1.1A bill for an act1.2relating to local government; amending the municipal boundary adjustment law;1.3amending Minnesota Statutes 2008, sections 414.011, by adding a subdivision; 1.4414.033, subdivisions 2, 12; 414.036.1.5BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA:1.6    Section 1. Minnesota Statutes 2008, section 414.011, is amended by adding a 1.7subdivision to read:1.8    Subd. 13.Urban or suburban in character."Urban or suburban in character" 1.9means any area, property, or collection of properties where actual or planned residential 1.10densities exceed on average one unit per two and one-half acres or any area where actual 1.11or planned governmental, institutional, commercial, or industrial development exists, 1.12excluding industrial development that is appropriate for rural settings such as those 1.13connected with agricultural, forestry, mining, or energy production industries.1.14    Sec. 2. Minnesota Statutes 2008, section 414.033, subdivision 2, is amended to read:1.15    Subd. 2. Conditions.(a) A municipal council may by ordinance declare land 1.16annexed to the municipality and any such land is deemed to be urban or suburban in 1.17character or about to become so if:1.18    (1) the land is owned by the municipality;1.19    (2) the land is completely surrounded by land within the municipal limits;1.20    (3) the land abuts the municipality and the area to be annexed is 120 acres or less, 1.21and the area to be annexed is not presently served by public wastewater facilities or 1.22public wastewater facilities are not otherwise available, and the municipality receives a 1.23petition for annexation from all the property owners of the land. Except as provided for 2.1by an orderly annexation agreement, this clause may not be used to annex any property 2.2contiguous to any property previously annexed under this clause within the preceding 12 2.3months if the property is owned by the same owners and annexation would cumulatively 2.4exceed 120 acres; or2.5    (4) the land has been approved after August 1, 1995, by a preliminary plat or final 2.6plat for subdivision to provide residential lots that average 21,780 square feet or less in 2.7area and the land is located within two miles of the municipal limits.2.8(b) A municipality also may annex by ordinance unincorporated territory that abuts 2.9the municipality under the procedures in this paragraph.2.10(1) The municipality must adopt a resolution of consideration and file it with the 2.11Office of Administrative Hearings, the clerk of the county where the property is located, 2.12and the clerk of the affected township at least 90 days before the municipality may enact 2.13an annexation ordinance. The resolution must include a statement of the municipality's 2.14intent to annex under this paragraph and a legal description of the area to be annexed.2.15(2) After the adoption of the resolution of consideration the municipality must 2.16update its comprehensive plan to include the area proposed for annexation and must 2.17prepare a report detailing the urban characteristics of the area and a plan for the provision 2.18of urban services. The report and service plan must include:2.19(i) a map showing the area proposed for annexation and its relation to current 2.20municipal boundaries;2.21(ii) a description of the general physical land use pattern, current and proposed 2.22land uses, current and proposed land use controls, service needs, projected growth, 2.23environmental conditions, and current and future transportation needs within the proposed 2.24annexation area;2.25(iii) plans for the provision of water and sewer services including a schedule of 2.26when services would be extended to the annexation area;2.27(iv) a plan for the extension of public safety services such as police and fire 2.28protection;2.29(v) a plan for the extension of other municipal services such as recreation, street 2.30maintenance, and administration; and2.31(vi) an updated comprehensive plan that does not allow residential densities in the 2.32annexation area that are less than what is already in effect for the existing residential 2.33parts of the municipality.2.34(3) The updated comprehensive plan, report, and service plan must be completed at 2.35least 30 days before a public hearing is held on the proposed annexation. Copies of the 3.1plans must be sent to the Office of Administrative Hearings and the affected town, and 3.2must also be made available at city hall for public inspection and copying.3.3(4) After the compilation of the report required under clause (2), the municipality 3.4must fix a date for a public hearing on the question of annexation. The municipality 3.5must publish notice in a newspaper of general circulation at least ten days before the 3.6hearing. The municipality must also send a notice of the public hearing to the town clerk 3.7of the affected township and to all property owners within and contiguous to the proposed 3.8annexation area. Notice must be given to the town clerk of the affected township and the 3.9property owners no later than 14 days before the public hearing.3.10(5) At the public hearing the municipality shall present its findings and 3.11recommendations and hear public testimony on the question of annexation. All persons 3.12appearing must have an opportunity to be heard at least once. The governing body of the 3.13municipality also may accept written comments on the question of annexation at that time 3.14and for ten days following the public hearing.3.15(6) After the public hearing and before enacting an annexation ordinance under this 3.16paragraph, the governing body of the municipality must make the following findings:3.17(i) the proposed annexation area is contiguous to the municipality's boundaries;3.18(ii) the proposed annexation area is developed or is planned to be developed with 3.19residential lots averaging two and one-half acres or less, or the area is or is planned to be 3.20developed for commercial, industrial, governmental, or institutional uses; and3.21(iii) the municipality is capable of extending services in a manner consistent with the 3.22municipality's service plan in a reasonable time.3.23(7) Upon making the findings required by clause (6), the municipality may enact the 3.24annexation ordinance declaring the land to be annexed to the municipality.3.25    Sec. 3. Minnesota Statutes 2008, section 414.033, subdivision 12, is amended to read:3.26    Subd. 12. Property taxes. When a municipality annexes land under subdivision 3.272, paragraph (a), clause (2), (3), or (4), or paragraph (b), property taxes payable on the 3.28annexed land shall continue to be paid to the affected town or towns for the year in which 3.29the annexation becomes effective. If the annexation becomes effective on or before 3.30August 1 of a levy year, the municipality may levy on the annexed area beginning with 3.31that same levy year. If the annexation becomes effective after August 1 of a levy year, the 3.32town may continue to levy on the annexed area for that levy year, and the municipality 3.33may not levy on the annexed area until the following levy year. 4.1    Sec. 4. Minnesota Statutes 2008, section 414.036, is amended to read:4.2414.036 CITY REIMBURSEMENTLIMITATION ON PAYMENTS TO 4.3TOWN TO ANNEX TAXABLE PROPERTY.4.4    Subdivision 1.Orderly annexation.Unless otherwise agreed to by the annexing 4.5municipality and the affected town, When an order or other approval under this chapter4.6section 414.0325 annexes part of a town to a municipality, the order or other approval 4.7must provide a reimbursement from the municipality to the town for all or part of the 4.8taxable property annexed at the town tax rate at the time of annexation as part of the 4.9order. The reimbursement shall be completed in substantially equal payments over not 4.10less than two nor more than eight years from the time of annexation. The municipality 4.11must reimburse the township for all special assessments assigned by the township to the 4.12annexed property that are received by the municipality, and any portion of debt incurred 4.13by the town prior to the annexation and attributable to the property to be annexed but 4.14for which no special assessments are outstanding, provided the town makes a written 4.15request and includes supporting documentation to the municipality within 60 days of the 4.16order. Reimbursement for debt attributable to the annexed property must either be paid 4.17by the municipality in substantially equal payments over a period of not less than two or 4.18no more than eight years or upon the same terms as the debt was incurred by the town. 4.19Reimbursement for special assessments must be paid to the town within 30 days of receipt 4.20of assessment payments by the municipality from the county or property owner.4.21    Subd. 2.Annexation by ordinance.When a municipality adopts an ordinance 4.22under section 414.033 annexing part of a town to a municipality, the ordinance must 4.23provide a reimbursement from the municipality to the town for the loss of taxes from the 4.24property annexed for the period and in accordance with the following schedule:4.25(1) in the first levy year following the year when the annexing municipality could 4.26first levy on the annexed area, the municipality must make a cash payment to the affected 4.27town in an amount equal to 90 percent of the property taxes distributed to the town 4.28in regard to the annexed area in the last year the property taxes from the annexed area 4.29were payable to the town;4.30(2) in the second year, an amount equal to 80 percent;4.31(3) in the third year, an amount equal to 60 percent;4.32(4) in the fourth year, an amount equal to 40 percent; and4.33(5) in the fifth and final year, an amount equal to 20 percent.4.34    Subd. 3.Exclusive.The reimbursements authorized in this section are the only 4.35payments or consideration that can be made by a municipality to a town under this chapter.