7.2 	Revenue Code, making the payment; and
7.3 	(iii) for the purposes of items (i) and (ii), interest on obligations of an Indian tribal 
7.4 	government described in section 7871(c) of the Internal Revenue Code shall be treated as 
7.5 	interest income on obligations of the state in which the tribe is located;
7.6 	(2) the amount of income or sales and use taxes paid or accrued within the taxable 
7.7 	year under this chapter and the amount of taxes based on net income paid or sales and 
7.8 	use taxes paid to any other state or to any province or territory of Canada, to the extent 
7.9 	allowed as a deduction under section 63(d) of the Internal Revenue Code, but the addition 
7.10 	may not be more than the amount by which the itemized deductions as allowed under 
7.11 	section 63(d) of the Internal Revenue Code exceeds the amount of the standard deduction 
7.12 	as defined in section 63(c) of the Internal Revenue Code minus the addition which would 
7.13 	have been required under clause (10) if the taxpayer had claimed the standard deduction. 
7.14 	For the purpose of this paragraph, the disallowance of itemized deductions under section 
7.15 	68 of the Internal Revenue Code of 1986, income or sales and use tax is the last itemized 
7.16 	deduction disallowed;
7.17 	(3) the capital gain amount of a lump sum distribution to which the special tax under 
7.18 	section 1122(h)(3)(B)(ii) of the Tax Reform Act of 1986, Public Law 99-514, applies;
7.19 	(4) the amount of income taxes paid or accrued within the taxable year under this 
7.20 	chapter and taxes based on net income paid to any other state or any province or territory 
7.21 	of Canada, to the extent allowed as a deduction in determining federal adjusted gross 
7.22 	income. For the purpose of this paragraph, income taxes do not include the taxes imposed 
7.23 	by sections 290.0922, subdivision 1, paragraph (b), 290.9727, 290.9728, and 290.9729;
7.24 	(5) the amount of expense, interest, or taxes disallowed pursuant to section 290.10
7.25 	other than expenses or interest used in computing net interest income for the subtraction 
7.26 	allowed under subdivision 19b, clause (1);
7.27 	(6) the amount of a partner's pro rata share of net income which does not flow 
7.28 	through to the partner because the partnership elected to pay the tax on the income under 
7.29 	section 6242(a)(2) of the Internal Revenue Code;
7.30 	(7) 80 percent of the depreciation deduction allowed under section 168(k) of the 
7.31 	Internal Revenue Code. For purposes of this clause, if the taxpayer has an activity that 
7.32 	in the taxable year generates a deduction for depreciation under section 168(k) and the 
7.33 	activity generates a loss for the taxable year that the taxpayer is not allowed to claim for 
7.34 	the taxable year, "the depreciation allowed under section 168(k)" for the taxable year is 
7.35 	limited to excess of the depreciation claimed by the activity under section 168(k) over the 
7.36 	amount of the loss from the activity that is not allowed in the taxable year. In succeeding 
8.1 	taxable years when the losses not allowed in the taxable year are allowed, the depreciation 
8.2 	under section 168(k) is allowed;
8.3 	(8) 80 percent of the amount by which the deduction allowed by section 179 of the 
8.4 	Internal Revenue Code exceeds the deduction allowable by section 179 of the Internal 
8.5 	Revenue Code of 1986, as amended through December 31, 2003;
8.6 	(9) to the extent deducted in computing federal taxable income, the amount of the 
8.7 	deduction allowable under section 199 of the Internal Revenue Code; and
8.8 	(10) for tax years beginning after December 31, 2004, to the extent deducted in 
8.9 	computing federal taxable income, the amount by which the standard deduction allowed 
8.10 	under section 63(c) of the Internal Revenue Code exceeds the standard deduction 
8.11 	allowable under section 63(c) of the Internal Revenue Code of 1986, as amended through 
8.12 	December 31, 2003; and
8.13 	(11) (10) the exclusion allowed under section 139A of the Internal Revenue Code 
8.14 	for federal subsidies for prescription drug plans.

8.15 	EFFECTIVE DATE. This section is effective for taxable years beginning after 
8.16 	December 31, 2005.

8.17 	Sec. 4. Minnesota Statutes 2005 Supplement, section 290.01, subdivision 19c, is 
8.18 	amended to read:
8.19 		Subd. 19c.Corporations; additions to federal taxable income. For corporations, 
8.20 	there shall be added to federal taxable income:
8.21 	(1) the amount of any deduction taken for federal income tax purposes for income, 
8.22 	excise, or franchise taxes based on net income or related minimum taxes, including but not 
8.23 	limited to the tax imposed under section 290.0922, paid by the corporation to Minnesota, 
8.24 	another state, a political subdivision of another state, the District of Columbia, or any 
8.25 	foreign country or possession of the United States;
8.26 	(2) interest not subject to federal tax upon obligations of: the United States, its 
8.27 	possessions, its agencies, or its instrumentalities; the state of Minnesota or any other 
8.28 	state, any of its political or governmental subdivisions, any of its municipalities, or any 
8.29 	of its governmental agencies or instrumentalities; the District of Columbia; or Indian 
8.30 	tribal governments;
8.31 	(3) exempt-interest dividends received as defined in section 852(b)(5) of the Internal 
8.32 	Revenue Code;
8.33 	(4) the amount of any net operating loss deduction taken for federal income tax 
8.34 	purposes under section 172 or 832(c)(10) of the Internal Revenue Code or operations loss 
8.35 	deduction under section 810 of the Internal Revenue Code;
9.1 	(5) the amount of any special deductions taken for federal income tax purposes 
9.2 	under sections 241 to 247 and 965  of the Internal Revenue Code;
9.3 	(6) losses from the business of mining, as defined in section 290.05, subdivision 1, 
9.4 	clause (a), that are not subject to Minnesota income tax;
9.5 	(7) the amount of any capital losses deducted for federal income tax purposes under 
9.6 	sections 1211 and 1212 of the Internal Revenue Code;
9.7 	(8) the exempt foreign trade income of a foreign sales corporation under sections 
9.8 	921(a) and 291 of the Internal Revenue Code;
9.9 	(9) the amount of percentage depletion deducted under sections 611 through 614 and 
9.10 	291 of the Internal Revenue Code;
9.11 	(10) for certified pollution control facilities placed in service in a taxable year 
9.12 	beginning before December 31, 1986, and for which amortization deductions were elected 
9.13 	under section 169 of the Internal Revenue Code of 1954, as amended through December 
9.14 	31, 1985, the amount of the amortization deduction allowed in computing federal taxable 
9.15 	income for those facilities;
9.16 	(11) the amount of any deemed dividend from a foreign operating corporation 
9.17 	determined pursuant to section 290.17, subdivision 4, paragraph (g);
9.18 	(12) the amount of a partner's pro rata share of net income which does not flow 
9.19 	through to the partner because the partnership elected to pay the tax on the income under 
9.20 	section 6242(a)(2) of the Internal Revenue Code;
9.21 	(13) the amount of net income excluded under section 114 of the Internal Revenue 
9.22 	Code;
9.23 	(14) any increase in subpart F income, as defined in section 952(a) of the Internal 
9.24 	Revenue Code, for the taxable year when subpart F income is calculated without regard to 
9.25 	the provisions of section 614 of Public Law 107-147 103 of Public Law 109-222;
9.26 	(15) 80 percent of the depreciation deduction allowed under section 168(k)(1)(A) 
9.27 	and (k)(4)(A) of the Internal Revenue Code. For purposes of this clause, if the taxpayer 
9.28 	has an activity that in the taxable year generates a deduction for depreciation under 
9.29 	section 168(k)(1)(A) and (k)(4)(A) and the activity generates a loss for the taxable year 
9.30 	that the taxpayer is not allowed to claim for the taxable year, "the depreciation allowed 
9.31 	under section 168(k)(1)(A) and (k)(4)(A)" for the taxable year is limited to excess of the 
9.32 	depreciation claimed by the activity under section 168(k)(1)(A) and (k)(4)(A) over the 
9.33 	amount of the loss from the activity that is not allowed in the taxable year. In succeeding 
9.34 	taxable years when the losses not allowed in the taxable year are allowed, the depreciation 
9.35 	under section 168(k)(1)(A) and (k)(4)(A) is allowed;
10.1 	(16) 80 percent of the amount by which the deduction allowed by section 179 of the 
10.2 	Internal Revenue Code exceeds the deduction allowable by section 179 of the Internal 
10.3 	Revenue Code of 1986, as amended through December 31, 2003;
10.4 	(17) to the extent deducted in computing federal taxable income, the amount of the 
10.5 	deduction allowable under section 199 of the Internal Revenue Code; and
10.6 	(18) the exclusion allowed under section 139A of the Internal Revenue Code for 
10.7 	federal subsidies for prescription drug plans.

10.8 	EFFECTIVE DATE. The amendment to clause (5) is effective at the same time as 
10.9 	the provisions of section 965 of the Internal Revenue Code. Clause (14) of this section is 
10.10 	effective for taxable years beginning after December 31, 2006.

10.11 	Sec. 5. Minnesota Statutes 2005 Supplement, section 290.01, subdivision 31, is 
10.12 	amended to read:
10.13 		Subd. 31.Internal Revenue Code. Unless specifically defined otherwise, "Internal 
10.14 	Revenue Code" means the Internal Revenue Code of 1986, as amended through April 
10.15 	15, 2005 May 18, 2006.

10.16 	EFFECTIVE DATE. This section is effective the day following final enactment 
10.17 	except the changes incorporated by federal changes are effective at the same times as the 
10.18 	changes were effective for federal purposes.

10.19 	Sec. 6. Minnesota Statutes 2005 Supplement, section 290.0675, subdivision 1, is 
10.20 	amended to read:
10.21 		Subdivision 1.Definitions. (a) For purposes of this section the following terms 
10.22 	have the meanings given.
10.23 	(b) "Earned income" means the sum of the following, to the extent included in 
10.24 	Minnesota taxable income:
10.25 	(1) earned income as defined in section 32(c)(2) of the Internal Revenue Code;
10.26 	(2) income received from a retirement pension, profit-sharing, stock bonus, or 
10.27 	annuity plan; and
10.28 	(3) Social Security benefits as defined in section 86(d)(1) of the Internal Revenue 
10.29 	Code.
10.30 	(c) "Taxable income" means net income as defined in section 290.01, subdivision 19.
10.31 	(d) "Earned income of lesser-earning spouse" means the earned income of the 
10.32 	spouse with the lesser amount of earned income as defined in paragraph (b) for the taxable 
10.33 	year minus the sum of (i) the amount for one exemption under section 151(d) of the 
11.1 	Internal Revenue Code and (ii) one-half the amount of the standard deduction under 
11.2 	section 63(c)(2)(A) and (4) of the Internal Revenue Code minus one-half of any addition 
11.3 	required under section 290.01, subdivision 19a, clause (10), and one-half of the addition 
11.4 	which would have been required under section 290.01, subdivision 19a, clause (10), if the 
11.5 	taxpayer had claimed the standard deduction.

11.6 	EFFECTIVE DATE. This section is effective for taxable years beginning after 
11.7 	December 31, 2005.

11.8 	Sec. 7. Minnesota Statutes 2005 Supplement, section 290A.03, subdivision 15, is 
11.9 	amended to read:
11.10 		Subd. 15.Internal Revenue Code. "Internal Revenue Code" means the Internal 
11.11 	Revenue Code of 1986, as amended through April 15, 2005 May 18, 2006.

11.12 	EFFECTIVE DATE. This section is effective for property tax refunds based on 
11.13 	property taxes payable on or after December 31, 2005, and rent paid on or after December 
11.14 	31, 2004.

11.15 	Sec. 8. Minnesota Statutes 2005 Supplement, section 291.005, subdivision 1, is 
11.16 	amended to read:
11.17 		Subdivision 1.Scope. Unless the context otherwise clearly requires, the following 
11.18 	terms used in this chapter shall have the following meanings:
11.19 	(1) "Federal gross estate" means the gross estate of a decedent as valued and 
11.20 	otherwise determined for federal estate tax purposes by federal taxing authorities pursuant 
11.21 	to the provisions of the Internal Revenue Code.
11.22 	(2) "Minnesota gross estate" means the federal gross estate of a decedent after (a) 
11.23 	excluding therefrom any property included therein which has its situs outside Minnesota, 
11.24 	and (b) including therein any property omitted from the federal gross estate which is 
11.25 	includable therein, has its situs in Minnesota, and was not disclosed to federal taxing 
11.26 	authorities.
11.27 	(3) "Personal representative" means the executor, administrator or other person 
11.28 	appointed by the court to administer and dispose of the property of the decedent. If there 
11.29 	is no executor, administrator or other person appointed, qualified, and acting within this 
11.30 	state, then any person in actual or constructive possession of any property having a situs in 
11.31 	this state which is included in the federal gross estate of the decedent shall be deemed 
11.32 	to be a personal representative to the extent of the property and the Minnesota estate tax 
11.33 	due with respect to the property.
12.1 	(4) "Resident decedent" means an individual whose domicile at the time of death 
12.2 	was in Minnesota.
12.3 	(5) "Nonresident decedent" means an individual whose domicile at the time of 
12.4 	death was not in Minnesota.
12.5 	(6) "Situs of property" means, with respect to real property, the state or country in 
12.6 	which it is located; with respect to tangible personal property, the state or country in which 
12.7 	it was normally kept or located at the time of the decedent's death; and with respect to 
12.8 	intangible personal property, the state or country in which the decedent was domiciled 
12.9 	at death.
12.10 	(7) "Commissioner" means the commissioner of revenue or any person to whom the 
12.11 	commissioner has delegated functions under this chapter.
12.12 	(8) "Internal Revenue Code" means the United States Internal Revenue Code of 
12.13 	1986, as amended through April 15, 2005 May 18, 2006.
12.14 	(9) "Minnesota adjusted taxable estate" means federal adjusted taxable estate as 
12.15 	defined by section 2011(b)(3) of the Internal Revenue Code, increased by the amount of 
12.16 	deduction for state death taxes allowed under section 2058 of the Internal Revenue Code.

12.17 	EFFECTIVE DATE. This section is effective for estates of decedents dying after 
12.18 	December 31, 2005.

12.19 	ARTICLE 3
12.20 	SALES AND USE TAX

12.21 	Section 1. Minnesota Statutes 2005 Supplement, section 270C.722, subdivision 2, 
12.22 	is amended to read:
12.23 		Subd. 2.New permits after revocation. (a) The commissioner shall not issue a 
12.24 	new permit after revocation or reinstate a revoked permit unless the taxpayer applies for a 
12.25 	permit and provides reasonable evidence of intention to comply with the sales and use 
12.26 	tax laws and rules. The commissioner may require the applicant to provide security, in 
12.27 	addition to that authorized by section 297A.92, in an amount reasonably necessary to 
12.28 	ensure compliance with the sales and use tax laws and rules. If the commissioner issues 
12.29 	or reinstates a permit not in conformance with the requirements of this subdivision or 
12.30 	applicable rules, the commissioner may cancel the permit upon notice to the permit holder. 
12.31 	The notice must be served by first class and certified mail at the permit holder's last known 
12.32 	address. The cancellation shall be effective immediately, subject to the right of the permit 
12.33 	holder to show that the permit was issued in conformance with the requirements of this 
12.34 	subdivision and applicable rules. Upon such showing, the permit must be reissued.
13.1 	(b) If a taxpayer has had a permit or permits revoked three times in a five-year 
13.2 	period, the commissioner shall not may refuse to issue a new permit or reinstate the 
13.3 	revoked permit until 24 months have elapsed after revocation and the taxpayer has 
13.4 	satisfied the conditions for reinstatement of a revoked permit or issuance of a new permit 
13.5 	imposed by this section and rules adopted under this section.
13.6 	(c) For purposes of this subdivision, "taxpayer" means:
13.7 	(1) an individual, if a revoked permit was issued to or in the name of an individual, 
13.8 	or a corporation or partnership, if a revoked permit was issued to or in the name of a 
13.9 	corporation or partnership; and
13.10 	(2) an officer of a corporation, a member of a partnership, or an individual who is 
13.11 	liable for delinquent sales taxes, either for the entity for which the new or reinstated 
13.12 	permit is at issue, or for another entity for which a permit was previously revoked, or 
13.13 	personally as a permit holder.

13.14 	Sec. 2. Minnesota Statutes 2004, section 297A.71, is amended by adding a subdivision 
13.15 	to read:
13.16 		Subd. 37.Hydroelectric generating facility. Materials and supplies used or 
13.17 	consumed in the construction of a 10.3 megawatt run-of-the-river hydroelectric generating 
13.18 	facility that meets the requirements of this subdivision are exempt. To qualify for the 
13.19 	exemption under this subdivision, a hydroelectric generating facility must:
13.20 	(1) utilize between 12 and 16 turbine generators at a dam site existing on March 
13.21 	31, 1994;
13.22 	(2) be located on land within 3,000 feet of a 13.8 kilovolt distribution circuit; and
13.23 	(3) be eligible to receive a renewable energy production incentive payment under 
13.24 	section 216C.41.

13.25 	EFFECTIVE DATE. This section is effective for sales and purchases made after 
13.26 	April 30, 2006, and on or before December 31, 2009.

13.27 	Sec. 3. Laws 1996, chapter 471, article 2, section 29, subdivision 1, is amended to read:
13.28 	
13.29 	Subdivision 1.  Sales tax authorized. Notwithstanding  Minnesota Statutes, section 
13.30 	477A.016, or any other contrary  provision of law, ordinance, or city charter, the city of  
13.31 	Hermantown may, by ordinance, impose an additional sales tax of  up to one percent 
13.32 	on sales transactions taxable pursuant to  Minnesota Statutes, chapter 297A, that occur 
13.33 	within the city.  The proceeds of the tax imposed under this section must be used  to 
13.34 	meet the costs of:  
14.1 	
14.2 	(1) extending a sewer interceptor line;  
14.3 	
14.4 	(2) construction of a booster pump station, reservoirs, and  related improvements 
14.5 	to the water system; and  
14.6 	
14.7 	(3) construction of a building containing a police and fire station and an 
14.8 	administrative services facility.  
14.9 	

14.10 	EFFECTIVE DATE. This section is effective the day following final enactment, 
14.11 	upon compliance with Minnesota Statutes, section 645.021, subdivision 3, by the city of 
14.12 	Hermantown.

14.13 	Sec. 4. Laws 1996, chapter 471, article 2, section 29, subdivision 4, is amended to read:
14.14 	
14.15 	Subd. 4.  Termination. The tax authorized under this  section terminates at the later 
14.16 	of (1) ten years after the date  of initial imposition of the tax, or (2) on the first day of the 
14.17 	second month next succeeding a determination by the city council  that sufficient funds 
14.18 	have been received from the tax to finance  the improvements described in subdivision 1, 
14.19 	clauses (1) to (3),  and to prepay or retire at maturity the principal, interest, and  premium 
14.20 	due on any bonds issued for the improvements on March 31, 2026.  Any funds  remaining 
14.21 	after completion of the improvements and retirement or  redemption of the bonds may 
14.22 	be placed in the general fund of the  city.  

14.23 	EFFECTIVE DATE. This section is effective the day following final enactment, 
14.24 	upon compliance with Minnesota Statutes, section 645.021, subdivision 3, by the city of 
14.25 	Hermantown.

14.26 	Sec. 5. Laws 2005, First Special Session chapter 3, article 5, section 14, the effective 
14.27 	date, is amended to read:

14.28 	EFFECTIVE DATE. This section is effective for sales made after December 31, 
14.29 	2004, and on or before December 31, 2007 2009.

14.30 	Sec. 6. Laws 2005, First Special Session chapter 3, article 5, section 38, subdivision 2, 
14.31 	is amended to read:
15.1 	Subd. 2. Use of revenues. The proceeds of the tax  imposed under this section shall 
15.2 	be used to pay for lake  improvement projects as detailed in the Shell Rock River watershed 
15.3 	plan and as directed by the Shell Rock River Watershed Board. Notwithstanding any 
15.4 	provision of statute, other law, or city charter to the contrary, the city shall transfer all 
15.5 	revenues from the tax imposed under subdivision 1, as soon as they are received, to the 
15.6 	Shell Rock River Watershed District. The city is not required to review the intended uses 
15.7 	of the revenues by the watershed district, nor is the watershed district required to submit 
15.8 	to the city proposed budgets, statements, or invoices explaining the intended uses of the 
15.9 	revenues as a prerequisite for the transfer of the revenues.

15.10 	EFFECTIVE DATE. This section is effective the day after compliance by the 
15.11 	governing body of the city of Albert Lea with Minnesota Statutes, section 645.021, 
15.12 	subdivision 3.

15.13 	Sec. 7. Laws 2005, First Special Session chapter 3, article 5, section 43, subdivision 3, 
15.14 	is amended to read:
15.15 	
15.16 	Subd. 3.  Use of revenues. Revenues received from the  taxes authorized by 
15.17 	subdivisions 1 and 2 must be used to pay all  or part of the capital costs of transportation 
15.18 	contained in the  Minnesota Department of Transportation's Winona Intermodal study  
15.19 	dated June 2002 and in the resolution approved by the city  council on January 3, 2005, 
15.20 	and all or a part of the capital costs of flood control projects, up to $1,200,000, approved 
15.21 	by resolution of the city council on February 6, 2006, including securing or paying debt  
15.22 	service on bonds issued under subdivision 4, for the  transportation and flood control 
15.23 	projects and to pay the cost of collecting and  administering the tax.  Authorized costs 
15.24 	include, but are not  limited to, acquiring property and paying construction and  engineering 
15.25 	costs related to the projects.  
15.26 	

15.27 	EFFECTIVE DATE. This section is effective the day after the governing body of 
15.28 	the city of Winona and its chief clerical officer comply with Minnesota Statutes, section 
15.29 	645.021, subdivisions 2 and 3.

15.30 	Sec. 8. Laws 2005, First Special Session chapter 3, article 5, section 44, subdivision 1, 
15.31 	is amended to read:
15.32 	
16.1 	Subdivision 1. Sales and use tax. Notwithstanding  Minnesota Statutes, section 
16.2 	477A.016, or any other provision of  law, ordinance, or city charter, if approved by the 
16.3 	voters  pursuant to Minnesota Statutes, section 297A.99, at the next a   general election
16.4 	held before January 1, 2008, the city of Worthington may impose by  ordinance a sales 
16.5 	and use tax of up to one-half of one percent  for the purpose specified in subdivision 3.  
16.6 	Except as otherwise  provided in this section, the provisions of Minnesota Statutes,  section 
16.7 	297A.99, govern the imposition, administration,  collection, and enforcement of the tax 
16.8 	authorized under this  subdivision.  
16.9 	

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

16.11 	Sec. 9. CITY OF AUSTIN; TAXES AUTHORIZED.
 16.12 		Subdivision 1.Sales and use tax. Notwithstanding Minnesota Statutes, section 
16.13 	477A.016, or any other provision of law, ordinance, or city charter, if approved by the 
16.14 	voters pursuant to Minnesota Statutes, section 297A.99, at the next general election or 
16.15 	special election held for that purpose before January 1, 2007, the city of Austin may 
16.16 	impose by ordinance a sales and use tax of up to one-half of one percent for the purpose 
16.17 	specified in subdivision 2. Except as otherwise provided in this section, the provisions of 
16.18 	Minnesota Statutes, section 297A.99, govern the imposition, administration, collection, 
16.19 	and enforcement of the tax authorized under this subdivision.
16.20 		Subd. 2.Use of revenues. Revenues received from taxes authorized by subdivision 
16.21 	1 must be used by the city of Austin to pay all or part of the capital or administrative costs 
16.22 	of flood mitigation projects in the city of Austin. Authorized expenses include, but are not 
16.23 	limited to, acquiring property and paying construction and engineering expenses related 
16.24 	to the flood mitigation projects.
16.25 		Subd. 3.Bonding authority. Pursuant to the approval of the city voters to impose 
16.26 	the tax authorized in subdivision 1, the city of Austin may issue, without an additional 
16.27 	election, general obligation bonds of the city in an amount not to exceed $14,000,000 to 
16.28 	finance the costs for the projects specified in subdivision 2. The debt represented by the 
16.29 	bonds must not be included in computing any debt limitations applicable to the city, and 
16.30 	the levy of taxes required by Minnesota Statutes, section 475.61, to pay the principal or 
16.31 	any interest on the bonds must not be subject to any levy limitation.
16.32 		Subd. 4.Termination of tax. The tax authorized under subdivision 1 terminates at 
16.33 	the earlier of:
16.34 	(1) 20 years after the date of initial imposition of the tax; or
17.1 	(2) when the Austin City Council determines that the amount described in 
17.2 	subdivision 2 has been received from the tax to finance the capital and administrative costs 
17.3 	for the projects specified in subdivision 2, and to repay or retire at maturity, the principal, 
17.4 	interest, and premium due on any bonds issued for the projects under subdivision 3.
17.5 	Any funds remaining after completion of the projects specified in subdivision 2, and 
17.6 	retirement or redemption of the bonds in subdivision 3, may be placed in the general fund 
17.7 	of the city. The tax imposed under subdivision 1 may expire at an earlier time if the 
17.8 	city so determines by ordinance.

17.9 	EFFECTIVE DATE. This section is effective the day after the governing body of 
17.10 	the city of Austin and its chief clerical officer comply with Minnesota Statutes, section 
17.11 	645.021, subdivisions 2 and 3.

17.12 	Sec. 10. CITY OF BAXTER; TAXES AUTHORIZED.
 17.13 		Subdivision 1.Sales and use tax authorized. Notwithstanding Minnesota Statutes, 
17.14 	section 477A.016, or any other provision of law, ordinance, or city charter, pursuant to 
17.15 	the approval of the voters on November 2, 2004, and pursuant to Minnesota Statutes, 
17.16 	section 297A.99, the city of Baxter may impose by ordinance a sales and use tax of 
17.17 	one-half of one percent for the purposes specified in subdivision 3. The provisions of 
17.18 	Minnesota Statutes, section 297A.99, govern the imposition, administration, collection, 
17.19 	and enforcement of the tax authorized under this subdivision.
17.20 		Subd. 2.Excise tax authorized. Notwithstanding Minnesota Statutes, section 
17.21 	477A.016, or any other contrary provision of law, ordinance, or city charter, the city of 
17.22 	Baxter may impose by ordinance, for the purposes specified in subdivision 3, an excise tax 
17.23 	of up to $20 per motor vehicle, as defined by ordinance, purchased or acquired from any 
17.24 	person engaged within the city of Baxter in the business of selling motor vehicles at retail.
17.25 		Subd. 3.Use of revenues. Revenues received from the taxes authorized by 
17.26 	subdivisions 1 and 2 must be used to pay the cost of collecting and administering the tax 
17.27 	and to finance the acquisition and betterment of water and wastewater facilities to serve the 
17.28 	cities of Brainerd and Baxter, building and equipping a fire substation, as approved by the 
17.29 	voters at the referendum authorizing the tax. Authorized costs include, but are not limited 
17.30 	to, acquiring property and paying construction and engineering costs related to the projects.
17.31 		Subd. 4.Bonds. The city of Baxter, pursuant to the approval of the voters at the 
17.32 	November 2, 2004, referendum authorizing the imposition of the taxes in this section, may 
17.33 	issue general obligation bonds of the city, in one or more series, in the aggregate principal 
17.34 	amount not to exceed $15,000,000 to finance the projects listed in subdivision 3. The debt 
17.35 	represented by the bonds is not included in computing any debt limitations applicable to 
18.1 	the city, and the levy of taxes required by Minnesota Statutes, section 475.61, to pay the 
18.2 	principal of and interest on the bonds is not subject to any levy limitation or included in 
18.3 	computing or applying any levy limitation applicable to the city of Baxter.
18.4 		Subd. 5.Termination of taxes. The taxes imposed under subdivisions 1 and 2 
18.5 	expire at the earlier of a date 12 years after the imposition of the tax or when the Baxter 
18.6 	City Council first determines that the amount of revenues raised from the taxes to pay for 
18.7 	the projects under subdivision 3 equals or exceeds $15,000,000 plus any interest on bonds 
18.8 	issued for the projects under subdivision 4. Any funds remaining after the expiration of 
18.9 	the taxes and retirement of the bonds shall be placed in a capital project fund of the city of 
18.10 	Baxter. The taxes imposed under subdivisions 1 and 2 may expire at an earlier time if the 
18.11 	city of Baxter so determines by ordinance.

18.12 	EFFECTIVE DATE. This section is effective the day after the governing body of 
18.13 	the city of Baxter and its chief clerical officer comply with Minnesota Statutes, section 
18.14 	645.021, subdivisions 2 and 3.

18.15 	Sec. 11. CITY OF BRAINERD; TAXES AUTHORIZED.
 18.16 		Subdivision 1.Sales and use tax authorized. Notwithstanding Minnesota Statutes, 
18.17 	section 477A.016, or any other provision of law, ordinance, or city charter, contingent 
18.18 	on the approval of the voters on the November 7, 2006, referendum, and pursuant to 
18.19 	Minnesota Statutes, section 297A.99, the city of Brainerd may impose by ordinance a sales 
18.20 	and use tax of one-half of one percent for the purposes specified in subdivision 3. The 
18.21 	provisions of Minnesota Statutes, section 297A.99, govern the imposition, administration, 
18.22 	collection, and enforcement of the tax authorized under this section.
18.23 		Subd. 2.Excise tax authorized. Notwithstanding Minnesota Statutes, section 
18.24 	477A.016, or any other provision of law, ordinance, or city charter, the city of Brainerd 
18.25 	may impose by ordinance, for the purposes specified in subdivision 3, an excise tax of up 
18.26 	to $20 per motor vehicle, as defined by ordinance, purchased, or acquired from any person 
18.27 	engaged within the city of Brainerd in the business of selling motor vehicles at retail.
18.28 		Subd. 3.Use of revenues. Revenues received from the taxes authorized by 
18.29 	subdivisions 1 and 2 must be used to pay the cost of collecting and administering the tax 
18.30 	and to finance all or part of the costs of constructing upgraded water and wastewater 
18.31 	treatment facilities to serve the cities of Brainerd and Baxter, water infrastructure 
18.32 	improvements, and trail development, contingent on approval by Brainerd voters at the 
18.33 	November 7, 2006, referendum. Authorized costs include, but are not limited to, acquiring 
18.34 	property and paying construction and engineering costs related to the projects.
19.1 		Subd. 4.Bonds. The city of Brainerd, contingent on approval of the voters at the 
19.2 	November 7, 2006, referendum authorizing the imposition of taxes in this section, may 
19.3 	issue general obligation bonds of the city, in one or more series, in the aggregate principal 
19.4 	amount not to exceed $22,030,000 to finance the projects listed in subdivision 3. The debt 
19.5 	represented by the bonds is not included in computing any debt limitations applicable to 
19.6 	Brainerd, and the levy of taxes required by Minnesota Statutes, section 475.61, to pay the 
19.7 	principal and interest on the bonds is not subject to any levy limitation or included in 
19.8 	computing any levy limitation applicable to the city of Brainerd.
19.9 		Subd. 5.Termination of taxes. The taxes imposed under subdivisions 1 and 2 
19.10 	expire at the earlier of a date 12 years after the imposition of the tax or when the city 
19.11 	council first determines that the amount of revenues raised from the taxes to pay for 
19.12 	projects under subdivision 3 equals or exceeds $22,030,000 plus any interest on bonds 
19.13 	issued for the projects under subdivision 4. Any funds remaining after the expiration of 
19.14 	the taxes and retirement of the bonds shall be placed in a capital project fund of the city of 
19.15 	Brainerd. The taxes imposed under subdivision 1 and 2 may expire at an earlier time if the 
19.16 	city of Brainerd so determines by ordinance.

19.17 	EFFECTIVE DATE. This section is effective the day after the governing body of 
19.18 	the city of Brainerd and its chief clerical officer comply with Minnesota Statutes, section 
19.19 	645.021, subdivisions 2 and 3.

19.20 	Sec. 12. CITY OF OWATONNA; TAXES AUTHORIZED.
 19.21 		Subdivision 1.Sales and use tax authorized. Notwithstanding Minnesota Statutes, 
19.22 	section 477A.016, or any other provision of law, ordinance, or city charter, if approved by 
19.23 	the voters at the next general election pursuant to Minnesota Statutes, section 297A.99, 
19.24 	the city of Owatonna may impose by ordinance a sales and use tax of one-half of one 
19.25 	percent for the purposes specified in subdivision 3. The provisions of Minnesota Statutes, 
19.26 	section 297A.99, govern the imposition, administration, collection, and enforcement of 
19.27 	the taxes authorized under this subdivision.
19.28 		Subd. 2.Excise tax authorized. Notwithstanding Minnesota Statutes, section 
19.29 	477A.016, or any other provision of law, ordinance, or city charter, the city of Owatonna 
19.30 	may impose by ordinance, for the purposes specified in subdivision 3, an excise tax of 
19.31 	$20 per motor vehicle, as defined by ordinance, purchased or acquired from any person 
19.32 	engaged within the city in the business of selling motor vehicles at retail.
19.33 		Subd. 3.Use of revenues. Revenues received from the taxes authorized by 
19.34 	subdivisions 1 and 2 must be used to pay all or part of the capital costs of transportation 
19.35 	projects included in the 2004 U.S. Highway 14-Owatonna Beltline Study by the Minnesota 
20.1 	Department of Transportation, Steele County, and the city of Owatonna; regional parks 
20.2 	and trail developments; and the West Hills complex, including the firehall, and library 
20.3 	improvement projects; as described in the city resolution No. 4-06, Exhibit A, as adopted 
20.4 	by the city on January 17, 2006. The amount paid from these revenues for transportation 
20.5 	projects may not exceed $4,450,000 plus associated bond costs. The amount paid from 
20.6 	these revenues for park and trail projects may not exceed $5,400,000 plus associated bond 
20.7 	costs. The amount paid from these revenues for West Hills complex, fire hall, and library 
20.8 	improvement projects may not exceed $2,823,000 plus associated bond costs.
20.9 		Subd. 4.Bonds. (a) The city of Owatonna, if approved by voters pursuant to 
20.10 	Minnesota Statutes, section 297A.99, may issue bonds under Minnesota Statutes, chapter 
20.11 	475, to pay capital and administrative expenses for the projects described in subdivision 3, 
20.12 	in an amount that does not exceed $12,700,000. A separate election to approve the bonds 
20.13 	under Minnesota Statutes, section 475.58, is not required.
20.14 	(b) The debt represented by the bonds is not included in computing any debt 
20.15 	limitation applicable to the city, and any levy of taxes under Minnesota Statutes, section 
20.16 	475.61, to pay principal and interest on the bonds, is not subject to any levy limitation.
20.17 		Subd. 5.Termination of taxes. The taxes imposed under subdivisions 1 and 2 
20.18 	expire at the earlier of (1) ten years after the tax is first imposed, or (2) when the city 
20.19 	council determines that the amount of revenues received from the taxes to pay for the 
20.20 	projects under subdivision 3 first equals or exceeds the amount authorized to be spent for 
20.21 	each project plus the additional amount needed to pay the costs related to issuance of the 
20.22 	bonds under subdivision 4, including interest on the bonds. Any funds remaining after 
20.23 	completion of the projects and retirement or redemption of the bonds shall be placed in 
20.24 	a capital project fund of the city. The taxes imposed under sections 1 and 2 may expire 
20.25 	at an earlier time if the city so determines by ordinance.

20.26 	EFFECTIVE DATE. This section is effective the day after compliance by the 
20.27 	governing body of the city of Owatonna with Minnesota Statutes, section 645.021, 
20.28 	subdivision 3.

20.29 	ARTICLE 4
20.30 	PROPERTY TAXES

20.31 	Section 1. Minnesota Statutes 2004, section 116J.993, subdivision 3, is amended to 
20.32 	read:
20.33 		Subd. 3.Business subsidy. "Business subsidy" or "subsidy" means a state or local 
20.34 	government agency grant, contribution of personal property, real property, infrastructure, 
21.1 	the principal amount of a loan at rates below those commercially available to the recipient, 
21.2 	any reduction or deferral of any tax or any fee, any guarantee of any payment under any 
21.3 	loan, lease, or other obligation, or any preferential use of government facilities given 
21.4 	to a business.
21.5 	The following forms of financial assistance are not a business subsidy:
21.6 	(1) a business subsidy of less than $25,000;
21.7 	(2) assistance that is generally available to all businesses or to a general class of 
21.8 	similar businesses, such as a line of business, size, location, or similar general criteria;
21.9 	(3) public improvements to buildings or lands owned by the state or local 
21.10 	government that serve a public purpose and do not principally benefit a single business or 
21.11 	defined group of businesses at the time the improvements are made;
21.12 	(4) redevelopment property polluted by contaminants as defined in section  116J.552, 
21.13 	subdivision 3; 
21.14 	(5) assistance provided for the sole purpose of renovating old or decaying building 
21.15 	stock or bringing it up to code and assistance provided for designated historic preservation 
21.16 	districts, provided that the assistance is equal to or less than 50 percent of the total cost;
21.17 	(6) assistance to provide job readiness and training services if the sole purpose of 
21.18 	the assistance is to provide those services;
21.19 	(7) assistance for housing;
21.20 	(8) assistance for pollution control or abatement, including assistance for a tax 
21.21 	increment financing hazardous substance subdistrict as defined under section  469.174, 
21.22 	subdivision 23; 
21.23 	(9) assistance for energy conservation;
21.24 	(10) tax reductions resulting from conformity with federal tax law;
21.25 	(11) workers' compensation and unemployment insurance;
21.26 	(12) benefits derived from regulation;
21.27 	(13) indirect benefits derived from assistance to educational institutions;
21.28 	(14) funds from bonds allocated under chapter 474A, bonds issued to refund 
21.29 	outstanding bonds, and bonds issued for the benefit of an organization described in section 
21.30 	501(c)(3) of the Internal Revenue Code of 1986, as amended through December 31, 1999;
21.31 	(15) assistance for a collaboration between a Minnesota higher education institution 
21.32 	and a business;
21.33 	(16) assistance for a tax increment financing soils condition district as defined under 
21.34 	section  469.174, subdivision 19; 
22.1 	(17) redevelopment when the recipient's investment in the purchase of the site 
22.2 	and in site preparation is 70 percent or more of the assessor's current year's estimated 
22.3 	market value;
22.4 	(18) general changes in tax increment financing law and other general tax law 
22.5 	changes of a principally technical nature;
22.6 	(19) federal assistance until the assistance has been repaid to, and reinvested by, the 
22.7 	state or local government agency;
22.8 	(20) funds from dock and wharf bonds issued by a seaway port authority;
22.9 	(21) business loans and loan guarantees of $75,000 or less; and
22.10 	(22) federal loan funds provided through the United States Department of 
22.11 	Commerce, Economic Development Administration; and
22.12 	(23) property tax abatements granted under section 469.1813 to property that is 
22.13 	subject to valuation under Minnesota Rules, chapter 8100.

22.14 	Sec. 2. Minnesota Statutes 2005 Supplement, section 126C.17, subdivision 9, is 
22.15 	amended to read:
22.16 		Subd. 9.Referendum revenue. (a) The revenue authorized by section 126C.10, 
22.17 	subdivision 1, may be increased in the amount approved by the voters of the district at a 
22.18 	referendum called for the purpose. The referendum may be called by the board or shall be 
22.19 	called by the board upon written petition of qualified voters of the district. The referendum 
22.20 	must be conducted one or two calendar years before the increased levy authority, if 
22.21 	approved, first becomes payable. Only one election to approve an increase may be held 
22.22 	in a calendar year. Unless the referendum is conducted by mail under paragraph (g), the 
22.23 	referendum must be held on the first Tuesday after the first Monday in November. The 
22.24 	ballot must state the maximum amount of the increased revenue per resident marginal cost 
22.25 	pupil unit. The ballot may state a schedule, determined by the board, of increased revenue 
22.26 	per resident marginal cost pupil unit that differs from year to year over the number of 
22.27 	years for which the increased revenue is authorized or may state that the amount shall 
22.28 	increase annually by the rate of inflation. For this purpose, the rate of inflation shall be the 
22.29 	annual inflationary increase calculated under subdivision 2, paragraph (b). The ballot may 
22.30 	state that existing referendum levy authority is expiring. In this case, the ballot may also 
22.31 	compare the proposed levy authority to the existing expiring levy authority, and express 
22.32 	the proposed increase as the amount, if any, over the expiring referendum levy authority. 
22.33 	The ballot must designate the specific number of years, not to exceed ten, for which the 
22.34 	referendum authorization applies. The ballot, including a ballot on the question to revoke 
22.35 	or reduce the increased revenue amount under paragraph (c), must abbreviate the term 
23.1 	"per resident marginal cost pupil unit" as "per pupil." The notice required under section 
23.2 	275.60 may be modified to read, in cases of renewing existing levies:
23.3 	"BY VOTING "YES" ON THIS BALLOT QUESTION, YOU MAY BE VOTING 
23.4 	FOR A PROPERTY TAX INCREASE."
23.5 	The ballot may contain a textual portion with the information required in this 
23.6 	subdivision and a question stating substantially the following:
23.7 	"Shall the increase in the revenue proposed by (petition to) the board of ........., 
23.8 	School District No. .., be approved?"
23.9 	If approved, an amount equal to the approved revenue per resident marginal cost 
23.10 	pupil unit times the resident marginal cost pupil units for the school year beginning in 
23.11 	the year after the levy is certified shall be authorized for certification for the number of 
23.12 	years approved, if applicable, or until revoked or reduced by the voters of the district at a 
23.13 	subsequent referendum.
23.14 	(b) The board must prepare and deliver by first class mail at least 15 days but no more 
23.15 	than 30 days before the day of the referendum to each taxpayer a notice of the referendum 
23.16 	and the proposed revenue increase. The board need not mail more than one notice to any 
23.17 	taxpayer. For the purpose of giving mailed notice under this subdivision, owners must be 
23.18 	those shown to be owners on the records of the county auditor or, in any county where 
23.19 	tax statements are mailed by the county treasurer, on the records of the county treasurer. 
23.20 	Every property owner whose name does not appear on the records of the county auditor 
23.21 	or the county treasurer is deemed to have waived this mailed notice unless the owner 
23.22 	has requested in writing that the county auditor or county treasurer, as the case may be, 
23.23 	include the name on the records for this purpose. The notice must project the anticipated 
23.24 	amount of tax increase in annual dollars for typical residential homesteads, agricultural 
23.25 	homesteads, apartments, and commercial-industrial property within the school district.
23.26 	The notice for a referendum may state that an existing referendum levy is expiring 
23.27 	and project the anticipated amount of increase over the existing referendum levy in 
23.28 	the first year, if any, in annual dollars for typical residential homesteads, agricultural 
23.29 	homesteads, apartments, and commercial-industrial property within the district.
23.30 	The notice must include the following statement: "Passage of this referendum will 
23.31 	result in an increase in your property taxes." However, in cases of renewing existing 
23.32 	levies, the notice may include the following statement: "Passage of this referendum may 
23.33 	result in an increase in your property taxes."
23.34 	(c) A referendum on the question of revoking or reducing the increased revenue 
23.35 	amount authorized pursuant to paragraph (a) may be called by the board and shall be called 
23.36 	by the board upon the written petition of qualified voters of the district. A referendum to 
24.1 	revoke or reduce the revenue amount must state the amount per resident marginal cost 
24.2 	pupil unit by which the authority is to be reduced. Revenue authority approved by the 
24.3 	voters of the district pursuant to paragraph (a) must be available to the school district at 
24.4 	least once before it is subject to a referendum on its revocation or reduction for subsequent 
24.5 	years. Only one revocation or reduction referendum may be held to revoke or reduce 
24.6 	referendum revenue for any specific year and for years thereafter.
24.7 	(d) A petition authorized by paragraph (a) or (c) is effective if signed by a number of 
24.8 	qualified voters in excess of 15 percent of the registered voters of the district on the day 
24.9 	the petition is filed with the board. A referendum invoked by petition must be held on the 
24.10 	date specified in paragraph (a).
24.11 	(e) The approval of 50 percent plus one of those voting on the question is required to 
24.12 	pass a referendum authorized by this subdivision.
24.13 	(f) At least 15 days before the day of the referendum, the district must submit a 
24.14 	copy of the notice required under paragraph (b) to the commissioner and to the county 
24.15 	auditor of each county in which the district is located. Within 15 days after the results 
24.16 	of the referendum have been certified by the board, or in the case of a recount, the 
24.17 	certification of the results of the recount by the canvassing board, the district must notify 
24.18 	the commissioner of the results of the referendum.

24.19 	EFFECTIVE DATE. This section is effective for referenda conducted on or after 
24.20 	July 1, 2006.

24.21 	Sec. 3. Minnesota Statutes 2004, section 144F.01, subdivision 4, is amended to read:
24.22 		Subd. 4.Property tax levy authority. The district's board may levy a tax on 
24.23 	the taxable real and personal property in the district. The ad valorem tax levy may not 
24.24 	exceed 0.048 percent of the taxable market value of the district or $250,000 $400,000, 
24.25 	whichever is less. The proceeds of the levy must be used as provided in subdivision 5. 
24.26 	The board shall certify the levy at the times as provided under section  275.07. The board 
24.27 	shall provide the county with whatever information is necessary to identify the property 
24.28 	that is located within the district. If the boundaries include a part of a parcel, the entire 
24.29 	parcel shall be included in the district. The county auditors must spread, collect, and 
24.30 	distribute the proceeds of the tax at the same time and in the same manner as provided by 
24.31 	law for all other property taxes.

24.32 	Sec. 4. Minnesota Statutes 2004, section 216B.2424, subdivision 5, is amended to read:
24.33 		Subd. 5.Mandate. (a) A public utility, as defined in section  216B.02, subdivision 4, 
24.34 	that operates a nuclear-powered electric generating plant within this state must construct 
25.1 	and operate, purchase, or contract to construct and operate (1) by December 31, 1998, 
25.2 	50 megawatts of electric energy installed capacity generated by farm-grown closed-loop 
25.3 	biomass scheduled to be operational by December 31, 2001; and (2) by December 31, 
25.4 	1998, an additional 75 megawatts of installed capacity so generated scheduled to be 
25.5 	operational by December 31, 2002. 
25.6 	(b) Of the 125 megawatts of biomass electricity installed capacity required under 
25.7 	this subdivision, no more than 55 megawatts of this capacity may be provided by a facility 
25.8 	that uses poultry litter as its primary fuel source and any such facility:
25.9 	(1) need not use biomass that complies with the definition in subdivision 1;
25.10 	(2) must enter into a contract with the public utility for such capacity, that has an 
25.11 	average purchase price per megawatt hour over the life of the contract that is equal to or 
25.12 	less than the average purchase price per megawatt hour over the life of the contract in 
25.13 	contracts approved by the Public Utilities Commission before April 1, 2000, to satisfy 
25.14 	the mandate of this section, and file that contract with the Public Utilities Commission 
25.15 	prior to September 1, 2000; and
25.16 	(3) must schedule such capacity to be operational by December 31, 2002.
25.17 	(c) Of the total 125 megawatts of biomass electric energy installed capacity required 
25.18 	under this section, no more than 75 megawatts may be provided by a single project.
25.19 	(d) Of the 75 megawatts of biomass electric energy installed capacity required under 
25.20 	paragraph (a), clause (2), no more than 33 megawatts of this capacity may be provided by 
25.21 	a St. Paul district heating and cooling system cogeneration facility utilizing waste wood 
25.22 	as a primary fuel source. The St. Paul district heating and cooling system cogeneration 
25.23 	facility need not use biomass that complies with the definition in subdivision 1.
25.24 	(e) The public utility must accept and consider on an equal basis with other biomass 
25.25 	proposals:
25.26 	(1) a proposal to satisfy the requirements of this section that includes a project that 
25.27 	exceeds the megawatt capacity requirements of either paragraph (a), clause (1) or (2), and 
25.28 	that proposes to sell the excess capacity to the public utility or to other purchasers; and
25.29 	(2) a proposal for a new facility to satisfy more than ten but not more than 20 
25.30 	megawatts of the electrical generation requirements by a small business-sponsored 
25.31 	independent power producer facility to be located within the northern quarter of the state, 
25.32 	which means the area located north of Constitutional Route No. 8 as described in section  
25.33 	161.114, subdivision 2, and that utilizes biomass residue wood, sawdust, bark, chipped 
25.34 	wood, or brush to generate electricity. A facility described in this clause is not required 
25.35 	to utilize biomass complying with the definition in subdivision 1, but must be under 
25.36 	construction by December 31, 2005. 
26.1 	(f) If a public utility files a contract with the commission for electric energy installed 
26.2 	capacity that uses poultry litter as its primary fuel source, the commission must do a 
26.3 	preliminary review of the contract to determine if it meets the purchase price criteria 
26.4 	provided in paragraph (b), clause (2), of this subdivision. The commission shall perform 
26.5 	its review and advise the parties of its determination within 30 days of filing of such a 
26.6 	contract by a public utility. A public utility may submit by September 1, 2000, a revised 
26.7 	contract to address the commission's preliminary determination.
26.8 	(g) The commission shall finally approve, modify, or disapprove no later than July 
26.9 	1, 2001, all contracts submitted by a public utility as of September 1, 2000, to meet the 
26.10 	mandate set forth in this subdivision.
26.11 	(h) If a public utility subject to this section exercises an option to increase the 
26.12 	generating capacity of a project in a contract approved by the commission prior to April 
26.13 	25, 2000, to satisfy the mandate in this subdivision, the public utility must notify the 
26.14 	commission by September 1, 2000, that it has exercised the option and include in the 
26.15 	notice the amount of additional megawatts to be generated under the option exercised. 
26.16 	Any review by the commission of the project after exercise of such an option shall be 
26.17 	based on the same criteria used to review the existing contract.
26.18 	(i) A facility specified in this subdivision qualifies for exemption from property 
26.19 	taxation under section  272.02, subdivision 43 45. 

26.20 	EFFECTIVE DATE. This section is effective for property taxes levied in 2006, 
26.21 	payable in 2007, and thereafter.

26.22 	Sec. 5. Minnesota Statutes 2004, section 272.02, subdivision 45, is amended to read:
26.23 		Subd. 45.Biomass electrical generation facility; personal property.
 26.24 	Notwithstanding subdivision 9, clause (a), attached machinery and other personal property 
26.25 	which is part of an electrical generating facility that meets the requirements of this 
26.26 	subdivision is exempt. At the time of construction, the facility must:
26.27 	(1) be designed to utilize biomass as established in section  216B.2424 as a primary 
26.28 	fuel source; and 
26.29 	(2) be constructed for the purpose of generating power at the facility that will be sold 
26.30 	pursuant to a contract approved by the Public Utilities Commission in accordance with 
26.31 	the biomass mandate imposed under section  216B.2424. 
26.32 	Construction of the facility must be commenced after January 1, 2000, and before 
26.33 	December 31, 2002 2005. Property eligible for this exemption does not include electric 
26.34 	transmission lines and interconnections or gas pipelines and interconnections appurtenant 
26.35 	to the property or facility.

27.1 	EFFECTIVE DATE. This section is effective for taxes levied in 2006, payable 
27.2 	in 2007, and thereafter.

27.3 	Sec. 6. Minnesota Statutes 2005 Supplement, section 272.02, subdivision 53, is 
27.4 	amended to read:
27.5 		Subd. 53.Electric generation facility; personal property. Notwithstanding 
27.6 	subdivision 9, clause (a), attached machinery and other personal property which is part 
27.7 	of a 3.2 megawatt run-of-the-river hydroelectric generation facility and that meets the 
27.8 	requirements of this subdivision is exempt. At the time of construction, the facility must:
27.9 	(1) utilize two turbine generators at a dam site existing on March 31, 1994;
27.10 	(2) be located on land within 1,500 feet of a 13.8 kilovolt distribution substation; and
27.11 	(3) be eligible to receive a renewable energy production incentive payment under 
27.12 	section 216C.41.
27.13 	Construction of the facility must be commenced after December 31, 2004, and
27.14 	before January 1, 2007 2009. Property eligible for this exemption does not include electric 
27.15 	transmission lines and interconnections or gas pipelines and interconnections appurtenant 
27.16 	to the property or the facility.

27.17 	EFFECTIVE DATE. This section is effective for taxes levied in 2006, payable 
27.18 	in 2007, and thereafter.

27.19 	Sec. 7. Minnesota Statutes 2004, section 272.02, subdivision 54, is amended to read:
27.20 		Subd. 54.Small biomass electric generation facility; personal property. (a) 
27.21 	Subject to paragraph (b), notwithstanding subdivision 9, clause (a), attached machinery 
27.22 	and other personal property which is part of an electrical generating facility that meets the 
27.23 	requirements of this subdivision is exempt. At the time of construction the facility must:
27.24 	(1) have a generation capacity of less than 25 megawatts;
27.25 	(2) provide process heating needs in addition to electrical generation; and
27.26 	(3) utilize agricultural by-products from the malting process and other biomass 
27.27 	fuels as its primary fuel source.
27.28 	Construction of the facility must be commenced after January 1, 2002, and before 
27.29 	January 1, 2006 January 1, 2008. Property eligible for this exemption does not include 
27.30 	electric transmission lines and interconnections or gas pipelines and interconnections 
27.31 	appurtenant to the property or facility.
27.32 	(b) The exemption under this subdivision is contingent on approval by the governing 
27.33 	bodies of the municipality and county in which the electric generation facility is located.

28.1 	EFFECTIVE DATE. This section is effective for taxes levied in 2008, payable 
28.2 	in 2009, and thereafter.

28.3 	Sec. 8. Minnesota Statutes 2004, section 272.02, subdivision 55, is amended to read:
28.4 		Subd. 55.Electric generation facility; personal property. Notwithstanding 
28.5 	subdivision 9, clause (a), attached machinery and other personal property which is part of 
28.6 	an electric generating facility that meets the requirements of this subdivision is exempt. At 
28.7 	the time of construction, the facility must be sited on an energy park that (i) is located on 
28.8 	an active mining site, or on a former mining or industrial site where mining or industrial 
28.9 	operations have terminated be designated as an innovative energy project as defined in 
28.10 	section 216B.1694, (ii) isbe within a tax relief area as defined in section  273.134, (iii) 
28.11 	has on-site have access to existing railroad infrastructure within less than three miles, (iv) 
28.12 	has direct rail access to a Great Lakes port, (v) has sufficient private water resources 
28.13 	on site, and (vi) ishave received by resolution approval from the governing body of 
28.14 	the county and township or city in which the proposed facility is to be located for the 
28.15 	exemption of personal property under this subdivision, and (v) be designed to host at 
28.16 	least 500 megawatts of electrical generation.
28.17 	Construction of the first 250 500 megawatts of the facility must be commenced 
28.18 	after January 1, 2002 2006, and before January 1, 2005 2010. Construction of up to an 
28.19 	additional 750 megawatts of generation must be commenced before January 1, 2010
28.20 	2015. Property eligible for this exemption does not include electric transmission lines and 
28.21 	interconnections or gas pipelines and interconnections appurtenant to the property or the 
28.22 	facility. To qualify for an exemption under this subdivision, the owner of the electric 
28.23 	generation facility must have an agreement with the host county, township or city, and 
28.24 	school district, for payment in lieu of personal property taxes to the host county, township 
28.25 	or city, and school district.

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

28.27 	Sec. 9. Minnesota Statutes 2004, section 272.02, is amended by adding a subdivision 
28.28 	to read:
28.29 		Subd. 84.Electric generation facility; personal property. Notwithstanding 
28.30 	subdivision 9, clause (a), attached machinery and other personal property which is part 
28.31 	of a 10.3 megawatt run-of-the-river hydroelectric generation facility and that meets the 
28.32 	requirements of this subdivision is exempt. At the time of construction, the facility must:
28.33 	(1) utilize between 12 and 16 turbine generators at a dam site existing on March 
28.34 	31, 1994;
29.1 	(2) be located on land within 3,000 feet of a 13.8 kilovolt distribution substation; and
29.2 	(3) be eligible to receive a renewable energy production incentive payment under 
29.3 	section 216C.41.
29.4 	Construction of the facility must be commenced after April 30, 2006, and 
29.5 	before January 1, 2009. Property eligible for this exemption does not include electric 
29.6 	transmission lines and interconnections or gas pipelines and interconnections appurtenant 
29.7 	to the property or the facility.

29.8 	EFFECTIVE DATE. This section is effective for property taxes levied in 2006, 
29.9 	payable in 2007, and thereafter.

29.10 	Sec. 10. Minnesota Statutes 2004, section 272.029, subdivision 2, is amended to read:
29.11 		Subd. 2.Definitions. (a) For the purposes of this section, the term:
29.12 	(1) "wind energy conversion system" has the meaning given it in section  216C.06, 
29.13 	subdivision 19, and also includes a substation that is used and owned by one or more 
29.14 	wind energy conversion facilities; 
29.15 	(2) "large scale wind energy conversion system" means a wind energy conversion 
29.16 	system of more than 12 megawatts, as measured by the nameplate capacity of the system 
29.17 	or as combined with other systems as provided in paragraph (b);
29.18 	(3) "medium scale wind energy conversion system" means a wind energy conversion 
29.19 	system of over two and not more than 12 megawatts, as measured by the nameplate 
29.20 	capacity of the system or as combined with other systems as provided in paragraph (b); and
29.21 	(4) "small scale wind energy conversion system" means a wind energy conversion 
29.22 	system of two megawatts and under, as measured by the nameplate capacity of the system 
29.23 	or as combined with other systems as provided in paragraph (b).
29.24 	(b) For systems installed and contracted for after January 1, 2002, the total size of a 
29.25 	wind energy conversion system under this subdivision shall be determined according to 
29.26 	this paragraph. Unless the systems are interconnected with different distribution systems, 
29.27 	the nameplate capacity of one wind energy conversion system shall be combined with the 
29.28 	nameplate capacity of any other wind energy conversion system that is:
29.29 	(1) located within five miles of the wind energy conversion system;
29.30 	(2) constructed within the same calendar year as the wind energy conversion system; 
29.31 	and
29.32 	(3) under common ownership.
29.33 	In the case of a dispute, the commissioner of commerce shall determine the total size 
29.34 	of the system, and shall draw all reasonable inferences in favor of combining the systems.
30.1 	(c) In making a determination under paragraph (b), the commissioner of commerce 
30.2 	may determine that two wind energy conversion systems are under common ownership 
30.3 	when the underlying ownership structure contains similar persons or entities, even if the 
30.4 	ownership shares differ between the two systems. Wind energy conversion systems are 
30.5 	not under common ownership solely because the same person or entity provided equity 
30.6 	financing for the systems.

30.7 	EFFECTIVE DATE. This section is effective for taxes levied in 2006, payable 
30.8 	in 2007, and thereafter.

30.9 	Sec. 11. Minnesota Statutes 2004, section 273.11, is amended by adding a subdivision 
30.10 	to read:
30.11 		Subd. 23.First tier valuation limit; agricultural homestead property. (a) 
30.12 	Beginning with assessment year 2006, the commissioner of revenue shall annually certify 
30.13 	the first tier limit for agricultural homestead property as the product of (i) $600,000, and 
30.14 	(ii) the ratio of the statewide average taxable market value of agricultural property per acre 
30.15 	of deeded farm land in the preceding assessment year to the statewide average taxable 
30.16 	market value of agricultural property per acre of deeded farm land for assessment year 
30.17 	2004. The limit shall be rounded to the nearest $10,000.
30.18 	(b) For the purposes of this subdivision, "agricultural property" means all class 2 
30.19 	property under section 273.13, subdivision 23, except for (1) timberland, (2) a landing 
30.20 	area or public access area of a privately owned public use airport, and (3) property 
30.21 	consisting of the house, garage and immediately surrounding one acre of land of an 
30.22 	agricultural homestead.
30.23 	(c) The commissioner shall certify the limit by January 2 of each assessment year, 
30.24 	except that for assessment year 2006 the commissioner shall certify the limit by June 
30.25 	1, 2006.

30.26 	EFFECTIVE DATE. This section is effective for assessment year 2006 and 
30.27 	thereafter.

30.28 	Sec. 12. Minnesota Statutes 2004, section 273.124, subdivision 12, is amended to read:
30.29 		Subd. 12.Homestead of member of United States armed forces; Peace Corps; 
30.30 	VISTA.  (a) Real estate actually occupied and used for the purpose of a homestead by 
30.31 	a person, or by a member of that person's immediate family shall be classified as a 
30.32 	homestead even though the person or family is absent if (1) the person or the person's 
30.33 	family is absent solely because the person is on active duty with the armed forces of the 
31.1 	United States, or is serving as a volunteer under the VISTA or Peace Corps program; (2) 
31.2 	the owner intends to return as soon as discharged or relieved from service; and (3) the 
31.3 	owner claims it as a homestead. A person who knowingly makes or submits to an assessor 
31.4 	an affidavit or other statement that is false in any material matter to obtain or aid another 
31.5 	in obtaining a benefit under this subdivision is guilty of a felony.
31.6 	(b) In the case of a person who is absent solely because the person is on active duty 
31.7 	with the United States armed forces, homestead classification must be granted as provided 
31.8 	in this paragraph if the requirements of paragraph (a), clauses (1) to (3), are met, even 
31.9 	if the property has not been occupied as a homestead by the person or a member of the 
31.10 	person's family. To qualify for this classification, the person who acquires the property 
31.11 	must notify the assessor of the acquisition and of the person's absence due to military 
31.12 	service. When the person returns from military service and occupies the property as 
31.13 	a homestead, the person shall notify the assessor, who will provide for abatement of 
31.14 	the difference between the nonhomestead and homestead taxes for the current and two 
31.15 	preceding years, not to exceed the time during which the person owned the property.

31.16 	EFFECTIVE DATE. This section is effective for assessments in 2006, taxes 
31.17 	payable in 2007, and thereafter.

31.18 	Sec. 13. Minnesota Statutes 2004, section 273.13, subdivision 23, is amended to read:
31.19 		Subd. 23.Class 2. (a) Class 2a property is agricultural land including any 
31.20 	improvements that is homesteaded. The market value of the house and garage and 
31.21 	immediately surrounding one acre of land has the same class rates as class 1a property 
31.22 	under subdivision 22. The value of the remaining land including improvements up to and 
31.23 	including $600,000 market value the first tier valuation limit of agricultural homestead 
31.24 	property  has a net class rate of 0.55 percent of market value. The remaining property 
31.25 	over $600,000 market value the first tier  has a class rate of one percent of market value.
31.26 	For purposes of this subdivision, the "first tier valuation limit of agricultural homestead 
31.27 	property" and "first tier" means the limit certified under section 273.11, subdivision 23.
31.28 	(b) Class 2b property is (1) real estate, rural in character and used exclusively for 
31.29 	growing trees for timber, lumber, and wood and wood products; (2) real estate that 
31.30 	is not improved with a structure and is used exclusively for growing trees for timber, 
31.31 	lumber, and wood and wood products, if the owner has participated or is participating in 
31.32 	a cost-sharing program for afforestation, reforestation, or timber stand improvement on 
31.33 	that particular property, administered or coordinated by the commissioner of natural 
31.34 	resources; (3) real estate that is nonhomestead agricultural land; or (4) a landing area or 
32.1 	public access area of a privately owned public use airport. Class 2b property has a net 
32.2 	class rate of one percent of market value.
32.3 	(c) Agricultural land as used in this section means contiguous acreage of ten acres or 
32.4 	more, used during the preceding year for agricultural purposes. "Agricultural purposes" as 
32.5 	used in this section means the raising or cultivation of agricultural products. "Agricultural 
32.6 	purposes" also includes enrollment in the Reinvest in Minnesota program under sections  
32.7 	103F.501 to  103F.535 or the federal Conservation Reserve Program as contained in Public 
32.8 	Law 99-198 if the property was classified as agricultural (i) under this subdivision for 
32.9 	the assessment year 2002 or (ii) in the year prior to its enrollment. Contiguous acreage 
32.10 	on the same parcel, or contiguous acreage on an immediately adjacent parcel under the 
32.11 	same ownership, may also qualify as agricultural land, but only if it is pasture, timber, 
32.12 	waste, unusable wild land, or land included in state or federal farm programs. Agricultural 
32.13 	classification for property shall be determined excluding the house, garage, and 
32.14 	immediately surrounding one acre of land, and shall not be based upon the market value of 
32.15 	any residential structures on the parcel or contiguous parcels under the same ownership. 
32.16 	(d) Real estate, excluding the house, garage, and immediately surrounding one acre 
32.17 	of land, of less than ten acres which is exclusively and intensively used for raising or 
32.18 	cultivating agricultural products, shall be considered as agricultural land.
32.19 	Land shall be classified as agricultural even if all or a portion of the agricultural use 
32.20 	of that property is the leasing to, or use by another person for agricultural purposes.
32.21 	Classification under this subdivision is not determinative for qualifying under 
32.22 	section  273.111. 
32.23 	The property classification under this section supersedes, for property tax purposes 
32.24 	only, any locally administered agricultural policies or land use restrictions that define 
32.25 	minimum or maximum farm acreage.
32.26 	(e) The term "agricultural products" as used in this subdivision includes production 
32.27 	for sale of:
32.28 	(1) livestock, dairy animals, dairy products, poultry and poultry products, fur-bearing 
32.29 	animals, horticultural and nursery stock, fruit of all kinds, vegetables, forage, grains, 
32.30 	bees, and apiary products by the owner;
32.31 	(2) fish bred for sale and consumption if the fish breeding occurs on land zoned 
32.32 	for agricultural use;
32.33 	(3) the commercial boarding of horses if the boarding is done in conjunction with 
32.34 	raising or cultivating agricultural products as defined in clause (1);
32.35 	(4) property which is owned and operated by nonprofit organizations used for 
32.36 	equestrian activities, excluding racing;
33.1 	(5) game birds and waterfowl bred and raised for use on a shooting preserve licensed 
33.2 	under section  97A.115; 
33.3 	(6) insects primarily bred to be used as food for animals;
33.4 	(7) trees, grown for sale as a crop, and not sold for timber, lumber, wood, or wood 
33.5 	products; and
33.6 	(8) maple syrup taken from trees grown by a person licensed by the Minnesota 
33.7 	Department of Agriculture under chapter 28A as a food processor.
33.8 	(f) If a parcel used for agricultural purposes is also used for commercial or industrial 
33.9 	purposes, including but not limited to:
33.10 	(1) wholesale and retail sales;
33.11 	(2) processing of raw agricultural products or other goods;
33.12 	(3) warehousing or storage of processed goods; and
33.13 	(4) office facilities for the support of the activities enumerated in clauses (1), (2), 
33.14 	and (3),
33.15 	the assessor shall classify the part of the parcel used for agricultural purposes as class 
33.16 	1b, 2a, or 2b, whichever is appropriate, and the remainder in the class appropriate to its 
33.17 	use. The grading, sorting, and packaging of raw agricultural products for first sale is 
33.18 	considered an agricultural purpose. A greenhouse or other building where horticultural 
33.19 	or nursery products are grown that is also used for the conduct of retail sales must be 
33.20 	classified as agricultural if it is primarily used for the growing of horticultural or nursery 
33.21 	products from seed, cuttings, or roots and occasionally as a showroom for the retail sale of 
33.22 	those products. Use of a greenhouse or building only for the display of already grown 
33.23 	horticultural or nursery products does not qualify as an agricultural purpose.
33.24 	The assessor shall determine and list separately on the records the market value of 
33.25 	the homestead dwelling and the one acre of land on which that dwelling is located. If any 
33.26 	farm buildings or structures are located on this homesteaded acre of land, their market 
33.27 	value shall not be included in this separate determination.
33.28 	(g) To qualify for classification under paragraph (b), clause (4), a privately owned 
33.29 	public use airport must be licensed as a public airport under section  360.018. For purposes 
33.30 	of paragraph (b), clause (4), "landing area" means that part of a privately owned public use 
33.31 	airport properly cleared, regularly maintained, and made available to the public for use by 
33.32 	aircraft and includes runways, taxiways, aprons, and sites upon which are situated landing 
33.33 	or navigational aids. A landing area also includes land underlying both the primary surface 
33.34 	and the approach surfaces that comply with all of the following: 
34.1 	(i) the land is properly cleared and regularly maintained for the primary purposes of 
34.2 	the landing, taking off, and taxiing of aircraft; but that portion of the land that contains 
34.3 	facilities for servicing, repair, or maintenance of aircraft is not included as a landing area;
34.4 	(ii) the land is part of the airport property; and
34.5 	(iii) the land is not used for commercial or residential purposes.
34.6 	The land contained in a landing area under paragraph (b), clause (4), must be described 
34.7 	and certified by the commissioner of transportation. The certification is effective until 
34.8 	it is modified, or until the airport or landing area no longer meets the requirements of 
34.9 	paragraph (b), clause (4). For purposes of paragraph (b), clause (4), "public access area" 
34.10 	means property used as an aircraft parking ramp, apron, or storage hangar, or an arrival 
34.11 	and departure building in connection with the airport.

34.12 	EFFECTIVE DATE. This section is effective for taxes levied in 2006, payable 
34.13 	in 2007, and thereafter.

34.14 	Sec. 14. Minnesota Statutes 2004, section 469.1813, subdivision 1, is amended to read:
34.15 		Subdivision 1.Authority. The governing body of a political subdivision may grant 
34.16 	an a current or prospective abatement, by contract or otherwise, of the taxes imposed by 
34.17 	the political subdivision on a parcel of property, which may include personal property 
34.18 	and machinery, or defer the payments of the taxes and abate the interest and penalty 
34.19 	that otherwise would apply, if:
34.20 	(a)(1) it expects the benefits to the political subdivision of the proposed abatement 
34.21 	agreement to at least equal the costs to the political subdivision of the proposed agreement 
34.22 	or intends the abatement to phase in a property tax increase, as provided in clause (b)(7); 
34.23 	and
34.24 	(b)(2) it finds that doing so is in the public interest because it will:
34.25 	(1)(i) increase or preserve tax base;
34.26 	(2)(ii) provide employment opportunities in the political subdivision;
34.27 	(3)(iii) provide or help acquire or construct public facilities;
34.28 	(4)(iv) help redevelop or renew blighted areas;
34.29 	(5)(v) help provide access to services for residents of the political subdivision;
34.30 	(6)(vi) finance or provide public infrastructure; or
34.31 	(7)(vii) phase in a property tax increase on the parcel resulting from an increase of 
34.32 	50 percent or more in one year on the estimated market value of the parcel, other than 
34.33 	increase attributable to improvement of the parcel; or
35.1 	(viii) stabilize the tax base through equalization of property tax revenues for a 
35.2 	specified period of time with respect to a taxpayer whose real and personal property is 
35.3 	subject to valuation under Minnesota Rules, chapter 8100.

35.4 	Sec. 15. Minnesota Statutes 2005 Supplement, section 469.1813, subdivision 6, 
35.5 	is amended to read:
35.6 		Subd. 6.Duration limit. (a) A political subdivision may grant an abatement for a 
35.7 	period no longer than 15 years, except as provided under paragraph (b). The abatement 
35.8 	period commences in the first year in which the abatement granted is either paid or 
35.9 	retained in accordance with section 469.1815, subdivision 2. The subdivision may specify 
35.10 	in the abatement resolution a shorter duration. If the resolution does not specify a period 
35.11 	of time, the abatement is for eight years. If an abatement has been granted to a parcel of 
35.12 	property and the period of the abatement has expired, the political subdivision that granted 
35.13 	the abatement may not grant another abatement for eight years after the expiration of the 
35.14 	first abatement. This prohibition does not apply to improvements added after and not 
35.15 	subject to the first abatement. Economic abatement agreements for real and personal 
35.16 	property subject to valuation under Minnesota Rules, chapter 8100, are not subject to this 
35.17 	prohibition and may be granted successively.
35.18 	(b) A political subdivision proposing to abate taxes for a parcel may request, in 
35.19 	writing, that the other political subdivisions in which the parcel is located grant an 
35.20 	abatement for the property. If one of the other political subdivisions declines, in writing, 
35.21 	to grant an abatement or if 90 days pass after receipt of the request to grant an abatement 
35.22 	without a written response from one of the political subdivisions, the duration limit 
35.23 	for an abatement for the parcel by the requesting political subdivision and any other 
35.24 	participating political subdivision is increased to 20 years. If the political subdivision 
35.25 	which declined to grant an abatement later grants an abatement for the parcel, the 20-year 
35.26 	duration limit is reduced by one year for each year that the declining political subdivision 
35.27 	grants an abatement for the parcel during the period of the abatement granted by the 
35.28 	requesting political subdivision. The duration limit may not be reduced below the limit 
35.29 	under paragraph (a).

35.30 	Sec. 16. Minnesota Statutes 2004, section 469.1813, subdivision 6b, is amended to 
35.31 	read:
35.32 		Subd. 6b.Extended duration limit. (a) Notwithstanding the provisions of 
35.33 	subdivision 6, a political subdivision may grant an abatement for a period of up to 20 
35.34 	years, if the abatement is for a qualified business.
36.1 	(b) To be a qualified business for purposes of this subdivision, at least 50 percent of 
36.2 	the payroll of the operations of the business that qualify for the abatement must be for 
36.3 	employees engaged in one of the following lines of business or any combination of them:
36.4 	(1) manufacturing;
36.5 	(2) agricultural processing;
36.6 	(3) mining;
36.7 	(4) research and development;
36.8 	(5) warehousing; or
36.9 	(6) qualified high technology.
36.10 	Alternatively, a qualified business also includes a taxpayer whose real and personal 
36.11 	property is subject to valuation under Minnesota Rules, chapter 8100.
36.12 	(c)(1) "Manufacturing" means the material staging and production of tangible 
36.13 	personal property by procedures commonly regarded as manufacturing, processing, 
36.14 	fabrication, or assembling which changes some existing material into new shapes, new 
36.15 	qualities, or new combinations.
36.16 	(2) "Mining" has the meaning given in section 613(c) of the Internal Revenue Code 
36.17 	of 1986.
36.18 	(3) "Agricultural processing" means transforming, packaging, sorting, or grading 
36.19 	livestock or livestock products, agricultural commodities, or plants or plant products into 
36.20 	goods that are used for intermediate or final consumption including goods for nonfood use.
36.21 	(4) "Research and development" means qualified research as defined in section 
36.22 	41(d) of the Internal Revenue Code of 1986.
36.23 	(5) "Qualified high technology" means one or more of the following activities:
36.24 	(i) advanced computing, which is any technology used in the design and 
36.25 	development of any of the following:
36.26 	(A) computer hardware and software;
36.27 	(B) data communications; and
36.28 	(C) information technologies;
36.29 	(ii) advanced materials, which are materials with engineered properties created 
36.30 	through the development of specialized process and synthesis technology;
36.31 	(iii) biotechnology, which is any technology that uses living organisms, cells, 
36.32 	macromolecules, microorganisms, or substances from living organisms to make or modify 
36.33 	a product, improve plants or animals, or develop microorganisms for useful purposes;
36.34 	(iv) electronic device technology, which is any technology that involves 
36.35 	microelectronics, semiconductors, electronic equipment, and instrumentation, radio 
37.1 	frequency, microwave, and millimeter electronics, and optical and optic-electrical devices, 
37.2 	or data and digital communications and imaging devices;
37.3 	(v) engineering or laboratory testing related to the development of a product;
37.4 	(vi) technology that assists in the assessment or prevention of threats or damage to 
37.5 	human health or the environment, including, but not limited to, environmental cleanup 
37.6 	technology, pollution prevention technology, or development of alternative energy sources;
37.7 	(vii) medical device technology, which is any technology that involves medical 
37.8 	equipment or products other than a pharmaceutical product that has therapeutic or 
37.9 	diagnostic value and is regulated; or
37.10 	(viii) advanced vehicles technology which is any technology that involves electric 
37.11 	vehicles, hybrid vehicles, or alternative fuel vehicles, or components used in the 
37.12 	construction of electric vehicles, hybrid vehicles, or alternative fuel vehicles. An electric 
37.13 	vehicle is a road vehicle that draws propulsion energy only from an on-board source of 
37.14 	electrical energy. A hybrid vehicle is a road vehicle that can draw propulsion energy from 
37.15 	both a consumable fuel and a rechargeable energy storage system.
37.16 	(d) The authority to grant new abatements under this subdivision expires on July 1, 
37.17 	2004, except that the authority to grant new abatements for real and personal property 
37.18 	subject to valuation under Minnesota Rules, chapter 8100, does not expire.

37.19 	Sec. 17. Minnesota Statutes 2004, section 469.1813, subdivision 8, is amended to read:
37.20 		Subd. 8.Limitation on abatements. In any year, the total amount of property taxes 
37.21 	abated by a political subdivision under this section may not exceed (1) ten percent of 
37.22 	the current levy, or (2) $200,000, whichever is greater. The limit under this subdivision 
37.23 	does not apply to:
37.24 	(1) an uncollected abatement from a prior year that is added to the abatement levy; or
37.25 	(2) a taxpayer whose real and personal property is subject to valuation under 
37.26 	Minnesota Rules, chapter 8100.

37.27 	Sec. 18. Minnesota Statutes 2004, section 469.1813, subdivision 9, is amended to read:
37.28 		Subd. 9.Consent of property owner not required. A political subdivision may 
37.29 	abate the taxes on a parcel under sections  469.1812 to  469.1815 without obtaining the 
37.30 	consent of the property owner. This subdivision does not apply to abatements granted to a 
37.31 	taxpayer whose real and personal property is valued under Minnesota Rules, chapter 8100.

37.32 	Sec. 19. Minnesota Statutes 2004, section 469.1813, is amended by adding a 
37.33 	subdivision to read:
38.1 		Subd. 10.Applicability to utility properties. When this statute is applied or 
38.2 	utilized with respect to a taxpayer whose real and personal property is subject to valuation 
38.3 	under Minnesota Rules, chapter 8100, the provisions of this section and sections 469.1814 
38.4 	and 469.1815 shall apply only to property specified or described in the abatement contract 
38.5 	or agreement.

38.6 	Sec. 20. Laws 2001, First Special Session chapter 5,  article 3, section 8, the effective 
38.7 	date, as amended by Laws 2005, chapter 151, article 3, section 19, is amended to read:
38.8 	[EFFECTIVE DATE.] This section is effective for taxes  levied in 2002, payable in 
38.9 	2003, through taxes levied in   2009 2011, payable in  2010 2012.  

38.10 	Sec. 21. PROPERTY TAX REFUND COLLECTION ACTION PROHIBITED; 
38.11 	REFUNDS REQUIRED.
 38.12 	Notwithstanding Minnesota Statutes, section 289A.60, subdivision 12, or any other 
38.13 	law to the contrary, the commissioner of revenue shall not disallow any part of a claim 
38.14 	for a property tax refund filed in 2005 or an earlier year to the extent that the claim 
38.15 	was excessive because it did not include in the claimant's income as determined under 
38.16 	Minnesota Statutes, section 290A.03, subdivision 3, the cash value of a tuition discount 
38.17 	provided by a postsecondary education institution. If a claimant was required to repay 
38.18 	any part of a property tax refund based on inclusion of this discount in the claimant's 
38.19 	income on a claim filed in 2005 or an earlier year, the commissioner must refund that 
38.20 	amount to the claimant.

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

38.22 	Sec. 22. BUFFALO-RED RIVER WATERSHED DISTRICT.
 38.23 	(a) Notwithstanding the limitations of Minnesota Statutes, section 103D.905, 
38.24 	subdivision 3, and Laws 1976, chapter 162, as amended, the Buffalo-Red River watershed 
38.25 	district may levy only (1) the annual general levy as provided in Minnesota Statutes, 
38.26 	section 103D.905, subdivision 3, and (2) a tax not to exceed 0.02394 percent of taxable 
38.27 	market value to pay the cost attributable to the basic water management features of 
38.28 	projects initiated by petition of a political subdivision within the watershed district or by 
38.29 	petition of at least 50 resident owners of property within the watershed district. In addition 
38.30 	to any other purposes authorized by law, the levy under this section may be used to 
38.31 	develop and implement total maximum daily loads for water quality. Any project initiated 
38.32 	by petition cannot be for a period exceeding 15 consecutive years.
39.1 	(b) The tax levy under paragraph (a), clause (2), is effective beginning with taxes 
39.2 	levied in 2006, payable in 2007, through taxes levied in 2008, payable in 2009, except that 
39.3 	any project initiated by petition under this section within the two-year time period that 
39.4 	extends beyond taxes payable in 2009, the 0.00798 percent of taxable market value levy 
39.5 	authorization under Minnesota Statutes, section 103D.905, subdivision 3, shall continue to 
39.6 	fund those projects for their duration. The tax levy under paragraph (a), clause (i), has 
39.7 	no expiration date.

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

39.9 	Sec. 23. COOK-ORR HOSPITAL DISTRICT; ADDITION OF TERRITORY.
 39.10 	The board of the hospital district created under Laws 1988, chapter 645, may 
39.11 	enter into an agreement with the Tribal Council of the Bois Forte Band of Minnesota 
39.12 	Chippewa that would permit the reservation lands of the Bois Forte Band at Nett Lake 
39.13 	and Lake Vermilion to be included in the territory of the hospital district. The agreement 
39.14 	must establish the terms and conditions under which the territory would be so expanded, 
39.15 	including the amount of or means for determining the amount of the contribution by the 
39.16 	Bois Forte Band to the district.

39.17 	Sec. 24. PROPERTY TAX CERTIFICATION; ROCHESTER SCHOOL 
39.18 	DISTRICT.
 39.19 	Notwithstanding Minnesota Statutes, sections 126C.48 and 275.065, with the 
39.20 	agreement of the school district's home county, Independent School District No. 535, 
39.21 	Rochester, on or before October 8, shall certify to the county auditor the district's proposed 
39.22 	property tax levy for taxes payable in the following year.

39.23 	EFFECTIVE DATE. This section is effective for taxes payable in 2007 only.

39.24 	Sec. 25. LEASE LEVY; ADMINISTRATIVE SPACE, ROCORI AND 
39.25 	FARIBAULT.
 39.26 	Independent School Districts Nos. 656, Faribault, and 750, Rocori, may lease 
39.27 	administrative space under Minnesota Statutes, section 126C.40, subdivision 1, if the 
39.28 	district can demonstrate to the satisfaction of the commissioner of education that the 
39.29 	administrative space is less expensive than instructional space that the district would 
39.30 	otherwise lease. A school district may not levy under this section for more than five years. 
39.31 	The commissioner must deny this levy authority unless the district passes a resolution 
39.32 	stating its intent to lease instructional space under Minnesota Statutes, section 126C.40, 
40.1 	subdivision 1, if the commissioner does not grant authority under this section.  The 
40.2 	resolution must also certify that a lease of administrative space under this section is 
40.3 	less expensive than the district's proposed instructional lease. Levy authority under 
40.4 	this section shall not exceed the total levy authority under Minnesota Statutes, section 
40.5 	126C.40, subdivision 1, paragraph (e). 

40.6 	EFFECTIVE DATE. This section is effective beginning with revenue for taxes 
40.7 	payable in 2007.

40.8 	ARTICLE 5
40.9 	DEPARTMENT OF REVENUE PROPERTY TAXES AND AIDS

40.10 	Section 1. Minnesota Statutes 2005 Supplement, section 273.13, subdivision 22, 
40.11 	is amended to read:
40.12 		Subd. 22.Class 1. (a) Except as provided in subdivision 23 and in paragraphs (b) 
40.13 	and (c), real estate which is residential and used for homestead purposes is class 1a. In the 
40.14 	case of a duplex or triplex in which one of the units is used for homestead purposes, the 
40.15 	entire property is deemed to be used for homestead purposes. The market value of class 1a 
40.16 	property must be determined based upon the value of the house, garage, and land.
40.17 	The first $500,000 of market value of class 1a property has a net class rate of 
40.18 	one percent of its market value; and the market value of class 1a property that exceeds 
40.19 	$500,000 has a class rate of 1.25 percent of its market value.
40.20 	(b) Class 1b property includes homestead real estate or homestead manufactured 
40.21 	homes used for the purposes of a homestead by
40.22 	(1) any person who is blind as defined in section 256D.35, or the blind person and 
40.23 	the blind person's spouse; or
40.24 	(2) any person, hereinafter referred to as "veteran," who:
40.25 	(i) served in the active military or naval service of the United States; and
40.26 	(ii) is entitled to compensation under the laws and regulations of the United States 
40.27 	for permanent and total service-connected disability due to the loss, or loss of use, by 
40.28 	reason of amputation, ankylosis, progressive muscular dystrophies, or paralysis, of both 
40.29 	lower extremities, such as to preclude motion without the aid of braces, crutches, canes, or 
40.30 	a wheelchair; and
40.31 	(iii) has acquired a special housing unit with special fixtures or movable facilities 
40.32 	made necessary by the nature of the veteran's disability, or the surviving spouse of the 
40.33 	deceased veteran for as long as the surviving spouse retains the special housing unit 
40.34 	as a homestead; or
41.1 	(3) any person who is permanently and totally disabled.
41.2 	Property is classified and assessed under clause (3) only if the government agency or 
41.3 	income-providing source certifies, upon the request of the homestead occupant, that the 
41.4 	homestead occupant satisfies the disability requirements of this paragraph.
41.5 	Property is classified and assessed pursuant to clause (1) only if the commissioner of 
41.6 	revenue certifies to the assessor that the homestead occupant satisfies the requirements of 
41.7 	this paragraph.
41.8 	Permanently and totally disabled for the purpose of this subdivision means a 
41.9 	condition which is permanent in nature and totally incapacitates the person from working 
41.10 	at an occupation which brings the person an income. The first $32,000 market value of 
41.11 	class 1b property has a net class rate of .45 percent of its market value. The remaining 
41.12 	market value of class 1b property has a class rate using the rates for class 1a or class 2a 
41.13 	property, whichever is appropriate, of similar market value.
41.14 	(c) Class 1c property is commercial use real property that abuts a lakeshore line and 
41.15 	is devoted to temporary and seasonal residential occupancy for recreational purposes but 
41.16 	not devoted to commercial purposes for more than 250 days in the year preceding the 
41.17 	year of assessment, and that includes a portion used as a homestead by the owner, which 
41.18 	includes a dwelling occupied as a homestead by a shareholder of a corporation that owns 
41.19 	the resort, a partner in a partnership that owns the resort, or a member of a limited liability 
41.20 	company that owns the resort even if the title to the homestead is held by the corporation, 
41.21 	partnership, or limited liability company. For purposes of this clause, property is devoted 
41.22 	to a commercial purpose on a specific day if any portion of the property, excluding the 
41.23 	portion used exclusively as a homestead, is used for residential occupancy and a fee 
41.24 	is charged for residential occupancy. The portion of the property used as a homestead 
41.25 	by the owner has the same class rates asis class 1a property under paragraph (a). The 
41.26 	remainder of the property is classified as follows: the first $500,000 of market value is tier 
41.27 	I, the next $1,700,000 of market value is tier II, and any remaining market value is tier III. 
41.28 	The class rates for class 1c are: tier I, 0.55 percent; tier II, 1.0 percent; and tier III, 1.25
41.29 	percent. If a class 1c resort property has any market value in tier III, the entire property 
41.30 	must meet the requirements of subdivision 25, paragraph (d), clause (1), to qualify for 
41.31 	class 1c treatment under this paragraph.
41.32 	(d) Class 1d property includes structures that meet all of the following criteria:
41.33 	(1) the structure is located on property that is classified as agricultural property under 
41.34 	section 273.13, subdivision 23;
41.35 	(2) the structure is occupied exclusively by seasonal farm workers during the time 
41.36 	when they work on that farm, and the occupants are not charged rent for the privilege of 
42.1 	occupying the property, provided that use of the structure for storage of farm equipment 
42.2 	and produce does not disqualify the property from classification under this paragraph;
42.3 	(3) the structure meets all applicable health and safety requirements for the 
42.4 	appropriate season; and
42.5 	(4) the structure is not salable as residential property because it does not comply 
42.6 	with local ordinances relating to location in relation to streets or roads.
42.7 	The market value of class 1d property has the same class rates as class 1a property 
42.8 	under paragraph (a).

42.9 	EFFECTIVE DATE. This section is effective for taxes payable in 2006 and 
42.10 	thereafter.

42.11 	Sec. 2. Minnesota Statutes 2005 Supplement, section 273.13, subdivision 25, is 
42.12 	amended to read:
42.13 		Subd. 25.Class 4. (a) Class 4a is residential real estate containing four or more 
42.14 	units and used or held for use by the owner or by the tenants or lessees of the owner 
42.15 	as a residence for rental periods of 30 days or more, excluding property qualifying for 
42.16 	class 4d. Class 4a also includes hospitals licensed under sections 144.50 to 144.56, other 
42.17 	than hospitals exempt under section 272.02, and contiguous property used for hospital 
42.18 	purposes, without regard to whether the property has been platted or subdivided. The 
42.19 	market value of class 4a property has a class rate of 1.25 percent.
42.20 	(b) Class 4b includes:
42.21 	(1) residential real estate containing less than four units that does not qualify as class 
42.22 	4bb, other than seasonal residential recreational property;
42.23 	(2) manufactured homes not classified under any other provision;
42.24 	(3) a dwelling, garage, and surrounding one acre of property on a nonhomestead 
42.25 	farm classified under subdivision 23, paragraph (b) containing two or three units; and
42.26 	(4) unimproved property that is classified residential as determined under subdivision 
42.27 	33.
42.28 	The market value of class 4b property has a class rate of 1.25 percent.
42.29 	(c) Class 4bb includes:
42.30 	(1) nonhomestead residential real estate containing one unit, other than seasonal 
42.31 	residential recreational property; and
42.32 	(2) a single family dwelling, garage, and surrounding one acre of property on a 
42.33 	nonhomestead farm classified under subdivision 23, paragraph (b).
42.34 	Class 4bb property has the same class rates as class 1a property under subdivision 22.
43.1 	Property that has been classified as seasonal residential recreational property at 
43.2 	any time during which it has been owned by the current owner or spouse of the current 
43.3 	owner does not qualify for class 4bb.
43.4 	(d) Class 4c property includes:
43.5 	(1) except as provided in subdivision 22, paragraph (c), real property devoted to 
43.6 	temporary and seasonal residential occupancy for recreation purposes, including real 
43.7 	property devoted to temporary and seasonal residential occupancy for recreation purposes 
43.8 	and not devoted to commercial purposes for more than 250 days in the year preceding 
43.9 	the year of assessment. For purposes of this clause, property is devoted to a commercial 
43.10 	purpose on a specific day if any portion of the property is used for residential occupancy, 
43.11 	and a fee is charged for residential occupancy. In order for a property to be classified as 
43.12 	class 4c, seasonal residential recreational for commercial purposes, at least 40 percent of 
43.13 	the annual gross lodging receipts related to the property must be from business conducted 
43.14 	during 90 consecutive days and either (i) at least 60 percent of all paid bookings by lodging 
43.15 	guests during the year must be for periods of at least two consecutive nights; or (ii) at least 
43.16 	20 percent of the annual gross receipts must be from charges for rental of fish houses, 
43.17 	boats and motors, snowmobiles, downhill or cross-country ski equipment, or charges for 
43.18 	marina services, launch services, and guide services, or the sale of bait and fishing tackle. 
43.19 	For purposes of this determination, a paid booking of five or more nights shall be counted 
43.20 	as two bookings. Class 4c also includes commercial use real property used exclusively 
43.21 	for recreational purposes in conjunction with class 4c property devoted to temporary 
43.22 	and seasonal residential occupancy for recreational purposes, up to a total of two acres, 
43.23 	provided the property is not devoted to commercial recreational use for more than 250 
43.24 	days in the year preceding the year of assessment and is located within two miles of the 
43.25 	class 4c property with which it is used. Owners of real property devoted to temporary and 
43.26 	seasonal residential occupancy for recreation purposes and all or a portion of which was 
43.27 	devoted to commercial purposes for not more than 250 days in the year preceding the year 
43.28 	of assessment desiring classification as class 1c or 4c, must submit a declaration to the 
43.29 	assessor designating the cabins or units occupied for 250 days or less in the year preceding 
43.30 	the year of assessment by January 15 of the assessment year. Those cabins or units and a 
43.31 	proportionate share of the land on which they are located will be designated class 1c or 4c 
43.32 	as otherwise provided. The remainder of the cabins or units and a proportionate share of 
43.33 	the land on which they are located will be designated as class 3a. The owner of property 
43.34 	desiring designation as class 1c or 4c property must provide guest registers or other 
43.35 	records demonstrating that the units for which class 1c or 4c designation is sought were 
43.36 	not occupied for more than 250 days in the year preceding the assessment if so requested. 
44.1 	The portion of a property operated as a (1) restaurant, (2) bar, (3) gift shop, and (4) other 
44.2 	nonresidential facility operated on a commercial basis not directly related to temporary and 
44.3 	seasonal residential occupancy for recreation purposes shall not qualify for class 1c or 4c;
44.4 	(2) qualified property used as a golf course if:
44.5 	(i) it is open to the public on a daily fee basis. It may charge membership fees or 
44.6 	dues, but a membership fee may not be required in order to use the property for golfing, 
44.7 	and its green fees for golfing must be comparable to green fees typically charged by 
44.8 	municipal courses; and
44.9 	(ii) it meets the requirements of section 273.112, subdivision 3, paragraph (d).
44.10 	A structure used as a clubhouse, restaurant, or place of refreshment in conjunction 
44.11 	with the golf course is classified as class 3a property;
44.12 	(3) real property up to a maximum of one acre of land owned by a nonprofit 
44.13 	community service oriented organization; provided that the property is not used for a 
44.14 	revenue-producing activity for more than six days in the calendar year preceding the year 
44.15 	of assessment and the property is not used for residential purposes on either a temporary 
44.16 	or permanent basis. For purposes of this clause, a "nonprofit community service oriented 
44.17 	organization" means any corporation, society, association, foundation, or institution 
44.18 	organized and operated exclusively for charitable, religious, fraternal, civic, or educational 
44.19 	purposes, and which is exempt from federal income taxation pursuant to section 501(c)(3), 
44.20 	(10), or (19) of the Internal Revenue Code of 1986, as amended through December 31, 
44.21 	1990. For purposes of this clause, "revenue-producing activities" shall include but not be 
44.22 	limited to property or that portion of the property that is used as an on-sale intoxicating 
44.23 	liquor or 3.2 percent malt liquor establishment licensed under chapter 340A, a restaurant 
44.24 	open to the public, bowling alley, a retail store, gambling conducted by organizations 
44.25 	licensed under chapter 349, an insurance business, or office or other space leased or 
44.26 	rented to a lessee who conducts a for-profit enterprise on the premises. Any portion of 
44.27 	the property which is used for revenue-producing activities for more than six days in the 
44.28 	calendar year preceding the year of assessment shall be assessed as class 3a. The use of 
44.29 	the property for social events open exclusively to members and their guests for periods of 
44.30 	less than 24 hours, when an admission is not charged nor any revenues are received by the 
44.31 	organization shall not be considered a revenue-producing activity;
44.32 	(4) postsecondary student housing of not more than one acre of land that is owned by 
44.33 	a nonprofit corporation organized under chapter 317A and is used exclusively by a student 
44.34 	cooperative, sorority, or fraternity for on-campus housing or housing located within two 
44.35 	miles of the border of a college campus;
44.36 	(5) manufactured home parks as defined in section 327.14, subdivision 3;
45.1 	(6) real property that is actively and exclusively devoted to indoor fitness, health, 
45.2 	social, recreational, and related uses, is owned and operated by a not-for-profit corporation, 
45.3 	and is located within the metropolitan area as defined in section 473.121, subdivision 2;
45.4 	(7) a leased or privately owned noncommercial aircraft storage hangar not exempt 
45.5 	under section 272.01, subdivision 2, and the land on which it is located, provided that:
45.6 	(i) the land is on an airport owned or operated by a city, town, county, Metropolitan 
45.7 	Airports Commission, or group thereof; and
45.8 	(ii) the land lease, or any ordinance or signed agreement restricting the use of the 
45.9 	leased premise, prohibits commercial activity performed at the hangar.
45.10 	If a hangar classified under this clause is sold after June 30, 2000, a bill of sale must 
45.11 	be filed by the new owner with the assessor of the county where the property is located 
45.12 	within 60 days of the sale;
45.13 	(8) a privately owned noncommercial aircraft storage hangar not exempt under 
45.14 	section 272.01, subdivision 2, and the land on which it is located, provided that:
45.15 	(i) the land abuts a public airport; and
45.16 	(ii) the owner of the aircraft storage hangar provides the assessor with a signed 
45.17 	agreement restricting the use of the premises, prohibiting commercial use or activity 
45.18 	performed at the hangar; and
45.19 	(9) residential real estate, a portion of which is used by the owner for homestead 
45.20 	purposes, and that is also a place of lodging, if all of the following criteria are met:
45.21 	(i) rooms are provided for rent to transient guests that generally stay for periods 
45.22 	of 14 or fewer days;
45.23 	(ii) meals are provided to persons who rent rooms, the cost of which is incorporated 
45.24 	in the basic room rate;
45.25 	(iii) meals are not provided to the general public except for special events on fewer 
45.26 	than seven days in the calendar year preceding the year of the assessment; and
45.27 	(iv) the owner is the operator of the property.
45.28 	The market value subject to the 4c classification under this clause is limited to five rental 
45.29 	units. Any rental units on the property in excess of five, must be valued and assessed as 
45.30 	class 3a. The portion of the property used for purposes of a homestead by the owner must 
45.31 	be classified as class 1a property under subdivision 22.
45.32 	Class 4c property has a class rate of 1.5 percent of market value, except that (i) each 
45.33 	parcel of seasonal residential recreational property not used for commercial purposes has 
45.34 	the same class rates as class 4bb property, (ii) manufactured home parks assessed under 
45.35 	clause (5) have the same class rate as class 4b property, (iii) commercial-use seasonal 
45.36 	residential recreational property has a class rate of one percent for the first $500,000 
46.1 	of market value, which includes any market value receiving the one percent rate under 
46.2 	subdivision 22, and 1.25 percent for the remaining market value, (iv) the market value 
46.3 	of property described in clause (4) has a class rate of one percent, (v) the market value 
46.4 	of property described in clauses (2) and (6) has a class rate of 1.25 percent, and (vi) that 
46.5 	portion of the market value of property in clause (9) qualifying for class 4c property 
46.6 	has a class rate of 1.25 percent.
46.7 	(e) Class 4d property is qualifying low-income rental housing certified to the assessor 
46.8 	by the Housing Finance Agency under section 273.128, subdivision 3. If only a portion 
46.9 	of the units in the building qualify as low-income rental housing units as certified under 
46.10 	section 273.128, subdivision 3, only the proportion of qualifying units to the total number 
46.11 	of units in the building qualify for class 4d. The remaining portion of the building shall be 
46.12 	classified by the assessor based upon its use. Class 4d also includes the same proportion of 
46.13 	land as the qualifying low-income rental housing units are to the total units in the building. 
46.14 	For all properties qualifying as class 4d, the market value determined by the assessor must 
46.15 	be based on the normal approach to value using normal unrestricted rents.
46.16 	Class 4d property has a class rate of 0.75 percent.

46.17 	EFFECTIVE DATE. This section is effective for taxes payable in 2006 and 
46.18 	subsequent years.

46.19 	Sec. 3. Minnesota Statutes 2005 Supplement, section 273.1384, subdivision 1, is 
46.20 	amended to read:
46.21 		Subdivision 1.Residential homestead market value credit. Each county auditor 
46.22 	shall determine a homestead credit for each class 1a, 1b, 1c, and 2a homestead property 
46.23 	within the county equal to 0.4 percent of the first $76,000 of market value of the property 
46.24 	minus .09 percent of the market value in excess of $76,000. The credit amount may not 
46.25 	be less than zero. In the case of an agricultural or resort homestead, only the market 
46.26 	value of the house, garage, and immediately surrounding one acre of land is eligible 
46.27 	in determining the property's homestead credit. In the case of a property which that is 
46.28 	classified as part homestead and part nonhomestead, (i) the credit shall apply only to 
46.29 	the homestead portion of the property, but (ii) if a portion of a property is classified as 
46.30 	nonhomestead solely because not all the owners occupy the property, not all the owners 
46.31 	have qualifying relatives occupying the property, or solely because both not all the spouses 
46.32 	do not of owners occupy the property, the credit amount shall be initially computed as 
46.33 	if that nonhomestead portion were also in the homestead class and then prorated to the 
46.34 	owner-occupant's percentage of ownership or prorated to one-half if both spouses do not 
46.35 	occupy the property. For the purpose of this section, when an owner-occupant's spouse 
47.1 	does not occupy the property, the percentage of ownership for the owner-occupant spouse 
47.2 	is one-half of the couple's ownership percentage.

47.3 	EFFECTIVE DATE. This section is effective for taxes payable in 2007 and 
47.4 	thereafter.

47.5 	Sec. 4. Minnesota Statutes 2004, section 273.1384, subdivision 2, is amended to read:
47.6 		Subd. 2.Agricultural homestead market value credit. Property classified 
47.7 	as class 2a agricultural homestead is eligible for an agricultural credit. The credit is 
47.8 	computed using the property's agricultural credit market value, defined for this purpose 
47.9 	as the property's class 2a market value excluding the market value of the house, garage, 
47.10 	and immediately surrounding one acre of land. The credit is equal to 0.3 percent of the 
47.11 	first $115,000 of the property's agricultural credit market value. The credit under this 
47.12 	subdivision is limited to $345 for each homestead. The credit is reduced by minus .05 
47.13 	percent of the property's agricultural credit market value in excess of $115,000, subject to 
47.14 	a maximum reduction of $115. In the case of property that is classified in part as class 2a 
47.15 	agricultural homestead and in part as class 2b nonhomestead farm land solely because not 
47.16 	all the owners occupy or farm the property, not all the owners have qualifying relatives 
47.17 	occupying or farming the property, or solely because not all the spouses of owners occupy 
47.18 	the property, the credit must be initially computed as if that nonhomestead agricultural 
47.19 	land was also classified as class 2a agricultural homestead and then prorated to the 
47.20 	owner-occupant's percentage of ownership.

47.21 	EFFECTIVE DATE. This section is effective for taxes payable in 2007 and 
47.22 	thereafter.

47.23 	Sec. 5. Minnesota Statutes 2004, section 273.1398, subdivision 3, is amended to read:
47.24 		Subd. 3.Disparity reduction aid. For taxes payable in 2003 and subsequent years,
47.25 	The amount of disparity aid certified for each taxing district within each unique taxing 
47.26 	jurisdiction for taxes payable in the prior year shall be multiplied by the ratio of (1) the 
47.27 	jurisdiction's tax capacity using the class rates for taxes payable in the year for which aid 
47.28 	is being computed, to (2) its tax capacity using the class rates for taxes payable in the year 
47.29 	prior to that for which aid is being computed, both based upon market values for taxes 
47.30 	payable in the year prior to that for which aid is being computed. For the purposes of this 
47.31 	aid determination, disparity reduction aid certified for taxes payable in the prior year for 
47.32 	a taxing entity other than a town or school district is deemed to be county government 
47.33 	disparity reduction aid. The amount of disparity aid certified to each taxing jurisdiction 
48.1 	shall be reduced by any reductions required in the current year or permanent reductions 
48.2 	required in previous years under section  477A.0132.  If the commissioner determines that 
48.3 	insufficient information is available to reasonably and timely calculate the numerator 
48.4 	in this ratio for the first taxes payable year that a class rate change or new class rate is 
48.5 	effective, the commissioner shall omit the effects of that class rate change or new class 
48.6 	rate when calculating this ratio for aid payable in that taxes payable year. For aid payable 
48.7 	in the year following a year for which such omission was made, the commissioner shall 
48.8 	use in the denominator for the class that was changed or created, the tax capacity for taxes 
48.9 	payable two years prior to that in which the aid is payable, based on market values for 
48.10 	taxes payable in the year prior to that for which aid is being computed.

48.11 	EFFECTIVE DATE. This section is effective for taxes payable in 2006 and 
48.12 	thereafter.

48.13 	Sec. 6. Minnesota Statutes 2004, section 281.23, subdivision 9, is amended to read:
48.14 		Subd. 9.Certificate. After the time for redemption of any lands shall have expired 
48.15 	after notice given, as provided in subdivisions 2, 3, 5, and 6, the county auditor shall 
48.16 	execute a certificate describing the lands, specifying the tax judgment sale at which the 
48.17 	same were bid in for the state, and stating that the time for redemption thereof has expired 
48.18 	after notice given as provided by law and that absolute title thereto has vested in the 
48.19 	state of Minnesota. Such certificate shall be recorded in the office of the county recorder 
48.20 	and thereafter filed in the office of the county auditor, except that in case of registered 
48.21 	land such certificate shall be filedrecorded in the office of the registrar of titles and a 
48.22 	duplicate filed in the office of the county auditor. Such certificate and the record thereof 
48.23 	shall be prima facie evidence of the facts therein stated, but failure to execute or record or 
48.24 	file such certificate shall not affect the validity of any proceedings hereunder respecting 
48.25 	such lands or the title of the state thereto.

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

48.27 	Sec. 7. Minnesota Statutes 2005 Supplement, section 284.07, is amended to read:
48.28 	284.07 COUNTY AUDITOR'S CERTIFICATE TO BE PRIMA FACIE 
48.29 	EVIDENCE.
48.30 	The county auditor's certificate of forfeiture filed recorded by the county auditor 
48.31 	as provided by section 281.23, subdivision 9, and acts supplemental thereto, or by any 
48.32 	other law hereafter enacted providing for the recording of such a certificate or a certified 
48.33 	copy of such certificate or of the record thereof, shall, for all purposes, be prima facie 
49.1 	evidence that all requirements of the law respecting the taxation and forfeiture of the 
49.2 	lands therein described were complied with, and that at the date of the certificate absolute 
49.3 	title to such lands had vested in the state by reason of forfeiture for delinquent taxes, as 
49.4 	set forth in the certificate.

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

49.6 	Sec. 8. Minnesota Statutes 2004, section 477A.014, subdivision 1, is amended to read:
49.7 		Subdivision 1.Calculations and payments. (a) The commissioner of revenue 
49.8 	shall make all necessary calculations and make payments pursuant to sections  477A.013,  
49.9 	477A.0132, and  477A.03 directly to the affected taxing authorities annually. In addition, 
49.10 	the commissioner shall notify the authorities of their aid amounts, as well as the 
49.11 	computational factors used in making the calculations for their authority, and those 
49.12 	statewide total figures that are pertinent, before August 1 of the year preceding the aid 
49.13 	distribution year.
49.14 	(b) For the purposes of this subdivision, aid is determined for a city or town based 
49.15 	on its city or town status as of June 30 of the year preceding the aid distribution year. If 
49.16 	the effective date for a municipal incorporation, consolidation, annexation, detachment, 
49.17 	dissolution, or township organization is on or before June 30 of the year preceding 
49.18 	the aid distribution year, such change in boundaries or form of government shall be 
49.19 	recognized for aid determinations for the aid distribution year. If the effective date for a 
49.20 	municipal incorporation, consolidation, annexation, detachment, dissolution, or township 
49.21 	organization is after June 30 of the year preceding the aid distribution year, such change in 
49.22 	boundaries or form of government shall not be recognized for aid determinations until 
49.23 	the following year. 
49.24 	(c) Changes in boundaries or form of government will only be recognized for the 
49.25 	purposes of this subdivision, to the extent that: (1) changes in market values are included 
49.26 	in market values reported by assessors to the commissioner, and changes in population, 
49.27 	household size, and the road accidents factor are included in their respective certifications 
49.28 	to the commissioner as referenced in section 477A.011, or (2) an annexation information 
49.29 	report as provided in paragraph (d) is received by the commissioner on or before July 15 
49.30 	of the aid calculation year. Revisions to estimates or data for use in recognizing changes 
49.31 	in boundaries or form of government are not effective for purposes of this subdivision 
49.32 	unless received by the commissioner on or before July 15 of the aid calculation year. 
49.33 	Clerical errors in the certification or use of estimates and data established as of July 15 in 
49.34 	the aid calculation year are subject to correction within the time periods allowed under 
49.35 	subdivision 3.
50.1 	(d) In the case of an annexation, an annexation information report may be completed 
50.2 	by the annexing jurisdiction and submitted to the commissioner for purposes of this 
50.3 	subdivision if the net tax capacity of annexed area for the assessment year preceding the 
50.4 	effective date of the annexation exceeds five percent of the city's net tax capacity for the 
50.5 	same year. The form and contents of the annexation information report shall be prescribed 
50.6 	by the commissioner. The commissioner shall change the net tax capacity, the population, 
50.7 	the population decline, the commercial industrial percentage, and the transformed 
50.8 	population for the annexing jurisdiction only if the annexation information report provides 
50.9 	data the commissioner determines to be reliable for all of these factors used to compute city 
50.10 	revenue need for the annexing jurisdiction. The commissioner shall adjust the pre-1940 
50.11 	housing percentage, the road accidents factor, and household size only if the entire area of 
50.12 	an existing city or town is annexed or consolidated and only if reliable data is available for 
50.13 	all of these factors used to compute city revenue need for the annexing jurisdiction.

50.14 	EFFECTIVE DATE. This section is effective for aid payable in 2007 and thereafter.

50.15 	ARTICLE 6
50.16 	DEPARTMENT OF REVENUE SALES AND USE TAXES

50.17 	Section 1. Minnesota Statutes 2005 Supplement, section 297A.61, subdivision 3, 
50.18 	is amended to read:
50.19 		Subd. 3.Sale and purchase. (a) "Sale" and "purchase" include, but are not limited 
50.20 	to, each of the transactions listed in this subdivision.
50.21 	(b) Sale and purchase include:
50.22 	(1) any transfer of title or possession, or both, of tangible personal property, whether 
50.23 	absolutely or conditionally, for a consideration in money or by exchange or barter; and
50.24 	(2) the leasing of or the granting of a license to use or consume, for a consideration 
50.25 	in money or by exchange or barter, tangible personal property, other than a manufactured 
50.26 	home used for residential purposes for a continuous period of 30 days or more.
50.27 	(c) Sale and purchase include the production, fabrication, printing, or processing of 
50.28 	tangible personal property for a consideration for consumers who furnish either directly or 
50.29 	indirectly the materials used in the production, fabrication, printing, or processing.
50.30 	(d) Sale and purchase include the preparing for a consideration of food. 
50.31 	Notwithstanding section 297A.67, subdivision 2, taxable food includes, but is not limited 
50.32 	to, the following:
50.33 	(1) prepared food sold by the retailer;
50.34 	(2) soft drinks;
51.1 	(3) candy;
51.2 	(4) dietary supplements; and
51.3 	(5) all food sold through vending machines.
51.4 	(e) A sale and a purchase includes the furnishing for a consideration of electricity, 
51.5 	gas, water, or steam for use or consumption within this state.
51.6 	(f) A sale and a purchase includes the transfer for a consideration of prewritten 
51.7 	computer software whether delivered electronically, by load and leave, or otherwise.
51.8 	(g) A sale and a purchase includes the furnishing for a consideration of the following 
51.9 	services:
51.10 	(1) the privilege of admission to places of amusement, recreational areas, or athletic 
51.11 	events, and the making available of amusement devices, tanning facilities, reducing 
51.12 	salons, steam baths, turkish baths, health clubs, and spas or athletic facilities;
51.13 	(2) lodging and related services by a hotel, rooming house, resort, campground, 
51.14 	motel, or trailer camp and the granting of any similar license to use real property in a 
51.15 	specific facility, other than the renting or leasing of it for a continuous period of 30 days 
51.16 	or more under an enforceable written agreement that may not be terminated without 
51.17 	prior notice;
51.18 	(3) nonresidential parking services, whether on a contractual, hourly, or other 
51.19 	periodic basis, except for parking at a meter;
51.20 	(4) the granting of membership in a club, association, or other organization if:
51.21 	(i) the club, association, or other organization makes available for the use of its 
51.22 	members sports and athletic facilities, without regard to whether a separate charge is 
51.23 	assessed for use of the facilities; and
51.24 	(ii) use of the sports and athletic facility is not made available to the general public 
51.25 	on the same basis as it is made available to members.
51.26 	Granting of membership means both onetime initiation fees and periodic membership 
51.27 	dues. Sports and athletic facilities include golf courses; tennis, racquetball, handball, and 
51.28 	squash courts; basketball and volleyball facilities; running tracks; exercise equipment; 
51.29 	swimming pools; and other similar athletic or sports facilities;
51.30 	(5) delivery of aggregate materials and concrete block by a third party if the delivery 
51.31 	would be subject to the sales tax if provided by the seller of the aggregate material or 
51.32 	concrete block; and
51.33 	(6) services as provided in this clause:
51.34 	(i) laundry and dry cleaning services including cleaning, pressing, repairing, altering, 
51.35 	and storing clothes, linen services and supply, cleaning and blocking hats, and carpet, 
52.1 	drapery, upholstery, and industrial cleaning. Laundry and dry cleaning services do not 
52.2 	include services provided by coin operated facilities operated by the customer;
52.3 	(ii) motor vehicle washing, waxing, and cleaning services, including services 
52.4 	provided by coin operated facilities operated by the customer, and rustproofing, 
52.5 	undercoating, and towing of motor vehicles;
52.6 	(iii) building and residential cleaning, maintenance, and disinfecting and 
52.7 	exterminating services;
52.8 	(iv) detective, security, burglar, fire alarm, and armored car services; but not 
52.9 	including services performed within the jurisdiction they serve by off-duty licensed peace 
52.10 	officers as defined in section 626.84, subdivision 1, or services provided by a nonprofit 
52.11 	organization for monitoring and electronic surveillance of persons placed on in-home 
52.12 	detention pursuant to court order or under the direction of the Minnesota Department 
52.13 	of Corrections;
52.14 	(v) pet grooming services;
52.15 	(vi) lawn care, fertilizing, mowing, spraying and sprigging services; garden planting 
52.16 	and maintenance; tree, bush, and shrub pruning, bracing, spraying, and surgery; indoor 
52.17 	plant care; tree, bush, shrub, and stump removal, except when performed as part of a land 
52.18 	clearing contract as defined in section 297A.68, subdivision 40; and tree trimming for 
52.19 	public utility lines. Services performed under a construction contract for the installation of 
52.20 	shrubbery, plants, sod, trees, bushes, and similar items are not taxable;
52.21 	(vii) massages, except when provided by a licensed health care facility or 
52.22 	professional or upon written referral from a licensed health care facility or professional for 
52.23 	treatment of illness, injury, or disease; and
52.24 	(viii) the furnishing of lodging, board, and care services for animals in kennels and 
52.25 	other similar arrangements, but excluding veterinary and horse boarding services.
52.26 	In applying the provisions of this chapter, the terms "tangible personal property" 
52.27 	and "sales at retail sale" include taxable services listed in clause (6), items (i) to (vi) and 
52.28 	(viii), and the provision of these taxable services, unless specifically provided otherwise. 
52.29 	Services performed by an employee for an employer are not taxable. Services performed 
52.30 	by a partnership or association for another partnership or association are not taxable if one 
52.31 	of the entities owns or controls more than 80 percent of the voting power of the equity 
52.32 	interest in the other entity. Services performed between members of an affiliated group of 
52.33 	corporations are not taxable. For purposes of the preceding sentence, "affiliated group 
52.34 	of corporations" includesmeans those entities that would be classified as members of an 
52.35 	affiliated group as defined under United States Code, title 26, section 1504, and that are 
53.1 	eligible to file a consolidated tax return for federal income tax purposes disregarding 
53.2 	the exclusions in section 1504(b).
53.3 	(h) A sale and a purchase includes the furnishing for a consideration of tangible 
53.4 	personal property or taxable services by the United States or any of its agencies or 
53.5 	instrumentalities, or the state of Minnesota, its agencies, instrumentalities, or political 
53.6 	subdivisions.
53.7 	(i) A sale and a purchase includes the furnishing for a consideration of 
53.8 	telecommunications services, including cable television services and direct satellite 
53.9 	services. Telecommunications services are taxed to the extent allowed under federal law.
53.10 	(j) A sale and a purchase includes the furnishing for a consideration of installation if 
53.11 	the installation charges would be subject to the sales tax if the installation were provided 
53.12 	by the seller of the item being installed.
53.13 	(k) A sale and a purchase includes the rental of a vehicle by a motor vehicle dealer 
53.14 	to a customer when (1) the vehicle is rented by the customer for a consideration, or (2) 
53.15 	the motor vehicle dealer is reimbursed pursuant to a service contract as defined in section 
53.16 	65B.29, subdivision 1, clause (1).

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

53.18 	Sec. 2. Minnesota Statutes 2004, section 297A.61, subdivision 12, is amended to read:
53.19 		Subd. 12.Farm machinery. (a) "Farm machinery" means new or used machinery, 
53.20 	equipment, implements, accessories, and contrivances used directly and principally in 
53.21 	agricultural production of tangible personal property intended to be sold ultimately at 
53.22 	retail including, but not limited to:
53.23 	(1) machinery for the preparation, seeding, or cultivation of soil for growing 
53.24 	agricultural crops;
53.25 	(2) barn cleaners, milking systems, grain dryers, feeding systems including 
53.26 	stationary feed bunks, and similar installations, whether or not the equipment is installed 
53.27 	by the seller and becomes part of the real property; and
53.28 	(3) irrigation equipment sold for exclusively agricultural use, including pumps, pipe 
53.29 	fittings, valves, sprinklers, and other equipment necessary to the operation of an irrigation 
53.30 	system when sold as part of an irrigation system, whether or not the equipment is installed 
53.31 	by the seller and becomes part of the real property.
53.32 	(b) Farm machinery does not include:
53.33 	(1) repair or replacement parts;
53.34 	(2) tools, shop equipment, grain bins, fencing material, communication equipment, 
53.35 	and other farm supplies;
54.1 	(3) motor vehicles taxed under chapter 297B;
54.2 	(4) snowmobiles or snow blowers;
54.3 	(5) lawn mowers except those used in the production of sod for sale, or garden-type 
54.4 	tractors or garden tillers; or
54.5 	(6) machinery, equipment, implements, accessories, and contrivances used directly in 
54.6 	the production of horses not raised for slaughter, fur-bearing animals, or research animals.

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

54.8 	Sec. 3. Minnesota Statutes 2004, section 297A.61, is amended by adding a subdivision 
54.9 	to read:
54.10 		Subd. 16a.Computer. "Computer" means an electronic device that accepts 
54.11 	information in digital or similar form and manipulates it for a result based on a sequence 
54.12 	of instructions.

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

54.14 	Sec. 4. Minnesota Statutes 2004, section 297A.61, is amended by adding a subdivision 
54.15 	to read:
54.16 		Subd. 16b.Electronic. "Electronic" means relating to technology having electrical, 
54.17 	digital, magnetic, wireless, optical, electromagnetic, or similar capabilities.

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

54.19 	Sec. 5. Minnesota Statutes 2004, section 297A.61, is amended by adding a subdivision 
54.20 	to read:
54.21 		Subd. 16c.Computer software. "Computer software" means a set of coded 
54.22 	instructions designed to cause a computer or automatic data processing equipment to 
54.23 	perform a task.

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

54.25 	Sec. 6. Minnesota Statutes 2004, section 297A.61, subdivision 17, is amended to read:
54.26 		Subd. 17.Prewritten computer software. "Prewritten computer software" means 
54.27 	computer software, including prewritten upgrades, that is not designed and developed by 
54.28 	the author or other creator to the specifications of a specific purchaser. The combining 
54.29 	of two or more "prewritten computer software" programs or prewritten portions of the 
54.30 	programs does not cause the combination to be other than "prewritten computer software." 
55.1 	"Prewritten computer software" includes software designed and developed by the author 
55.2 	or other creator to the specifications of a specific purchaser when it is sold to a person 
55.3 	other than the specific  purchaser. If a person modifies or enhances computer software 
55.4 	of which the person is not the author or creator, the person is deemed to be the author 
55.5 	or creator only of such person's modifications or enhancements. "Prewritten computer 
55.6 	software" or a prewritten portion of it that is modified or enhanced to any degree, if the 
55.7 	modification or enhancement is designed and developed to the specifications of a specific 
55.8 	purchaser, remains "prewritten computer software"; provided, however, that if there is a 
55.9 	reasonable, separately stated charge or an invoice or other statement of the price given to 
55.10 	the purchaser for such modification or enhancement, the modification or enhancement 
55.11 	does not constitute "prewritten computer software." For purposes of this subdivision:
55.12 	(1) "computer" means an electronic device that accepts information in digital or 
55.13 	similar form and manipulates it for a result based on a sequence of instructions;
55.14 	(2) "electronic" means relating to technology having electrical, digital, magnetic, 
55.15 	wireless, optical, electromagnetic, or similar capabilities; and
55.16 	(3) "computer software" means a set of coded instructions designed to cause a 
55.17 	"computer" or automatic data processing equipment to perform a task.

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

55.19 	Sec. 7. Minnesota Statutes 2004, section 297A.61, is amended by adding a subdivision 
55.20 	to read:
55.21 		Subd. 37.Logging equipment. (a) "Logging equipment" means new or used 
55.22 	machinery, equipment, implements, accessories, and contrivances used directly and 
55.23 	principally in the commercial cutting or removal or both of timber or other solid wood 
55.24 	forest products intended to be sold ultimately at retail, including, but not limited to:
55.25 	(1) machinery used for bucking, bunching, debarking, delimbing, felling, forwarding, 
55.26 	loading, piling, skidding, topping, and yarding operations performed on timber; and
55.27 	(2) chain saws.
55.28 	(b) Logging equipment does not include:
55.29 	(1) repair or replacement parts;
55.30 	(2) tools, shop equipment, communication equipment, and other logging supplies;
55.31 	(3) motor vehicles taxed under chapter 297B;
55.32 	(4) snowmobiles, snow blowers, or recreational all-terrain vehicles; or
55.33 	(5) machinery, equipment, implements, accessories, and contrivances used in the 
55.34 	creation of other commercial wood products for sale to others, including, but not limited 
55.35 	to, milling, planing, carving, wood chipping, or paper manufacturing.

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

56.2 	Sec. 8. Minnesota Statutes 2004, section 297A.63, is amended to read:
56.3 	297A.63 USE TAXES IMPOSED; RATES.
56.4 		Subdivision 1.Use of tangible personal property or taxable services. (a) For the 
56.5 	privilege of using, storing, distributing, or consuming in Minnesota tangible personal 
56.6 	property or taxable services purchased for use, storage, distribution, or consumption in 
56.7 	this state, a use tax is imposed on a person in Minnesota. The tax is imposed on the sales
56.8 	purchase price of retail sales of the tangible personal property or taxable services at the 
56.9 	rate of tax imposed under section  297A.62. A person that purchases property from a 
56.10 	Minnesota retailer and returns the tangible personal property to a point within Minnesota, 
56.11 	except in the course of interstate commerce, after it was delivered outside of Minnesota, 
56.12 	is subject to the use tax.
56.13 	(b) No tax is imposed under paragraph (a) if the tax imposed by section  297A.62
56.14 	was paid on the sales price of the tangible personal property or taxable services. 
56.15 	(c) No tax is imposed under paragraph (a) if the purchase meets the requirements for 
56.16 	exemption under section  297A.67, subdivision 21. 
56.17 		Subd. 2.Use of tangible personal property made from materials. (a) A use tax 
56.18 	is imposed on a person who manufactures, fabricates, or assembles tangible personal 
56.19 	property from materials, either within or outside this state and who uses, stores, distributes, 
56.20 	or consumes the tangible personal property in Minnesota. The tax is imposed on the sales
56.21 	purchase price of retail sales of the materials contained in the tangible personal property at 
56.22 	the rate of tax imposed under section  297A.62. 
56.23 	(b) No tax is imposed under paragraph (a) if the tax imposed by section  297A.62
56.24 	was paid on the sales price of materials contained in the tangible personal property. 

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

56.26 	Sec. 9. Minnesota Statutes 2004, section 297A.668, subdivision 6, is amended to read:
56.27 		Subd. 6.Multiple points of use. (a) Notwithstanding the provisions of subdivisions 
56.28 	2 to 5, a business purchaser that is not a holder of a direct pay permit that knows at the 
56.29 	time of its purchase of a digital good, computer software delivered electronically, or a 
56.30 	service that the digital good, computer software delivered electronically, or service will 
56.31 	be concurrently available for use in more than one taxing jurisdiction shall deliver to 
56.32 	the seller in conjunction with its purchase a multiple points of use exemption certificate 
56.33 	disclosing this fact.
57.1 	(b) Upon receipt of the multiple points of use exemption certificate, the seller is 
57.2 	relieved of the obligation to collect, pay, or remit the applicable tax and the purchaser is 
57.3 	obligated to collect, pay, or remit the applicable tax on a direct pay basis.
57.4 	(c) A purchaser delivering the multiple points of use exemption certificate may use 
57.5 	any reasonable, but consistent and uniform, method of apportionment that is supported by 
57.6 	the purchaser's business records as they exist at the time of the consummation of the sale.
57.7 	(d) The multiple points of use exemption certificate remains in effect for all future 
57.8 	sales by the seller to the purchaser until it is revoked in writing, except as to the subsequent 
57.9 	sale's specific apportionment that is governed by the principle of paragraph (c) and the 
57.10 	facts existing at the time of the sale.
57.11 	(e) A holder of a direct pay permit is not required to deliver a multiple points or use 
57.12 	exemption certificate to the seller. A direct pay permit holder shall follow the provisions 
57.13 	of paragraph (c) in apportioning the tax due on a digital good, computer software delivered 
57.14 	electronically, or a service that will be concurrently available for use in more than one 
57.15 	taxing jurisdiction.

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

57.17 	Sec. 10. Minnesota Statutes 2004, section 297A.669, subdivision 11, is amended to 
57.18 	read:
57.19 		Subd. 11.Mobile telecommunications service. "Mobile telecommunications 
57.20 	service," for purposes of this section, means the same as that term is defined in Section 
57.21 	124(1) 124(7) of Public Law 106-252 (Mobile Telecommunications Sourcing Act).

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

57.23 	Sec. 11. Minnesota Statutes 2004, section 297A.67, subdivision 4, is amended to read:
57.24 		Subd. 4.Exempt meals at residential facilities. Meals orPrepared food, candy, 
57.25 	and soft drinks served to patients, inmates, or persons residing at hospitals, sanitariums, 
57.26 	nursing homes, senior citizen homes, and correctional, detention, and detoxification 
57.27 	facilities are exempt. Food sold through vending machines is not exempt.

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

57.29 	Sec. 12. Minnesota Statutes 2004, section 297A.67, subdivision 5, is amended to read:
57.30 		Subd. 5.Exempt meals at schools. Meals and lunches Prepared food, candy, 
57.31 	and soft drinks served at public and private elementary, middle, or secondary schools as 
57.32 	defined in section  120A.05 are exempt. Meals and lunches  Prepared food, candy, and soft 
58.1 	drinks served to students at a college, university, or private career school under a board 
58.2 	contract are exempt. For purposes of this subdivision, "meals and lunches" does not 
58.3 	include sales from vending machines.  Food sold through vending machines is not exempt.

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

58.5 	Sec. 13. Minnesota Statutes 2005 Supplement, section 297A.67, subdivision 6, is 
58.6 	amended to read:
58.7 		Subd. 6.Other exempt meals. (a) Meals orPrepared food, candy, and soft drinks 
58.8 	purchased for and served exclusively to individuals who are 60 years of age or over and 
58.9 	their spouses or to handicapped persons and their spouses by governmental agencies, 
58.10 	nonprofit organizations, or churches, or pursuant to any program funded in whole or in 
58.11 	part through United States Code, title 42, sections 3001 through 3045, wherever delivered, 
58.12 	prepared, or served, are exempt. Food sold through vending machines is not exempt.
58.13 	(b) Meals or Prepared food, candy, and soft drinks purchased for and served 
58.14 	exclusively to children who are less than 14 years of age or disabled children who are less 
58.15 	than 16 years of age and who are attending a child care or early childhood education 
58.16 	program, are exempt if they are:
58.17 	(1) purchased by a nonprofit child care facility that is exempt under section 297A.70, 
58.18 	subdivision 4, and that primarily serves families with income of 250 percent or less of 
58.19 	federal poverty guidelines; and
58.20 	(2) prepared at the site of the child care facility.

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

58.22 	Sec. 14. Minnesota Statutes 2004, section 297A.67, subdivision 14, is amended to read:
58.23 		Subd. 14.Personal Computers prescribed for use by school. Personal Computers 
58.24 	and related computer software sold by a school, college, university, or private career 
58.25 	school to students who are enrolled at the institutions are exempt if:
58.26 	(1) the use of the personal computer, or of a substantially similar model of computer, 
58.27 	and the related computer software is prescribed by the institution in conjunction with a 
58.28 	course of study; and
58.29 	(2) each student of the institution, or of a unit of the institution in which the student 
58.30 	is enrolled, is required by the institution to have such a personal computer and related 
58.31 	software as a condition of enrollment.
58.32 	For the purposes of this subdivision, "school" and "private career school" have the 
58.33 	meanings given in subdivision 13.

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

59.2 	Sec. 15. Minnesota Statutes 2004, section 297A.67, subdivision 27, is amended to read:
59.3 		Subd. 27.Sewing materials. Sewing materials are exempt. For purposes of this 
59.4 	subdivision "sewing materials" mean fabric, thread, zippers, interfacing, buttons, trim, 
59.5 	and other items that are usually directly incorporated into the construction of clothing, as 
59.6 	defined in subdivision 8, regardless of whether it is actually used for making clothing. 
59.7 	It does not include batting, foam, or fabric specifically manufactured for arts and craft 
59.8 	projects, or other materials for craft projects.

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

59.10 	Sec. 16. Minnesota Statutes 2005 Supplement, section 297A.68, subdivision 37, 
59.11 	is amended to read:
59.12 		Subd. 37.Job opportunity building zones. (a) Purchases of tangible personal 
59.13 	property or taxable services by a qualified business, as defined in section 469.310, are 
59.14 	exempt if the property or services are primarily used or consumed in a job opportunity 
59.15 	building zone designated under section 469.314. For purposes of this subdivision, an aerial 
59.16 	camera package, including any camera, computer, and navigation device contained in the 
59.17 	package, that is used in an aircraft that is operated under a Federal Aviation Administration 
59.18 	Restricted Airworthiness Certificate according to Code of Federal Regulations, title 14, 
59.19 	part 21, section 21.25(b)(3), relating to aerial surveying, and that is based, maintained, and 
59.20 	dispatched from a job opportunity building zone, qualifies as primarily used or consumed 
59.21 	in a job opportunity building zone if the imagery acquired from the aerial camera package 
59.22 	is returned to the job opportunity building zone for processing. The exemption for an 
59.23 	aerial camera package is limited to$50,000 in taxes  as provided in this subdivision and 
59.24 	the tax must be imposed and collected as if the rate under section 297A.62, subdivision 1, 
59.25 	applied and then refunded in the manner provided in section 297A.75. The total amount 
59.26 	of the aerial camera package exemption refunded for all taxpayers for all fiscal years is 
59.27 	limited to $50,000 in taxes.
59.28 	(b) Purchase and use of construction materials,and supplies, or equipment used or 
59.29 	consumed in, and equipment incorporated into,  the construction of improvements to 
59.30 	real property in a job opportunity building zone are exempt if the improvements after 
59.31 	completion of construction are to be used in the conduct of a qualified business, as defined 
59.32 	in section 469.310. This exemption applies regardless of whether the purchases are made 
59.33 	by the business or a contractor.
60.1 	(c) The exemptions under this subdivision apply to a local sales and use tax 
60.2 	regardless of whether the local sales tax is imposed on the sales taxable as defined under 
60.3 	this chapter.
60.4 	(d) This subdivision applies to sales, if the purchase was made and delivery received 
60.5 	during the duration of the zone.
60.6 	(e) Notwithstanding the restriction in paragraph (a), which requires items purchased 
60.7 	to be primarily used or consumed in the zone, purchases by a qualified business that is 
60.8 	an electrical cooperative located in Meeker County of equipment and materials used for 
60.9 	the generation, transmission, and distribution of electrical energy are exempt under this 
60.10 	subdivision, except that:
60.11 	(1) the exemption for materials and equipment used or consumed outside the zone 
60.12 	must not exceed $200,000 in taxes for all taxpayers for all fiscal years; and
60.13 	(2) no sales and use tax exemption is allowed for equipment purchased for resale.
60.14 	For purposes of this paragraph, the tax must be imposed and collected as if the rate 
60.15 	under section 297A.62, subdivision 1, applied and then refunded in the manner provided 
60.16 	in section 297A.75.

60.17 	EFFECTIVE DATE. Paragraphs (a) and (e) are effective for sales and purchases 
60.18 	made on or after August 1, 2005. Paragraph (b) is effective for sales and purchases made 
60.19 	on or after January 1, 2004.

60.20 	Sec. 17. Minnesota Statutes 2005 Supplement, section 297A.68, subdivision 38, 
60.21 	is amended to read:
60.22 		Subd. 38.Biotechnology and health sciences industry zone. (a) Purchases of 
60.23 	tangible personal property or taxable services by a qualified business, as defined in section 
60.24 	469.330, are exempt if the property or services are primarily used or consumed in a 
60.25 	biotechnology and health sciences industry zone designated under section 469.334.
60.26 	(b) Purchase and use of construction materials,and supplies, or equipment used 
60.27 	or consumed in, and equipment incorporated into,  the construction of improvements 
60.28 	to real property in a biotechnology and health sciences industry zone are exempt if the 
60.29 	improvements after completion of construction are to be used in the conduct of a qualified 
60.30 	business, as defined in section 469.330. This exemption applies regardless of whether the 
60.31 	purchases are made by the business or a contractor.
60.32 	(c) The exemptions under this subdivision apply to a local sales and use tax 
60.33 	regardless of whether the local sales tax is imposed on the sales taxable as defined under 
60.34 	this chapter.
61.1 	(d)(1) The tax on sales of goods or services exempted under this subdivision are 
61.2 	imposed and collected as if the applicable rate under section 297A.62 applied. Upon 
61.3 	application by the purchaser, on forms prescribed by the commissioner, a refund equal 
61.4 	to the tax paid must be paid to the purchaser. The application must include sufficient 
61.5 	information to permit the commissioner to verify the sales tax paid and the eligibility of 
61.6 	the claimant to receive the credit. No more than two applications for refunds may be filed 
61.7 	under this subdivision in a calendar year. The provisions of section 289A.40 apply to 
61.8 	the refunds payable under this subdivision.
61.9 	(2) The amount required to make the refunds is annually appropriated to the 
61.10 	commissioner of revenue.
61.11 	(3) The aggregate amount refunded to a qualified business must not exceed the 
61.12 	amount allocated to the qualified business under section 469.335.
61.13 	(e) This subdivision applies only to sales made during the duration of the designation 
61.14 	of the zone.

61.15 	EFFECTIVE DATE. This section is effective for sales and purchases made on 
61.16 	or after January 1, 2004.

61.17 	Sec. 18. Minnesota Statutes 2004, section 297A.70, subdivision 2, is amended to read:
61.18 		Subd. 2.Sales to government. (a) All sales, except those listed in paragraph (b), 
61.19 	to the following governments and political subdivisions, or to the listed agencies or 
61.20 	instrumentalities of governments and political subdivisions, are exempt:
61.21 	(1) the United States and its agencies and instrumentalities;
61.22 	(2) school districts, the University of Minnesota, state universities, community 
61.23 	colleges, technical colleges, state academies, the Perpich Minnesota Center for Arts 
61.24 	Education, and an instrumentality of a political subdivision that is accredited as an 
61.25 	optional/special function school by the North Central Association of Colleges and Schools;
61.26 	(3) hospitals and nursing homes owned and operated by political subdivisions of 
61.27 	the state of tangible personal property and taxable services used at or by hospitals and 
61.28 	nursing homes;
61.29 	(4) the Metropolitan Council, for its purchases of vehicles and repair parts to equip 
61.30 	operations provided for in section  473.4051; 
61.31 	(5) other states or political subdivisions of other states, if the sale would be exempt 
61.32 	from taxation if it occurred in that state; and
61.33 	(6) sales to public libraries, public library systems, multicounty, multitype library 
61.34 	systems as defined in section  134.001, county law libraries under chapter 134A, state 
62.1 	agency libraries, the state library under section  480.09, and the Legislative Reference 
62.2 	Library. 
62.3 	(b) This exemption does not apply to the sales of the following products and services:
62.4 	(1) building, construction, or reconstruction materials purchased by a contractor 
62.5 	or a subcontractor as a part of a lump-sum contract or similar type of contract with a 
62.6 	guaranteed maximum price covering both labor and materials for use in the construction, 
62.7 	alteration, or repair of a building or facility;
62.8 	(2) construction materials purchased by tax exempt entities or their contractors to 
62.9 	be used in constructing buildings or facilities which will not be used principally by the 
62.10 	tax exempt entities;
62.11 	(3) the leasing of a motor vehicle as defined in section  297B.01, subdivision 5, 
62.12 	except for leases entered into by the United States or its agencies or instrumentalities; or 
62.13 	(4) meals and lodging as defined under section  297A.61, subdivision 3, paragraphs 
62.14 	(d) and (g) paragraph (g), clause (2), and prepared food, candy, and soft drinks, except for 
62.15 	meals and lodging, prepared food, candy, and soft drinks  purchased directly by the United 
62.16 	States or its agencies or instrumentalities. 
62.17 	(c) As used in this subdivision, "school districts" means public school entities and 
62.18 	districts of every kind and nature organized under the laws of the state of Minnesota, and 
62.19 	any instrumentality of a school district, as defined in section  471.59. 

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

62.21 	Sec. 19. Minnesota Statutes 2004, section 297A.70, subdivision 3, is amended to read:
62.22 		Subd. 3.Sales of certain goods and services to government. (a) The following 
62.23 	sales to or use by the specified governments and political subdivisions of the state are 
62.24 	exempt:
62.25 	(1) repair and replacement parts for emergency rescue vehicles, fire trucks, and 
62.26 	fire apparatus to a political subdivision;
62.27 	(2) machinery and equipment, except for motor vehicles, used directly for mixed 
62.28 	municipal solid waste management services at a solid waste disposal facility as defined in 
62.29 	section  115A.03, subdivision 10; 
62.30 	(3) chore and homemaking services to a political subdivision of the state to be 
62.31 	provided to elderly or disabled individuals;
62.32 	(4) telephone services to the Department of Administration that are used to provide 
62.33 	telecommunications services through the intertechnologies revolving fund;
62.34 	(5) firefighter personal protective equipment as defined in paragraph (b), if purchased 
62.35 	or authorized by and for the use of an organized fire department, fire protection district, or 
63.1 	fire company regularly charged with the responsibility of providing fire protection to the 
63.2 	state or a political subdivision;
63.3 	(6) bullet-resistant body armor that provides the wearer with ballistic and trauma 
63.4 	protection, if purchased by a law enforcement agency of the state or a political subdivision 
63.5 	of the state, or a licensed peace officer, as defined in section  626.84, subdivision 1; 
63.6 	(7) motor vehicles purchased or leased by political subdivisions of the state if the 
63.7 	vehicles are exempt from registration under section  168.012, subdivision 1, paragraph (b), 
63.8 	exempt from taxation under section  473.448, or exempt from the motor vehicle sales tax 
63.9 	under section  297B.03, clause (12); 
63.10 	(8) equipment designed to process, dewater, and recycle biosolids for wastewater 
63.11 	treatment facilities of political subdivisions, and materials incidental to installation of 
63.12 	that equipment; and
63.13 	(9) sales to a town of gravel and of machinery, equipment, and accessories, except 
63.14 	motor vehicles, used exclusively for road and bridge maintenance, and leases by a town of 
63.15 	motor vehicles exempt from tax under section  297B.03, clause (10).; and
63.16 	(10) the removal of trees, bushes, or shrubs for the construction and maintenance 
63.17 	of roads, trails, or firebreaks when purchased by an agency of the state or a political 
63.18 	subdivision of the state.
63.19 	(b) For purposes of this subdivision, "firefighters personal protective equipment" 
63.20 	means helmets, including face shields, chin straps, and neck liners; bunker coats and 
63.21 	pants, including pant suspenders; boots; gloves; head covers or hoods; wildfire jackets; 
63.22 	protective coveralls; goggles; self-contained breathing apparatus; canister filter masks; 
63.23 	personal alert safety systems; spanner belts; optical or thermal imaging search devices; 
63.24 	and all safety equipment required by the Occupational Safety and Health Administration.

63.25 	EFFECTIVE DATE. This section is effective for sales and purchases made after 
63.26 	October 28, 2002, but for sales and purchases made after October 28, 2002, and before 
63.27 	July 15, 2005, no refunds may be claimed under Minnesota Statutes, section 289A.50, for 
63.28 	sales taxes collected and remitted to the state.

63.29 	Sec. 20. Minnesota Statutes 2004, section 297A.70, subdivision 4, is amended to read:
63.30 		Subd. 4.Sales to nonprofit groups. (a) All sales, except those listed in paragraph 
63.31 	(b), to the following "nonprofit organizations" are exempt:
63.32 	(1) a corporation, society, association, foundation, or institution organized and 
63.33 	operated exclusively for charitable, religious, or educational purposes if the item 
63.34 	purchased is used in the performance of charitable, religious, or educational functions; and
63.35 	(2) any senior citizen group or association of groups that:
64.1 	(i) in general limits membership to persons who are either age 55 or older, or 
64.2 	physically disabled; and
64.3 	(ii) is organized and operated exclusively for pleasure, recreation, and other 
64.4 	nonprofit purposes, no part of the net earnings of which inures to the benefit of any private 
64.5 	shareholders.
64.6 	For purposes of this subdivision, charitable purpose includes the maintenance of a 
64.7 	cemetery owned by a religious organization.
64.8 	(b) This exemption does not apply to the following sales:
64.9 	(1) building, construction, or reconstruction materials purchased by a contractor 
64.10 	or a subcontractor as a part of a lump-sum contract or similar type of contract with a 
64.11 	guaranteed maximum price covering both labor and materials for use in the construction, 
64.12 	alteration, or repair of a building or facility;
64.13 	(2) construction materials purchased by tax-exempt entities or their contractors to 
64.14 	be used in constructing buildings or facilities that will not be used principally by the 
64.15 	tax-exempt entities; and
64.16 	(3) meals and lodging as defined under section  297A.61, subdivision 3, paragraphs 
64.17 	(d) and (g) paragraph (g), clause (2), and prepared food, candy, and soft drinks; and 
64.18 	(4) leasing of a motor vehicle as defined in section  297B.01, subdivision 5, except as 
64.19 	provided in paragraph (c). 
64.20 	(c) This exemption applies to the leasing of a motor vehicle as defined in section  
64.21 	297B.01, subdivision 5, only if the vehicle is: 
64.22 	(1) a truck, as defined in section  168.011, a bus, as defined in section  168.011, or a 
64.23 	passenger automobile, as defined in section  168.011, if the automobile is designed and 
64.24 	used for carrying more than nine persons including the driver; and 
64.25 	(2) intended to be used primarily to transport tangible personal property or 
64.26 	individuals, other than employees, to whom the organization provides service in 
64.27 	performing its charitable, religious, or educational purpose.
64.28 	(d) A limited liability company also qualifies for exemption under this subdivision if 
64.29 	(1) it consists of a sole member that would qualify for the exemption, and (2) the items 
64.30 	purchased qualify for the exemption.

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

64.32 	Sec. 21. Minnesota Statutes 2004, section 297A.70, subdivision 7, is amended to read:
64.33 		Subd. 7.Hospitals and outpatient surgical centers. (a) Sales, except for those 
64.34 	listed in paragraph (c), to a hospital are exempt, if the items purchased are used in 
65.1 	providing hospital services. For purposes of this subdivision, "hospital" means a hospital 
65.2 	organized and operated for charitable purposes within the meaning of section 501(c)(3) of 
65.3 	the Internal Revenue Code, and licensed under chapter 144 or by any other jurisdiction, 
65.4 	and "hospital services" are services authorized or required to be performed by a "hospital" 
65.5 	under chapter 144.
65.6 	(b) Sales, except for those listed in paragraph (c), to an outpatient surgical center 
65.7 	are exempt, if the items purchased are used in providing outpatient surgical services. For 
65.8 	purposes of this subdivision, "outpatient surgical center" means an outpatient surgical 
65.9 	center organized and operated for charitable purposes within the meaning of section 
65.10 	501(c)(3) of the Internal Revenue Code, and licensed under chapter 144 or by any other 
65.11 	jurisdiction. For the purposes of this subdivision, "outpatient surgical services" means: 
65.12 	(1) services authorized or required to be performed by an outpatient surgical center under 
65.13 	chapter 144; and (2) urgent care. For purposes of this subdivision, "urgent care" means 
65.14 	health services furnished to a person whose medical condition is sufficiently acute to 
65.15 	require treatment unavailable through, or inappropriate to be provided by, a clinic or 
65.16 	physician's office, but not so acute as to require treatment in a hospital emergency room.
65.17 	(c) This exemption does not apply to the following products and services:
65.18 	(1) purchases made by a clinic, physician's office, or any other medical facility not 
65.19 	operating as a hospital or outpatient surgical center, even though the clinic, office, or 
65.20 	facility may be owned and operated by a hospital or outpatient surgical center;
65.21 	(2) sales under section  297A.61, subdivision 3, paragraphs (d) and (g) paragraph 
65.22 	(g), clause (2), and prepared food, candy, and soft drinks; 
65.23 	(3) building and construction materials used in constructing buildings or facilities 
65.24 	that will not be used principally by the hospital or outpatient surgical center;
65.25 	(4) building, construction, or reconstruction materials purchased by a contractor 
65.26 	or a subcontractor as a part of a lump-sum contract or similar type of contract with a 
65.27 	guaranteed maximum price covering both labor and materials for use in the construction, 
65.28 	alteration, or repair of a hospital or outpatient surgical center; or
65.29 	(5) the leasing of a motor vehicle as defined in section  297B.01, subdivision 5. 
65.30 	(d) A limited liability company also qualifies for exemption under this subdivision if 
65.31 	(1) it consists of a sole member that would qualify for the exemption, and (2) the items 
65.32 	purchased qualify for the exemption.

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

65.34 	Sec. 22. Minnesota Statutes 2004, section 297A.70, subdivision 13, is amended to read:
66.1 		Subd. 13.Fund-raising sales by or for nonprofit groups. (a) The following 
66.2 	sales by the specified organizations for fund-raising purposes are exempt, subject to the 
66.3 	limitations listed in paragraph (b):
66.4 	(1) all sales made by an organization that exists solely for the purpose of providing 
66.5 	educational or social activities for young people primarily age 18 and under;
66.6 	(2) all sales made by an organization that is a senior citizen group or association of 
66.7 	groups if (i) in general it limits membership to persons age 55 or older; (ii) it is organized 
66.8 	and operated exclusively for pleasure, recreation, and other nonprofit purposes; and (iii) 
66.9 	no part of its net earnings inures to the benefit of any private shareholders;
66.10 	(3) the sale or use of tickets or admissions to a golf tournament held in Minnesota if 
66.11 	the beneficiary of the tournament's net proceeds qualifies as a tax-exempt organization 
66.12 	under section 501(c)(3) of the Internal Revenue Code; and
66.13 	(4) sales of gum, candy, and candy products sold for fund-raising purposes by a 
66.14 	nonprofit organization that provides educational and social activities primarily for young 
66.15 	people age 18 and under.
66.16 	(b) The exemptions listed in paragraph (a) are limited in the following manner:
66.17 	(1) the exemption under paragraph (a), clauses (1) and (2), applies only if the gross 
66.18 	annual receipts of the organization from fund-raising do not exceed $10,000; and
66.19 	(2) the exemption under paragraph (a), clause (1), does not apply if the sales are 
66.20 	derived from admission charges or from activities for which the money must be deposited 
66.21 	with the school district treasurer under section  123B.49, subdivision 2, or be recorded in 
66.22 	the same manner as other revenues or expenditures of the school district under section  
66.23 	123B.49, subdivision 4. 
66.24 	(c) Sales of tangible personal property are exempt if the entire proceeds, less the 
66.25 	necessary expenses for obtaining the property, will be contributed to a registered combined 
66.26 	charitable organization described in section  309.501, to be used exclusively for charitable, 
66.27 	religious, or educational purposes, and the registered combined charitable organization 
66.28 	has given its written permission for the sale. Sales that occur over a period of more than 
66.29 	24 days per year are not exempt under this paragraph. 
66.30 	(d) For purposes of this subdivision, a club, association, or other organization of 
66.31 	elementary or secondary school students organized for the purpose of carrying on sports, 
66.32 	educational, or other extracurricular activities is a separate organization from the school 
66.33 	district or school for purposes of applying the $10,000 limit.

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

66.35 	Sec. 23. Minnesota Statutes 2004, section 297A.70, subdivision 14, is amended to read:
67.1 		Subd. 14.Fund-raising events sponsored by nonprofit groups. (a) Sales of 
67.2 	tangible personal property at, and admission charges for fund-raising events sponsored 
67.3 	by, a nonprofit organization are exempt if:
67.4 	(1) all gross receipts are recorded as such, in accordance with generally accepted 
67.5 	accounting practices, on the books of the nonprofit organization; and
67.6 	(2) the entire proceeds, less the necessary expenses for the event, will be used 
67.7 	solely and exclusively for charitable, religious, or educational purposes. Exempt sales 
67.8 	include the sale of food, meals, and drinksprepared food, candy, and soft drinks at the 
67.9 	fund-raising event.
67.10 	(b) This exemption is limited in the following manner:
67.11 	(1) it does not apply to admission charges for events involving bingo or other 
67.12 	gambling activities or to charges for use of amusement devices involving bingo or other 
67.13 	gambling activities;
67.14 	(2) all gross receipts are taxable if the profits are not used solely and exclusively for 
67.15 	charitable, religious, or educational purposes;
67.16 	(3) it does not apply unless the organization keeps a separate accounting record, 
67.17 	including receipts and disbursements from each fund-raising event that documents all 
67.18 	deductions from gross receipts with receipts and other records;
67.19 	(4) it does not apply to any sale made by or in the name of a nonprofit corporation as 
67.20 	the active or passive agent of a person that is not a nonprofit corporation;
67.21 	(5) all gross receipts are taxable if fund-raising events exceed 24 days per year;
67.22 	(6) it does not apply to fund-raising events conducted on premises leased for more 
67.23 	than five days but less than 30 days; and
67.24 	(7) it does not apply if the risk of the event is not borne by the nonprofit organization 
67.25 	and the benefit to the nonprofit organization is less than the total amount of the state and 
67.26 	local tax revenues foregone by this exemption.
67.27 	(c) For purposes of this subdivision, a "nonprofit organization" means any unit of 
67.28 	government, corporation, society, association, foundation, or institution organized and 
67.29 	operated for charitable, religious, educational, civic, fraternal, and senior citizens' or 
67.30 	veterans' purposes, no part of the net earnings of which inures to the benefit of a private 
67.31 	individual.

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

67.33 	Sec. 24. Minnesota Statutes 2004, section 297A.70, subdivision 15, is amended to read:
67.34 		Subd. 15.Statewide amateur athletic games. Notwithstanding section  297A.61, 
67.35 	subdivision 3, or any other provision of this chapter, the gross receipts from the following 
68.1 	sales made to or by a nonprofit corporation designated by the Minnesota Amateur Sports 
68.2 	Commission to conduct a series of statewide amateur athletic games and related events, 
68.3 	workshops, and clinics are exempt: 
68.4 	(1) sales of tangible personal property to or the storage, use, or other consumption of 
68.5 	tangible personal property by the nonprofit corporation; and
68.6 	(2) sales of tangible personal property, admission charges, and sales of food, 
68.7 	meals, and drinksprepared food, candy, and soft drinks by the nonprofit corporation at 
68.8 	fund-raising events, athletic events, or athletic facilities.

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

68.10 	Sec. 25. Minnesota Statutes 2005 Supplement, section 297A.72, subdivision 2, is 
68.11 	amended to read:
68.12 		Subd. 2.Content and form of exemption certificate. An exemption certificate 
68.13 	must be substantially in the form prescribed by the commissioner and:
68.14 	(1) be signed by the purchaser or meet the requirements of section 270C.304;
68.15 	(2) bear the name and address of the purchaser; and
68.16 	(3) indicate the sales tax account number, if any, issued to the purchaser;.
68.17 	(4) indicate the general character of the property sold by the purchaser in the regular 
68.18 	course of business or the activities carried on by the organization; and
68.19 	(5) identify the property purchased.

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

68.21 	Sec. 26. Minnesota Statutes 2005 Supplement, section 297A.75, subdivision 1, is 
68.22 	amended to read:
68.23 		Subdivision 1.Tax collected. The tax on the gross receipts from the sale of the 
68.24 	following exempt items must be imposed and collected as if the sale were taxable and the 
68.25 	rate under section 297A.62, subdivision 1, applied. The exempt items include:
68.26 	(1) capital equipment exempt under section 297A.68, subdivision 5;
68.27 	(2) building materials for an agricultural processing facility exempt under section 
68.28 	297A.71, subdivision 13;
68.29 	(3) building materials for mineral production facilities exempt under section 
68.30 	297A.71, subdivision 14;
68.31 	(4) building materials for correctional facilities under section 297A.71, subdivision 
68.32 	3;
69.1 	(5) building materials used in a residence for disabled veterans exempt under section 
69.2 	297A.71, subdivision 11;
69.3 	(6) elevators and building materials exempt under section 297A.71, subdivision 12;
69.4 	(7) building materials for the Long Lake Conservation Center exempt under section 
69.5 	297A.71, subdivision 17;
69.6 	(8) materials, supplies, fixtures, furnishings, and equipment for a county law 
69.7 	enforcement and family service center under section 297A.71, subdivision 26;
69.8 	(9) materials and supplies for qualified low-income housing under section 297A.71, 
69.9 	subdivision 23; and
69.10 	(10) materials, supplies, and equipment for municipal electric utility facilities under 
69.11 	section 297A.71, subdivision 35.;
69.12 	(11) equipment and materials used for the generation, transmission, and distribution 
69.13 	of electrical energy and an aerial camera package exempt under section 297A.68, 
69.14 	subdivision 37; and
69.15 	(12) tangible personal property and taxable services and construction materials, 
69.16 	supplies, and equipment exempt under section 297A.68, subdivision 41.

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

69.18 	Sec. 27. Minnesota Statutes 2005 Supplement, section 297A.75, subdivision 2, is 
69.19 	amended to read:
69.20 		Subd. 2.Refund; eligible persons. Upon application on forms prescribed by the 
69.21 	commissioner, a refund equal to the tax paid on the gross receipts of the exempt items 
69.22 	must be paid to the applicant. Only the following persons may apply for the refund:
69.23 	(1) for subdivision 1, clauses (1) to (3), the applicant must be the purchaser;
69.24 	(2) for subdivision 1, clauses (4), (7), and (8), the applicant must be the governmental 
69.25 	subdivision;
69.26 	(3) for subdivision 1, clause (5), the applicant must be the recipient of the benefits 
69.27 	provided in United States Code, title 38, chapter 21;
69.28 	(4) for subdivision 1, clause (6), the applicant must be the owner of the homestead 
69.29 	property;
69.30 	(5) for subdivision 1, clause (9), the owner of the qualified low-income housing 
69.31 	project; and
69.32 	(6) for subdivision 1, clause (10), the applicant must be a municipal electric utility or 
69.33 	a joint venture of municipal electric utilities.; and 
69.34 	(7) for subdivision 1, clauses (11) and (12), the owner of the qualifying business.

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

70.2 	Sec. 28. Minnesota Statutes 2005 Supplement, section 297A.75, subdivision 3, is 
70.3 	amended to read:
70.4 		Subd. 3.Application. (a) The application must include sufficient information 
70.5 	to permit the commissioner to verify the tax paid. If the tax was paid by a contractor, 
70.6 	subcontractor, or builder, under subdivision 1, clause (4), (5), (6), (7), (8), (9), or (10), 
70.7 	 (11), or (12), the contractor, subcontractor, or builder must furnish to the refund applicant 
70.8 	a statement including the cost of the exempt items and the taxes paid on the items unless 
70.9 	otherwise specifically provided by this subdivision. The provisions of sections 289A.40
70.10 	and 289A.50 apply to refunds under this section.
70.11 	(b) An applicant may not file more than two applications per calendar year for 
70.12 	refunds for taxes paid on capital equipment exempt under section 297A.68, subdivision 5.

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

70.14 	Sec. 29. Minnesota Statutes 2005 Supplement, section 297A.815, subdivision 1, 
70.15 	is amended to read:
70.16 		Subdivision 1.Motor vehicle lease price; payment. (a) In the case of a lease of a 
70.17 	motor vehicle as provided in section 297A.61, subdivision 4, paragraph (k), clause (2), the 
70.18 	tax is imposed on the total amount to be paid by the lessee under the lease agreement. The 
70.19 	lessor shall collect the tax in full at the time the lease is executed or, if the tax is included 
70.20 	in the lease and the lease is assigned, the tax is due from the original lessor at the time the 
70.21 	lease is assigned. The total amount to be paid by the lessee under the lease agreement 
70.22 	equals the agreed-upon value of the vehicle less manufacturer's rebates, the stated residual 
70.23 	value of the leased vehicle, and the total value allowed for a vehicle owned by the lessee 
70.24 	taken in trade by the lessor, plus the price of any taxable goods and services included in 
70.25 	the lease and the rent charge as provided by Code of Federal Regulations, title 12, section 
70.26 	213.4, excluding any rent charge related to the capitalization of the tax.
70.27 	(b) If the total amount paid by the lessee for use of the leased vehicle includes 
70.28 	amounts that are not calculated at the time the lease is executed, the tax is imposed and 
70.29 	must be collected by the lessor at the time the amounts are paid by the lessee. In the case 
70.30 	of a lease which by its terms may be renewed, the sales tax is due and payable on the 
70.31 	total amount to be paid during the initial term of the lease, and then for each subsequent 
70.32 	renewal period on the total amount to be paid during the renewal period.
70.33 	(c) If a lease is canceled or rescinded on or before 90 days of its execution or if a 
70.34 	vehicle is returned to the manufacturer under section 325F.665, the lessor may file a claim 
71.1 	for a refund of the total tax paid minus the amount of tax due for the period the vehicle is 
71.2 	used by the lessee.
71.3 	(d) If a lessee's obligation to make payments on a lease is canceled more than 90 
71.4 	days after its execution, a credit is allowed against sales tax or motor vehicles sales tax 
71.5 	due on a subsequent lease or purchase of a motor vehicle if that lease or purchase is 
71.6 	consummated within 30 days of the date the prior lease was canceled. The amount of the 
71.7 	credit is equal to (1) the sales tax paid at the inception of the lease, multiplied by (2) 
71.8 	the ratio of the number of full months remaining in the lease at the time of termination 
71.9 	compared to the term of the lease used in calculating sales tax paid at the inception of the 
71.10 	lease. The credit or any part of it cannot be assigned or transferred to another person.

71.11 	EFFECTIVE DATE. This section is effective for leases entered into after 
71.12 	September 30, 2005.

71.13 	Sec. 30. Minnesota Statutes 2004, section 297A.99, subdivision 7, is amended to read:
71.14 		Subd. 7.Exemptions. (a) All goods or services that are otherwise exempt from 
71.15 	taxation under this chapter are exempt from a political subdivision's tax.
71.16 	(b) The gross receipts from the sale of tangible personal property that meets the 
71.17 	requirement of section  297A.68, subdivision 15, are exempt, except the qualification 
71.18 	test applies based on the boundaries of the political subdivision instead of the state 
71.19 	of Minnesota.
71.20 	(c) All mobile transportation equipment, and parts and accessories attached to or 
71.21 	to be attached to the equipment are exempt, if purchased by a holder of a motor carrier 
71.22 	direct pay permit under section  297A.90. 

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

71.24 	Sec. 31. Laws 2005, First Special Session chapter 3, article 5, section 3, the effective 
71.25 	date, is amended to read:
71.26 	
71.27 	
71.28 	EFFECTIVE DATE. This section is effective for sales and  purchases made after 
71.29 	October 28, 2002, but for land clearing contracts entered into after October 28, 2002, 
71.30 	but before July 15, 2005, no refunds may be claimed under Minnesota Statutes, section 
71.31 	289A.50, for sales taxes collected and remitted to the state on the land clearing contracts.  

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

72.1 	Sec. 32.  REPEALER.
 72.2 	(a) Minnesota Statutes 2004, section 297A.68, subdivisions 15 and 18, are repealed.
72.3 	(b) Minnesota Rules, parts 8130.0400, subpart 3; 8130.4800, subparts 1, 3, 4, 5, 6, 7, 
72.4 	and 8; 8130.5100; 8130.5400; and 8130.5800, subpart 6, are repealed.

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

72.6 	ARTICLE 7
72.7 	DEPARTMENT OF REVENUE SPECIAL TAXES AND FEES

72.8 	Section 1. Minnesota Statutes 2005 Supplement, section 115B.49, subdivision 4, is 
72.9 	amended to read:
72.10 		Subd. 4.Registration; fees. (a) The owner or operator of a dry cleaning facility 
72.11 	shall register on or before October 1 of each year with the commissioner of revenue in 
72.12 	a manner prescribed by the commissioner of revenue and pay a registration fee for the 
72.13 	facility. The amount of the fee is:
72.14 	(1) $500, for facilities with a full-time equivalence of fewer than five;
72.15 	(2) $1,000, for facilities with a full-time equivalence of five to ten; and
72.16 	(3) $1,500, for facilities with a full-time equivalence of more than ten.
72.17 	The registration fee must be paid on or before October 18 or the owner or operator 
72.18 	of a dry cleaning facility may elect to pay the fee in equal installments. Installment 
72.19 	payments must be paid on or before October 18, on or before January 18, on or before 
72.20 	April 18, and on or before June 18. All payments made after October 18 bear interest 
72.21 	at the rate specified in section 270C.40.
72.22 	(b) A person who sells dry cleaning solvents for use by dry cleaning facilities in the 
72.23 	state shall collect and remit to the commissioner of revenue in a manner prescribed by the 
72.24 	commissioner of revenue, on or before the 20th day of the month following the month in 
72.25 	which the sales of dry cleaning solvents are made, a fee of:
72.26 	(1) $3.50 for each gallon of perchloroethylene sold for use by dry cleaning facilities 
72.27 	in the state;
72.28 	(2) 70 cents for each gallon of hydrocarbon-based dry cleaning solvent sold for use 
72.29 	by dry cleaning facilities in the state; and
72.30 	(3) 35 cents for each gallon of other nonaqueous solvents sold for use by dry 
72.31 	cleaning facilities in the state.
72.32 	(c) The audit, assessment, appeal, collection, enforcement, and administrative 
72.33 	provisions of chapters 270C and 289A apply to the fee imposed by this subdivision. 
72.34 	To enforce this subdivision, the commissioner of revenue may grant extensions to file 
73.1 	returns and pay fees, impose penalties and interest on the annual registration fee under 
73.2 	paragraph (a) and the monthly fee under paragraph (b), and abate penalties and interest in 
73.3 	the manner provided in chapters 270C and 289A. The penalties and interest imposed on 
73.4 	taxes under chapter 297A apply to the fees imposed under this subdivision. Disclosure 
73.5 	of data collected by the commissioner of revenue under this subdivision is governed by 
73.6 	chapter 270B.

73.7 	EFFECTIVE DATE. This section is effective for returns and payments due on 
73.8 	or after October 1, 2006.

73.9 	Sec. 2. [287.222] TRANSFER TO OBTAIN FINANCING.
73.10 	The deed tax is $1.65 on a deed or other instrument that transfers real property if 
73.11 	the transfer is (1) to a person who is a builder or contractor, (2) intended to be temporary, 
73.12 	and (3) done solely to enable the builder or contractor to obtain financing to build an 
73.13 	improvement on the conveyed property under a contract for improvement with the grantor 
73.14 	that calls for the conveyed property to be reconveyed to the grantor upon completion of 
73.15 	and payment for the improvement. The deed tax is $1.65 on a deed or other instrument 
73.16 	that transfers the real property back from the builder or contractor to the grantor.

73.17 	EFFECTIVE DATE. This section is effective for deeds both executed and recorded 
73.18 	on or after July 1, 2006.

73.19 	Sec. 3. Minnesota Statutes 2004, section 295.50, subdivision 4, is amended to read:
73.20 		Subd. 4.Health care provider. (a) "Health care provider" means:
73.21 	(1) a person whose health care occupation is regulated or required to be regulated by 
73.22 	the state of Minnesota furnishing any or all of the following goods or services directly to a 
73.23 	patient or consumer: medical, surgical, optical, visual, dental, hearing, nursing services, 
73.24 	drugs, laboratory, diagnostic or therapeutic services;
73.25 	(2) a person who provides goods and services not listed in clause (1) that qualify for 
73.26 	reimbursement under the medical assistance program provided under chapter 256B;
73.27 	(3) a staff model health plan company;
73.28 	(4) an ambulance service required to be licensed; or
73.29 	(5) a person who sells or repairs hearing aids and related equipment or prescription 
73.30 	eyewear.
73.31 	(b) Health care provider does not include:
73.32 	(1) hospitals; medical supplies distributors, except as specified under paragraph 
73.33 	(a), clause (5); nursing homes licensed under chapter 144A or licensed in any other 
74.1 	jurisdiction; pharmacies; surgical centers; bus and taxicab transportation, or any other 
74.2 	providers of transportation services other than ambulance services required to be licensed; 
74.3 	supervised living facilities for persons with mental retardation or related conditions, 
74.4 	licensed under Minnesota Rules, parts 4665.0100 to 4665.9900; residential care homes 
74.5 	licensed under chapter 144B; housing with services establishments required to be 
74.6 	registered under chapter 144D; board and lodging establishments providing only custodial 
74.7 	services that are licensed under chapter 157 and registered under section  157.17 to 
74.8 	provide supportive services or health supervision services; adult foster homes as defined 
74.9 	in Minnesota Rules, part 9555.5105; day training and habilitation services for adults 
74.10 	with mental retardation and related conditions as defined in section  252.41, subdivision 
74.11 	3; boarding care homes, as defined in Minnesota Rules, part 4655.0100; and adult day 
74.12 	care centers as defined in Minnesota Rules, part 9555.9600; 
74.13 	(2) home health agencies as defined in Minnesota Rules, part 9505.0175, subpart 
74.14 	15; a person providing personal care services and supervision of personal care services 
74.15 	as defined in Minnesota Rules, part 9505.0335; a person providing private duty nursing 
74.16 	services as defined in Minnesota Rules, part 9505.0360; and home care providers required 
74.17 	to be licensed under chapter 144A;
74.18 	(3) a person who employs health care providers solely for the purpose of providing 
74.19 	patient services to its employees; and
74.20 	(4) an educational institution that employs health care providers solely for the 
74.21 	purpose of providing patient services to its students if the institution does not receive fee 
74.22 	for service payments or payments for extended coverage.

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

74.24 	Sec. 4. Minnesota Statutes 2004, section 295.53, subdivision 3, is amended to read:
74.25 		Subd. 3.Separate statement of tax. A hospital, surgical center, or health care 
74.26 	provider, or wholesale drug distributor  must not state the tax obligation under section  
74.27 	295.52 in a deceptive or misleading manner. It must not separately state tax obligations 
74.28 	on bills provided to patients, consumers, or other payers when the amount received for 
74.29 	the services or goods is not subject to tax. 
74.30 	Pharmacies that separately state the tax obligations on bills provided to consumers 
74.31 	or to other payers who purchase legend drugs may state the tax obligation as the wholesale 
74.32 	price of the legend drugs multiplied by the tax percentage specified in section  295.52. 
74.33 	Pharmacies must not state the tax obligation based on the retail price. 
74.34 	Whenever the commissioner determines that a person has engaged in any act or 
74.35 	practice constituting a violation of this subdivision, the commissioner may bring an action 
75.1 	in the name of the state in the district court of the appropriate county to enjoin the act 
75.2 	or practice and to enforce compliance with this subdivision, or the commissioner may 
75.3 	refer the matter to the attorney general or the county attorney of the appropriate county. 
75.4 	Upon a proper showing, a permanent or temporary injunction, restraining order, or other 
75.5 	appropriate relief must be granted.

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

75.7 	Sec. 5. Minnesota Statutes 2004, section 297F.01, is amended by adding a subdivision 
75.8 	to read:
75.9 		Subd. 22a.Weighted average retail price. "Weighted average retail price" means 
75.10 	(1) the average retail price per pack of 20 cigarettes, with the average price weighted by the 
75.11 	number of packs sold at each price, (2) reduced by the sales tax included in the retail price, 
75.12 	and (3) adjusted for the expected inflation from the time of the survey to the average of the 
75.13 	12 months that the sales tax will be imposed. The commissioner shall make the inflation 
75.14 	adjustment in accordance with the Consumer Price Index for all urban consumers inflation 
75.15 	indicator as published in the most recent state budget forecast. The inflation factor for the 
75.16 	calendar year in which the new tax rate takes effect must be used. If the survey indicates 
75.17 	that the average retail price of cigarettes has not increased relative to the average retail 
75.18 	price in the previous year's survey, then no inflation adjustment must be made.

75.19 	EFFECTIVE DATE. This section is effective April 30, 2006.

75.20 	Sec. 6. Minnesota Statutes 2004, section 297G.01, subdivision 7, is amended to read:
75.21 		Subd. 7.Distilled spirits. "Distilled spirits" is means:
75.22 	(1) intoxicating liquors, including ethyl alcohol, hydrated oxide of ethyl, spirits of 
75.23 	wine, whiskey, rum, brandy, gin, and other distilled spirits, including all dilutions and 
75.24 	mixtures, for nonindustrial use.;
75.25 	(2) any beverage that would be classified as a flavored malt beverage except that the 
75.26 	alcohol contribution from flavors and other nonbeverage materials exceeds 49 percent 
75.27 	of the alcohol content of the product; or 
75.28 	(3) any beverage that would be classified as a flavored malt beverage except that the 
75.29 	beverage contains more than six percent alcohol by volume, and more than 1.5 percent 
75.30 	of the volume of the finished product consists of alcohol derived from flavors and other 
75.31 	nonbeverage ingredients that contain alcohol.

75.32 	EFFECTIVE DATE. This section is effective July 1, 2006.

76.1 	Sec. 7. Minnesota Statutes 2004, section 297G.01, is amended by adding a subdivision 
76.2 	to read:
76.3 		Subd. 8a.Flavored malt beverage. (a) "Flavored malt beverage" means a 
76.4 	fermented malt beverage that:
76.5 	(1) contains six percent or less alcohol by volume and derives at least 51 percent 
76.6 	of its alcohol content by volume from the fermentation of grain-derived carbohydrates, 
76.7 	as long as not more than 49 percent of the beverage's overall alcohol content is obtained 
76.8 	from flavors and other added nonbeverage ingredients containing alcohol; or
76.9 	(2) contains more than six percent alcohol by volume that derives not more than 1.5 
76.10 	percent of its overall alcohol content by volume from flavors and other added nonbeverage 
76.11 	ingredients containing alcohol.
76.12 	(b) Flavored malt beverage does not include cider or an alcoholic beverage obtained 
76.13 	primarily by fermentation of rice, such as sake.

76.14 	EFFECTIVE DATE. This section is effective July 1, 2006.

76.15 	ARTICLE 8
76.16 	DEPARTMENT OF REVENUE MISCELLANEOUS

76.17 	Section 1. Minnesota Statutes 2005 Supplement, section 270C.01, subdivision 4, is 
76.18 	amended to read:
76.19 		Subd. 4.Electronic means; electronically. "Electronic means" and "electronically" 
76.20 	mean a method that is electronic, as defined in section 325L.02, paragraph (e), and that 
76.21 	is prescribed by the commissioner. Electronic means includes the use of a touch-tone 
76.22 	telephone to transmit return information in a manner prescribed by the commissioner.

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

76.24 	Sec. 2. Minnesota Statutes 2005 Supplement, section 270C.304, is amended to read:
76.25 	270C.304 ELECTRONICALLY FILED RETURNS; SIGNATURES.
76.26 	For purposes of a law administered by the commissioner, the name of the taxpayer, 
76.27 	the name of the taxpayer's authorized agent, or the taxpayer's identification number, 
76.28 	will constitute a signature when transmitted as part of the return information on returns 
76.29 	filed by electronic means by the taxpayer or at the taxpayer's direction. "Electronic 
76.30 	means" includes, but is not limited to, the use of a touch-tone telephone to transmit return 
76.31 	information in a manner prescribed by the commissioner.

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

77.1 	Sec. 3. Minnesota Statutes 2005 Supplement, section 270C.33, subdivision 4, is 
77.2 	amended to read:
77.3 		Subd. 4.Orders of assessment. (a) The commissioner may issue an order of 
77.4 	assessment in any of the following circumstances:
77.5 	(1) the commissioner determines that the correct amount of tax is different than that 
77.6 	assessed on a return filed with the commissioner;
77.7 	(2) no return has been filed and the commissioner determines the amount of tax 
77.8 	that should have been assessed;
77.9 	(3) the commissioner determines that the correct amount of a refundable credit 
77.10 	is different than the amount claimed by a taxpayer. For purposes of this subdivision, 
77.11 	"refundable credit" means a refund benefit or credit due a person that is unrelated to the 
77.12 	person's liability for a tax. "Refundable credit" does not include estimated tax payments 
77.13 	or withholding taxes. An assessment for an overpayment of a refundable credit may be 
77.14 	collected in the same manner as a tax collected by the commissioner; and
77.15 	(4) the commissioner determines the correct amount of a tax that the taxpayer is not 
77.16 	required to assess by a return filed with the commissioner.; and
77.17 	(5) the commissioner determines that a penalty other than a penalty for late payment 
77.18 	of tax, late filing of a return, or failure to pay tax by electronic means should be imposed, 
77.19 	and the penalty is not included on an order of assessment made under clauses (1) to (4).
77.20 	(b) An order of assessment must be in writing.
77.21 	(c) An order of assessment must be signed by the commissioner or a delegate, or 
77.22 	have their facsimile signature, if the change in tax, excluding penalties and interest, 
77.23 	exceeds $1,000.
77.24 	(d) An order of assessment is final when made but, as applicable, is reviewable 
77.25 	administratively under section 270C.35, or appealable to Tax Court under chapter 271.

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

77.27 	Sec. 4. Minnesota Statutes 2005 Supplement, section 270C.57, subdivision 3, is 
77.28 	amended to read:
77.29 		Subd. 3.Assessment; abatement; review. The commissioner may assess liability 
77.30 	against a successor business under this section within the time prescribed for collecting 
77.31 	the underlying sales and withholding taxes, interest, and penalties. The assessment is 
77.32 	presumed to be valid, and the burden is upon the successor to show it is incorrect or 
77.33 	invalid. An order assessing successor liability is reviewable administratively under section 
77.34 	270C.35 and is appealable to Tax Court under chapter 271. The commissioner may abate 
77.35 	an assessment if the successor's failure to give the notice required under this section is due 
78.1 	to reasonable cause. The procedural and appeal provisions under section 270C.34 apply 
78.2 	to abatement requests under this subdivision. Collection remedies available against the 
78.3 	transferring business are available against the successor from the date of assessment of 
78.4 	successor liability.

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

78.6 	Sec. 5. Minnesota Statutes 2005 Supplement, section 270C.67, subdivision 1, is 
78.7 	amended to read:
78.8 		Subdivision 1.Authority. If any tax payable to the commissioner or to the 
78.9 	department is not paid when due, such tax may be collected by the commissioner within 
78.10 	five years after the date of assessment of the tax, or if a lien has been filed, during the 
78.11 	period the lien is enforceable, or if the tax judgment has been filed, within the statutory 
78.12 	period of enforcement of a valid tax judgment, by a levy upon all property and rights 
78.13 	to property, including any property in the possession of law enforcement officials, of 
78.14 	the person liable for the payment or collection of such tax (except that which is exempt 
78.15 	from execution pursuant to section 550.37) or property on which there is a lien provided 
78.16 	in section 270C.63. For this purpose, "tax" includes any penalty, interest, and costs, 
78.17 	properly payable.

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

78.19 	Sec. 6. Minnesota Statutes 2005 Supplement, section 270C.67, is amended by adding a 
78.20 	subdivision to read:
78.21 		Subd. 1a.Exempt property.  A levy under this section is not enforceable against:
78.22 	(1) a purchaser with respect to tangible personal property purchased at retail in 
78.23 	the ordinary course of the seller's trade or business, unless at the time of purchase the 
78.24 	purchaser intends the purchase to or knows the purchase will hinder, evade, or defeat 
78.25 	the collection of a tax; or
78.26 	(2) the personal property listed as exempt in sections 550.37, 550.38, and 550.39.

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

78.28 	Sec. 7. Minnesota Statutes 2005 Supplement, section 271.12, is amended to read:
78.29 	271.12 WHEN ORDER EFFECTIVE.
78.30 	No order for refundment by the commissioner of revenue, the appropriate unit of 
78.31 	government, or the Tax Court shall take effect until the time for appeal therefrom or 
79.1 	review thereof by all parties entitled thereto has expired. Otherwise every order of the 
79.2 	commissioner, the appropriate unit of government, or the Tax Court shall take effect 
79.3 	immediately upon the filing thereof, and no appeal therefrom or review thereof shall 
79.4 	stay the execution thereof or extend the time for payment of any tax or other obligation 
79.5 	unless otherwise expressly provided by law; provided, that in case an order which has 
79.6 	been acted upon, in whole or in part, shall thereafter be set aside or modified upon appeal, 
79.7 	the determination upon appeal or review shall supersede the order appealed from and be 
79.8 	binding upon all parties affected thereby, and such adjustments as may be necessary 
79.9 	to give effect thereto shall be made accordingly; and provided further, the Tax Court 
79.10 	may enjoin enforcement of the order of the commissioner being appealed. If it be finally 
79.11 	determined upon such appeal or review that any person is entitled to refundment of any 
79.12 	amount which has been paid for a tax or other obligation, such amount, unless otherwise 
79.13 	provided by law, shall be paid to the person by the commissioner of finance, or other 
79.14 	proper officer, out of funds derived from taxes of the same kind, if available for the 
79.15 	purpose, or out of other available funds, if any, with interest at the rate specified in section 
79.16 	270C.405 from the date of payment of the tax, unless a different rate or date of accrual 
79.17 	of interest is otherwise provided by law, in which case such other rate or date of accrual 
79.18 	shall apply, upon certification by the commissioner of revenue, the appropriate unit of 
79.19 	government, the Tax Court or the Supreme Court.
79.20 	If, within 120 days after a decision of the Tax Court becomes final, the commissioner 
79.21 	does not refund the overpayment determined by the court, together with interest, on 
79.22 	motion by the taxpayer, the Tax Court shall have jurisdiction to order the refund of 
79.23 	the overpayment and interest, and to award reasonable litigation costs for bringing the 
79.24 	motion. If any tax, assessment, or other obligation be increased upon such appeal or 
79.25 	review, the increase shall be added to the original amount, and may be enforced and 
79.26 	collected therewith.

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

79.28 	Sec. 8. Minnesota Statutes 2005 Supplement, section 289A.121, subdivision 5, is 
79.29 	amended to read:
79.30 		Subd. 5.Reportable transactions. (a) For each taxable year in which a taxpayer 
79.31 	must make a return or a statement under Code of Federal Regulations, title 26, section 
79.32 	1.6011-4, for a reportable transaction, including a listed transaction, in which the taxpayer 
79.33 	participated in a taxable year for which a return is required under chapter 290, the taxpayer 
79.34 	must file a copy of the disclosure with the commissioner.
80.1 	(b) Any taxpayer that is a member of a unitary business group that includes any 
80.2 	person that must make a disclosure statement under Code of Federal Regulations, title 26, 
80.3 	section 1.6011-4, must file a disclosure under this subdivision.
80.4 	(c) Disclosure under this subdivision is required for any transaction entered into after 
80.5 	December 31, 2001, that the Internal Revenue Service determines is a listed transaction 
80.6 	at any time, and must be made in the manner prescribed by the commissioner. For 
80.7 	transactions in which the taxpayer participated for taxable years ending before December 
80.8 	31, 2005, disclosure must be made by the extended due date of the first return required 
80.9 	under chapter 290 that occurs 60 days or more after July 14, 2005. With respect to 
80.10 	transactions in which the taxpayer participated for taxable years ending on and after 
80.11 	December 31, 2005, disclosure must be made in the time and manner prescribed in Code 
80.12 	of Federal Regulations, title 26, section 1.6011-4(e).
80.13 	(d) Notwithstanding paragraphs (a) to (c), no disclosure is required for transactions 
80.14 	entered into after December 31, 2001, and before January 1, 2006, if (1) the taxpayer 
80.15 	has filed an amended income tax return which reverses the tax benefits of the tax 
80.16 	shelter transaction, or (2) as a result of a federal audit the Internal Revenue Service has 
80.17 	determined the tax treatment of the transaction and an amended return has been filed 
80.18 	to reflect the federal treatment.

80.19 	EFFECTIVE DATE. This section is effective for disclosures of reportable 
80.20 	transactions in which the taxpayer participated for taxable years ending before December 
80.21 	31, 2005.

80.22 	ARTICLE 9
80.23 	PUBLIC FINANCE

80.24 	Section 1. Minnesota Statutes 2004, section 103E.635, subdivision 7, is amended to 
80.25 	read:
80.26 		Subd. 7.Sale of definitive drainage bonds. The board must sell and negotiate the 
80.27 	definitive drainage bonds for at least their par value. The definitive bonds must be sold
80.28 	in accordance with section according to sections 475.56 and 475.60. 

80.29 	Sec. 2. Minnesota Statutes 2004, section 116A.20, subdivision 3, is amended to read:
80.30 		Subd. 3.How payable. The bonds shall be payable at such time or times, not to 
80.31 	exceed (1) 30 years from their date or (2) 40 years or the useful life of the asset, whichever 
80.32 	is less, if financed or guaranteed by the United States Department of Agriculture, and bear 
80.33 	such rate or rates of interest not exceeding eight percent per annum, payable annually or 
81.1 	semiannually as the county board shall by resolution determine. The years and amounts 
81.2 	of principal maturities shall be such as in the opinion of the county board are warranted 
81.3 	by the anticipated collections of the water and sewer improvement assessments without 
81.4 	regard to any limitations on such maturities imposed by section  475.54. 

81.5 	Sec. 3. Minnesota Statutes 2004, section 162.18, subdivision 1, is amended to read:
81.6 		Subdivision 1.Limitation on amount. Any city having a population of 5,000 or 
81.7 	more may in accordance with chapter 475, except as otherwise provided herein, issue and 
81.8 	sell its obligations for the purpose of establishing, locating, relocating, constructing, 
81.9 	reconstructing, and improving municipal state-aid streets therein. In the resolution 
81.10 	providing for the issuance of the obligations, the governing body of the municipality 
81.11 	shall irrevocably pledge and appropriate to the sinking fund from which the obligations 
81.12 	are payable, an amount of the moneys allotted or to be allotted to the municipality from 
81.13 	its account in the municipal state-aid street fund sufficient to pay the principal of and the 
81.14 	interest on the obligations as they respectively come due. The obligations shall be issued 
81.15 	in amounts and on terms such that the average annual amount of principal and interest due 
81.16 	in all subsequent calendar years on the obligations, including any similar obligations of 
81.17 	the municipality which are outstanding, shall not exceed 50 90  percent of the amount of 
81.18 	the last annual allotment preceding the bond issue received by the municipality from the 
81.19 	construction account in the municipal state-aid street fund; except that the municipality 
81.20 	may issue general obligation bonds for said purpose, to be purchased by it for the account 
81.21 	of any one or more of its own funds, including debt redemption funds, in which case such 
81.22 	bonds shall mature in not exceeding five years from their respective dates of issue, in 
81.23 	principal amounts not exceeding in any calendar year, with the principal amount of all 
81.24 	other municipal state-aid street obligations maturing in such year, the total amount of the 
81.25 	last annual allotment preceding the bond issue received by the municipality from the 
81.26 	construction account in the municipal state-aid street fund. All interest on the obligations 
81.27 	shall be paid out of the municipality's normal maintenance account in the municipal 
81.28 	state-aid street fund. Any such obligations may be made general obligations, but if 
81.29 	moneys of the municipality other than moneys received from the municipal state-aid street 
81.30 	fund, are used for payment of the obligations, the moneys so used shall be restored to the 
81.31 	appropriate fund from the moneys next received by the municipality from the construction 
81.32 	or maintenance account in the municipal state-aid street fund which are not required to be 
81.33 	paid into a sinking fund for obligations.

81.34 	Sec. 4. Minnesota Statutes 2004, section 162.181, subdivision 1, is amended to read:
82.1 		Subdivision 1.Limitation on amount. Except as otherwise provided herein, any 
82.2 	county may, in accordance with chapter 475, issue and sell its obligations, the total 
82.3 	amount thereof not to exceed the total of the preceding two years state-aid allotments, 
82.4 	for the purpose of establishing, locating, relocating, constructing, reconstructing, and 
82.5 	improving county state-aid highways and constructing buildings and other facilities for 
82.6 	maintaining county state-aid highways. In the resolution providing for the issuance of the 
82.7 	obligations, the county board of the county shall irrevocably pledge and appropriate to the 
82.8 	sinking fund from which the obligations are payable, an amount of the money allotted 
82.9 	or to be allotted to the county from its account in the county state-aid highway fund 
82.10 	sufficient to pay the principal of and the interest on the obligations as they respectively 
82.11 	come due. The obligations shall be issued in the amounts and on terms such that the 
82.12 	amount of principal and interest due in any calendar year on the obligations, including 
82.13 	any similar obligations of the county which are outstanding, shall not exceed 50 90 
82.14 	 percent of the amount of the last annual allotment preceding the bond issue received 
82.15 	by the county from the construction account in the county state-aid highway fund. All 
82.16 	interest on the obligations shall be paid out of the county's normal maintenance account 
82.17 	in the county state-aid highway fund. The obligations may be made general obligations, 
82.18 	but if money of the county other than money received from the county state-aid highway 
82.19 	fund, is used for payment of the obligations, the money so used shall be restored to the 
82.20 	appropriate fund from the money next received by the county from the construction or 
82.21 	maintenance account in the county state-aid highway fund which is not required to be 
82.22 	paid into a sinking fund for obligations.

82.23 	Sec. 5. Minnesota Statutes 2004, section 273.032, is amended to read:
82.24 	273.032 MARKET VALUE DEFINITION.
82.25 	For the purpose of determining any property tax levy limitation based on market 
82.26 	value, any net debt limit based on market value, any limit on the issuance of bonds, 
82.27 	certificates of indebtedness, or capital notes based on market value, any qualification 
82.28 	to receive state aid based on market value, or any state aid amount based on market 
82.29 	value, the terms "market value," "taxable market value," and "market valuation," whether 
82.30 	equalized or unequalized, mean the total taxable market value of property within the local 
82.31 	unit of government before any adjustments for tax increment, fiscal disparity, powerline 
82.32 	credit, or wind energy values, but after the limited market adjustments under section  
82.33 	273.11, subdivision 1a, and after the market value exclusions of certain improvements to 
82.34 	homestead property under section  273.11, subdivision 16. Unless otherwise provided, 
83.1 	"market value," "taxable market value," and "market valuation" for purposes of this 
83.2 	paragraph,  refer to the taxable market value for the previous assessment year. 
83.3 	For the purpose of determining any net debt limit based on market value, or any limit 
83.4 	on the issuance of bonds, certificates of indebtedness, or capital notes based on market 
83.5 	value, the terms "market value," "taxable market value," and "market valuation," whether 
83.6 	equalized or unequalized, mean the total taxable market value of property within the local 
83.7 	unit of government before any adjustments for tax increment, fiscal disparity, powerline 
83.8 	credit, or wind energy values, but after the limited market adjustments under section 
83.9 	273.11, subdivision 1a, and after the market value exclusions of certain improvements to 
83.10 	homestead property under section 273.11, subdivision 16. Unless otherwise provided, 
83.11 	"market value," "taxable market value," and "market valuation" for purposes of this 
83.12 	paragraph, mean the taxable market value as last finally equalized.

83.13 	Sec. 6. Minnesota Statutes 2004, section 373.45, subdivision 1, is amended to read:
83.14 		Subdivision 1.Definitions. (a) As used in this section, the following terms have 
83.15 	the meanings given.
83.16 	(b) "Authority" means the Minnesota Public Facilities Authority.
83.17 	(c) "Commissioner" means the commissioner of finance.
83.18 	(d) "Debt obligation" means a general obligation bond issued by a county, a bond to 
83.19 	which the general obligation of a county is pledged under section 469.034, subdivision 2, 
83.20 	or a bond payable from a county lease obligation under section  641.24, to provide funds 
83.21 	for the construction of: 
83.22 	(1) jails;
83.23 	(2) correctional facilities;
83.24 	(3) law enforcement facilities;
83.25 	(4) social services and human services facilities; or
83.26 	(5) solid waste facilities; or
83.27 	(6) qualified housing development projects as defined in section 469.034, subdivision 
83.28 	2.

83.29 	Sec. 7. Minnesota Statutes 2004, section 469.035, is amended to read:
83.30 	469.035 MANNER OF BOND ISSUANCE; SALE.
83.31 	Bonds of an authority shall be authorized by its resolution. They may be issued in 
83.32 	one or more series and shall bear the date or dates, mature at the time or times, bear interest 
83.33 	at the rate or rates, be in the denomination or denominations, be in the form either coupon 
83.34 	or registered, carry the conversion or registration privileges, have the rank or priority, be 
84.1 	executed in the manner, be payable in the medium of payment at the place or places, and 
84.2 	be subject to the terms of redemption with or without premium, as the resolution, its trust 
84.3 	indenture or mortgage provides. The bonds may be sold at public or private sale at not 
84.4 	less than par in the manner and for the price that the authority determines to be in the best 
84.5 	interest of the authority. Notwithstanding any other law, bonds issued pursuant to sections  
84.6 	469.001 to  469.047 shall be fully negotiable. In any suit, action, or proceedings involving 
84.7 	the validity or enforceability of any bonds of an authority or the security for the bonds, 
84.8 	any bond reciting in substance that it has been issued by the authority to aid in financing a 
84.9 	project shall be conclusively deemed to have been issued for that purpose, and the project 
84.10 	shall be conclusively deemed to have been planned, located, and carried out in accordance 
84.11 	with the purposes and provisions of sections  469.001 to  469.047. 
84.12 	In cities of the first class, the governing body of the city must approve all notes 
84.13 	executed with the Minnesota Housing Finance Agency pursuant to this section if the 
84.14 	interest rate on the note exceeds seven percent.

84.15 	Sec. 8. Minnesota Statutes 2004, section 469.103, subdivision 2, is amended to read:
84.16 		Subd. 2.Form. The bonds of each series issued by the authority under this section 
84.17 	shall bear interest at a rate or rates, shall mature at the time or times within 20 30  years 
84.18 	from the date of issuance, and shall be in the form, whether payable to bearer, registrable 
84.19 	as to principal, or fully registrable, as determined by the authority. Section  469.102, 
84.20 	subdivision 6, applies to all bonds issued under this section, and the bonds and their 
84.21 	coupons, if any, when payable to bearer, shall be negotiable instruments. 

84.22 	Sec. 9. Minnesota Statutes 2005 Supplement, section 469.178, subdivision 7, is 
84.23 	amended to read:
84.24 		Subd. 7.Interfund loans. The authority or municipality may advance or loan 
84.25 	money to finance expenditures under section 469.176, subdivision 4, from its general 
84.26 	fund or any other fund under which it has legal authority to do so. The loan or advance 
84.27 	must be authorized, by resolution of the governing body or of the authority, whichever 
84.28 	has jurisdiction over the fund from which the advance or loan is made, before money 
84.29 	is transferred, advanced, or spent, whichever is earliest. The resolution may generally 
84.30 	grant to the authority the power to make interfund loans under one or more tax increment 
84.31 	financing plans or for one or more districts. The terms and conditions for repayment of 
84.32 	the loan must be provided in writing and include, at a minimum, the principal amount, 
84.33 	the interest rate, and maximum term. The maximum rate of interest permitted to be 
84.34 	charged is limited to the greater of the rates specified under section 270C.40 or 549.09
85.1 	as of the date or advance is made, unless the written agreement states that the maximum 
85.2 	interest rate will fluctuate as the interest rates specified under section 270C.40 or 549.09
85.3 	are from time to time adjusted.

85.4 	Sec. 10. Minnesota Statutes 2004, section 474A.062, is amended to read:
85.5 	474A.062 HESO 120-DAY ISSUANCE EXEMPTION.
85.6 	The Minnesota Higher Education Services Office is exempt from the 120-day 
85.7 	issuance requirements in this chapter and may carry forward allocations for student loan 
85.8 	bonds into three one  successive calendar years year, subject to carryforward notice 
85.9 	requirements of section  474A.131, subdivision 2. The maximum cumulative carryforward 
85.10 	is limited to $25,000,000.

85.11 	EFFECTIVE DATE. This section is effective for bond allocations made in 2006 
85.12 	and thereafter.

85.13 	Sec. 11. CARVER COUNTY AUTHORITY NAME CHANGE.
 85.14 	The Carver County Housing and Redevelopment Authority created under Laws 
85.15 	1980, chapter 482, is renamed the Carver County Community Development Agency.

85.16 	Sec. 12. CITY OF RAMSEY; GENERAL OBLIGATION BONDS.
 85.17 	The governing body of the city of Ramsey or a development authority established 
85.18 	by the city may issue general obligation bonds to pay for costs related to a project in an 
85.19 	area within the city consisting of the property defined as outlot L, Ramsey Town Center 
85.20 	Addition and lot 2, block 1, Ramsey Town Center Addition. Bonds issued under this 
85.21 	section are not subject to the net debt limit of the city under Minnesota Statutes, section 
85.22 	475.53, or any other law or charter provision.

85.23 	Sec. 13. UNIFIED POOL; OFFICE OF HIGHER EDUCATION; TEMPORARY 
85.24 	PRIORITY.
 85.25 	Notwithstanding Minnesota Statutes, section 474A.091, subdivision 3, paragraph 
85.26 	(b), prior to October 1, 2006, only the following applications shall be awarded allocations 
85.27 	from the unified pool. Allocations shall be awarded in the following order of priority:
85.28 	(1) applications for student loan bonds issued by or on behalf of the Office of 
85.29 	Higher Education;
85.30 	(2) applications for residential rental project bonds;
85.31 	(3) applications for small issue bonds for manufacturing projects; and
86.1 	(4) applications for small issue bonds for agricultural development bond loan 
86.2 	projects.

86.3 	EFFECTIVE DATE. This section is effective July 1, 2006.

86.4 	Sec. 14. UNIFIED POOL; TEMPORARY PRIORITY CHANGE.
 86.5 	Notwithstanding Minnesota Statutes, section 474A.091, subdivision 3, paragraph 
86.6 	(c), on the first Monday in October 2006, through the last Monday in November 2006, 
86.7 	allocations shall be awarded from the unified pool in the following order of priority:
86.8 	(1) applications for mortgage bonds;
86.9 	(2) applications for public facility projects funded by public facility bonds;
86.10 	(3) applications for small issue bonds for manufacturing projects;
86.11 	(4) applications for small issue bonds for agricultural development bond loan 
86.12 	projects;
86.13 	(5) applications for residential rental project bonds;
86.14 	(6) applications for enterprise zone facility bonds;
86.15 	(7) applications for governmental bonds; and
86.16 	(8) applications for redevelopment bonds.

86.17 	EFFECTIVE DATE. This section is effective July 1, 2006.

86.18 	Sec. 15. UNIFIED POOL; OFFICE OF HIGHER EDUCATION TOTAL 
86.19 	ALLOCATION.
 86.20 	Notwithstanding Minnesota Statutes, section 474A.091, subdivision 3, paragraph (i), 
86.21 	the total amount of allocations for student loan bonds from the unified pool in calendar 
86.22 	year 2006 may not exceed 50 percent of the total in the unified pool on the day after the 
86.23 	last Monday in July, 2006.

86.24 	EFFECTIVE DATE. This section is effective July 1, 2006.

86.25 	ARTICLE 10
86.26 	TAX INCREMENT FINANCING

86.27 	Section 1. Minnesota Statutes 2005 Supplement, section 469.175, subdivision 2, 
86.28 	is amended to read:
86.29 		Subd. 2.Consultations; comment and filing. (a) Before formation of a tax 
86.30 	increment financing district, the authority shall provide the county auditor and clerk of 
86.31 	the school board with the proposed tax increment financing plan for the district and the 
87.1 	authority's estimate of the fiscal and economic implications of the proposed tax increment 
87.2 	financing district. The authority must provide the proposed tax increment financing plan 
87.3 	and the information on the fiscal and economic implications of the plan to the county 
87.4 	auditor and the clerk of the school district board at least 30 days before the public hearing 
87.5 	required by subdivision 3. The information on the fiscal and economic implications may 
87.6 	be included in or as part of the tax increment financing plan. The county auditor and 
87.7 	clerk of the school board shall provide copies to the members of the boards, as directed 
87.8 	by their respective boards. The 30-day requirement is waived if the boards of the county 
87.9 	and school district submit written comments on the proposal and any modification of the 
87.10 	proposal to the authority after receipt of the information.
87.11 	(b) For purposes of this subdivision, "fiscal and economic implications of the 
87.12 	proposed tax increment financing district" includes:
87.13 	(1) an estimate of the total amount of tax increment that will be generated over the 
87.14 	life of the district;
87.15 	(2) a description of the probable impact of the district on city-provided services such 
87.16 	as police and fire protection, public infrastructure, and borrowing costs the impact of 
87.17 	any general obligation tax increment bonds attributable to the district upon the ability to 
87.18 	issue other debt for general fund purposes;
87.19 	(3) the estimated amount of tax increments over the life of the district that would 
87.20 	be attributable to school district levies, assuming the school district's share of the total 
87.21 	local tax rate for all taxing jurisdictions remained the same;
87.22 	(4) the estimated amount of tax increments over the life of the district that would be 
87.23 	attributable to county levies, assuming the county's share of the total local tax rate for all 
87.24 	taxing jurisdictions remained the same; and
87.25 	(5) any additional information regarding the size, timing, or type of development in 
87.26 	the district requested by the county or the school district that would enable it to determine 
87.27 	additional costs that will accrue to it due to the development proposed for the district.
87.28 	If a county or school district has not adopted standard questions in a written policy on 
87.29 	information requested for fiscal and economic implications, a county or school district 
87.30 	must request additional information no later than 15 days after receipt of the tax increment 
87.31 	financing plan and the request does not require an additional 30 days of notice before 
87.32 	the public hearing.

87.33 	EFFECTIVE DATE. This section is effective for proposed tax increment financing 
87.34 	plans provided after June 30, 2006.

87.35 	Sec. 2. Minnesota Statutes 2004, section 469.175, subdivision 4, is amended to read:
88.1 		Subd. 4.Modification of plan. (a) A tax increment financing plan may be modified 
88.2 	by an authority.
88.3 	(b) The authority may make the following modifications only upon the notice and 
88.4 	after the discussion, public hearing, and findings required for approval of the original plan:
88.5 	(1) any reduction or enlargement of geographic area of the project or tax increment 
88.6 	financing district that does not meet the requirements of paragraph (e);
88.7 	(2) increase in amount of bonded indebtedness to be incurred;
88.8 	(3) a determination to capitalize interest on the debt if that determination was not a 
88.9 	part of the original plan, or to increase or decrease the amount of interest on the debt to 
88.10 	be capitalized;
88.11 	(4) increase in the portion of the captured net tax capacity to be retained by the 
88.12 	authority;
88.13 	(5) increase in the estimate of the cost of the project, including administrative 
88.14 	expenses, that will be paid or financed with tax increment from the district; or
88.15 	(6) designation of additional property to be acquired by the authority.
88.16 	(c) If an authority changes the type of district to another type of district, this change 
88.17 	is not a modification but requires the authority to follow the procedure set forth in sections  
88.18 	469.174 to  469.179 for adoption of a new plan, including certification of the net tax 
88.19 	capacity of the district by the county auditor. 
88.20 	(d) If a redevelopment district or a renewal and renovation district is enlarged, 
88.21 	the reasons and supporting facts for the determination that the addition to the district 
88.22 	meets the criteria of section  469.174, subdivision 10, paragraph (a), clauses (1) and (2), 
88.23 	or subdivision 10a, must be documented. 
88.24 	(e) The requirements of paragraph (b) do not apply if (1) the only modification is 
88.25 	elimination of parcels from the project or district and (2)(A) the current net tax capacity 
88.26 	of the parcels eliminated from the district equals or exceeds the net tax capacity of 
88.27 	those parcels in the district's original net tax capacity or (B) the authority agrees that, 
88.28 	notwithstanding section  469.177, subdivision 1, the original net tax capacity will be 
88.29 	reduced by no more than the current net tax capacity of the parcels eliminated from the 
88.30 	district. The authority must notify the county auditor of any modification that reduces or 
88.31 	enlarges the geographic area of a district or a project area. 
88.32 	(f) The geographic area of a tax increment financing district may be reduced, but 
88.33 	shall not be enlarged after five years following the date of certification of the original net 
88.34 	tax capacity by the county auditor or after August 1, 1984, for tax increment financing 
88.35 	districts authorized prior to August 1, 1979.

89.1 	EFFECTIVE DATE. This section is effective for all districts, regardless of when 
89.2 	the request for certification was made, and applies to plan amendments adopted after the 
89.3 	day following final enactment.

89.4 	Sec. 3. Minnesota Statutes 2005 Supplement, section 469.175, subdivision 5, is 
89.5 	amended to read:
89.6 		Subd. 5.Annual disclosure. An annual statement showing for each district the 
89.7 	information required to be reported under subdivision 6, paragraph (c), clauses (1), (2), 
89.8 	(3), (11), (12), (18), and (19); the amounts of tax increment received and expended in the 
89.9 	reporting period; and any additional information the authority deems necessary must be 
89.10 	published in a newspaper of general circulation in the municipality that approved the 
89.11 	tax increment financing plan. The annual statement must inform readers that additional 
89.12 	information regarding each district may be obtained from the authority, and must explain 
89.13 	how the additional information may be requested. The authority must publish the annual 
89.14 	statement for a year no later than August 15 of the next year. The authority must identify 
89.15 	the newspaper of general circulation in the municipality to which the annual statement has 
89.16 	been or will be submitted for publication and provide a copy of the annual statement to the 
89.17 	county board, the county auditor, the school board, the state auditor, and, if the authority is 
89.18 	other than the municipality, the governing body of the municipality on or before August 
89.19 	1 of the year in which the statement must be published.
89.20 	The disclosure requirements imposed by this subdivision apply to districts certified 
89.21 	before, on, or after August 1, 1979.

89.22 	EFFECTIVE DATE. This section is effective for disclosures required to be 
89.23 	provided after June 30, 2006.

89.24 	Sec. 4. Minnesota Statutes 2004, section 469.176, subdivision 1, is amended to read:
89.25 		Subdivision 1.Duration of tax increment financing districts. (a) Subject to the 
89.26 	limitations contained in subdivisions 1a to 1f, any tax increment financing district as to 
89.27 	which bonds are outstanding, payment for which the tax increment and other revenues 
89.28 	have been pledged, shall remain in existence at least as long as the bonds continue to be 
89.29 	outstanding. The municipality may, at the time of approval of the initial tax increment 
89.30 	financing plan, provide for a shorter maximum duration limit than specified in subdivisions 
89.31 	1a to 1f. The specified limit applies in place of the otherwise applicable limit, unless the 
89.32 	authority modifies the plan following the procedures under section 469.175, subdivision 4, 
89.33 	paragraph (b).
90.1 	(b) The tax increment pledged to the payment of the bonds and interest thereon may 
90.2 	be discharged and the tax increment financing district may be terminated if sufficient funds 
90.3 	have been irrevocably deposited in the debt service fund or other escrow account held in 
90.4 	trust for all outstanding bonds to provide for the payment of the bonds at maturity or date 
90.5 	of redemption and interest thereon to the maturity or redemption date.
90.6 	(c) For bonds issued pursuant to section  469.178, subdivisions 2 and 3, the full 
90.7 	faith and credit and any taxing powers of the municipality or authority are pledged to the 
90.8 	payment of the bonds until the principal of and interest on the bonds has been paid in full. 

90.9 	EFFECTIVE DATE. This section is effective for all districts, regardless of when 
90.10 	the request for certification was made, and applies to plan amendments adopted after the 
90.11 	day following final enactment.

90.12 	Sec. 5. Minnesota Statutes 2005 Supplement, section 469.1763, subdivision 2, is 
90.13 	amended to read:
90.14 		Subd. 2.Expenditures outside district. (a) For each tax increment financing 
90.15 	district, an amount equal to at least 75 percent of the total revenue derived from tax 
90.16 	increments paid by properties in the district must be expended on activities in the district 
90.17 	or to pay bonds, to the extent that the proceeds of the bonds were used to finance activities 
90.18 	in the district or to pay, or secure payment of, debt service on credit enhanced bonds. 
90.19 	For districts, other than redevelopment districts for which the request for certification 
90.20 	was made after June 30, 1995, the in-district percentage for purposes of the preceding 
90.21 	sentence is 80 percent. Not more than 25 percent of the total revenue derived from tax 
90.22 	increments paid by properties in the district may be expended, through a development fund 
90.23 	or otherwise, on activities outside of the district but within the defined geographic area of 
90.24 	the project except to pay, or secure payment of, debt service on credit enhanced bonds. 
90.25 	For districts, other than redevelopment districts for which the request for certification was 
90.26 	made after June 30, 1995, the pooling percentage for purposes of the preceding sentence is 
90.27 	20 percent. The revenue derived from tax increments for the district that are expended on 
90.28 	costs under section 469.176, subdivision 4h, paragraph (b), may be deducted first before 
90.29 	calculating the percentages that must be expended within and without the district.
90.30 	(b) In the case of a housing district, a housing project, as defined in section 469.174, 
90.31 	subdivision 11, is an activity in the district.
90.32 	(c) All administrative expenses are for activities outside of the district, except that 
90.33 	if the only expenses for activities outside of the district under this subdivision are for 
90.34 	the purposes described in paragraph (d), administrative expenses will be considered as 
90.35 	expenditures for activities in the district.
91.1 	(d) The authority may elect, in the tax increment financing plan for the district, 
91.2 	to increase by up to ten percentage points the permitted amount of expenditures for 
91.3 	activities located outside the geographic area of the district under paragraph (a). As 
91.4 	permitted by section 469.176, subdivision 4k, the expenditures, including the permitted 
91.5 	expenditures under paragraph (a), need not be made within the geographic area of the 
91.6 	project. Expenditures that meet the requirements of this paragraph are legally permitted 
91.7 	expenditures of the district, notwithstanding section 469.176, subdivisions 4b, 4c, and 4j. 
91.8 	To qualify for the increase under this paragraph, the expenditures must:
91.9 	(1) be used exclusively to assist housing that meets the requirement for a qualified 
91.10 	low-income building, as that term is used in section 42 of the Internal Revenue Code;
91.11 	(2) not exceed the qualified basis of the housing, as defined under section 42(c) of 
91.12 	the Internal Revenue Code, less the amount of any credit allowed under section 42 of 
91.13 	the Internal Revenue Code; and
91.14 	(3) be used to:
91.15 	(i) acquire and prepare the site of the housing;
91.16 	(ii) acquire, construct, or rehabilitate the housing; or
91.17 	(iii) make public improvements directly related to the housing.
91.18 	(e) For a district created within a biotechnology and health sciences industry zone 
91.19 	as defined in section 469.330, subdivision 6, or for an existing district located within 
91.20 	such a zone,  tax increment derived from such a district may be expended outside of 
91.21 	the district but within the zone only for expenditures required for the construction of 
91.22 	public infrastructure necessary to support the activities of the zone. Public infrastructure 
91.23 	expenditures are considered as expenditures for activities within the district.

91.24 	EFFECTIVE DATE. This section applies to all districts, regardless of when the 
91.25 	request for certification was made.

91.26 	Sec. 6. Minnesota Statutes 2004, section 469.1763, subdivision 3, is amended to read:
91.27 		Subd. 3.Five-year rule. (a) Revenues derived from tax increments are considered 
91.28 	to have been expended on an activity within the district under subdivision 2 only if one 
91.29 	of the following occurs:
91.30 	(1) before or within five years after certification of the district, the revenues are 
91.31 	actually paid to a third party with respect to the activity;
91.32 	(2) bonds, the proceeds of which must be used to finance the activity, are issued and 
91.33 	sold to a third party before or within five years after certification, the revenues are spent 
91.34 	to repay the bonds, and the proceeds of the bonds either are, on the date of issuance, 
91.35 	reasonably expected to be spent before the end of the later of (i) the five-year period, or 
92.1 	(ii) a reasonable temporary period within the meaning of the use of that term under section 
92.2 	148(c)(1) of the Internal Revenue Code, or are deposited in a reasonably required reserve 
92.3 	or replacement fund;
92.4 	(3) binding contracts with a third party are entered into for performance of the 
92.5 	activity before or within five years after certification of the district and the revenues are 
92.6 	spent under the contractual obligation;
92.7 	(4) costs with respect to the activity are paid before or within five years after 
92.8 	certification of the district and the revenues are spent to reimburse a party for payment 
92.9 	of the costs, including interest on unreimbursed costs; or
92.10 	(5) expenditures are made for housing purposes as permitted by subdivision 2, 
92.11 	paragraphparagraphs (b) and (d), or for public infrastructure purposes within a zone as 
92.12 	permitted by subdivision 2, paragraph (e).
92.13 	(b) For purposes of this subdivision, bonds include subsequent refunding bonds if 
92.14 	the original refunded bonds meet the requirements of paragraph (a), clause (2).

92.15 	Sec. 7. Minnesota Statutes 2004, section 469.1763, subdivision 4, is amended to read:
92.16 		Subd. 4.Use of revenues for decertification. (a) In each year beginning with the 
92.17 	sixth year following certification of the district, if the applicable in-district percent of the 
92.18 	revenues derived from tax increments paid by properties in the district exceeds the amount 
92.19 	of expenditures that have been made for costs permitted under subdivision 3, an amount 
92.20 	equal to the difference between the in-district percent of the revenues derived from tax 
92.21 	increments paid by properties in the district and the amount of expenditures that have 
92.22 	been made for costs permitted under subdivision 3 must be used and only used to pay or 
92.23 	defease the following or be set aside to pay the following:
92.24 	(1) outstanding bonds, as defined in subdivision 3, paragraphs (a), clause (2), and (b);
92.25 	(2) contracts, as defined in subdivision 3, paragraph (a), clauses (3) and (4); or
92.26 	(3) credit enhanced bonds to which the revenues derived from tax increments are 
92.27 	pledged, but only to the extent that revenues of the district for which the credit enhanced 
92.28 	bonds were issued are insufficient to pay the bonds and to the extent that the increments 
92.29 	from the applicable pooling percent share for the district are insufficient; or
92.30 	(4) the amount provided by the tax increment financing plan to be paid under 
92.31 	subdivision 2, paragraphs (b), (d), and (e).
92.32 	(b) The district must be decertified and the pledge of tax increment discharged 
92.33 	when the outstanding bonds have been defeased and when sufficient money has been set 
92.34 	aside to pay, based on the increment to be collected through the end of the calendar year, 
92.35 	the following amounts:
93.1 	(1) contractual obligations as defined in subdivision 3, paragraph (a), clauses (3) and 
93.2 	(4), the district must be decertified and the pledge of tax increment discharged.;
93.3 	(2) the amount specified in the tax increment financing plan for activities qualifying 
93.4 	under subdivision 2, paragraph (b), that have not been funded with the proceeds of bonds 
93.5 	qualifying under paragraph (a), clause (1); and
93.6 	(3) the additional expenditures permitted by the tax increment financing plan for 
93.7 	housing activities under an election under subdivision 2, paragraph (d), that have not been 
93.8 	funded with the proceeds of bonds qualifying under paragraph (a), clause (1).

93.9 	EFFECTIVE DATE. This section is effective for districts for which the request for 
93.10 	certification was made after April 30, 1990.

93.11 	Sec. 8. Minnesota Statutes 2005 Supplement, section 469.1763, subdivision 6, is 
93.12 	amended to read:
93.13 		Subd. 6.Pooling permitted for deficits. (a) This subdivision applies only to 
93.14 	districts for which the request for certification was made before August 1, 2001, and 
93.15 	without regard to whether the request for certification was made prior to August 1, 1979.
93.16 	(b) The municipality for the district may transfer available increments from another 
93.17 	tax increment financing district located in the municipality, if the transfer is necessary to 
93.18 	eliminate a deficit in the district to which the increments are transferred. The municipality 
93.19 	may transfer increments as provided by this subdivision without regard to whether the 
93.20 	transfer or expenditure is authorized by the tax increment financing plan for the district 
93.21 	from which the transfer is made. A deficit in the district for purposes of this subdivision 
93.22 	means the lesser of the following two amounts:
93.23 	(1)(i) the amount due during the calendar year to pay preexisting obligations of 
93.24 	the district; minus
93.25 	(ii) the total increments collected or to be collected from properties located within 
93.26 	the district that are available for the calendar year including amounts collected in prior 
93.27 	years that are currently available; plus
93.28 	(iii) total increments from properties located in other districts in the municipality 
93.29 	including amounts collected in prior years that are available to be used to meet the 
93.30 	district's obligations under this section, excluding this subdivision, or other provisions of 
93.31 	law (but excluding a special tax under section 469.1791 and the grant program under Laws 
93.32 	1997, chapter 231, article 1, section 19, or Laws 2001, First Special Session chapter 5); or
93.33 	(2) the reduction in increments collected from properties located in the district for 
93.34 	the calendar year as a result of the changes in class rates in Laws 1997, chapter 231, article 
93.35 	1; Laws 1998, chapter 389, article 2; and Laws 1999, chapter 243, and Laws 2001, First 
94.1 	Special Session chapter 5, or the elimination of the general education tax levy under 
94.2 	Laws 2001, First Special Session chapter 5.
94.3 	The authority may compute the deficit amount under clause (1) only (without regard 
94.4 	to the limit under clause (2)) if the authority makes an irrevocable commitment, by 
94.5 	resolution, to use increments from the district to which increments are to be transferred and 
94.6 	any transferred increments are only used to pay preexisting obligations and administrative 
94.7 	expenses for the district that are required to be paid under section 469.176, subdivision 
94.8 	4h, paragraph (a).
94.9 	(c) A preexisting obligation means:
94.10 	(1) bonds issued and sold before August 1, 2001, or bonds issued pursuant to a 
94.11 	binding contract requiring the issuance of bonds entered into before July 1, 2001, and 
94.12 	bonds issued to refund such bonds or to reimburse expenditures made in conjunction with 
94.13 	a signed contractual agreement entered into before August 1, 2001, to the extent that the 
94.14 	bonds are secured by a pledge of increments from the tax increment financing district; and
94.15 	(2) binding contracts entered into before August 1, 2001, to the extent that the 
94.16 	contracts require payments secured by a pledge of increments from the tax increment 
94.17 	financing district.
94.18 	(d) The municipality may require a development authority, other than a seaway port 
94.19 	authority, to transfer available increments including amounts collected in prior years that 
94.20 	are currently available for any of its tax increment financing districts in the municipality to 
94.21 	make up an insufficiency in another district in the municipality, regardless of whether the 
94.22 	district was established by the development authority or another development authority. 
94.23 	This authority applies notwithstanding any law to the contrary, but applies only to a 
94.24 	development authority that:
94.25 	(1) was established by the municipality; or
94.26 	(2) the governing body of which is appointed, in whole or part, by the municipality 
94.27 	or an officer of the municipality or which consists, in whole or part, of members of 
94.28 	the governing body of the municipality. The municipality may use this authority only 
94.29 	after it has first used all available increments of the receiving development authority to 
94.30 	eliminate the insufficiency and exercised any permitted action under section 469.1792, 
94.31 	subdivision 3, for preexisting districts of the receiving development authority to eliminate 
94.32 	the insufficiency.
94.33 	(e) The authority under this subdivision to spend tax increments outside of the area 
94.34 	of the district from which the tax increments were collected:
94.35 	(1) is an exception to the restrictions under section 469.176, subdivisions 4b, 4c, 
94.36 	4d, 4e, 4i, and 4j; the expenditure limits under section 469.176, subdivision 1c; and the 
95.1 	other provisions of this section; and the percentage restrictions under subdivision 2 must 
95.2 	be calculated after deducting increments spent under this subdivision from the total 
95.3 	increments for the district; and
95.4 	(2) applies notwithstanding the provisions of the Tax Increment Financing Act in 
95.5 	effect for districts for which the request for certification was made before June 30, 1982, 
95.6 	or any other law to the contrary.
95.7 	(f) If a preexisting obligation requires the development authority to pay an amount 
95.8 	that is limited to the increment from the district or a specific development within the 
95.9 	district and if the obligation requires paying a higher amount to the extent that increments 
95.10 	are available, the municipality may determine that the amount due under the preexisting 
95.11 	obligation equals the higher amount and may authorize the transfer of increments 
95.12 	under this subdivision to pay up to the higher amount. The existence of a guarantee of 
95.13 	obligations by the individual or entity that would receive the payment under this paragraph 
95.14 	is disregarded in the determination of eligibility to pool under this subdivision. The 
95.15 	authority to transfer increments under this paragraph may only be used to the extent 
95.16 	that the payment of all other preexisting obligations in the municipality due during the 
95.17 	calendar year have been satisfied.
95.18 	(g) For transfers of increments made in calendar year 2005 and later, the reduction in 
95.19 	increments as a result of the elimination of the general education tax levy for purposes of 
95.20 	paragraph (b), clause (2), for a taxes payable year equals the general education tax rate 
95.21 	for the school district under Minnesota Statutes 2000, section 273.1382, subdivision 1, 
95.22 	for taxes payable in 2001, multiplied by the captured tax capacity of the district for the 
95.23 	current taxes payable year.

95.24 	EFFECTIVE DATE. This section is effective for all districts, regardless of when 
95.25 	the request for certification was made, and applies retroactively to any transfer made 
95.26 	under subdivision 6.

95.27 	Sec. 9. Minnesota Statutes 2005 Supplement, section 469.177, subdivision 1, is 
95.28 	amended to read:
95.29 		Subdivision 1.Original net tax capacity. (a) Upon or after adoption of a tax 
95.30 	increment financing plan, the auditor of any county in which the district is situated shall, 
95.31 	upon request of the authority, certify the original net tax capacity of the tax increment 
95.32 	financing district and that portion of the district overlying any subdistrict as described in 
95.33 	the tax increment financing plan and shall certify in each year thereafter the amount by 
95.34 	which the original net tax capacity has increased or decreased as a result of a change in tax 
96.1 	exempt status of property within the district and any subdistrict, reduction or enlargement 
96.2 	of the district or changes pursuant to subdivision 4.
96.3 	(b) If the classification under section 273.13 of property located in a district changes 
96.4 	to a classification that has a different assessment ratio, the original net tax capacity of that 
96.5 	property must be redetermined at the time when its use is changed as if the property had 
96.6 	originally been classified in the same class in which it is classified after its use is changed.
96.7 	(c) The amount to be added to the original net tax capacity of the district as a result of 
96.8 	previously tax exempt real property within the district becoming taxable equals the net tax 
96.9 	capacity of the real property as most recently assessed pursuant to section 273.18 or, if that 
96.10 	assessment was made more than one year prior to the date of title transfer rendering the 
96.11 	property taxable, the net tax capacity assessed by the assessor at the time of the transfer. 
96.12 	If improvements are made to tax exempt property after certification of the municipality 
96.13 	approves the district and before the parcel becomes taxable, the assessor shall, at the 
96.14 	request of the authority, separately assess the estimated market value of the improvements. 
96.15 	If the property becomes taxable, the county auditor shall add to original net tax capacity, 
96.16 	the net tax capacity of the parcel, excluding the separately assessed improvements. If 
96.17 	substantial taxable improvements were made to a parcel after certification of the district 
96.18 	and if the property later becomes tax exempt, in whole or part, as a result of the authority 
96.19 	acquiring the property through foreclosure or exercise of remedies under a lease or other 
96.20 	revenue agreement or as a result of tax forfeiture, the amount to be added to the original 
96.21 	net tax capacity of the district as a result of the property again becoming taxable is the 
96.22 	amount of the parcel's value that was included in original net tax capacity when the parcel 
96.23 	was first certified. The amount to be added to the original net tax capacity of the district 
96.24 	as a result of enlargements equals the net tax capacity of the added real property as most 
96.25 	recently certified by the commissioner of revenue as of the date of modification of the tax 
96.26 	increment financing plan pursuant to section 469.175, subdivision 4.
96.27 	(d) If the net tax capacity of a property increases because the property no longer 
96.28 	qualifies under the Minnesota Agricultural Property Tax Law, section 273.111; the 
96.29 	Minnesota Open Space Property Tax Law, section 273.112; or the Metropolitan 
96.30 	Agricultural Preserves Act, chapter 473H, or because platted, unimproved property is 
96.31 	improved or market value is increased after approval of the plat under section 273.11, 
96.32 	subdivision 14, 14a, or 14b, the increase in net tax capacity must be added to the original 
96.33 	net tax capacity.
96.34 	(e) The amount to be subtracted from the original net tax capacity of the district 
96.35 	as a result of previously taxable real property within the district becoming tax exempt, 
96.36 	or a reduction in the geographic area of the district, shall be the amount of original net 
97.1 	tax capacity initially attributed to the property becoming tax exempt or being removed 
97.2 	from the district. If the net tax capacity of property located within the tax increment 
97.3 	financing district is reduced by reason of a court-ordered abatement, stipulation agreement, 
97.4 	voluntary abatement made by the assessor or auditor or by order of the commissioner of 
97.5 	revenue, the reduction shall be applied to the original net tax capacity of the district when 
97.6 	the property upon which the abatement is made has not been improved since the date of 
97.7 	certification of the district and to the captured net tax capacity of the district in each year 
97.8 	thereafter when the abatement relates to improvements made after the date of certification. 
97.9 	The county auditor may specify reasonable form and content of the request for certification 
97.10 	of the authority and any modification thereof pursuant to section 469.175, subdivision 4.
97.11 	(f) If a parcel of property contained a substandard building that was demolished 
97.12 	or removed and if the authority elects to treat the parcel as occupied by a substandard 
97.13 	building under section 469.174, subdivision 10, paragraph (b), the auditor shall certify the 
97.14 	original net tax capacity of the parcel using the greater of (1) the current net tax capacity 
97.15 	of the parcel, or (2) the estimated market value of the parcel for the year in which the 
97.16 	building was demolished or removed, but applying the class rates for the current year.
97.17 	(g) For a redevelopment district qualifying under section 469.174, subdivision 10, 
97.18 	paragraph (a), clause (4), as a qualified disaster area, the auditor shall certify the value of 
97.19 	the land as the original tax capacity for any parcel in the district that contains a building 
97.20 	that suffered substantial damage as a result of the disaster or emergency.

97.21 	EFFECTIVE DATE. This section is effective for improvements made to tax 
97.22 	exempt property made after June 30, 2006.

97.23 	Sec. 10. Minnesota Statutes 2004, section 469.1771, subdivision 2a, is amended to 
97.24 	read:
97.25 		Subd. 2a.Suspension of distribution of tax increment. (a) If an authority fails to 
97.26 	make a disclosure or to submit a report containing the information required by section  
97.27 	469.175, subdivisions 5 and 6, regarding a tax increment financing district within the 
97.28 	time provided in section  469.175, subdivisions 5 and 6, the state auditor shall mail to 
97.29 	the authority a written notice that it or the municipality has failed to make the required 
97.30 	disclosure or to submit a required report with respect to a particular district. The state 
97.31 	auditor shall mail the notice on or before the third Tuesday of August of the year in which 
97.32 	the disclosure or report was required to be made or submitted. The notice must describe 
97.33 	the consequences of failing to disclose or submit a report as provided in paragraph (b). 
97.34 	If the state auditor has not received a copy of a disclosure or a report described in this 
97.35 	paragraph on or before the third Tuesday of November first day of October of the year 
98.1 	in which the disclosure or report was required to be made or submitted, the state auditor 
98.2 	shall mail a written notice to the county auditor to hold the distribution of tax increment 
98.3 	from a particular district. 
98.4 	(b) Upon receiving written notice from the state auditor to hold the distribution of 
98.5 	tax increment, the county auditor shall hold:
98.6 	(1) 25 100 percent of the amount of tax increment that otherwise would be 
98.7 	distributed, if the distribution is made after the third Friday in November first day of 
98.8 	October but during the year in which the disclosure or report was required to be made or 
98.9 	submitted; or
98.10 	(2) 100 percent of the amount of tax increment that otherwise would be distributed, 
98.11 	if the distribution is made after December 31 of the year in which the disclosure or report 
98.12 	was required to be made or submitted.
98.13 	(c) Upon receiving the copy of the disclosure and all of the reports described in 
98.14 	paragraph (a) with respect to a district regarding which the state auditor has mailed to the 
98.15 	county auditor a written notice to hold distribution of tax increment, the state auditor shall 
98.16 	mail to the county auditor a written notice lifting the hold and authorizing the county 
98.17 	auditor to distribute to the authority or municipality any tax increment that the county 
98.18 	auditor had held pursuant to paragraph (b). The state auditor shall mail the written notice 
98.19 	required by this paragraph within five working days after receiving the last outstanding 
98.20 	item. The county auditor shall distribute the tax increment to the authority or municipality 
98.21 	within 15 working days after receiving the written notice required by this paragraph.
98.22 	(d) Notwithstanding any law to the contrary, any interest that accrues on tax 
98.23 	increment while it is being held by the county auditor pursuant to paragraph (b) is not tax 
98.24 	increment and may be retained by the county.
98.25 	(e) For purposes of sections  469.176, subdivisions 1a to 1g, and  469.177, subdivision 
98.26 	11, tax increment being held by the county auditor pursuant to paragraph (b) is considered 
98.27 	distributed to or received by the authority or municipality as of the time that it would have 
98.28 	been distributed or received but for paragraph (b). 

98.29 	EFFECTIVE DATE. This section is effective for disclosures and reports required 
98.30 	to be filed after December 30, 2006.

98.31 	Sec. 11. Minnesota Statutes 2004, section 475.58, subdivision 1, is amended to read:
98.32 		Subdivision 1.Approval by electors; exceptions. Obligations authorized by law or 
98.33 	charter may be issued by any municipality upon obtaining the approval of a majority of 
98.34 	the electors voting on the question of issuing the obligations, but an election shall not be 
98.35 	required to authorize obligations issued:
99.1 	(1) to pay any unpaid judgment against the municipality;
99.2 	(2) for refunding obligations;
99.3 	(3) for an improvement or improvement program, which obligation is payable 
99.4 	wholly or partly from the proceeds of special assessments levied upon property specially 
99.5 	benefited by the improvement or by an improvement within the improvement program, or 
99.6 	of taxes levied upon the increased value of property within a district for the development of 
99.7 	which the improvement is undertaken from tax increments, as defined in section 469.174, 
99.8 	subdivision 25, including obligations which are the general obligations of the municipality, 
99.9 	if the municipality is entitled to reimbursement in whole or in part from the proceeds of 
99.10 	such special assessments or taxes tax increments and not less than 20 percent of the cost of 
99.11 	the improvement or the improvement program is to be assessed against benefited property 
99.12 	or is to be paid from the proceeds of federal grant funds or a combination thereof, or is 
99.13 	estimated to be received from such taxes within the district tax increments;
99.14 	(4) payable wholly from the income of revenue producing conveniences;
99.15 	(5) under the provisions of a home rule charter which permits the issuance of 
99.16 	obligations of the municipality without election;
99.17 	(6) under the provisions of a law which permits the issuance of obligations of a 
99.18 	municipality without an election;
99.19 	(7) to fund pension or retirement fund liabilities pursuant to section  475.52, 
99.20 	subdivision 6; 
99.21 	(8) under a capital improvement plan under section  373.40; and 
99.22 	(9) under sections  469.1813 to  469.1815 (property tax abatement authority bonds), if 
99.23 	the proceeds of the bonds are not used for a purpose prohibited under section  469.176, 
99.24 	subdivision 4g, paragraph (b). 

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

99.26 	Sec. 12. BURNSVILLE; HEART OF THE CITY TAX INCREMENT 
99.27 	FINANCING DISTRICT.
 99.28 	Notwithstanding any contrary provision of law, the five-year rule under Minnesota 
99.29 	Statutes, section 469.1763, subdivisions 3 and 4, is extended to ten years for tax increment 
99.30 	derived from the parcel described as Lot 2, Block 1, Nicollet Commons Park within tax 
99.31 	increment financing District No. 6 established by the city and its economic development 
99.32 	authority on April 15, 2002.

99.33 	EFFECTIVE DATE. This section is effective upon compliance with Minnesota 
99.34 	Statutes, section 645.021, subdivision 3.

100.1 	Sec. 13. CITY OF DETROIT LAKES; REDEVELOPMENT TAX INCREMENT 
100.2 	FINANCING DISTRICT.
 100.3 		Subdivision 1.Authorization. At the election of the governing body of the city of 
100.4 	Detroit Lakes, upon adoption of the tax increment financing plan for the district described 
100.5 	in this section, the rules provided under this section apply to each such district.
100.6 		Subd. 2.Definition. In this section, "district" means a redevelopment district 
100.7 	established by the city of Detroit Lakes or the Detroit Lakes Development Authority 
100.8 	within the following area:
100.9 	Beginning at the intersection of Washington Avenue and the Burlington Northern 
100.10 	Santa Fe railroad then east to the intersection of Roosevelt Avenue then south to the 
100.11 	intersection of Highway 10/Frazee Street then west to the intersection of Frazee Street and 
100.12 	the alley that parallels Washington Avenue then north to the point of beginning.
100.13 	More than one district may be created under this section.
100.14 		Subd. 3.Qualification as redevelopment district; special rules. The city may 
100.15 	qualify the district as a redevelopment district under Minnesota Statutes, section 469.174, 
100.16 	subdivision 10, applying the rules under this subdivision: 
100.17 	(1) All buildings that are removed to facilitate the Highway 10 Realignment Project 
100.18 	are deemed to be "structurally substandard."
100.19 	(2) The three-year limit after demolition of the buildings to request tax increment 
100.20 	financing certification provided in Minnesota Statutes, section 469.174, subdivision 10, 
100.21 	paragraph (d), clause (1), does not apply.
100.22 		Subd. 4.Expiration. The authority to approve tax increment financing plans to 
100.23 	establish a tax increment financing redevelopment district subject to this section expires 
100.24 	on December 31, 2014.
100.25 		Subd. 5.Effective date. This section is effective upon approval of the governing 
100.26 	body of the city of Detroit Lakes and compliance with Minnesota Statutes, section 
100.27 	645.021, subdivision 3.

100.28 	Sec. 14. CITY OF MINNEAPOLIS; HOMELESS ASSISTANCE TAX 
100.29 	INCREMENT DISTRICT.
 100.30 		Subdivision 1.Definitions. (a) "City" means the city of Minneapolis.
100.31 	(b) "Homeless assistance tax increment district" means a contiguous area of the 
100.32 	city that:
100.33 	(1) is no larger than six acres;
100.34 	(2) is located within the boundaries of a city municipal development district; and
101.1 	(3) contains at least two shelters for homeless persons that have been owned or 
101.2 	operated by nonprofit corporations that (i) are qualified charitable organizations under 
101.3 	section 501(c)(3) of the United States Internal Revenue Code, (ii) have operated such 
101.4 	homeless facilities within the district for at least five years, and (iii) have been recipients 
101.5 	of emergency services grants under Minnesota Statutes, section 256E.36.
101.6 		Subd. 2.Establishment of tax increment district. The city may create one 
101.7 	homeless assistance tax increment district. To establish the homeless assistance tax 
101.8 	increment district, the city shall adopt a homeless assistance tax increment plan and 
101.9 	otherwise comply with the requirements of Minnesota Statutes, section 469.175, except 
101.10 	that the determinations required in Minnesota Statutes, section 469.175, subdivision 3, 
101.11 	paragraph (b), clauses (1) and (2), items (i) and (ii), are not required.
101.12 		Subd. 3.Application of tax increment law. Minnesota Statutes, sections 469.174 
101.13 	to 469.179, shall apply to the administration of the district, except:
101.14 	(1) as this section provides otherwise; and
101.15 	(2) with respect to the portion of the increment to be expended for homeless shelter 
101.16 	and services pursuant to subdivision 5, paragraph (b):
101.17 	(i) the use for which tax increment that may be expended is as provided by 
101.18 	subdivision 5; and
101.19 	(ii) Minnesota Statutes, sections 469.1761 and 469.1763, do not apply.
101.20 		Subd. 4.Duration limitation. No tax increment generated by the district shall 
101.21 	be paid to the city after the expiration of 25 years from the receipt by the city of the 
101.22 	first increment from that district.
101.23 		Subd. 5.Limitations on use of increment. (a) All increment received by the city 
101.24 	from the district shall be used in accordance with the homeless assistance tax increment 
101.25 	district plan.
101.26 	(b) No less than 50 percent of the increment, after deduction of allowable 
101.27 	administrative expenses under Minnesota Statutes, section 469.176, subdivision 3, shall 
101.28 	be used to provide emergency shelter and services for homeless persons within and 
101.29 	outside the district.
101.30 	(c) The remainder of the tax increment derived from the district shall be used for 
101.31 	purposes allowed under Minnesota Statutes, section 469.176, subdivision 4.
101.32 		Subd. 6.Applicability of other laws. References in Minnesota Statutes to tax 
101.33 	increment financing districts created and tax increment generated under Minnesota 
101.34 	Statutes, sections 469.174 to 469.179, include the homeless assistance district and tax 
101.35 	increment subject to this section.

102.1 	EFFECTIVE DATE. This section is effective upon compliance by the city of 
102.2 	Minneapolis with Minnesota Statutes, section 645.021.

102.3 	Sec. 15. CITY OF FARIBAULT; TIF EXTENSION.
 102.4 	Notwithstanding the provisions of Minnesota Statutes, section 469.176, subdivision 
102.5 	1b, or any other law to the contrary, the governing bodies of the city of Faribault and 
102.6 	its economic development authority may elect to extend the duration of tax increment 
102.7 	financing district No. 5-1 by two additional years through taxes payable in 2008. 
102.8 	Additional increments resulting from an extension authorized by this section must be 
102.9 	used to pay the city's bonds issued for redevelopment project No. 5 or to reimburse the 
102.10 	guarantor for payments made to pay the bonds. Any amounts in excess of those necessary 
102.11 	to pay those amounts must be returned as excess increments under Minnesota Statutes, 
102.12 	section 469.176, subdivision 2.

102.13 	EFFECTIVE DATE. This section is effective upon compliance by the governing 
102.14 	body of the city of Faribault with the requirements of Minnesota Statutes, section 645.021, 
102.15 	and by the governing bodies of the county, city, and school district with the requirements 
102.16 	of Minnesota Statutes, section 469.1782, subdivision 2.

102.17 	Sec. 16. BROOKLYN PARK; TIF.
 102.18 		Subdivision 1.Duration limit extension. Notwithstanding Minnesota Statutes, 
102.19 	section 469.176, subdivision 1b, or any other law to the contrary, the governing body of 
102.20 	the city of Brooklyn Park may extend the duration limit of the district established under 
102.21 	Laws 1994, chapter 587, article 9, section 20, by up to five additional years beyond the 
102.22 	limit permitted under Laws 2005, chapter 152, article 3, section 29. If the city extends the 
102.23 	duration of the district under this authority, all of the increment received after December 
102.24 	31, 2006, must be deposited in the housing development account of the authority.
102.25 		Subd. 2Housing districts; authority to establish. (a) The governing body of 
102.26 	the city of Brooklyn Park and an authority of the city, as defined in Minnesota Statutes, 
102.27 	section 469.174, subdivision 2, may establish up to six housing tax increment financing 
102.28 	districts under the provisions of this section. To qualify under this authority, a district must 
102.29 	be located within the boundaries of the city and at least 75 percent of the parcels in each 
102.30 	district must consist of either vacant land or contain a property or properties classified 
102.31 	under Minnesota Statutes, section 273.13, subdivision 25, as class 4a, 4b, or 4d, that 
102.32 	were originally constructed before 1975.
102.33 	(b) The districts are subject to all of the applicable rules under Minnesota Statutes, 
102.34 	sections 469.174 through 469.1799, except that for property or properties classified under 
103.1 	Minnesota Statutes, section 273.13, subdivision 25, as class 4a, 4b, or 4d, that were 
103.2 	originally constructed before 1975, the county auditor shall certify the original net tax 
103.3 	capacity of the parcel under Minnesota Statutes, section 469.177, subdivision 1, based 
103.4 	only on the net tax capacity of the value of the land.
103.5 	(c) The authority to establish districts under this subdivision expires on December 
103.6 	31, 2011.

103.7 	EFFECTIVE DATE. This section is effective upon compliance by the governing 
103.8 	body of the city of Brooklyn Park with the provisions of Minnesota Statutes, section 
103.9 	469.021, except subdivision 1 is effective only upon compliance by the governing bodies 
103.10 	of the county and school district with the provisions of Minnesota Statutes, section 
103.11 	469.1782, subdivision 2.

103.12 	Sec. 17.  REPEALER; DISTRIBUTION OF CERTAIN BURNSVILLE TAX 
103.13 	INCREMENTS.
 103.14 	Laws 1998, chapter 389, article 11, section 18, is repealed. The balance of tax 
103.15 	increments derived from tax increment financing district no. 2-1 as of the effective date 
103.16 	of this act must be returned to the county for distribution in accordance with Minnesota 
103.17 	Statutes, section 469.176, subdivision 2.

103.18 	EFFECTIVE DATE. This section is effective upon compliance with Minnesota 
103.19 	Statutes, section 645.021, subdivision 3.

103.20 	ARTICLE 11
103.21 	AIDS AND CREDITS

103.22 	Section 1. Minnesota Statutes 2005 Supplement, section 477A.011, subdivision 36, 
103.23 	is amended to read:
103.24 		Subd. 36.City aid base. (a) Except as otherwise provided in this subdivision, 
103.25 	"city aid base" is zero.
103.26 	(b) The city aid base for any city with a population less than 500 is increased by 
103.27 	$40,000 for aids payable in calendar year 1995 and thereafter, and the maximum amount 
103.28 	of total aid it may receive under section 477A.013, subdivision 9, paragraph (c), is also 
103.29 	increased by $40,000 for aids payable in calendar year 1995 only, provided that:
103.30 	(i) the average total tax capacity rate for taxes payable in 1995 exceeds 200 percent;
103.31 	(ii) the city portion of the tax capacity rate exceeds 100 percent; and
103.32 	(iii) its city aid base is less than $60 per capita.
104.1 	(c) The city aid base for a city is increased by $20,000 in 1998 and thereafter and 
104.2 	the maximum amount of total aid it may receive under section 477A.013, subdivision 9, 
104.3 	paragraph (c), is also increased by $20,000 in calendar year 1998 only, provided that:
104.4 	(i) the city has a population in 1994 of 2,500 or more;
104.5 	(ii) the city is located in a county, outside of the metropolitan area, which contains a 
104.6 	city of the first class;
104.7 	(iii) the city's net tax capacity used in calculating its 1996 aid under section 
104.8 	477A.013 is less than $400 per capita; and
104.9 	(iv) at least four percent of the total net tax capacity, for taxes payable in 1996, of 
104.10 	property located in the city is classified as railroad property.
104.11 	(d) The city aid base for a city is increased by $200,000 in 1999 and thereafter and 
104.12 	the maximum amount of total aid it may receive under section 477A.013, subdivision 9, 
104.13 	paragraph (c), is also increased by $200,000 in calendar year 1999 only, provided that:
104.14 	(i) the city was incorporated as a statutory city after December 1, 1993;
104.15 	(ii) its city aid base does not exceed $5,600; and
104.16 	(iii) the city had a population in 1996 of 5,000 or more.
104.17 	(e) The city aid base for a city is increased by $450,000 in 1999 to 2008 and the 
104.18 	maximum amount of total aid it may receive under section 477A.013, subdivision 9, 
104.19 	paragraph (c), is also increased by $450,000 in calendar year 1999 only, provided that:
104.20 	(i) the city had a population in 1996 of at least 50,000;
104.21 	(ii) its population had increased by at least 40 percent in the ten-year period ending 
104.22 	in 1996; and
104.23 	(iii) its city's net tax capacity for aids payable in 1998 is less than $700 per capita.
104.24 	(f) The city aid base for a city is increased by $150,000 for aids payable in 2000 and 
104.25 	thereafter, and the maximum amount of total aid it may receive under section 477A.013, 
104.26 	subdivision 9, paragraph (c), is also increased by $150,000 in calendar year 2000 only, 
104.27 	provided that:
104.28 	(1) the city has a population that is greater than 1,000 and less than 2,500;
104.29 	(2) its commercial and industrial percentage for aids payable in 1999 is greater 
104.30 	than 45 percent; and
104.31 	(3) the total market value of all commercial and industrial property in the city 
104.32 	for assessment year 1999 is at least 15 percent less than the total market value of all 
104.33 	commercial and industrial property in the city for assessment year 1998.
104.34 	(g) The city aid base for a city is increased by $200,000 in 2000 and thereafter, and 
104.35 	the maximum amount of total aid it may receive under section 477A.013, subdivision 9, 
104.36 	paragraph (c), is also increased by $200,000 in calendar year 2000 only, provided that:
105.1 	(1) the city had a population in 1997 of 2,500 or more;
105.2 	(2) the net tax capacity of the city used in calculating its 1999 aid under section 
105.3 	477A.013 is less than $650 per capita;
105.4 	(3) the pre-1940 housing percentage of the city used in calculating 1999 aid under 
105.5 	section 477A.013 is greater than 12 percent;
105.6 	(4) the 1999 local government aid of the city under section 477A.013 is less than 
105.7 	20 percent of the amount that the formula aid of the city would have been if the need 
105.8 	increase percentage was 100 percent; and
105.9 	(5) the city aid base of the city used in calculating aid under section 477A.013
105.10 	is less than $7 per capita.
105.11 	(h) The city aid base for a city is increased by $102,000 in 2000 and thereafter, and 
105.12 	the maximum amount of total aid it may receive under section 477A.013, subdivision 9, 
105.13 	paragraph (c), is also increased by $102,000 in calendar year 2000 only, provided that:
105.14 	(1) the city has a population in 1997 of 2,000 or more;
105.15 	(2) the net tax capacity of the city used in calculating its 1999 aid under section 
105.16 	477A.013 is less than $455 per capita;
105.17 	(3) the net levy of the city used in calculating 1999 aid under section 477A.013 is 
105.18 	greater than $195 per capita; and
105.19 	(4) the 1999 local government aid of the city under section 477A.013 is less than 
105.20 	38 percent of the amount that the formula aid of the city would have been if the need 
105.21 	increase percentage was 100 percent.
105.22 	(i) The city aid base for a city is increased by $32,000 in 2001 and thereafter, and 
105.23 	the maximum amount of total aid it may receive under section 477A.013, subdivision 9, 
105.24 	paragraph (c), is also increased by $32,000 in calendar year 2001 only, provided that:
105.25 	(1) the city has a population in 1998 that is greater than 200 but less than 500;
105.26 	(2) the city's revenue need used in calculating aids payable in 2000 was greater 
105.27 	than $200 per capita;
105.28 	(3) the city net tax capacity for the city used in calculating aids available in 2000 
105.29 	was equal to or less than $200 per capita;
105.30 	(4) the city aid base of the city used in calculating aid under section 477A.013
105.31 	is less than $65 per capita; and
105.32 	(5) the city's formula aid for aids payable in 2000 was greater than zero.
105.33 	(j) The city aid base for a city is increased by $7,200 in 2001 and thereafter, and 
105.34 	the maximum amount of total aid it may receive under section 477A.013, subdivision 9, 
105.35 	paragraph (c), is also increased by $7,200 in calendar year 2001 only, provided that:
105.36 	(1) the city had a population in 1998 that is greater than 200 but less than 500;
106.1 	(2) the city's commercial industrial percentage used in calculating aids payable in 
106.2 	2000 was less than ten percent;
106.3 	(3) more than 25 percent of the city's population was 60 years old or older according 
106.4 	to the 1990 census;
106.5 	(4) the city aid base of the city used in calculating aid under section 477A.013
106.6 	is less than $15 per capita; and
106.7 	(5) the city's formula aid for aids payable in 2000 was greater than zero.
106.8 	(k) The city aid base for a city is increased by $45,000 in 2001 and thereafter and 
106.9 	by an additional $50,000 in calendar years 2002 to 2011, and the maximum amount of 
106.10 	total aid it may receive under section 477A.013, subdivision 9, paragraph (c), is also 
106.11 	increased by $45,000 in calendar year 2001 only, and by $50,000 in calendar year 2002 
106.12 	only, provided that:
106.13 	(1) the net tax capacity of the city used in calculating its 2000 aid under section 
106.14 	477A.013 is less than $810 per capita;
106.15 	(2) the population of the city declined more than two percent between 1988 and 1998;
106.16 	(3) the net levy of the city used in calculating 2000 aid under section 477A.013 is 
106.17 	greater than $240 per capita; and
106.18 	(4) the city received less than $36 per capita in aid under section 477A.013, 
106.19 	subdivision 9, for aids payable in 2000.
106.20 	(l) The city aid base for a city with a population of 10,000 or more which is located 
106.21 	outside of the seven-county metropolitan area is increased in 2002 and thereafter, and the 
106.22 	maximum amount of total aid it may receive under section 477A.013, subdivision 9, 
106.23 	paragraph (b) or (c), is also increased in calendar year 2002 only, by an amount equal to 
106.24 	the lesser of:
106.25 	(1)(i) the total population of the city, as determined by the United States Bureau of 
106.26 	the Census, in the 2000 census, (ii) minus 5,000, (iii) times 60; or
106.27 	(2) $2,500,000.
106.28 	(m) The city aid base is increased by $50,000 in 2002 and thereafter, and the 
106.29 	maximum amount of total aid it may receive under section 477A.013, subdivision 9, 
106.30 	paragraph (c), is also increased by $50,000 in calendar year 2002 only, provided that:
106.31 	(1) the city is located in the seven-county metropolitan area;
106.32 	(2) its population in 2000 is between 10,000 and 20,000; and
106.33 	(3) its commercial industrial percentage, as calculated for city aid payable in 2001, 
106.34 	was greater than 25 percent.
106.35 	(n) The city aid base for a city is increased by $150,000 in calendar years 2002 
106.36 	to 2011 and the maximum amount of total aid it may receive under section 477A.013, 
107.1 	subdivision 9, paragraph (c), is also increased by $150,000 in calendar year 2002 only, 
107.2 	provided that:
107.3 	(1) the city had a population of at least 3,000 but no more than 4,000 in 1999;
107.4 	(2) its home county is located within the seven-county metropolitan area;
107.5 	(3) its pre-1940 housing percentage is less than 15 percent; and
107.6 	(4) its city net tax capacity per capita for taxes payable in 2000 is less than $900 
107.7 	per capita.
107.8 	(o) The city aid base for a city is increased by $200,000 beginning in calendar 
107.9 	year 2003 and the maximum amount of total aid it may receive under section 477A.013, 
107.10 	subdivision 9, paragraph (c), is also increased by $200,000 in calendar year 2003 only, 
107.11 	provided that the city qualified for an increase in homestead and agricultural credit aid 
107.12 	under Laws 1995, chapter 264, article 8, section 18.
107.13 	(p) The city aid base for a city is increased by $200,000 in 2004 only and the 
107.14 	maximum amount of total aid it may receive under section 477A.013, subdivision 9, is 
107.15 	also increased by $200,000 in calendar year 2004 only, if the city is the site of a nuclear 
107.16 	dry cask storage facility.
107.17 	(q) The city aid base for a city is increased by $10,000 in 2004 and thereafter and the 
107.18 	maximum total aid it may receive under section 477A.013, subdivision 9, is also increased 
107.19 	by $10,000 in calendar year 2004 only, if the city was included in a federal major disaster 
107.20 	designation issued on April 1, 1998, and its pre-1940 housing stock was decreased by 
107.21 	more than 40 percent between 1990 and 2000.
107.22 	(r) The city aid base for a city is increased by $25,000 in 2006 only and the 
107.23 	maximum total aid it may receive under section 477A.013, subdivision 9, is also increased 
107.24 	by $25,000 in calendar year 2006 only if the city had a population in 2003 of at least 1,000 
107.25 	and has a state park for which the city provides rescue services and which comprised at 
107.26 	least 14 percent of the total geographic area included within the city boundaries in 2000.
107.27 	(s) The city aid base for a city with a population less than 5,000 is increased in 
107.28 	2006 and thereafter and the minimum and maximum amount of total aid it may receive 
107.29 	under this section is also increased in calendar year 2006 only by an amount equal to 
107.30 	$6 multiplied by its population.
107.31 	(t) The city aid base for a city is increased by $80,000 in 2007 only and the minimum 
107.32 	and maximum amount of total aid it may receive under section 477A.013, subdivision 9, 
107.33 	is also increased by $80,000 in calendar year 2007 only, if:
107.34 	(1) as of May 1, 2006, at least 25 percent of the tax capacity of the city is proposed 
107.35 	to be placed in trust status as tax-exempt Indian land;
107.36 	(2) the placement of the land is being challenged administratively or in court; and 
108.1 	(3) due to the challenge, the land proposed to be placed in trust is still on the tax 
108.2 	rolls as of May 1, 2006.
108.3 	(u) the city aid base for a city is increased by $100,000 in 2007 and thereafter and 
108.4 	the minimum and maximum total amount of aid it may receive under this section is also 
108.5 	increased in calendar year 2007 only, provided that:
108.6 	(1) the city has a 2004 estimated population greater than 200 but less than 2,000;
108.7 	(2) its city net tax capacity for aids payable in 2006 was less than $300 per capita;
108.8 	(3) the ratio of its pay 2005 tax levy compared to its city net tax capacity for aids 
108.9 	payable in 2006 was greater than 110 percent; and
108.10 	(4) it is located in a county where at least 15,000 acres of land are classified as tax- 
108.11 	exempt Indian reservations according to the 2004 abstract of tax-exempt property.

108.12 	EFFECTIVE DATE. This section is effective beginning with aids payable in 2007.

108.13 	Sec. 2. Minnesota Statutes 2004, section 477A.013, subdivision 9, is amended to read:
108.14 		Subd. 9.City aid distribution. (a) In calendar year 2002 and thereafter, each 
108.15 	city shall receive an aid distribution equal to the sum of (1) the city formula aid under 
108.16 	subdivision 8, and (2) its city aid base.
108.17 	(b) The aid for a city in calendar year 2004 shall not exceed the amount of its aid in 
108.18 	calendar year 2003 after the reductions under Laws 2003, First Special Session chapter 21, 
108.19 	article 5.
108.20 	(c) (b) For aids payable in 2005 and thereafter, the total aid for any city shall not 
108.21 	exceed the sum of (1) ten percent of the city's net levy for the year prior to the aid 
108.22 	distribution plus (2) its total aid in the previous year. For aids payable in 2005 and 
108.23 	thereafter, the total aid for any city with a population of 2,500 or more may not decrease 
108.24 	from its total aid under this section in the previous year by an amount greater than ten 
108.25 	percent of its net levy in the year prior to the aid distribution.
108.26 	(d) (c) For aids payable in 2004 only, the total aid for a city with a population less 
108.27 	than 2,500 may not be less than the amount it was certified to receive in 2003 minus the 
108.28 	greater of (1) the reduction to this aid payment in 2003 under Laws 2003, First Special 
108.29 	Session chapter 21, article 5, or (2) five percent of its 2003 aid amount. For aids payable 
108.30 	in 2005 and thereafter, the total aid for a city with a population less than 2,500 must not be 
108.31 	less than the amount it was certified to receive in the previous year minus five percent 
108.32 	of its 2003 certified aid amount.
108.33 	(d) If a city's net tax capacity used in calculating aid under this section has decreased 
108.34 	in any year by more than 25 percent from its net tax capacity in the previous year due to 
108.35 	property becoming tax-exempt Indian land, the city's maximum allowed aid increase 
109.1 	under paragraph (b) shall be increased by an amount equal to (1) the city's tax rate in the 
109.2 	year of the aid calculation, multiplied by (2) the amount of its net tax capacity decrease 
109.3 	resulting from the property becoming tax exempt.

109.4 	EFFECTIVE DATE. This section is effective beginning with aids payable in 2007.

109.5 	Sec. 3. MAHNOMEN COUNTY; COUNTY, CITY, SCHOOL DISTRICT, 
109.6 	PROPERTY TAX REIMBURSEMENT; 2006 ONLY.
 109.7 		Subdivision 1.Aid appropriation. $600,000 is appropriated from the general fund 
109.8 	to the commissioner of revenue to be used to make payments to compensate for the loss of 
109.9 	property tax revenue due to the placement of land located in the city of Mahnomen that 
109.10 	was put in trust status by the United Stated Department of the Interior, Bureau of Indian 
109.11 	Affairs, during calendar year 2006. The commissioner shall pay the county of Mahnomen, 
109.12 	$450,000; the city of Mahnomen, $80,000; and Independent School District No. 432, 
109.13 	Mahnomen, $70,000. The payments shall be made on July 20, 2006.
109.14 		Subd. 2.School district tax base adjustments. The Department of Revenue 
109.15 	must reduce the referendum market value and the adjusted net tax capacity certified 
109.16 	for assessment year 2005 used to calculate school levies for taxes payable in 2007 
109.17 	for Independent School District No. 432, Mahnomen, by the amounts of any values 
109.18 	attributable to property that is no longer subject to property taxation because the land has 
109.19 	been placed in trust in calendar year 2006 through action of the United States Department 
109.20 	of Interior, Bureau of Indian Affairs. The Mahnomen County auditor must certify the 
109.21 	reductions in value to the Department of Revenue in the form and manner specified by the 
109.22 	Department of Revenue.

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

109.24 	ARTICLE 12
109.25 	MINERALS

109.26 	Section 1. Minnesota Statutes 2004, section 298.001, is amended by adding a 
109.27 	subdivision to read:
109.28 		Subd. 3a.Producer. "Producer" means a person engaged in the business of mining 
109.29 	or producing iron ore, taconite concentrate, or direct reduced ore in this state.

109.30 	EFFECTIVE DATE. This section is effective for tax years beginning after 
109.31 	December 31, 2005.

110.1 	Sec. 2. Minnesota Statutes 2005 Supplement, section 298.01, subdivision 3, is 
110.2 	amended to read:
110.3 		Subd. 3.Occupation tax; other ores. Every person engaged in the business of 
110.4 	mining or producing ores in this state, except iron ore or taconite concentrates, shall pay 
110.5 	an occupation tax to the state of Minnesota as provided in this subdivision. The tax is 
110.6 	determined in the same manner as the tax imposed by section 290.02, except that sections 
110.7 	290.05, subdivision 1, clause (a), 290.17, subdivision 4, and 290.191, subdivision 2, do 
110.8 	not apply, and the occupation tax must be computed by applying to taxable income the 
110.9 	rate of 2.45 percent. A person subject to occupation tax under this section shall apportion 
110.10 	its net income on the basis of the percentage obtained by taking the sum of:
110.11 	(1) 75 percent of the percentage which the sales made within this state in connection 
110.12 	with the trade or business during the tax period are of the total sales wherever made in 
110.13 	connection with the trade or business during the tax period;
110.14 	(2) 12.5 percent of the percentage which the total tangible property used by the 
110.15 	taxpayer in this state in connection with the trade or business during the tax period is of 
110.16 	the total tangible property, wherever located, used by the taxpayer in connection with the 
110.17 	trade or business during the tax period; and
110.18 	(3) 12.5 percent of the percentage which the taxpayer's total payrolls paid or 
110.19 	incurred in this state or paid in respect to labor performed in this state in connection with 
110.20 	the trade or business during the tax period are of the taxpayer's total payrolls paid or 
110.21 	incurred in connection with the trade or business during the tax period.
110.22 	The tax is in addition to all other taxes.

110.23 	EFFECTIVE DATE. This section is effective for tax years beginning after 
110.24 	December 31, 2005.

110.25 	Sec. 3. Minnesota Statutes 2004, section 298.01, subdivision 3a, is amended to read:
110.26 		Subd. 3a.Gross income. (a) For purposes of determining a person's taxable income 
110.27 	under subdivision 3, gross income is determined by the amount of gross proceeds from 
110.28 	mining in this state under section  298.016 and includes any gain or loss recognized from 
110.29 	the sale or disposition of assets used in the business in this state. If more than one mineral, 
110.30 	metal, or energy resource referred to in section 298.016 is mined and processed at the 
110.31 	same mine and plant, a gross income for each mineral, metal, or energy resource must be 
110.32 	determined separately. The gross incomes may be combined on one occupation tax return 
110.33 	to arrive at the gross income of all production.
111.1 	(b) In applying section  290.191, subdivision 5, transfers of ores are deemed to be 
111.2 	sales outside in this state if the ores are transported out of this state after the ores have 
111.3 	been converted to a marketable quality. 

111.4 	EFFECTIVE DATE. This section is effective for tax years beginning after 
111.5 	December 31, 2005.

111.6 	Sec. 4. Minnesota Statutes 2004, section 298.01, subdivision 3b, is amended to read:
111.7 		Subd. 3b.Deductions. (a) For purposes of determining taxable income under 
111.8 	subdivision 3, the deductions from gross income include only those expenses necessary 
111.9 	to convert raw ores to marketable quality. Such expenses include costs associated with 
111.10 	refinement but do not include expenses such as transportation, stockpiling, marketing, or 
111.11 	marine insurance that are incurred after marketable ores are produced, unless the expenses 
111.12 	are included in gross income. The allowable deductions from a mine or plant that mines 
111.13 	and produces more than one mineral, metal, or energy resource must be determined 
111.14 	separately for the purposes of computing the deduction in section 290.01, subdivision 19c, 
111.15 	clause (9). These deductions may be combined on one occupation tax return to arrive at 
111.16 	the deduction from gross income for all production.
111.17 	(b) The provisions of section  290.01, subdivisions 19c, clauses (6) and (9), and 19d, 
111.18 	clauses (7) and (11), are not used to determine taxable income. 

111.19 	EFFECTIVE DATE. This section is effective for tax years beginning after 
111.20 	December 31, 2005.

111.21 	Sec. 5. Minnesota Statutes 2005 Supplement, section 298.01, subdivision 4, is 
111.22 	amended to read:
111.23 		Subd. 4.Occupation tax; iron ore; taconite concentrates. A person engaged in 
111.24 	the business of mining or producing of iron ore, taconite concentrates or direct reduced ore 
111.25 	in this state shall pay an occupation tax to the state of Minnesota. The tax is determined 
111.26 	in the same manner as the tax imposed by section 290.02, except that sections 290.05, 
111.27 	subdivision 1, clause (a), 290.17, subdivision 4, and 290.191, subdivision 2, do not apply, 
111.28 	and the occupation tax shall be computed by applying to taxable income the rate of 2.45 
111.29 	percent. A person subject to occupation tax under this section shall apportion its net 
111.30 	income on the basis of the percentage obtained by taking the sum of:
111.31 	(1) 75 percent of the percentage which the sales made within this state in connection 
111.32 	with the trade or business during the tax period are of the total sales wherever made in 
111.33 	connection with the trade or business during the tax period;
112.1 	(2) 12.5 percent of the percentage which the total tangible property used by the 
112.2 	taxpayer in this state in connection with the trade or business during the tax period is of 
112.3 	the total tangible property, wherever located, used by the taxpayer in connection with the 
112.4 	trade or business during the tax period; and
112.5 	(3) 12.5 percent of the percentage which the taxpayer's total payrolls paid or 
112.6 	incurred in this state or paid in respect to labor performed in this state in connection with 
112.7 	the trade or business during the tax period are of the taxpayer's total payrolls paid or 
112.8 	incurred in connection with the trade or business during the tax period.
112.9 	The tax is in addition to all other taxes.

112.10 	EFFECTIVE DATE. This section is effective for tax years beginning after 
112.11 	December 31, 2005.

112.12 	Sec. 6. Minnesota Statutes 2004, section 298.01, subdivision 4a, is amended to read:
112.13 		Subd. 4a.Gross income. (a) For purposes of determining a person's taxable income 
112.14 	under subdivision 4, gross income is determined by the mine value of the ore mined in 
112.15 	Minnesota and includes any gain or loss recognized from the sale or disposition of assets 
112.16 	used in the business in this state.
112.17 	(b) Mine value is the value, or selling price, of iron ore or taconite concentrates, f.o.b. 
112.18 	mine. The mine value is calculated by multiplying the iron unit price for the period, as 
112.19 	determined by the commissioner, by the tons produced and the weighted average analysis.
112.20 	(c) In applying section  290.191, subdivision 5, transfers of iron ore and taconite 
112.21 	concentrates are deemed to be sales outside in this state if the iron ore or taconite 
112.22 	concentrates are transported out of this state after the raw iron ore and taconite 
112.23 	concentrates have been converted to a marketable quality. 
112.24 	(d) If iron ore or taconite and a mineral, metal, or energy resource referred to in 
112.25 	section 298.016 is mined and processed at the same mine and plant, a gross income for 
112.26 	each mineral, metal, or energy resource must be determined separately from the mine 
112.27 	value for the iron ore or taconite. The gross income may be combined on one occupation 
112.28 	tax return to arrive at the gross income from all production.

112.29 	EFFECTIVE DATE. This section is effective for tax years beginning after 
112.30 	December 31, 2005.

112.31 	Sec. 7. Minnesota Statutes 2004, section 298.01, subdivision 4b, is amended to read:
112.32 		Subd. 4b.Deductions. For purposes of determining taxable income under 
112.33 	subdivision 4, the deductions from gross income include only those expenses necessary 
113.1 	to convert raw iron ore or taconite concentrates to marketable quality. Such expenses 
113.2 	include costs associated with beneficiation and refinement but do not include expenses 
113.3 	such as transportation, stockpiling, marketing, or marine insurance that are incurred after 
113.4 	marketable iron ore or taconite pellets are produced. The allowable deductions from a 
113.5 	mine or plant that mines and produces iron ore or taconite and one or more mineral or 
113.6 	metal referred to in section 298.016 must be determined separately for the purposes of 
113.7 	computing the deduction in section 290.01, subdivision 19c, clause (9). These deductions 
113.8 	may be combined on one occupation tax return to arrive at the deduction from gross 
113.9 	income for all production.

113.10 	EFFECTIVE DATE. This section is effective for tax years beginning after 
113.11 	December 31, 2005.

113.12 	Sec. 8. Minnesota Statutes 2004, section 298.01, is amended by adding a subdivision 
113.13 	to read:
113.14 		Subd. 6.Deductions applicable to mining both taconite and other ores; ratio 
113.15 	applied. If a person is engaged in the business of mining or producing both iron ores, 
113.16 	taconite concentrates, or direct reduced ore, and other ores from the same mine or 
113.17 	facility, that person must separately determine the mine value of (1) the iron ore, taconite 
113.18 	concentrates, and direct reduced ore, and (2) the amount of gross proceeds from mining 
113.19 	other ores in Minnesota. The ratio of mine value from iron ore, taconite concentrates, 
113.20 	and direct reduced ore to gross proceeds from mining other ores must be applied to 
113.21 	deductions common to both processes to determine taxable income for tax paid pursuant 
113.22 	to subdivisions 3 and 4.

113.23 	EFFECTIVE DATE. This section is effective for tax years beginning after 
113.24 	December 31, 2005.

113.25 	Sec. 9. Minnesota Statutes 2004, section 298.227, is amended to read:
113.26 	298.227 TACONITE ECONOMIC DEVELOPMENT FUND.
113.27 	An amount equal to that distributed pursuant to each taconite producer's taxable 
113.28 	production and qualifying sales under section  298.28, subdivision 9a, shall be held by 
113.29 	the Iron Range Resources and Rehabilitation Board in a separate taconite economic 
113.30 	development fund for each taconite and direct reduced ore producer. Money from the 
113.31 	fund for each producer shall be released by the commissioner after review by a joint 
113.32 	committee consisting of an equal number of representatives of the salaried employees and 
113.33 	the nonsalaried production and maintenance employees of that producer. The District 11 
114.1 	director of the United States Steelworkers of America, on advice of each local employee 
114.2 	president, shall select the employee members. In nonorganized operations, the employee 
114.3 	committee shall be elected by the nonsalaried production and maintenance employees. 
114.4 	The review must be completed no later than six months after the producer presents a 
114.5 	proposal for expenditure of the funds to the committee. The funds held pursuant to this 
114.6 	section may be released only for acquisition of equipment and facilities for the producer 
114.7 	or for research and development in Minnesota on new mining, or taconite, iron, or steel 
114.8 	production technology, but only if the producer provides a matching expenditure to be 
114.9 	used for the same purpose of at least 50 percent of the distribution based on 14.7 cents 
114.10 	per ton beginning with distributions in 2002. If a producer uses money from the fund to 
114.11 	procure haulage trucks, mobile equipment, or mining shovels, and the producer removes 
114.12 	the piece of equipment from the taconite tax relief area defined in section 273.134 within 
114.13 	ten years from the date of receipt of the money from the fund, a portion of the money 
114.14 	granted from the fund must be repaid to the taconite economic development fund. The 
114.15 	portion of the money to be repaid is 100 percent of the grant if the equipment is removed 
114.16 	from the taconite tax relief area within 12 months after receipt of the money from the fund, 
114.17 	declining by ten percent for each of the subsequent nine years during which the equipment 
114.18 	remains within the taconite tax relief area. If a taconite production facility is sold after 
114.19 	operations at the facility had ceased, any money remaining in the fund for the former 
114.20 	producer may be released to the purchaser of the facility on the terms otherwise applicable 
114.21 	to the former producer under this section. If a producer fails to provide matching funds 
114.22 	for a proposed expenditure within six months after the commissioner approves release 
114.23 	of the funds, the funds are available for release to another producer in proportion to the 
114.24 	distribution provided and under the conditions of this section. Any portion of the fund 
114.25 	which is not released by the commissioner within two years of its deposit in the fund shall 
114.26 	be divided between the taconite environmental protection fund created in section  298.223
114.27 	and the Douglas J. Johnson economic protection trust fund created in section  298.292 for 
114.28 	placement in their respective special accounts. Two-thirds of the unreleased funds shall be 
114.29 	distributed to the taconite environmental protection fund and one-third to the Douglas J. 
114.30 	Johnson economic protection trust fund. 

114.31 	Sec. 10. Minnesota Statutes 2004, section 298.28, subdivision 6, is amended to read:
114.32 		Subd. 6.Property tax relief. (a) In 2002 and thereafter, 33.9 cents per taxable 
114.33 	ton, less any amount required to be distributed under paragraphs (b) and (c), or section 
114.34 	298.2961, subdivision 5,  must be allocated to St. Louis County acting as the counties' 
114.35 	fiscal agent, to be distributed as provided in sections  273.134 to  273.136. 
115.1 	(b) If an electric power plant owned by and providing the primary source of power 
115.2 	for a taxpayer mining and concentrating taconite is located in a county other than the 
115.3 	county in which the mining and the concentrating processes are conducted, .1875 cent per 
115.4 	taxable ton of the tax imposed and collected from such taxpayer shall be paid to the county.
115.5 	(c) If an electric power plant owned by and providing the primary source of power 
115.6 	for a taxpayer mining and concentrating taconite is located in a school district other than 
115.7 	a school district in which the mining and concentrating processes are conducted, .4541 
115.8 	cent per taxable ton of the tax imposed and collected from the taxpayer shall be paid to 
115.9 	the school district.

115.10 	Sec. 11. Minnesota Statutes 2004, section 298.28, subdivision 8, is amended to read:
115.11 		Subd. 8.Range Association of Municipalities and Schools. .20 .30 cent per 
115.12 	taxable ton shall be paid to the Range Association of Municipalities and Schools, for 
115.13 	the purpose of providing an areawide approach to problems which demand coordinated 
115.14 	and cooperative actions and which are common to those areas of northeast Minnesota 
115.15 	affected by operations involved in mining iron ore and taconite and producing concentrate 
115.16 	therefrom, and for the purpose of promoting the general welfare and economic 
115.17 	development of the cities, towns and school districts within the iron range area of 
115.18 	northeast Minnesota.

115.19 	EFFECTIVE DATE. This section is effective for taxes paid in 2007 and subsequent 
115.20 	years.

115.21 	Sec. 12. Minnesota Statutes 2005 Supplement, section 298.2961, subdivision 4, 
115.22 	is amended to read:
115.23 		Subd. 4.Grant and loan fund. (a) A fund is established to receive distributions 
115.24 	under section 298.28, subdivision 9b, and to make grants or loans as provided in this 
115.25 	subdivision. Any grant or loan made under this subdivision must be approved by 
115.26 	a majority of the members of the Iron Range Resources and Rehabilitation Board, 
115.27 	established under section 298.22.
115.28 	(b) Distributions received in calendar year 2005 are allocated to the city of Virginia 
115.29 	for improvements and repairs to the city's steam heating system.
115.30 	(c) Distributions received in calendar year 2006 are allocated to a project of the 
115.31 	public utilities commissions of the cities of Hibbing and Virginia to convert their electrical 
115.32 	generating plants to the use of biomass products, such as wood.
115.33 	(d) Distributions received in calendar year 2007 must be paid to the city of Tower to 
115.34 	be used for the East Two Rivers project in or near the city of Tower.
116.1 	(e) For distributions received in 2008 and later,amounts may be allocated to joint 
116.2 	ventures with mining companies for reclamation of lands containing abandoned or worked 
116.3 	out mines to convert these lands to marketable properties for residential, recreational, 
116.4 	commercial, or other valuable uses, the first $2,000,000 of the 2008 distribution must be 
116.5 	paid to St. Louis County for deposit in its county road and bridge fund to be used for 
116.6 	relocation of St. Louis County Road 715, commonly referred to as Pike River Road. The 
116.7 	remainder of the 2008 distribution and the full amount of the distributions in 2009 and 
116.8 	subsequent years is allocated for projects under section 298.223, subdivision 1.

116.9 	Sec. 13. Minnesota Statutes 2004, section 298.2961, is amended by adding a 
116.10 	subdivision to read:
116.11 		Subd. 5.Public works and local economic development fund. For distributions in 
116.12 	2007 only, a special fund is established to receive 38.4 cents per ton that otherwise would 
116.13 	be allocated under section 298.28, subdivision 6. The following amounts are allocated to 
116.14 	St. Louis County acting as the fiscal agent for the recipients for the specific purposes:
116.15 	(1) 13.4 cents per ton for the Central Iron Range Sanitary Sewer District for 
116.16 	construction of a combined wastewater facility;
116.17 	(2) six cents per ton to the city of Eveleth to redesign and design and construct 
116.18 	improvements to renovate its water treatment facility;
116.19 	(3) one cent per ton for the East Range Joint Powers Board to acquire land for and to 
116.20 	design a central wastewater collection and treatment system;
116.21 	(4) 0.5 cents per ton to the city of Hoyt Lakes to repair Leeds Road;
116.22 	(5) 0.7 cents per ton to the city of Virginia to extend Eighth Street South;
116.23 	(6) 0.7 cents per ton to the city of Mountain Iron to repair Hoover Road;
116.24 	(7) 0.9 cents per ton to the city of Gilbert for alley repairs between Michigan and 
116.25 	Indiana Avenues and for repayment of a loan to the Minnesota Department of Employment 
116.26 	and Economic Development;
116.27 	(8) 0.4 cents per ton to the city of Keewatin for a new city well;
116.28 	(9) 0.3 cents per ton to the city of Grand Rapids for planning for a fire and hazardous 
116.29 	materials center;
116.30 	(10) 0.9 cents per ton to Aitkin County Growth for an economic development 
116.31 	project for peat harvesting;
116.32 	(11) 0.4 cents per ton to the city of Nashwauk to develop a comprehensive city plan;
116.33 	(12) 0.4 cents per ton to the city of Taconite for development of a city comprehensive 
116.34 	plan;
116.35 	(13) 0.3 cents per ton to the city of Marble for water and sewer infrastructure;
117.1 	(14) 0.8 cents per ton to Aitkin County for improvements to the Long Lake 
117.2 	Environmental Learning Center; 
117.3 	(15) 0.3 cents per ton to the city of Coleraine for the Coleraine Technology Center;
117.4 	(16) 0.5 cents per ton to the Economic Development Authority of the city of Grand 
117.5 	Rapids for planning for the North Central Research and Technology Laboratory;
117.6 	(17) 0.6 cents per ton to the city of Bovey for sewer and water extension;
117.7 	(18) 0.3 cents per ton to the city of Calumet for infrastructure improvements; and
117.8 	(19) ten cents per ton to an economic development authority in a city through which 
117.9 	State Highway 1 passes, or a city in Independent School District No. 2142 that has an 
117.10 	active mine, for an economic development project approved by the Iron Range Resources 
117.11 	and Rehabilitation Board.

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

117.13 	Sec. 14. Minnesota Statutes 2004, section 298.75, is amended by adding a subdivision 
117.14 	to read:
117.15 		Subd. 10.Tax may be imposed; Sylvan Township. (a) If Cass County does not 
117.16 	impose a tax under this section and approves imposition of the tax under this subdivision, 
117.17 	the town of Sylvan in Cass County may impose the aggregate materials tax under this 
117.18 	section. 
117.19 	(b) For purposes of exercising the powers contained in this section, the "town" is 
117.20 	deemed to be the "county." 
117.21 	(c) All provisions in this section apply to the town of Sylvan, except that, in lieu 
117.22 	of the distribution of the tax proceeds under subdivision 7, all proceeds of the tax must 
117.23 	be retained by the town. 
117.24 	(d) If Cass County imposes an aggregate materials tax under this section, the tax 
117.25 	imposed by the town of Sylvan under this subdivision is repealed on the effective date 
117.26 	of the Cass County tax. 

117.27 	EFFECTIVE DATE. This section is effective the day after the governing body of 
117.28 	the town of Sylvan and its chief clerical officer comply with section 645.021, subdivisions 
117.29 	2 and 3. 

117.30 	Sec. 15. Laws 2005, chapter 152, article 1, section 39, subdivision 1, is amended to 
117.31 	read:
117.32 		Subdivision 1.Issuance; purpose. Notwithstanding any provision of Minnesota 
117.33 	Statutes, chapter 298, to the contrary, the commissioner of Iron Range resources and 
118.1 	rehabilitation may shall issue revenue bonds in a principal amount of $15,000,000 plus 
118.2 	an amount sufficient to pay costs of issuance, in one or more series, and thereafter may 
118.3 	issue bonds to refund those bonds.  The proceeds of the bonds must be used to pay costs 
118.4 	of issuance and to make grants to school districts located in the taconite tax relief area 
118.5 	defined in Minnesota Statutes, section 273.134, or the taconite assistance area defined 
118.6 	in Minnesota Statutes, section 273.1341, to be used by the school districts to pay for 
118.7 	health, safety, and maintenance improvements but only if the school district has levied the 
118.8 	maximum amount allowable under law for those purposes.

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

118.10 	Sec. 16. TRANSITION PROVISIONS.
 118.11 	Each person with an alternative minimum tax credit on December 31, 2005, pursuant 
118.12 	to Minnesota Statutes 2004, section 298.01, subdivision 3d or 4e, may take that credit 
118.13 	against occupation tax under Minnesota Statutes, section 298.01.

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

118.15 	Sec. 17.  REPEALER.
 118.16 	Minnesota Statutes 2004, section 298.01, subdivisions 3c, 3d, 4d, and 4e, are 
118.17 	repealed effective for tax years beginning after December 31, 2005.

118.18 	ARTICLE 13
118.19 	MISCELLANEOUS

118.20 	Section 1. Minnesota Statutes 2005 Supplement, section 272.02, subdivision 83, 
118.21 	is amended to read:
118.22 		Subd. 83.International economic development zone property. (a) Improvements 
118.23 	to real property, and personal property, classified under section 273.13, subdivision 
118.24 	24, and located within the international economic development zone designated under 
118.25 	section 469.322, are exempt from ad valorem taxes levied under chapter 275, if the 
118.26 	improvements are:
118.27 	(1) part of a regional distribution center as defined in section 469.321; or
118.28 	(2) occupied by a qualified business as defined in section 469.321, that uses the 
118.29 	improvements primarily in freight forwarding operations.
118.30 	(b) The exemption applies beginning for the first assessment year after designation of 
118.31 	the international economic development zone. The exemption applies to each assessment 
118.32 	year that begins during the duration of the international economic development zone. To 
119.1 	be exempt under paragraph (a), clause (2), the property must be occupied by July 1 of the 
119.2 	assessment year by a qualified business that has signed the business subsidy agreement 
119.3 	by July 1 of the assessment year.

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

119.5 	Sec. 2. Minnesota Statutes 2005 Supplement, section 289A.20, subdivision 4, is 
119.6 	amended to read:
119.7 		Subd. 4.Sales and use tax. (a) The taxes imposed by chapter 297A are due and 
119.8 	payable to the commissioner monthly on or before the 20th day of the month following the 
119.9 	month in which the taxable event occurred, or following another reporting period as the 
119.10 	commissioner prescribes or as allowed under section 289A.18, subdivision 4, paragraph 
119.11 	(f) or (g), except that use taxes due on an annual use tax return as provided under section 
119.12 	289A.11, subdivision 1, are payable by April 15 following the close of the calendar year.
119.13 	(b) A vendor having a liability of $120,000 or more during a fiscal year ending June 
119.14 	30 must remit the June liability for the next year in the following manner:
119.15 	(1) Two business days before June 30 of the year, the vendor must remit 85 78 
119.16 	percent of the estimated June liability to the commissioner.
119.17 	(2) On or before August 20 of the year, the vendor must pay any additional amount 
119.18 	of tax not remitted in June.
119.19 	(c) A vendor having a liability of:
119.20 	(1) $20,000 or more in the fiscal year ending June 30, 2005; or
119.21 	(2) $10,000 or more in the fiscal year ending June 30, 2006, and fiscal years 
119.22 	thereafter,
119.23 	must remit all liabilities on returns due for periods beginning in the subsequent calendar 
119.24 	year by electronic means on or before the 20th day of the month following the month in 
119.25 	which the taxable event occurred, or on or before the 20th day of the month following the 
119.26 	month in which the sale is reported under section 289A.18, subdivision 4, except for 85 78
119.27 	percent of the estimated June liability, which is due two business days before June 30. The 
119.28 	remaining amount of the June liability is due on August 20.

119.29 	EFFECTIVE DATE. This section is effective for sales tax payments in June 2007 
119.30 	and thereafter.

119.31 	Sec. 3. Minnesota Statutes 2004, section 289A.60, subdivision 15, is amended to read:
119.32 		Subd. 15.Accelerated payment of June sales tax liability; penalty for 
119.33 	underpayment. (a) For payments made after December 31, 2002, and before January 1, 
120.1 	2004, if a vendor is required by law to submit an estimation of June sales tax liabilities 
120.2 	and 75 percent payment by a certain date, the vendor shall pay a penalty equal to ten 
120.3 	percent of the amount of actual June liability required to be paid in June less the amount 
120.4 	remitted in June. The penalty must not be imposed, however, if the amount remitted in 
120.5 	June equals the lesser of 75 percent of the preceding May's liability or 75 percent of the 
120.6 	average monthly liability for the previous calendar year.
120.7 	(b) For payments made after December 31, 2003 2006, if a vendor is required by 
120.8 	law to submit an estimation of June sales tax liabilities and 85 78 percent payment by a 
120.9 	certain date, the vendor shall pay a penalty equal to ten percent of the amount of actual 
120.10 	June liability required to be paid in June less the amount remitted in June. The penalty 
120.11 	must not be imposed, however, if the amount remitted in June equals the lesser of 85 78
120.12 	percent of the preceding May's liability or 85 78 percent of the average monthly liability 
120.13 	for the previous calendar year.

120.14 	EFFECTIVE DATE. This section is effective for sales tax payments in June 2007 
120.15 	and thereafter.

120.16 	Sec. 4. Minnesota Statutes 2005 Supplement, section 290.0922, subdivision 2, is 
120.17 	amended to read:
120.18 		Subd. 2.Exemptions. The following entities are exempt from the tax imposed 
120.19 	by this section:
120.20 	(1) corporations exempt from tax under section 290.05;
120.21 	(2) real estate investment trusts;
120.22 	(3) regulated investment companies or a fund thereof; and
120.23 	(4) entities having a valid election in effect under section 860D(b) of the Internal 
120.24 	Revenue Code;
120.25 	(5) town and farmers' mutual insurance companies;
120.26 	(6) cooperatives organized under chapter 308A or 308B that provide housing 
120.27 	exclusively to persons age 55 and over and are classified as homesteads under section 
120.28 	273.124, subdivision 3;
120.29 	(7) an entity, if for the taxable year all of its property is located in a job opportunity 
120.30 	building zone designated under section 469.314 and all of its payroll is a job opportunity 
120.31 	building zone payroll under section 469.310; and
120.32 	(8) an entity, if for the taxable year all of its property is located in an international 
120.33 	economic development zone designated under section 469.322, and all of its payroll is 
120.34 	international economic development zone payroll under section 469.321. The exemption 
121.1 	under this clause applies to taxable years beginning during the duration of the international 
121.2 	economic development zone.
121.3 	Entities not specifically exempted by this subdivision are subject to tax under this 
121.4 	section, notwithstanding section 290.05.

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

121.6 	Sec. 5. Minnesota Statutes 2005 Supplement, section 290.0922, subdivision 3, is 
121.7 	amended to read:
121.8 		Subd. 3.Definitions. (a) "Minnesota sales or receipts" means the total sales 
121.9 	apportioned to Minnesota pursuant to section 290.191, subdivision 5, the total receipts 
121.10 	attributed to Minnesota pursuant to section 290.191, subdivisions 6 to 8, and/or the 
121.11 	total sales or receipts apportioned or attributed to Minnesota pursuant to any other 
121.12 	apportionment formula applicable to the taxpayer.
121.13 	(b) "Minnesota property" means total Minnesota tangible property as provided in 
121.14 	section 290.191, subdivisions 9 to 11, any other tangible property located in Minnesota, 
121.15 	but does not include: (1) property located in a job opportunity building zone designated 
121.16 	under section 469.314, or (2) property of a qualified business located in a biotechnology 
121.17 	and health sciences industry zone designated under section 469.334, or (3) for taxable 
121.18 	years beginning during the duration of the zone, property of a qualified business located 
121.19 	in the international economic development zone designated under section 469.322. 
121.20 	Intangible property shall not be included in Minnesota property for purposes of this 
121.21 	section. Taxpayers who do not utilize tangible property to apportion income shall 
121.22 	nevertheless include Minnesota property for purposes of this section. On a return for 
121.23 	a short taxable year, the amount of Minnesota property owned, as determined under 
121.24 	section 290.191, shall be included in Minnesota property based on a fraction in which the 
121.25 	numerator is the number of days in the short taxable year and the denominator is 365.
121.26 	(c) "Minnesota payrolls" means total Minnesota payrolls as provided in section 
121.27 	290.191, subdivision 12, but does not include: (1) job opportunity building zone payrolls 
121.28 	under section 469.310, subdivision 8, or (2) biotechnology and health sciences industry 
121.29 	zone payrolls under section 469.330, subdivision 8, or (3) for taxable years beginning 
121.30 	during the duration of the zone, international economic development zone payrolls under 
121.31 	section 469.321, subdivision 9. Taxpayers who do not utilize payrolls to apportion income 
121.32 	shall nevertheless include Minnesota payrolls for purposes of this section.

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

122.1 	Sec. 6. Minnesota Statutes 2005 Supplement, section 297A.68, subdivision 41, is 
122.2 	amended to read:
122.3 		Subd. 41.International economic development zones. (a) Purchases of tangible 
122.4 	personal property or taxable services by a qualified business, as defined in section 469.321, 
122.5 	are exempt if the property or services are primarily used or consumed in the international 
122.6 	economic development zone designated under section 469.322. This exemption applies 
122.7 	only if the purchase is made and delivery received after the business signed the business 
122.8 	subsidy agreement required under chapter 469.
122.9 	(b) Purchase and use of construction materials, supplies, and equipment incorporated 
122.10 	into the construction of improvements to real property in the international economic 
122.11 	development zone are exempt if the improvements after completion of construction are 
122.12 	to be used as a regional distribution center as defined in section 469.321 or otherwise 
122.13 	used in the conduct of freight forwarding activities of a qualified business as defined in 
122.14 	section 469.321. This exemption applies regardless of whether the purchases are made 
122.15 	by the business or a contractor.
122.16 	(c) The exemptions under this subdivision apply to a local sales and use tax, 
122.17 	regardless of whether the local tax is imposed on sales taxable under this chapter or in 
122.18 	another law, ordinance, or charter provision.
122.19 	(d) The exemption in paragraph (a) applies exemptions in this section apply to sales 
122.20 	during the duration of the zone and after June 30, 2007, if the purchase was made and 
122.21 	delivery received after the business signs the business subsidy agreement required under 
122.22 	chapter 469 and purchases made after the date of final zone designation under section 
122.23 	469.322, paragraph (c), and before the expiration of the zone under section 469.322, 
122.24 	paragraph (d).
122.25 	(e) For purchases made for improvements to real property to be occupied by a 
122.26 	business that has not signed a business subsidy agreement at the time of the purchase, the 
122.27 	tax must be imposed and collected as if the rate under section 297A.62, subdivision 1, 
122.28 	applied, and then refunded in the manner provided in section 297A.75beginning in fiscal 
122.29 	year 2008. The taxpayer must attach to the claim for refund information sufficient for 
122.30 	the commissioner to be able to determine that the improvements are being occupied by 
122.31 	a business that has signed a business subsidy agreement.

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

122.33 	Sec. 7. Minnesota Statutes 2004, section 297F.09, subdivision 10, is amended to read:
122.34 		Subd. 10.Accelerated tax payment; cigarette or tobacco products distributor.
 122.35 	A cigarette or tobacco products distributor having a liability of $120,000 or more during a 
123.1 	fiscal year ending June 30, shall remit the June liability for the next year in the following 
123.2 	manner:
123.3 	(a) Two business days before June 30 of the year, the distributor shall remit the 
123.4 	actual May liability and 85 78 percent of the estimated June liability to the commissioner 
123.5 	and file the return in the form and manner prescribed by the commissioner.
123.6 	(b) On or before August 18 of the year, the distributor shall submit a return showing 
123.7 	the actual June liability and pay any additional amount of tax not remitted in June. A 
123.8 	penalty is imposed equal to ten percent of the amount of June liability required to be paid 
123.9 	in June, less the amount remitted in June. However, the penalty is not imposed if the 
123.10 	amount remitted in June equals the lesser of:
123.11 	(1) 85 78 percent of the actual June liability; or
123.12 	(2) 85 78 percent of the preceding May's liability.

123.13 	EFFECTIVE DATE. This section is effective for sales tax payments in June 2007 
123.14 	and thereafter.

123.15 	Sec. 8. Minnesota Statutes 2004, section 297G.09, subdivision 9, is amended to read:
123.16 		Subd. 9.Accelerated tax payment; penalty. A person liable for tax under this 
123.17 	chapter having a liability of $120,000 or more during a fiscal year ending June 30, shall 
123.18 	remit the June liability for the next year in the following manner:
123.19 	(a) Two business days before June 30 of the year, the taxpayer shall remit the actual 
123.20 	May liability and 85 78 percent of the estimated June liability to the commissioner and file 
123.21 	the return in the form and manner prescribed by the commissioner.
123.22 	(b) On or before August 18 of the year, the taxpayer shall submit a return showing 
123.23 	the actual June liability and pay any additional amount of tax not remitted in June. A 
123.24 	penalty is imposed equal to ten percent of the amount of June liability required to be paid 
123.25 	in June less the amount remitted in June. However, the penalty is not imposed if the 
123.26 	amount remitted in June equals the lesser of:
123.27 	(1) 85 78 percent of the actual June liability; or
123.28 	(2) 85 78 percent of the preceding May liability.

123.29 	EFFECTIVE DATE. This section is effective for sales tax payments in June 2007 
123.30 	and thereafter.

123.31 	Sec. 9. [469.193] FOREIGN TRADE ZONES.
123.32 	A city, county, town, or other political subdivision may apply to the board defined in 
123.33 	United States Code, title 19, section 81a, for the right to use the powers provided in United 
124.1 	States Code, title 19, sections 81a to 81u. If the right is granted, the city, county, town, or 
124.2 	other political subdivision may use the powers within or outside of a port district. Any 
124.3 	city, county, town, or other political subdivision may apply jointly with any other city, 
124.4 	county, town, or other political subdivision.

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

124.6 	Sec. 10. Minnesota Statutes 2004, section 469.312, subdivision 5, is amended to read:
124.7 		Subd. 5.Duration limit. (a) The maximum duration of a zone is 12 years. The 
124.8 	applicant may request a shorter duration. The commissioner may specify a shorter 
124.9 	duration, regardless of the requested duration.
124.10 	(b) The duration limit under this subdivision and the duration of the zone for 
124.11 	purposes of allowance of tax incentives described in section 469.315 is extended by three 
124.12 	calendar years for each parcel of property that meets the following requirements:
124.13 	(1) the qualified business operates an ethanol plant, as defined in section 41A.09, on 
124.14 	the site that includes the parcel; and 
124.15 	(2) the business subsidy agreement was executed after April 30, 2006, and before 
124.16 	July 1, 2007.

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

124.18 	Sec. 11. Minnesota Statutes 2005 Supplement, section 469.322, is amended to read:
124.19 	469.322 DESIGNATION OF INTERNATIONAL ECONOMIC 
124.20 	DEVELOPMENT ZONE.
124.21 	(a) An area designated as a foreign trade zone may be designated by the foreign 
124.22 	trade zone authority as an international economic development zone if within the zone 
124.23 	a regional distribution center is being developed pursuant to section 469.323. The zone 
124.24 	must consist of contiguous area of not less than 500 acres and not more than 1,000 acres. 
124.25 	The designation authority under this section is limited to one zone.
124.26 	(b) In making the designation, the foreign trade zone authority, in consultation with 
124.27 	the Minnesota Department of Transportation and the Metropolitan Council, shall consider 
124.28 	access to major transportation routes, consistency with current state transportation and 
124.29 	air cargo planning, adequacy of the size of the site, access to airport facilities, present 
124.30 	and future capacity at the designated airport, the capability to meet integrated present 
124.31 	and future air cargo, security, and inspection services, and access to other infrastructure 
124.32 	and financial incentives. The border of the international economic development zone 
125.1 	must be no more than 60 miles distant or 90 minutes drive time from the border of the 
125.2 	Minneapolis-St. Paul International Airport.
125.3 	(c) Before final designation of the zone, the foreign trade zone authority, in 
125.4 	consultation with the applicant, must conduct a transportation impact study based on the 
125.5 	regional model and utilizing traffic forecasting and assignments. The results must be used 
125.6 	to evaluate the effects of the proposed use on the transportation system and identify any 
125.7 	needed improvements. If the site is in the metropolitan area the study must also evaluate 
125.8 	the effect of the transportation impacts on the Metropolitan Transportation System plan 
125.9 	as well as the comprehensive plans of the municipalities that would be affected. The 
125.10 	authority shall provide copies of the study to the legislature under section 3.195 and to the 
125.11 	chairs of the committees with jurisdiction over transportation and economic development. 
125.12 	The applicant must pay the cost of the study.
125.13 	(c)(d) Final zone designation must be made by June 30, 2006 2008.
125.14 	(d)(e) Duration of the zone is a 12-year period beginning on January 1, 2007 2010.

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

125.16 	Sec. 12. Minnesota Statutes 2005 Supplement, section 469.323, subdivision 2, is 
125.17 	amended to read:
125.18 		Subd. 2.Business plan. Before designation of an international economic 
125.19 	development zone under section 469.322, the governing body of the foreign trade zone 
125.20 	authority shall prepare a business plan. The findings of the business plan shall be 
125.21 	presented to the legislature pursuant to section 3.195. Copies of the business plan shall be 
125.22 	provided to the chairs of committees with jurisdiction over transportation and economic 
125.23 	development. The plan must include an analysis of the economic feasibility of the regional 
125.24 	distribution center once it becomes operational and of the operations of freight forwarders 
125.25 	and other businesses that choose to locate within the boundaries of the zone. The analysis 
125.26 	must provide profitability models that:
125.27 	(1) include the benefits of the incentives;
125.28 	(2) estimate the amount of time needed to achieve profitability; and
125.29 	(3) analyze the length of time incentives will be necessary to the economic viability 
125.30 	of the regional distribution center.
125.31 	If the governing body of the foreign trade authority determines that the models do 
125.32 	not establish the economic feasibility of the project, the regional distribution center does 
125.33 	not meet the development requirements of this section and section 469.322.

126.1 	Sec. 13. Minnesota Statutes 2005 Supplement, section 469.327, is amended to read:
126.2 	469.327 JOBS CREDIT.
126.3 		Subdivision 1.Credit allowed. (a) A qualified business is allowed a credit against 
126.4 	the taxes imposed under chapter 290. The credit equals seven percent of the:
126.5 	(1) lesser of:
126.6 	(i) zone payroll for the taxable year, less the zone payroll for the base year; or
126.7 	(ii) total Minnesota payroll for the taxable year, less total Minnesota payroll for 
126.8 	the base year; minus
126.9 	(2) $30,000 multiplied by the number of full-time equivalent employees that the 
126.10 	qualified business employs in the international economic development zone for the taxable 
126.11 	year, minus the number of full-time equivalent employees the business employed in the 
126.12 	zone in the base year, but not less than zero.
126.13 	(b) This section applies only to tax years beginning during the duration of the 
126.14 	international economic development zone.
126.15 		Subd. 2.Definitions. (a) For purposes of this section, the following terms have 
126.16 	the meanings given.
126.17 	(b) "Base year" means the taxable year beginning during the calendar year 
126.18 	immediately preceding the calendar year in which the zone designation was made duration 
126.19 	of the zone begins under section 469.322, paragraph (d).
126.20 	(c) "Full-time equivalent employees" means the equivalent of annualized expected 
126.21 	hours of work equal to 2,080 hours.
126.22 	(d) "Minnesota payroll" means the wages or salaries attributed to Minnesota under 
126.23 	section 290.191, subdivision 12, for the qualified business or the unitary business of which 
126.24 	the qualified business is a part, whichever is greater.
126.25 	(e) "Zone payroll" means wages or salaries used to determine the zone payroll 
126.26 	factor for the qualified business, less the amount of compensation attributable to any 
126.27 	employee that exceeds $70,000.
126.28 		Subd. 3.Inflation adjustment. For taxable years beginning after December 31, 
126.29 	2006 2010, the dollar amounts in subdivisions 1, clause (2); and 2, paragraph (e), are 
126.30 	annually adjusted for inflation. The commissioner of revenue shall adjust the amounts by 
126.31 	the percentage determined under section 290.06, subdivision 2d, for the taxable year.
126.32 		Subd. 4.Refundable. If the amount of the credit exceeds the liability for tax under 
126.33 	chapter 290, the commissioner of revenue shall refund the excess to the qualified business.
126.34 		Subd. 5.Appropriation. An amount sufficient to pay the refunds authorized by this 
126.35 	section is appropriated to the commissioner of revenue from the general fund.

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

127.2 	Sec. 14. Minnesota Statutes 2004, section 473.39, is amended by adding a subdivision 
127.3 	to read:
127.4 		Subd. 11.Obligations. After July 1, 2006, in addition to the authority in 
127.5 	subdivisions 1a, 1b, 1c, 1d, 1e, 1g, 1h, 1i, 1j, and 1k, the council may issue certificates of 
127.6 	indebtedness, bonds, or other obligations under this section in an amount not exceeding 
127.7 	$32,800,000 for capital expenditures as prescribed in the council's regional transit master 
127.8 	plan and transit capital improvement program, as adopted through May 1, 2006, and for 
127.9 	related costs, including the costs of issuance and sale of the obligations.

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

127.11 	Sec. 15. Minnesota Statutes 2004, section 645.44, is amended by adding a subdivision 
127.12 	to read:
127.13 		Subd. 19.Fee and tax. (a) "Tax" means any fee, charge, exaction, or assessment 
127.14 	imposed by a governmental entity on an individual, person, entity, transaction, good, 
127.15 	service, or other thing.  It excludes a price that an individual or entity chooses voluntarily 
127.16 	to pay in return for receipt of goods or services provided by the governmental entity. 
127.17 	A government good or service does not include access to or the authority to engage in 
127.18 	private market transactions with a nongovernmental party, such as licenses to engage in a 
127.19 	trade, profession, or business or to improve private property.
127.20 	(b) For purposes of applying the laws of this state, a "fee," "charge," or other similar 
127.21 	term that satisfies the functional requirements of paragraph (a) must be treated as a tax 
127.22 	for all purposes, regardless of whether the statute or law names or describes it as a tax. 
127.23 	The provisions of this subdivision do not preempt or supersede limitations under law 
127.24 	that apply to fees, charges, or assessments.
127.25 	(c) This subdivision is not intended to extend or limit article 4, section 18 of the 
127.26 	Minnesota Constitution.

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

127.28 	Sec. 16. Laws 2005, First Special Session chapter 3, article 10, section 23, is amended 
127.29 	to read:
127.30 	Sec. 23. GRANTS TO QUALIFYING BUSINESSES.
127.31 	
128.1 	$750,000 is appropriated in fiscal year 2006 from the  general fund to the 
128.2 	commissioner of employment and economic  development to be distributed to the foreign 
128.3 	trade zone  authority to provide grants to qualified businesses as  determined by the 
128.4 	authority, subject to Minnesota Statutes,  sections 116J.993 to 116J.995, to provide 
128.5 	incentives for the  businesses to locate their operations in an international  economic 
128.6 	development zone.  If the money is not distributed  during fiscal year 2006, it remains 
128.7 	available for distribution  under this section during fiscal year 2007 until December 31, 
128.8 	2010.  

128.9 	Sec. 17. TAX RELIEF ACCOUNT.
 128.10 	(a) On June 30, 2006, the commissioner of finance shall cancel to the general fund an 
128.11 	amount in the tax relief account under Minnesota Statutes, section 16A.1522, subdivision 
128.12 	4, sufficient to provide an ending general fund balance for fiscal year 2007 of zero after 
128.13 	taking into account the effect on the general fund of laws enacted during the 2006 regular 
128.14 	legislative session relative to the February 2006 forecast.
128.15 	(b) On July 1, 2007, the remaining balance in the tax relief account under Minnesota 
128.16 	Statutes, section 16A.1522, subdivision 4, is cancelled to the general fund.

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

128.18 	Sec. 18. APPLICATION.
 128.19 	Section 14 applies in the counties of Anoka, Carver, Dakota, Hennepin, Ramsey, 
128.20 	Scott, and Washington.