<a id="pl.1.3"></a><var>1.3</var>amending Minnesota Statutes 2008, sections 414.011, by adding a subdivision; <br/>
<a id="pl.1.4"></a><var>1.4</var>414.033, subdivisions 2, 12; 414.036.<br/>
<a id="pl.1.5"></a><var>1.5</var>BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA:<br/>
<br/>
<a id="bill.0.1.0"></a><a id="pl.1.6"></a><var>1.6</var>    Section 1. Minnesota Statutes 2008, section 414.011, is amended by adding a <br/>
<a id="pl.1.7"></a><var>1.7</var>subdivision to read:<br/>
<a id="pl.1.8"></a><var>1.8</var>    Subd. 13. <b>Urban or suburban in character.</b> "Urban or suburban in character" <br/>
<a id="pl.1.9"></a><var>1.9</var>means any area, property, or collection of properties where actual or planned residential <br/>
<a id="pl.1.10"></a><var>1.10</var>densities exceed on average one unit per two and one-half acres or any area where actual <br/>
<a id="pl.1.11"></a><var>1.11</var>or planned governmental, institutional, commercial, or industrial development exists, <br/>
<a id="pl.1.12"></a><var>1.12</var>excluding industrial development that is appropriate for rural settings such as those <br/>
<a id="pl.1.13"></a><var>1.13</var>connected with agricultural, forestry, mining, or energy production industries.<br/>
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<a id="bill.0.2.0"></a><a id="pl.1.14"></a><var>1.14</var>    Sec. 2. Minnesota Statutes 2008, section 414.033, subdivision 2, is amended to read:<br/>
<a id="pl.1.15"></a><var>1.15</var>    Subd. 2. <b>Conditions.</b> (a) A municipal council may by ordinance declare land <br/>
<a id="pl.1.16"></a><var>1.16</var>annexed to the municipality and any such land is deemed to be urban or suburban in <br/>
<a id="pl.1.17"></a><var>1.17</var>character or about to become so if:<br/>
<a id="pl.1.18"></a><var>1.18</var>    (1) the land is owned by the municipality;<br/>
<a id="pl.1.19"></a><var>1.19</var>    (2) the land is completely surrounded by land within the municipal limits;<br/>
<a id="pl.1.20"></a><var>1.20</var>    (3) the land abuts the municipality and the area to be annexed is 120 acres or less, <br/>
<a id="pl.1.21"></a><var>1.21</var>and the area to be annexed is not presently served by public wastewater facilities or <br/>
<a id="pl.1.22"></a><var>1.22</var>public wastewater facilities are not otherwise available, and the municipality receives a <br/>
<a id="pl.1.23"></a><var>1.23</var>petition for annexation from all the property owners of the land. Except as provided for <br/>
<a id="pl.2.1"></a><var>2.1</var>by an orderly annexation agreement, this clause may not be used to annex any property <br/>
<a id="pl.2.2"></a><var>2.2</var>contiguous to any property previously annexed under this clause within the preceding 12 <br/>
<a id="pl.2.3"></a><var>2.3</var>months if the property is owned by the same owners and annexation would cumulatively <br/>
<a id="pl.2.4"></a><var>2.4</var>exceed 120 acres; or<br/>
<a id="pl.2.5"></a><var>2.5</var>    (4) the land has been approved after August 1, 1995, by a preliminary plat or final <br/>
<a id="pl.2.6"></a><var>2.6</var>plat for subdivision to provide residential lots that average 21,780 square feet or less in <br/>
<a id="pl.2.7"></a><var>2.7</var>area and the land is located within two miles of the municipal limits.<br/>
<a id="pl.2.8"></a><var>2.8</var>(b) A municipality also may annex by ordinance unincorporated territory that abuts <br/>
<a id="pl.2.9"></a><var>2.9</var>the municipality under the procedures in this paragraph.<br/>
<a id="pl.2.10"></a><var>2.10</var>(1) The municipality must adopt a resolution of consideration and file it with the <br/>
<a id="pl.2.11"></a><var>2.11</var>Office of Administrative Hearings, the clerk of the county where the property is located, <br/>
<a id="pl.2.12"></a><var>2.12</var>and the clerk of the affected township at least 90 days before the municipality may enact <br/>
<a id="pl.2.13"></a><var>2.13</var>an annexation ordinance. The resolution must include a statement of the municipality's <br/>
<a id="pl.2.14"></a><var>2.14</var>intent to annex under this paragraph and a legal description of the area to be annexed.<br/>
<a id="pl.2.15"></a><var>2.15</var>(2) After the adoption of the resolution of consideration the municipality must <br/>
<a id="pl.2.16"></a><var>2.16</var>update its comprehensive plan to include the area proposed for annexation and must <br/>
<a id="pl.2.17"></a><var>2.17</var>prepare a report detailing the urban characteristics of the area and a plan for the provision <br/>
<a id="pl.2.18"></a><var>2.18</var>of urban services. The report and service plan must include:<br/>
<a id="pl.2.19"></a><var>2.19</var>(i) a map showing the area proposed for annexation and its relation to current <br/>
<a id="pl.2.20"></a><var>2.20</var>municipal boundaries;<br/>
<a id="pl.2.21"></a><var>2.21</var>(ii) a description of the general physical land use pattern, current and proposed <br/>
<a id="pl.2.22"></a><var>2.22</var>land uses, current and proposed land use controls, service needs, projected growth, <br/>
<a id="pl.2.23"></a><var>2.23</var>environmental conditions, and current and future transportation needs within the proposed <br/>
<a id="pl.2.24"></a><var>2.24</var>annexation area;<br/>
<a id="pl.2.25"></a><var>2.25</var>(iii) plans for the provision of water and sewer services including a schedule of <br/>
<a id="pl.2.26"></a><var>2.26</var>when services would be extended to the annexation area;<br/>
<a id="pl.2.27"></a><var>2.27</var>(iv) a plan for the extension of public safety services such as police and fire <br/>
<a id="pl.2.28"></a><var>2.28</var>protection;<br/>
<a id="pl.2.29"></a><var>2.29</var>(v) a plan for the extension of other municipal services such as recreation, street <br/>
<a id="pl.2.30"></a><var>2.30</var>maintenance, and administration; and<br/>
<a id="pl.2.31"></a><var>2.31</var>(vi) an updated comprehensive plan that does not allow residential densities in the <br/>
<a id="pl.2.32"></a><var>2.32</var>annexation area that are less than what is already in effect for the existing residential <br/>
<a id="pl.2.33"></a><var>2.33</var>parts of the municipality.<br/>
<a id="pl.2.34"></a><var>2.34</var>(3) The updated comprehensive plan, report, and service plan must be completed at <br/>
<a id="pl.2.35"></a><var>2.35</var>least 30 days before a public hearing is held on the proposed annexation. Copies of the <br/>
<a id="pl.3.1"></a><var>3.1</var>plans must be sent to the Office of Administrative Hearings and the affected town, and <br/>
<a id="pl.3.2"></a><var>3.2</var>must also be made available at city hall for public inspection and copying.<br/>
<a id="pl.3.3"></a><var>3.3</var>(4) After the compilation of the report required under clause (2), the municipality <br/>
<a id="pl.3.4"></a><var>3.4</var>must fix a date for a public hearing on the question of annexation. The municipality <br/>
<a id="pl.3.5"></a><var>3.5</var>must publish notice in a newspaper of general circulation at least ten days before the <br/>
<a id="pl.3.6"></a><var>3.6</var>hearing. The municipality must also send a notice of the public hearing to the town clerk <br/>
<a id="pl.3.7"></a><var>3.7</var>of the affected township and to all property owners within and contiguous to the proposed <br/>
<a id="pl.3.8"></a><var>3.8</var>annexation area. Notice must be given to the town clerk of the affected township and the <br/>
<a id="pl.3.9"></a><var>3.9</var>property owners no later than 14 days before the public hearing.<br/>
<a id="pl.3.10"></a><var>3.10</var>(5) At the public hearing the municipality shall present its findings and <br/>
<a id="pl.3.11"></a><var>3.11</var>recommendations and hear public testimony on the question of annexation. All persons <br/>
<a id="pl.3.12"></a><var>3.12</var>appearing must have an opportunity to be heard at least once. The governing body of the <br/>
<a id="pl.3.13"></a><var>3.13</var>municipality also may accept written comments on the question of annexation at that time <br/>
<a id="pl.3.14"></a><var>3.14</var>and for ten days following the public hearing.<br/>
<a id="pl.3.15"></a><var>3.15</var>(6) After the public hearing and before enacting an annexation ordinance under this <br/>
<a id="pl.3.16"></a><var>3.16</var>paragraph, the governing body of the municipality must make the following findings:<br/>
<a id="pl.3.17"></a><var>3.17</var>(i) the proposed annexation area is contiguous to the municipality's boundaries;<br/>
<a id="pl.3.18"></a><var>3.18</var>(ii) the proposed annexation area is developed or is planned to be developed with <br/>
<a id="pl.3.19"></a><var>3.19</var>residential lots averaging two and one-half acres or less, or the area is or is planned to be <br/>
<a id="pl.3.20"></a><var>3.20</var>developed for commercial, industrial, governmental, or institutional uses; and<br/>
<a id="pl.3.21"></a><var>3.21</var>(iii) the municipality is capable of extending services in a manner consistent with the <br/>
<a id="pl.3.22"></a><var>3.22</var>municipality's service plan in a reasonable time.<br/>
<a id="pl.3.23"></a><var>3.23</var>(7) Upon making the findings required by clause (6), the municipality may enact the <br/>
<a id="pl.3.24"></a><var>3.24</var>annexation ordinance declaring the land to be annexed to the municipality.<br/>
<br/>
<a id="bill.0.3.0"></a><a id="pl.3.25"></a><var>3.25</var>    Sec. 3. Minnesota Statutes 2008, section 414.033, subdivision 12, is amended to read:<br/>
<a id="pl.3.26"></a><var>3.26</var>    Subd. 12. <b>Property taxes.</b> When a municipality annexes land under subdivision <br/>
<a id="pl.3.27"></a><var>3.27</var>2, paragraph (a), clause (2), (3), or (4), or paragraph (b), property taxes payable on the <br/>
<a id="pl.3.28"></a><var>3.28</var>annexed land shall continue to be paid to the affected town or towns for the year in which <br/>
<a id="pl.3.29"></a><var>3.29</var>the annexation becomes effective. If the annexation becomes effective on or before <br/>
<a id="pl.3.30"></a><var>3.30</var>August 1 of a levy year, the municipality may levy on the annexed area beginning with <br/>
<a id="pl.3.31"></a><var>3.31</var>that same levy year. If the annexation becomes effective after August 1 of a levy year, the <br/>
<a id="pl.3.32"></a><var>3.32</var>town may continue to levy on the annexed area for that levy year, and the municipality <br/>
<a id="pl.3.33"></a><var>3.33</var>may not levy on the annexed area until the following levy year. <br/>
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<a id="bill.0.4.0"></a><a id="pl.4.1"></a><var>4.1</var>    Sec. 4. Minnesota Statutes 2008, section 414.036, is amended to read:<br/>
<a id="pl.4.2"></a><var>4.2</var><b>414.036 </b><b>CITY REIMBURSEMENT</b><b> </b><b>LIMITATION ON PAYMENTS </b><b>TO </b><br/>
<a id="pl.4.3"></a><var>4.3</var><b>TOWN TO ANNEX TAXABLE PROPERTY.</b><br/>
<a id="pl.4.4"></a><var>4.4</var>    Subdivision 1. <b>Orderly annexation.</b> Unless otherwise agreed to by the annexing <br/>
<a id="pl.4.5"></a><var>4.5</var>municipality and the affected town, When an order or other approval under this chapter <br/>
<a id="pl.4.6"></a><var>4.6</var>section 414.0325 annexes part of a town to a municipality, the order or other approval <br/>
<a id="pl.4.7"></a><var>4.7</var>must provide a reimbursement from the municipality to the town for all or part of the <br/>
<a id="pl.4.8"></a><var>4.8</var>taxable property annexed at the town tax rate at the time of annexation as part of the <br/>
<a id="pl.4.9"></a><var>4.9</var>order. The reimbursement shall be completed in substantially equal payments over not <br/>
<a id="pl.4.10"></a><var>4.10</var>less than two nor more than eight years from the time of annexation. The municipality <br/>
<a id="pl.4.11"></a><var>4.11</var>must reimburse the township for all special assessments assigned by the township to the <br/>
<a id="pl.4.12"></a><var>4.12</var>annexed property that are received by the municipality, and any portion of debt incurred <br/>
<a id="pl.4.13"></a><var>4.13</var>by the town prior to the annexation and attributable to the property to be annexed but <br/>
<a id="pl.4.14"></a><var>4.14</var>for which no special assessments are outstanding, provided the town makes a written <br/>
<a id="pl.4.15"></a><var>4.15</var>request and includes supporting documentation to the municipality within 60 days of the <br/>
<a id="pl.4.16"></a><var>4.16</var>order. Reimbursement for debt attributable to the annexed property must either be paid <br/>
<a id="pl.4.17"></a><var>4.17</var>by the municipality in substantially equal payments over a period of not less than two or <br/>
<a id="pl.4.18"></a><var>4.18</var>no more than eight years or upon the same terms as the debt was incurred by the town. <br/>
<a id="pl.4.19"></a><var>4.19</var>Reimbursement for special assessments must be paid to the town within 30 days of receipt <br/>
<a id="pl.4.20"></a><var>4.20</var>of assessment payments by the municipality from the county or property owner.<br/>
<a id="pl.4.21"></a><var>4.21</var>    Subd. 2. <b>Annexation by ordinance.</b> When a municipality adopts an ordinance <br/>
<a id="pl.4.22"></a><var>4.22</var>under section 414.033 annexing part of a town to a municipality, the ordinance must <br/>
<a id="pl.4.23"></a><var>4.23</var>provide a reimbursement from the municipality to the town for the loss of taxes from the <br/>
<a id="pl.4.24"></a><var>4.24</var>property annexed for the period and in accordance with the following schedule:<br/>
<a id="pl.4.25"></a><var>4.25</var>(1) in the first levy year following the year when the annexing municipality could <br/>
<a id="pl.4.26"></a><var>4.26</var>first levy on the annexed area, the municipality must make a cash payment to the affected <br/>
<a id="pl.4.27"></a><var>4.27</var>town in an amount equal to 90 percent of the property taxes distributed to the town <br/>
<a id="pl.4.28"></a><var>4.28</var>in regard to the annexed area in the last year the property taxes from the annexed area <br/>
<a id="pl.4.29"></a><var>4.29</var>were payable to the town;<br/>
<a id="pl.4.30"></a><var>4.30</var>(2) in the second year, an amount equal to 80 percent;<br/>
<a id="pl.4.31"></a><var>4.31</var>(3) in the third year, an amount equal to 60 percent;<br/>
<a id="pl.4.32"></a><var>4.32</var>(4) in the fourth year, an amount equal to 40 percent; and<br/>
<a id="pl.4.33"></a><var>4.33</var>(5) in the fifth and final year, an amount equal to 20 percent.<br/>
<a id="pl.4.34"></a><var>4.34</var>    Subd. 3. <b>Exclusive.</b> The reimbursements authorized in this section are the only <br/>
<a id="pl.4.35"></a><var>4.35</var>payments or consideration that can be made by a municipality to a town under this chapter.<br/>