1.1 	A bill for an act
1.2 	relating to taxation; delaying the final designation of the international economic 
1.3 	development zone and the beginning of zone duration; changing corresponding 
1.4 	dates relating to tax incentives; authorizing political subdivisions to apply for 
1.5 	foreign trade zone powers; extending the period that appropriation for funding 
1.6 	certain grants to qualifying business is available;amending Minnesota Statutes 
1.7 	2005 Supplement, sections 272.02, subdivision 83; 290.0922, subdivisions 2, 3; 
1.8 	297A.68, subdivision 41; 469.322; 469.323, subdivision 2; 469.327;  Laws 2005, 
1.9 	First Special Session chapter 3, article 10, section 23; proposing coding for new 
1.10 	law in Minnesota Statutes, chapter 469.
1.11 	BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA:

1.12 	Section 1. Minnesota Statutes 2005 Supplement, section 272.02, subdivision 83, 
1.13 	is amended to read:
1.14 		Subd. 83.International economic development zone property. (a) Improvements 
1.15 	to real property, and personal property, classified under section 273.13, subdivision 
1.16 	24, and located within the international economic development zone designated under 
1.17 	section 469.322, are exempt from ad valorem taxes levied under chapter 275, if the 
1.18 	improvements are:
1.19 	(1) part of a regional distribution center as defined in section 469.321; or
1.20 	(2) occupied by a qualified business as defined in section 469.321, that uses the 
1.21 	improvements primarily in freight forwarding operations.
1.22 	(b) The exemption applies beginning for the first assessment year after designation of 
1.23 	the international economic development zone. The exemption applies to each assessment 
1.24 	year that begins during the duration of the international economic development zone. To 
1.25 	be exempt under paragraph (a), clause (2), the property must be occupied by July 1 of the 
1.26 	assessment year by a qualified business that has signed the business subsidy agreement 
1.27 	by July 1 of the assessment year.

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

2.2 	Sec. 2. Minnesota Statutes 2005 Supplement, section 290.0922, subdivision 2, is 
2.3 	amended to read:
2.4 		Subd. 2.Exemptions. The following entities are exempt from the tax imposed 
2.5 	by this section:
2.6 	(1) corporations exempt from tax under section 290.05;
2.7 	(2) real estate investment trusts;
2.8 	(3) regulated investment companies or a fund thereof; and
2.9 	(4) entities having a valid election in effect under section 860D(b) of the Internal 
2.10 	Revenue Code;
2.11 	(5) town and farmers' mutual insurance companies;
2.12 	(6) cooperatives organized under chapter 308A or 308B that provide housing 
2.13 	exclusively to persons age 55 and over and are classified as homesteads under section 
2.14 	273.124, subdivision 3;
2.15 	(7) an entity, if for the taxable year all of its property is located in a job opportunity 
2.16 	building zone designated under section 469.314 and all of its payroll is a job opportunity 
2.17 	building zone payroll under section 469.310; and
2.18 	(8) an entity, if for the taxable year all of its property is located in an international 
2.19 	economic development zone designated under section 469.322, and all of its payroll is 
2.20 	international economic development zone payroll under section 469.321. The exemption 
2.21 	under this clause applies to taxable years beginning during the duration of the international 
2.22 	economic development zone.
2.23 	Entities not specifically exempted by this subdivision are subject to tax under this 
2.24 	section, notwithstanding section 290.05.

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

2.26 	Sec. 3. Minnesota Statutes 2005 Supplement, section 290.0922, subdivision 3, is 
2.27 	amended to read:
2.28 		Subd. 3.Definitions. (a) "Minnesota sales or receipts" means the total sales 
2.29 	apportioned to Minnesota pursuant to section 290.191, subdivision 5, the total receipts 
2.30 	attributed to Minnesota pursuant to section 290.191, subdivisions 6 to 8, and/or the 
2.31 	total sales or receipts apportioned or attributed to Minnesota pursuant to any other 
2.32 	apportionment formula applicable to the taxpayer.
2.33 	(b) "Minnesota property" means total Minnesota tangible property as provided in 
2.34 	section 290.191, subdivisions 9 to 11, any other tangible property located in Minnesota, 
3.1 	but does not include: (1) property located in a job opportunity building zone designated 
3.2 	under section 469.314, or (2) property of a qualified business located in a biotechnology 
3.3 	and health sciences industry zone designated under section 469.334, or (3) for taxable 
3.4 	years beginning during the duration of the zone, property of a qualified business located 
3.5 	in the international economic development zone designated under section 469.322. 
3.6 	Intangible property shall not be included in Minnesota property for purposes of this 
3.7 	section. Taxpayers who do not utilize tangible property to apportion income shall 
3.8 	nevertheless include Minnesota property for purposes of this section. On a return for 
3.9 	a short taxable year, the amount of Minnesota property owned, as determined under 
3.10 	section 290.191, shall be included in Minnesota property based on a fraction in which the 
3.11 	numerator is the number of days in the short taxable year and the denominator is 365.
3.12 	(c) "Minnesota payrolls" means total Minnesota payrolls as provided in section 
3.13 	290.191, subdivision 12, but does not include: (1) job opportunity building zone payrolls 
3.14 	under section 469.310, subdivision 8, or (2) biotechnology and health sciences industry 
3.15 	zone payrolls under section 469.330, subdivision 8, or (3) for taxable years beginning 
3.16 	during the duration of the zone, international economic development zone payrolls under 
3.17 	section 469.321, subdivision 9. Taxpayers who do not utilize payrolls to apportion income 
3.18 	shall nevertheless include Minnesota payrolls for purposes of this section.

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

3.20 	Sec. 4. Minnesota Statutes 2005 Supplement, section 297A.68, subdivision 41, is 
3.21 	amended to read:
3.22 		Subd. 41.International economic development zones. (a) Purchases of tangible 
3.23 	personal property or taxable services by a qualified business, as defined in section 469.321, 
3.24 	are exempt if the property or services are primarily used or consumed in the international 
3.25 	economic development zone designated under section 469.322.
3.26 	(b) Purchase and use of construction materials, supplies, and equipment incorporated 
3.27 	into the construction of improvements to real property in the international economic 
3.28 	development zone are exempt if the improvements after completion of construction are 
3.29 	to be used as a regional distribution center as defined in section 469.321 or otherwise 
3.30 	used in the conduct of freight forwarding activities of a qualified business as defined in 
3.31 	section 469.321. This exemption applies regardless of whether the purchases are made 
3.32 	by the business or a contractor.
3.33 	(c) The exemptions under this subdivision apply to a local sales and use tax, 
3.34 	regardless of whether the local tax is imposed on sales taxable under this chapter or in 
3.35 	another law, ordinance, or charter provision.
4.1 	(d) The exemption in paragraph (a) applies exemptions in this section apply to sales 
4.2 	during the duration of the zone and after June 30, 2007, if the purchase was made and 
4.3 	delivery received after the business signs the business subsidy agreement required under 
4.4 	chapter 469 and purchases made after the date of final zone designation under section 
4.5 	469.322, paragraph (c), and before the expiration of the zone under section 469.322, 
4.6 	paragraph (d).
4.7 	(e) For purchases made for improvements to real property to be occupied by a 
4.8 	business that has not signed a business subsidy agreement at the time of the purchase, the 
4.9 	tax must be imposed and collected as if the rate under section 297A.62, subdivision 1, 
4.10 	applied, and then refunded in the manner provided in section 297A.75beginning in fiscal 
4.11 	year 2008. The taxpayer must attach to the claim for refund information sufficient for 
4.12 	the commissioner to be able to determine that the improvements are being occupied by 
4.13 	a business that has signed a business subsidy agreement.

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

4.15 	Sec. 5. [469.193] FOREIGN TRADE ZONES.
4.16 	A city, county, town, or other political subdivision may apply to the board defined in 
4.17 	United States Code, title 19, section 81a, for the right to use the powers provided in United 
4.18 	States Code, title 19, sections 81a to 81u. If the right is granted, the city, county, town, or 
4.19 	other political subdivision may use the powers within or outside of a port district. Any 
4.20 	city, county, town, or other political subdivision may apply jointly with any other city, 
4.21 	county, town, or other political subdivision.

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

4.23 	Sec. 6. Minnesota Statutes 2005 Supplement, section 469.322, is amended to read:
4.24 	469.322 DESIGNATION OF INTERNATIONAL ECONOMIC 
4.25 	DEVELOPMENT ZONE.
4.26 	(a) An area designated as a foreign trade zone may be designated by the foreign 
4.27 	trade zone authority as an international economic development zone if within the zone 
4.28 	a regional distribution center is being developed pursuant to section 469.323. The zone 
4.29 	must consist of contiguous area of not less than 500 acres and not more than 1,000 acres. 
4.30 	The designation authority under this section is limited to one zone.
4.31 	(b) In making the designation, the foreign trade zone authority, in consultation with 
4.32 	the Minnesota Department of Transportation and the Metropolitan Council, shall consider 
4.33 	access to major transportation routes, consistency with current state transportation and 
5.1 	air cargo planning, adequacy of the size of the site, access to airport facilities, present 
5.2 	and future capacity at the designated airport, the capability to meet integrated present 
5.3 	and future air cargo, security, and inspection services, and access to other infrastructure 
5.4 	and financial incentives. The border of the international economic development zone 
5.5 	must be no more than 60 miles distant or 90 minutes drive time from the border of the 
5.6 	Minneapolis-St. Paul International Airport.
5.7 	(c) Before final designation of the zone, the foreign trade zone authority, in 
5.8 	consultation with the applicant, must conduct a transportation impact study based on the 
5.9 	regional model and utilizing traffic forecasting and assignments. The results must be used 
5.10 	to evaluate the effects of the proposed use on the transportation system and identify any 
5.11 	needed improvements. If the site is in the metropolitan area, the study must also evaluate 
5.12 	the effect of the transportation impacts on the metropolitan transportation system plan 
5.13 	as well as the comprehensive plans of the municipalities that would be affected. The 
5.14 	authority shall provide copies of the study to the legislature under section 3.195 and to the 
5.15 	chairs of the committees with jurisdiction over transportation and economic development. 
5.16 	The applicant must pay the cost of the study.
5.17 	(c)(d) Final zone designation must be made by June 30, 2006 2008.
5.18 	(d)(e) Duration of the zone is a 12-year period beginning on January 1, 2007 2010.

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

5.20 	Sec. 7. Minnesota Statutes 2005 Supplement, section 469.323, subdivision 2, is 
5.21 	amended to read:
5.22 		Subd. 2.Business plan. Before designation of an international economic 
5.23 	development zone under section 469.322, the governing body of the foreign trade zone 
5.24 	authority shall prepare a business plan. The findings of the business plan shall be 
5.25 	presented to the legislature pursuant to section 3.195. Copies of the business plan shall be 
5.26 	provided to the chairs of committees with jurisdiction over transportation and economic 
5.27 	development. The plan must include an analysis of the economic feasibility of the regional 
5.28 	distribution center once it becomes operational and of the operations of freight forwarders 
5.29 	and other businesses that choose to locate within the boundaries of the zone. The analysis 
5.30 	must provide profitability models that:
5.31 	(1) include the benefits of the incentives;
5.32 	(2) estimate the amount of time needed to achieve profitability; and
5.33 	(3) analyze the length of time incentives will be necessary to the economic viability 
5.34 	of the regional distribution center.
6.1 	If the governing body of the foreign trade authority determines that the models do 
6.2 	not establish the economic feasibility of the project, the regional distribution center does 
6.3 	not meet the development requirements of this section and section 469.322.

6.4 	Sec. 8. Minnesota Statutes 2005 Supplement, section 469.327, is amended to read:
6.5 	469.327 JOBS CREDIT.
6.6 		Subdivision 1.Credit allowed. (a) A qualified business is allowed a credit against 
6.7 	the taxes imposed under chapter 290. The credit equals seven percent of the:
6.8 	(1) lesser of:
6.9 	(i) zone payroll for the taxable year, less the zone payroll for the base year; or
6.10 	(ii) total Minnesota payroll for the taxable year, less total Minnesota payroll for 
6.11 	the base year; minus
6.12 	(2) $30,000 multiplied by the number of full-time equivalent employees that the 
6.13 	qualified business employs in the international economic development zone for the taxable 
6.14 	year, minus the number of full-time equivalent employees the business employed in the 
6.15 	zone in the base year, but not less than zero.
6.16 	(b) This section applies only to tax years beginning during the duration of the 
6.17 	international economic development zone.
6.18 		Subd. 2.Definitions. (a) For purposes of this section, the following terms have 
6.19 	the meanings given.
6.20 	(b) "Base year" means the taxable year beginning during the calendar year 
6.21 	immediately preceding the calendar year in which the zone designation was made duration 
6.22 	of the zone begins under section 469.322, paragraph (d).
6.23 	(c) "Full-time equivalent employees" means the equivalent of annualized expected 
6.24 	hours of work equal to 2,080 hours.
6.25 	(d) "Minnesota payroll" means the wages or salaries attributed to Minnesota under 
6.26 	section 290.191, subdivision 12, for the qualified business or the unitary business of which 
6.27 	the qualified business is a part, whichever is greater.
6.28 	(e) "Zone payroll" means wages or salaries used to determine the zone payroll 
6.29 	factor for the qualified business, less the amount of compensation attributable to any 
6.30 	employee that exceeds $70,000.
6.31 		Subd. 3.Inflation adjustment. For taxable years beginning after December 31, 
6.32 	2006 2010, the dollar amounts in subdivisions 1, clause (2); and 2, paragraph (e), are 
6.33 	annually adjusted for inflation. The commissioner of revenue shall adjust the amounts by 
6.34 	the percentage determined under section 290.06, subdivision 2d, for the taxable year.
7.1 		Subd. 4.Refundable. If the amount of the credit exceeds the liability for tax under 
7.2 	chapter 290, the commissioner of revenue shall refund the excess to the qualified business.
7.3 		Subd. 5.Appropriation. An amount sufficient to pay the refunds authorized by this 
7.4 	section is appropriated to the commissioner of revenue from the general fund.

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

7.6 	Sec. 9. Laws 2005, First Special Session chapter 3, article 10, section 23, is amended 
7.7 	to read:
7.8 	Sec. 23. GRANTS TO QUALIFYING BUSINESSES.
7.9 	
7.10 	$750,000 is appropriated in fiscal year 2006 from the  general fund to the 
7.11 	commissioner of employment and economic  development to be distributed to the foreign 
7.12 	trade zone  authority to provide grants to qualified businesses as  determined by the 
7.13 	authority, subject to Minnesota Statutes,  sections 116J.993 to 116J.995, to provide 
7.14 	incentives for the  businesses to locate their operations in an international  economic 
7.15 	development zone.  If the money is not distributed  during fiscal year 2006, it remains 
7.16 	available for distribution  under this section during fiscal year 2007 until December 31, 
7.17 	2010.