1.1 	A bill for an act
1.2 	relating to property taxation; modifying the definition of property classified 
1.3 	as agricultural; defining the classification of rural vacant land; modifying the 
1.4 	criteria for property to be enrolled in the Minnesota agricultural property tax law;
1.5 	amending Minnesota Statutes 2006, sections 273.11, by adding a subdivision; 
1.6 	273.111, subdivisions 3, as amended, 4, 8, 9, 11, 11a, by adding a subdivision; 
1.7 	273.13, subdivision 23, as amended; repealing Minnesota Statutes 2006, section 
1.8 	273.111, subdivision 6.
1.9 	BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA:

1.10 	Section 1. Minnesota Statutes 2006, section 273.11, is amended by adding a 
1.11 	subdivision to read:
1.12 		Subd. 24.Rural vacant land abutting public waters. (a) Any property that:
1.13 	(1) is located in a township;
1.14 	(2) is classified as rural vacant land under section 273.13, subdivision 23, paragraph 
1.15 	(c); and
1.16 	(3) abuts public waters in whole or in part, shall be valued by the assessor on the 
1.17 	same basis as rural vacant land of the same quality that does not abut public waters until 
1.18 	some action is taken to develop the land as specified in paragraph (c).
1.19 	(b) In each assessment year, the assessor shall determine the estimated market value 
1.20 	of the property as provided under subdivision 1, taking into consideration its highest 
1.21 	and best use. For each year that the property is classified under this subdivision, the 
1.22 	property tax statement shall include a notice that the property is being taxed under a 
1.23 	reduced valuation that will terminate under certain conditions.
1.24 	(c) An owner of property meeting the criteria of this subdivision must notify the 
1.25 	county assessor within 30 days of applying for a development permit from the county or 
2.1 	local zoning board. If development permits are not required, an owner of property meeting 
2.2 	the criteria of this subdivision must notify the assessor prior to the property being platted.
2.3 	(d) When one of the conditions specified in paragraph (c) occurs, additional taxes 
2.4 	shall be imposed in an amount equal to (1) the difference between the amount of taxes 
2.5 	actually levied on the property in the current year, and the amount of taxes that would 
2.6 	have been levied in the current year based on the estimated market value determined under 
2.7 	paragraph (b), (2) multiplied by seven. The additional taxes shall be extended against the 
2.8 	property on the tax list for the current year, provided that no interest or penalties shall be 
2.9 	levied on the additional taxes if timely paid. For purposes of this subdivision, "public 
2.10 	waters" means a meandered lake as defined under section 103G.005, subdivision 15, 
2.11 	paragraph (a), clause (3).

2.12 	EFFECTIVE DATE. This section is effective for the 2008 assessment and 
2.13 	thereafter.

2.14 	Sec. 2. Minnesota Statutes 2006, section 273.111, subdivision 3, as amended by Laws 
2.15 	2008, chapter 154, article 13, section 26, is amended to read:
2.16 		Subd. 3. Requirements. (a) Real estate consisting of ten acres or more or a nursery 
2.17 	or greenhouse, and qualifying for classification as class 1b, 2a, or 2b under section 273.13, 
2.18 	shall be entitled to valuation and tax deferment under this section only if it is primarily 
2.19 	devoted to agricultural use, and meets the qualifications in subdivision 6, and either: 
2.20 	(1) is the homestead of the owner, or of a surviving spouse, child, or sibling of the 
2.21 	owner or is real estate which is farmed with the real estate which contains the homestead 
2.22 	property; or 
2.23 	(2) has been in possession of the applicant, the applicant's spouse, parent, or sibling, 
2.24 	or any combination thereof, for a period of at least seven years prior to application for 
2.25 	benefits under the provisions of this section, or is real estate which is farmed with the 
2.26 	real estate which qualifies under this clause and is within four townships or cities or 
2.27 	combination thereof from the qualifying real estate; or 
2.28 	(3) is the homestead of a shareholder in a family farm corporation as defined in an 
2.29 	individual who is part of an entity in compliance with section 500.24, notwithstanding 
2.30 	the fact that legal title to the real estate may be held in the name of the family farm 
2.31 	corporation; or 
2.32 	(4) is in the possession of a nursery or greenhouse or an entity owned by a proprietor, 
2.33 	partnership, or corporation which also owns the nursery or greenhouse operations on 
2.34 	the parcel or parcels, provided that only the acreage that is used to grow nursery stock 
2.35 	qualify for treatment under this section. 
3.1 	(b) Valuation of real estate under this section is limited to parcels the ownership of 
3.2 	which is in noncorporate entities except for:
3.3 	(1) family farm corporations organized pursuant to section 500.24; and 
3.4 	(2) corporations that derive 80 percent or more of their gross receipts from the 
3.5 	wholesale or retail sale of horticultural or nursery stock. 
3.6 	(c) Land that previously qualified for tax deferment under this section and no longer 
3.7 	qualifies because it is not primarily used for agricultural purposes but would otherwise 
3.8 	qualify under subdivisions Minnesota Statutes 2006, section 273.111, subdivision 3 and 6
3.9 	for a period of at least three years will not be required to make payment of the previously 
3.10 	deferred taxes, notwithstanding the provisions of subdivision 9. Sale of the land prior to 
3.11 	the expiration of the three-year period requires payment of deferred taxes as follows: sale 
3.12 	in the year the land no longer qualifies requires payment of the current year's deferred 
3.13 	taxes plus payment of deferred taxes for the two prior years; sale during the second year 
3.14 	the land no longer qualifies requires payment of the current year's deferred taxes plus 
3.15 	payment of the deferred taxes for the prior year; and sale during the third year the land 
3.16 	no longer qualifies requires payment of the current year's deferred taxes. Deferred taxes 
3.17 	shall be paid even if the land qualifies pursuant to subdivision 11a. When such property is 
3.18 	sold or no longer qualifies under this paragraph, or at the end of the three-year period, 
3.19 	whichever comes first, all deferred special assessments plus interest are payable in equal 
3.20 	installments spread over the time remaining until the last maturity date of the bonds issued 
3.21 	to finance the improvement for which the assessments were levied. If the bonds have 
3.22 	matured, the deferred special assessments plus interest are payable within 90 days. The 
3.23 	provisions of section 429.061, subdivision 2, apply to the collection of these installments. 
3.24 	Penalties are not imposed on any such special assessments if timely paid. 

3.25 	EFFECTIVE DATE. This section is effective for assessment year 2008 and 
3.26 	thereafter.

3.27 	Sec. 3. Minnesota Statutes 2006, section 273.111, is amended by adding a subdivision 
3.28 	to read:
3.29 		Subd. 3a.Property no longer eligible for deferment. Real estate that qualifies for 
3.30 	tax deferment under this section for assessment year 2007, but which does not qualify 
3.31 	for the current assessment year due to changes in qualification requirements under this 
3.32 	act, shall continue to qualify until the land is sold or transferred, provided that the 
3.33 	property continues to meet the requirements of Minnesota Statutes 2006, section 273.111, 
3.34 	subdivision 3.

4.1 	EFFECTIVE DATE. This section is effective for taxes payable in 2009 and 
4.2 	thereafter.

4.3 	Sec. 4. Minnesota Statutes 2006, section 273.111, subdivision 4, is amended to read:
4.4 		Subd. 4.Determination of value. (a) The value of any real estate described 
4.5 	in subdivision 3 shall upon timely application by the owner, in the manner provided 
4.6 	in subdivision 8, be determined solely with reference to its appropriate agricultural 
4.7 	classification and value notwithstanding sections 272.03, subdivision 8, and 273.11. In 
4.8 	determining the value for ad valorem tax purposes, the assessor shall use sales data for 
4.9 	agricultural lands located outside the seven metropolitan counties having similar soil 
4.10 	types, number of degree days, and other similar agricultural characteristics. Furthermore, 
4.11 	the assessor shall not consider any added values resulting from nonagricultural factors. 
4.12 	In order to account for the presence of nonagricultural influences that may affect the value 
4.13 	of agricultural land, the commissioner of revenue shall develop a fair and uniform method 
4.14 	of determining agricultural values for each county in the state that are consistent with this 
4.15 	subdivision. The commissioner shall annually assign the resulting values to each county, 
4.16 	and these values shall be used as the basis for determining the agricultural value for all 
4.17 	properties in the county qualifying for tax deferment under this section.
4.18 	(b) In the case of property qualifying for tax deferment only under subdivision 3a 
4.19 	of this section, the value shall be based on the value in effect for assessment year 2007, 
4.20 	multiplied by the ratio of the total taxable market value of all property in the county for 
4.21 	the current assessment year divided by the total taxable market value of all property 
4.22 	in the county for assessment year 2007.

4.23 	EFFECTIVE DATE. This section is effective for taxes payable in 2009 and 
4.24 	thereafter.

4.25 	Sec. 5. Minnesota Statutes 2006, section 273.111, subdivision 8, is amended to read:
4.26 		Subd. 8.Application. Application for deferment of taxes and assessment under this 
4.27 	section shall be filed by May 1 of the year prior to the year in which the taxes are payable. 
4.28 	Any application filed hereunder and granted shall continue in effect for subsequent years 
4.29 	until the property no longer qualifies. Such application shall be filed with the assessor of 
4.30 	the taxing district in which the real property is located on such form as may be prescribed 
4.31 	by the commissioner of revenue. The assessor may require proof by affidavit or otherwise 
4.32 	that the property qualifies under subdivisions subdivision 3 and 6.

5.1 	EFFECTIVE DATE. This section is effective for taxes payable in 2009 and 
5.2 	thereafter.

5.3 	Sec. 6. Minnesota Statutes 2006, section 273.111, subdivision 9, is amended to read:
5.4 		Subd. 9.Additional taxes. When real property which is being, or has been valued 
5.5 	and assessed under this section no longer qualifies under subdivisions subdivision 3 and 6
5.6 	or 3a, the portion no longer qualifying shall be subject to additional taxes, in the amount 
5.7 	equal to the difference between the taxes determined in accordance with subdivision 4, 
5.8 	and the amount determined under subdivision 5, provided, however, that the amount 
5.9 	determined under subdivision 5 shall not be greater than it would have been had the actual 
5.10 	bona fide sale price of the real property at an arm's-length transaction been used in lieu of 
5.11 	the market value determined under subdivision 5. Such additional taxes shall be extended 
5.12 	against the property on the tax list for the current year, provided, however, that no interest 
5.13 	or penalties shall be levied on such additional taxes if timely paid, and provided further, 
5.14 	that such additional taxes shall only be levied with respect to the last three seven years that 
5.15 	the said property has been valued and assessed under this section.

5.16 	EFFECTIVE DATE. This section is effective for taxes payable in 2009 and 
5.17 	thereafter.

5.18 	Sec. 7. Minnesota Statutes 2006, section 273.111, subdivision 11, is amended to read:
5.19 		Subd. 11.Special local assessments. The payment of special local assessments 
5.20 	levied after June 1, 1967, for improvements made to any real property described in 
5.21 	subdivision 3 together with the interest thereon shall, on timely application as provided 
5.22 	in subdivision 8, be deferred as long as such property meets the conditions contained in 
5.23 	subdivisions subdivision 3 and 6 or 3a or is transferred to an agricultural preserve under 
5.24 	sections 473H.02 to 473H.17. If special assessments against the property have been 
5.25 	deferred pursuant to this subdivision, the governmental unit shall file with the county 
5.26 	recorder in the county in which the property is located a certificate containing the legal 
5.27 	description of the affected property and of the amount deferred. When such property 
5.28 	no longer qualifies under subdivisions subdivision 3 and 6 or 3a, all deferred special 
5.29 	assessments plus interest shall be payable in equal installments spread over the time 
5.30 	remaining until the last maturity date of the bonds issued to finance the improvement 
5.31 	for which the assessments were levied. If the bonds have matured, the deferred special 
5.32 	assessments plus interest shall be payable within 90 days. The provisions of section 
5.33 	429.061, subdivision 2, apply to the collection of these installments. Penalty shall not be 
5.34 	levied on any such special assessments if timely paid. 

6.1 	EFFECTIVE DATE. This section is effective for taxes payable in 2009 and 
6.2 	thereafter.

6.3 	Sec. 8. Minnesota Statutes 2006, section 273.111, subdivision 11a, is amended to read:
6.4 		Subd. 11a.Continuation of tax treatment upon sale. When real property 
6.5 	qualifying under subdivisions subdivision 3 and 6 is sold, no additional taxes or deferred 
6.6 	special assessments plus interest shall be extended against the property provided the 
6.7 	property continues to qualify pursuant to subdivisions subdivision 3 and 6, and provided 
6.8 	the new owner files an application for continued deferment within 30 days after the sale.
6.9 	For purposes of meeting the income requirements of subdivision 6, the property 
6.10 	purchased shall be considered in conjunction with other qualifying property owned by 
6.11 	the purchaser.

6.12 	EFFECTIVE DATE. This section is effective for taxes payable in 2009 and 
6.13 	thereafter.

6.14 	Sec. 9. Minnesota Statutes 2006, section 273.13, subdivision 23, as amended by Laws 
6.15 	2008, chapter 154, article 2, section 12, is amended to read:
6.16 		Subd. 23. Class 2. (a) Class 2a property is agricultural land including any 
6.17 	improvements An agricultural homestead consists of class 2a agricultural land that is 
6.18 	homesteaded, along with any class 2b rural vacant land that is contiguous to the class 2a 
6.19 	land. The market value of the house and garage and immediately surrounding one acre 
6.20 	of land has the same class rates as class 1a or 1b property under subdivision 22. The 
6.21 	value of the remaining land including improvements up to the first tier valuation limit of 
6.22 	agricultural homestead property has a net class rate of 0.55 percent of market value. The 
6.23 	remaining property over the first tier has a class rate of one percent of market value. 
6.24 	For purposes of this subdivision, the "first tier valuation limit of agricultural homestead 
6.25 	property" and "first tier" means the limit certified under section 273.11, subdivision 23. 
6.26 	(b) Class 2a consists of parcels of property, or portions thereof, that are agricultural 
6.27 	land and buildings. Class 2a property has a net class rate of one percent of market value, 
6.28 	unless it is part of an agricultural homestead under paragraph (a). Class 2a property 
6.29 	may contain an incidental amount of property that would otherwise be classified as 2b, 
6.30 	including but not limited to sloughs, wooded wind shelters, acreage abutting ditches, and 
6.31 	other similar land impractical for the assessor to value separately from the rest of the 
6.32 	property.
6.33 	(c) Class 2b property is (1) consists of parcels of property, or portions thereof, 
6.34 	that are unplatted  real estate, rural in character and not used for agricultural purposes, 
7.1 	including land used exclusively for growing trees for timber, lumber, and wood and wood 
7.2 	products; (2) real estate that is not improved with a structure and is used exclusively 
7.3 	for growing trees for timber, lumber, and wood and wood products, if the owner has 
7.4 	participated or is participating in a cost-sharing program for afforestation, reforestation, or 
7.5 	timber stand improvement on that particular property, administered or coordinated by the 
7.6 	commissioner of natural resources; (3) real estate that is nonhomestead agricultural land; 
7.7 	or (4) a landing area or public access area of a privately owned public use airport, provided 
7.8 	that the presence of a minor, ancillary nonresidential structure does not disqualify the 
7.9 	property from classification under this paragraph. Class 2b property has a net class rate of 
7.10 	one percent of market value, except that unplatted property described in clause (1) or (2) 
7.11 	has a net class rate of .65 percent if it consists unless it is part of an agricultural homestead 
7.12 	under paragraph (a), or qualifies as class 2c under paragraph (d).
7.13 	(d) Class 2c is property  consisting  of no less than ten and no more than 1,920 acres 
7.14 	and that is being managed under a forest management plan that meets the requirements of 
7.15 	chapter 290C, but is not enrolled in the sustainable forest resource management incentive 
7.16 	program. It has a class rate of .65 percent, provided that the owner of the property must 
7.17 	apply to the assessor annually to receive the reduced class rate and provide the information 
7.18 	required by the assessor to verify that the property qualifies for the reduced rate. 
7.19 	(c) (e) Agricultural land as used in this section means contiguous acreage of 
7.20 	ten acres or more, property used during the preceding year for agricultural purposes. 
7.21 	"Agricultural purposes" as used in this section means the raising or, cultivation, drying, or 
7.22 	storage of agricultural products for sale, or the storage of machinery or equipment used in 
7.23 	support of agricultural production. "Agricultural purposes" also includes enrollment in 
7.24 	the Reinvest in Minnesota program under sections 103F.501 to 103F.535 or the federal 
7.25 	Conservation Reserve Program as contained in Public Law 99-198 if the property was 
7.26 	classified as agricultural (i) under this subdivision for the assessment year 2002 or (ii) in 
7.27 	the year prior to its enrollment. Contiguous acreage on the same parcel, or contiguous 
7.28 	acreage on an immediately adjacent parcel under the same ownership, may also qualify 
7.29 	as agricultural land, but only if it is pasture, timber, waste, unusable wild land, or land 
7.30 	included in state or federal farm programs. Agricultural classification for property shall be 
7.31 	determined excluding the house, garage, and immediately surrounding one acre of land, 
7.32 	and shall not be based upon the market value of any residential structures on the parcel or 
7.33 	contiguous parcels under the same ownership. 
7.34 	(d) Real estate, excluding the house, garage, and immediately surrounding one acre 
7.35 	of land, of less than ten acres which is exclusively and intensively used for raising or 
7.36 	cultivating agricultural products, shall be considered as agricultural land. 
8.1 	(f) Land shall be classified as agricultural even if all or a portion of the agricultural 
8.2 	use of that property is the leasing to, or use by another person for agricultural purposes. 
8.3 	Classification under this subdivision is not determinative for qualifying under 
8.4 	section 273.111. 
8.5 	(g) The property classification under this section supersedes, for property tax 
8.6 	purposes only, any locally administered agricultural policies or land use restrictions that 
8.7 	define minimum or maximum farm acreage. 
8.8 	(e) (h) The term "agricultural products" as used in this subdivision includes 
8.9 	production for sale of: 
8.10 	(1) livestock, dairy animals, dairy products, poultry and poultry products, fur-bearing 
8.11 	animals, horticultural and nursery stock, fruit of all kinds, vegetables, forage, grains, 
8.12 	bees, and apiary products by the owner; 
8.13 	(2) fish bred for sale and consumption if the fish breeding occurs on land zoned 
8.14 	for agricultural use; 
8.15 	(3) the commercial boarding of horses if the boarding is done in conjunction with 
8.16 	raising or cultivating agricultural products as defined in clause (1); 
8.17 	(4) property which is owned and operated by nonprofit organizations used for 
8.18 	equestrian activities, excluding racing; 
8.19 	(5) game birds and waterfowl bred and raised for use on a shooting preserve licensed 
8.20 	under section 97A.115; 
8.21 	(6) insects primarily bred to be used as food for animals; 
8.22 	(7) trees, grown for sale as a crop, including short rotation woody crops, and not 
8.23 	sold for timber, lumber, wood, or wood products; and 
8.24 	(8) maple syrup taken from trees grown by a person licensed by the Minnesota 
8.25 	Department of Agriculture under chapter 28A as a food processor. 
8.26 	(f) (i) If a parcel used for agricultural purposes is also used for commercial or 
8.27 	industrial purposes, including but not limited to: 
8.28 	(1) wholesale and retail sales; 
8.29 	(2) processing of raw agricultural products or other goods; 
8.30 	(3) warehousing or storage of processed goods; and 
8.31 	(4) office facilities for the support of the activities enumerated in clauses (1), (2), 
8.32 	and (3), 
8.33 	the assessor shall classify the part of the parcel used for agricultural purposes as class 
8.34 	1b, 2a, or 2b, whichever is appropriate, and the remainder in the class appropriate to its 
8.35 	use. The grading, sorting, and packaging of raw agricultural products for first sale is 
8.36 	considered an agricultural purpose. A greenhouse or other building where horticultural 
9.1 	or nursery products are grown that is also used for the conduct of retail sales must be 
9.2 	classified as agricultural if it is primarily used for the growing of horticultural or nursery 
9.3 	products from seed, cuttings, or roots and occasionally as a showroom for the retail sale of 
9.4 	those products. Use of a greenhouse or building only for the display of already grown 
9.5 	horticultural or nursery products does not qualify as an agricultural purpose. 
9.6 	The assessor shall determine and list separately on the records the market value of 
9.7 	the homestead dwelling and the one acre of land on which that dwelling is located. If any 
9.8 	farm buildings or structures are located on this homesteaded acre of land, their market 
9.9 	value shall not be included in this separate determination. 
9.10 	(g) (j) A landing area or public access area of a privately owned public use airport 
9.11 	is class 2d. To qualify for classification under this paragraph (b), clause (4), a privately 
9.12 	owned public use airport must be licensed as a public airport under section 360.018. For 
9.13 	purposes of this paragraph (b), clause (4), "landing area" means that part of a privately 
9.14 	owned public use airport properly cleared, regularly maintained, and made available to the 
9.15 	public for use by aircraft and includes runways, taxiways, aprons, and sites upon which 
9.16 	are situated landing or navigational aids. A landing area also includes land underlying 
9.17 	both the primary surface and the approach surfaces that comply with all of the following: 
9.18 	(i) the land is properly cleared and regularly maintained for the primary purposes of 
9.19 	the landing, taking off, and taxiing of aircraft; but that portion of the land that contains 
9.20 	facilities for servicing, repair, or maintenance of aircraft is not included as a landing area; 
9.21 	(ii) the land is part of the airport property; and 
9.22 	(iii) the land is not used for commercial or residential purposes. 
9.23 	The land contained in a landing area under this paragraph (b), clause (4), must be described 
9.24 	and certified by the commissioner of transportation. The certification is effective until it 
9.25 	is modified, or until the airport or landing area no longer meets the requirements of this 
9.26 	paragraph (b), clause (4). For purposes of this paragraph (b), clause (4), "public access 
9.27 	area" means property used as an aircraft parking ramp, apron, or storage hangar, or an 
9.28 	arrival and departure building in connection with the airport. 

9.29 	EFFECTIVE DATE. This section is effective for taxes payable in 2009 and 
9.30 	thereafter.

9.31 	Sec. 10.  REPEALER.
 9.32 	Minnesota Statutes 2006, section 273.111, subdivision 6, is repealed.

9.33 	EFFECTIVE DATE. This section is effective for taxes payable in 2009 and 
9.34 	thereafter.