HF 2690

1st Unofficial Engrossment - 87th Legislature (2011 - 2012)

Posted on 05/10/2012 02:26 p.m.

1.1A bill for an act 1.2relating to financing of state and local government; making changes to 1.3individual income, corporate franchise, property, sales and use, and other 1.4taxes and tax-related provisions; providing a supplemental targeting refund; 1.5modifying city aid payments and exempting certain cities from 2011 aid payment 1.6penalties; making technical, minor, and clarifying changes in enterprise zone and 1.7economic development powers and eliminating obsolete provisions; requiring 1.8a funds transfer; appropriating money; amending Minnesota Statutes 2010, 1.9sections 16C.16, subdivision 7; 41A.036, subdivision 2; 117.025, subdivision 1.1010; 270B.14, subdivision 3; 272.02, subdivision 77; 273.13, subdivision 24; 1.11273.1398, subdivision 4; 276A.01, subdivision 3; 290.01, subdivision 29; 1.12290.067, subdivision 1; 290.0921, subdivision 3; 469.015, subdivision 4; 1.13469.033, subdivision 7; 469.166, subdivisions 3, 5, 6; 469.167, subdivision 2; 1.14469.171, subdivisions 1, 4, 6a, 7, 9, 11; 469.172; 469.173, subdivisions 5, 6; 1.15469.174, subdivisions 20, 25; 469.176, subdivision 7; 469.1763, subdivision 1.166; 469.1764, subdivision 1; 469.177, subdivision 1; 469.1793; 469.1813, 1.17subdivision 6b; 473F.02, subdivision 3; 477A.011, subdivision 36; 477A.013, 1.18by adding a subdivision; Minnesota Statutes 2011 Supplement, sections 290.01, 1.19subdivision 19b; 290.06, subdivision 2c; 290.0671, subdivision 1; 290.091, 1.20subdivision 2; 290.0922, subdivisions 2, 3; 297A.75, subdivision 1; 477A.013, 1.21subdivision 9; repealing Minnesota Statutes 2010, sections 272.02, subdivision 1.2283; 290.06, subdivisions 24, 32; 297A.68, subdivision 41; 469.042, subdivisions 1.232, 3, 4; 469.043; 469.059, subdivision 13; 469.129; 469.134; 469.162, 1.24subdivision 2; 469.1651; 469.166, subdivisions 7, 8, 9, 10, 11, 12; 469.167, 1.25subdivisions 1, 3; 469.168; 469.169, subdivisions 1, 2, 3, 4, 5, 6, 7, 8, 9, 10, 1.2611, 13; 469.170, subdivisions 1, 2, 3, 4, 5, 5a, 5b, 5c, 5d, 5e, 6, 7, 8; 469.171, 1.27subdivisions 2, 5, 6b; 469.173, subdivisions 1, 3; 469.1765; 469.1791; 469.1799, 1.28subdivision 2; 469.301, subdivisions 1, 2, 3, 4, 5; 469.302; 469.303; 469.304; 1.29469.321; 469.3215; 469.322; 469.323; 469.324; 469.325; 469.326; 469.327; 1.30469.328; 469.329; 473.680. 1.31BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA: 2.1ARTICLE 1 2.2PROPERTY TAX 2.3    Section 1. Minnesota Statutes 2010, section 477A.011, subdivision 36, is amended to 2.4read: 2.5    Subd. 36. City aid base. (a) Except as otherwise provided in this subdivision, 2.6"city aid base" is zero. 2.7    (b) The city aid base for any city with a population less than 500 is increased by 2.8$40,000 for aids payable in calendar year 1995 and thereafter, and the maximum amount 2.9of total aid it may receive under section 477A.013, subdivision 9, paragraph (c), is also 2.10increased by $40,000 for aids payable in calendar year 1995 only, provided that: 2.11    (i) the average total tax capacity rate for taxes payable in 1995 exceeds 200 percent; 2.12    (ii) the city portion of the tax capacity rate exceeds 100 percent; and 2.13    (iii) its city aid base is less than $60 per capita. 2.14    (c) The city aid base for a city is increased by $20,000 in 1998 and thereafter and 2.15the maximum amount of total aid it may receive under section 477A.013, subdivision 9, 2.16paragraph (c), is also increased by $20,000 in calendar year 1998 only, provided that: 2.17    (i) the city has a population in 1994 of 2,500 or more; 2.18    (ii) the city is located in a county, outside of the metropolitan area, which contains a 2.19city of the first class; 2.20    (iii) the city's net tax capacity used in calculating its 1996 aid under section 2.21477A.013 is less than $400 per capita; and 2.22    (iv) at least four percent of the total net tax capacity, for taxes payable in 1996, of 2.23property located in the city is classified as railroad property. 2.24    (d) The city aid base for a city is increased by $200,000 in 1999 and thereafter and 2.25the maximum amount of total aid it may receive under section 477A.013, subdivision 9, 2.26paragraph (c), is also increased by $200,000 in calendar year 1999 only, provided that: 2.27    (i) the city was incorporated as a statutory city after December 1, 1993; 2.28    (ii) its city aid base does not exceed $5,600; and 2.29    (iii) the city had a population in 1996 of 5,000 or more. 2.30    (e) The city aid base for a city is increased by $150,000 for aids payable in 2000 and 2.31thereafter, and the maximum amount of total aid it may receive under section 477A.013, 2.32subdivision 9 , paragraph (c), is also increased by $150,000 in calendar year 2000 only, 2.33provided that: 2.34    (1) the city has a population that is greater than 1,000 and less than 2,500; 3.1    (2) its commercial and industrial percentage for aids payable in 1999 is greater 3.2than 45 percent; and 3.3    (3) the total market value of all commercial and industrial property in the city 3.4for assessment year 1999 is at least 15 percent less than the total market value of all 3.5commercial and industrial property in the city for assessment year 1998. 3.6    (f) The city aid base for a city is increased by $200,000 in 2000 and thereafter, and 3.7the maximum amount of total aid it may receive under section 477A.013, subdivision 9, 3.8paragraph (c), is also increased by $200,000 in calendar year 2000 only, provided that: 3.9    (1) the city had a population in 1997 of 2,500 or more; 3.10    (2) the net tax capacity of the city used in calculating its 1999 aid under section 3.11477A.013 is less than $650 per capita; 3.12    (3) the pre-1940 housing percentage of the city used in calculating 1999 aid under 3.13section 477A.013 is greater than 12 percent; 3.14    (4) the 1999 local government aid of the city under section 477A.013 is less than 3.1520 percent of the amount that the formula aid of the city would have been if the need 3.16increase percentage was 100 percent; and 3.17    (5) the city aid base of the city used in calculating aid under section 477A.013 3.18is less than $7 per capita. 3.19    (g) The city aid base for a city is increased by $102,000 in 2000 and thereafter, and 3.20the maximum amount of total aid it may receive under section 477A.013, subdivision 9, 3.21paragraph (c), is also increased by $102,000 in calendar year 2000 only, provided that: 3.22    (1) the city has a population in 1997 of 2,000 or more; 3.23    (2) the net tax capacity of the city used in calculating its 1999 aid under section 3.24477A.013 is less than $455 per capita; 3.25    (3) the net levy of the city used in calculating 1999 aid under section 477A.013 is 3.26greater than $195 per capita; and 3.27    (4) the 1999 local government aid of the city under section 477A.013 is less than 3.2838 percent of the amount that the formula aid of the city would have been if the need 3.29increase percentage was 100 percent. 3.30    (h) The city aid base for a city is increased by $32,000 in 2001 and thereafter, and 3.31the maximum amount of total aid it may receive under section 477A.013, subdivision 9, 3.32paragraph (c), is also increased by $32,000 in calendar year 2001 only, provided that: 3.33    (1) the city has a population in 1998 that is greater than 200 but less than 500; 3.34    (2) the city's revenue need used in calculating aids payable in 2000 was greater 3.35than $200 per capita; 4.1    (3) the city net tax capacity for the city used in calculating aids available in 2000 4.2was equal to or less than $200 per capita; 4.3    (4) the city aid base of the city used in calculating aid under section 477A.013 4.4is less than $65 per capita; and 4.5    (5) the city's formula aid for aids payable in 2000 was greater than zero. 4.6    (i) The city aid base for a city is increased by $7,200 in 2001 and thereafter, and 4.7the maximum amount of total aid it may receive under section 477A.013, subdivision 9, 4.8paragraph (c), is also increased by $7,200 in calendar year 2001 only, provided that: 4.9    (1) the city had a population in 1998 that is greater than 200 but less than 500; 4.10    (2) the city's commercial industrial percentage used in calculating aids payable in 4.112000 was less than ten percent; 4.12    (3) more than 25 percent of the city's population was 60 years old or older according 4.13to the 1990 census; 4.14    (4) the city aid base of the city used in calculating aid under section 477A.013 4.15is less than $15 per capita; and 4.16    (5) the city's formula aid for aids payable in 2000 was greater than zero. 4.17    (j) The city aid base for a city is increased by $45,000 in 2001 and thereafter and 4.18by an additional $50,000 in calendar years 2002 to 2011, and the maximum amount of 4.19total aid it may receive under section 477A.013, subdivision 9, paragraph (c), is also 4.20increased by $45,000 in calendar year 2001 only, and by $50,000 in calendar year 2002 4.21only, provided that: 4.22    (1) the net tax capacity of the city used in calculating its 2000 aid under section 4.23477A.013 is less than $810 per capita; 4.24    (2) the population of the city declined more than two percent between 1988 and 1998; 4.25    (3) the net levy of the city used in calculating 2000 aid under section 477A.013 is 4.26greater than $240 per capita; and 4.27    (4) the city received less than $36 per capita in aid under section 477A.013, 4.28subdivision 9 , for aids payable in 2000. 4.29    (k) The city aid base for a city with a population of 10,000 or more which is located 4.30outside of the seven-county metropolitan area is increased in 2002 and thereafter, and the 4.31maximum amount of total aid it may receive under section 477A.013, subdivision 9, 4.32paragraph (b) or (c), is also increased in calendar year 2002 only, by an amount equal to 4.33the lesser of: 4.34    (1)(i) the total population of the city, as determined by the United States Bureau of 4.35the Census, in the 2000 census, (ii) minus 5,000, (iii) times 60; or 4.36    (2) $2,500,000. 5.1    (l) The city aid base is increased by $50,000 in 2002 and thereafter, and the 5.2maximum amount of total aid it may receive under section 477A.013, subdivision 9, 5.3paragraph (c), is also increased by $50,000 in calendar year 2002 only, provided that: 5.4    (1) the city is located in the seven-county metropolitan area; 5.5    (2) its population in 2000 is between 10,000 and 20,000; and 5.6    (3) its commercial industrial percentage, as calculated for city aid payable in 2001, 5.7was greater than 25 percent. 5.8    (m) The city aid base for a city is increased by $150,000 in calendar years 2002 to 5.92011 and by an additional $75,000 in calendar years 2009 to 2014 and the maximum 5.10amount of total aid it may receive under section 477A.013, subdivision 9, paragraph (c), is 5.11also increased by $150,000 in calendar year 2002 only and by $75,000 in calendar year 5.122009 only, provided that: 5.13    (1) the city had a population of at least 3,000 but no more than 4,000 in 1999; 5.14    (2) its home county is located within the seven-county metropolitan area; 5.15    (3) its pre-1940 housing percentage is less than 15 percent; and 5.16    (4) its city net tax capacity per capita for taxes payable in 2000 is less than $900 5.17per capita. 5.18    (n) The city aid base for a city is increased by $200,000 beginning in calendar 5.19year 2003 and the maximum amount of total aid it may receive under section 477A.013, 5.20subdivision 9 , paragraph (c), is also increased by $200,000 in calendar year 2003 only, 5.21provided that the city qualified for an increase in homestead and agricultural credit aid 5.22under Laws 1995, chapter 264, article 8, section 18. 5.23    (o) The city aid base for a city is increased by $200,000 in 2004 only and the 5.24maximum amount of total aid it may receive under section 477A.013, subdivision 9, is 5.25also increased by $200,000 in calendar year 2004 only, if the city is the site of a nuclear 5.26dry cask storage facility. 5.27    (p) The city aid base for a city is increased by $10,000 in 2004 and thereafter and the 5.28maximum total aid it may receive under section 477A.013, subdivision 9, is also increased 5.29by $10,000 in calendar year 2004 only, if the city was included in a federal major disaster 5.30designation issued on April 1, 1998, and its pre-1940 housing stock was decreased by 5.31more than 40 percent between 1990 and 2000. 5.32    (q) The city aid base for a city is increased by $30,000 in 2009 and thereafter and the 5.33maximum total aid it may receive under section 477A.013, subdivision 9, is also increased 5.34by $25,000 in calendar year 2006 only if the city had a population in 2003 of at least 1,000 5.35and has a state park for which the city provides rescue services and which comprised at 5.36least 14 percent of the total geographic area included within the city boundaries in 2000. 6.1    (r) The city aid base for a city is increased by $80,000 in 2009 and thereafter and 6.2the minimum and maximum amount of total aid it may receive under section 477A.013, 6.3subdivision 9, is also increased by $80,000 in calendar year 2009 only, if: 6.4    (1) as of May 1, 2006, at least 25 percent of the tax capacity of the city is proposed 6.5to be placed in trust status as tax-exempt Indian land; 6.6    (2) the placement of the land is being challenged administratively or in court; and 6.7    (3) due to the challenge, the land proposed to be placed in trust is still on the tax 6.8rolls as of May 1, 2006. 6.9    (s) The city aid base for a city is increased by $100,000 in 2007 and thereafter and 6.10the minimum and maximum total amount of aid it may receive under this section is also 6.11increased in calendar year 2007 only, provided that: 6.12    (1) the city has a 2004 estimated population greater than 200 but less than 2,000; 6.13    (2) its city net tax capacity for aids payable in 2006 was less than $300 per capita; 6.14    (3) the ratio of its pay 2005 tax levy compared to its city net tax capacity for aids 6.15payable in 2006 was greater than 110 percent; and 6.16    (4) it is located in a county where at least 15,000 acres of land are classified as 6.17tax-exempt Indian reservations according to the 2004 abstract of tax-exempt property. 6.18    (t) The city aid base for a city is increased by $30,000 in 2009 only, and the 6.19maximum total aid it may receive under section 477A.013, subdivision 9, is also increased 6.20by $30,000 in calendar year 2009, only if the city had a population in 2005 of less than 6.213,000 and the city's boundaries as of 2007 were formed by the consolidation of two cities 6.22and one township in 2002. 6.23    (u) The city aid base for a city is increased by $100,000 in 2009 and thereafter, and 6.24the maximum total aid it may receive under section 477A.013, subdivision 9, is also 6.25increased by $100,000 in calendar year 2009 only, if the city had a city net tax capacity for 6.26aids payable in 2007 of less than $150 per capita and the city experienced flooding on 6.27March 14, 2007, that resulted in evacuation of at least 40 homes. 6.28    (v) The city aid base for a city is increased by $100,000 in 2009 to 2013, and the 6.29maximum total aid it may receive under section 477A.013, subdivision 9, is also increased 6.30by $100,000 in calendar year 2009 only, if the city: 6.31    (1) is located outside of the Minneapolis-St. Paul standard metropolitan statistical 6.32area; 6.33    (2) has a 2005 population greater than 7,000 but less than 8,000; and 6.34    (3) has a 2005 net tax capacity per capita of less than $500. 7.1    (w) The city aid base is increased by $25,000 in calendar years 2009 to 2013 and the 7.2maximum amount of total aid it may receive under section 477A.013, subdivision 9, is 7.3increased by $25,000 in calendar year 2009 only, provided that: 7.4    (1) the city is located in the seven-county metropolitan area; 7.5    (2) its population in 2006 is less than 200; and 7.6    (3) the percentage of its housing stock built before 1940, according to the 2000 7.7United States Census, is greater than 40 percent. 7.8    (x) The city aid base is increased by $90,000 in calendar year 2009 only and the 7.9minimum and maximum total amount of aid it may receive under section 477A.013, 7.10subdivision 9, is also increased by $90,000 in calendar year 2009 only, provided that the 7.11city is located in the seven-county metropolitan area, has a 2006 population between 5,000 7.12and 7,000 and has a 1997 population of over 7,000. 7.13    (y) In calendar year 2010 only, the city aid base for a city is increased by $225,000 if 7.14it was eligible for a $450,000 payment in calendar year 2008 under Minnesota Statutes 7.152006, section 477A.011, subdivision 36, paragraph (e), and the second half of the payment 7.16under that paragraph in December 2008 was canceled due to the governor's unallotment. 7.17The payment under this paragraph is not subject to any aid reductions under section 7.18477A.0134 or any future unallotment of the city aid under section 16A.152. 7.19(z) The city aid base and the maximum total aid the city may receive under section 7.20477A.013, subdivision 9, is increased by $25,000 in calendar year 2010 only if: 7.21(1) the city is a first class city in the seven-county metropolitan area with a 7.22population below 300,000; and 7.23(2) the city has made an equivalent grant to its local growers' association to 7.24reimburse up to $1,000 each for membership fees and retail leases for members of the 7.25association who farm in and around Dakota County and who incurred crop damage as a 7.26result of the hail storm in that area on July 10, 2008. 7.27The payment under this paragraph is not subject to any aid reductions under section 7.28 or any future unallotment of the city aid under section . 7.29(aa) The city aid base for a city is increased by $106,964 in 2011 only and the 7.30minimum and maximum amount of total aid it may receive under section , 7.31subdivision 9, is also increased by $106,964 in calendar year 2011 only, if the city had a 7.32population as defined in Minnesota Statutes, section 477A.011, subdivision 3, that was in 7.33excess of 1,000 in 2007 and that was less than 1,000 in 2008. 7.34 new text begin (z) In calendar year 2013 only, the total aid the city may receive under section new text end 7.35 new text begin is increased by $12,000 if: new text end 8.1 new text begin (1) the city's 2010 population is less than 100 and its population growth between new text end 8.2 new text begin 2000 and 2010 was more than 55 percent; and new text end 8.3 new text begin (2) its commercial industrial percentage as defined in subdivision 32, based on new text end 8.4 new text begin assessments for calendar year 2010, payable in 2011, is greater than 15 percent. new text end 8.5 new text begin EFFECTIVE DATE. new text end new text begin This section is effective for aids payable in calendar year new text end 8.6 new text begin 2013 and thereafter. new text end 8.7    Sec. 2. Minnesota Statutes 2011 Supplement, section 477A.013, subdivision 9, is 8.8amended to read: 8.9    Subd. 9. City aid distribution. (a) In calendar year 2009 new text begin 2013 new text end and thereafter, each 8.10city shall receive an aid distribution equal to the sum of (1) the city formula aid under 8.11subdivision 8, and (2) its city aid base. 8.12    (b) For aids payable in 2013 new text begin and 2014 new text end only, the total aid in the previous year for any 8.13city shall mean the amount of aid it was certified to receive for aids payable in 2012 under 8.14this section. For aids payable in 2014 new text begin 2015 new text end and thereafter, the total aid in the previous 8.15year for any city means the amount of aid it was certified to receive under this section in 8.16the previous payable year. 8.17    (c) For aids payable in 2010 and thereafter, the total aid for any city shall not exceed 8.18the sum of (1) ten percent of the city's net levy for the year prior to the aid distribution 8.19plus (2) its total aid in the previous year. For aids payable in 2009 and thereafter, the total 8.20aid for any city with a population of 2,500 or more may not be less than its total aid under 8.21this section in the previous year minus the lesser of $10 multiplied by its population, or ten 8.22percent of its net levy in the year prior to the aid distribution. 8.23    (d) For aids payable in 2010 and thereafter, the total aid for a city with a population 8.24less than 2,500 must not be less than the amount it was certified to receive in the 8.25previous year minus the lesser of $10 multiplied by its population, or five percent of its 8.262003 certified aid amount. For aids payable in 2009 only, the total aid for a city with a 8.27population less than 2,500 must not be less than what it received under this section in the 8.28previous year unless its total aid in calendar year 2008 was aid under section 477A.011, 8.29subdivision 36, paragraph (s), in which case its minimum aid is zero. 8.30    (e) A city's aid loss under this section may not exceed $300,000 in any year in 8.31which the total city aid appropriation under section 477A.03, subdivision 2a, is equal or 8.32greater than the appropriation under that subdivision in the previous year, unless the 8.33city has an adjustment in its city net tax capacity under the process described in section 8.34469.174, subdivision 28 . 9.1    (f) If a city's net tax capacity used in calculating aid under this section has decreased 9.2in any year by more than 25 percent from its net tax capacity in the previous year due to 9.3property becoming tax-exempt Indian land, the city's maximum allowed aid increase 9.4under paragraph (c) shall be increased by an amount equal to (1) the city's tax rate in the 9.5year of the aid calculation, multiplied by (2) the amount of its net tax capacity decrease 9.6resulting from the property becoming tax exempt. 9.7 new text begin EFFECTIVE DATE. new text end new text begin This section is effective for aids payable in calendar year new text end 9.8 new text begin 2013 and thereafter. new text end 9.9    Sec. 3. Minnesota Statutes 2010, section 477A.013, is amended by adding a 9.10subdivision to read: 9.11     new text begin Subd. 12. new text end new text begin Aid payments in 2013. new text end new text begin (a) Notwithstanding aids calculated for 2013 new text end 9.12 new text begin under subdivision 9, for 2013, each city with a population of 5,000 or more shall receive new text end 9.13 new text begin an aid distribution under this section equal to its aid distribution under this section in 2012. new text end 9.14 new text begin (b) Notwithstanding aids calculated for 2013 under subdivision 9, each city with new text end 9.15 new text begin a population under 5,000 shall receive an aid distribution under this section equal to new text end 9.16 new text begin any additional city aid base authorized in calendar year 2013 under section 477A.011, new text end 9.17 new text begin subdivision 36, paragraph (z), plus the greater of (1) its aid distribution under this section new text end 9.18 new text begin in 2012 or (2) its amount that it is calculated to receive under subdivision 9. new text end 9.19 new text begin EFFECTIVE DATE. new text end new text begin This section is effective for aids payable in calendar year new text end 9.20 new text begin 2013. new text end 9.21    Sec. 4. new text begin 2011 CITY AID PENALTIES. new text end 9.22 new text begin (a) Notwithstanding Minnesota Statutes, section 477A.017, subdivision 3, any city new text end 9.23 new text begin that did not meet the requirements for filing calendar year 2010 financial reports with new text end 9.24 new text begin the state auditor imposed under Minnesota Statutes, section 477A.017, subdivision 2, new text end 9.25 new text begin shall receive its 2011 aid payment as calculated pursuant to Minnesota Statutes, section new text end 9.26 new text begin 477A.013, subdivision 11, provided that the forms are submitted to the state auditor by new text end 9.27 new text begin May 31, 2012. The commissioner shall make payment to each qualifying city no later new text end 9.28 new text begin than June 30, 2012. new text end 9.29 new text begin (b) Up to $794,579 of the fiscal year 2012 appropriation for local government aid new text end 9.30 new text begin in Minnesota Statutes, section 477A.013, subdivision 11, is available for the payment new text end 9.31 new text begin under this section. new text end 9.32 new text begin EFFECTIVE DATE. new text end new text begin This section is effective the day following final enactment. new text end 10.1    Sec. 5. new text begin ADDITIONAL AID PAYMENT IN 2012 FOR CERTAIN CITIES. new text end 10.2 new text begin For calendar year 2012 only, a city shall receive a onetime payment of $12,000 new text end 10.3 new text begin if: (1) the city's 2010 population is less than 100 and its population growth between new text end 10.4 new text begin 2000 and 2010 was more than 55 percent; and (2) its commercial industrial percentage as new text end 10.5 new text begin defined in Minnesota Statutes, section 477A.011, subdivision 32, based on assessments new text end 10.6 new text begin for calendar year 2010, payable 2011, is greater than 15 percent. The aid paid under this new text end 10.7 new text begin section shall be paid on the same schedule as aid paid under Minnesota Statutes, sections new text end 10.8 new text begin 477A.011 to 477A.03. The amount necessary to make the payment under this section shall new text end 10.9 new text begin be appropriated from the general fund in fiscal year 2013. new text end 10.10 new text begin EFFECTIVE DATE. new text end new text begin This section is effective the day following final enactment. new text end 10.11    Sec. 6. new text begin SUPPLEMENTAL TARGETING REFUND FOR TAXES PAYABLE IN new text end 10.12 new text begin 2012 ONLY. new text end 10.13     new text begin Subdivision 1. new text end new text begin Determination of supplemental refund. new text end new text begin (a) For property tax refund new text end 10.14 new text begin claims under Minnesota Statutes, section 290A.04, subdivision 2h, based upon property new text end 10.15 new text begin taxes payable in 2012, the state must pay a supplemental refund such that the combined new text end 10.16 new text begin amount of the regular refund under Minnesota Statutes, section 290A.04, subdivision 2h, new text end 10.17 new text begin and the supplemental refund is equal to 90 percent of the increase over the greater of (1) 12 new text end 10.18 new text begin percent of the payable 2011 property taxes, or (2) $100. The maximum combined refund new text end 10.19 new text begin under Minnesota Statutes, section 290A.04, subdivision 2h, and this section is $1,000. new text end 10.20 new text begin (b) The supplemental refund amount must be determined by the commissioner of new text end 10.21 new text begin revenue based upon the information submitted with the claim for the regular refund and new text end 10.22 new text begin must be combined with the regular refund for payment. new text end 10.23 new text begin (c) Any supplemental refund paid under this section must be subtracted from new text end 10.24 new text begin "property taxes payable" for the purposes of determining any refund amount under new text end 10.25 new text begin Minnesota Statutes, section 290A.04, subdivision 2, based upon property taxes payable new text end 10.26 new text begin in 2012. new text end 10.27 new text begin (d) Any supplemental refund paid under this section must be subtracted from new text end 10.28 new text begin "property taxes payable" for taxes payable in 2012 for the purposes of determining any new text end 10.29 new text begin refund amount under Minnesota Statutes, section 290A.04, subdivision 2h, based upon new text end 10.30 new text begin property taxes payable in 2013. new text end 10.31     new text begin Subd. 2. new text end new text begin Appropriation. new text end new text begin The amount necessary to make the payments required new text end 10.32 new text begin under this section is appropriated to the commissioner of revenue from the general fund new text end 10.33 new text begin for fiscal years 2013 and 2014. new text end 11.1 new text begin EFFECTIVE DATE. new text end new text begin This section is effective for refund claims based on taxes new text end 11.2 new text begin payable in 2012 only. new text end 11.3ARTICLE 2 11.4ECONOMIC DEVELOPMENT PROVISIONS CLEANUP 11.5    Section 1. Minnesota Statutes 2010, section 16C.16, subdivision 7, is amended to read: 11.6    Subd. 7. Economically disadvantaged areas. (a) Except as otherwise provided in 11.7paragraph (b), the commissioner may award up to a six percent preference in the amount 11.8bid on state procurement to small businesses located in an economically disadvantaged 11.9area. 11.10(b) The commissioner may award up to a four percent preference in the amount bid 11.11on state construction to small businesses located in an economically disadvantaged area. 11.12(c) A business is located in an economically disadvantaged area if: 11.13(1) the owner resides in or the business is located in a county in which the median 11.14income for married couples is less than 70 percent of the state median income for married 11.15couples; 11.16(2) the owner resides in or the business is located in an area designated a labor 11.17surplus area by the United States Department of Labor; or 11.18(3) the business is a certified rehabilitation facility or extended employment provider 11.19as described in chapter 268A. 11.20(d) The commissioner may designate one or more areas designated as targeted 11.21neighborhoods under section 469.202 or as new text begin border city new text end enterprise zones under section 11.22469.167 new text begin 469.166 new text end as economically disadvantaged areas for purposes of this subdivision 11.23if the commissioner determines that this designation would further the purposes of this 11.24section. If the owner of a small business resides or is employed in a designated area, the 11.25small business is eligible for any preference provided under this subdivision. 11.26(e) The Department of Revenue shall gather data necessary to make the 11.27determinations required by paragraph (c), clause (1), and shall annually certify counties 11.28that qualify under paragraph (c), clause (1). An area designated a labor surplus area 11.29retains that status for 120 days after certified small businesses in the area are notified of 11.30the termination of the designation by the United States Department of Labor. 11.31    Sec. 2. Minnesota Statutes 2010, section 41A.036, subdivision 2, is amended to read: 11.32    Subd. 2. Small business development loans; preferences. The following eligible 11.33small businesses have preference among all business applicants for small business 11.34development loans: 12.1(1) businesses located in rural areas of the state that are experiencing the most 12.2severe unemployment rates in the state; 12.3(2) businesses that are likely to expand and provide additional permanent 12.4employment in rural areas of the state, or enhance the quality of existing jobs in those 12.5areas; 12.6(3) businesses located in border communities that experience a competitive 12.7disadvantage due to location; 12.8(4) businesses that have been unable to obtain traditional financial assistance due to 12.9a disadvantageous location, minority ownership, or other factors rather than due to the 12.10business having been considered a poor financial risk; 12.11(5) businesses that utilize state resources and reduce state dependence on outside 12.12resources, and that produce products or services consistent with the long-term social and 12.13economic needs of the state; and 12.14(6) businesses located in designated new text begin border city new text end enterprise zones, as described in 12.15section new text begin 469.166 new text end . 12.16    Sec. 3. Minnesota Statutes 2010, section 117.025, subdivision 10, is amended to read: 12.17    Subd. 10. Public service corporation. "Public service corporation" means a 12.18utility, as defined by section 216E.01, subdivision 10; gas, electric, telephone, or cable 12.19communications company; cooperative association; natural gas pipeline company; 12.20crude oil or petroleum products pipeline company; municipal utility; municipality when 12.21operating its municipally owned utilities; joint venture created pursuant to section 452.25 12.22or 452.26; or municipal power or gas agency. Public service corporation also means a 12.23municipality or public corporation when operating an airport under chapter 360 or 473, a 12.24common carrier, a watershed district, or a drainage authority. Public service corporation 12.25also means an entity operating a regional distribution center within an international 12.26economic development zone designated under section . 12.27    Sec. 4. Minnesota Statutes 2010, section 270B.14, subdivision 3, is amended to read: 12.28    Subd. 3. Administration of enterprise, job opportunity, and biotechnology 12.29and health sciences industry zone programs. The commissioner may disclose return 12.30information relating to the taxes imposed by chapters 290 and 297A to the Department of 12.31Employment and Economic Development or a municipality receiving an new text begin with a border new text end 12.32 new text begin city new text end enterprise zone designation new text begin as defined new text end under section new text begin 469.166, new text end but only as 12.33necessary to administer the funding limitations under section 469.169, subdivision 7, or 12.34to the Department of Employment and Economic Development and appropriate officials 13.1from the local government units in which a qualified business is located but only as 13.2necessary to enforce the job opportunity building zone benefits under section 469.315, or 13.3biotechnology and health sciences industry zone benefits under section 469.336. 13.4    Sec. 5. Minnesota Statutes 2010, section 272.02, subdivision 77, is amended to read: 13.5    Subd. 77. Property of housing and redevelopment authorities. Property of 13.6projects of housing and redevelopment authorities are exempt to the extent permitted by 13.7sections new text begin section new text end 469.042, subdivision 1, and 469.043, subdivisions 2 and 5. 13.8    Sec. 6. Minnesota Statutes 2010, section 273.13, subdivision 24, is amended to read: 13.9    Subd. 24. Class 3. (a) Commercial and industrial property and utility real and 13.10personal property is class 3a. 13.11(1) Except as otherwise provided, each parcel of commercial, industrial, or utility 13.12real property has a class rate of 1.5 percent of the first tier of market value, and 2.0 percent 13.13of the remaining market value. In the case of contiguous parcels of property owned by the 13.14same person or entity, only the value equal to the first-tier value of the contiguous parcels 13.15qualifies for the reduced class rate, except that contiguous parcels owned by the same 13.16person or entity shall be eligible for the first-tier value class rate on each separate business 13.17operated by the owner of the property, provided the business is housed in a separate 13.18structure. For the purposes of this subdivision, the first tier means the first $150,000 of 13.19market value. Real property owned in fee by a utility for transmission line right-of-way 13.20shall be classified at the class rate for the higher tier. 13.21For purposes of this subdivision, parcels are considered to be contiguous even if 13.22they are separated from each other by a road, street, waterway, or other similar intervening 13.23type of property. Connections between parcels that consist of power lines or pipelines do 13.24not cause the parcels to be contiguous. Property owners who have contiguous parcels of 13.25property that constitute separate businesses that may qualify for the first-tier class rate shall 13.26notify the assessor by July 1, for treatment beginning in the following taxes payable year. 13.27(2) All personal property that is: (i) part of an electric generation, transmission, or 13.28distribution system; or (ii) part of a pipeline system transporting or distributing water, gas, 13.29crude oil, or petroleum products; and (iii) not described in clause (3), and all railroad 13.30operating property has a class rate as provided under clause (1) for the first tier of market 13.31value and the remaining market value. In the case of multiple parcels in one county that 13.32are owned by one person or entity, only one first tier amount is eligible for the reduced rate. 13.33(3) The entire market value of personal property that is: (i) tools, implements, and 13.34machinery of an electric generation, transmission, or distribution system; (ii) tools, 14.1implements, and machinery of a pipeline system transporting or distributing water, gas, 14.2crude oil, or petroleum products; or (iii) the mains and pipes used in the distribution of 14.3steam or hot or chilled water for heating or cooling buildings, has a class rate as provided 14.4under clause (1) for the remaining market value in excess of the first tier. 14.5(b) Employment property defined in section , during the period provided 14.6in section , shall constitute class 3b. The class rates for class 3b property are 14.7determined under paragraph (a). 14.8    Sec. 7. Minnesota Statutes 2010, section 273.1398, subdivision 4, is amended to read: 14.9    Subd. 4. Disparity reduction credit. (a) Beginning with taxes payable in 1989, 14.10class 4a, new text begin and new text end class 3a, and class 3b property qualifies for a disparity reduction credit if: (1) 14.11the property is located in a border city that has an enterprise zone designated pursuant to 14.12section 469.168, subdivision 4 new text begin , as defined in section 469.166 new text end ; (2) the property is located 14.13in a city with a population greater than 2,500 and less than 35,000 according to the 14.141980 decennial census; (3) the city is adjacent to a city in another state or immediately 14.15adjacent to a city adjacent to a city in another state; and (4) the adjacent city in the 14.16other state has a population of greater than 5,000 and less than 75,000 according to the 14.171980 decennial census. 14.18    (b) The credit is an amount sufficient to reduce (i) the taxes levied on class 4a 14.19property to 2.3 percent of the property's market value and (ii) the tax on class 3a and class 14.203b property to 2.3 percent of market value. 14.21    (c) The county auditor shall annually certify the costs of the credits to the 14.22Department of Revenue. The department shall reimburse local governments for the 14.23property taxes forgone as the result of the credits in proportion to their total levies. 14.24    Sec. 8. Minnesota Statutes 2010, section 276A.01, subdivision 3, is amended to read: 14.25    Subd. 3. Commercial-industrial property. "Commercial-industrial property" 14.26means the following categories of property, as defined in section 273.13, excluding that 14.27portion of the property (i) that may, by law, constitute the tax base for a tax increment 14.28pledged pursuant to section or or sections 469.174 to 469.178, 14.29certification of which was requested prior to May 1, 1996, to the extent and while the tax 14.30increment is so pledged; or (ii) that is exempt from taxation under section 272.02: 14.31    (1) that portion of class 5 property consisting of unmined iron ore and low-grade 14.32iron-bearing formations as defined in section 273.14, tools, implements, and machinery, 14.33except the portion of high voltage transmission lines, the value of which is deducted from 14.34net tax capacity under section 273.425; and 15.1    (2) that portion of class 3 and class 5 property which is either used or zoned for 15.2use for any commercial or industrial purpose, including property that becomes taxable 15.3under section 298.25, except for such property which is, or, in the case of property under 15.4construction, will when completed be used exclusively for residential occupancy and 15.5the provision of services to residential occupants thereof. Property must be considered 15.6as used exclusively for residential occupancy only if each of not less than 80 percent 15.7of its occupied residential units is, or, in the case of property under construction, will 15.8when completed be occupied under an oral or written agreement for occupancy over a 15.9continuous period of not less than 30 days. 15.10    If the classification of property prescribed by section 273.13 is modified by 15.11legislative amendment, the references in this subdivision are to the successor class or 15.12classes of property, or portions thereof, that include the kinds of property designated 15.13in this subdivision. 15.14    Sec. 9. Minnesota Statutes 2011 Supplement, section 290.01, subdivision 19b, is 15.15amended to read: 15.16    Subd. 19b. Subtractions from federal taxable income. For individuals, estates, 15.17and trusts, there shall be subtracted from federal taxable income: 15.18    (1) net interest income on obligations of any authority, commission, or 15.19instrumentality of the United States to the extent includable in taxable income for federal 15.20income tax purposes but exempt from state income tax under the laws of the United States; 15.21    (2) if included in federal taxable income, the amount of any overpayment of income 15.22tax to Minnesota or to any other state, for any previous taxable year, whether the amount 15.23is received as a refund or as a credit to another taxable year's income tax liability; 15.24    (3) the amount paid to others, less the amount used to claim the credit allowed under 15.25section 290.0674, not to exceed $1,625 for each qualifying child in grades kindergarten 15.26to 6 and $2,500 for each qualifying child in grades 7 to 12, for tuition, textbooks, and 15.27transportation of each qualifying child in attending an elementary or secondary school 15.28situated in Minnesota, North Dakota, South Dakota, Iowa, or Wisconsin, wherein a 15.29resident of this state may legally fulfill the state's compulsory attendance laws, which 15.30is not operated for profit, and which adheres to the provisions of the Civil Rights Act 15.31of 1964 and chapter 363A. For the purposes of this clause, "tuition" includes fees or 15.32tuition as defined in section 290.0674, subdivision 1, clause (1). As used in this clause, 15.33"textbooks" includes books and other instructional materials and equipment purchased 15.34or leased for use in elementary and secondary schools in teaching only those subjects 15.35legally and commonly taught in public elementary and secondary schools in this state. 16.1Equipment expenses qualifying for deduction includes expenses as defined and limited in 16.2section 290.0674, subdivision 1, clause (3). "Textbooks" does not include instructional 16.3books and materials used in the teaching of religious tenets, doctrines, or worship, the 16.4purpose of which is to instill such tenets, doctrines, or worship, nor does it include books 16.5or materials for, or transportation to, extracurricular activities including sporting events, 16.6musical or dramatic events, speech activities, driver's education, or similar programs. No 16.7deduction is permitted for any expense the taxpayer incurred in using the taxpayer's or 16.8the qualifying child's vehicle to provide such transportation for a qualifying child. For 16.9purposes of the subtraction provided by this clause, "qualifying child" has the meaning 16.10given in section 32(c)(3) of the Internal Revenue Code; 16.11    (4) income as provided under section 290.0802; 16.12    (5) to the extent included in federal adjusted gross income, income realized on 16.13disposition of property exempt from tax under section 290.491; 16.14    (6) to the extent not deducted or not deductible pursuant to section 408(d)(8)(E) 16.15of the Internal Revenue Code in determining federal taxable income by an individual 16.16who does not itemize deductions for federal income tax purposes for the taxable year, an 16.17amount equal to 50 percent of the excess of charitable contributions over $500 allowable 16.18as a deduction for the taxable year under section 170(a) of the Internal Revenue Code, 16.19under the provisions of Public Law 109-1 and Public Law 111-126; 16.20    (7) for individuals who are allowed a federal foreign tax credit for taxes that do not 16.21qualify for a credit under section 290.06, subdivision 22, an amount equal to the carryover 16.22of subnational foreign taxes for the taxable year, but not to exceed the total subnational 16.23foreign taxes reported in claiming the foreign tax credit. For purposes of this clause, 16.24"federal foreign tax credit" means the credit allowed under section 27 of the Internal 16.25Revenue Code, and "carryover of subnational foreign taxes" equals the carryover allowed 16.26under section 904(c) of the Internal Revenue Code minus national level foreign taxes to 16.27the extent they exceed the federal foreign tax credit; 16.28    (8) in each of the five tax years immediately following the tax year in which an 16.29addition is required under subdivision 19a, clause (7), or 19c, clause (15), in the case 16.30of a shareholder of a corporation that is an S corporation, an amount equal to one-fifth 16.31of the delayed depreciation. For purposes of this clause, "delayed depreciation" means 16.32the amount of the addition made by the taxpayer under subdivision 19a, clause (7), or 16.33subdivision 19c, clause (15), in the case of a shareholder of an S corporation, minus the 16.34positive value of any net operating loss under section 172 of the Internal Revenue Code 16.35generated for the tax year of the addition. The resulting delayed depreciation cannot be 16.36less than zero; 17.1    (9) job opportunity building zone income as provided under section 469.316; 17.2    (10) to the extent included in federal taxable income, the amount of compensation 17.3paid to members of the Minnesota National Guard or other reserve components of the 17.4United States military for active service, excluding compensation for services performed 17.5under the Active Guard Reserve (AGR) program. For purposes of this clause, "active 17.6service" means (i) state active service as defined in section 190.05, subdivision 5a, clause 17.7(1); or (ii) federally funded state active service as defined in section 190.05, subdivision 17.85b , but "active service" excludes service performed in accordance with section 190.08, 17.9subdivision 3 ; 17.10    (11) to the extent included in federal taxable income, the amount of compensation 17.11paid to Minnesota residents who are members of the armed forces of the United States 17.12or United Nations for active duty performed under United States Code, title 10; or the 17.13authority of the United Nations; 17.14    (12) an amount, not to exceed $10,000, equal to qualified expenses related to a 17.15qualified donor's donation, while living, of one or more of the qualified donor's organs 17.16to another person for human organ transplantation. For purposes of this clause, "organ" 17.17means all or part of an individual's liver, pancreas, kidney, intestine, lung, or bone marrow; 17.18"human organ transplantation" means the medical procedure by which transfer of a human 17.19organ is made from the body of one person to the body of another person; "qualified 17.20expenses" means unreimbursed expenses for both the individual and the qualified donor 17.21for (i) travel, (ii) lodging, and (iii) lost wages net of sick pay, except that such expenses 17.22may be subtracted under this clause only once; and "qualified donor" means the individual 17.23or the individual's dependent, as defined in section 152 of the Internal Revenue Code. An 17.24individual may claim the subtraction in this clause for each instance of organ donation for 17.25transplantation during the taxable year in which the qualified expenses occur; 17.26    (13) in each of the five tax years immediately following the tax year in which an 17.27addition is required under subdivision 19a, clause (8), or 19c, clause (16), in the case of a 17.28shareholder of a corporation that is an S corporation, an amount equal to one-fifth of the 17.29addition made by the taxpayer under subdivision 19a, clause (8), or 19c, clause (16), in the 17.30case of a shareholder of a corporation that is an S corporation, minus the positive value of 17.31any net operating loss under section 172 of the Internal Revenue Code generated for the 17.32tax year of the addition. If the net operating loss exceeds the addition for the tax year, a 17.33subtraction is not allowed under this clause; 17.34    (14) to the extent included in the federal taxable income of a nonresident of 17.35Minnesota, compensation paid to a service member as defined in United States Code, title 18.110, section 101(a)(5), for military service as defined in the Servicemembers Civil Relief 18.2Act, Public Law 108-189, section 101(2); 18.3    (15) international economic development zone income as provided under section 18.4; 18.5    (16) to the extent included in federal taxable income, the amount of national service 18.6educational awards received from the National Service Trust under United States Code, 18.7title 42, sections 12601 to 12604, for service in an approved Americorps National Service 18.8program; 18.9(17) new text begin (16) new text end to the extent included in federal taxable income, discharge of indebtedness 18.10income resulting from reacquisition of business indebtedness included in federal taxable 18.11income under section 108(i) of the Internal Revenue Code. This subtraction applies only 18.12to the extent that the income was included in net income in a prior year as a result of the 18.13addition under section 290.01, subdivision 19a, clause (16); and 18.14(18) new text begin (17) new text end the amount of the net operating loss allowed under section 290.095, 18.15subdivision 11, paragraph (c). 18.16    Sec. 10. Minnesota Statutes 2010, section 290.01, subdivision 29, is amended to read: 18.17    Subd. 29. Taxable income. The term "taxable income" means: 18.18(1) for individuals, estates, and trusts, the same as taxable net income; 18.19(2) for corporations, the taxable net income less 18.20(i) the net operating loss deduction under section 290.095; 18.21(ii) the dividends received deduction under section 290.21, subdivision 4; 18.22(iii) the exemption for operating in a job opportunity building zone under section 18.23469.317 ; new text begin and new text end 18.24(iv) the exemption for operating in a biotechnology and health sciences industry 18.25zone under section 469.337; and 18.26(v) the exemption for operating in an international economic development zone 18.27under section . 18.28    Sec. 11. Minnesota Statutes 2011 Supplement, section 290.06, subdivision 2c, is 18.29amended to read: 18.30    Subd. 2c. Schedules of rates for individuals, estates, and trusts. (a) The income 18.31taxes imposed by this chapter upon married individuals filing joint returns and surviving 18.32spouses as defined in section 2(a) of the Internal Revenue Code must be computed by 18.33applying to their taxable net income the following schedule of rates: 18.34    (1) On the first $25,680, 5.35 percent; 19.1    (2) On all over $25,680, but not over $102,030, 7.05 percent; 19.2    (3) On all over $102,030, 7.85 percent. 19.3    Married individuals filing separate returns, estates, and trusts must compute their 19.4income tax by applying the above rates to their taxable income, except that the income 19.5brackets will be one-half of the above amounts. 19.6    (b) The income taxes imposed by this chapter upon unmarried individuals must be 19.7computed by applying to taxable net income the following schedule of rates: 19.8    (1) On the first $17,570, 5.35 percent; 19.9    (2) On all over $17,570, but not over $57,710, 7.05 percent; 19.10    (3) On all over $57,710, 7.85 percent. 19.11    (c) The income taxes imposed by this chapter upon unmarried individuals qualifying 19.12as a head of household as defined in section 2(b) of the Internal Revenue Code must be 19.13computed by applying to taxable net income the following schedule of rates: 19.14    (1) On the first $21,630, 5.35 percent; 19.15    (2) On all over $21,630, but not over $86,910, 7.05 percent; 19.16    (3) On all over $86,910, 7.85 percent. 19.17    (d) In lieu of a tax computed according to the rates set forth in this subdivision, the 19.18tax of any individual taxpayer whose taxable net income for the taxable year is less than 19.19an amount determined by the commissioner must be computed in accordance with tables 19.20prepared and issued by the commissioner of revenue based on income brackets of not 19.21more than $100. The amount of tax for each bracket shall be computed at the rates set 19.22forth in this subdivision, provided that the commissioner may disregard a fractional part of 19.23a dollar unless it amounts to 50 cents or more, in which case it may be increased to $1. 19.24    (e) An individual who is not a Minnesota resident for the entire year must compute 19.25the individual's Minnesota income tax as provided in this subdivision. After the 19.26application of the nonrefundable credits provided in this chapter, the tax liability must 19.27then be multiplied by a fraction in which: 19.28    (1) the numerator is the individual's Minnesota source federal adjusted gross income 19.29as defined in section 62 of the Internal Revenue Code and increased by the additions 19.30required under section 290.01, subdivision 19a, clauses (1), (5), (6), (7), (8), (9), (12), 19.31(13), and (16) to (18), and reduced by the Minnesota assignable portion of the subtraction 19.32for United States government interest under section 290.01, subdivision 19b, clause (1), 19.33and the subtractions under section 290.01, subdivision 19b, clauses (8), (9), (13), (14), 19.34(15), (17), new text begin (16), new text end and (18) new text begin (17) new text end , after applying the allocation and assignability provisions of 19.35section 290.081, clause (a), or 290.17; and 20.1    (2) the denominator is the individual's federal adjusted gross income as defined in 20.2section 62 of the Internal Revenue Code of 1986, increased by the amounts specified in 20.3section 290.01, subdivision 19a, clauses (1), (5), (6), (7), (8), (9), (12), (13), and (16) to 20.4(18), and reduced by the amounts specified in section 290.01, subdivision 19b, clauses (1), 20.5(8), (9), (13), (14), (15), (17) new text begin (16) new text end , and (18) new text begin (17) new text end . 20.6    Sec. 12. Minnesota Statutes 2010, section 290.067, subdivision 1, is amended to read: 20.7    Subdivision 1. Amount of credit. (a) A taxpayer may take as a credit against the 20.8tax due from the taxpayer and a spouse, if any, under this chapter an amount equal to the 20.9dependent care credit for which the taxpayer is eligible pursuant to the provisions of 20.10section 21 of the Internal Revenue Code subject to the limitations provided in subdivision 20.112 except that in determining whether the child qualified as a dependent, income received 20.12as a Minnesota family investment program grant or allowance to or on behalf of the child 20.13must not be taken into account in determining whether the child received more than half 20.14of the child's support from the taxpayer, and the provisions of section 32(b)(1)(D) of 20.15the Internal Revenue Code do not apply. 20.16(b) If a child who has not attained the age of six years at the close of the taxable year 20.17is cared for at a licensed family day care home operated by the child's parent, the taxpayer 20.18is deemed to have paid employment-related expenses. If the child is 16 months old or 20.19younger at the close of the taxable year, the amount of expenses deemed to have been paid 20.20equals the maximum limit for one qualified individual under section 21(c) and (d) of the 20.21Internal Revenue Code. If the child is older than 16 months of age but has not attained the 20.22age of six years at the close of the taxable year, the amount of expenses deemed to have 20.23been paid equals the amount the licensee would charge for the care of a child of the same 20.24age for the same number of hours of care. 20.25(c) If a married couple: 20.26(1) has a child who has not attained the age of one year at the close of the taxable 20.27year; 20.28(2) files a joint tax return for the taxable year; and 20.29(3) does not participate in a dependent care assistance program as defined in section 20.30129 of the Internal Revenue Code, in lieu of the actual employment related expenses paid 20.31for that child under paragraph (a) or the deemed amount under paragraph (b), the lesser of 20.32(i) the combined earned income of the couple or (ii) the amount of the maximum limit for 20.33one qualified individual under section 21(c) and (d) of the Internal Revenue Code will 20.34be deemed to be the employment related expense paid for that child. The earned income 20.35limitation of section 21(d) of the Internal Revenue Code shall not apply to this deemed 21.1amount. These deemed amounts apply regardless of whether any employment-related 21.2expenses have been paid. 21.3(d) If the taxpayer is not required and does not file a federal individual income tax 21.4return for the tax year, no credit is allowed for any amount paid to any person unless: 21.5(1) the name, address, and taxpayer identification number of the person are included 21.6on the return claiming the credit; or 21.7(2) if the person is an organization described in section 501(c)(3) of the Internal 21.8Revenue Code and exempt from tax under section 501(a) of the Internal Revenue Code, 21.9the name and address of the person are included on the return claiming the credit. 21.10In the case of a failure to provide the information required under the preceding sentence, 21.11the preceding sentence does not apply if it is shown that the taxpayer exercised due 21.12diligence in attempting to provide the information required. 21.13In the case of a nonresident, part-year resident, or a person who has earned income 21.14not subject to tax under this chapter including earned income excluded pursuant to section 21.15290.01, subdivision 19b , clause (9) or (15), the credit determined under section 21 of the 21.16Internal Revenue Code must be allocated based on the ratio by which the earned income 21.17of the claimant and the claimant's spouse from Minnesota sources bears to the total earned 21.18income of the claimant and the claimant's spouse. 21.19For residents of Minnesota, the subtractions for military pay under section 290.01, 21.20subdivision 19b , clauses (10) and (11), are not considered "earned income not subject to 21.21tax under this chapter." 21.22For residents of Minnesota, the exclusion of combat pay under section 112 of the 21.23Internal Revenue Code is not considered "earned income not subject to tax under this 21.24chapter." 21.25    Sec. 13. Minnesota Statutes 2011 Supplement, section 290.0671, subdivision 1, 21.26is amended to read: 21.27    Subdivision 1. Credit allowed. (a) An individual is allowed a credit against the tax 21.28imposed by this chapter equal to a percentage of earned income. To receive a credit, a 21.29taxpayer must be eligible for a credit under section 32 of the Internal Revenue Code. 21.30(b) For individuals with no qualifying children, the credit equals 1.9125 percent of 21.31the first $4,620 of earned income. The credit is reduced by 1.9125 percent of earned 21.32income or adjusted gross income, whichever is greater, in excess of $5,770, but in no 21.33case is the credit less than zero. 21.34(c) For individuals with one qualifying child, the credit equals 8.5 percent of the first 21.35$6,920 of earned income and 8.5 percent of earned income over $12,080 but less than 22.1$13,450. The credit is reduced by 5.73 percent of earned income or adjusted gross income, 22.2whichever is greater, in excess of $15,080, but in no case is the credit less than zero. 22.3(d) For individuals with two or more qualifying children, the credit equals ten 22.4percent of the first $9,720 of earned income and 20 percent of earned income over 22.5$14,860 but less than $16,800. The credit is reduced by 10.3 percent of earned income 22.6or adjusted gross income, whichever is greater, in excess of $17,890, but in no case is 22.7the credit less than zero. 22.8(e) For a nonresident or part-year resident, the credit must be allocated based on the 22.9percentage calculated under section 290.06, subdivision 2c, paragraph (e). 22.10(f) For a person who was a resident for the entire tax year and has earned income 22.11not subject to tax under this chapter, including income excluded under section 290.01, 22.12subdivision 19b , clause (9) or (15), the credit must be allocated based on the ratio of 22.13federal adjusted gross income reduced by the earned income not subject to tax under 22.14this chapter over federal adjusted gross income. For purposes of this paragraph, the 22.15subtractions for military pay under section 290.01, subdivision 19b, clauses (10) and (11), 22.16are not considered "earned income not subject to tax under this chapter." 22.17For the purposes of this paragraph, the exclusion of combat pay under section 112 22.18of the Internal Revenue Code is not considered "earned income not subject to tax under 22.19this chapter." 22.20(g) For tax years beginning after December 31, 2007, and before December 31, 22.212010, the $5,770 in paragraph (b), the $15,080 in paragraph (c), and the $17,890 in 22.22paragraph (d), after being adjusted for inflation under subdivision 7, are each increased by 22.23$3,000 for married taxpayers filing joint returns. For tax years beginning after December 22.2431, 2008, the commissioner shall annually adjust the $3,000 by the percentage determined 22.25pursuant to the provisions of section 1(f) of the Internal Revenue Code, except that in 22.26section 1(f)(3)(B), the word "2007" shall be substituted for the word "1992." For 2009, 22.27the commissioner shall then determine the percent change from the 12 months ending on 22.28August 31, 2007, to the 12 months ending on August 31, 2008, and in each subsequent 22.29year, from the 12 months ending on August 31, 2007, to the 12 months ending on August 22.3031 of the year preceding the taxable year. The earned income thresholds as adjusted 22.31for inflation must be rounded to the nearest $10. If the amount ends in $5, the amount 22.32is rounded up to the nearest $10. The determination of the commissioner under this 22.33subdivision is not a rule under the Administrative Procedure Act. 22.34(h) For tax years beginning after December 31, 2010, and before January 1, 2012, 22.35the $5,770 in paragraph (b), the $15,080 in paragraph (c), and the $17,890 in paragraph 22.36(d), after being adjusted for inflation under subdivision 7, are each increased by $5,000 23.1for married taxpayers filing joint returns. For tax years beginning after December 31, 23.22010, and before January 1, 2012, the commissioner shall annually adjust the $5,000 23.3by the percentage determined pursuant to the provisions of section 1(f) of the Internal 23.4Revenue Code, except that in section 1(f)(3)(B), the word "2008" shall be substituted for 23.5the word "1992." For 2011, the commissioner shall then determine the percent change 23.6from the 12 months ending on August 31, 2008, to the 12 months ending on August 23.731, 2010. The earned income thresholds as adjusted for inflation must be rounded to 23.8the nearest $10. If the amount ends in $5, the amount is rounded up to the nearest $10. 23.9The determination of the commissioner under this subdivision is not a rule under the 23.10Administrative Procedure Act. 23.11(i) The commissioner shall construct tables showing the amount of the credit at 23.12various income levels and make them available to taxpayers. The tables shall follow 23.13the schedule contained in this subdivision, except that the commissioner may graduate 23.14the transition between income brackets. 23.15    Sec. 14. Minnesota Statutes 2011 Supplement, section 290.091, subdivision 2, is 23.16amended to read: 23.17    Subd. 2. Definitions. For purposes of the tax imposed by this section, the following 23.18terms have the meanings given: 23.19    (a) "Alternative minimum taxable income" means the sum of the following for 23.20the taxable year: 23.21    (1) the taxpayer's federal alternative minimum taxable income as defined in section 23.2255(b)(2) of the Internal Revenue Code; 23.23    (2) the taxpayer's itemized deductions allowed in computing federal alternative 23.24minimum taxable income, but excluding: 23.25    (i) the charitable contribution deduction under section 170 of the Internal Revenue 23.26Code; 23.27    (ii) the medical expense deduction; 23.28    (iii) the casualty, theft, and disaster loss deduction; and 23.29    (iv) the impairment-related work expenses of a disabled person; 23.30    (3) for depletion allowances computed under section 613A(c) of the Internal 23.31Revenue Code, with respect to each property (as defined in section 614 of the Internal 23.32Revenue Code), to the extent not included in federal alternative minimum taxable income, 23.33the excess of the deduction for depletion allowable under section 611 of the Internal 23.34Revenue Code for the taxable year over the adjusted basis of the property at the end of the 23.35taxable year (determined without regard to the depletion deduction for the taxable year); 24.1    (4) to the extent not included in federal alternative minimum taxable income, the 24.2amount of the tax preference for intangible drilling cost under section 57(a)(2) of the 24.3Internal Revenue Code determined without regard to subparagraph (E); 24.4    (5) to the extent not included in federal alternative minimum taxable income, the 24.5amount of interest income as provided by section 290.01, subdivision 19a, clause (1); and 24.6    (6) the amount of addition required by section 290.01, subdivision 19a, clauses (7) 24.7to (9), (12), (13), and (16) to (18); 24.8    less the sum of the amounts determined under the following: 24.9    (1) interest income as defined in section 290.01, subdivision 19b, clause (1); 24.10    (2) an overpayment of state income tax as provided by section 290.01, subdivision 24.1119b , clause (2), to the extent included in federal alternative minimum taxable income; 24.12    (3) the amount of investment interest paid or accrued within the taxable year on 24.13indebtedness to the extent that the amount does not exceed net investment income, as 24.14defined in section 163(d)(4) of the Internal Revenue Code. Interest does not include 24.15amounts deducted in computing federal adjusted gross income; 24.16    (4) amounts subtracted from federal taxable income as provided by section 290.01, 24.17subdivision 19b , clauses (6), (8) to (15) new text begin (14) new text end , and (17) new text begin (16) new text end ; and 24.18(5) the amount of the net operating loss allowed under section 290.095, subdivision 24.1911, paragraph (c). 24.20    In the case of an estate or trust, alternative minimum taxable income must be 24.21computed as provided in section 59(c) of the Internal Revenue Code. 24.22    (b) "Investment interest" means investment interest as defined in section 163(d)(3) 24.23of the Internal Revenue Code. 24.24    (c) "Net minimum tax" means the minimum tax imposed by this section. 24.25    (d) "Regular tax" means the tax that would be imposed under this chapter (without 24.26regard to this section and section 290.032), reduced by the sum of the nonrefundable 24.27credits allowed under this chapter. 24.28    (e) "Tentative minimum tax" equals 6.4 percent of alternative minimum taxable 24.29income after subtracting the exemption amount determined under subdivision 3. 24.30    Sec. 15. Minnesota Statutes 2010, section 290.0921, subdivision 3, is amended to read: 24.31    Subd. 3. Alternative minimum taxable income. "Alternative minimum taxable 24.32income" is Minnesota net income as defined in section 290.01, subdivision 19, and 24.33includes the adjustments and tax preference items in sections 56, 57, 58, and 59(d), (e), 24.34(f), and (h) of the Internal Revenue Code. If a corporation files a separate company 24.35Minnesota tax return, the minimum tax must be computed on a separate company basis. 25.1If a corporation is part of a tax group filing a unitary return, the minimum tax must be 25.2computed on a unitary basis. The following adjustments must be made. 25.3(1) For purposes of the depreciation adjustments under section 56(a)(1) and 25.456(g)(4)(A) of the Internal Revenue Code, the basis for depreciable property placed in 25.5service in a taxable year beginning before January 1, 1990, is the adjusted basis for federal 25.6income tax purposes, including any modification made in a taxable year under section 25.7290.01, subdivision 19e , or Minnesota Statutes 1986, section 290.09, subdivision 7, 25.8paragraph (c). 25.9For taxable years beginning after December 31, 2000, the amount of any remaining 25.10modification made under section 290.01, subdivision 19e, or Minnesota Statutes 1986, 25.11section 290.09, subdivision 7, paragraph (c), not previously deducted is a depreciation 25.12allowance in the first taxable year after December 31, 2000. 25.13(2) The portion of the depreciation deduction allowed for federal income tax 25.14purposes under section 168(k) of the Internal Revenue Code that is required as an 25.15addition under section 290.01, subdivision 19c, clause (15), is disallowed in determining 25.16alternative minimum taxable income. 25.17(3) The subtraction for depreciation allowed under section 290.01, subdivision 19d, 25.18clause (17), is allowed as a depreciation deduction in determining alternative minimum 25.19taxable income. 25.20(4) The alternative tax net operating loss deduction under sections 56(a)(4) and 56(d) 25.21of the Internal Revenue Code does not apply. 25.22(5) The special rule for certain dividends under section 56(g)(4)(C)(ii) of the Internal 25.23Revenue Code does not apply. 25.24(6) The special rule for dividends from section 936 companies under section 25.2556(g)(4)(C)(iii) does not apply. 25.26(7) The tax preference for depletion under section 57(a)(1) of the Internal Revenue 25.27Code does not apply. 25.28(8) The tax preference for intangible drilling costs under section 57(a)(2) of the 25.29Internal Revenue Code must be calculated without regard to subparagraph (E) and the 25.30subtraction under section 290.01, subdivision 19d, clause (4). 25.31(9) The tax preference for tax exempt interest under section 57(a)(5) of the Internal 25.32Revenue Code does not apply. 25.33(10) The tax preference for charitable contributions of appreciated property under 25.34section 57(a)(6) of the Internal Revenue Code does not apply. 25.35(11) For purposes of calculating the tax preference for accelerated depreciation or 25.36amortization on certain property placed in service before January 1, 1987, under section 26.157(a)(7) of the Internal Revenue Code, the deduction allowable for the taxable year is the 26.2deduction allowed under section 290.01, subdivision 19e. 26.3For taxable years beginning after December 31, 2000, the amount of any remaining 26.4modification made under section 290.01, subdivision 19e, not previously deducted is a 26.5depreciation or amortization allowance in the first taxable year after December 31, 2004. 26.6(12) For purposes of calculating the adjustment for adjusted current earnings in 26.7section 56(g) of the Internal Revenue Code, the term "alternative minimum taxable 26.8income" as it is used in section 56(g) of the Internal Revenue Code, means alternative 26.9minimum taxable income as defined in this subdivision, determined without regard to the 26.10adjustment for adjusted current earnings in section 56(g) of the Internal Revenue Code. 26.11(13) For purposes of determining the amount of adjusted current earnings under 26.12section 56(g)(3) of the Internal Revenue Code, no adjustment shall be made under section 26.1356(g)(4) of the Internal Revenue Code with respect to (i) the amount of foreign dividend 26.14gross-up subtracted as provided in section 290.01, subdivision 19d, clause (1), (ii) the 26.15amount of refunds of income, excise, or franchise taxes subtracted as provided in section 26.16290.01, subdivision 19d , clause (9), or (iii) the amount of royalties, fees or other like 26.17income subtracted as provided in section 290.01, subdivision 19d, clause (10). 26.18(14) Alternative minimum taxable income excludes the income from operating in a 26.19job opportunity building zone as provided under section 469.317. 26.20(15) Alternative minimum taxable income excludes the income from operating in a 26.21biotechnology and health sciences industry zone as provided under section 469.337. 26.22(16) Alternative minimum taxable income excludes the income from operating in an 26.23international economic development zone as provided under section . 26.24Items of tax preference must not be reduced below zero as a result of the 26.25modifications in this subdivision. 26.26    Sec. 16. Minnesota Statutes 2011 Supplement, section 290.0922, subdivision 2, 26.27is amended to read: 26.28    Subd. 2. Exemptions. The following entities are exempt from the tax imposed 26.29by this section: 26.30(1) corporations exempt from tax under section 290.05; 26.31(2) real estate investment trusts; 26.32(3) regulated investment companies or a fund thereof; and 26.33(4) entities having a valid election in effect under section 860D(b) of the Internal 26.34Revenue Code; 26.35(5) town and farmers' mutual insurance companies; 27.1(6) cooperatives organized under chapter 308A or 308B that provide housing 27.2exclusively to persons age 55 and over and are classified as homesteads under section 27.3273.124, subdivision 3 ; new text begin and new text end 27.4(7) a qualified business as defined under section 469.310, subdivision 11, if for the 27.5taxable year all of its property is located in a job opportunity building zone designated 27.6under section 469.314 and all of its payroll is a job opportunity building zone payroll 27.7under section 469.310; and new text begin . new text end 27.8(8) an entity, if for the taxable year all of its property is located in an international 27.9economic development zone designated under section , and all of its payroll is 27.10international economic development zone payroll under section . The exemption 27.11under this clause applies to taxable years beginning during the duration of the international 27.12economic development zone. 27.13Entities not specifically exempted by this subdivision are subject to tax under this 27.14section, notwithstanding section 290.05. 27.15    Sec. 17. Minnesota Statutes 2011 Supplement, section 290.0922, subdivision 3, 27.16is amended to read: 27.17    Subd. 3. Definitions. (a) "Minnesota sales or receipts" means the total sales 27.18apportioned to Minnesota pursuant to section 290.191, subdivision 5, the total receipts 27.19attributed to Minnesota pursuant to section 290.191, subdivisions 6 to 8, and/or the 27.20total sales or receipts apportioned or attributed to Minnesota pursuant to any other 27.21apportionment formula applicable to the taxpayer. 27.22(b) "Minnesota property" means total Minnesota tangible property as provided in 27.23section 290.191, subdivisions 9 to 11, any other tangible property located in Minnesota, 27.24but does not include: (1) the property of a qualified business as defined under section 27.25469.310, subdivision 11 , that is located in a job opportunity building zone designated under 27.26section 469.314, new text begin and new text end (2) property of a qualified business located in a biotechnology and 27.27health sciences industry zone designated under section 469.334, or (3) for taxable years 27.28beginning during the duration of the zone, property of a qualified business located in the 27.29international economic development zone designated under section . Intangible 27.30property shall not be included in Minnesota property for purposes of this section. 27.31Taxpayers who do not utilize tangible property to apportion income shall nevertheless 27.32include Minnesota property for purposes of this section. On a return for a short taxable 27.33year, the amount of Minnesota property owned, as determined under section 290.191, 27.34shall be included in Minnesota property based on a fraction in which the numerator is the 27.35number of days in the short taxable year and the denominator is 365. 28.1(c) "Minnesota payrolls" means total Minnesota payrolls as provided in section 28.2290.191, subdivision 12 , but does not include: (1) the job opportunity building zone 28.3payroll under section 469.310, subdivision 8, of a qualified business as defined under 28.4section 469.310, subdivision 11, new text begin and new text end (2) biotechnology and health sciences industry zone 28.5payrolls under section 469.330, subdivision 8, or (3) for taxable years beginning during 28.6the duration of the zone, international economic development zone payrolls under section 28.7469.321, subdivision 9. Taxpayers who do not utilize payrolls to apportion income shall 28.8nevertheless include Minnesota payrolls for purposes of this section. 28.9    Sec. 18. Minnesota Statutes 2011 Supplement, section 297A.75, subdivision 1, is 28.10amended to read: 28.11    Subdivision 1. Tax collected. The tax on the gross receipts from the sale of the 28.12following exempt items must be imposed and collected as if the sale were taxable and the 28.13rate under section 297A.62, subdivision 1, applied. The exempt items include: 28.14    (1) capital equipment exempt under section 297A.68, subdivision 5; 28.15    (2) building materials for an agricultural processing facility exempt under section 28.16297A.71, subdivision 13 ; 28.17    (3) building materials for mineral production facilities exempt under section 28.18297A.71, subdivision 14 ; 28.19    (4) building materials for correctional facilities under section 297A.71, subdivision 28.203 ; 28.21    (5) building materials used in a residence for disabled veterans exempt under section 28.22297A.71, subdivision 11 ; 28.23    (6) elevators and building materials exempt under section 297A.71, subdivision 12; 28.24    (7) building materials for the Long Lake Conservation Center exempt under section 28.25297A.71, subdivision 17 ; 28.26    (8) materials and supplies for qualified low-income housing under section 297A.71, 28.27subdivision 23 ; 28.28    (9) materials, supplies, and equipment for municipal electric utility facilities under 28.29section 297A.71, subdivision 35; 28.30    (10) equipment and materials used for the generation, transmission, and distribution 28.31of electrical energy and an aerial camera package exempt under section 297A.68, 28.32subdivision 37; 28.33    (11) tangible personal property and taxable services and construction materials, 28.34supplies, and equipment exempt under section , subdivision 41; 29.1    (12) commuter rail vehicle and repair parts under section 297A.70, subdivision 29.23, clause (11); 29.3    (13) new text begin (12) new text end materials, supplies, and equipment for construction or improvement of 29.4projects and facilities under section 297A.71, subdivision 40; 29.5(14) new text begin (13) new text end materials, supplies, and equipment for construction or improvement of a 29.6meat processing facility exempt under section 297A.71, subdivision 41; 29.7(15) new text begin (14) new text end materials, supplies, and equipment for construction, improvement, or 29.8expansion of an aerospace defense manufacturing facility exempt under section 297A.71, 29.9subdivision 42; and 29.10(16) new text begin (15) new text end enterprise information technology equipment and computer software for 29.11use in a qualified data center exempt under section 297A.68, subdivision 42. 29.12    Sec. 19. Minnesota Statutes 2010, section 469.015, subdivision 4, is amended to read: 29.13    Subd. 4. Exceptions. (a) An authority need not require competitive bidding in the 29.14following circumstances: 29.15(1) in the case of a contract for the acquisition of a low-rent housing project: 29.16(i) for which financial assistance is provided by the federal government; 29.17(ii) which does not require any direct loan or grant of money from the municipality 29.18as a condition of the federal financial assistance; and 29.19(iii) for which the contract provides for the construction of the project upon land that 29.20is either owned by the authority for redevelopment purposes or not owned by the authority 29.21at the time of the contract but the contract provides for the conveyance or lease to the 29.22authority of the project or improvements upon completion of construction; 29.23(2) with respect to a structured parking facility: 29.24(i) constructed in conjunction with, and directly above or below, a development; and 29.25(ii) financed with the proceeds of tax increment or parking ramp general obligation 29.26or revenue bonds; new text begin and new text end 29.27(3) until August 1, 2009, with respect to a facility built for the purpose of facilitating 29.28the operation of public transit or encouraging its use: 29.29(i) constructed in conjunction with, and directly above or below, a development; and 29.30(ii) financed with the proceeds of parking ramp general obligation or revenue bonds 29.31or with at least 60 percent of the construction cost being financed with funding provided 29.32by the federal government; and 29.33(4) in the case of any building in which at least 75 percent of the usable square 29.34footage constitutes a housing development project if: 30.1(i) the project is financed with the proceeds of bonds issued under section 469.034 or 30.2from nongovernmental sources; 30.3(ii) the project is either located on land that is owned or is being acquired by the 30.4authority only for development purposes, or is not owned by the authority at the time the 30.5contract is entered into but the contract provides for conveyance or lease to the authority 30.6of the project or improvements upon completion of construction; and 30.7(iii) the authority finds and determines that elimination of the public bidding 30.8requirements is necessary in order for the housing development project to be economical 30.9and feasible. 30.10(b) An authority need not require a performance bond for the following projects: 30.11(1) a contract described in paragraph (a), clause (1); 30.12(2) a construction change order for a housing project in which 30 percent of the 30.13construction has been completed; 30.14(3) a construction contract for a single-family housing project in which the authority 30.15acts as the general construction contractor; or 30.16(4) a services or materials contract for a housing project. 30.17For purposes of this paragraph, "services or materials contract" does not include 30.18construction contracts. 30.19    Sec. 20. Minnesota Statutes 2010, section 469.033, subdivision 7, is amended to read: 30.20    Subd. 7. Inactive authorities; transfer of funds; dissolution. The authority may 30.21transfer to the city in and for which it was created all property, assets, cash or other 30.22funds held or used by the authority which were derived from the special benefit tax 30.23for redevelopment levied pursuant to subdivision 6 prior to March 6, 1953, whenever 30.24collected. Upon any such transfer, an authority shall not thereafter levy the tax or exercise 30.25the redevelopment powers of sections 469.001 to 469.047. All cash or other funds 30.26transferred to the city shall be used exclusively for permanent improvements in the city 30.27or the retirement of debts or bonds incurred for permanent improvements in the city. 30.28An authority which transfers its property, assets, cash, or other funds derived from the 30.29special benefit tax for redevelopment and which has not entered into a contract with 30.30the federal government with respect to any low-rent public housing project prior to 30.31March 6, 1953, shall be dissolved as herein provided new text begin in this subdivision new text end . After a public 30.32hearing after ten days' published notice thereof in a newspaper of general circulation in 30.33the city, the governing body of a city in and for which an authority has been created 30.34may dissolve the authority if the authority has not entered into any contract with the 30.35federal government or any agency or instrumentality thereof for a loan or a grant with 31.1respect to any urban redevelopment or low-rent public housing project new text begin that remains in new text end 31.2 new text begin effect new text end . The resolution or ordinance dissolving the authority shall be published in the 31.3same manner in which ordinances are published in the city and the authority shall be 31.4dissolved when the resolution or ordinance becomes finally effective. The clerk of the 31.5governing body of the municipality shall furnish to the commissioner of employment and 31.6economic development a certified copy of the resolution or ordinance of the governing 31.7body dissolving the authority. All property, records, assets, cash, or other funds held or 31.8used by an authority shall be transferred to and become the property of the municipality 31.9and cash or other funds shall be used as herein provided. Upon dissolution of an authority, 31.10all rights of an authority against any person, firm, or corporation shall accrue to and 31.11be enforced by the municipality. 31.12    Sec. 21. Minnesota Statutes 2010, section 469.166, subdivision 3, is amended to read: 31.13    Subd. 3. new text begin Border city new text end enterprise zone. " new text begin Border city new text end enterprise zone" means an area 31.14in the state designated as such new text begin an enterprise zone new text end by the commissioner new text begin in the cities of new text end 31.15 new text begin Breckenridge, Dilworth, East Grand Forks, Moorhead, or Ortonville new text end . 31.16    Sec. 22. Minnesota Statutes 2010, section 469.166, subdivision 5, is amended to read: 31.17    Subd. 5. Municipality. "Municipality" means a city, or a county for an area located 31.18outside the boundaries of a city. If an area lies in two or more cities or in both incorporated 31.19and unincorporated areas, "municipality" shall include an entity formed pursuant to 31.20section by the governing bodies of the cities with jurisdiction over the incorporated 31.21area and the counties with jurisdiction over the unincorporated area. 31.22    Sec. 23. Minnesota Statutes 2010, section 469.166, subdivision 6, is amended to read: 31.23    Subd. 6. Governing body. "Governing body" means the county board in the case 31.24of a county, the city council or other body designated by its new text begin the new text end charter in the case of a new text begin new text end 31.25 new text begin of the new text end city, or the tribal or federal agency recognized as the governing body of an Indian 31.26reservation by the United States Secretary of the Interior. 31.27    Sec. 24. Minnesota Statutes 2010, section 469.167, subdivision 2, is amended to read: 31.28    Subd. 2. Duration. The designation of an area as an new text begin a border city new text end enterprise zone 31.29shall be effective for seven years after the date of designation, except that enterprise zones 31.30in border cities eligible to receive allocations for tax reductions under section 469.169, 31.31subdivisions 7 and 8 , and under section 469.171, subdivision 6a or 6b, shall be new text begin is new text end effective 32.1until terminated by resolution adopted by the city in which the border city enterprise 32.2zone is located. 32.3    Sec. 25. Minnesota Statutes 2010, section 469.171, subdivision 1, is amended to read: 32.4    Subdivision 1. Authorized types. new text begin (a) new text end The following types of tax reductions may 32.5be approved by the commissioner for businesses located in an new text begin a border city new text end enterprise 32.6zone new text begin , after the governing body of the border city has designated an area or areas, each new text end 32.7 new text begin consisting of at least 100 acres, of the city not in excess of a total of 400 acres in which the new text end 32.8 new text begin tax reductions may be provided new text end : 32.9(1) an exemption from the general sales tax imposed by chapter 297A for purchases 32.10of construction materials or equipment for use in the zone if the purchase was made 32.11after the date of application for the zone; 32.12(2) a credit against the income tax of an employer for additional workers employed 32.13in the zone, other than workers employed in construction, up to a maximum of $3,000 32.14per employee per year; 32.15(3) an income tax credit for a percentage of the cost of debt financing to construct 32.16new or expanded facilities in the zone; and 32.17(4) a state paid property tax credit for a portion of the property taxes paid by a new 32.18commercial or industrial facility or the additional property taxes paid by an expansion of 32.19an existing commercial or industrial facility in the zone. 32.20 new text begin (b) An application for a tax reduction under this subdivision may not be approved new text end 32.21 new text begin unless the governing body finds that the construction or improvement of the facility is new text end 32.22 new text begin not likely to have the effect of transferring existing employment from a location outside new text end 32.23 new text begin of the municipality but within the state. new text end 32.24    Sec. 26. Minnesota Statutes 2010, section 469.171, subdivision 4, is amended to read: 32.25    Subd. 4. Restriction. The tax reductions provided by this section shall not 32.26apply to (1) a facility the primary purpose of which is one of the following: retail food 32.27and beverage services, automobile sales or service, or the provision of recreation or 32.28entertainment, or a private or commercial golf course, country club, massage parlor, tennis 32.29club, skating facility including roller skating, skateboard, and ice skating, racquet sports 32.30facility, including any handball or racquetball court, hot tub facility, suntan facility, or 32.31racetrack; (2) property of a public utility; (3) property used in the operation of a financial 32.32institution; (4) property owned by a fraternal or veterans' organization; or (5) property of a 32.33business operating under a franchise agreement that requires the business to be located in 32.34the state; except that, in an enterprise zone designated under section 469.168, subdivision 33.14, paragraph (c) , that is not in a city of the first class, tax reductions may be provided to 33.2a retail food or beverage facility or an automobile sales or service facility, or a business 33.3operating under a franchise agreement that requires the business to be located in this state 33.4except for such a franchised retail food or beverage facility. 33.5    Sec. 27. Minnesota Statutes 2010, section 469.171, subdivision 6a, is amended to read: 33.6    Subd. 6a. Additional border city allocations. In addition to tax reductions 33.7authorized in section 469.169, subdivisions 7 and 8, The commissioner may allocate 33.8$2,000,000 for tax reductions pursuant to subdivision 9 to new text begin border city new text end enterprise zones 33.9designated under section 469.168, subdivision 4, paragraph (c), except for zones located 33.10in cities of the first class. This money shall be allocated among the zones on a per 33.11capita basis. Limits on the maximum allocation to a zone imposed by section 469.169, 33.12subdivision 7 , do not apply to allocations made under this subdivision. Tax reductions 33.13authorized by this subdivision may not be allocated to any property which is: 33.14(1) a facility the primary purpose of which is one of the following: the provision 33.15of recreation or entertainment, or a private or commercial golf course, country club, 33.16massage parlor, tennis club, skating facility including roller skating, skateboard, and 33.17ice skating, racquet sports facility, including any handball or racquetball court, hot tub 33.18facility, suntan facility, or racetrack; 33.19(2) property of a public utility; 33.20(3) property used in the operation of a financial institution; 33.21(4) property owned by a fraternal or veterans' organization; 33.22(5) property of a retail food or beverage service business operating under a franchise 33.23agreement that requires the business to be located in the state. 33.24    Sec. 28. Minnesota Statutes 2010, section 469.171, subdivision 7, is amended to read: 33.25    Subd. 7. Duration. Each tax reduction provided to a business pursuant to this 33.26subdivision shall terminate not longer than five years after the effective date of the tax 33.27reduction for the business unless the business is located in a border city enterprise zone 33.28designated under section 469.168, subdivision 4, paragraph (c), that is not a city of the 33.29first class. Each tax reduction provided to a business that is located in a border city 33.30enterprise zone designated under section 469.168, subdivision 4, paragraph (c), that is not 33.31located in a city of the first class, may be provided until the allocations provided under 33.32subdivision 6a, and under section 469.169, subdivisions 7 and 8, have been expended. 33.33Subject to the limitation in this subdivision, the tax reductions may be provided after 33.34expiration of the zone's designation. 34.1    Sec. 29. Minnesota Statutes 2010, section 469.171, subdivision 9, is amended to read: 34.2    Subd. 9. Recapture. Any business that (1) receives tax reductions authorized by 34.3subdivisions 1 to 8, classification as employment property pursuant to section , or 34.4an alternative local contribution under section 469.169, subdivision 5; and (2) ceases to 34.5operate its facility located within the new text begin border city new text end enterprise zone shall repay the amount of 34.6the tax reduction or local contribution received during the two years immediately before 34.7it ceased to operate in the zone. 34.8The repayment must be paid to the state to the extent it represents a tax reduction 34.9under subdivisions 1 to 8 and to the municipality to the extent it represents a property tax 34.10reduction or other local contribution. Any amount repaid to the state must be credited 34.11to the amount certified as available for tax reductions in the zone pursuant to section 34.12469.169, subdivision 7 new text begin the city's allocation new text end . Any amount repaid to the municipality must 34.13be used by the municipality for economic development purposes. The commissioner of 34.14revenue may seek repayment of tax credits from a business ceasing to operate within an 34.15enterprise zone by utilizing any remedies available for the collection of tax. 34.16    Sec. 30. Minnesota Statutes 2010, section 469.171, subdivision 11, is amended to read: 34.17    Subd. 11. Limitations; last eight months of duration. This subdivision applies 34.18only to state tax reductions first authorized by the municipality to be provided to a business 34.19within eight months of the expiration of the new text begin border city new text end enterprise zone's designation. 34.20Before agreeing with a business to provide tax reductions, the municipality must 34.21submit the proposed tax reductions to the commissioner for approval. The commissioner 34.22shall review and analyze the proposal in light of, at least: (1) the proposed investment that 34.23the business will make in the zone, (2) the number and quality of new jobs that will be 34.24created in the zone, (3) the overall positive impact on economic activity in the zone, and 34.25(4) the extent to which the impacts in clauses (1) to (3) are dependent upon providing the 34.26state tax reductions to the business. The commissioner shall disapprove the proposal if the 34.27commissioner determines the public benefits of increased investment and employment 34.28resulting from the tax reductions is disproportionately small relative to the cost of the 34.29state tax reductions. If the commissioner disapproves of the proposal, the tax reductions 34.30are not allowed to the business. 34.31If the municipality submits the proposal to the commissioner before expiration 34.32of the zone designation, the authority to grant the tax reductions continues until the 34.33commissioner acts on the proposal. 35.1    Sec. 31. Minnesota Statutes 2010, section 469.172, is amended to read: 35.2469.172 DEVELOPMENT AND REDEVELOPMENT POWERS. 35.3Notwithstanding any contrary provision of law or charter, any city of the first or 35.4second class that contains an new text begin a border city new text end enterprise zone or that has been designated as 35.5an enterprise zone may, in addition to its other powers, exercise the powers granted to 35.6a governmental subdivision by sections 469.001 to 469.047, 469.048 to 469.068, and 35.7469.109 to 469.113. Section 469.059, subdivision 15, shall apply new text begin applies new text end to the city in 35.8the exercise of the powers granted pursuant to this section. It may exercise the powers 35.9assigned to redevelopment agencies pursuant to sections 469.152 to 469.165, without 35.10limitation to further the purposes of sections 469.001 to 469.047, 469.048 to 469.068, and 35.11469.109 to 469.134. It may exercise the powers set forth in sections 469.001 to 469.047, 35.12469.048 to 469.068, and 469.109 to 469.164 without limitation to further the purposes 35.13and policies set forth in sections 469.152 to 469.165. It may exercise the powers granted 35.14by this subdivision and any other development or redevelopment powers authorized by 35.15other laws, including sections 469.124 to 469.134 and 469.152 to 469.165, independently 35.16or in conjunction with each other as though all the powers had been granted to a single 35.17entity. Any project undertaken to accomplish the purposes of sections 469.001 to 469.047 35.18that qualifies as single-family housing under section 462C.02, subdivision 4, shall be new text begin is new text end 35.19subject to the provisions of chapter 462C. 35.20Upon expiration of the designation of the enterprise zone, the powers granted by 35.21this subdivision may be exercised only with respect to any project, program, or activity 35.22commenced or established prior to that date. The powers granted by this subdivision may 35.23only be exercised within the zone. 35.24    Sec. 32. Minnesota Statutes 2010, section 469.173, subdivision 5, is amended to read: 35.25    Subd. 5. Information sharing. Pursuant to section 270B.14, subdivision 3, 35.26the commissioner of revenue may share information with the commissioner or with a 35.27municipality receiving an enterprise zone designation, insofar as necessary to administer 35.28the funding limitations provided by section 469.169, subdivision 7. 35.29    Sec. 33. Minnesota Statutes 2010, section 469.173, subdivision 6, is amended to read: 35.30    Subd. 6. Zone boundary realignment. The commissioner may approve specific 35.31applications by a municipality to amend the boundaries of a new text begin border city enterprise new text end zone 35.32or of an area or areas designated pursuant to section 469.171, subdivision 5, at any time. 35.33Boundaries of a zone may not be amended to create noncontiguous subdivisions. If the 35.34commissioner approves the amended boundaries, the change is effective on the date of 36.1approval. Notwithstanding the area limitation under section 469.168, subdivision 3, the 36.2commissioner may approve a specific application to amend the boundaries of an enterprise 36.3zone which is located within five municipalities and was designated in 1984, to increase 36.4its area to not more than 800 acres, and may approve an additional specific application to 36.5amend the boundaries of that enterprise zone to include a sixth municipality or to further 36.6increase its area to include all or part of the territory of a town that surrounds one of 36.7the five municipalities, or both. 36.8Notwithstanding the area limitation under section 469.168, subdivision 3, the 36.9commissioner may approve a specific application to amend the boundaries of an enterprise 36.10zone that is located within four municipalities to include a fifth municipality. The addition 36.11of the fifth municipality may only be approved after the existing municipalities, by 36.12adoption of a resolution by each municipality's governing board, agree to the addition 36.13of the fifth municipality. 36.14    Sec. 34. Minnesota Statutes 2010, section 469.174, subdivision 20, is amended to read: 36.15    Subd. 20. Internal Revenue Code. "Internal Revenue Code" means the Internal 36.16Revenue Code of 1986, as amended through December 31, 1993. 36.17    Sec. 35. Minnesota Statutes 2010, section 469.174, subdivision 25, is amended to read: 36.18    Subd. 25. Increment. "Increment," "tax increment," "tax increment revenues," 36.19"revenues derived from tax increment," and other similar terms for a district include: 36.20(1) taxes paid by the captured net tax capacity, but excluding any excess taxes, as 36.21computed under section 469.177; 36.22(2) the proceeds from the sale or lease of property, tangible or intangible, to the 36.23extent the property was purchased by the authority with tax increments; 36.24(3) principal and interest received on loans or other advances made by the authority 36.25with tax increments; 36.26(4) interest or other investment earnings on or from tax increments; new text begin and new text end 36.27(5) repayments or return of tax increments made to the authority under agreements 36.28for districts for which the request for certification was made after August 1, 1993; and 36.29(6) the market value homestead credit paid to the authority under section . 36.30    Sec. 36. Minnesota Statutes 2010, section 469.176, subdivision 7, is amended to read: 36.31    Subd. 7. Parcels not includable in districts. (a) The authority may request 36.32inclusion in a tax increment financing district and the county auditor may certify the 36.33original tax capacity of a parcel or a part of a parcel that qualified under the provisions of 37.1section 273.111 or new text begin , new text end 273.112 new text begin , 273.114, new text end or chapter 473H for taxes payable in any of the five 37.2calendar years before the filing of the request for certification only for: 37.3    (1) a district in which 85 percent or more of the planned buildings and facilities 37.4(determined on the basis of square footage) are a qualified manufacturing facility or a 37.5qualified distribution facility or a combination of both; or 37.6    (2) a housing district. 37.7    (b)(1) A distribution facility means buildings and other improvements to real 37.8property that are used to conduct activities in at least each of the following categories: 37.9    (i) to store or warehouse tangible personal property; 37.10    (ii) to take orders for shipment, mailing, or delivery; 37.11    (iii) to prepare personal property for shipment, mailing, or delivery; and 37.12    (iv) to ship, mail, or deliver property. 37.13    (2) A manufacturing facility includes space used for manufacturing or producing 37.14tangible personal property, including processing resulting in the change in condition of the 37.15property, and space necessary for and related to the manufacturing activities. 37.16    (3) To be a qualified facility, the owner or operator of a manufacturing or distribution 37.17facility must agree to pay and pay 90 percent or more of the employees of the facility at 37.18a rate equal to or greater than 160 percent of the federal minimum wage for individuals 37.19over the age of 20. 37.20    Sec. 37. Minnesota Statutes 2010, section 469.1763, subdivision 6, is amended to read: 37.21    Subd. 6. Pooling permitted for deficits. (a) This subdivision applies only to 37.22districts for which the request for certification was made before August 1, 2001, and 37.23without regard to whether the request for certification was made prior to August 1, 1979. 37.24(b) The municipality for the district may transfer available increments from another 37.25tax increment financing district located in the municipality, if the transfer is necessary to 37.26eliminate a deficit in the district to which the increments are transferred. The municipality 37.27may transfer increments as provided by this subdivision without regard to whether the 37.28transfer or expenditure is authorized by the tax increment financing plan for the district 37.29from which the transfer is made. A deficit in the district for purposes of this subdivision 37.30means the lesser of the following two amounts: 37.31(1)(i) the amount due during the calendar year to pay preexisting obligations of 37.32the district; minus 37.33(ii) the total increments collected or to be collected from properties located within 37.34the district that are available for the calendar year including amounts collected in prior 37.35years that are currently available; plus 38.1(iii) total increments from properties located in other districts in the municipality 38.2including amounts collected in prior years that are available to be used to meet the district's 38.3obligations under this section, excluding this subdivision, or other provisions of law (but 38.4excluding a special tax under section and the grant program under Laws 1997, 38.5chapter 231, article 1, section 19, or Laws 2001, First Special Session chapter 5); or 38.6(2) the reduction in increments collected from properties located in the district for 38.7the calendar year as a result of the changes in class rates in Laws 1997, chapter 231, article 38.81; Laws 1998, chapter 389, article 2; and Laws 1999, chapter 243, and Laws 2001, First 38.9Special Session chapter 5, or the elimination of the general education tax levy under 38.10Laws 2001, First Special Session chapter 5. 38.11The authority may compute the deficit amount under clause (1) only (without regard 38.12to the limit under clause (2)) if the authority makes an irrevocable commitment, by 38.13resolution, to use increments from the district to which increments are to be transferred and 38.14any transferred increments are only used to pay preexisting obligations and administrative 38.15expenses for the district that are required to be paid under section 469.176, subdivision 38.164h , paragraph (a). 38.17(c) A preexisting obligation means: 38.18(1) bonds issued and sold before August 1, 2001, or bonds issued pursuant to a 38.19binding contract requiring the issuance of bonds entered into before July 1, 2001, and 38.20bonds issued to refund such bonds or to reimburse expenditures made in conjunction with 38.21a signed contractual agreement entered into before August 1, 2001, to the extent that the 38.22bonds are secured by a pledge of increments from the tax increment financing district; and 38.23(2) binding contracts entered into before August 1, 2001, to the extent that the 38.24contracts require payments secured by a pledge of increments from the tax increment 38.25financing district. 38.26(d) The municipality may require a development authority, other than a seaway port 38.27authority, to transfer available increments including amounts collected in prior years that 38.28are currently available for any of its tax increment financing districts in the municipality to 38.29make up an insufficiency in another district in the municipality, regardless of whether the 38.30district was established by the development authority or another development authority. 38.31This authority applies notwithstanding any law to the contrary, but applies only to a 38.32development authority that: 38.33(1) was established by the municipality; or 38.34(2) the governing body of which is appointed, in whole or part, by the municipality 38.35or an officer of the municipality or which consists, in whole or part, of members of 38.36the governing body of the municipality. The municipality may use this authority only 39.1after it has first used all available increments of the receiving development authority to 39.2eliminate the insufficiency and exercised any permitted action under section 469.1792, 39.3subdivision 3 , for preexisting districts of the receiving development authority to eliminate 39.4the insufficiency. 39.5(e) The authority under this subdivision to spend tax increments outside of the area 39.6of the district from which the tax increments were collected: 39.7(1) is an exception to the restrictions under section 469.176, subdivisions 4b, 4c, 39.84d, 4e, 4i, and 4j ; the expenditure limits under section 469.176, subdivision 1c; and the 39.9other provisions of this section; and the percentage restrictions under subdivision 2 must 39.10be calculated after deducting increments spent under this subdivision from the total 39.11increments for the district; and 39.12(2) applies notwithstanding the provisions of the Tax Increment Financing Act in 39.13effect for districts for which the request for certification was made before June 30, 1982, 39.14or any other law to the contrary. 39.15(f) If a preexisting obligation requires the development authority to pay an amount 39.16that is limited to the increment from the district or a specific development within the 39.17district and if the obligation requires paying a higher amount to the extent that increments 39.18are available, the municipality may determine that the amount due under the preexisting 39.19obligation equals the higher amount and may authorize the transfer of increments 39.20under this subdivision to pay up to the higher amount. The existence of a guarantee of 39.21obligations by the individual or entity that would receive the payment under this paragraph 39.22is disregarded in the determination of eligibility to pool under this subdivision. The 39.23authority to transfer increments under this paragraph may only be used to the extent 39.24that the payment of all other preexisting obligations in the municipality due during the 39.25calendar year have been satisfied. 39.26(g) For transfers of increments made in calendar year 2005 and later, the reduction in 39.27increments as a result of the elimination of the general education tax levy for purposes of 39.28paragraph (b), clause (2), for a taxes payable year equals the general education tax rate 39.29for the school district under Minnesota Statutes 2000, section 273.1382, subdivision 1, 39.30for taxes payable in 2001, multiplied by the captured tax capacity of the district for the 39.31current taxes payable year. 39.32    Sec. 38. Minnesota Statutes 2010, section 469.1764, subdivision 1, is amended to read: 39.33    Subdivision 1. Scope; application. (a) This section applies to a tax increment 39.34financing district or area added to a district, if the request for certification of the district or 39.35the area added to the district was made after July 31, 1979, and before July 1, 1982. 40.1(b) This section, section 469.1763, subdivision 6, and any special law applying to 40.2the district are the exclusive authority to spend tax increments on activities located outside 40.3of the geographic area of a tax increment financing district that is subject to this section. 40.4(c) This section does not apply to increments from a district that is subject to the 40.5provisions of this section, if: 40.6(1) the district was decertified before the enactment of this section and all increments 40.7spent on activities located outside of the geographic area of the district were repaid and 40.8distributed as excess increments under section 469.176, subdivision 2; or 40.9(2) the use of increments on activities located outside of the geographic area of 40.10the district consists solely of payment of debt service on bonds under section 469.129, 40.11subdivision 2 new text begin , before its repeal new text end , and any bonds issued to refund bonds issued under that 40.12subdivision. 40.13    Sec. 39. Minnesota Statutes 2010, section 469.177, subdivision 1, is amended to read: 40.14    Subdivision 1. Original net tax capacity. (a) Upon or after adoption of a tax 40.15increment financing plan, the auditor of any county in which the district is situated shall, 40.16upon request of the authority, certify the original net tax capacity of the tax increment 40.17financing district and that portion of the district overlying any subdistrict as described in 40.18the tax increment financing plan and shall certify in each year thereafter the amount by 40.19which the original net tax capacity has increased or decreased as a result of a change in tax 40.20exempt status of property within the district and any subdistrict, reduction or enlargement 40.21of the district or changes pursuant to subdivision 4. The auditor shall certify the amount 40.22within 30 days after receipt of the request and sufficient information to identify the parcels 40.23included in the district. The certification relates to the taxes payable year as provided in 40.24subdivision 6. 40.25    (b) If the classification under section 273.13 of property located in a district changes 40.26to a classification that has a different assessment ratio, the original net tax capacity of that 40.27property must be redetermined at the time when its use is changed as if the property had 40.28originally been classified in the same class in which it is classified after its use is changed. 40.29    (c) The amount to be added to the original net tax capacity of the district as a result 40.30of previously tax exempt real property within the district becoming taxable equals the net 40.31tax capacity of the real property as most recently assessed pursuant to section 273.18 or, if 40.32that assessment was made more than one year prior to the date of title transfer rendering 40.33the property taxable, the net tax capacity assessed by the assessor at the time of the 40.34transfer. If improvements are made to tax exempt property after the municipality approves 40.35the district and before the parcel becomes taxable, the assessor shall, at the request of 41.1the authority, separately assess the estimated market value of the improvements. If the 41.2property becomes taxable, the county auditor shall add to original net tax capacity, the net 41.3tax capacity of the parcel, excluding the separately assessed improvements. If substantial 41.4taxable improvements were made to a parcel after certification of the district and if the 41.5property later becomes tax exempt, in whole or part, as a result of the authority acquiring 41.6the property through foreclosure or exercise of remedies under a lease or other revenue 41.7agreement or as a result of tax forfeiture, the amount to be added to the original net tax 41.8capacity of the district as a result of the property again becoming taxable is the amount 41.9of the parcel's value that was included in original net tax capacity when the parcel was 41.10first certified. The amount to be added to the original net tax capacity of the district as a 41.11result of enlargements equals the net tax capacity of the added real property as most 41.12recently certified by the commissioner of revenue as of the date of modification of the tax 41.13increment financing plan pursuant to section 469.175, subdivision 4. 41.14    (d) If the net tax capacity of a property increases because the property no longer 41.15qualifies under the Minnesota Agricultural Property Tax Law, section 273.111; the 41.16Minnesota Open Space Property Tax Law, section 273.112; or the Metropolitan 41.17Agricultural Preserves Act, chapter 473H, new text begin the Rural Preserve Property Tax Program under new text end 41.18 new text begin section 273.114, new text end or because platted, unimproved property is improved or market value 41.19is increased after approval of the plat under section 273.11, subdivision 14, 14a, or 14b, 41.20the increase in net tax capacity must be added to the original net tax capacity. new text begin If the new text end 41.21 new text begin net tax capacity of a property increases because the property no longer qualifies for the new text end 41.22 new text begin homestead market value exclusion under section 273.13, subdivision 35, the increase in new text end 41.23 new text begin net tax capacity must be added to original net tax capacity if the original construction of new text end 41.24 new text begin the affected home was completed before the date the assessor certified the original net new text end 41.25 new text begin tax capacity of the district. new text end 41.26    (e) The amount to be subtracted from the original net tax capacity of the district as a 41.27result of previously taxable real property within the district becoming tax exempt new text begin or new text end 41.28 new text begin qualifying in whole or part for an exclusion from taxable market value new text end , or a reduction in 41.29the geographic area of the district, shall be the amount of original net tax capacity initially 41.30attributed to the property becoming tax exempt new text begin , being excluded from taxable market new text end 41.31 new text begin value, new text end or being removed from the district. If the net tax capacity of property located within 41.32the tax increment financing district is reduced by reason of a court-ordered abatement, 41.33stipulation agreement, voluntary abatement made by the assessor or auditor or by order 41.34of the commissioner of revenue, the reduction shall be applied to the original net tax 41.35capacity of the district when the property upon which the abatement is made has not been 41.36improved since the date of certification of the district and to the captured net tax capacity 42.1of the district in each year thereafter when the abatement relates to improvements made 42.2after the date of certification. The county auditor may specify reasonable form and content 42.3of the request for certification of the authority and any modification thereof pursuant to 42.4section 469.175, subdivision 4. 42.5    (f) If a parcel of property contained a substandard building or improvements 42.6described in section 469.174, subdivision 10, paragraph (e), that were demolished or 42.7removed and if the authority elects to treat the parcel as occupied by a substandard 42.8building under section 469.174, subdivision 10, paragraph (b), or by improvements under 42.9section 469.174, subdivision 10, paragraph (e), the auditor shall certify the original net tax 42.10capacity of the parcel using the greater of (1) the current net tax capacity of the parcel, or 42.11(2) the estimated market value of the parcel for the year in which the building or other 42.12improvements were demolished or removed, but applying the class rates for the current 42.13year. 42.14    (g) For a redevelopment district qualifying under section 469.174, subdivision 10, 42.15paragraph (a), clause (4), as a qualified disaster area, the auditor shall certify the value of 42.16the land as the original tax capacity for any parcel in the district that contains a building 42.17that suffered substantial damage as a result of the disaster or emergency. 42.18    Sec. 40. Minnesota Statutes 2010, section 469.1793, is amended to read: 42.19469.1793 DEVELOPER OBLIGATIONS CONTINUED. 42.20If a developer or other private entity agreed to make payments to the authority or 42.21municipality to reimburse the municipality for the state aid offset under Minnesota Statutes 42.222000, section 273.1399, the obligation continues in effect, notwithstanding the repeal of 42.23section 273.1399. Payments received by the development authority are increments for 42.24purposes of the state grant program under section . 42.25    Sec. 41. Minnesota Statutes 2010, section 469.1813, subdivision 6b, is amended to 42.26read: 42.27    Subd. 6b. Extended duration limit. (a) Notwithstanding the provisions of 42.28subdivision 6, a political subdivision may grant an abatement for a period of up to 20 42.29years, if the abatement is for a qualified business. 42.30(b) To be a qualified business for purposes of this subdivision, at least 50 percent of 42.31the payroll of the operations of the business that qualify for the abatement must be for 42.32employees engaged in one of the following lines of business or any combination of them: 42.33(1) manufacturing; 42.34(2) agricultural processing; 43.1(3) mining; 43.2(4) research and development; 43.3(5) warehousing; or 43.4(6) qualified high technology. 43.5Alternatively, a qualified business also includes a taxpayer whose real and personal 43.6property is subject to valuation under Minnesota Rules, chapter 8100. 43.7(c)(1) "Manufacturing" means the material staging and production of tangible 43.8personal property by procedures commonly regarded as manufacturing, processing, 43.9fabrication, or assembling which changes some existing material into new shapes, new 43.10qualities, or new combinations. 43.11(2) "Mining" has the meaning given in section 613(c) of the Internal Revenue Code 43.12of 1986. 43.13(3) "Agricultural processing" means transforming, packaging, sorting, or grading 43.14livestock or livestock products, agricultural commodities, or plants or plant products into 43.15goods that are used for intermediate or final consumption including goods for nonfood use. 43.16(4) "Research and development" means qualified research as defined in section 43.1741(d) of the Internal Revenue Code of 1986. 43.18(5) "Qualified high technology" means one or more of the following activities: 43.19(i) advanced computing, which is any technology used in the design and development 43.20of any of the following: 43.21(A) computer hardware and software; 43.22(B) data communications; and 43.23(C) information technologies; 43.24(ii) advanced materials, which are materials with engineered properties created 43.25through the development of specialized process and synthesis technology; 43.26(iii) biotechnology, which is any technology that uses living organisms, cells, 43.27macromolecules, microorganisms, or substances from living organisms to make or modify 43.28a product, improve plants or animals, or develop microorganisms for useful purposes; 43.29(iv) electronic device technology, which is any technology that involves 43.30microelectronics, semiconductors, electronic equipment, and instrumentation, radio 43.31frequency, microwave, and millimeter electronics, and optical and optic-electrical devices, 43.32or data and digital communications and imaging devices; 43.33(v) engineering or laboratory testing related to the development of a product; 43.34(vi) technology that assists in the assessment or prevention of threats or damage to 43.35human health or the environment, including, but not limited to, environmental cleanup 43.36technology, pollution prevention technology, or development of alternative energy sources; 44.1(vii) medical device technology, which is any technology that involves medical 44.2equipment or products other than a pharmaceutical product that has therapeutic or 44.3diagnostic value and is regulated; or 44.4(viii) advanced vehicles technology which is any technology that involves electric 44.5vehicles, hybrid vehicles, or alternative fuel vehicles, or components used in the 44.6construction of electric vehicles, hybrid vehicles, or alternative fuel vehicles. An electric 44.7vehicle is a road vehicle that draws propulsion energy only from an onboard source of 44.8electrical energy. A hybrid vehicle is a road vehicle that can draw propulsion energy from 44.9both a consumable fuel and a rechargeable energy storage system. 44.10(d) The authority to grant new abatements under this subdivision expires on July 1, 44.112004, except that the authority to grant new abatements for real and personal property 44.12subject to valuation under Minnesota Rules, chapter 8100, does not expire. 44.13    Sec. 42. Minnesota Statutes 2010, section 473F.02, subdivision 3, is amended to read: 44.14    Subd. 3. Commercial-industrial property. "Commercial-industrial property" 44.15means the following categories of property, as defined in section 273.13, excluding that 44.16portion of such property (1) which may, by law, constitute the tax base for a tax increment 44.17pledged under section or , certification of which was requested prior to 44.18August 1, 1979, to the extent and while such tax increment is so pledged; or (2) which is 44.19exempt from taxation under section 272.02: 44.20(a) That portion of class 3 property defined in Minnesota Statutes 1971, section 44.21273.13 , consisting of stocks of merchandise and furniture and fixtures used therewith; 44.22manufacturers' materials and manufactured articles; and tools, implements and machinery, 44.23whether fixtures or otherwise. 44.24(b) That portion of class 4 property defined in Minnesota Statutes 1971, section 44.25273.13 , which is either used or zoned for use for any commercial or industrial purpose, 44.26except for such property which is, or, in the case of property under construction, will when 44.27completed be used exclusively for residential occupancy and the provision of services 44.28to residential occupants thereof. Property shall be considered as used exclusively for 44.29residential occupancy only if each of not less than 80 percent of its occupied residential 44.30units is, or, in the case of property under construction, will when completed be occupied 44.31under an oral or written agreement for occupancy over a continuous period of not less 44.32than 30 days. 44.33If the classification of property prescribed by section 273.13 is modified by 44.34legislative amendment, the references in this subdivision shall be to such successor class 45.1or classes of property, or portions thereof, as embrace the kinds of property designated 45.2in this subdivision. 45.3    Sec. 43. new text begin REPEALER. new text end 45.4 new text begin Minnesota Statutes 2010, sections 272.02, subdivision 83; 290.06, subdivisions new text end 45.5 new text begin 24 and 32; 297A.68, subdivision 41; 469.042, subdivisions 2, 3, and 4; 469.043; new text end 45.6 new text begin 469.059, subdivision 13; 469.129; 469.134; 469.162, subdivision 2; 469.1651; 469.166, new text end 45.7 new text begin subdivisions 7, 8, 9, 10, 11, and 12; 469.167, subdivisions 1 and 3; 469.168; 469.169, new text end 45.8 new text begin subdivisions 1, 2, 3, 4, 5, 6, 7, 8, 9, 10, 11, and 13; 469.170, subdivisions 1, 2, 3, 4, 5, 5a, new text end 45.9 new text begin 5b, 5c, 5d, 5e, 6, 7, and 8; 469.171, subdivisions 2, 5, and 6b; 469.173, subdivisions 1 new text end 45.10 new text begin and 3; 469.1765; 469.1791; 469.1799, subdivision 2; 469.301, subdivisions 1, 2, 3, 4, and new text end 45.11 new text begin 5; 469.302; 469.303; 469.304; 469.321; 469.3215; 469.322; 469.323; 469.324; 469.325; new text end 45.12 new text begin 469.326; 469.327; 469.328; 469.329; and 473.680, new text end new text begin are repealed. new text end 45.13    Sec. 44. new text begin EFFECTIVE DATE. new text end 45.14 new text begin This article is effective August 1, 2012, and the tax increment financing provisions new text end 45.15 new text begin apply to all districts, regardless of when the request for certification was made, provided new text end 45.16 new text begin that the adjustments to original tax capacity required under Minnesota Statutes, section new text end 45.17 new text begin 469.177, subdivision 1, apply only to exclusions that reduced taxable market value new text end 45.18 new text begin beginning with taxes payable in 2012 or thereafter, regardless of when the law authorizing new text end 45.19 new text begin the exclusion became effective. new text end 45.20ARTICLE 3 45.21MISCELLANEOUS 45.22    Section 1. new text begin SPECIAL RECOVERY FUND; CANCELLATION. new text end 45.23 new text begin $4,112,000 of the balance in the Revenue Department service and recovery special new text end 45.24 new text begin revenue fund under Minnesota Statutes, section 270C.15, is transferred in fiscal year new text end 45.25 new text begin 2012 to the general fund. new text end 45.26 new text begin EFFECTIVE DATE. new text end new text begin This section is effective the day following final enactment. new text end