1.1 	A bill for an act
1.2 	relating to local government; modifying municipal boundary adjustment 
1.3 	provisions; establishing the municipal boundary adjustment task force; 
1.4 	authorizing use of remaining committee funds;amending Minnesota Statutes 
1.5 	2004, sections 414.01, subdivision 1a; 414.02, by adding a subdivision; 414.031, 
1.6 	subdivision 4, by adding a subdivision; 414.0325, subdivision 1, by adding a 
1.7 	subdivision; 414.033, subdivisions 2, 12; 414.036; 414.061, subdivision 5; 
1.8 	proposing coding for new law in Minnesota Statutes, chapter 414.
1.9 	BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA:

1.10 	Section 1. MUNICIPAL BOUNDARY ADJUSTMENT ADVISORY TASK 
1.11 	FORCE ESTABLISHED.
 1.12 		Subdivision 1.Membership. An advisory task force on municipal boundary 
1.13 	adjustments is established to study and make recommendations on what, if any, changes 
1.14 	should be made to the law governing municipal boundary adjustments. The task force 
1.15 	shall develop recommendations regarding best practices annexation training for city and 
1.16 	township officials to better communicate and jointly plan potential annexations. The task 
1.17 	force is comprised of the following members:
1.18 	(1) two state senators, one from the majority caucus and one from the minority 
1.19 	caucus, appointed by at least two-thirds vote of the senate committee with jurisdiction 
1.20 	over local government issues;
1.21 	(2) two state representatives, one from the majority caucus and one from the 
1.22 	minority caucus, appointed by at least two-thirds vote of the house of representatives 
1.23 	committee with jurisdiction over local government issues;
1.24 	(3) three representatives of city interests, appointed by the League of Minnesota 
1.25 	Cities in consultation with the Association of Metropolitan Municipalities, the Coalition 
1.26 	of Greater Minnesota Cities, and the Minnesota Association of Small Cities;
2.1 	(4) three representatives of township interests, appointed by the Minnesota 
2.2 	Association of Townships; and
2.3 	(5) one person appointed jointly by the senate majority leader and the speaker of the 
2.4 	house of representatives to serve as chair of the task force, selected based on knowledge 
2.5 	and experience in municipal boundary adjustment issues and who could serve without bias 
2.6 	towards either side of the issue of annexation.
2.7 	All appointing authorities shall provide for balance of geographic areas of the state and 
2.8 	city and town interests.
2.9 		Subd. 2.Report by January 2007. The task force shall report its recommendations 
2.10 	to the chairs and members of the house of representatives and senate committees with 
2.11 	jurisdiction over municipal boundary adjustments by January 1, 2007. The task force shall 
2.12 	also provide a copy of its recommendations to the Legislative Reference Library.
2.13 		Subd. 3.Funds available. Any funds remaining in the committee budgets for the 
2.14 	house local government committee or the senate state and local government operations 
2.15 	committee as of the 2006 adjournment of the legislature will be available to pay for the 
2.16 	administrative expenses of the task force, including per diems and expenses of members 
2.17 	and the services of a facilitator from the management analysis division of the Department 
2.18 	of Administration. 

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

2.20 	Sec. 2. Minnesota Statutes 2004, section 414.01, subdivision 1a, is amended to read:
2.21 		Subd. 1a.Legislative findings. The legislature finds that:
2.22 	(1) sound urban development and preservation of agricultural land and open spaces 
2.23 	through land use planning is essential to the continued economic growth of this state;
2.24 	(2) municipal government most efficiently provides governmental services in areas 
2.25 	intensively developed for residential, commercial, industrial, and governmental purposes; 
2.26 	and township government most efficiently provides governmental services in areas used or 
2.27 	developed for agricultural, open space, and rural residential purposes;
2.28 	(3) the public interest requires that municipalities be formed when there exists or will 
2.29 	likely exist the necessary resources to provide for their economical and efficient operation;
2.30 	(4) annexation to existing municipalities of unincorporated areas unable to supply 
2.31 	municipal services should be facilitated; and
2.32 	(5) the consolidation of municipalities should be encouraged. long-range joint 
2.33 	powers planning or other cooperative efforts among counties, cities, and towns should 
2.34 	be encouraged.

3.1 	Sec. 3. Minnesota Statutes 2004, section 414.02, is amended by adding a subdivision 
3.2 	to read:
3.3 		Subd. 1a.Notice of intent to incorporate. At least 30 days before submitting to the 
3.4 	director the petition or resolution under this section, the township must serve the clerk of 
3.5 	each municipality and each township that is contiguous to the township by certified mail a 
3.6 	notice of the township's intent to incorporate.

3.7 	Sec. 4. Minnesota Statutes 2004, section 414.031, is amended by adding a subdivision 
3.8 	to read:
3.9 		Subd. 1a.Notice of intent to annex. At least 30 days before submitting to the 
3.10 	director a petition or resolution under this section, the municipality must serve the 
3.11 	township clerk of the affected township by certified mail a notice of the municipality's 
3.12 	intent to annex property within the township. The notice must clearly identify the 
3.13 	boundaries of the area proposed to be annexed.

3.14 	Sec. 5. Minnesota Statutes 2004, section 414.031, subdivision 4, is amended to read:
3.15 		Subd. 4.Relevant factors, order. (a) In arriving at a decision, the director shall 
3.16 	consider the following sources and factors:
3.17 	(1) recordings and public documents from joint informational meetings under 
3.18 	section 414.0333 relevant to other factors listed in this subdivision;
3.19 	(1) (2) present population and number of households, past population and projected 
3.20 	population growth of the annexing municipality and subject area and adjacent units of 
3.21 	local government;
3.22 	(2) (3) quantity of land within the subject area and adjacent units of local government; 
3.23 	and natural terrain including recognizable physical features, general topography, major 
3.24 	watersheds, soil conditions and such natural features as rivers, lakes and major bluffs;
3.25 	(3) (4) degree of contiguity of the boundaries between the annexing municipality 
3.26 	and the subject area;
3.27 	(4) (5) present pattern of physical development, planning, and intended land 
3.28 	uses in the subject area and the annexing municipality including residential, industrial, 
3.29 	commercial, agricultural and institutional land uses and the impact of the proposed action 
3.30 	on those land uses;
3.31 	(5) (6) the present transportation network and potential transportation issues, 
3.32 	including proposed highway development;
3.33 	(6) (7) land use controls and planning presently being utilized in the annexing 
3.34 	municipality and the subject area, including comprehensive plans for development in 
4.1 	the area and plans and policies of the Metropolitan Council, and whether there are 
4.2 	inconsistencies between proposed development and existing land use controls and the 
4.3 	reasons therefore;
4.4 	(7) (8) existing levels of governmental services being provided in the annexing 
4.5 	municipality and the subject area, including water and sewer service, fire rating and 
4.6 	protection, law enforcement, street improvements and maintenance, administrative 
4.7 	services, and recreational facilities and the impact of the proposed action on the delivery 
4.8 	of said services;
4.9 	(9) the implementation of previous annexation agreements and orders;
4.10 	(8) (10) existing or potential environmental problems and whether the proposed 
4.11 	action is likely to improve or resolve these problems;
4.12 	(9) (11) plans and programs by the annexing municipality for providing needed and 
4.13 	enhanced governmental services to the subject area in a cost-effective and feasible manner 
4.14 	within a reasonable time from the date of the annexation;
4.15 	(10) (12) an analysis of the fiscal impact on the annexing municipality, the subject 
4.16 	area, and adjacent units of local government, including net tax capacity and the present 
4.17 	bonded indebtedness, and the local tax rates of the county, school district, and township;
4.18 	(11) (13) relationship and effect of the proposed action on affected and adjacent 
4.19 	school districts and communities;
4.20 	(12) (14) adequacy of town government to deliver services to the subject area;
4.21 	(13) (15) analysis of whether necessary governmental services can best be provided 
4.22 	through the proposed action or another type of boundary adjustment; and
4.23 	(14) (16) if only a part of a township is annexed, the ability of the remainder of the 
4.24 	township to continue or the feasibility of it being incorporated separately or being annexed 
4.25 	to another municipality.
4.26 	(b) Based upon the factors, the director may order the annexation on finding:
4.27 	(1) that the subject area is now, or is about to become, urban or suburban in character;
4.28 	(2) that municipal government in the area proposed for annexation is required to 
4.29 	protect the public health, safety, and welfare; or
4.30 	(3) that the annexation would be in the best interest of the subject area.
4.31 	(c) If only a part of a township is to be annexed, the director shall consider whether 
4.32 	the remainder of the township can continue to carry on the functions of government 
4.33 	without undue hardship.
4.34 	(d) The director shall deny the annexation on finding that the increase in revenues for 
4.35 	the annexing municipality bears no reasonable relation to the monetary value of benefits 
4.36 	conferred upon the annexed area.
5.1 	(e) The director may deny the annexation on finding:
5.2 	(1) that annexation of all or a part of the property to an adjacent municipality would 
5.3 	better serve the interests of the residents of the property; or
5.4 	(2) that the remainder of the township would suffer undue hardship.
5.5 	(f) The director may alter the boundaries of the area to be annexed by increasing or 
5.6 	decreasing the area so as to include only that property which is now or is about to become 
5.7 	urban or suburban in character or to add property of such character abutting the area 
5.8 	proposed for annexation in order to preserve or improve the symmetry of the area, or to 
5.9 	exclude property that may better be served by another unit of government.
5.10 	(g) The director may also alter the boundaries of the proposed annexation so as to 
5.11 	follow visible, clearly recognizable physical features.
5.12 	(h) If the director determines that part of the area would be better served by another 
5.13 	municipality or township, the director may initiate and approve annexation by conducting 
5.14 	further hearings and issuing orders pursuant to subdivisions 3 and 4.
5.15 	(i) In all cases, the director shall set forth the factors which are the basis for the 
5.16 	decision.

5.17 	Sec. 6. Minnesota Statutes 2004, section 414.0325, subdivision 1, is amended to read:
5.18 		Subdivision 1.Initiating the proceeding. (a) One or more townships and one or 
5.19 	more municipalities, by joint resolution, may designate an unincorporated area as in 
5.20 	need of orderly annexation. One or more municipalities, by joint resolution with the 
5.21 	county, may designate an unincorporated area in which there is no organized township 
5.22 	government as in need of orderly annexation.
5.23 	(b) The joint resolution will confer jurisdiction on the director over annexations in 
5.24 	the designated area and over the various provisions in said agreement by submission of 
5.25 	said joint resolution to the director.
5.26 	(c) The resolution shall include a description of the designated area and the reasons 
5.27 	for designation.
5.28 	(d) Thereafter, an annexation of any part of the designated area may be initiated by:
5.29 	(1) submitting to the director a resolution of any signatory to the joint resolution; or
5.30 	(2) the director.
5.31 	(e) Whenever a state agency, other than the pollution control agency, orders a 
5.32 	municipality to extend a municipal service to an area, the order confers jurisdiction on the 
5.33 	director to consider designation of the area for orderly annexation.
6.1 	(f) If a joint resolution designates an area as in need of orderly annexation and states 
6.2 	that no alteration of its stated boundaries is appropriate, the director may review and 
6.3 	comment, but may not alter the boundaries.
6.4 	(g) If a joint resolution designates an area as in need of orderly annexation, provides 
6.5 	for the conditions for its annexation, and states that no consideration by the director is 
6.6 	necessary, the director may review and comment, but shall, within 30 days, order the 
6.7 	annexation in accordance with the terms of the resolution.

6.8 	Sec. 7. Minnesota Statutes 2004, section 414.0325, is amended by adding a subdivision 
6.9 	to read:
6.10 		Subd. 1b.Notice of intent to designate an area. At least ten days before the 
6.11 	municipality or township adopts an orderly annexation agreement, a notice of the intent to 
6.12 	include property in an orderly annexation area must be published in a newspaper of general 
6.13 	circulation in both the township and municipality. The notice must clearly identify the 
6.14 	boundaries of the area proposed to be included in the orderly annexation agreement and the 
6.15 	date, time, and place of the public informational meeting to be held as provided in section 
6.16 	414.0333. The cost of providing notice must be equally divided between the municipality 
6.17 	and the township, unless otherwise agreed upon by the municipality and the township.

6.18 	Sec. 8. Minnesota Statutes 2004, section 414.033, subdivision 2, is amended to read:
6.19 		Subd. 2.Conditions. A municipal council may by ordinance declare land annexed 
6.20 	to the municipality and any such land is deemed to be urban or suburban in character 
6.21 	or about to become so if:
6.22 	(1) the land is owned by the municipality;
6.23 	(2) the land is completely surrounded by land within the municipal limits;
6.24 	(3) the land abuts the municipality and the area to be annexed is 60 120 acres or less, 
6.25 	and the area to be annexed is not presently served by public sewer wastewater facilities 
6.26 	or public sewer wastewater facilities are not otherwise available, and the municipality 
6.27 	receives a petition for annexation from all the property owners of the land. Except as 
6.28 	provided for by an orderly annexation agreement, the director must not accept a petition 
6.29 	from a property owner for more than one annexation per year of property contiguous to 
6.30 	the parcel previously annexed under this clause; or
6.31 	(4) the land has been approved after August 1, 1995, by a preliminary plat or final 
6.32 	plat for subdivision to provide residential lots that average 21,780 square feet or less in 
6.33 	area and the land is located within two miles of the municipal limits.

7.1 	Sec. 9. Minnesota Statutes 2004, section 414.033, subdivision 12, is amended to read:
7.2 		Subd. 12.Property taxes. When a municipality annexes land under subdivision 2, 
7.3 	clause (2), (3), or (4), property taxes payable on the annexed land shall continue to be paid 
7.4 	to the affected town or towns for the year in which the annexation becomes effective. If 
7.5 	the annexation becomes effective on or before August 1 of a levy year, the municipality 
7.6 	may levy on the annexed area beginning with that same levy year. If the annexation 
7.7 	becomes effective after August 1 of a levy year, the town may continue to levy on the 
7.8 	annexed area for that levy year, and the municipality may not levy on the annexed area 
7.9 	until the following levy year. In the first year following the year when the municipality 
7.10 	could first levy on the annexed area under this subdivision, and thereafter, property taxes 
7.11 	on the annexed land shall be paid to the municipality. In the first year following the year 
7.12 	the municipality could first levy on the annexed area, the municipality shall make a cash 
7.13 	payment to the affected town or towns in an amount equal to 90 percent of the property 
7.14 	taxes distributed to the town in regard to the annexed area in the last year the property 
7.15 	taxes from the annexed area were payable to the town; in the second year, an amount 
7.16 	equal to 70 percent; in the third year, an amount equal to 50 percent; in the fourth year, 
7.17 	an amount equal to 30 percent; and in the fifth year, an amount equal to ten percent. The 
7.18 	municipality and the affected township may agree to a different payment.

7.19 	Sec. 10. [414.0333] JOINT INFORMATIONAL MEETING.
7.20 	There must be a joint informational meeting of the municipal council of the annexing 
7.21 	municipality and the town board of supervisors of the township containing the land 
7.22 	proposed to be annexed or included in annexation proceedings under section 414.0325 or 
7.23 	414.031. For an annexation under section 414.031, the joint information meeting must be 
7.24 	held after the final mediation meeting or the final meeting held pursuant to section 414.01, 
7.25 	subdivision 16, if any, and before the hearing on the matter is held. If no mediation 
7.26 	meetings are held, the joint informational meeting must be held after the initiating 
7.27 	documents have been filed and before the hearing on the matter. The time, date, and 
7.28 	place of the public informational meeting must be determined jointly by the chair of the 
7.29 	town board of supervisors and the mayor of the annexing municipality. The chair of the 
7.30 	town board of supervisors and the mayor must serve as the cochairs for the informational 
7.31 	meeting. Notice of the time, date, place, and purpose of the informational meeting must be 
7.32 	posted by the town clerk in the township's designated place for posting notices, and by the 
7.33 	municipal clerk in the municipality's designated place for posting notices. A joint notice 
7.34 	shall be published in a newspaper of general circulation within both the municipality and 
7.35 	the township. All notice required by this section must be provided at least ten days before 
8.1 	the date for the public informational meeting. At the public informational meeting, all 
8.2 	persons appearing must have an opportunity to be heard. The municipal council, the town 
8.3 	board of supervisors, and any resident or affected property owner may be represented by 
8.4 	counsel and introduce evidence, including but not limited to expert testimony, into the 
8.5 	record of the informational meeting. The clerk of the township must record minutes 
8.6 	of the proceedings of the informational meeting and the municipal clerk must make an 
8.7 	audio recording of the informational meeting. The township must provide the director 
8.8 	and the municipality with a copy of the printed minutes and the municipality must 
8.9 	provide the director and the township with a copy of the audio recording. The record of 
8.10 	the informational meeting for a proceeding under section 414.031 is admissible in any 
8.11 	proceeding under this chapter and shall be taken into consideration by the director or 
8.12 	the director's designee.

8.13 	Sec. 11. Minnesota Statutes 2004, section 414.036, is amended to read:
8.14 	414.036 CITY REIMBURSEMENT TO TOWN TO ANNEX TAXABLE 
8.15 	PROPERTY.
8.16 	Unless otherwise agreed to by the annexing municipality and the affected town, when 
8.17 	an order or other approval under section  414.0325 this chapter annexes part of a town to a 
8.18 	municipality, the orderly annexation agreement between the town and municipality may
8.19 	order or other approval must provide a reimbursement from the municipality to the town 
8.20 	for all or part of the taxable property annexed as part of the order. The reimbursement 
8.21 	shall be completed in substantially equal payments over not less than two nor more 
8.22 	than six eight years from the time of annexation. The municipality must reimburse the 
8.23 	township for all special assessments assigned by the township to the annexed property, 
8.24 	and any portion of debt incurred by the town prior to the annexation and attributable 
8.25 	to the property to be annexed but for which no special assessments are outstanding, in 
8.26 	substantially equal payments over not less than two or more than eight years.

8.27 	Sec. 12. Minnesota Statutes 2004, section 414.061, subdivision 5, is amended to read:
8.28 		Subd. 5.Property owners may initiate. Property owners may initiate proceedings 
8.29 	for the concurrent detachment of their property from one municipality and its annexation 
8.30 	to an adjacent municipality by a petition signed by all of them that they submit to the 
8.31 	director accompanied by a resolution of the city council of at least one each of the affected 
8.32 	municipalities. The director shall conduct hearings and issue an order pursuant to section  
8.33 	414.09. In arriving at a decision, the director shall consider the factors in section  414.02, 
8.34 	subdivision 3. The director shall order the proposed action on finding that it will be for the 
9.1 	best interests of the municipalities and the property owner. In all cases, the director shall 
9.2 	set forth the factors which are the basis for the decision. 

9.3 	Sec. 13. EFFECTIVE DATE.
 9.4 	Section 8 is effective until July 1, 2007.