Minnesota Legislature
HF 1597
1st Engrossment - 83rd Legislature (2003 - 2004) Posted on 12/15/2009 12:00am
KEY: stricken = removed, old language.
underscored = added, new language.
1.1 A bill for an act 1.2 relating to financing and operation of state and local 1.3 government; providing for job opportunity building 1.4 zones; providing for a biotechnology and health 1.5 services industry zone; changing income, corporate 1.6 franchise, estate, sales and use, motor vehicle sales, 1.7 property, minerals, gravel, cigarette and tobacco, 1.8 liquor, mortgage registry and deed, healthcare 1.9 provider, insurance premiums, hazardous waste 1.10 generator, and other taxes and tax provisions; 1.11 changing and providing powers and duties relating to 1.12 tax administration, collection, compliance, and 1.13 enforcement; updating provisions to the internal 1.14 revenue code;changing provisions relating to the state 1.15 elections campaign fund; changing June accelerated tax 1.16 liability provisions and extending the requirements to 1.17 other taxes; changing and providing for 1.18 intergovernmental aids; imposing levy limits; changing 1.19 truth in taxation provisions and providing for reverse 1.20 referenda; providing for economic development 1.21 incentives; changing tax increment financing 1.22 provisions; changing certain levy and other provisions 1.23 relating to the metropolitan council and the 1.24 metropolitan mosquito control district; authorizing 1.25 towns to impose certain charges; giving special powers 1.26 to the cities of Medford, Newport, Moorhead, Duluth, 1.27 and Hopkins; repealing certain local laws; 1.28 establishing a legislative commission on unnecessary 1.29 mandates; changing provisions relating to local impact 1.30 notes; abolishing or providing for the expiration of 1.31 certain funds and accounts; providing for cash flow 1.32 and budget reserve accounts; providing for deposit of 1.33 certain revenues in the general fund; providing for 1.34 data disclosure; requiring studies and reports; 1.35 providing for appointments; authorizing grants; 1.36 imposing penalties; appropriating money; amending 1.37 Minnesota Statutes 2002, sections 3.842, subdivision 1.38 4a; 3.843; 3.986, subdivision 4; 3.987, subdivision 1; 1.39 4A.02; 8.30; 10A.31, subdivisions 1, 3; 16A.152, 1.40 subdivisions 1, 1b, 2, 7; 62J.694, subdivision 4; 1.41 115B.24, subdivision 8; 144.395, subdivision 3; 1.42 161.465; 168.27, subdivision 4a; 168A.03; 168A.05, 1.43 subdivision 1a; 216B.2424, subdivision 5; 270.06; 1.44 270.10, subdivision 1a; 270.60, subdivision 4; 270.67, 1.45 subdivision 4; 270.69, by adding a subdivision; 1.46 270.701, subdivision 2, by adding a subdivision; 2.1 270.72, subdivision 2; 270A.03, subdivision 2; 2.2 270B.12, by adding a subdivision; 272.02, subdivisions 2.3 31, 47, 48, 53, by adding subdivisions; 272.029, by 2.4 adding a subdivision; 272.12; 273.01; 273.05, 2.5 subdivision 1; 273.061, by adding subdivisions; 2.6 273.08; 273.11, subdivision 1a; 273.112, subdivision 2.7 3; 273.124, subdivisions 1, 14; 273.13, subdivisions 2.8 22, 23, 25; 273.1398, subdivisions 4a, 4b, 4c, 6, 8; 2.9 273.372; 273.42, subdivision 2; 274.01, subdivision 1; 2.10 274.13, subdivision 1; 275.025, subdivisions 1, 3, 4; 2.11 275.065, subdivisions 1, 1a, 1c, 3, 6, 8, by adding a 2.12 subdivision; 275.07, subdivision 1; 275.70, 2.13 subdivision 5; 275.71, subdivisions 2, 4, 5, 6; 2.14 275.72, subdivision 3; 275.73, subdivision 2; 275.74, 2.15 subdivision 3; 276.10; 276.11, subdivision 1; 277.20, 2.16 subdivision 2; 278.01, subdivision 4; 278.05, 2.17 subdivision 6; 279.06, subdivision 1; 281.17; 282.01, 2.18 subdivision 7a; 282.08; 287.12; 287.29, subdivision 1; 2.19 287.31, by adding a subdivision; 289A.02, subdivision 2.20 7; 289A.10, subdivision 1; 289A.18, subdivision 4; 2.21 289A.19, subdivision 4; 289A.20, subdivision 4; 2.22 289A.31, subdivisions 3, 4, 7, by adding a 2.23 subdivision; 289A.36, subdivision 7, by adding 2.24 subdivisions; 289A.40, subdivision 2; 289A.50, 2.25 subdivision 2a, by adding subdivisions; 289A.56, 2.26 subdivisions 3, 4; 289A.60, subdivisions 7, 15, by 2.27 adding a subdivision; 290.01, subdivisions 19, 19a, 2.28 19b, 19c, 19d, 29, 31; 290.05, subdivision 1; 290.06, 2.29 subdivisions 2c, 23, 24, by adding subdivisions; 2.30 290.067, subdivision 1; 290.0671, subdivision 1; 2.31 290.0675, subdivisions 2, 3; 290.0679, subdivision 2; 2.32 290.0802, subdivision 1; 290.091, subdivision 2; 2.33 290.0921, subdivision 3; 290.0922, subdivisions 2, 3; 2.34 290.17, subdivision 4; 290.191, subdivision 1; 2.35 290A.03, subdivisions 8, 15; 290C.02, subdivisions 3, 2.36 7; 290C.03; 290C.07; 290C.09; 290C.10; 290C.11; 2.37 291.005, subdivision 1; 291.03, subdivision 1; 295.50, 2.38 subdivision 9b; 295.53, subdivision 1; 295.58; 2.39 297A.61, subdivisions 3, 7, 10, 12, 17, 30, 31, 34, by 2.40 adding subdivisions; 297A.66, by adding a subdivision; 2.41 297A.665; 297A.668; 297A.67, subdivisions 2, 7, 8, by 2.42 adding a subdivision; 297A.68, subdivisions 2, 4, 5, 2.43 36, by adding subdivisions; 297A.69, subdivisions 2, 2.44 3, 4; 297A.70, subdivisions 8, 16; 297A.71, by adding 2.45 a subdivision; 297A.75, subdivision 4; 297A.81; 2.46 297A.82, subdivision 4; 297A.85; 297A.99, subdivisions 2.47 5, 10, 12; 297A.995, by adding a subdivision; 297B.01, 2.48 subdivision 7; 297B.025, subdivisions 1, 2; 297B.03; 2.49 297B.035, subdivision 1, by adding a subdivision; 2.50 297F.01, subdivisions 21a, 23; 297F.05, subdivision 1; 2.51 297F.06, subdivision 4; 297F.08, subdivision 7; 2.52 297F.09, subdivisions 1, 2, by adding a subdivision; 2.53 297F.10, subdivision 1; 297F.20, subdivisions 1, 2, 3, 2.54 6, 9; 297G.01, by adding a subdivision; 297G.03, 2.55 subdivision 1; 297G.09, by adding a subdivision; 2.56 297I.01, subdivision 9; 297I.20; 298.001, by adding a 2.57 subdivision; 298.01, subdivisions 3, 3a, 4; 298.015, 2.58 subdivisions 1, 2; 298.016, subdivision 4; 298.018; 2.59 298.24, subdivision 1; 298.27; 298.28, subdivisions 2.60 9a, 11; 298.75, subdivision 1; 325D.421, subdivision 2.61 2, by adding a subdivision; 349.16, by adding a 2.62 subdivision; 352.15, subdivision 1; 353.15, 2.63 subdivision 1; 354.10, subdivision 1; 354B.30; 2.64 354C.165; 366.011; 366.012; 469.169, by adding a 2.65 subdivision; 469.1731, subdivision 3; 469.174, 2.66 subdivisions 3, 6, 10, 25, by adding a subdivision; 2.67 469.175, subdivisions 1, 3, 4, 6; 469.176, 2.68 subdivisions 1c, 2, 3, 4d, 4l, 7; 469.1763, 2.69 subdivisions 1, 2, 3, 4, 6; 469.177, subdivisions 1, 2.70 12; 469.1771, subdivision 4, by adding a subdivision; 2.71 469.178, subdivision 7; 469.1791, subdivision 3; 3.1 469.1792, subdivisions 1, 2, 3; 469.1813, subdivision 3.2 8; 469.1815, subdivision 1; 473.167, subdivision 3; 3.3 473.246; 473.249, subdivision 1; 473.253, subdivision 3.4 1; 473.702; 473.711, subdivision 2a; 473F.07, 3.5 subdivision 4; 477A.011, subdivisions 34, 36, by 3.6 adding subdivisions; 477A.013, subdivisions 8, 9; 3.7 477A.03, subdivision 2; 515B.1-116; 611.27, 3.8 subdivisions 13, 15; Laws 1997, chapter 231, article 3.9 10, section 25; Laws 2001, First Special Session 3.10 chapter 5, article 3, section 61; Laws 2001, First 3.11 Special Session chapter 5, article 3, section 63; Laws 3.12 2001, First Special Session chapter 5, article 9, 3.13 section 12; Laws 2001, First Special Session chapter 3.14 5, article 12, section 95, as amended; Laws 2002, 3.15 chapter 377, article 6, section 4; Laws 2002, chapter 3.16 377, article 7, section 3; Laws 2002, chapter 377, 3.17 article 11, section 1; Laws 2002, chapter 377, article 3.18 12, section 17; proposing coding for new law in 3.19 Minnesota Statutes, chapters 3; 123A; 270; 273; 274; 3.20 275; 276; 290C; 297A; 297F; 469; 477A; repealing 3.21 Minnesota Statutes 2002, sections 37.13, subdivision 3.22 2; 270.691, subdivision 8; 273.138, subdivisions 2, 3, 3.23 6; 273.1398, subdivisions 2, 2c, 4, 4d; 273.166; 3.24 274.04; 275.065, subdivisions 3a, 4; 290.0671, 3.25 subdivision 3; 290.0675, subdivision 5; 294.01; 3.26 294.02; 294.021; 294.03; 294.06; 294.07; 294.08; 3.27 294.09; 294.10; 294.11; 294.12; 297A.61, subdivisions 3.28 14, 15; 297A.69, subdivision 5; 297A.72, subdivision 3.29 1; 297A.97; 298.01, subdivisions 3c, 3d, 4d, 4e; 3.30 298.017; 298.24, subdivision 3; 298.28, subdivisions 3.31 9, 9b, 10; 298.2961; 298.297; 325E.112, subdivision 3.32 2a; 473.711, subdivision 2b; 477A.011, subdivision 37; 3.33 477A.0121; 477A.0122; 477A.0123; 477A.0132; 477A.03, 3.34 subdivisions 3, 4; 477A.06; 477A.065; 477A.07; Laws 3.35 1984, chapter 652, section 2; Laws 2002, chapter 390, 3.36 sections 36, 37, 38; Minnesota Rules, parts 8007.0300, 3.37 subpart 3; 8009.7100; 8009.7200; 8009.7300; 8009.7400; 3.38 8092.1000; 8106.0100, subparts 11, 15, 16; 8106.0200; 3.39 8125.1000; 8125.1300, subpart 1; 8125.1400; 8130.0800, 3.40 subparts 5, 12; 8130.1300; 8130.1600, subpart 5; 3.41 8130.1700, subparts 3, 4; 8130.4800, subpart 2; 3.42 8130.7500, subpart 5; 8130.8000; 8130.8300. 3.43 BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA: 3.44 ARTICLE 1 3.45 JOB OPPORTUNITY BUILDING ZONES 3.46 Section 1. Minnesota Statutes 2002, section 272.02, is 3.47 amended by adding a subdivision to read: 3.48 Subd. 56. [JOB OPPORTUNITY BUILDING ZONE PROPERTY.] (a) 3.49 Improvements to real property, and personal property, classified 3.50 under section 273.13, subdivision 24, and located within a job 3.51 opportunity building zone, designated under section 469.314, are 3.52 exempt from ad valorem taxes levied under chapter 275. 3.53 (b) Improvements to real property, and tangible personal 3.54 property, of an agricultural production facility located within 3.55 an agricultural processing facility zone, designated under 3.56 section 469.314, is exempt from ad valorem taxes levied under 4.1 chapter 275. 4.2 (c) For property to qualify for exemption under paragraph 4.3 (a), the occupant must be a qualified business, as defined in 4.4 section 469.310. 4.5 (d) The exemption applies beginning for the first 4.6 assessment year after designation of the job opportunity 4.7 building zone by the commissioner of trade and economic 4.8 development. The exemption applies to each assessment year that 4.9 begins during the duration of the job opportunity building zone 4.10 and to property occupied by July 1 of the assessment year by a 4.11 qualified business. This exemption does not apply to: 4.12 (1) the levy under section 475.61 or similar levy 4.13 provisions under any other law to pay general obligation bonds; 4.14 or 4.15 (2) a levy under section 126C.17, if the levy was approved 4.16 by the voters before the designation of the job opportunity 4.17 building zone. 4.18 [EFFECTIVE DATE.] This section is effective beginning for 4.19 property taxes assessed in 2004, payable in 2005. 4.20 Sec. 2. Minnesota Statutes 2002, section 272.029, is 4.21 amended by adding a subdivision to read: 4.22 Subd. 7. [EXEMPTION.] The tax imposed under this section 4.23 does not apply to electricity produced by wind energy conversion 4.24 systems located in a job opportunity building zone, designated 4.25 under section 469.314, for the duration of the zone. The 4.26 exemption applies beginning for the first calendar year after 4.27 designation of the zone and applies to each calendar year that 4.28 begins during the designation of the zone. 4.29 [EFFECTIVE DATE.] This section is effective the day 4.30 following final enactment. 4.31 Sec. 3. Minnesota Statutes 2002, section 290.01, 4.32 subdivision 19b, is amended to read: 4.33 Subd. 19b. [SUBTRACTIONS FROM FEDERAL TAXABLE INCOME.] For 4.34 individuals, estates, and trusts, there shall be subtracted from 4.35 federal taxable income: 4.36 (1) interest income on obligations of any authority, 5.1 commission, or instrumentality of the United States to the 5.2 extent includable in taxable income for federal income tax 5.3 purposes but exempt from state income tax under the laws of the 5.4 United States; 5.5 (2) if included in federal taxable income, the amount of 5.6 any overpayment of income tax to Minnesota or to any other 5.7 state, for any previous taxable year, whether the amount is 5.8 received as a refund or as a credit to another taxable year's 5.9 income tax liability; 5.10 (3) the amount paid to others, less the amount used to 5.11 claim the credit allowed under section 290.0674, not to exceed 5.12 $1,625 for each qualifying child in grades kindergarten to 6 and 5.13 $2,500 for each qualifying child in grades 7 to 12, for tuition, 5.14 textbooks, and transportation of each qualifying child in 5.15 attending an elementary or secondary school situated in 5.16 Minnesota, North Dakota, South Dakota, Iowa, or Wisconsin, 5.17 wherein a resident of this state may legally fulfill the state's 5.18 compulsory attendance laws, which is not operated for profit, 5.19 and which adheres to the provisions of the Civil Rights Act of 5.20 1964 and chapter 363. For the purposes of this clause, 5.21 "tuition" includes fees or tuition as defined in section 5.22 290.0674, subdivision 1, clause (1). As used in this clause, 5.23 "textbooks" includes books and other instructional materials and 5.24 equipment purchased or leased for use in elementary and 5.25 secondary schools in teaching only those subjects legally and 5.26 commonly taught in public elementary and secondary schools in 5.27 this state. Equipment expenses qualifying for deduction 5.28 includes expenses as defined and limited in section 290.0674, 5.29 subdivision 1, clause (3). "Textbooks" does not include 5.30 instructional books and materials used in the teaching of 5.31 religious tenets, doctrines, or worship, the purpose of which is 5.32 to instill such tenets, doctrines, or worship, nor does it 5.33 include books or materials for, or transportation to, 5.34 extracurricular activities including sporting events, musical or 5.35 dramatic events, speech activities, driver's education, or 5.36 similar programs. For purposes of the subtraction provided by 6.1 this clause, "qualifying child" has the meaning given in section 6.2 32(c)(3) of the Internal Revenue Code; 6.3 (4) income as provided under section 290.0802; 6.4 (5) to the extent included in federal adjusted gross 6.5 income, income realized on disposition of property exempt from 6.6 tax under section 290.491; 6.7 (6) to the extent not deducted in determining federal 6.8 taxable income or used to claim the long-term care insurance 6.9 credit under section 290.0672, the amount paid for health 6.10 insurance of self-employed individuals as determined under 6.11 section 162(l) of the Internal Revenue Code, except that the 6.12 percent limit does not apply. If the individual deducted 6.13 insurance payments under section 213 of the Internal Revenue 6.14 Code of 1986, the subtraction under this clause must be reduced 6.15 by the lesser of: 6.16 (i) the total itemized deductions allowed under section 6.17 63(d) of the Internal Revenue Code, less state, local, and 6.18 foreign income taxes deductible under section 164 of the 6.19 Internal Revenue Code and the standard deduction under section 6.20 63(c) of the Internal Revenue Code; or 6.21 (ii) the lesser of (A) the amount of insurance qualifying 6.22 as "medical care" under section 213(d) of the Internal Revenue 6.23 Code to the extent not deducted under section 162(1) of the 6.24 Internal Revenue Code or excluded from income or (B) the total 6.25 amount deductible for medical care under section 213(a); 6.26 (7) the exemption amount allowed under Laws 1995, chapter 6.27 255, article 3, section 2, subdivision 3; 6.28 (8) to the extent included in federal taxable income, 6.29 postservice benefits for youth community service under section 6.30 124D.42 for volunteer service under United States Code, title 6.31 42, sections 12601 to 12604; 6.32 (9) to the extent not deducted in determining federal 6.33 taxable income by an individual who does not itemize deductions 6.34 for federal income tax purposes for the taxable year, an amount 6.35 equal to 50 percent of the excess of charitable contributions 6.36 allowable as a deduction for the taxable year under section 7.1 170(a) of the Internal Revenue Code over $500; 7.2 (10) for taxable years beginning before January 1, 2008, 7.3 the amount of the federal small ethanol producer credit allowed 7.4 under section 40(a)(3) of the Internal Revenue Code which is 7.5 included in gross income under section 87 of the Internal 7.6 Revenue Code; 7.7 (11) for individuals who are allowed a federal foreign tax 7.8 credit for taxes that do not qualify for a credit under section 7.9 290.06, subdivision 22, an amount equal to the carryover of 7.10 subnational foreign taxes for the taxable year, but not to 7.11 exceed the total subnational foreign taxes reported in claiming 7.12 the foreign tax credit. For purposes of this clause, "federal 7.13 foreign tax credit" means the credit allowed under section 27 of 7.14 the Internal Revenue Code, and "carryover of subnational foreign 7.15 taxes" equals the carryover allowed under section 904(c) of the 7.16 Internal Revenue Code minus national level foreign taxes to the 7.17 extent they exceed the federal foreign tax credit;and7.18 (12) in each of the five tax years immediately following 7.19 the tax year in which an addition is required under subdivision 7.20 19a, clause (7), an amount equal to one-fifth of the delayed 7.21 depreciation. For purposes of this clause, "delayed 7.22 depreciation" means the amount of the addition made by the 7.23 taxpayer under subdivision 19a, clause (7), minus the positive 7.24 value of any net operating loss under section 172 of the 7.25 Internal Revenue Code generated for the tax year of the 7.26 addition. The resulting delayed depreciation cannot be less 7.27 than zero; and 7.28 (13) job opportunity building zone income as provided under 7.29 section 469.316. 7.30 [EFFECTIVE DATE.] This section is effective for taxable 7.31 years beginning after December 31, 2003. 7.32 Sec. 4. Minnesota Statutes 2002, section 290.01, 7.33 subdivision 29, is amended to read: 7.34 Subd. 29. [TAXABLE INCOME.] The term "taxable income" 7.35 means: 7.36 (1) for individuals, estates, and trusts, the same as 8.1 taxable net income; 8.2 (2) for corporations, the taxable net income less 8.3 (i) the net operating loss deduction under section 290.095; 8.4and8.5 (ii) the dividends received deduction under section 290.21, 8.6 subdivision 4; and 8.7 (iii) the exemption for operating in a job opportunity 8.8 building zone under section 469.317. 8.9 [EFFECTIVE DATE.] This section is effective for taxable 8.10 years beginning after December 31, 2003. 8.11 Sec. 5. Minnesota Statutes 2002, section 290.06, 8.12 subdivision 2c, is amended to read: 8.13 Subd. 2c. [SCHEDULES OF RATES FOR INDIVIDUALS, ESTATES, 8.14 AND TRUSTS.] (a) The income taxes imposed by this chapter upon 8.15 married individuals filing joint returns and surviving spouses 8.16 as defined in section 2(a) of the Internal Revenue Code must be 8.17 computed by applying to their taxable net income the following 8.18 schedule of rates: 8.19 (1) On the first $25,680, 5.35 percent; 8.20 (2) On all over $25,680, but not over $102,030, 7.05 8.21 percent; 8.22 (3) On all over $102,030, 7.85 percent. 8.23 Married individuals filing separate returns, estates, and 8.24 trusts must compute their income tax by applying the above rates 8.25 to their taxable income, except that the income brackets will be 8.26 one-half of the above amounts. 8.27 (b) The income taxes imposed by this chapter upon unmarried 8.28 individuals must be computed by applying to taxable net income 8.29 the following schedule of rates: 8.30 (1) On the first $17,570, 5.35 percent; 8.31 (2) On all over $17,570, but not over $57,710, 7.05 8.32 percent; 8.33 (3) On all over $57,710, 7.85 percent. 8.34 (c) The income taxes imposed by this chapter upon unmarried 8.35 individuals qualifying as a head of household as defined in 8.36 section 2(b) of the Internal Revenue Code must be computed by 9.1 applying to taxable net income the following schedule of rates: 9.2 (1) On the first $21,630, 5.35 percent; 9.3 (2) On all over $21,630, but not over $86,910, 7.05 9.4 percent; 9.5 (3) On all over $86,910, 7.85 percent. 9.6 (d) In lieu of a tax computed according to the rates set 9.7 forth in this subdivision, the tax of any individual taxpayer 9.8 whose taxable net income for the taxable year is less than an 9.9 amount determined by the commissioner must be computed in 9.10 accordance with tables prepared and issued by the commissioner 9.11 of revenue based on income brackets of not more than $100. The 9.12 amount of tax for each bracket shall be computed at the rates 9.13 set forth in this subdivision, provided that the commissioner 9.14 may disregard a fractional part of a dollar unless it amounts to 9.15 50 cents or more, in which case it may be increased to $1. 9.16 (e) An individual who is not a Minnesota resident for the 9.17 entire year must compute the individual's Minnesota income tax 9.18 as provided in this subdivision. After the application of the 9.19 nonrefundable credits provided in this chapter, the tax 9.20 liability must then be multiplied by a fraction in which: 9.21 (1) the numerator is the individual's Minnesota source 9.22 federal adjusted gross income as defined in section 62 of the 9.23 Internal Revenue Code and increased by the additions required 9.24 under section 290.01, subdivision 19a, clauses (1) and (6), and 9.25 reduced by the subtraction under section 290.01, subdivision 9.26 19b, clause (13), and the Minnesota assignable portion of the 9.27 subtraction for United States government interest under section 9.28 290.01, subdivision 19b, clause (1), after applying the 9.29 allocation and assignability provisions of section 290.081, 9.30 clause (a), or 290.17; and 9.31 (2) the denominator is the individual's federal adjusted 9.32 gross income as defined in section 62 of the Internal Revenue 9.33 Code of 1986, increased by the amounts specified in section 9.34 290.01, subdivision 19a, clauses (1) and (6), and reduced by the 9.35 amounts specified in section 290.01, subdivision 19b,clause9.36 clauses (1) and (13). 10.1 [EFFECTIVE DATE.] This section is effective for taxable 10.2 years beginning after December 31, 2003. 10.3 Sec. 6. Minnesota Statutes 2002, section 290.06, is 10.4 amended by adding a subdivision to read: 10.5 Subd. 29. [JOB OPPORTUNITY BUILDING ZONE JOB CREDIT.] A 10.6 taxpayer that is a qualified business, as defined in section 10.7 469.310, subdivision 11, is allowed a credit as determined under 10.8 section 469.318 against the tax imposed by this chapter. 10.9 [EFFECTIVE DATE.] This section is effective the day 10.10 following final enactment. 10.11 Sec. 7. Minnesota Statutes 2002, section 290.067, 10.12 subdivision 1, is amended to read: 10.13 Subdivision 1. [AMOUNT OF CREDIT.] (a) A taxpayer may take 10.14 as a credit against the tax due from the taxpayer and a spouse, 10.15 if any, under this chapter an amount equal to the dependent care 10.16 credit for which the taxpayer is eligible pursuant to the 10.17 provisions of section 21 of the Internal Revenue Code subject to 10.18 the limitations provided in subdivision 2 except that in 10.19 determining whether the child qualified as a dependent, income 10.20 received as a Minnesota family investment program grant or 10.21 allowance to or on behalf of the child must not be taken into 10.22 account in determining whether the child received more than half 10.23 of the child's support from the taxpayer, and the provisions of 10.24 section 32(b)(1)(D) of the Internal Revenue Code do not apply. 10.25 (b) If a child who has not attained the age of six years at 10.26 the close of the taxable year is cared for at a licensed family 10.27 day care home operated by the child's parent, the taxpayer is 10.28 deemed to have paid employment-related expenses. If the child 10.29 is 16 months old or younger at the close of the taxable year, 10.30 the amount of expenses deemed to have been paid equals the 10.31 maximum limit for one qualified individual under section 21(c) 10.32 and (d) of the Internal Revenue Code. If the child is older 10.33 than 16 months of age but has not attained the age of six years 10.34 at the close of the taxable year, the amount of expenses deemed 10.35 to have been paid equals the amount the licensee would charge 10.36 for the care of a child of the same age for the same number of 11.1 hours of care. 11.2 (c) If a married couple: 11.3 (1) has a child who has not attained the age of one year at 11.4 the close of the taxable year; 11.5 (2) files a joint tax return for the taxable year; and 11.6 (3) does not participate in a dependent care assistance 11.7 program as defined in section 129 of the Internal Revenue Code, 11.8 in lieu of the actual employment related expenses paid for that 11.9 child under paragraph (a) or the deemed amount under paragraph 11.10 (b), the lesser of (i) the combined earned income of the couple 11.11 or (ii) the amount of the maximum limit for one qualified 11.12 individual under section 21(c) and (d) of the Internal Revenue 11.13 Code will be deemed to be the employment related expense paid 11.14 for that child. The earned income limitation of section 21(d) 11.15 of the Internal Revenue Code shall not apply to this deemed 11.16 amount. These deemed amounts apply regardless of whether any 11.17 employment-related expenses have been paid. 11.18 (d) If the taxpayer is not required and does not file a 11.19 federal individual income tax return for the tax year, no credit 11.20 is allowed for any amount paid to any person unless: 11.21 (1) the name, address, and taxpayer identification number 11.22 of the person are included on the return claiming the credit; or 11.23 (2) if the person is an organization described in section 11.24 501(c)(3) of the Internal Revenue Code and exempt from tax under 11.25 section 501(a) of the Internal Revenue Code, the name and 11.26 address of the person are included on the return claiming the 11.27 credit. 11.28 In the case of a failure to provide the information required 11.29 under the preceding sentence, the preceding sentence does not 11.30 apply if it is shown that the taxpayer exercised due diligence 11.31 in attempting to provide the information required. 11.32 In the case of a nonresident, part-year resident, or a 11.33 person who has earned income not subject to tax under this 11.34 chapter including earned income excluded pursuant to section 11.35 290.01, subdivision 19b, clause (13), the credit determined 11.36 under section 21 of the Internal Revenue Code must be allocated 12.1 based on the ratio by which the earned income of the claimant 12.2 and the claimant's spouse from Minnesota sources bears to the 12.3 total earned income of the claimant and the claimant's spouse. 12.4 [EFFECTIVE DATE.] This section is effective for taxable 12.5 years beginning after December 31, 2003. 12.6 Sec. 8. Minnesota Statutes 2002, section 290.0671, 12.7 subdivision 1, is amended to read: 12.8 Subdivision 1. [CREDIT ALLOWED.] (a) An individual is 12.9 allowed a credit against the tax imposed by this chapter equal 12.10 to a percentage of earned income. To receive a credit, a 12.11 taxpayer must be eligible for a credit under section 32 of the 12.12 Internal Revenue Code. 12.13 (b) For individuals with no qualifying children, the credit 12.14 equals 1.9125 percent of the first $4,620 of earned income. The 12.15 credit is reduced by 1.9125 percent of earned income or modified 12.16 adjusted gross income, whichever is greater, in excess of 12.17 $5,770, but in no case is the credit less than zero. 12.18 (c) For individuals with one qualifying child, the credit 12.19 equals 8.5 percent of the first $6,920 of earned income and 8.5 12.20 percent of earned income over $12,080 but less than $13,450. 12.21 The credit is reduced by 5.73 percent of earned income or 12.22 modified adjusted gross income, whichever is greater, in excess 12.23 of $15,080, but in no case is the credit less than zero. 12.24 (d) For individuals with two or more qualifying children, 12.25 the credit equals ten percent of the first $9,720 of earned 12.26 income and 20 percent of earned income over $14,860 but less 12.27 than $16,800. The credit is reduced by 10.3 percent of earned 12.28 income or modified adjusted gross income, whichever is greater, 12.29 in excess of $17,890, but in no case is the credit less than 12.30 zero. 12.31 (e) For a nonresident or part-year resident, the credit 12.32 must be allocated based on the percentage calculated under 12.33 section 290.06, subdivision 2c, paragraph (e). 12.34 (f) For a person who was a resident for the entire tax year 12.35 and has earned income not subject to tax under this 12.36 chapter including income excluded under section 290.01, 13.1 subdivision 19b, clause (13), the credit must be allocated based 13.2 on the ratio of federal adjusted gross income reduced by the 13.3 earned income not subject to tax under this chapter over federal 13.4 adjusted gross income. 13.5 (g) For tax years beginning after December 31, 2001, and 13.6 before December 31, 2004, the $5,770 in paragraph (b) is 13.7 increased to $6,770, the $15,080 in paragraph (c) is increased 13.8 to $16,080, and the $17,890 in paragraph (d) is increased to 13.9 $18,890 for married taxpayers filing joint returns. 13.10 (h) For tax years beginning after December 31, 2004, and 13.11 before December 31, 2007, the $5,770 in paragraph (b) is 13.12 increased to $7,770, the $15,080 in paragraph (c) is increased 13.13 to $17,080, and the $17,890 in paragraph (d) is increased to 13.14 $19,890 for married taxpayers filing joint returns. 13.15 (i) For tax years beginning after December 31, 2007, and 13.16 before December 31, 2010, the $5,770 in paragraph (b) is 13.17 increased to $8,770, the $15,080 in paragraph (c) is increased 13.18 to $18,080 and the $17,890 in paragraph (d) is increased to 13.19 $20,890 for married taxpayers filing joint returns. 13.20 (j) The commissioner shall construct tables showing the 13.21 amount of the credit at various income levels and make them 13.22 available to taxpayers. The tables shall follow the schedule 13.23 contained in this subdivision, except that the commissioner may 13.24 graduate the transition between income brackets. 13.25 [EFFECTIVE DATE.] This section is effective for taxable 13.26 years beginning after December 31, 2003. 13.27 Sec. 9. Minnesota Statutes 2002, section 290.091, 13.28 subdivision 2, is amended to read: 13.29 Subd. 2. [DEFINITIONS.] For purposes of the tax imposed by 13.30 this section, the following terms have the meanings given: 13.31 (a) "Alternative minimum taxable income" means the sum of 13.32 the following for the taxable year: 13.33 (1) the taxpayer's federal alternative minimum taxable 13.34 income as defined in section 55(b)(2) of the Internal Revenue 13.35 Code; 13.36 (2) the taxpayer's itemized deductions allowed in computing 14.1 federal alternative minimum taxable income, but excluding: 14.2 (i) the charitable contribution deduction under section 170 14.3 of the Internal Revenue Code to the extent that the deduction 14.4 exceeds 1.3 percent of adjusted gross income, as defined in 14.5 section 62 of the Internal Revenue Code; 14.6 (ii) the medical expense deduction; 14.7 (iii) the casualty, theft, and disaster loss deduction; and 14.8 (iv) the impairment-related work expenses of a disabled 14.9 person; 14.10 (3) for depletion allowances computed under section 613A(c) 14.11 of the Internal Revenue Code, with respect to each property (as 14.12 defined in section 614 of the Internal Revenue Code), to the 14.13 extent not included in federal alternative minimum taxable 14.14 income, the excess of the deduction for depletion allowable 14.15 under section 611 of the Internal Revenue Code for the taxable 14.16 year over the adjusted basis of the property at the end of the 14.17 taxable year (determined without regard to the depletion 14.18 deduction for the taxable year); 14.19 (4) to the extent not included in federal alternative 14.20 minimum taxable income, the amount of the tax preference for 14.21 intangible drilling cost under section 57(a)(2) of the Internal 14.22 Revenue Code determined without regard to subparagraph (E); 14.23 (5) to the extent not included in federal alternative 14.24 minimum taxable income, the amount of interest income as 14.25 provided by section 290.01, subdivision 19a, clause (1); and 14.26 (6) the amount of addition required by section 290.01, 14.27 subdivision 19a, clause (7); 14.28 less the sum of the amounts determined under the following: 14.29 (1) interest income as defined in section 290.01, 14.30 subdivision 19b, clause (1); 14.31 (2) an overpayment of state income tax as provided by 14.32 section 290.01, subdivision 19b, clause (2), to the extent 14.33 included in federal alternative minimum taxable income; 14.34 (3) the amount of investment interest paid or accrued 14.35 within the taxable year on indebtedness to the extent that the 14.36 amount does not exceed net investment income, as defined in 15.1 section 163(d)(4) of the Internal Revenue Code. Interest does 15.2 not include amounts deducted in computing federal adjusted gross 15.3 income; and 15.4 (4) amounts subtracted from federal taxable income as 15.5 provided by section 290.01, subdivision 19b,clauseclauses (12) 15.6 and (13). 15.7 In the case of an estate or trust, alternative minimum 15.8 taxable income must be computed as provided in section 59(c) of 15.9 the Internal Revenue Code. 15.10 (b) "Investment interest" means investment interest as 15.11 defined in section 163(d)(3) of the Internal Revenue Code. 15.12 (c) "Tentative minimum tax" equals 6.4 percent of 15.13 alternative minimum taxable income after subtracting the 15.14 exemption amount determined under subdivision 3. 15.15 (d) "Regular tax" means the tax that would be imposed under 15.16 this chapter (without regard to this section and section 15.17 290.032), reduced by the sum of the nonrefundable credits 15.18 allowed under this chapter. 15.19 (e) "Net minimum tax" means the minimum tax imposed by this 15.20 section. 15.21 [EFFECTIVE DATE.] This section is effective for taxable 15.22 years beginning after December 31, 2003. 15.23 Sec. 10. Minnesota Statutes 2002, section 290.0921, 15.24 subdivision 3, is amended to read: 15.25 Subd. 3. [ALTERNATIVE MINIMUM TAXABLE INCOME.] 15.26 "Alternative minimum taxable income" is Minnesota net income as 15.27 defined in section 290.01, subdivision 19, and includes the 15.28 adjustments and tax preference items in sections 56, 57, 58, and 15.29 59(d), (e), (f), and (h) of the Internal Revenue Code. If a 15.30 corporation files a separate company Minnesota tax return, the 15.31 minimum tax must be computed on a separate company basis. If a 15.32 corporation is part of a tax group filing a unitary return, the 15.33 minimum tax must be computed on a unitary basis. The following 15.34 adjustments must be made. 15.35 (1) For purposes of the depreciation adjustments under 15.36 section 56(a)(1) and 56(g)(4)(A) of the Internal Revenue Code, 16.1 the basis for depreciable property placed in service in a 16.2 taxable year beginning before January 1, 1990, is the adjusted 16.3 basis for federal income tax purposes, including any 16.4 modification made in a taxable year under section 290.01, 16.5 subdivision 19e, or Minnesota Statutes 1986, section 290.09, 16.6 subdivision 7, paragraph (c). 16.7 For taxable years beginning after December 31, 2000, the 16.8 amount of any remaining modification made under section 290.01, 16.9 subdivision 19e, or Minnesota Statutes 1986, section 290.09, 16.10 subdivision 7, paragraph (c), not previously deducted is a 16.11 depreciation allowance in the first taxable year after December 16.12 31, 2000. 16.13 (2) The portion of the depreciation deduction allowed for 16.14 federal income tax purposes under section 168(k) of the Internal 16.15 Revenue Code that is required as an addition under section 16.16 290.01, subdivision 19c, clause (16), is disallowed in 16.17 determining alternative minimum taxable income. 16.18 (3) The subtraction for depreciation allowed under section 16.19 290.01, subdivision 19d, clause (19), is allowed as a 16.20 depreciation deduction in determining alternative minimum 16.21 taxable income. 16.22 (4) The alternative tax net operating loss deduction under 16.23 sections 56(a)(4) and 56(d) of the Internal Revenue Code does 16.24 not apply. 16.25 (5) The special rule for certain dividends under section 16.26 56(g)(4)(C)(ii) of the Internal Revenue Code does not apply. 16.27 (6) The special rule for dividends from section 936 16.28 companies under section 56(g)(4)(C)(iii) does not apply. 16.29 (7) The tax preference for depletion under section 57(a)(1) 16.30 of the Internal Revenue Code does not apply. 16.31 (8) The tax preference for intangible drilling costs under 16.32 section 57(a)(2) of the Internal Revenue Code must be calculated 16.33 without regard to subparagraph (E) and the subtraction under 16.34 section 290.01, subdivision 19d, clause (4). 16.35 (9) The tax preference for tax exempt interest under 16.36 section 57(a)(5) of the Internal Revenue Code does not apply. 17.1 (10) The tax preference for charitable contributions of 17.2 appreciated property under section 57(a)(6) of the Internal 17.3 Revenue Code does not apply. 17.4 (11) For purposes of calculating the tax preference for 17.5 accelerated depreciation or amortization on certain property 17.6 placed in service before January 1, 1987, under section 57(a)(7) 17.7 of the Internal Revenue Code, the deduction allowable for the 17.8 taxable year is the deduction allowed under section 290.01, 17.9 subdivision 19e. 17.10 For taxable years beginning after December 31, 2000, the 17.11 amount of any remaining modification made under section 290.01, 17.12 subdivision 19e, not previously deducted is a depreciation or 17.13 amortization allowance in the first taxable year after December 17.14 31, 2004. 17.15 (12) For purposes of calculating the adjustment for 17.16 adjusted current earnings in section 56(g) of the Internal 17.17 Revenue Code, the term "alternative minimum taxable income" as 17.18 it is used in section 56(g) of the Internal Revenue Code, means 17.19 alternative minimum taxable income as defined in this 17.20 subdivision, determined without regard to the adjustment for 17.21 adjusted current earnings in section 56(g) of the Internal 17.22 Revenue Code. 17.23 (13) For purposes of determining the amount of adjusted 17.24 current earnings under section 56(g)(3) of the Internal Revenue 17.25 Code, no adjustment shall be made under section 56(g)(4) of the 17.26 Internal Revenue Code with respect to (i) the amount of foreign 17.27 dividend gross-up subtracted as provided in section 290.01, 17.28 subdivision 19d, clause (1), (ii) the amount of refunds of 17.29 income, excise, or franchise taxes subtracted as provided in 17.30 section 290.01, subdivision 19d, clause (10), or (iii) the 17.31 amount of royalties, fees or other like income subtracted as 17.32 provided in section 290.01, subdivision 19d, clause (11). 17.33 (14) Alternative minimum taxable income excludes the income 17.34 from operating in a job opportunity building zone as provided 17.35 under section 469.317. 17.36 Items of tax preference must not be reduced below zero as a 18.1 result of the modifications in this subdivision. 18.2 [EFFECTIVE DATE.] This section is effective for taxable 18.3 years beginning after December 31, 2003. 18.4 Sec. 11. Minnesota Statutes 2002, section 290.0922, 18.5 subdivision 2, is amended to read: 18.6 Subd. 2. [EXEMPTIONS.] The following entities are exempt 18.7 from the tax imposed by this section: 18.8 (1) corporations exempt from tax under section 290.05; 18.9 (2) real estate investment trusts; 18.10 (3) regulated investment companies or a fund thereof; and 18.11 (4) entities having a valid election in effect under 18.12 section 860D(b) of the Internal Revenue Code; 18.13 (5) town and farmers' mutual insurance companies;and18.14 (6) cooperatives organized under chapter 308A that provide 18.15 housing exclusively to persons age 55 and over and are 18.16 classified as homesteads under section 273.124, subdivision 3; 18.17 and 18.18 (7) an entity, if for the taxable year all of its property 18.19 is located in a job opportunity building zone designated under 18.20 section 469.314 and all of its payroll is a job opportunity 18.21 building zone payroll under section 469.310. 18.22 Entities not specifically exempted by this subdivision are 18.23 subject to tax under this section, notwithstanding section 18.24 290.05. 18.25 [EFFECTIVE DATE.] This section is effective for taxable 18.26 years beginning after December 31, 2003. 18.27 Sec. 12. Minnesota Statutes 2002, section 290.0922, 18.28 subdivision 3, is amended to read: 18.29 Subd. 3. [DEFINITIONS.] (a) "Minnesota sales or receipts" 18.30 means the total sales apportioned to Minnesota pursuant to 18.31 section 290.191, subdivision 5, the total receipts attributed to 18.32 Minnesota pursuant to section 290.191, subdivisions 6 to 8, 18.33 and/or the total sales or receipts apportioned or attributed to 18.34 Minnesota pursuant to any other apportionment formula applicable 18.35 to the taxpayer. 18.36 (b) "Minnesota property" means total Minnesota tangible 19.1 property as provided in section 290.191, subdivisions 9 to 11, 19.2 and any other tangible property located in Minnesota, but does 19.3 not include property located in a job opportunity building zone 19.4 designated under section 469.314. Intangible property shall not 19.5 be included in Minnesota property for purposes of this section. 19.6 Taxpayers who do not utilize tangible property to apportion 19.7 income shall nevertheless include Minnesota property for 19.8 purposes of this section. On a return for a short taxable year, 19.9 the amount of Minnesota property owned, as determined under 19.10 section 290.191, shall be included in Minnesota property based 19.11 on a fraction in which the numerator is the number of days in 19.12 the short taxable year and the denominator is 365. 19.13 (c) "Minnesota payrolls" means total Minnesota payrolls as 19.14 provided in section 290.191, subdivision 12, but does not 19.15 include job opportunity building zone payrolls under section 19.16 469.310, subdivision 8. Taxpayers who do not utilize payrolls 19.17 to apportion income shall nevertheless include Minnesota 19.18 payrolls for purposes of this section. 19.19 [EFFECTIVE DATE.] This section is effective for taxable 19.20 years beginning after December 31, 2003. 19.21 Sec. 13. Minnesota Statutes 2002, section 297A.68, is 19.22 amended by adding a subdivision to read: 19.23 Subd. 37. [JOB OPPORTUNITY BUILDING ZONES.] (a) Purchases 19.24 of tangible personal property or taxable services by a qualified 19.25 business, as defined in section 469.310, are exempt if the 19.26 property or services are primarily used or consumed in a job 19.27 opportunity building zone designated under section 469.314. 19.28 (b) Purchase and use of construction materials and supplies 19.29 for construction of improvements to real property in a job 19.30 opportunity building zone are exempt if the improvements after 19.31 completion of construction are to be used in the conduct of a 19.32 qualified business, as defined in section 469.310. This 19.33 exemption applies regardless of whether the purchases are made 19.34 by the business or a contractor. 19.35 (c) The exemptions under this subdivision apply to a local 19.36 sales and use tax regardless of whether the local sales tax is 20.1 imposed on the sales taxable as defined under this chapter. 20.2 (d) This subdivision applies to sales, if the purchase was 20.3 made and delivery received during the duration of the zone. 20.4 [EFFECTIVE DATE.] This section is effective for sales made 20.5 on or after the day following final enactment. 20.6 Sec. 14. Minnesota Statutes 2002, section 297B.03, is 20.7 amended to read: 20.8 297B.03 [EXEMPTIONS.] 20.9 There is specifically exempted from the provisions of this 20.10 chapter and from computation of the amount of tax imposed by it 20.11 the following: 20.12 (1) purchase or use, including use under a lease purchase 20.13 agreement or installment sales contract made pursuant to section 20.14 465.71, of any motor vehicle by the United States and its 20.15 agencies and instrumentalities and by any person described in 20.16 and subject to the conditions provided in section 297A.67, 20.17 subdivision 11; 20.18 (2) purchase or use of any motor vehicle by any person who 20.19 was a resident of another state or country at the time of the 20.20 purchase and who subsequently becomes a resident of Minnesota, 20.21 provided the purchase occurred more than 60 days prior to the 20.22 date such person began residing in the state of Minnesota and 20.23 the motor vehicle was registered in the person's name in the 20.24 other state or country; 20.25 (3) purchase or use of any motor vehicle by any person 20.26 making a valid election to be taxed under the provisions of 20.27 section 297A.90; 20.28 (4) purchase or use of any motor vehicle previously 20.29 registered in the state of Minnesota when such transfer 20.30 constitutes a transfer within the meaning of section 118, 331, 20.31 332, 336, 337, 338, 351, 355, 368, 721, 731, 1031, 1033, or 20.32 1563(a) of the Internal Revenue Code of 1986, as amended through 20.33 December 31, 1999; 20.34 (5) purchase or use of any vehicle owned by a resident of 20.35 another state and leased to a Minnesota based private or for 20.36 hire carrier for regular use in the transportation of persons or 21.1 property in interstate commerce provided the vehicle is titled 21.2 in the state of the owner or secured party, and that state does 21.3 not impose a sales tax or sales tax on motor vehicles used in 21.4 interstate commerce; 21.5 (6) purchase or use of a motor vehicle by a private 21.6 nonprofit or public educational institution for use as an 21.7 instructional aid in automotive training programs operated by 21.8 the institution. "Automotive training programs" includes motor 21.9 vehicle body and mechanical repair courses but does not include 21.10 driver education programs; 21.11 (7) purchase of a motor vehicle for use as an ambulance by 21.12 an ambulance service licensed under section 144E.10; 21.13 (8) purchase of a motor vehicle by or for a public library, 21.14 as defined in section 134.001, subdivision 2, as a bookmobile or 21.15 library delivery vehicle; 21.16 (9) purchase of a ready-mixed concrete truck; 21.17 (10) purchase or use of a motor vehicle by a town for use 21.18 exclusively for road maintenance, including snowplows and dump 21.19 trucks, but not including automobiles, vans, or pickup trucks; 21.20 (11) purchase or use of a motor vehicle by a corporation, 21.21 society, association, foundation, or institution organized and 21.22 operated exclusively for charitable, religious, or educational 21.23 purposes, except a public school, university, or library, but 21.24 only if the vehicle is: 21.25 (i) a truck, as defined in section 168.011, a bus, as 21.26 defined in section 168.011, or a passenger automobile, as 21.27 defined in section 168.011, if the automobile is designed and 21.28 used for carrying more than nine persons including the driver; 21.29 and 21.30 (ii) intended to be used primarily to transport tangible 21.31 personal property or individuals, other than employees, to whom 21.32 the organization provides service in performing its charitable, 21.33 religious, or educational purpose; 21.34 (12) purchase of a motor vehicle for use by a transit 21.35 provider exclusively to provide transit service is exempt if the 21.36 transit provider is either (i) receiving financial assistance or 22.1 reimbursement under section 174.24 or 473.384, or (ii) operating 22.2 under section 174.29, 473.388, or 473.405; 22.3 (13) purchase or use of a motor vehicle by a qualified 22.4 business, as defined in section 469.310, located in a job 22.5 opportunity building zone, if the motor vehicle is principally 22.6 garaged in the job opportunity building zone and is primarily 22.7 used as part of or in direct support of the person's operations 22.8 carried on in the job opportunity building zone. The exemption 22.9 under this clause applies to sales, if the purchase was made and 22.10 delivery received during the duration of the job opportunity 22.11 building zone. The exemption under this clause also applies to 22.12 any local sales and use tax. 22.13 [EFFECTIVE DATE.] This section is effective for sales made 22.14 after December 31, 2003. 22.15 Sec. 15. [469.310] [DEFINITIONS.] 22.16 Subdivision 1. [SCOPE.] For purposes of sections 469.310 22.17 to 469.320, the following terms have the meanings given. 22.18 Subd. 2. [AGRICULTURAL PROCESSING FACILITY.] "Agricultural 22.19 processing facility" means one or more facilities or operations 22.20 that transform, package, sort, or grade livestock or livestock 22.21 products, agricultural commodities, or plants or plant products 22.22 into goods that are used for intermediate or final consumption 22.23 including goods for nonfood use, and surrounding property. 22.24 Subd. 3. [APPLICANT.] "Applicant" means a local government 22.25 unit or units applying for designation of an area as a job 22.26 opportunity building zone or a joint powers board, established 22.27 under section 471.59, acting on behalf of two or more local 22.28 government units. 22.29 Subd. 4. [COMMISSIONER.] "Commissioner" means the 22.30 commissioner of trade and economic development. 22.31 Subd. 5. [DEVELOPMENT PLAN.] "Development plan" means a 22.32 plan meeting the requirements of section 469.311. 22.33 Subd. 6. [JOB OPPORTUNITY BUILDING ZONE OR ZONE.] "Job 22.34 opportunity building zone" or "zone" means a zone designated by 22.35 the commissioner under section 469.314, and includes an 22.36 agricultural processing facility zone. 23.1 Subd. 7. [JOB OPPORTUNITY BUILDING ZONE PERCENTAGE OR ZONE 23.2 PERCENTAGE.] "Job opportunity building zone percentage" or "zone 23.3 percentage" means the following fraction reduced to a percentage: 23.4 (1) the numerator of the fraction is: 23.5 (i) the ratio of the taxpayer's property factor under 23.6 section 290.191 located in the zone for the taxable year over 23.7 the property factor numerator determined under section 290.191, 23.8 plus 23.9 (ii) the ratio of the taxpayer's job opportunity building 23.10 zone payroll factor under subdivision 8 over the payroll factor 23.11 numerator determined under section 290.191; and 23.12 (2) the denominator of the fraction is two. 23.13 When calculating the zone percentage for a business that is 23.14 part of a unitary business as defined under section 290.17, 23.15 subdivision 4, the denominator of the payroll and property 23.16 factors is the Minnesota payroll and property of the unitary 23.17 business as reported on the combined report under section 23.18 290.17, subdivision 4, paragraph (j). 23.19 Subd. 8. [JOB OPPORTUNITY BUILDING ZONE PAYROLL 23.20 FACTOR.] "Job opportunity building zone payroll factor" or "job 23.21 opportunity building zone payroll" is that portion of the 23.22 payroll factor under section 290.191 that represents: 23.23 (1) wages or salaries paid to an individual for services 23.24 performed in a job opportunity building zone; or 23.25 (2) wages or salaries paid to individuals working from 23.26 offices within a job opportunity building zone if their 23.27 employment requires them to work outside the zone and the work 23.28 is incidental to the work performed by the individual within the 23.29 zone. 23.30 Subd. 9. [LOCAL GOVERNMENT UNIT.] "Local government unit" 23.31 means a statutory or home rule charter city, county, town, iron 23.32 range resources and rehabilitation agency, regional development 23.33 commission, or a federally designated economic development 23.34 district. 23.35 Subd. 10. [PERSON.] "Person" includes an individual, 23.36 corporation, partnership, limited liability company, 24.1 association, or any other entity. 24.2 Subd. 11. [QUALIFIED BUSINESS.] (a) "Qualified business" 24.3 means a person carrying on a trade or business at a place of 24.4 business located within a job opportunity building zone. 24.5 (b) A person that relocates a trade or business from 24.6 outside a job opportunity building zone into a zone is not a 24.7 qualified business, unless the business: 24.8 (1)(i) increases full-time employment in the first full 24.9 year of operation within the job opportunity building zone by at 24.10 least 20 percent measured relative to the operations that were 24.11 relocated and maintains the required level of employment for 24.12 each year the zone designation applies; or 24.13 (ii) makes a capital investment in the property located 24.14 within a zone equivalent to ten percent of the gross revenues of 24.15 operation that were relocated in the immediately preceding 24.16 taxable year; and 24.17 (2) enters a binding written agreement with the 24.18 commissioner that: 24.19 (i) pledges the business will meet the requirements of 24.20 clause (1); 24.21 (ii) provides for repayment of all tax benefits enumerated 24.22 under section 469.315 to the business under the procedures in 24.23 section 469.319, if the requirements of clause (1) are not met 24.24 for the taxable year or for taxes payable during the year in 24.25 which the requirements were not met; and 24.26 (iii) contains any other terms the commissioner determines 24.27 appropriate. 24.28 Subd. 12. [RELOCATES.] (a) "Relocates" means that the 24.29 trade or business: 24.30 (1) ceases one or more operations or functions at another 24.31 location in Minnesota and begins performing substantially the 24.32 same operations or functions at a location in a job opportunity 24.33 building zone; or 24.34 (2) reduces employment at another location in Minnesota 24.35 during a period starting one year before and ending one year 24.36 after it begins operations in a job opportunity building zone 25.1 and its employees in the job opportunity building zone are 25.2 engaged in the same line of business as the employees at the 25.3 location where it reduced employment. 25.4 (b) "Relocate" does not include an expansion by a business 25.5 that establishes a new facility that does not replace or 25.6 supplant an existing operation or employment, in whole or in 25.7 part. 25.8 (c) "Trade or business" includes any business entity that 25.9 is substantially similar in operation or ownership to the 25.10 business entity seeking to be a qualified business under this 25.11 section. 25.12 [EFFECTIVE DATE.] This section is effective the day 25.13 following final enactment. 25.14 Sec. 16. [469.311] [DEVELOPMENT PLAN.] 25.15 (a) An applicant for designation of a job opportunity 25.16 building zone must adopt a written development plan for the zone 25.17 before submitting the application to the commissioner. 25.18 (b) The development plan must contain, at least, the 25.19 following: 25.20 (1) a map of the proposed zone that indicates the 25.21 geographic boundaries of the zone, the total area, and present 25.22 use and conditions generally of the land and structures within 25.23 those boundaries; 25.24 (2) evidence of community support and commitment from local 25.25 government, local workforce investment boards, school districts, 25.26 and other education institutions, business groups, and the 25.27 public; 25.28 (3) a description of the methods proposed to increase 25.29 economic opportunity and expansion, facilitate infrastructure 25.30 improvement, reduce the local regulatory burden, and identify 25.31 job-training opportunities; 25.32 (4) current social, economic, and demographic 25.33 characteristics of the proposed zone and anticipated 25.34 improvements in education, health, human services, and 25.35 employment if the zone is created; 25.36 (5) a description of anticipated activity in the zone and 26.1 each subzone, including, but not limited to, industrial use, 26.2 industrial site reuse, commercial or retail use, and residential 26.3 use; and 26.4 (6) any other information required by the commissioner. 26.5 [EFFECTIVE DATE.] This section is effective the day 26.6 following final enactment. 26.7 Sec. 17. [469.312] [JOB OPPORTUNITY BUILDING ZONES; 26.8 LIMITATIONS.] 26.9 Subdivision 1. [MAXIMUM SIZE.] A job opportunity building 26.10 zone may not exceed 5,000 acres. For a zone designated as an 26.11 agricultural processing facility zone, the zone also may not 26.12 exceed the size of a site necessary for the agricultural 26.13 processing facility, including ancillary operations and space 26.14 for expansion in the reasonably foreseeable future. 26.15 Subd. 2. [SUBZONES.] The area of a job opportunity 26.16 building zone may consist of one or more noncontiguous areas or 26.17 subzones. 26.18 Subd. 3. [OUTSIDE METROPOLITAN AREA.] The area of a job 26.19 opportunity building zone must be located outside of the 26.20 metropolitan area, as defined in section 473.121, subdivision 2. 26.21 Subd. 4. [BORDER CITY DEVELOPMENT ZONES.] (a) The area of 26.22 a job opportunity building zone may not include the area of a 26.23 border city development zone designated under section 469.1731. 26.24 The city may remove property from a border city development zone 26.25 contingent upon the area being designated as a job opportunity 26.26 building zone. Before removing a parcel of property from a 26.27 border city development zone, the city must obtain the written 26.28 consent to the removal from each recipient that is located on 26.29 the parcel and receives incentives under the border city 26.30 development zone. Consent of any other property owner or 26.31 taxpayer in the border city development zone is not required. 26.32 (b) A city may not provide tax incentives under section 26.33 469.1734 to individuals or businesses for operations or activity 26.34 in a job opportunity building zone. 26.35 Subd. 5. [DURATION LIMIT.] The maximum duration of a zone 26.36 is 12 years. The applicant may request a shorter duration. The 27.1 commissioner may specify a shorter duration, regardless of the 27.2 requested duration. 27.3 [EFFECTIVE DATE.] This section is effective the day 27.4 following final enactment. 27.5 Sec. 18. [469.313] [APPLICATION FOR DESIGNATION.] 27.6 Subdivision 1. [WHO MAY APPLY.] One or more local 27.7 government units, or a joint powers board under section 471.59, 27.8 acting on behalf of two or more units, may apply for designation 27.9 of an area as a job opportunity building zone. All or part of 27.10 the area proposed for designation as a zone must be located 27.11 within the boundaries of each of the governmental units. A 27.12 local government unit may not submit or have submitted on its 27.13 behalf more than one application for designation of a job 27.14 opportunity building zone. 27.15 Subd. 2. [APPLICATION CONTENT.] The application must 27.16 include: 27.17 (1) a development plan meeting the requirements of section 27.18 469.311; 27.19 (2) the proposed duration of the zone, not to exceed 12 27.20 years; 27.21 (3) a resolution or ordinance adopted by each of the cities 27.22 or towns and the counties in which the zone is located, agreeing 27.23 to provide all of the local tax exemptions provided under 27.24 section 469.315; 27.25 (4) if the proposed zone includes area in a border city 27.26 development zone, written consent to removal of the property 27.27 from the border city development zone to the extent required by 27.28 section 469.312, subdivision 4; and 27.29 (5) supporting evidence to allow the commissioner to 27.30 evaluate the application under the criteria in section 469.314. 27.31 [EFFECTIVE DATE.] This section is effective the day 27.32 following final enactment. 27.33 Sec. 19. [469.314] [DESIGNATION OF JOB OPPORTUNITY 27.34 BUILDING ZONES.] 27.35 Subdivision 1. [COMMISSIONER TO DESIGNATE.] (a) The 27.36 commissioner, in consultation with the commissioner of revenue, 28.1 shall designate not more than ten job opportunity building 28.2 zones. In making the designations, the commissioner shall 28.3 consider need and likelihood of success to yield the most 28.4 economic development and revitalization of economically 28.5 distressed rural areas of Minnesota. 28.6 (b) In addition to the designations under paragraph (a), 28.7 the commissioner may, in consultation with the commissioners of 28.8 agriculture and revenue, designate up to five agricultural 28.9 processing facility zones. 28.10 (c) The commissioner may, upon designation of a zone, 28.11 modify the development plan, including the boundaries of the 28.12 zone or subzones, if in the commissioner's opinion a modified 28.13 plan would better meet the objectives of the job opportunity 28.14 building zone program. The commissioner shall notify the 28.15 applicant of the modification and provide a statement of the 28.16 reasons for the modifications. 28.17 Subd. 2. [NEED INDICATORS.] (a) In evaluating applications 28.18 to determine the need for designation of a job opportunity 28.19 building zone, the commissioner shall consider the following 28.20 factors as indicators of need: 28.21 (1) the percentage of the population that is below 200 28.22 percent of the poverty rate, compared with the state as a whole; 28.23 (2) the extent to which the area's average weekly wage is 28.24 significantly lower than the state average weekly wage; 28.25 (3) the amount of property in or near the proposed zone 28.26 that is deteriorated or underutilized; 28.27 (4) the extent to which the median sale price of housing 28.28 units in the area is below the state median; 28.29 (5) the extent to which the median household income of the 28.30 area is lower than the state median household income; 28.31 (6) the extent to which the area experienced a population 28.32 loss during the 20-year period ending the year before the 28.33 application is made; 28.34 (7) the extent to which an area has experienced sudden or 28.35 severe job loss as a result of closing of businesses or other 28.36 employers; 29.1 (8) the extent to which property in the area would remain 29.2 underdeveloped or nonperforming due to physical characteristics; 29.3 (9) the extent to which the area has substantial real 29.4 property with adequate infrastructure and energy to support new 29.5 or expanded development; and 29.6 (10) the extent to which the business startup or expansion 29.7 rates are significantly lower than the respective rate for the 29.8 state. 29.9 (b) In applying the need indicators, the best available 29.10 data should be used. If reported data are not available for the 29.11 proposed zone, data for the smallest area that is available and 29.12 includes the area of the proposed zone may be used. The 29.13 commissioner may require applicants to provide data to 29.14 demonstrate how the area meets one or more of the indicators of 29.15 need. 29.16 Subd. 3. [SUCCESS INDICATORS.] In determining the 29.17 likelihood of success of a proposed zone, the commissioner shall 29.18 consider: 29.19 (1) the strength and viability of the proposed development 29.20 goals, objectives, and strategies in the development plan; 29.21 (2) whether the development plan is creative and innovative 29.22 in comparison to other applications; 29.23 (3) local public and private commitment to development of 29.24 the proposed zone and the potential cooperation of surrounding 29.25 communities; 29.26 (4) existing resources available to the proposed zone; 29.27 (5) how the designation of the zone would relate to other 29.28 economic and community development projects and to regional 29.29 initiatives or programs; 29.30 (6) how the regulatory burden will be eased for businesses 29.31 operating in the proposed zone; 29.32 (7) proposals to establish and link job creation and job 29.33 training; and 29.34 (8) the extent to which the development is directed at 29.35 encouraging and that designation of the zone is likely to result 29.36 in the creation of high-paying jobs. 30.1 Subd. 4. [DESIGNATION SCHEDULE.] (a) The schedule in 30.2 paragraphs (b) to (e) applies to the designation of job 30.3 opportunity building zones. 30.4 (b) The commissioner shall publish the form for 30.5 applications and any procedural, form, or content requirements 30.6 for applications by no later than August 1, 2003. The 30.7 commissioner may publish these requirements on the Internet, in 30.8 the State Register, or by any other means the commissioner 30.9 determines appropriate to disseminate the information to 30.10 potential applicants for designation. 30.11 (c) Applications must be submitted by October 15, 2003. 30.12 (d) The commissioner shall designate the zones by no later 30.13 than December 31, 2003. 30.14 (e) The designation of the zones takes effect January 1, 30.15 2004. 30.16 Subd. 5. [GEOGRAPHIC DISTRIBUTION.] The commissioner shall 30.17 have as a goal the geographic distribution of zones around the 30.18 state. 30.19 Subd. 6. [RULEMAKING EXEMPTION.] The commissioner's 30.20 actions in establishing procedures, requirements, and making 30.21 determinations to administer sections 469.310 to 469.320 are not 30.22 a rule for purposes of chapter 14 and are not subject to the 30.23 Administrative Procedure Act contained in chapter 14 and are not 30.24 subject to section 14.386. 30.25 [EFFECTIVE DATE.] This section is effective the day 30.26 following final enactment. 30.27 Sec. 20. [469.315] [TAX INCENTIVES AVAILABLE IN ZONES.] 30.28 Qualified businesses that operate in a job opportunity 30.29 building zone, individuals who invest in a qualified business 30.30 that operates in a job opportunity building zone, and property 30.31 located in a job opportunity building zone qualify for: 30.32 (1) exemption from individual income taxes as provided 30.33 under section 469.316; 30.34 (2) exemption from corporate franchise taxes as provided 30.35 under section 469.317; 30.36 (3) exemption from the state sales and use tax and any 31.1 local sales and use taxes on qualifying purchases as provided in 31.2 section 297A.68, subdivision 37; 31.3 (4) exemption from the state sales tax on motor vehicles 31.4 and any local sales tax on motor vehicles as provided under 31.5 section 297B.03; 31.6 (5) exemption from the property tax as provided in section 31.7 272.02, subdivision 56; 31.8 (6) exemption from the wind energy production tax under 31.9 section 272.029, subdivision 7; and 31.10 (7) the jobs credit allowed under section 469.318. 31.11 [EFFECTIVE DATE.] This section is effective the day 31.12 following final enactment. 31.13 Sec. 21. [469.316] [INDIVIDUAL INCOME TAX EXEMPTION.] 31.14 Subdivision 1. [APPLICATION.] An individual operating a 31.15 trade or business in a job opportunity building zone, and an 31.16 individual making a qualifying investment in a qualified 31.17 business operating in a job opportunity building zone qualifies 31.18 for the exemptions from taxes imposed under chapter 290, as 31.19 provided in this section. The exemptions provided under this 31.20 section apply only to the extent that the income otherwise would 31.21 be taxable under chapter 290. Subtractions under this section 31.22 from federal taxable income, alternative minimum taxable income, 31.23 or any other base subject to tax are limited to the amount that 31.24 otherwise would be included in the tax base absent the exemption 31.25 under this section. This section applies only to taxable years 31.26 beginning during the duration of the job opportunity building 31.27 zone. 31.28 Subd. 2. [RENTS.] An individual is exempt from the taxes 31.29 imposed under chapter 290 on net rents derived from real or 31.30 tangible personal property located in a zone for a taxable year 31.31 in which the zone was designated a job opportunity building 31.32 zone. If tangible personal property was used both within and 31.33 outside of the zone, the exemption amount for the net rental 31.34 income must be multiplied by a fraction, the numerator of which 31.35 is the number of days the property was used in the zone and the 31.36 denominator of which is the total days. 32.1 Subd. 3. [BUSINESS INCOME.] An individual is exempt from 32.2 the taxes imposed under chapter 290 on net income from the 32.3 operation of a qualified business in a job opportunity building 32.4 zone. If the trade or business is carried on within and without 32.5 the zone and the individual is not a resident of Minnesota, the 32.6 exemption must be apportioned based on the zone percentage for 32.7 the taxable year. If the trade or business is carried on within 32.8 and without the zone and the individual is a resident of 32.9 Minnesota, the exemption must be apportioned based on the zone 32.10 percentage for the taxable year, except the ratios under section 32.11 469.310, subdivision 7, clause (1), items (i) and (ii), must use 32.12 the denominators of the property and payroll factors determined 32.13 under section 290.191. No subtraction is allowed under this 32.14 section in excess of 20 percent of the sum of the job 32.15 opportunity building zone payroll and the adjusted basis of the 32.16 property at the time that the property is first used in the job 32.17 opportunity building zone by the business. 32.18 Subd. 4. [CAPITAL GAINS.] (a) An individual is exempt from 32.19 the taxes imposed under chapter 290 on: 32.20 (1) net gain derived on a sale or exchange of real property 32.21 located in the zone and used by a qualified business. If the 32.22 property was held by the individual during a period when the 32.23 zone was not designated, the gain must be prorated based on the 32.24 percentage of time, measured in calendar days, that the real 32.25 property was held by the individual during the period the zone 32.26 designation was in effect to the total period of time the real 32.27 property was held by the individual; 32.28 (2) net gain derived on a sale or exchange of tangible 32.29 personal property used by a qualified business in the zone. If 32.30 the property was held by the individual during a period when the 32.31 zone was not designated, the gain must be prorated based on the 32.32 percentage of time, measured in calendar days, that the property 32.33 was held by the individual during the period the zone 32.34 designation was in effect to the total period of time the 32.35 property was held by the individual. If the tangible personal 32.36 property was used outside of the zone during the period of the 33.1 zone's designation, the exemption must be multiplied by a 33.2 fraction, the numerator of which is the number of days the 33.3 property was used in the zone during the time of the designation 33.4 and the denominator of which is the total days the property was 33.5 held during the time of the designation; and 33.6 (3) net gain derived on a sale of an ownership interest in 33.7 a qualified business operating in the job opportunity building 33.8 zone, meeting the requirements of paragraph (b). The exemption 33.9 on the gain must be multiplied by the zone percentage of the 33.10 business for the taxable year prior to the sale. 33.11 (b) A qualified business meets the requirements of 33.12 paragraph (a), clause (3), if it is a corporation, an S 33.13 corporation, or a partnership, and for the taxable year its job 33.14 opportunity building zone percentage exceeds 25 percent. For 33.15 purposes of paragraph (a), clause (3), the zone percentage must 33.16 be calculated by modifying the ratios under section 469.310, 33.17 subdivision 7, clause (1), items (i) and (ii), to use the 33.18 denominators of the property and payroll factors determined 33.19 under section 290.191. Upon the request of an individual 33.20 holding an ownership interest in the entity, the entity must 33.21 certify to the owner, in writing, the job opportunity building 33.22 zone percentage needed to determine the exemption. 33.23 [EFFECTIVE DATE.] This section is effective for taxable 33.24 years beginning after December 31, 2003. 33.25 Sec. 22. [469.317] [CORPORATE FRANCHISE TAX EXEMPTION.] 33.26 (a) A qualified business is exempt from taxation under 33.27 section 290.02, the alternative minimum tax under section 33.28 290.0921, and the minimum fee under section 290.0922, on the 33.29 portion of its income attributable to operations within the 33.30 zone. This exemption is determined as follows: 33.31 (1) for purposes of the tax imposed under section 290.02, 33.32 by multiplying its taxable net income by its zone percentage and 33.33 subtracting the result in determining taxable income; 33.34 (2) for purposes of the alternative minimum tax under 33.35 section 290.0921, by multiplying its alternative minimum taxable 33.36 income by its zone percentage and reducing alternative minimum 34.1 taxable income by this amount; and 34.2 (3) for purposes of the minimum fee under section 290.0922, 34.3 by excluding property and payroll in the zone from the 34.4 computations of the fee or by exempting the entity under section 34.5 290.0922, subdivision 2, clause (7). 34.6 (b) No subtraction is allowed under this section in excess 34.7 of 20 percent of the sum of the corporation's job opportunity 34.8 building zone payroll and the adjusted basis of the property at 34.9 the time that the property is first used in the job opportunity 34.10 building zone by the corporation. 34.11 (c) This section applies only to taxable years beginning 34.12 during the duration of the job opportunity building zone. 34.13 [EFFECTIVE DATE.] This section is effective for taxable 34.14 years beginning after December 31, 2003. 34.15 Sec. 23. [469.318] [JOBS CREDIT.] 34.16 Subdivision 1. [CREDIT ALLOWED.] A qualified business is 34.17 allowed a credit against the taxes imposed under chapter 290. 34.18 The credit equals seven percent of the: 34.19 (1) lesser of: 34.20 (i) zone payroll for the taxable year, less the zone 34.21 payroll for the base year; or 34.22 (ii) total Minnesota payroll for the taxable year, less 34.23 total Minnesota payroll for the base year; minus 34.24 (2) $30,000 multiplied by (the number of full-time 34.25 equivalent employees that the qualified business employs in the 34.26 job opportunity building zone for the taxable year, minus the 34.27 number of full-time equivalent employees the business employed 34.28 in the zone in the base year, but not less than zero). 34.29 Subd. 2. [DEFINITIONS.] (a) For purposes of this section, 34.30 the following terms have the meanings given. 34.31 (b) "Base year" means the taxable year beginning during the 34.32 calendar year prior to the calendar year in which the zone 34.33 designation took effect. 34.34 (c) "Full-time equivalent employees" means the equivalent 34.35 of annualized expected hours of work equal to 2,080 hours. 34.36 (d) "Minnesota payroll" means the wages or salaries 35.1 attributed to Minnesota under section 290.191, subdivision 12, 35.2 for the qualified business or the unitary business of which the 35.3 qualified business is a part, whichever is greater. 35.4 (e) "Zone payroll" means wages or salaries used to 35.5 determine the zone payroll factor for the qualified business, 35.6 less the amount of compensation attributable to any employee 35.7 that exceeds $100,000. 35.8 Subd. 3. [INFLATION ADJUSTMENT.] For taxable years 35.9 beginning after December 31, 2004, the dollar amounts in 35.10 subdivision 1, clause (2), and subdivision 2, paragraph (e), are 35.11 annually adjusted for inflation. The commissioner of revenue 35.12 shall adjust the amounts by the percentage determined under 35.13 section 290.06, subdivision 2d, for the taxable year. 35.14 Subd. 4. [REFUNDABLE.] If the amount of the credit exceeds 35.15 the liability for tax under chapter 290, the commissioner of 35.16 revenue shall refund the excess to the qualified business. 35.17 Subd. 5. [APPROPRIATION.] An amount sufficient to pay the 35.18 refunds authorized by this section is appropriated to the 35.19 commissioner of revenue from the general fund. 35.20 [EFFECTIVE DATE.] This section is effective for taxable 35.21 years beginning after December 31, 2003. 35.22 Sec. 24. [469.319] [REPAYMENT OF TAX BENEFITS.] 35.23 Subdivision 1. [REPAYMENT OBLIGATION.] A business must 35.24 repay the amount of the total tax reduction listed in section 35.25 469.315 and any refund under section 469.318 in excess of tax 35.26 liability, received during the two years immediately before it 35.27 ceased to operate in the zone, if the business: 35.28 (1) received tax reductions authorized by section 469.315; 35.29 and 35.30 (2)(i) did not meet the goals specified in an agreement 35.31 entered into with the applicant that states any obligation the 35.32 qualified business must fulfill in order to be eligible for tax 35.33 benefits. The commissioner may extend for up to one year the 35.34 period for meeting any goals provided in an agreement. The 35.35 applicant may extend the period for meeting other goals by 35.36 documenting in writing the reason for the extension and 36.1 attaching a copy of the document to its next annual report to 36.2 the commissioner; or 36.3 (ii) ceased to operate its facility located within the job 36.4 opportunity building zone or otherwise ceases to be or is not a 36.5 qualified business. 36.6 Subd. 2. [DEFINITIONS.] (a) For purposes of this section, 36.7 the following terms have the meanings given. 36.8 (b) "Business" means any person who received tax benefits 36.9 enumerated in section 469.315. 36.10 (c) "Commissioner" means the commissioner of revenue. 36.11 Subd. 3. [DISPOSITION OR REPAYMENT.] The repayment must be 36.12 paid to the state to the extent it represents a state tax 36.13 reduction and to the county to the extent it represents a 36.14 property tax reduction. Any amount repaid to the state must be 36.15 deposited in the general fund. Any amount repaid to the county 36.16 for the property tax exemption must be distributed to the local 36.17 governments with authority to levy taxes in the zone in the same 36.18 manner provided for distribution of payment of delinquent 36.19 property taxes. Any repayment of local sales taxes must be 36.20 repaid to the city or county imposing the local sales tax. 36.21 Subd. 4. [REPAYMENT PROCEDURES.] (a) For the repayment of 36.22 taxes imposed under chapter 290 or 297A or local taxes collected 36.23 pursuant to section 297A.99, a business must file an amended 36.24 return with the commissioner of revenue and pay any taxes 36.25 required to be repaid within 30 days after ceasing to do 36.26 business in the zone. The amount required to be repaid is 36.27 determined by calculating the tax for the period or periods for 36.28 which repayment is required without regard to the exemptions and 36.29 credits allowed under section 469.315. 36.30 (b) For the repayment of taxes imposed under chapter 297B, 36.31 a business must pay any taxes required to be repaid to the motor 36.32 vehicle registrar, as agent for the commissioner of revenue, 36.33 within 30 days after ceasing to do business in the zone. 36.34 (c) For the repayment of property taxes, the county auditor 36.35 shall prepare a tax statement for the business, applying the 36.36 applicable tax extension rates for each payable year and provide 37.1 a copy to the business. The business must pay the taxes to the 37.2 county treasurer within 30 days after receipt of the tax 37.3 statement. The taxpayer may appeal the valuation and 37.4 determination of the property tax to the tax court within 30 37.5 days after receipt of the tax statement. 37.6 (d) The provisions of chapters 270 and 289A relating to the 37.7 commissioner's authority to audit, assess, and collect the tax 37.8 and to hear appeals are applicable to the repayment required 37.9 under paragraphs (a) and (b). The commissioner may impose civil 37.10 penalties as provided in chapter 289A, and the additional tax 37.11 and penalties are subject to interest at the rate provided in 37.12 section 270.75, from 30 days after ceasing to do business in the 37.13 job opportunity building zone until the date the tax is paid. 37.14 (e) If a property tax is not repaid under paragraph (c), 37.15 the county treasurer shall add the amount required to be repaid 37.16 to the property taxes assessed against the property for payment 37.17 in the year following the year in which the treasurer discovers 37.18 that the business ceased to operate in the job opportunity 37.19 building zone. 37.20 (f) For determining the tax required to be repaid, a tax 37.21 reduction is deemed to have been received on the date that the 37.22 tax would have been due if the taxpayer had not been entitled to 37.23 the exemption or on the date a refund was issued for a 37.24 refundable tax credit. 37.25 (g) The commissioner may assess the repayment of taxes 37.26 under paragraph (d) any time within two years after the business 37.27 ceases to operate in the job opportunity building zone, or 37.28 within any period of limitations for the assessment of tax under 37.29 section 289A.38, whichever period is later. 37.30 Subd. 5. [WAIVER AUTHORITY.] The commissioner may waive 37.31 all or part of a repayment, if the commissioner, in consultation 37.32 with the commissioner of trade and economic development and 37.33 appropriate officials from the local government units in which 37.34 the qualified business is located, determines that requiring 37.35 repayment of the tax is not in the best interest of the state or 37.36 the local government units and the business ceased operating as 38.1 a result of circumstances beyond its control including, but not 38.2 limited to: 38.3 (1) a natural disaster; 38.4 (2) unforeseen industry trends; or 38.5 (3) loss of a major supplier or customer. 38.6 [EFFECTIVE DATE.] This section is effective the day 38.7 following final enactment. 38.8 Sec. 25. [469.320] [ZONE PERFORMANCE; REMEDIES.] 38.9 Subdivision 1. [REPORTING REQUIREMENT.] An applicant 38.10 receiving designation of a job opportunity building zone under 38.11 section 469.314 must annually report to the commissioner on its 38.12 progress in meeting the zone performance goals under the 38.13 development plan for the zone. 38.14 Subd. 2. [PROCEDURES.] For reports required by subdivision 38.15 1, the commissioner may prescribe: 38.16 (1) the required time or times by which the reports must be 38.17 filed; 38.18 (2) the form of the report; and 38.19 (3) the information required to be included in the report. 38.20 Subd. 3. [REMEDIES.] If the commissioner determines, based 38.21 on a report filed under subdivision 1 or other available 38.22 information, that a zone or subzone is failing to meet its 38.23 performance goals, the commissioner may take any actions the 38.24 commissioner determines appropriate, including modification of 38.25 the boundaries of the zone or a subzone or termination of the 38.26 zone or a subzone. Before taking any action, the commissioner 38.27 shall consult with the applicant and the affected local 38.28 government units, including notifying them of the proposed 38.29 actions to be taken. The commissioner shall publish any order 38.30 modifying a zone in the State Register and on the Internet. The 38.31 applicant may appeal the commissioner's order under the 38.32 contested case procedures of chapter 14. 38.33 Subd. 4. [EXISTING BUSINESSES.] (a) An action to remove 38.34 area from a zone or to terminate a zone under this section does 38.35 not apply to: 38.36 (1) the property tax on improvements constructed before the 39.1 first January 2 following publication of the commissioner's 39.2 order; 39.3 (2) sales tax on purchases made before the first day of the 39.4 next calendar month beginning at least 30 days after publication 39.5 of the commissioner's order; and 39.6 (3) individual income tax or corporate franchise tax 39.7 attributable to a facility that was in operation before the 39.8 publication of the commissioner's order. 39.9 (b) The tax exemptions specified in paragraph (a) terminate 39.10 on the date on which the zone expires under the original 39.11 designation. 39.12 [EFFECTIVE DATE.] This section is effective the day 39.13 following final enactment. 39.14 Sec. 26. [477A.08] [JOB OPPORTUNITY BUILDING ZONE AID.] 39.15 Subdivision 1. [ELIGIBILITY.] (a) For each assessment year 39.16 that the exemption for job opportunity building zone property is 39.17 in effect under section 272.02, subdivision 56, the assessor 39.18 shall determine the difference between the actual net tax 39.19 capacity and the net tax capacity that would be determined for 39.20 the job opportunity building zone, including any property 39.21 removed from the zone that continues to qualify under section 39.22 469.320, subdivision 4, if the exemption were not in effect. 39.23 (b) Each city and county is eligible for aid equal to 39.24 one-half of: 39.25 (1) the amount by which the sum of the differences 39.26 determined in paragraph (a) for the corresponding assessment 39.27 year exceeds three percent of the city's or county's total 39.28 taxable net tax capacity for taxes payable in 2003, multiplied 39.29 by 39.30 (2) the city's or the county's, as applicable, average 39.31 local tax rate for taxes payable in 2003. 39.32 Subd. 2. [CERTIFICATION.] The county assessor shall notify 39.33 the commissioner of revenue of the amount determined under 39.34 subdivision 1, paragraph (b), clause (1), for any city or county 39.35 that qualifies for aid under this section by June 30 of the 39.36 assessment year, in a form prescribed by the commissioner. The 40.1 commissioner shall notify each city and county of its qualifying 40.2 aid amount by August 15 of the assessment year. 40.3 Subd. 3. [APPROPRIATION; PAYMENT.] The commissioner shall 40.4 pay each city and county its qualifying aid amount by July 20 of 40.5 the following year. An amount sufficient to pay the aid under 40.6 this section is appropriated to the commissioner of revenue from 40.7 the general fund. 40.8 [EFFECTIVE DATE.] This section is effective beginning for 40.9 aid based on property taxes assessed in 2004, payable in 2005. 40.10 Sec. 27. [APPROPRIATION; COST OF ADMINISTRATION.] 40.11 $100,000 in fiscal year 2004 and $30,000 in fiscal year 40.12 2005 are appropriated to the commissioner of trade and economic 40.13 development for the cost of designating job opportunity building 40.14 zones. 40.15 $53,000 in fiscal year 2004 and $29,000 in fiscal year 2005 40.16 are appropriated to the commissioner of revenue for the cost of 40.17 administering the tax provisions of this act. 40.18 [EFFECTIVE DATE.] This section is effective the day 40.19 following final enactment. 40.20 ARTICLE 2 40.21 BIOTECHNOLOGY AND HEALTH SCIENCES INDUSTRY ZONE 40.22 Section 1. [LEGISLATIVE FINDINGS.] 40.23 The legislature finds, as a matter of public policy, that 40.24 biotechnology and the health sciences hold immense promise in 40.25 improving the quality of our lives, including curing diseases, 40.26 making our foods safer and more abundant, reducing our 40.27 dependence on fossil fuels and foreign oil, making better use of 40.28 Minnesota agriculture products, and growing tens of thousands of 40.29 new, high-paying jobs. 40.30 The legislature further finds that there are hundreds of 40.31 discoveries made each year at the University of Minnesota, the 40.32 Mayo Clinic, and other research institutions that, if properly 40.33 commercialized, could help provide these benefits. 40.34 The legislature further finds that biotechnology and health 40.35 sciences companies benefit from location in proximity to these 40.36 research institutions and the many faculty, students, and other 41.1 intellectual and physical infrastructure these institutions 41.2 provide. 41.3 The legislature further finds that Minnesota's high-quality 41.4 workforce is attractive to biotechnology and health sciences 41.5 companies that would want to relocate, start up, or expand in 41.6 Minnesota. 41.7 The legislature further finds and declares that it is 41.8 appropriate and necessary, to improve our quality of life and as 41.9 a matter of economic development, that Minnesota take rapid and 41.10 affirmative steps to encourage the development of biotechnology 41.11 and the health sciences and the commercialization of important 41.12 discoveries, especially through expansion of business 41.13 opportunities in proximity to the research institutions where 41.14 those discoveries occur. 41.15 Sec. 2. Minnesota Statutes 2002, section 272.02, is 41.16 amended by adding a subdivision to read: 41.17 Subd. 56. [BIOTECHNOLOGY AND HEALTH SCIENCES INDUSTRY ZONE 41.18 PROPERTY.] (a) Improvements to real property, and personal 41.19 property, classified under section 273.13, subdivision 24, and 41.20 located within a biotechnology and health sciences industry 41.21 zone, designated under section 469.314, are exempt from ad 41.22 valorem taxes levied under chapter 275. 41.23 (b) For property to qualify for exemption under paragraph 41.24 (a), the occupant must be a qualified business, as defined in 41.25 section 469.310. 41.26 (c) The exemption applies beginning for the first 41.27 assessment year after designation of the biotechnology and 41.28 health sciences industry zone, designated under section 469.314, 41.29 by the commissioner of trade and economic development. The 41.30 exemption applies to each assessment year that begins during the 41.31 duration of the biotechnology and health sciences industry zone 41.32 and to property occupied by July 1 of the assessment year by a 41.33 qualified business. This exemption does not apply to: 41.34 (1) a levy under section 475.61 or similar levy provisions 41.35 under any other law to pay general obligation bonds; or 41.36 (2) a levy under section 126C.17, if the levy was approved 42.1 by the voters before the designation of the biotechnology and 42.2 health sciences industry zone. 42.3 [EFFECTIVE DATE.] This section is effective beginning for 42.4 property taxes assessed in 2004, payable in 2005. 42.5 Sec. 3. Minnesota Statutes 2002, section 290.01, 42.6 subdivision 19b, is amended to read: 42.7 Subd. 19b. [SUBTRACTIONS FROM FEDERAL TAXABLE INCOME.] For 42.8 individuals, estates, and trusts, there shall be subtracted from 42.9 federal taxable income: 42.10 (1) interest income on obligations of any authority, 42.11 commission, or instrumentality of the United States to the 42.12 extent includable in taxable income for federal income tax 42.13 purposes but exempt from state income tax under the laws of the 42.14 United States; 42.15 (2) if included in federal taxable income, the amount of 42.16 any overpayment of income tax to Minnesota or to any other 42.17 state, for any previous taxable year, whether the amount is 42.18 received as a refund or as a credit to another taxable year's 42.19 income tax liability; 42.20 (3) the amount paid to others, less the amount used to 42.21 claim the credit allowed under section 290.0674, not to exceed 42.22 $1,625 for each qualifying child in grades kindergarten to 6 and 42.23 $2,500 for each qualifying child in grades 7 to 12, for tuition, 42.24 textbooks, and transportation of each qualifying child in 42.25 attending an elementary or secondary school situated in 42.26 Minnesota, North Dakota, South Dakota, Iowa, or Wisconsin, 42.27 wherein a resident of this state may legally fulfill the state's 42.28 compulsory attendance laws, which is not operated for profit, 42.29 and which adheres to the provisions of the Civil Rights Act of 42.30 1964 and chapter 363. For the purposes of this clause, 42.31 "tuition" includes fees or tuition as defined in section 42.32 290.0674, subdivision 1, clause (1). As used in this clause, 42.33 "textbooks" includes books and other instructional materials and 42.34 equipment purchased or leased for use in elementary and 42.35 secondary schools in teaching only those subjects legally and 42.36 commonly taught in public elementary and secondary schools in 43.1 this state. Equipment expenses qualifying for deduction 43.2 includes expenses as defined and limited in section 290.0674, 43.3 subdivision 1, clause (3). "Textbooks" does not include 43.4 instructional books and materials used in the teaching of 43.5 religious tenets, doctrines, or worship, the purpose of which is 43.6 to instill such tenets, doctrines, or worship, nor does it 43.7 include books or materials for, or transportation to, 43.8 extracurricular activities including sporting events, musical or 43.9 dramatic events, speech activities, driver's education, or 43.10 similar programs. For purposes of the subtraction provided by 43.11 this clause, "qualifying child" has the meaning given in section 43.12 32(c)(3) of the Internal Revenue Code; 43.13 (4) income as provided under section 290.0802; 43.14 (5) to the extent included in federal adjusted gross 43.15 income, income realized on disposition of property exempt from 43.16 tax under section 290.491; 43.17 (6) to the extent not deducted in determining federal 43.18 taxable income or used to claim the long-term care insurance 43.19 credit under section 290.0672, the amount paid for health 43.20 insurance of self-employed individuals as determined under 43.21 section 162(l) of the Internal Revenue Code, except that the 43.22 percent limit does not apply. If the individual deducted 43.23 insurance payments under section 213 of the Internal Revenue 43.24 Code of 1986, the subtraction under this clause must be reduced 43.25 by the lesser of: 43.26 (i) the total itemized deductions allowed under section 43.27 63(d) of the Internal Revenue Code, less state, local, and 43.28 foreign income taxes deductible under section 164 of the 43.29 Internal Revenue Code and the standard deduction under section 43.30 63(c) of the Internal Revenue Code; or 43.31 (ii) the lesser of (A) the amount of insurance qualifying 43.32 as "medical care" under section 213(d) of the Internal Revenue 43.33 Code to the extent not deducted under section 162(1) of the 43.34 Internal Revenue Code or excluded from income or (B) the total 43.35 amount deductible for medical care under section 213(a); 43.36 (7) the exemption amount allowed under Laws 1995, chapter 44.1 255, article 3, section 2, subdivision 3; 44.2 (8) to the extent included in federal taxable income, 44.3 postservice benefits for youth community service under section 44.4 124D.42 for volunteer service under United States Code, title 44.5 42, sections 12601 to 12604; 44.6 (9) to the extent not deducted in determining federal 44.7 taxable income by an individual who does not itemize deductions 44.8 for federal income tax purposes for the taxable year, an amount 44.9 equal to 50 percent of the excess of charitable contributions 44.10 allowable as a deduction for the taxable year under section 44.11 170(a) of the Internal Revenue Code over $500; 44.12 (10) for taxable years beginning before January 1, 2008, 44.13 the amount of the federal small ethanol producer credit allowed 44.14 under section 40(a)(3) of the Internal Revenue Code which is 44.15 included in gross income under section 87 of the Internal 44.16 Revenue Code; 44.17 (11) for individuals who are allowed a federal foreign tax 44.18 credit for taxes that do not qualify for a credit under section 44.19 290.06, subdivision 22, an amount equal to the carryover of 44.20 subnational foreign taxes for the taxable year, but not to 44.21 exceed the total subnational foreign taxes reported in claiming 44.22 the foreign tax credit. For purposes of this clause, "federal 44.23 foreign tax credit" means the credit allowed under section 27 of 44.24 the Internal Revenue Code, and "carryover of subnational foreign 44.25 taxes" equals the carryover allowed under section 904(c) of the 44.26 Internal Revenue Code minus national level foreign taxes to the 44.27 extent they exceed the federal foreign tax credit;and44.28 (12) in each of the five tax years immediately following 44.29 the tax year in which an addition is required under subdivision 44.30 19a, clause (7), an amount equal to one-fifth of the delayed 44.31 depreciation. For purposes of this clause, "delayed 44.32 depreciation" means the amount of the addition made by the 44.33 taxpayer under subdivision 19a, clause (7), minus the positive 44.34 value of any net operating loss under section 172 of the 44.35 Internal Revenue Code generated for the tax year of the 44.36 addition. The resulting delayed depreciation cannot be less 45.1 than zero; and 45.2 (13) biotechnology and health sciences industry zone income 45.3 as provided under section 469.316. 45.4 [EFFECTIVE DATE.] This section is effective for taxable 45.5 years beginning after December 31, 2003. 45.6 Sec. 4. Minnesota Statutes 2002, section 290.01, 45.7 subdivision 29, is amended to read: 45.8 Subd. 29. [TAXABLE INCOME.] The term "taxable income" 45.9 means: 45.10 (1) for individuals, estates, and trusts, the same as 45.11 taxable net income; 45.12 (2) for corporations, the taxable net income less 45.13 (i) the net operating loss deduction under section 290.095; 45.14and45.15 (ii) the dividends received deduction under section 290.21, 45.16 subdivision 4; and 45.17 (iii) the exemption for operating in a biotechnology and 45.18 health sciences industry zone under section 469.317. 45.19 [EFFECTIVE DATE.] This section is effective for taxable 45.20 years beginning after December 31, 2003. 45.21 Sec. 5. Minnesota Statutes 2002, section 290.06, 45.22 subdivision 2c, is amended to read: 45.23 Subd. 2c. [SCHEDULES OF RATES FOR INDIVIDUALS, ESTATES, 45.24 AND TRUSTS.] (a) The income taxes imposed by this chapter upon 45.25 married individuals filing joint returns and surviving spouses 45.26 as defined in section 2(a) of the Internal Revenue Code must be 45.27 computed by applying to their taxable net income the following 45.28 schedule of rates: 45.29 (1) On the first $25,680, 5.35 percent; 45.30 (2) On all over $25,680, but not over $102,030, 7.05 45.31 percent; 45.32 (3) On all over $102,030, 7.85 percent. 45.33 Married individuals filing separate returns, estates, and 45.34 trusts must compute their income tax by applying the above rates 45.35 to their taxable income, except that the income brackets will be 45.36 one-half of the above amounts. 46.1 (b) The income taxes imposed by this chapter upon unmarried 46.2 individuals must be computed by applying to taxable net income 46.3 the following schedule of rates: 46.4 (1) On the first $17,570, 5.35 percent; 46.5 (2) On all over $17,570, but not over $57,710, 7.05 46.6 percent; 46.7 (3) On all over $57,710, 7.85 percent. 46.8 (c) The income taxes imposed by this chapter upon unmarried 46.9 individuals qualifying as a head of household as defined in 46.10 section 2(b) of the Internal Revenue Code must be computed by 46.11 applying to taxable net income the following schedule of rates: 46.12 (1) On the first $21,630, 5.35 percent; 46.13 (2) On all over $21,630, but not over $86,910, 7.05 46.14 percent; 46.15 (3) On all over $86,910, 7.85 percent. 46.16 (d) In lieu of a tax computed according to the rates set 46.17 forth in this subdivision, the tax of any individual taxpayer 46.18 whose taxable net income for the taxable year is less than an 46.19 amount determined by the commissioner must be computed in 46.20 accordance with tables prepared and issued by the commissioner 46.21 of revenue based on income brackets of not more than $100. The 46.22 amount of tax for each bracket shall be computed at the rates 46.23 set forth in this subdivision, provided that the commissioner 46.24 may disregard a fractional part of a dollar unless it amounts to 46.25 50 cents or more, in which case it may be increased to $1. 46.26 (e) An individual who is not a Minnesota resident for the 46.27 entire year must compute the individual's Minnesota income tax 46.28 as provided in this subdivision. After the application of the 46.29 nonrefundable credits provided in this chapter, the tax 46.30 liability must then be multiplied by a fraction in which: 46.31 (1) the numerator is the individual's Minnesota source 46.32 federal adjusted gross income as defined in section 62 of the 46.33 Internal Revenue Code and increased by the additions required 46.34 under section 290.01, subdivision 19a, clauses (1) and (6), and 46.35 reduced by the subtraction under section 290.01, subdivision 46.36 19b, clause (13), and the Minnesota assignable portion of the 47.1 subtraction for United States government interest under section 47.2 290.01, subdivision 19b, clause (1), after applying the 47.3 allocation and assignability provisions of section 290.081, 47.4 clause (a), or 290.17; and 47.5 (2) the denominator is the individual's federal adjusted 47.6 gross income as defined in section 62 of the Internal Revenue 47.7 Code of 1986, increased by the amounts specified in section 47.8 290.01, subdivision 19a, clauses (1) and (6), and reduced by the 47.9 amounts specified in section 290.01, subdivision 19b,clause47.10 clauses (1) and (13). 47.11 [EFFECTIVE DATE.] This section is effective for taxable 47.12 years beginning after December 31, 2003. 47.13 Sec. 6. Minnesota Statutes 2002, section 290.067, 47.14 subdivision 1, is amended to read: 47.15 Subdivision 1. [AMOUNT OF CREDIT.] (a) A taxpayer may take 47.16 as a credit against the tax due from the taxpayer and a spouse, 47.17 if any, under this chapter an amount equal to the dependent care 47.18 credit for which the taxpayer is eligible pursuant to the 47.19 provisions of section 21 of the Internal Revenue Code subject to 47.20 the limitations provided in subdivision 2 except that in 47.21 determining whether the child qualified as a dependent, income 47.22 received as a Minnesota family investment program grant or 47.23 allowance to or on behalf of the child must not be taken into 47.24 account in determining whether the child received more than half 47.25 of the child's support from the taxpayer, and the provisions of 47.26 section 32(b)(1)(D) of the Internal Revenue Code do not apply. 47.27 (b) If a child who has not attained the age of six years at 47.28 the close of the taxable year is cared for at a licensed family 47.29 day care home operated by the child's parent, the taxpayer is 47.30 deemed to have paid employment-related expenses. If the child 47.31 is 16 months old or younger at the close of the taxable year, 47.32 the amount of expenses deemed to have been paid equals the 47.33 maximum limit for one qualified individual under section 21(c) 47.34 and (d) of the Internal Revenue Code. If the child is older 47.35 than 16 months of age but has not attained the age of six years 47.36 at the close of the taxable year, the amount of expenses deemed 48.1 to have been paid equals the amount the licensee would charge 48.2 for the care of a child of the same age for the same number of 48.3 hours of care. 48.4 (c) If a married couple: 48.5 (1) has a child who has not attained the age of one year at 48.6 the close of the taxable year; 48.7 (2) files a joint tax return for the taxable year; and 48.8 (3) does not participate in a dependent care assistance 48.9 program as defined in section 129 of the Internal Revenue Code, 48.10 in lieu of the actual employment related expenses paid for that 48.11 child under paragraph (a) or the deemed amount under paragraph 48.12 (b), the lesser of (i) the combined earned income of the couple 48.13 or (ii) the amount of the maximum limit for one qualified 48.14 individual under section 21(c) and (d) of the Internal Revenue 48.15 Code will be deemed to be the employment related expense paid 48.16 for that child. The earned income limitation of section 21(d) 48.17 of the Internal Revenue Code shall not apply to this deemed 48.18 amount. These deemed amounts apply regardless of whether any 48.19 employment-related expenses have been paid. 48.20 (d) If the taxpayer is not required and does not file a 48.21 federal individual income tax return for the tax year, no credit 48.22 is allowed for any amount paid to any person unless: 48.23 (1) the name, address, and taxpayer identification number 48.24 of the person are included on the return claiming the credit; or 48.25 (2) if the person is an organization described in section 48.26 501(c)(3) of the Internal Revenue Code and exempt from tax under 48.27 section 501(a) of the Internal Revenue Code, the name and 48.28 address of the person are included on the return claiming the 48.29 credit. 48.30 In the case of a failure to provide the information required 48.31 under the preceding sentence, the preceding sentence does not 48.32 apply if it is shown that the taxpayer exercised due diligence 48.33 in attempting to provide the information required. 48.34 In the case of a nonresident, part-year resident, or a 48.35 person who has earned income not subject to tax under this 48.36 chapter including earned income excluded pursuant to section 49.1 290.01, subdivision 19b, clause (13), the credit determined 49.2 under section 21 of the Internal Revenue Code must be allocated 49.3 based on the ratio by which the earned income of the claimant 49.4 and the claimant's spouse from Minnesota sources bears to the 49.5 total earned income of the claimant and the claimant's spouse. 49.6 [EFFECTIVE DATE.] This section is effective for taxable 49.7 years beginning after December 31, 2003. 49.8 Sec. 7. Minnesota Statutes 2002, section 290.0671, 49.9 subdivision 1, is amended to read: 49.10 Subdivision 1. [CREDIT ALLOWED.] (a) An individual is 49.11 allowed a credit against the tax imposed by this chapter equal 49.12 to a percentage of earned income. To receive a credit, a 49.13 taxpayer must be eligible for a credit under section 32 of the 49.14 Internal Revenue Code. 49.15 (b) For individuals with no qualifying children, the credit 49.16 equals 1.9125 percent of the first $4,620 of earned income. The 49.17 credit is reduced by 1.9125 percent of earned income or modified 49.18 adjusted gross income, whichever is greater, in excess of 49.19 $5,770, but in no case is the credit less than zero. 49.20 (c) For individuals with one qualifying child, the credit 49.21 equals 8.5 percent of the first $6,920 of earned income and 8.5 49.22 percent of earned income over $12,080 but less than $13,450. 49.23 The credit is reduced by 5.73 percent of earned income or 49.24 modified adjusted gross income, whichever is greater, in excess 49.25 of $15,080, but in no case is the credit less than zero. 49.26 (d) For individuals with two or more qualifying children, 49.27 the credit equals ten percent of the first $9,720 of earned 49.28 income and 20 percent of earned income over $14,860 but less 49.29 than $16,800. The credit is reduced by 10.3 percent of earned 49.30 income or modified adjusted gross income, whichever is greater, 49.31 in excess of $17,890, but in no case is the credit less than 49.32 zero. 49.33 (e) For a nonresident or part-year resident, the credit 49.34 must be allocated based on the percentage calculated under 49.35 section 290.06, subdivision 2c, paragraph (e). 49.36 (f) For a person who was a resident for the entire tax year 50.1 and has earned income not subject to tax under this 50.2 chapter including income excluded under section 290.01, 50.3 subdivision 19b, clause (13), the credit must be allocated based 50.4 on the ratio of federal adjusted gross income reduced by the 50.5 earned income not subject to tax under this chapter over federal 50.6 adjusted gross income. 50.7 (g) For tax years beginning after December 31, 2001, and 50.8 before December 31, 2004, the $5,770 in paragraph (b) is 50.9 increased to $6,770, the $15,080 in paragraph (c) is increased 50.10 to $16,080, and the $17,890 in paragraph (d) is increased to 50.11 $18,890 for married taxpayers filing joint returns. 50.12 (h) For tax years beginning after December 31, 2004, and 50.13 before December 31, 2007, the $5,770 in paragraph (b) is 50.14 increased to $7,770, the $15,080 in paragraph (c) is increased 50.15 to $17,080, and the $17,890 in paragraph (d) is increased to 50.16 $19,890 for married taxpayers filing joint returns. 50.17 (i) For tax years beginning after December 31, 2007, and 50.18 before December 31, 2010, the $5,770 in paragraph (b) is 50.19 increased to $8,770, the $15,080 in paragraph (c) is increased 50.20 to $18,080 and the $17,890 in paragraph (d) is increased to 50.21 $20,890 for married taxpayers filing joint returns. 50.22 (j) The commissioner shall construct tables showing the 50.23 amount of the credit at various income levels and make them 50.24 available to taxpayers. The tables shall follow the schedule 50.25 contained in this subdivision, except that the commissioner may 50.26 graduate the transition between income brackets. 50.27 [EFFECTIVE DATE.] This section is effective for taxable 50.28 years beginning after December 31, 2003. 50.29 Sec. 8. Minnesota Statutes 2002, section 290.091, 50.30 subdivision 2, is amended to read: 50.31 Subd. 2. [DEFINITIONS.] For purposes of the tax imposed by 50.32 this section, the following terms have the meanings given: 50.33 (a) "Alternative minimum taxable income" means the sum of 50.34 the following for the taxable year: 50.35 (1) the taxpayer's federal alternative minimum taxable 50.36 income as defined in section 55(b)(2) of the Internal Revenue 51.1 Code; 51.2 (2) the taxpayer's itemized deductions allowed in computing 51.3 federal alternative minimum taxable income, but excluding: 51.4 (i) the charitable contribution deduction under section 170 51.5 of the Internal Revenue Code to the extent that the deduction 51.6 exceeds 1.3 percent of adjusted gross income, as defined in 51.7 section 62 of the Internal Revenue Code; 51.8 (ii) the medical expense deduction; 51.9 (iii) the casualty, theft, and disaster loss deduction; and 51.10 (iv) the impairment-related work expenses of a disabled 51.11 person; 51.12 (3) for depletion allowances computed under section 613A(c) 51.13 of the Internal Revenue Code, with respect to each property (as 51.14 defined in section 614 of the Internal Revenue Code), to the 51.15 extent not included in federal alternative minimum taxable 51.16 income, the excess of the deduction for depletion allowable 51.17 under section 611 of the Internal Revenue Code for the taxable 51.18 year over the adjusted basis of the property at the end of the 51.19 taxable year (determined without regard to the depletion 51.20 deduction for the taxable year); 51.21 (4) to the extent not included in federal alternative 51.22 minimum taxable income, the amount of the tax preference for 51.23 intangible drilling cost under section 57(a)(2) of the Internal 51.24 Revenue Code determined without regard to subparagraph (E); 51.25 (5) to the extent not included in federal alternative 51.26 minimum taxable income, the amount of interest income as 51.27 provided by section 290.01, subdivision 19a, clause (1); and 51.28 (6) the amount of addition required by section 290.01, 51.29 subdivision 19a, clause (7); 51.30 less the sum of the amounts determined under the following: 51.31 (1) interest income as defined in section 290.01, 51.32 subdivision 19b, clause (1); 51.33 (2) an overpayment of state income tax as provided by 51.34 section 290.01, subdivision 19b, clause (2), to the extent 51.35 included in federal alternative minimum taxable income; 51.36 (3) the amount of investment interest paid or accrued 52.1 within the taxable year on indebtedness to the extent that the 52.2 amount does not exceed net investment income, as defined in 52.3 section 163(d)(4) of the Internal Revenue Code. Interest does 52.4 not include amounts deducted in computing federal adjusted gross 52.5 income; and 52.6 (4) amounts subtracted from federal taxable income as 52.7 provided by section 290.01, subdivision 19b,clauseclauses (12) 52.8 and (13). 52.9 In the case of an estate or trust, alternative minimum 52.10 taxable income must be computed as provided in section 59(c) of 52.11 the Internal Revenue Code. 52.12 (b) "Investment interest" means investment interest as 52.13 defined in section 163(d)(3) of the Internal Revenue Code. 52.14 (c) "Tentative minimum tax" equals 6.4 percent of 52.15 alternative minimum taxable income after subtracting the 52.16 exemption amount determined under subdivision 3. 52.17 (d) "Regular tax" means the tax that would be imposed under 52.18 this chapter (without regard to this section and section 52.19 290.032), reduced by the sum of the nonrefundable credits 52.20 allowed under this chapter. 52.21 (e) "Net minimum tax" means the minimum tax imposed by this 52.22 section. 52.23 [EFFECTIVE DATE.] This section is effective for taxable 52.24 years beginning after December 31, 2003. 52.25 Sec. 9. Minnesota Statutes 2002, section 290.0921, 52.26 subdivision 3, is amended to read: 52.27 Subd. 3. [ALTERNATIVE MINIMUM TAXABLE INCOME.] 52.28 "Alternative minimum taxable income" is Minnesota net income as 52.29 defined in section 290.01, subdivision 19, and includes the 52.30 adjustments and tax preference items in sections 56, 57, 58, and 52.31 59(d), (e), (f), and (h) of the Internal Revenue Code. If a 52.32 corporation files a separate company Minnesota tax return, the 52.33 minimum tax must be computed on a separate company basis. If a 52.34 corporation is part of a tax group filing a unitary return, the 52.35 minimum tax must be computed on a unitary basis. The following 52.36 adjustments must be made. 53.1 (1) For purposes of the depreciation adjustments under 53.2 section 56(a)(1) and 56(g)(4)(A) of the Internal Revenue Code, 53.3 the basis for depreciable property placed in service in a 53.4 taxable year beginning before January 1, 1990, is the adjusted 53.5 basis for federal income tax purposes, including any 53.6 modification made in a taxable year under section 290.01, 53.7 subdivision 19e, or Minnesota Statutes 1986, section 290.09, 53.8 subdivision 7, paragraph (c). 53.9 For taxable years beginning after December 31, 2000, the 53.10 amount of any remaining modification made under section 290.01, 53.11 subdivision 19e, or Minnesota Statutes 1986, section 290.09, 53.12 subdivision 7, paragraph (c), not previously deducted is a 53.13 depreciation allowance in the first taxable year after December 53.14 31, 2000. 53.15 (2) The portion of the depreciation deduction allowed for 53.16 federal income tax purposes under section 168(k) of the Internal 53.17 Revenue Code that is required as an addition under section 53.18 290.01, subdivision 19c, clause (16), is disallowed in 53.19 determining alternative minimum taxable income. 53.20 (3) The subtraction for depreciation allowed under section 53.21 290.01, subdivision 19d, clause (19), is allowed as a 53.22 depreciation deduction in determining alternative minimum 53.23 taxable income. 53.24 (4) The alternative tax net operating loss deduction under 53.25 sections 56(a)(4) and 56(d) of the Internal Revenue Code does 53.26 not apply. 53.27 (5) The special rule for certain dividends under section 53.28 56(g)(4)(C)(ii) of the Internal Revenue Code does not apply. 53.29 (6) The special rule for dividends from section 936 53.30 companies under section 56(g)(4)(C)(iii) does not apply. 53.31 (7) The tax preference for depletion under section 57(a)(1) 53.32 of the Internal Revenue Code does not apply. 53.33 (8) The tax preference for intangible drilling costs under 53.34 section 57(a)(2) of the Internal Revenue Code must be calculated 53.35 without regard to subparagraph (E) and the subtraction under 53.36 section 290.01, subdivision 19d, clause (4). 54.1 (9) The tax preference for tax exempt interest under 54.2 section 57(a)(5) of the Internal Revenue Code does not apply. 54.3 (10) The tax preference for charitable contributions of 54.4 appreciated property under section 57(a)(6) of the Internal 54.5 Revenue Code does not apply. 54.6 (11) For purposes of calculating the tax preference for 54.7 accelerated depreciation or amortization on certain property 54.8 placed in service before January 1, 1987, under section 57(a)(7) 54.9 of the Internal Revenue Code, the deduction allowable for the 54.10 taxable year is the deduction allowed under section 290.01, 54.11 subdivision 19e. 54.12 For taxable years beginning after December 31, 2000, the 54.13 amount of any remaining modification made under section 290.01, 54.14 subdivision 19e, not previously deducted is a depreciation or 54.15 amortization allowance in the first taxable year after December 54.16 31, 2004. 54.17 (12) For purposes of calculating the adjustment for 54.18 adjusted current earnings in section 56(g) of the Internal 54.19 Revenue Code, the term "alternative minimum taxable income" as 54.20 it is used in section 56(g) of the Internal Revenue Code, means 54.21 alternative minimum taxable income as defined in this 54.22 subdivision, determined without regard to the adjustment for 54.23 adjusted current earnings in section 56(g) of the Internal 54.24 Revenue Code. 54.25 (13) For purposes of determining the amount of adjusted 54.26 current earnings under section 56(g)(3) of the Internal Revenue 54.27 Code, no adjustment shall be made under section 56(g)(4) of the 54.28 Internal Revenue Code with respect to (i) the amount of foreign 54.29 dividend gross-up subtracted as provided in section 290.01, 54.30 subdivision 19d, clause (1), (ii) the amount of refunds of 54.31 income, excise, or franchise taxes subtracted as provided in 54.32 section 290.01, subdivision 19d, clause (10), or (iii) the 54.33 amount of royalties, fees or other like income subtracted as 54.34 provided in section 290.01, subdivision 19d, clause (11). 54.35 (14) Alternative minimum taxable income excludes the income 54.36 from operating in a biotechnology and health sciences industry 55.1 zone as provided under section 469.317. 55.2 Items of tax preference must not be reduced below zero as a 55.3 result of the modifications in this subdivision. 55.4 [EFFECTIVE DATE.] This section is effective for taxable 55.5 years beginning after December 31, 2003. 55.6 Sec. 10. Minnesota Statutes 2002, section 290.0922, 55.7 subdivision 3, is amended to read: 55.8 Subd. 3. [DEFINITIONS.] (a) "Minnesota sales or receipts" 55.9 means the total sales apportioned to Minnesota pursuant to 55.10 section 290.191, subdivision 5, the total receipts attributed to 55.11 Minnesota pursuant to section 290.191, subdivisions 6 to 8, 55.12 and/or the total sales or receipts apportioned or attributed to 55.13 Minnesota pursuant to any other apportionment formula applicable 55.14 to the taxpayer. 55.15 (b) "Minnesota property" means total Minnesota tangible 55.16 property as provided in section 290.191, subdivisions 9 to 11, 55.17 and any other tangible property located in Minnesota, but does 55.18 not include property of a qualified business located in a 55.19 biotechnology and health sciences industry zone designated under 55.20 section 469.314. Intangible property shall not be included in 55.21 Minnesota property for purposes of this section. Taxpayers who 55.22 do not utilize tangible property to apportion income shall 55.23 nevertheless include Minnesota property for purposes of this 55.24 section. On a return for a short taxable year, the amount of 55.25 Minnesota property owned, as determined under section 290.191, 55.26 shall be included in Minnesota property based on a fraction in 55.27 which the numerator is the number of days in the short taxable 55.28 year and the denominator is 365. 55.29 (c) "Minnesota payrolls" means total Minnesota payrolls as 55.30 provided in section 290.191, subdivision 12, but does not 55.31 include biotechnology and health sciences industry zone payrolls 55.32 under section 469.310, subdivision 8. Taxpayers who do not 55.33 utilize payrolls to apportion income shall nevertheless include 55.34 Minnesota payrolls for purposes of this section. 55.35 [EFFECTIVE DATE.] This section is effective for taxable 55.36 years beginning after December 31, 2003. 56.1 Sec. 11. Minnesota Statutes 2002, section 297A.68, is 56.2 amended by adding a subdivision to read: 56.3 Subd. 37. [BIOTECHNOLOGY AND HEALTH SCIENCES INDUSTRY 56.4 ZONE.] (a) Purchases of tangible personal property or taxable 56.5 services by a qualified business, as defined in section 469.310, 56.6 are exempt if the property or services are primarily used or 56.7 consumed in a biotechnology and health sciences industry zone 56.8 designated under section 469.314. 56.9 (b) Purchase and use of construction materials and supplies 56.10 for construction of improvements to real property in a 56.11 biotechnology and health sciences industry zone are exempt if 56.12 the improvements after completion of construction are to be used 56.13 in the conduct of a qualified business, as defined in section 56.14 469.310. This exemption applies regardless of whether the 56.15 purchases are made by the business or a contractor. 56.16 (c) The exemptions under this subdivision apply to a local 56.17 sales and use tax regardless of whether the local sales tax is 56.18 imposed on the sales taxable as defined under this chapter. 56.19 (d) This subdivision applies to sales made during the 56.20 duration of the zone. 56.21 [EFFECTIVE DATE.] This section is effective for sales made 56.22 on or after the day following final enactment. 56.23 Sec. 12. Minnesota Statutes 2002, section 297B.03, is 56.24 amended to read: 56.25 297B.03 [EXEMPTIONS.] 56.26 There is specifically exempted from the provisions of this 56.27 chapter and from computation of the amount of tax imposed by it 56.28 the following: 56.29 (1) purchase or use, including use under a lease purchase 56.30 agreement or installment sales contract made pursuant to section 56.31 465.71, of any motor vehicle by the United States and its 56.32 agencies and instrumentalities and by any person described in 56.33 and subject to the conditions provided in section 297A.67, 56.34 subdivision 11; 56.35 (2) purchase or use of any motor vehicle by any person who 56.36 was a resident of another state or country at the time of the 57.1 purchase and who subsequently becomes a resident of Minnesota, 57.2 provided the purchase occurred more than 60 days prior to the 57.3 date such person began residing in the state of Minnesota and 57.4 the motor vehicle was registered in the person's name in the 57.5 other state or country; 57.6 (3) purchase or use of any motor vehicle by any person 57.7 making a valid election to be taxed under the provisions of 57.8 section 297A.90; 57.9 (4) purchase or use of any motor vehicle previously 57.10 registered in the state of Minnesota when such transfer 57.11 constitutes a transfer within the meaning of section 118, 331, 57.12 332, 336, 337, 338, 351, 355, 368, 721, 731, 1031, 1033, or 57.13 1563(a) of the Internal Revenue Code of 1986, as amended through 57.14 December 31, 1999; 57.15 (5) purchase or use of any vehicle owned by a resident of 57.16 another state and leased to a Minnesota based private or for 57.17 hire carrier for regular use in the transportation of persons or 57.18 property in interstate commerce provided the vehicle is titled 57.19 in the state of the owner or secured party, and that state does 57.20 not impose a sales tax or sales tax on motor vehicles used in 57.21 interstate commerce; 57.22 (6) purchase or use of a motor vehicle by a private 57.23 nonprofit or public educational institution for use as an 57.24 instructional aid in automotive training programs operated by 57.25 the institution. "Automotive training programs" includes motor 57.26 vehicle body and mechanical repair courses but does not include 57.27 driver education programs; 57.28 (7) purchase of a motor vehicle for use as an ambulance by 57.29 an ambulance service licensed under section 144E.10; 57.30 (8) purchase of a motor vehicle by or for a public library, 57.31 as defined in section 134.001, subdivision 2, as a bookmobile or 57.32 library delivery vehicle; 57.33 (9) purchase of a ready-mixed concrete truck; 57.34 (10) purchase or use of a motor vehicle by a town for use 57.35 exclusively for road maintenance, including snowplows and dump 57.36 trucks, but not including automobiles, vans, or pickup trucks; 58.1 (11) purchase or use of a motor vehicle by a corporation, 58.2 society, association, foundation, or institution organized and 58.3 operated exclusively for charitable, religious, or educational 58.4 purposes, except a public school, university, or library, but 58.5 only if the vehicle is: 58.6 (i) a truck, as defined in section 168.011, a bus, as 58.7 defined in section 168.011, or a passenger automobile, as 58.8 defined in section 168.011, if the automobile is designed and 58.9 used for carrying more than nine persons including the driver; 58.10 and 58.11 (ii) intended to be used primarily to transport tangible 58.12 personal property or individuals, other than employees, to whom 58.13 the organization provides service in performing its charitable, 58.14 religious, or educational purpose; 58.15 (12) purchase of a motor vehicle for use by a transit 58.16 provider exclusively to provide transit service is exempt if the 58.17 transit provider is either (i) receiving financial assistance or 58.18 reimbursement under section 174.24 or 473.384, or (ii) operating 58.19 under section 174.29, 473.388, or 473.405; 58.20 (13) purchase or use of a motor vehicle by a qualified 58.21 business, as defined in section 469.310, located in a 58.22 biotechnology and health sciences industry zone, if the motor 58.23 vehicle is principally garaged in the zone and is primarily used 58.24 as part of or in direct support of the person's operations 58.25 carried on in the zone. The exemption under this clause applies 58.26 to sales, if the purchase was made and delivery received during 58.27 the duration of the zone. The exemption under this clause also 58.28 applies to any local sales and use tax. 58.29 [EFFECTIVE DATE.] This section is effective for sales made 58.30 after December 31, 2003. 58.31 Sec. 13. [469.310] [DEFINITIONS.] 58.32 Subdivision 1. [SCOPE.] For purposes of sections 469.310 58.33 to 469.320, the following terms have the meanings given. 58.34 Subd. 2. [APPLICANT.] "Applicant" means a local government 58.35 unit or units applying for designation of an area as a 58.36 biotechnology and health sciences industry zone or a joint 59.1 powers board, established under section 471.59, acting on behalf 59.2 of two or more local government units. 59.3 Subd. 3. [BIOTECHNOLOGY AND HEALTH SCIENCES INDUSTRY 59.4 FACILITY.] "Biotechnology and health sciences industry facility" 59.5 means one or more facilities or operations involved in: (1) 59.6 researching, developing, and/or manufacturing a biotechnology 59.7 product or service or a biotechnology-related health sciences 59.8 product or service; or (2) promoting, supplying, or servicing a 59.9 facility or operation involved in clause (1), if the business 59.10 derives more than 50 percent of its gross receipts from those 59.11 activities. 59.12 Subd. 4. [COMMISSIONER.] "Commissioner" means the 59.13 commissioner of trade and economic development. 59.14 Subd. 5. [DEVELOPMENT PLAN.] "Development plan" means a 59.15 plan meeting the requirements of section 469.311. 59.16 Subd. 6. [BIOTECHNOLOGY AND HEALTH SCIENCES INDUSTRY ZONE 59.17 OR ZONE.] "Biotechnology and health sciences industry zone" or 59.18 "zone" means a zone designated by the commissioner under section 59.19 469.314. 59.20 Subd. 7. [BIOTECHNOLOGY AND HEALTH SCIENCES INDUSTRY ZONE 59.21 PERCENTAGE OR ZONE PERCENTAGE.] "Biotechnology and health 59.22 sciences industry zone percentage" or "zone percentage" means 59.23 the following fraction reduced to a percentage: 59.24 (1) the numerator of the fraction is: 59.25 (i) the ratio of the taxpayer's property factor under 59.26 section 290.191 located in the zone for the taxable year over 59.27 the property factor numerator determined under section 290.191, 59.28 plus 59.29 (ii) the ratio of the taxpayer's biotechnology and health 59.30 sciences industry zone payroll factor under subdivision 8 over 59.31 the payroll factor numerator determined under section 290.191; 59.32 and 59.33 (2) the denominator of the fraction is two. 59.34 When calculating the zone percentage for a business that is 59.35 part of a unitary business as defined under section 290.17, 59.36 subdivision 4, the denominator of the payroll and property 60.1 factors is the Minnesota payroll and property of the unitary 60.2 business as reported on the combined report under section 60.3 290.17, subdivision 4, paragraph (j). 60.4 Subd. 8. [BIOTECHNOLOGY AND HEALTH SCIENCES INDUSTRY ZONE 60.5 PAYROLL FACTOR.] "Biotechnology and health sciences industry 60.6 zone payroll factor" or "biotechnology and health sciences 60.7 industry zone payroll" is that portion of the payroll factor 60.8 under section 290.191 that represents: 60.9 (1) wages or salaries paid to an individual for services 60.10 performed for a qualified business in a biotechnology and health 60.11 sciences industry zone; or 60.12 (2) wages or salaries paid to individuals working from 60.13 offices of a qualified business within a biotechnology and 60.14 health sciences industry zone if their employment requires them 60.15 to work outside the zone and the work is incidental to the work 60.16 performed by the individual within the zone. 60.17 Subd. 9. [LOCAL GOVERNMENT UNIT.] "Local government unit" 60.18 means a statutory or home rule charter city, county, town, or 60.19 school district. 60.20 Subd. 10. [PERSON.] "Person" includes an individual, 60.21 corporation, partnership, limited liability company, 60.22 association, or any other entity. 60.23 Subd. 11. [QUALIFIED BUSINESS.] (a) "Qualified business" 60.24 means a person carrying on a trade or business at a 60.25 biotechnology and health sciences industry facility located 60.26 within a biotechnology and health sciences industry zone. 60.27 (b) A person that relocates a biotechnology and health 60.28 sciences industry facility from outside a biotechnology and 60.29 health sciences industry zone into a zone is not a qualified 60.30 business, unless the business: 60.31 (1)(i) increases full-time employment in the first full 60.32 year of operation within the biotechnology and health sciences 60.33 industry zone by at least 20 percent measured relative to the 60.34 operations that were relocated and maintains the required level 60.35 of employment for each year the zone designation applies; or 60.36 (ii) makes a capital investment in the property located 61.1 within a zone equivalent to ten percent of the gross revenues of 61.2 operation that were relocated in the immediately preceding 61.3 taxable year; and 61.4 (2) enters a binding written agreement with the 61.5 commissioner that: 61.6 (i) pledges the business will meet the requirements of 61.7 clause (1); 61.8 (ii) provides for repayment of all tax benefits enumerated 61.9 under section 469.315 to the business under the procedures in 61.10 section 469.319, if the requirements of clause (1) are not met 61.11 for the taxable year or for taxes payable during the year in 61.12 which the requirements were not met; and 61.13 (iii) contains any other terms the commissioner determines 61.14 appropriate. 61.15 Subd. 12. [RELOCATES.] (a) "Relocates" means that the 61.16 trade or business: 61.17 (1) ceases one or more operations or functions at another 61.18 location in Minnesota and begins performing substantially the 61.19 same operations or functions at a location in a biotechnology 61.20 and health sciences industry zone; or 61.21 (2) reduces employment at another location in Minnesota 61.22 during a period starting one year before and ending one year 61.23 after it begins operations in a biotechnology and health 61.24 sciences industry zone and its employees in the biotechnology 61.25 and health sciences industry zone are engaged in the same line 61.26 of business as the employees at the location where it reduced 61.27 employment. 61.28 (b) "Relocate" does not include an expansion by a business 61.29 that establishes a new facility that does not replace or 61.30 supplant an existing operation or employment, in whole or in 61.31 part. 61.32 (c) "Trade or business" includes any business entity that 61.33 is substantially similar in operation or ownership to the 61.34 business entity seeking to be a qualified business under this 61.35 section. 61.36 [EFFECTIVE DATE.] This section is effective the day 62.1 following final enactment. 62.2 Sec. 14. [469.311] [DEVELOPMENT PLAN.] 62.3 (a) An applicant for designation of a biotechnology and 62.4 health sciences industry zone must adopt a written development 62.5 plan for the zone before submitting the application to the 62.6 commissioner. 62.7 (b) The development plan must contain, at least, the 62.8 following: 62.9 (1) a map of the proposed zone that indicates the 62.10 geographic boundaries of the zone, the total area, and present 62.11 use and conditions generally of the land and structures within 62.12 those boundaries; 62.13 (2) evidence of community support and commitment from local 62.14 government, local workforce investment boards, school districts, 62.15 and other education institutions, business groups, and the 62.16 public; 62.17 (3) a description of the methods proposed to increase 62.18 economic opportunity and expansion, facilitate infrastructure 62.19 improvement, reduce the local regulatory burden, and identify 62.20 job-training opportunities; 62.21 (4) current social, economic, and demographic 62.22 characteristics of the proposed zone and anticipated 62.23 improvements in education, health, human services, and 62.24 employment if the zone is created; 62.25 (5) a description of anticipated activity in the zone and 62.26 each subzone, including, but not limited to, industrial use and 62.27 industrial site reuse; and 62.28 (6) any other information required by the commissioner. 62.29 [EFFECTIVE DATE.] This section is effective the day 62.30 following final enactment. 62.31 Sec. 15. [469.312] [BIOTECHNOLOGY AND HEALTH SCIENCES 62.32 INDUSTRY ZONE; LIMITATIONS.] 62.33 Subdivision 1. [MAXIMUM SIZE.] A biotechnology and health 62.34 sciences industry zone may not exceed 5,000 acres. 62.35 Subd. 2. [SUBZONES.] The area of a biotechnology and 62.36 health sciences industry zone may consist of one or more 63.1 noncontiguous areas or subzones. 63.2 Subd. 3. [DURATION LIMIT.] The maximum duration of a zone 63.3 is 12 years. The applicant may request a shorter duration. The 63.4 commissioner may specify a shorter duration, regardless of the 63.5 requested duration. 63.6 [EFFECTIVE DATE.] This section is effective the day 63.7 following final enactment. 63.8 Sec. 16. [469.313] [APPLICATION FOR DESIGNATION.] 63.9 Subdivision 1. [WHO MAY APPLY.] One or more local 63.10 government units, or a joint powers board under section 471.59, 63.11 acting on behalf of two or more units, may apply for designation 63.12 of an area as a biotechnology and health sciences industry 63.13 zone. All or part of the area proposed for designation as a 63.14 zone must be located within the boundaries of each of the 63.15 governmental units. A local government unit may not submit or 63.16 have submitted on its behalf more than one application for 63.17 designation of a biotechnology and health sciences industry zone. 63.18 Subd. 2. [APPLICATION CONTENT.] The application must 63.19 include: 63.20 (1) a development plan meeting the requirements of section 63.21 469.311; 63.22 (2) the proposed duration of the zone, not to exceed 12 63.23 years; 63.24 (3) a resolution or ordinance adopted by each of the cities 63.25 or towns and the counties in which the zone is located, agreeing 63.26 to provide all of the local tax exemptions provided under 63.27 section 469.315; and 63.28 (4) supporting evidence to allow the commissioner to 63.29 evaluate the application under the criteria in section 469.314. 63.30 [EFFECTIVE DATE.] This section is effective the day 63.31 following final enactment. 63.32 Sec. 17. [469.314] [DESIGNATION OF BIOTECHNOLOGY AND 63.33 HEALTH SCIENCES INDUSTRY ZONE.] 63.34 Subdivision 1. [COMMISSIONER TO DESIGNATE.] (a) The 63.35 commissioner, in consultation with the commissioner of revenue, 63.36 shall designate not more than one biotechnology and health 64.1 sciences industry zone. Priority must be given to applicants 64.2 with a development plan that links a higher education/research 64.3 institution with a biotechnology and health sciences industry 64.4 facility. 64.5 (b) The commissioner may, upon designation of a zone, 64.6 modify the development plan, including the boundaries of the 64.7 zone or subzones, if in the commissioner's opinion a modified 64.8 plan would better meet the objectives of the biotechnology and 64.9 health sciences industry zone program. The commissioner shall 64.10 notify the applicant of the modification and provide a statement 64.11 of the reasons for the modifications. 64.12 Subd. 2. [NEED INDICATORS.] (a) In evaluating applications 64.13 to determine the need for designation of a biotechnology and 64.14 health sciences industry zone, the commissioner shall consider 64.15 the following factors as indicators of need: 64.16 (1) the extent to which land in proximity to a significant 64.17 scientific research institution could be developed as a higher 64.18 and better use for biotechnology and health sciences industry 64.19 facilities; 64.20 (2) the amount of property in or near the zone that is 64.21 deteriorated or underutilized; and 64.22 (3) the extent to which property in the area would remain 64.23 underdeveloped or nonperforming due to physical characteristics. 64.24 (b) The commissioner may require applicants to provide data 64.25 to demonstrate how the area meets one or more of the indicators 64.26 of need. 64.27 Subd. 3. [SUCCESS INDICATORS.] In determining the 64.28 likelihood of success of a proposed zone, the commissioner shall 64.29 consider: 64.30 (1) applicants that show a viable link between a higher 64.31 education/research institution, the biotechnology and/or medical 64.32 devices business sectors, and one or more units of local 64.33 government with a development plan; 64.34 (2) the extent to which the area has substantial real 64.35 property with adequate infrastructure and energy to support new 64.36 or expanded development; 65.1 (3) the strength and viability of the proposed development 65.2 goals, objectives, and strategies in the development plan; 65.3 (4) whether the development plan is creative and innovative 65.4 in comparison to other applications; 65.5 (5) local public and private commitment to development of a 65.6 biotechnology and health sciences industry facility or 65.7 facilities in the proposed zone and the potential cooperation of 65.8 surrounding communities; 65.9 (6) existing resources available to the proposed zone; 65.10 (7) how the designation of the zone would relate to other 65.11 economic and community development projects and to regional 65.12 initiatives or programs; 65.13 (8) how the regulatory burden will be eased for 65.14 biotechnology and health sciences industry facilities located in 65.15 the proposed zone; 65.16 (9) proposals to establish and link job creation and job 65.17 training in the biotechnology and health sciences industry with 65.18 research/educational institutions; and 65.19 (10) the extent to which the development is directed at 65.20 encouraging, and that designation of the zone is likely to 65.21 result in, the creation of high-paying jobs. 65.22 Subd. 4. [DESIGNATION SCHEDULE.] (a) The schedule in 65.23 paragraphs (b) to (e) applies to the designation of the 65.24 biotechnology and health sciences industry zone. 65.25 (b) The commissioner shall publish the form for 65.26 applications and any procedural, form, or content requirements 65.27 for applications by no later than August 1, 2003. The 65.28 commissioner may publish these requirements on the Internet, in 65.29 the State Register, or by any other means the commissioner 65.30 determines appropriate to disseminate the information to 65.31 potential applicants for designation. 65.32 (c) Applications must be submitted by October 15, 2003. 65.33 (d) The commissioner shall designate the zones by no later 65.34 than December 31, 2003. 65.35 (e) The designation of the zones takes effect January 1, 65.36 2004. 66.1 Subd. 5. [RULEMAKING EXEMPTION.] The commissioner's 66.2 actions in establishing procedures, requirements, and making 66.3 determinations to administer sections 469.310 to 469.320 are not 66.4 a rule for purposes of chapter 14 and are not subject to the 66.5 Administrative Procedure Act contained in chapter 14, and not 66.6 subject to section 14.386. 66.7 [EFFECTIVE DATE.] This section is effective the day 66.8 following final enactment. 66.9 Sec. 18. [469.315] [TAX INCENTIVES AVAILABLE IN ZONES.] 66.10 Qualified businesses that operate in a biotechnology and 66.11 health sciences industry zone, individuals who invest in a 66.12 qualified business that operates in a biotechnology and health 66.13 sciences industry zone, and property of a qualified business 66.14 located in a biotechnology and health sciences industry zone 66.15 qualify for: 66.16 (1) exemption from individual income taxes as provided 66.17 under section 469.316; 66.18 (2) exemption from corporate franchise taxes as provided 66.19 under section 469.317; 66.20 (3) exemption from the state sales and use tax and any 66.21 local sales and use taxes on qualifying purchases as provided in 66.22 section 297A.68, subdivision 37; 66.23 (4) exemption from the state sales tax on motor vehicles 66.24 and any local sales tax on motor vehicles as provided under 66.25 section 297B.03; and 66.26 (5) exemption from the property tax as provided in section 66.27 272.02, subdivision 56. 66.28 [EFFECTIVE DATE.] This section is effective the day 66.29 following final enactment. 66.30 Sec. 19. [469.316] [INDIVIDUAL INCOME TAX EXEMPTION.] 66.31 Subdivision 1. [APPLICATION.] An individual operating a 66.32 qualified business in a biotechnology and health sciences 66.33 industry zone, and an individual making a qualifying investment 66.34 in a qualified business operating in a biotechnology and health 66.35 sciences industry zone qualifies for the exemptions from taxes 66.36 imposed under chapter 290, as provided in this section. The 67.1 exemptions provided under this section apply only to the extent 67.2 that the income otherwise would be taxable under chapter 290. 67.3 Subtractions under this section from federal taxable income, 67.4 alternative minimum taxable income, or any other base subject to 67.5 tax are limited to the amount that otherwise would be included 67.6 in the tax base absent the exemption under this section. 67.7 Subd. 2. [RENTS.] An individual is exempt from the taxes 67.8 imposed under chapter 290 on net rents derived from the rental 67.9 of real or tangible personal property located in a zone to a 67.10 qualified business for a taxable year in which the zone was 67.11 designated a biotechnology and health sciences industry zone. 67.12 If tangible personal property was used both within and outside 67.13 of the zone, the exemption amount for the net rental income must 67.14 be multiplied by a fraction, the numerator of which is the 67.15 number of days the property was used in the zone and the 67.16 denominator of which is the total days. 67.17 Subd. 3. [BUSINESS INCOME.] An individual is exempt from 67.18 the taxes imposed under chapter 290 on net income from the 67.19 operation of a qualified business in a biotechnology and health 67.20 sciences industry zone. If the trade or business is carried on 67.21 within and without the zone and the individual is not a resident 67.22 of Minnesota, the exemption must be apportioned based on the 67.23 zone percentage for the taxable year. If the trade or business 67.24 is carried on within and without the zone and the individual is 67.25 a resident of Minnesota, the exemption must be apportioned based 67.26 on the zone percentage for the taxable year, except the ratios 67.27 under section 469.310, subdivision 7, clause (1), items (i) and 67.28 (ii), must use the denominators of the property and payroll 67.29 factors determined under section 290.191. No subtraction is 67.30 allowed under this section in excess of 20 percent of the sum of 67.31 the biotechnology and health sciences industry zone payroll and 67.32 the adjusted basis of the property at the time that the property 67.33 is first used in the biotechnology and health sciences industry 67.34 zone by the business. 67.35 Subd. 4. [CAPITAL GAINS.] (a) An individual is exempt from 67.36 the taxes imposed under chapter 290 on: 68.1 (1) net gain derived on a sale or exchange of real property 68.2 located in the zone to or with a qualified business. If the 68.3 property was held by the individual during a period when the 68.4 zone was not designated, the gain must be prorated based on the 68.5 percentage of time, measured in calendar days, that the real 68.6 property was held by the individual during the period the zone 68.7 designation was in effect to the total period of time the real 68.8 property was held by the individual; 68.9 (2) net gain derived on a sale or exchange of tangible 68.10 personal property used by a qualified business in the zone. If 68.11 the property was held by the individual during a period when the 68.12 zone was not designated, the gain must be prorated based on the 68.13 percentage of time, measured in calendar days, that the property 68.14 was held by the individual during the period the zone 68.15 designation was in effect to the total period of time the 68.16 property was held by the individual. If the tangible personal 68.17 property was used outside of the zone during the period of the 68.18 zone's designation, the exemption must be multiplied by a 68.19 fraction, the numerator of which is the number of days the 68.20 property was used in the zone during the time of the designation 68.21 and the denominator of which is the total days the property was 68.22 held during the time of the designation; and 68.23 (3) net gain derived on a sale of an ownership interest in 68.24 a qualified business operating in the biotechnology and health 68.25 sciences industry zone, meeting the requirements of paragraph 68.26 (b). The exemption on the gain must be multiplied by the zone 68.27 percentage of the business for the taxable year prior to the 68.28 sale. 68.29 (b) A qualified business meets the requirements of 68.30 paragraph (a), clause (3), if it is a corporation, an S 68.31 corporation, or a partnership, and for the taxable year its 68.32 biotechnology and health sciences industry zone percentage 68.33 exceeds 25 percent. For purposes of paragraph (a), clause (3), 68.34 the zone percentage must be calculated by modifying the ratios 68.35 under section 469.310, subdivision 7, clause (1), items (i) and 68.36 (ii), to use the denominators of the property and payroll 69.1 factors determined under section 290.191. Upon the request of 69.2 an individual holding an ownership interest in the entity, the 69.3 entity must certify to the owner, in writing, the biotechnology 69.4 and health sciences industry zone percentage needed to determine 69.5 the exemption. 69.6 [EFFECTIVE DATE.] This section is effective for taxable 69.7 years beginning after December 31, 2003. 69.8 Sec. 20. [469.317] [CORPORATE FRANCHISE TAX EXEMPTION.] 69.9 (a) A qualified business is exempt from taxation under 69.10 section 290.02, the alternative minimum tax under section 69.11 290.0921, and the minimum fee under section 290.0922, on the 69.12 portion of its income attributable to operations of a qualified 69.13 business within the biotechnology and health sciences industry 69.14 zone. This exemption is determined as follows: 69.15 (1) for purposes of the tax imposed under section 290.02, 69.16 by multiplying its taxable net income by its zone percentage and 69.17 subtracting the result in determining taxable income; 69.18 (2) for purposes of the alternative minimum tax under 69.19 section 290.0921, by multiplying its alternative minimum taxable 69.20 income by its zone percentage and reducing alternative minimum 69.21 taxable income by this amount; and 69.22 (3) for purposes of the minimum fee under section 290.0922, 69.23 by excluding property and payroll in the zone from the 69.24 computations of the fee. 69.25 (b) No subtraction is allowed under this section in excess 69.26 of 20 percent of the sum of the corporation's biotechnology and 69.27 health sciences industry zone payroll and the adjusted basis of 69.28 the property at the time that the property is first used in the 69.29 biotechnology and health sciences industry zone by the 69.30 corporation. 69.31 (c) This section applies only to taxable years beginning 69.32 during the duration of the zone. 69.33 [EFFECTIVE DATE.] This section is effective for taxable 69.34 years beginning after December 31, 2003. 69.35 Sec. 21. [469.319] [REPAYMENT OF TAX BENEFITS.] 69.36 Subdivision 1. [REPAYMENT OBLIGATION.] A business must 70.1 repay the amount of the tax reduction received during the two 70.2 years immediately before it ceased to operate in the zone, if 70.3 the business: 70.4 (1) received tax reductions authorized by section 469.315; 70.5 and 70.6 (2)(i) did not meet the goals specified in an agreement 70.7 entered into with the applicant that states any obligation the 70.8 qualified business must fulfill in order to be eligible for tax 70.9 benefits. The commissioner may extend for up to one year the 70.10 period for meeting any goals provided in an agreement. The 70.11 applicant may extend the period for meeting other goals by 70.12 documenting in writing the reason for the extension and 70.13 attaching a copy of the document to its next annual report to 70.14 the commissioner; or 70.15 (ii) ceased to operate its facility located within the 70.16 biotechnology and health sciences industry zone or otherwise 70.17 ceases to be or is not a qualified business. 70.18 Subd. 2. [DEFINITIONS.] (a) For purposes of this section, 70.19 the following terms have the meanings given. 70.20 (b) "Business" means any person who received tax benefits 70.21 enumerated in section 469.315. 70.22 (c) "Commissioner" means the commissioner of revenue. 70.23 Subd. 3. [DISPOSITION OR REPAYMENT.] The repayment must be 70.24 paid to the state to the extent it represents a state tax 70.25 reduction and to the county to the extent it represents a 70.26 property tax reduction. Any amount repaid to the state must be 70.27 deposited in the general fund. Any amount repaid to the county 70.28 for the property tax exemption must be distributed to the local 70.29 governments with authority to levy taxes in the zone in the same 70.30 manner provided for distribution of payment of delinquent 70.31 property taxes. Any repayment of local sales taxes must be 70.32 repaid to the city or county imposing the local sales tax. 70.33 Subd. 4. [REPAYMENT PROCEDURES.] (a) For the repayment of 70.34 taxes imposed under chapter 290 or 297A or local taxes collected 70.35 pursuant to section 297A.99, a business must file an amended 70.36 return with the commissioner of revenue and pay any taxes 71.1 required to be repaid within 30 days after ceasing to do 71.2 business in the zone. The amount required to be repaid is 71.3 determined by calculating the tax for the period or periods for 71.4 which repayment is required without regard to the exemptions and 71.5 credits allowed under section 469.315. 71.6 (b) For the repayment of taxes imposed under chapter 297B, 71.7 a business must pay any taxes required to be repaid to the motor 71.8 vehicle registrar, as agent for the commissioner of revenue, 71.9 within 30 days after ceasing to do business in the zone. 71.10 (c) For the repayment of property taxes, the county auditor 71.11 shall prepare a tax statement for the business, applying the 71.12 applicable tax extension rates for each payable year and provide 71.13 a copy to the business. The business must pay the taxes to the 71.14 county treasurer within 30 days after receipt of the tax 71.15 statement. The taxpayer may appeal the valuation and 71.16 determination of the property tax to the tax court within 30 71.17 days after receipt of the tax statement. 71.18 (d) The provisions of chapters 270 and 289A relating to the 71.19 commissioner's authority to audit, assess, and collect the tax 71.20 and to hear appeals are applicable to the repayment required 71.21 under paragraphs (a) and (b). The commissioner may impose civil 71.22 penalties as provided in chapter 289A, and the additional tax 71.23 and penalties are subject to interest at the rate provided in 71.24 section 270.75, from 30 days after ceasing to do business in the 71.25 biotechnology and health sciences industry zone until the date 71.26 the tax is paid. 71.27 (e) If a property tax is not repaid under paragraph (c), 71.28 the county treasurer shall add the amount required to be repaid 71.29 to the property taxes assessed against the property for payment 71.30 in the year following the year in which the treasurer discovers 71.31 that the business ceased to operate in the biotechnology and 71.32 health sciences industry zone. 71.33 (f) For determining the tax required to be repaid, a tax 71.34 reduction is deemed to have been received on the date that the 71.35 tax would have been due if the taxpayer had not been entitled to 71.36 the exemption. 72.1 (g) The commissioner may assess the repayment of taxes 72.2 under paragraph (d) any time within two years after the business 72.3 ceases to operate in the biotechnology and health sciences 72.4 industry zone, or within any period of limitations for the 72.5 assessment of tax under section 289A.38, whichever period is 72.6 later. 72.7 Subd. 5. [WAIVER AUTHORITY.] The commissioner may waive 72.8 all or part of a repayment, if the commissioner, in consultation 72.9 with the commissioner of trade and economic development and 72.10 appropriate officials from the local government units in which 72.11 the business is located, determines that requiring repayment of 72.12 the tax is not in the best interest of the state or the local 72.13 government units and the business ceased operating as a result 72.14 of circumstances beyond its control including, but not limited 72.15 to: 72.16 (1) a natural disaster; 72.17 (2) unforeseen industry trends; or 72.18 (3) loss of a major supplier or customer. 72.19 [EFFECTIVE DATE.] This section is effective the day 72.20 following final enactment. 72.21 Sec. 22. [469.320] [ZONE PERFORMANCE; REMEDIES.] 72.22 Subdivision 1. [REPORTING REQUIREMENT.] An applicant 72.23 receiving designation of a biotechnology and health sciences 72.24 industry zone under section 469.314 must annually report to the 72.25 commissioner on its progress in meeting the zone performance 72.26 goals under the development plan for the zone. 72.27 Subd. 2. [PROCEDURES.] For reports required by subdivision 72.28 1, the commissioner may prescribe: 72.29 (1) the required time or times by which the reports must be 72.30 filed; 72.31 (2) the form of the report; and 72.32 (3) the information required to be included in the report. 72.33 Subd. 3. [REMEDIES.] If the commissioner determines, based 72.34 on a report filed under subdivision 1 or other available 72.35 information, that a zone or subzone is failing to meet its 72.36 performance goals, the commissioner may take any actions the 73.1 commissioner determines appropriate, including modification of 73.2 the boundaries of the zone or a subzone or termination of the 73.3 zone or a subzone. Before taking any action, the commissioner 73.4 shall consult with the applicant and the affected local 73.5 government units, including notifying them of the proposed 73.6 actions to be taken. The commissioner shall publish any order 73.7 modifying a zone in the State Register and on the Internet. The 73.8 applicant may appeal the commissioner's order under the 73.9 contested case procedures of chapter 14. 73.10 Subd. 4. [EXISTING BUSINESSES.] (a) An action to remove 73.11 area from a zone or to terminate a zone under this section does 73.12 not apply to: 73.13 (1) the property tax on improvements constructed before the 73.14 first January 2 following publication of the commissioner's 73.15 order; 73.16 (2) sales tax on purchases made before the first day of the 73.17 next calendar month beginning at least 30 days after publication 73.18 of the commissioner's order; and 73.19 (3) individual income tax or corporate franchise tax 73.20 attributable to a facility that was in operation before the 73.21 publication of the commissioner's order. 73.22 (b) The tax exemptions specified in paragraph (a) terminate 73.23 on the date on which the zone expires under the original 73.24 designation. 73.25 ARTICLE 3 73.26 INCOME, FRANCHISE, AND ESTATE TAXES 73.27 Section 1. Minnesota Statutes 2002, section 10A.31, 73.28 subdivision 1, is amended to read: 73.29 Subdivision 1. [DESIGNATION.] An individual resident of 73.30 this state who files an income tax return ora renter and73.31homeownerproperty tax refund return with the commissioner of 73.32 revenue may designate on their original return that$5 be paid73.33from the general fund of the state$1 to $25, or $1 to $50 if 73.34 the return is filed jointly, be added to the tax or deducted 73.35 from the refund that would otherwise be payable by or to the 73.36 individual and paid into the state elections campaign fund.If74.1a husband and wife file a joint return, each spouse may74.2designate that $5 be paid. No individual is allowed to74.3designate $5 more than once in any year.The taxpayer may 74.4 designate that the amount be paid into the account of a 74.5 political party or into the general account. Designations made 74.6 under this section are not eligible for refund under section 74.7 290.06, subdivision 23. 74.8 [EFFECTIVE DATE.] This section is effective beginning with 74.9 designations made on income tax returns filed for tax years 74.10 beginning after December 31, 2002, and on property tax refund 74.11 returns based on property taxes payable in 2004 or rent 74.12 constituting property taxes paid in 2003. 74.13 Sec. 2. Minnesota Statutes 2002, section 10A.31, 74.14 subdivision 3, is amended to read: 74.15 Subd. 3. [FORM.] The commissioner of revenue must provide 74.16 onthe first page ofthe income tax form and the renter and 74.17 homeowner property tax refund return a space for the individual 74.18 to indicate a wish to pay$5$1 to $25 ($10$50 if filing a 74.19 joint return)from the general fund of the stateto finance 74.20 election campaigns. The form must also contain language 74.21 prepared by the commissioner that permits the individual to 74.22 direct thestate to pay the $5 (or $10 if filing a joint return)74.23 designation to: (1) one of the major political parties; (2) any 74.24 minor political party that qualifies under subdivision 3a; or 74.25 (3) all qualifying candidates as provided by subdivision 7.The74.26renter and homeowner property tax refund return must include74.27instructions that the individual filing the return may designate74.28$5 on the return only if the individual has not designated $5 on74.29the income tax return.74.30 [EFFECTIVE DATE.] This section is effective beginning with 74.31 designations made on income tax returns filed for tax years 74.32 beginning after December 31, 2002, and on property tax refund 74.33 returns based on property taxes payable in 2004 or rent 74.34 constituting property taxes paid in 2003. 74.35 Sec. 3. Minnesota Statutes 2002, section 289A.10, 74.36 subdivision 1, is amended to read: 75.1 Subdivision 1. [RETURN REQUIRED.] In the case of a 75.2 decedent who has an interest in property with a situs in 75.3 Minnesota, the personal representative must submit a Minnesota 75.4 estate tax return to the commissioner, on a form prescribed by 75.5 the commissioner, if (i) the federal gross estate exceeds 75.6 $700,000 for estates of decedents dying after December 31, 2001, 75.7 and beforeJanuary 1, 2004July 1, 2003;$850,000 for estates of75.8decedents dying after December 31, 2003, and before January 1,75.92005; $950,000 for estates of decedents dying after December 31,75.102004, and before January 1, 2006;and $1,000,000 for estates of 75.11 decedents dying afterDecember 31, 2005June 30, 2003, or (ii) a 75.12 federal estate tax return is required to be filed. 75.13 The return must contain a computation of the Minnesota 75.14 estate tax due. The return must be signed by the personal 75.15 representative. 75.16 [EFFECTIVE DATE.] This section is effective for decedents 75.17 dying after December 31, 2002. 75.18 Sec. 4. Minnesota Statutes 2002, section 290.06, 75.19 subdivision 23, is amended to read: 75.20 Subd. 23. [REFUND OF CONTRIBUTIONS TO POLITICAL PARTIES 75.21 AND CANDIDATES.] (a) A taxpayer may claim a refund equal 75.22 to one-half of the amount of the taxpayer's contributions made 75.23 in the calendar year to candidates and to a political party. 75.24 The maximum refund for an individual must not exceed$50$25 and 75.25 for a married couple, filing jointly, must not exceed$100$50. 75.26 A refund of a contribution is allowed only if the taxpayer files 75.27 a form required by the commissioner and attaches to the form a 75.28 copy of an official refund receipt form issued by the candidate 75.29 or party and signed by the candidate, the treasurer of the 75.30 candidate's principal campaign committee, or the chair or 75.31 treasurer of the party unit, after the contribution was 75.32 received. The receipt forms must be numbered, and the data on 75.33 the receipt that are not public must be made available to the 75.34 campaign finance and public disclosure board upon its request. 75.35 A claim must be filed with the commissioner no sooner than 75.36 January 1 of the calendar year in which the contribution was 76.1 made and no later than April 15 of the calendar year following 76.2 the calendar year in which the contribution was made. A 76.3 taxpayer may file only one claim per calendar year. Amounts 76.4 paid by the commissioner after June 15 of the calendar year 76.5 following the calendar year in which the contribution was made 76.6 must include interest at the rate specified in section 270.76. 76.7 (b) No refund is allowed under this subdivision for a 76.8 contribution to a candidate unless the candidate: 76.9 (1) has signed an agreement to limit campaign expenditures 76.10 as provided in section 10A.322; 76.11 (2) is seeking an office for which voluntary spending 76.12 limits are specified in section 10A.25; and 76.13 (3) has designated a principal campaign committee. 76.14 This subdivision does not limit the campaign expenditures 76.15 of a candidate who does not sign an agreement but accepts a 76.16 contribution for which the contributor improperly claims a 76.17 refund. 76.18 (c) For purposes of this subdivision, "political party" 76.19 means a major political party as defined in section 200.02, 76.20 subdivision 7, or a minor political party qualifying for 76.21 inclusion on the income tax or property tax refund form under 76.22 section 10A.31, subdivision 3a. 76.23 A "major party" or "minor party" includes the aggregate of 76.24 that party's organization within each house of the legislature, 76.25 the state party organization, and the party organization within 76.26 congressional districts, counties, legislative districts, 76.27 municipalities, and precincts. 76.28 "Candidate" means a candidate as defined in section 10A.01, 76.29 subdivision 10, except a candidate for judicial office. 76.30 "Contribution" means a gift of money. 76.31 (d) The commissioner shall make copies of the form 76.32 available to the public and candidates upon request. 76.33 (e) The following data collected or maintained by the 76.34 commissioner under this subdivision are private: the identities 76.35 of individuals claiming a refund, the identities of candidates 76.36 to whom those individuals have made contributions, and the 77.1 amount of each contribution. 77.2 (f) The commissioner shall report to the campaign finance 77.3 and public disclosure board by each August 1 a summary showing 77.4 the total number and aggregate amount of political contribution 77.5 refunds made on behalf of each candidate and each political 77.6 party. These data are public. 77.7 (g) The amount necessary to pay claims for the refund 77.8 provided in this section is appropriated from the general fund 77.9 to the commissioner of revenue. 77.10 (h) For a taxpayer who files a claim for refund via the 77.11 Internet or other electronic means, the commissioner may accept 77.12 the number on the official receipt as documentation that a 77.13 contribution was made rather than the actual receipt as required 77.14 by paragraph (a). 77.15 [EFFECTIVE DATE.] This section is effective for that 77.16 portion of any refund claim based on contributions that are made 77.17 on or after the day following final enactment. 77.18 Sec. 5. Minnesota Statutes 2002, section 290.06, 77.19 subdivision 24, is amended to read: 77.20 Subd. 24. [CREDIT FOR JOB CREATION.] (a) A corporation 77.21 that leases and operates a heavy maintenance base for aircraft 77.22 that is owned by the state of Minnesota or one of its political 77.23 subdivisions, or an engine repair facility described in section 77.24 116R.02, subdivision 6, or both, may take a credit against the 77.25 tax due under this chapter. 77.26 (b) For the first taxable year when the facility has been 77.27 in operation for at least three consecutive months, the credit 77.28 is equal to $5,000 multiplied by the number of persons employed 77.29 by the corporation on a full-time basis at the facility on the 77.30 last day of the taxable year, not to exceed the number of 77.31 persons employed by the corporation on a full-time basis at the 77.32 facility on the date 90 days before the last day of the taxable 77.33 year. For each of the succeeding four taxable years, the credit 77.34 is equal to $5,000 multiplied by the number of persons employed 77.35 by the corporation on a full-time basis at the facility on the 77.36 last day of the taxable year, not to exceed the number of 78.1 persons employed by the corporation on a full-time basis at the 78.2 facility on the date 90 days before the last day of the taxable 78.3 year. 78.4 (c) For the first taxable year in which the credit is 78.5 allowed for the facility, the credit must not exceed 80 percent 78.6 of the wages paid to or incurred for persons employed by the 78.7 taxpayer at the facility during the taxable year. For the 78.8 succeeding four taxable years, the credit must not exceed 20 78.9 percent of the wages paid to or incurred for persons employed by 78.10 the taxpayer at the facility during the taxable year. For 78.11 purposes of this section, "wages" has the meaning given under 78.12 section 3121(b) of the Internal Revenue Code, except the 78.13 limitation to the contribution and benefit base does not apply. 78.14 (d) If the credit provided under this subdivision exceeds 78.15 the tax liability of the corporation for the taxable year, the 78.16 excess amount of the credit may be carried over to each of the 78.17ten20 taxable years succeeding the taxable year. The entire 78.18 amount of the credit must be carried to the earliest taxable 78.19 year to which the amount may be carried. The unused portion of 78.20 the credit must be carried to the following taxable year. No 78.21 credit may be carried to a taxable year more thanten20 years 78.22 after the taxable year in which the credit was earned. 78.23 (e) if an unused portion of the credit remains at the end 78.24 of the carryover period under paragraph (d), the commissioner 78.25 shall refund the unused portion to the taxpayer. The provisions 78.26 of this paragraph do not apply if the corporation that earned 78.27 the credit under this subdivision or a successor in interest to 78.28 the corporation filed for bankruptcy protection. 78.29 [EFFECTIVE DATE.] This section is effective for taxable 78.30 years beginning after December 31, 2003. 78.31 Sec. 6. Minnesota Statutes 2002, section 290.06, is 78.32 amended by adding a subdivision to read: 78.33 Subd. 29. [REGIONAL INVESTMENT CREDIT.] (a) A credit is 78.34 allowed against the tax imposed by this chapter for investment 78.35 in a qualifying regional angel investment network fund. The 78.36 credit equals 25 percent of the taxpayer's investment made in 79.1 the fund for the taxable year, but not to exceed the lesser of: 79.2 (1) the liability for tax under this chapter, including the 79.3 applicable alternative minimum tax; or 79.4 (2) the amount of the certificate under paragraph (c) 79.5 provided to the taxpayer by the fund. 79.6 (b) For purposes of this subdivision, a regional angel 79.7 investment network fund means a pool investment fund that: 79.8 (1) is organized as a limited liability company and 79.9 consists of members who are accredited investors within the 79.10 meaning of Regulation D of the Securities and Exchange 79.11 Commission, Code of Federal Regulations, title 17, section 79.12 230.501(a); and 79.13 (2) primarily makes equity investments in emerging and 79.14 expanding small businesses as defined by the Small Business 79.15 Administration that are located in local communities in 79.16 Minnesota outside of the metropolitan area as defined in section 79.17 473.121, subdivision 2, and does not make investments in 79.18 residential real estate. 79.19 (c) Regional angel investment network funds may apply to 79.20 the commissioner of trade and economic development for 79.21 certification as a qualifying regional angel investment network 79.22 fund. The application must be in the form and made under 79.23 procedures specified by the commissioner of trade and economic 79.24 development. The commissioner of trade and economic development 79.25 may certify up to ten qualifying funds and provide certificates 79.26 entitling investors in the funds to credits under this 79.27 subdivision of up to $250,000 for each fund. The commissioner 79.28 of trade and economic development must not issue a total amount 79.29 of certificates for all funds of more than $2,500,000. In 79.30 awarding certificates under this paragraph, the commissioner of 79.31 trade and economic development shall generally award them to 79.32 qualified applicants in the order in which the applications are 79.33 received, but shall also seek to certify funds that are broadly 79.34 dispersed across the entire state outside of the metropolitan 79.35 area, as defined in section 473.121, subdivision 2. 79.36 (d) The commissioner may require a taxpayer to provide a 80.1 copy of the credit certificate under paragraph (c) to verify the 80.2 taxpayer's entitlement to a credit under this subdivision. 80.3 (e) If the amount of the credit under this subdivision for 80.4 any taxable year exceeds the limitation under paragraph (a), 80.5 clause (1), the excess is a credit carryover to each of the 15 80.6 succeeding taxable years. The entire amount of the excess 80.7 unused credit for the taxable year must be carried first to the 80.8 earliest of the taxable years to which the credit may be carried 80.9 and then to each successive year to which the credit may be 80.10 carried. The amount of the unused credit which may be added 80.11 under this paragraph may not exceed the taxpayer's liability for 80.12 tax less the credit for the taxable year. 80.13 [EFFECTIVE DATE.] This section is effective the day 80.14 following final enactment and for taxable years beginning after 80.15 December 31, 2002. It applies to investments made after the 80.16 fund has been certified by the commissioner of trade and 80.17 economic development under this section. 80.18 Sec. 7. Minnesota Statutes 2002, section 290.091, 80.19 subdivision 2, is amended to read: 80.20 Subd. 2. [DEFINITIONS.] For purposes of the tax imposed by 80.21 this section, the following terms have the meanings given: 80.22 (a) "Alternative minimum taxable income" means the sum of 80.23 the following for the taxable year: 80.24 (1) the taxpayer's federal alternative minimum taxable 80.25 income as defined in section 55(b)(2) of the Internal Revenue 80.26 Code; 80.27 (2) the taxpayer's itemized deductions allowed in computing 80.28 federal alternative minimum taxable income, but excluding: 80.29 (i) the charitable contribution deduction under section 170 80.30 of the Internal Revenue Codeto the extent that the deduction80.31exceeds 1.3 percent of adjusted gross income, as defined in80.32section 62 of the Internal Revenue Code; 80.33 (ii) the medical expense deduction; 80.34 (iii) the casualty, theft, and disaster loss deduction; and 80.35 (iv) the impairment-related work expenses of a disabled 80.36 person; 81.1 (3) for depletion allowances computed under section 613A(c) 81.2 of the Internal Revenue Code, with respect to each property (as 81.3 defined in section 614 of the Internal Revenue Code), to the 81.4 extent not included in federal alternative minimum taxable 81.5 income, the excess of the deduction for depletion allowable 81.6 under section 611 of the Internal Revenue Code for the taxable 81.7 year over the adjusted basis of the property at the end of the 81.8 taxable year (determined without regard to the depletion 81.9 deduction for the taxable year); 81.10 (4) to the extent not included in federal alternative 81.11 minimum taxable income, the amount of the tax preference for 81.12 intangible drilling cost under section 57(a)(2) of the Internal 81.13 Revenue Code determined without regard to subparagraph (E); 81.14 (5) to the extent not included in federal alternative 81.15 minimum taxable income, the amount of interest income as 81.16 provided by section 290.01, subdivision 19a, clause (1); and 81.17 (6) the amount of addition required by section 290.01, 81.18 subdivision 19a, clause (7); 81.19 less the sum of the amounts determined under the following: 81.20 (1) interest income as defined in section 290.01, 81.21 subdivision 19b, clause (1); 81.22 (2) an overpayment of state income tax as provided by 81.23 section 290.01, subdivision 19b, clause (2), to the extent 81.24 included in federal alternative minimum taxable income; 81.25 (3) the amount of investment interest paid or accrued 81.26 within the taxable year on indebtedness to the extent that the 81.27 amount does not exceed net investment income, as defined in 81.28 section 163(d)(4) of the Internal Revenue Code. Interest does 81.29 not include amounts deducted in computing federal adjusted gross 81.30 income; and 81.31 (4) amounts subtracted from federal taxable income as 81.32 provided by section 290.01, subdivision 19b, clause (12). 81.33 In the case of an estate or trust, alternative minimum 81.34 taxable income must be computed as provided in section 59(c) of 81.35 the Internal Revenue Code. 81.36 (b) "Investment interest" means investment interest as 82.1 defined in section 163(d)(3) of the Internal Revenue Code. 82.2 (c) "Tentative minimum tax" equals 6.4 percent of 82.3 alternative minimum taxable income after subtracting the 82.4 exemption amount determined under subdivision 3. 82.5 (d) "Regular tax" means the tax that would be imposed under 82.6 this chapter (without regard to this section and section 82.7 290.032), reduced by the sum of the nonrefundable credits 82.8 allowed under this chapter. 82.9 (e) "Net minimum tax" means the minimum tax imposed by this 82.10 section. 82.11 [EFFECTIVE DATE.] This section is effective for taxable 82.12 years beginning after December 31, 2002. 82.13 Sec. 8. Minnesota Statutes 2002, section 291.03, 82.14 subdivision 1, is amended to read: 82.15 Subdivision 1. [TAX AMOUNT.] The tax imposed shall be an 82.16 amount equal to the proportion of the maximum credit computed 82.17 under section 2011 of the Internal Revenue Code for state death 82.18 taxes as the Minnesota gross estate bears to the value of the 82.19 federal gross estate. For a resident decedent, the tax shall be 82.20 the maximum credit computed under section 2011 of the Internal 82.21 Revenue Code reduced by the amount of the death tax paid the 82.22 other state and credited against the federal estate tax if this 82.23 results in a larger amount of tax than the proportionate amount 82.24 of the credit. Thetax determinedmaximum credit under this 82.25 paragraph shall not be greater than the federal estate tax 82.26 computed under section 2001 of the Internal Revenue Code after 82.27 the allowance of the federal credits allowed under section 2010 82.28 of the Internal Revenue Code of 1986,as amended through82.29December 31, 2000determined as if the decedent died during 82.30 calendar year 2003. 82.31 [EFFECTIVE DATE.] This section is effective for decedents 82.32 dying after June 30, 2003. 82.33 Sec. 9. [APPROPRIATION.] 82.34 (a) $100,000 is appropriated from the general fund to the 82.35 commissioner of revenue to make grants to one or more nonprofit 82.36 organizations, qualifying under section 501(c)(3) of the 83.1 Internal Revenue Code of 1986, to coordinate, facilitate, 83.2 encourage, and aid in the provision of taxpayer assistance 83.3 services. This appropriation is available for fiscal years 2004 83.4 and 2005 and does not become a part of the base. 83.5 (b) "Taxpayer assistance services" mean accounting and tax 83.6 preparation services provided by volunteers to low-income and 83.7 disadvantaged Minnesota residents to help them file federal and 83.8 state income tax returns and Minnesota property tax refund 83.9 claims and to provide personal representation before the 83.10 department of revenue and Internal Revenue Service. 83.11 ARTICLE 4 83.12 SALES AND USE TAXES 83.13 Section 1. Minnesota Statutes 2002, section 168.27, 83.14 subdivision 4a, is amended to read: 83.15 Subd. 4a. [LIMITED USED VEHICLE LICENSE.] A limited used 83.16 vehicle license shall be provided to a nonprofit charitable 83.17 organization that qualifies for tax exemption under section 83.18 501(c)(3) of the Internal Revenue Code whose primary business in 83.19 the transfer of vehicles is to raise funds for the corporation, 83.20 who acquires vehicles for sale through donation, and who uses a 83.21 licensed motor vehicle auctioneer to sell vehicles to retail 83.22 customers. This license does not apply to educational 83.23 institutions whose primary purpose is to train students in the 83.24 repair, maintenance, and sale of motor vehicles. A limited used 83.25 vehicle license allows the organization to accept assignment of 83.26 vehicles without the requirement to transfer title as provided 83.27 in section 168A.10 until sold to a retail customer or licensed 83.28 motor vehicle dealer. Limited used vehicle license holders are 83.29 not entitled to dealer plates, and shall report all vehicles 83.30 held for resale to the department of public safety in a manner 83.31 and time prescribed by the department. 83.32 [EFFECTIVE DATE.] This section is effective for sales made 83.33 after June 30, 2003. 83.34 Sec. 2. Minnesota Statutes 2002, section 168A.03, is 83.35 amended to read: 83.36 168A.03 [EXEMPT VEHICLES.] 84.1 Subdivision 1. [EXEMPTIONS.] The registrar shall not issue 84.2 a certificate of title for: 84.3 (1) a vehicle owned by the United States; 84.4 (2)a vehicle owned by a manufacturer or dealer and held84.5for sale, even though incidentally moved on the highway or used84.6pursuant to section 168.27 or 168.28, or a vehicle used by a84.7manufacturer solely for testing;84.8(3)a vehicle owned by a nonresident and not required by 84.9 law to be registered in this state; 84.10(4)(3) a vehicle owned by a nonresident and regularly 84.11 engaged in the interstate transportation of persons or property 84.12 for which a currently effective certificate of title has been 84.13 issued in another state; 84.14(5)(4) a vehicle moved solely by animal power; 84.15(6)(5) an implement of husbandry; 84.16(7)(6) special mobile equipment; 84.17(8)(7) a self-propelled wheelchair or invalid tricycle; 84.18(9)(8) a trailer (i) having a gross weight of 4,000 pounds 84.19 or less unless a secured party holds an interest in the trailer 84.20 or a certificate of title was previously issued by this state or 84.21 any other state or (ii) designed primarily for agricultural 84.22 purposes except recreational equipment or a manufactured home, 84.23 both as defined in section 168.011, subdivisions 8 and 25; 84.24(10)(9) a snowmobile. 84.25 Subd. 2. [DEALERS.] No certificate of title need be 84.26 obtained for a vehicle owned by a manufacturer or dealer and 84.27 held for sale, even though incidentally moved on the highway or 84.28 used pursuant to section 168.27 or 168.28, or a vehicle used by 84.29 a manufacturer solely for testing. 84.30 [EFFECTIVE DATE.] This section is effective for sales made 84.31 after June 30, 2003. 84.32 Sec. 3. Minnesota Statutes 2002, section 289A.18, 84.33 subdivision 4, is amended to read: 84.34 Subd. 4. [SALES AND USE TAX RETURNS.] (a) Sales and use 84.35 tax returns must be filed on or before the 20th day of the month 84.36 following the close of the preceding reporting period, except 85.1 that annual use tax returns provided for under section 289A.11, 85.2 subdivision 1, must be filed by April 15 following the close of 85.3 the calendar year, in the case of individuals. Annual use tax 85.4 returns of businesses, including sole proprietorships, and 85.5 annual sales tax returns must be filed by February 5 following 85.6 the close of the calendar year. 85.7 (b) Returns for the June reporting period filed by 85.8 retailers required to remit their June liability under section 85.9 289A.20, subdivision 4, paragraph (b), are due on or before 85.10 August 20. 85.11 (c) If a retailer has an average sales and use tax 85.12 liability, including local sales and use taxes administered by 85.13 the commissioner, equal to or less than $500 per month in any 85.14 quarter of a calendar year, and has substantially complied with 85.15 the tax laws during the preceding four calendar quarters, the 85.16 retailer may request authorization to file and pay the taxes 85.17 quarterly in subsequent calendar quarters. The authorization 85.18 remains in effect during the period in which the retailer's 85.19 quarterly returns reflect sales and use tax liabilities of less 85.20 than $1,500 and there is continued compliance with state tax 85.21 laws. 85.22 (d) If a retailer has an average sales and use tax 85.23 liability, including local sales and use taxes administered by 85.24 the commissioner, equal to or less than $100 per month during a 85.25 calendar year, and has substantially complied with the tax laws 85.26 during that period, the retailer may request authorization to 85.27 file and pay the taxes annually in subsequent years. The 85.28 authorization remains in effect during the period in which the 85.29 retailer's annual returns reflect sales and use tax liabilities 85.30 of less than $1,200 and there is continued compliance with state 85.31 tax laws. 85.32 (e) The commissioner may also grant quarterly or annual 85.33 filing and payment authorizations to retailers if the 85.34 commissioner concludes that the retailers' future tax 85.35 liabilities will be less than the monthly totals identified in 85.36 paragraphs (c) and (d). An authorization granted under this 86.1 paragraph is subject to the same conditions as an authorization 86.2 granted under paragraphs (c) and (d). 86.3 (f) A taxpayer who is a materials supplier may report gross 86.4 receipts either on: 86.5 (1) the cash basis as the consideration is received; or 86.6 (2) the accrual basis as sales are made. 86.7 As used in this paragraph, "materials supplier" means a person 86.8 who provides materials for the improvement of real property; who 86.9 is primarily engaged in the sale of lumber and building 86.10 materials-related products to owners, contractors, 86.11 subcontractors, repairers, or consumers; who is authorized to 86.12 file a mechanics lien upon real property and improvements under 86.13 chapter 514; and who files with the commissioner an election to 86.14 file sales and use tax returns on the basis of this paragraph. 86.15 (g) Notwithstanding paragraphs (a) to (f), a seller that is 86.16 not a Model 1, 2, or 3 seller, as those terms are used in the 86.17 Streamlined Sales and Use Tax Agreement, that does not have a 86.18 legal requirement to register in Minnesota, and that is 86.19 registered under the agreement, must file a return by February 5 86.20 following the close of the calendar year in which the seller 86.21 initially registers, and must file subsequent returns on 86.22 February 5 on an annual basis in succeeding years. 86.23 Additionally, a return must be submitted on or before the 20th 86.24 day of the month following any month by which sellers have 86.25 accumulated state and local tax funds for the state in the 86.26 amount of $1,000 or more. 86.27 [EFFECTIVE DATE.] This section is effective for sales and 86.28 purchases made on or after January 1, 2004. 86.29 Sec. 4. Minnesota Statutes 2002, section 289A.20, 86.30 subdivision 4, is amended to read: 86.31 Subd. 4. [SALES AND USE TAX.] (a) The taxes imposed by 86.32 chapter 297A are due and payable to the commissioner monthly on 86.33 or before the 20th day of the month following the month in which 86.34 the taxable event occurred, or following another reporting 86.35 period as the commissioner prescribes or as allowed under 86.36 section 289A.18, subdivision 4, paragraph (f) or (g), except 87.1 that use taxes due on an annual use tax return as provided under 87.2 section 289A.11, subdivision 1, are payable by April 15 87.3 following the close of the calendar year. 87.4 (b)For a fiscal year ending before July 1, 2002,A vendor 87.5 having a liability of $120,000 or more during a fiscal year 87.6 ending June 30 must remit the June liability for the next year 87.7 in the following manner: 87.8 (1) Two business days before June 30 of the year, the 87.9 vendor must remit7585 percent of the estimated June liability 87.10 to the commissioner. 87.11 (2) On or before August 20 of the year, the vendor must pay 87.12 any additional amount of tax not remitted in June. 87.13 (c) A vendor having a liability of $120,000 or more during 87.14 a fiscal year ending June 30 must remit all liabilities on 87.15 returns due for periods beginning in the subsequent calendar 87.16 year by electronic means on or before the 20th day of the month 87.17 following the month in which the taxable event occurred, or on 87.18 or before the 20th day of the month following the month in which 87.19 the sale is reported under section 289A.18, subdivision 4, 87.20 except for7585 percent of the estimated June liability, which 87.21 is due two business days before June 30. The remaining amount 87.22 of the June liability is due on August 20. 87.23 [EFFECTIVE DATE.] This section, paragraph (a), is effective 87.24 for sales and purchases made on or after January 1, 2004. The 87.25 rest of this section is effective for payments made after 87.26 December 31, 2003. 87.27 Sec. 5. Minnesota Statutes 2002, section 289A.31, 87.28 subdivision 7, is amended to read: 87.29 Subd. 7. [SALES AND USE TAX.] (a) The sales and use tax 87.30 required to be collected by the retailer under chapter 297A 87.31 constitutes a debt owed by the retailer to Minnesota, and the 87.32 sums collected must be held as a special fund in trust for the 87.33 state of Minnesota. 87.34 A retailer who does not maintain a place of business within 87.35 this state as defined by section 297A.66, subdivision 1, shall 87.36 not be indebted to Minnesota for amounts of tax that it was 88.1 required to collect but did not collect unless the retailer knew 88.2 or had been advised by the commissioner of its obligation to 88.3 collect the tax. 88.4 (b) The use tax required to be paid by a purchaser is a 88.5 debt owed by the purchaser to Minnesota. 88.6 (c) The tax imposed by chapter 297A, and interest and 88.7 penalties, is a personal debt of the individual required to file 88.8 a return from the time the liability arises, irrespective of 88.9 when the time for payment of that liability occurs. The debt 88.10 is, in the case of the executor or administrator of the estate 88.11 of a decedent and in the case of a fiduciary, that of the 88.12 individual in an official or fiduciary capacity unless the 88.13 individual has voluntarily distributed the assets held in that 88.14 capacity without reserving sufficient assets to pay the tax, 88.15 interest, and penalties, in which case the individual is 88.16 personally liable for the deficiency. 88.17 (d) Liability for payment of sales and use taxes includes 88.18 any responsible person or entity described in the personal 88.19 liability provisions of section 270.101. 88.20 (e) Any amounts collected, even if erroneously or illegally 88.21 collected, from a purchaser under a representation that they are 88.22 taxes imposed under chapter 297A are state funds from the time 88.23 of collection and must be reported on a return filed with the 88.24 commissioner. 88.25(f) The tax imposed under chapter 297A on sales of tickets88.26to the premises of or events sponsored by the state agricultural88.27society and conducted on the state fairgrounds during the period88.28of the annual state fair may be retained by the state88.29agricultural society if the funds are used and matched as88.30required under section 37.13, subdivision 2.88.31 [EFFECTIVE DATE.] This section is effective for sales taxes 88.32 collected on sales occurring after June 30, 2003. 88.33 Sec. 6. Minnesota Statutes 2002, section 289A.40, 88.34 subdivision 2, is amended to read: 88.35 Subd. 2. [BAD DEBT LOSS.] If a claim relates to an 88.36 overpayment because of a failure to deduct a loss due to a bad 89.1 debt or to a security becoming worthless, the claim is 89.2 considered timely if filed within seven years from the date 89.3 prescribed for the filing of the return. A claim relating to an 89.4 overpayment of taxes under chapter 297A must be filed within 89.5 3-1/2 years from the date prescribed for filing the return, plus 89.6 any extensions granted for filing the return, but only if filed 89.7 within the extended time, or within one year from the date the89.8taxpayer's federal income tax return is timely filed claiming89.9the bad debt deduction, whichever period expires later. The 89.10 refund or credit is limited to the amount of overpayment 89.11 attributable to the loss. "Bad debt" for purposes of this 89.12 subdivision, has the same meaning as that term is used in United 89.13 States Code, title 26, section 166, except that the following 89.14 are excluded from the calculation of bad debt: financing 89.15 charges or interest; sales or use taxes charged on the purchase 89.16 price; uncollectible amounts on property that remain in the 89.17 possession of the seller until the full purchase price is paid; 89.18 expenses incurred in attempting to collect any debt; and 89.19 repossessed property. 89.20 [EFFECTIVE DATE.] This section is effective for sales and 89.21 purchases made on or after January 1, 2004. 89.22 Sec. 7. Minnesota Statutes 2002, section 289A.50, is 89.23 amended by adding a subdivision to read: 89.24 Subd. 2b. [CERTIFIED SERVICE PROVIDER; BAD DEBT CLAIM.] A 89.25 certified service provider, as defined in section 297A.995, 89.26 subdivision 2, may claim on behalf of a taxpayer that is its 89.27 client any bad debt allowance provided by section 297A.81. The 89.28 certified service provider must credit or refund to its client 89.29 the full amount of any bad debt allowance or refund received. 89.30 [EFFECTIVE DATE.] This section is effective for sales and 89.31 purchases made on or after January 1, 2004. 89.32 Sec. 8. Minnesota Statutes 2002, section 289A.50, is 89.33 amended by adding a subdivision to read: 89.34 Subd. 2c. [NOTICE FROM PURCHASER TO VENDOR REQUESTING 89.35 REFUND.] (a) If a vendor has collected from a purchaser a tax on 89.36 a transaction that is not subject to the tax imposed by chapter 90.1 297A, the purchaser may seek from the vendor a return of 90.2 over-collected sales or use taxes as follows: 90.3 (1) the purchaser must provide written notice to the 90.4 vendor; 90.5 (2) the notice to the vendor must contain the information 90.6 necessary to determine the validity of the request; and 90.7 (3) no cause of action against the vendor accrues until the 90.8 vendor has had 60 days to respond to the written notice. 90.9 (b) In connection with a purchaser's request from a vendor 90.10 of over-collected sales or use taxes, a vendor is presumed to 90.11 have a reasonable business practice, if in the collection of 90.12 such sales or use taxes, the vendor: (1) uses a certified 90.13 service provider as defined in section 297A.995, a certified 90.14 automated system, as defined in section 297A.995, or a 90.15 proprietary system that is certified by the state; and (2) has 90.16 remitted to the state all taxes collected less any deductions, 90.17 credits, or collection allowances. 90.18 [EFFECTIVE DATE.] This section is effective for sales and 90.19 purchases made on or after January 1, 2004. 90.20 Sec. 9. Minnesota Statutes 2002, section 289A.56, 90.21 subdivision 4, is amended to read: 90.22 Subd. 4. [CAPITAL EQUIPMENT AND CERTAIN BUILDING MATERIALS 90.23 REFUNDS; REFUNDS TO PURCHASERS.] Notwithstanding subdivision 3, 90.24 for refunds payable undersectionsections 297A.75, subdivision 90.25 1,clauses (1), (2), (3), and (5), interest is computed from the90.26date the refund claim is filed with the commissioner. For90.27refunds payable under sectionand 289A.50, subdivision 2a, 90.28 interest is computed fromthe 20th day of the month following90.29the month of the invoice date for the purchase which is the90.30subject of the refund, if the refund claim includes a detailed90.31schedule of purchases made during each of the periods in the90.32claim. If the refund claim submitted does not contain a90.33schedule reflecting purchases made in each period, interest is90.34computed from the date the claim was filed90 days after the 90.35 refund claim is filed with the commissioner. 90.36 [EFFECTIVE DATE.] This section is effective for refund 91.1 claims filed on or after April 1, 2003. 91.2 Sec. 10. Minnesota Statutes 2002, section 289A.60, 91.3 subdivision 15, is amended to read: 91.4 Subd. 15. [ACCELERATED PAYMENT OF JUNE SALES TAX 91.5 LIABILITY; PENALTY FOR UNDERPAYMENT.] (a) For payments made 91.6 after December 31, 2003, if a vendor is required by law to 91.7 submit an estimation of June sales tax liabilities and6285 91.8 percent payment by a certain date, the vendor shall pay a 91.9 penalty equal to ten percent of the amount of actual June 91.10 liability required to be paid in June less the amount remitted 91.11 in June. The penalty must not be imposed, however, if the 91.12 amount remitted in June equals the lesser of6285 percent of 91.13 the preceding May's liability or6285 percent of the average 91.14 monthly liability for the previous calendar year. 91.15 (b) For payments made after December 31, 2002, and before 91.16 January 1, 2004, if a vendor is required by law to submit an 91.17 estimation of June sales tax liabilities and 75 percent payment 91.18 by a certain date, the vendor shall pay a penalty equal to ten 91.19 percent of the amount of actual June liability required to be 91.20 paid in June less the amount remitted in June. The penalty must 91.21 not be imposed, however, if the amount remitted in June equals 91.22 the lesser of 75 percent of the preceding May's liability or 75 91.23 percent of the average monthly liability for the previous 91.24 calendar year. 91.25 [EFFECTIVE DATE.] Paragraph (a) of this section is 91.26 effective for payments made after December 31, 2003. Paragraph 91.27 (b) of this section is effective for payments made after 91.28 December 31, 2002, and before January 1, 2004. 91.29 Sec. 11. Minnesota Statutes 2002, section 297A.61, 91.30 subdivision 3, is amended to read: 91.31 Subd. 3. [SALE AND PURCHASE.] (a) "Sale" and "purchase" 91.32 include, but are not limited to, each of the transactions listed 91.33 in this subdivision. 91.34 (b) Sale and purchase include: 91.35 (1) any transfer of title or possession, or both, of 91.36 tangible personal property, whether absolutely or conditionally, 92.1 for a consideration in money or by exchange or barter; and 92.2 (2) the leasing of or the granting of a license to use or 92.3 consume, for a consideration in money or by exchange or barter, 92.4 tangible personal property, other than a manufactured home used 92.5 for residential purposes for a continuous period of 30 days or 92.6 more. 92.7 (c) Sale and purchase include the production, fabrication, 92.8 printing, or processing of tangible personal property for a 92.9 consideration for consumers who furnish either directly or 92.10 indirectly the materials used in the production, fabrication, 92.11 printing, or processing. 92.12 (d) Sale and purchase include the preparing for a 92.13 consideration of food. Notwithstanding section 297A.67, 92.14 subdivision 2, taxable food includes, but is not limited to, the 92.15 following: 92.16 (1) prepared food sold by the retailer; 92.17 (2) soft drinks; 92.18 (3) candy; and 92.19 (4) all food sold through vending machines. 92.20 (e) A sale and a purchase includes the furnishing for a 92.21 consideration of electricity, gas, water, or steam for use or 92.22 consumption within this state. 92.23 (f) A sale and a purchase includes the transfer for a 92.24 consideration of prewritten computer software whether delivered 92.25 electronically, by load and leave, or otherwise. 92.26 (g) A sale and a purchase includes the furnishing for a 92.27 consideration of the following services: 92.28 (1) the privilege of admission to places of amusement, 92.29 recreational areas, or athletic events, and the making available 92.30 of amusement devices, tanning facilities, reducing salons, steam 92.31 baths, turkish baths, health clubs, and spas or athletic 92.32 facilities; but not including separately stated fees or charges 92.33 for pen-raised game or poultry at a game farm or hunting 92.34 preserve; 92.35 (2) lodging and related services by a hotel, rooming house, 92.36 resort, campground, motel, or trailer camp and the granting of 93.1 any similar license to use real property other than the renting 93.2 or leasing of it for a continuous period of 30 days or more; 93.3 (3) parking services, whether on a contractual, hourly, or 93.4 other periodic basis, except for parking at a meter; 93.5 (4) the granting of membership in a club, association, or 93.6 other organization if: 93.7 (i) the club, association, or other organization makes 93.8 available for the use of its members sports and athletic 93.9 facilities, without regard to whether a separate charge is 93.10 assessed for use of the facilities; and 93.11 (ii) use of the sports and athletic facility is not made 93.12 available to the general public on the same basis as it is made 93.13 available to members. 93.14 Granting of membership means both onetime initiation fees and 93.15 periodic membership dues but does not include separately stated 93.16 fees or charges for pen-raised game or poultry by a game farm or 93.17 hunting preserve. Sports and athletic facilities include golf 93.18 courses; tennis, racquetball, handball, and squash courts; 93.19 basketball and volleyball facilities; running tracks; exercise 93.20 equipment; swimming pools; and other similar athletic or sports 93.21 facilities; 93.22 (5) delivery of aggregate materials and concrete block by a 93.23 third party if the delivery would be subject to the sales tax if 93.24 provided by the seller of the aggregate material or concrete 93.25 block; and 93.26 (6) services as provided in this clause: 93.27 (i) laundry and dry cleaning services including cleaning, 93.28 pressing, repairing, altering, and storing clothes, linen 93.29 services and supply, cleaning and blocking hats, and carpet, 93.30 drapery, upholstery, and industrial cleaning. Laundry and dry 93.31 cleaning services do not include services provided by coin 93.32 operated facilities operated by the customer; 93.33 (ii) motor vehicle washing, waxing, and cleaning services, 93.34 including services provided by coin operated facilities operated 93.35 by the customer, and rustproofing, undercoating, and towing of 93.36 motor vehicles; 94.1 (iii) building and residential cleaning, maintenance, and 94.2 disinfecting and exterminating services; 94.3 (iv) detective, security, burglar, fire alarm, and armored 94.4 car services; but not including services performed within the 94.5 jurisdiction they serve by off-duty licensed peace officers as 94.6 defined in section 626.84, subdivision 1, or services provided 94.7 by a nonprofit organization for monitoring and electronic 94.8 surveillance of persons placed on in-home detention pursuant to 94.9 court order or under the direction of the Minnesota department 94.10 of corrections; 94.11 (v) pet grooming services; 94.12 (vi) lawn care, fertilizing, mowing, spraying and sprigging 94.13 services; garden planting and maintenance; tree, bush, and shrub 94.14 pruning, bracing, spraying, and surgery; indoor plant care; 94.15 tree, bush, shrub, and stump removal; and tree trimming for 94.16 public utility lines. Services performed under a construction 94.17 contract for the installation of shrubbery, plants, sod, trees, 94.18 bushes, and similar items are not taxable; 94.19 (vii) massages, except when provided by a licensed health 94.20 care facility or professional or upon written referral from a 94.21 licensed health care facility or professional for treatment of 94.22 illness, injury, or disease; and 94.23 (viii) the furnishing of lodging, board, and care services 94.24 for animals in kennels and other similar arrangements, but 94.25 excluding veterinary and horse boarding services. 94.26 In applying the provisions of this chapter, the terms 94.27 "tangible personal property" and "sales at retail" include 94.28 taxable services and the provision of taxable services, unless 94.29 specifically provided otherwise. Services performed by an 94.30 employee for an employer are not taxable. Services performed by 94.31 a partnership or association for another partnership or 94.32 association are not taxable if one of the entities owns or 94.33 controls more than 80 percent of the voting power of the equity 94.34 interest in the other entity. Services performed between 94.35 members of an affiliated group of corporations are not taxable. 94.36 For purposes of this section, "affiliated group of corporations" 95.1 includes those entities that would be classified as members of 95.2 an affiliated group under United States Code, title 26, section 95.3 1504, and that are eligible to file a consolidated tax return 95.4 for federal income tax purposes. 95.5 (h) A sale and a purchase includes the furnishing for a 95.6 consideration of tangible personal property or taxable services 95.7 by the United States or any of its agencies or 95.8 instrumentalities, or the state of Minnesota, its agencies, 95.9 instrumentalities, or political subdivisions. 95.10 (i) A sale and a purchase includes the furnishing for a 95.11 consideration of telecommunications services, including cable 95.12 television services and direct satellite services. 95.13 Telecommunications services are taxed to the extent allowed 95.14 under federal lawif those services:. 95.15(1) either (i) originate and terminate in this state; or95.16(ii) originate in this state and terminate outside the state and95.17the service is charged to a telephone number customer located in95.18this state or to the account of any transmission instrument in95.19this state; or (iii) originate outside this state and terminate95.20in this state and the service is charged to a telephone number95.21customer located in this state or to the account of any95.22transmission instrument in this state; or95.23(2) are rendered by providing a private communications95.24service for which the customer has one or more locations within95.25Minnesota connected to the service and the service is charged to95.26a telephone number customer located in this state or to the95.27account of any transmission instrument in this state.95.28All charges for mobile telecommunications services, as95.29defined in United States Code, title 4, section 124, are deemed95.30to be provided by the customer's home service provider and95.31sourced to the customer's place of primary use and are subject95.32to tax based upon the customer's place of primary use in95.33accordance with the Mobile Telecommunications Sourcing Act,95.34United States Code, title 4, sections 116 to 126. All other95.35definitions and provisions of the Mobile Telecommunications95.36Sourcing Act as provided in United States Code, title 4, are96.1hereby adopted.96.2 (j) A sale and a purchase includes the furnishing for a 96.3 consideration of installation if the installation charges would 96.4 be subject to the sales tax if the installation were provided by 96.5 the seller of the item being installed. 96.6 (k) A sale and a purchase includes the rental of a vehicle 96.7 by a motor vehicle dealer to a customer when (1) the vehicle is 96.8 rented by the customer for a consideration, or (2) the motor 96.9 vehicle dealer is reimbursed pursuant to a service contract as 96.10 defined in Minnesota Statutes, section 65B.29, subdivision 1, 96.11 clause (1). 96.12 [EFFECTIVE DATE.] This section is effective for sales and 96.13 purchases made on or after January 1, 2004, except that the 96.14 amendments in paragraph (g) and the addition of paragraph (k) 96.15 are effective for sales and purchases made after June 30, 2003. 96.16 Sec. 12. Minnesota Statutes 2002, section 297A.61, 96.17 subdivision 7, is amended to read: 96.18 Subd. 7. [SALES PRICE.] (a) "Sales price" means the 96.19 measure subject to sales tax, and means the total amount of 96.20 consideration, including cash, credit, personal property, and 96.21 services, for which personal property or services are sold, 96.22 leased, or rented, valued in money, whether received in money or 96.23 otherwise, without any deduction for the following: 96.24 (1) the seller's cost of the property sold; 96.25 (2) the cost of materials used, labor or service cost, 96.26 interest, losses, all costs of transportation to the seller, all 96.27 taxes imposed on the seller, and any other expenses of the 96.28 seller; 96.29 (3) charges by the seller for any services necessary to 96.30 complete the sale, other than delivery and installation charges; 96.31 (4) delivery charges; 96.32 (5) installation charges; and 96.33 (6) the value of exempt property given to the purchaser 96.34 when taxable and exempt personal property have been bundled 96.35 together and sold by the seller as a single product or piece of 96.36 merchandise. 97.1 (b) Sales price does not include: 97.2 (1) discounts, including cash, terms, or coupons, that are 97.3 not reimbursed by a third party and that are allowed by the 97.4 seller and taken by a purchaser on a sale; 97.5 (2) interest, financing, and carrying charges from credit 97.6 extended on the sale of personal property or services, if the 97.7 amount is separately stated on the invoice, bill of sale, or 97.8 similar document given to the purchaser; and 97.9 (3) any taxes legally imposed directly on the consumer that 97.10 are separately stated on the invoice, bill of sale, or similar 97.11 document given to the purchaser. 97.12 [EFFECTIVE DATE.] This section is effective for sales and 97.13 purchases made on or after January 1, 2004. 97.14 Sec. 13. Minnesota Statutes 2002, section 297A.61, 97.15 subdivision 10, is amended to read: 97.16 Subd. 10. [TANGIBLE PERSONAL PROPERTY.] (a) "Tangible 97.17 personal property" meanscorporeal personal property of any97.18kind, including property that is to become real property as a97.19result of incorporation, attachment, or installation following97.20its acquisition.97.21(b) Tangible personal property includes, but is not limited97.22to:97.23(1) computer software, whether contained on tape, discs,97.24cards, or other devices; and97.25(2) prepaid telephone calling cards.97.26(c)personal property that can be seen, weighed, measured, 97.27 felt, or touched, or that is in any other manner perceptible to 97.28 the senses. "Tangible personal property" includes, but is not 97.29 limited to, electricity, water, gas, steam, prewritten computer 97.30 software, and prepaid calling cards. 97.31 (b) Tangible personal property does not include: 97.32 (1) large ponderous machinery and equipment used in a 97.33 business or production activity which at common law would be 97.34 considered to be real property; 97.35 (2) property which is subject to an ad valorem property 97.36 tax; 98.1 (3) property described in section 272.02, subdivision 9, 98.2 clauses (a) to (d); and 98.3 (4) property described in section 272.03, subdivision 2, 98.4 clauses (3) and (5). 98.5 [EFFECTIVE DATE.] This section is effective for sales and 98.6 purchases made on or after January 1, 2004. 98.7 Sec. 14. Minnesota Statutes 2002, section 297A.61, is 98.8 amended by adding a subdivision to read: 98.9 Subd. 14a. [LEASE OR RENTAL.] (a) "Lease or rental" means 98.10 any transfer of possession or control of tangible personal 98.11 property for a fixed or indeterminate term for consideration. A 98.12 lease or rental may include future options to purchase or extend. 98.13 (b) Lease or rental does not include: 98.14 (1) a transfer of possession or control of property under a 98.15 security agreement or deferred payment plan that requires the 98.16 transfer of title upon completion of the required payments; 98.17 (2) a transfer of possession or control of property under 98.18 an agreement that requires the transfer of title upon completion 98.19 of required payments and payment of an option price does not 98.20 exceed the greater of $100 or one percent of the total required 98.21 payments; or 98.22 (3) providing tangible personal property along with an 98.23 operator for a fixed or indeterminate period of time. A 98.24 condition of this exclusion is that the operator is necessary 98.25 for the equipment to perform as designed. For the purpose of 98.26 this subdivision, an operator must do more than maintain, 98.27 inspect, or set up the tangible personal property. 98.28 (c) Lease or rental does include agreements covering motor 98.29 vehicles and trailers where the amount of consideration may be 98.30 increased or decreased by reference to the amount realized upon 98.31 sale or disposition of the property as defined in United States 98.32 Code, title 26, section 7701(h)(l). 98.33 (d) This definition must be used for sales and use tax 98.34 purposes regardless if a transaction is characterized as a lease 98.35 or rental under generally accepted accounting principles, the 98.36 Internal Revenue Code, chapter 336, or other provisions of 99.1 federal, state, or local law. 99.2 [EFFECTIVE DATE.] This section is effective for leases and 99.3 rentals entered into on or after January 1, 2004. 99.4 Sec. 15. Minnesota Statutes 2002, section 297A.61, 99.5 subdivision 17, is amended to read: 99.6 Subd. 17. [PREWRITTEN COMPUTER SOFTWARE.] "Prewritten 99.7 computer software" meansa computer program, either in the form99.8of written procedures or contained on tapes, discs, cards, or99.9another device, or any required documentation or manuals99.10designed to facilitate the use of the computer program.computer 99.11 software, including prewritten upgrades, that is not designed 99.12 and developed by the author or other creator to the 99.13 specifications of a specific purchaser. The combining of two or 99.14 more "prewritten computer software" programs or prewritten 99.15 portions of the programs does not cause the combination to be 99.16 other than "prewritten computer software." "Prewritten computer 99.17 software" includes software designed and developed by the author 99.18 or other creator to the specifications of a specific purchaser 99.19 when it is sold to a person other than the purchaser. If a 99.20 person modifies or enhances computer software of which the 99.21 person is not the author or creator, the person is deemed to be 99.22 the author or creator only of such person's modifications or 99.23 enhancements. "Prewritten computer software" or a prewritten 99.24 portion of it that is modified or enhanced to any degree, if the 99.25 modification or enhancement is designed and developed to the 99.26 specifications of a specific purchaser, remains "prewritten 99.27 computer software"; provided, however, that if there is a 99.28 reasonable, separately stated charge or an invoice or other 99.29 statement of the price given to the purchaser for such 99.30 modification or enhancement, the modification or enhancement 99.31 does not constitute "prewritten computer software." For 99.32 purposes of this subdivision: 99.33 (1) "computer"does not include tape-controlled automatic99.34drilling, milling, or other manufacturing machinery or equipment99.35 means an electronic device that accepts information in digital 99.36 or similar form and manipulates it for a result based on a 100.1 sequence of instructions;and100.2 (2)"computer program" means information and directions100.3that dictate the function performed by data processing100.4equipment. It includes the complete plan for the solution of a100.5problem, such as the complete sequence of automatic data100.6processing equipment instructions necessary to solve a problem100.7and includes both systems and application programs and100.8subdivisions, such as assemblers, compilers, routines,100.9generators, and utility programs. Computer program includes a100.10"canned" or prewritten computer program that is held or existing100.11for general or repeated sale or lease, even if the prewritten or100.12"canned" program was initially developed on a custom basis or100.13for in-house use."electronic" means relating to technology 100.14 having electrical, digital, magnetic, wireless, optical, 100.15 electromagnetic, or similar capabilities; and 100.16 (3) "computer software" means a set of coded instructions 100.17 designed to cause a "computer" or automatic data processing 100.18 equipment to perform a task. 100.19 [EFFECTIVE DATE.] This section is effective for sales and 100.20 purchases made on or after January 1, 2004. 100.21 Sec. 16. Minnesota Statutes 2002, section 297A.61, is 100.22 amended by adding a subdivision to read: 100.23 Subd. 17a. [DELIVERED ELECTRONICALLY.] "Delivered 100.24 electronically" means delivered to the purchaser by means other 100.25 than tangible storage media. 100.26 [EFFECTIVE DATE.] This section is effective for sales and 100.27 purchases made on or after January 1, 2004. 100.28 Sec. 17. Minnesota Statutes 2002, section 297A.61, is 100.29 amended by adding a subdivision to read: 100.30 Subd. 17b. [LOAD AND LEAVE.] "Load and leave" means 100.31 delivered to the purchaser by use of a tangible storage media 100.32 where the tangible storage media is not physically transferred 100.33 to the purchaser. 100.34 [EFFECTIVE DATE.] This section is effective for sales and 100.35 purchases made on or after January 1, 2004. 100.36 Sec. 18. Minnesota Statutes 2002, section 297A.61, 101.1 subdivision 30, is amended to read: 101.2 Subd. 30. [DELIVERY CHARGES.] "Delivery charges" means 101.3 charges by the seller of personal property or services for 101.4 preparation and delivery to a location designated by the 101.5 purchaser of personal property or services including, but not 101.6 limited to, transportation, shipping, postage, handling, 101.7 crating, and packing. 101.8 [EFFECTIVE DATE.] This section is effective for sales and 101.9 purchases made on or after January 1, 2004. 101.10 Sec. 19. Minnesota Statutes 2002, section 297A.61, 101.11 subdivision 31, is amended to read: 101.12 Subd. 31. [PREPARED FOOD.] (a) "Prepared food" means food 101.13 that meetseitherany of the following conditions: 101.14 (1)thefoodissold with eating utensils provided by the 101.15 seller, including plates, knives, forks, spoons, glasses, cups, 101.16 napkins, or straws. A "plate" does not include a container or 101.17 packaging used to transport the food; or 101.18 (2)thefoodissold in a heated state or heated by the 101.19 seller; or 101.20 (3) two or more food ingredientsaremixed or combined by 101.21 the seller for sale as a single item, except for:. 101.22 (b) "Prepared food" does not include the following if sold 101.23 without eating utensils provided by the seller: 101.24(i)(1) bakery items, including, but not limited to, bread, 101.25 rolls, buns, biscuits, bagels, croissants, pastries, donuts, 101.26 danish, cakes, tortes, pies, tarts, muffins, bars, cookies, 101.27 tortillas; or 101.28(ii)(2)ready-to-eat meat and seafoodfood sold in an 101.29 unheated state sold by weight;or volume as a single item. 101.30 (c) "Prepared food" under paragraph (a), clause (3), does 101.31 not include: 101.32(iii)(1) eggs, fish, meat, poultry, and foods containing 101.33 these raw animal foods requiring cooking by the consumer as 101.34 recommended by the Food and Drug Administration in chapter 3, 101.35 part 401.11 of its food code so as to prevent food borne 101.36 illnesses; or 102.1(iv)(2) food that is onlyslicedcut, repackaged, or 102.2 pasteurized by the seller. 102.3 [EFFECTIVE DATE.] This section is effective for sales and 102.4 purchases made on or after January 1, 2004. 102.5 Sec. 20. Minnesota Statutes 2002, section 297A.61, is 102.6 amended by adding a subdivision to read: 102.7 Subd. 35. [DIRECT MAIL.] "Direct mail" means printed 102.8 material delivered or distributed by United States mail or other 102.9 delivery service to a mass audience or to addressees on a 102.10 mailing list provided by the purchaser or at the direction of 102.11 the purchaser when the cost of the items are not billed directly 102.12 to the recipients. "Direct mail" includes tangible personal 102.13 property supplied directly or indirectly by the purchaser to the 102.14 direct mail seller for inclusion in the package containing 102.15 printed material. "Direct mail" does not include multiple items 102.16 of printed material delivered to a single address. 102.17 [EFFECTIVE DATE.] This section is effective for sales and 102.18 purchases made on or after January 1, 2004. 102.19 Sec. 21. Minnesota Statutes 2002, section 297A.66, is 102.20 amended by adding a subdivision to read: 102.21 Subd. 5. [WITHDRAWAL FROM STREAMLINED SALES AND USE TAX 102.22 AGREEMENT.] If the state has withdrawn its membership or been 102.23 expelled from the streamlined sales and use tax agreement, it 102.24 shall not use a seller's registration with the central 102.25 registration system and the collection of sales and use taxes in 102.26 the state as a factor in determining whether the seller has 102.27 nexus with that state for any tax at any time. 102.28 [EFFECTIVE DATE.] This section is effective for sales and 102.29 purchases made on or after January 1, 2004. 102.30 Sec. 22. [297A.666] [AMNESTY FOR REGISTRATION.] 102.31 Subdivision 1. [AMNESTY PROVISIONS.] Subject to the 102.32 limitations of subdivision 2: 102.33 (1) this state shall provide amnesty for uncollected or 102.34 unpaid sales or use tax to a seller who registers to pay or to 102.35 collect and remit applicable sales or use tax on sales made to 102.36 purchasers in this state in accordance with the terms of the 103.1 streamlined sales and use tax agreement, provided that the 103.2 seller was not so registered in this state in the 12-month 103.3 period preceding the effective date of the state's participation 103.4 in the agreement; and 103.5 (2) the amnesty shall preclude assessment for uncollected 103.6 or unpaid sales or use tax together with penalty or interest for 103.7 sales made during the period the seller was not registered in 103.8 this state, provided registration occurs within 12 months of the 103.9 effective date of the state's participation in the agreement. 103.10 Subd. 2. [LIMITATIONS.] (a) The amnesty is not available 103.11 to a seller with respect to any matter or matters for which the 103.12 seller received notice of the commencement of an audit and the 103.13 audit is not yet finally resolved, including any related 103.14 administrative and judicial processes. 103.15 (b) The amnesty is not available for sales or use taxes 103.16 already paid or remitted to this state or to taxes collected by 103.17 the seller. 103.18 (c) The amnesty is fully effective, absent the seller's 103.19 fraud or intentional misrepresentation of a material fact, as 103.20 long as the seller continues registration and continues payment 103.21 or collection and remittance of applicable sales or use taxes 103.22 for a period of at least 36 months. The statute of limitations 103.23 provisions of chapter 289A applicable to asserting a sales or 103.24 use tax liability must be tolled during this 36-month period. 103.25 (d) The amnesty is applicable only to sales or use taxes 103.26 due from a seller in its capacity as a seller and not to sales 103.27 or use taxes due from a seller in its capacity as a buyer. 103.28 [EFFECTIVE DATE.] This section is effective for sales and 103.29 purchases made on or after January 1, 2004. 103.30 Sec. 23. Minnesota Statutes 2002, section 297A.668, is 103.31 amended to read: 103.32 297A.668 [SOURCING OF SALE; SITUS IN THIS STATE.] 103.33 Subdivision 1. [SOURCING RULESAPPLICABILITY.](a)The 103.34followingprovisions of this section apply regardless of the 103.35 characterization of a product as tangible personal property, a 103.36 digital good, or a service; but do not apply to 104.1 telecommunications services, or the sales of motor vehicles, 104.2 watercraft, aircraft, modular homes, manufactured homes, or 104.3 mobile homes. These provisions only apply to determine a 104.4 seller's obligation to pay or collect and remit a sales or use 104.5 tax with respect to the seller's sale of a product. These 104.6 provisions do not affect the obligation of a seller as purchaser 104.7 to remit tax on the use of the product. 104.8 Subd. 2. [SOURCING RULES.] (a) The retail sale, excluding 104.9 lease or rental, of a product shall be sourced as required in 104.10 paragraphs (b) through (f). 104.11 (b) When the product is received by the purchaser at a 104.12 business location of the seller, the sale is sourced to that 104.13 business location. 104.14 (c) When the product is not received by the purchaser at a 104.15 business location of the seller, the sale is sourced to the 104.16 location where receipt by the purchaser or the donee designated 104.17 by the purchaser occurs, including the location indicated by 104.18 instructions for delivery to the purchasers or the purchaser's 104.19 donee, known to the seller. 104.20 (d) When paragraphs (b) and (c) do not apply, the sale is 104.21 sourced to the location indicated by an address for the 104.22 purchaser that is available from the business records of the 104.23 seller that are maintained in the ordinary course of the 104.24 seller's business, when use of this address does not constitute 104.25 bad faith. 104.26 (e) When paragraphs (b), (c), and (d) do not apply, the 104.27 sale is sourced to the location indicated by an address for the 104.28 purchaser obtained during the consummation of the sale, 104.29 including the address of a purchaser's payment instrument if no 104.30 other address is available, when use of this address does not 104.31 constitute bad faith. 104.32 (f) When paragraphs (b), (c), (d), and (e) do not apply, 104.33 including the circumstance where the seller is without 104.34 sufficient information to apply the previous paragraphs, then 104.35 the location is determined by the address from which tangible 104.36 personal property was shipped, from which the digital good or 105.1 the computer software delivered electronically was first 105.2 available for transmission by the seller, or from which the 105.3 service was provided. For purposes of this paragraph, the 105.4 seller must disregard any location that merely provided the 105.5 digital transfer of the product sold. 105.6 (g) For purposes of this subdivision, the terms "receive" 105.7 and "receipt" mean taking possession of tangible personal 105.8 property, making first use of services, or taking possession or 105.9 making first use of digital goods or the computer software 105.10 delivered electronically, whichever occurs first. The terms 105.11 receive and receipt do not include possession by a carrier for 105.12 hire on behalf of the purchaser. 105.13 Subd. 3. [LEASE OR RENTAL OF TANGIBLE PERSONAL 105.14 PROPERTY.] The lease or rental of tangible personal property, 105.15 other than property identified in subdivision 4 or 5, shall be 105.16 sourced as required in paragraphs (a) to (c). 105.17 (a) For a lease or rental that requires recurring periodic 105.18 payments, the first periodic payment is sourced the same as a 105.19 retail sale in accordance with the provisions of subdivision 6. 105.20 Periodic payments made subsequent to the first payment are 105.21 sourced to the primary property location for each period covered 105.22 by the payment. The primary property location must be as 105.23 indicated by an address for the property provided by the lessee 105.24 that is available to the lessor from its records maintained in 105.25 the ordinary course of business, when use of this address does 105.26 not constitute bad faith. The property location must not be 105.27 altered by intermittent use at different locations, such as use 105.28 of business property that accompanies employees on business 105.29 trips and service calls. 105.30 (b) For a lease or rental that does not require recurring 105.31 periodic payments, the payment is sourced the same as a retail 105.32 sale in accordance with the provisions of subdivision 2. 105.33 (c) This subdivision does not affect the imposition or 105.34 computation of sales or use tax on leases or rentals based on a 105.35 lump sum or accelerated basis, or on the acquisition of property 105.36 for lease. 106.1 Subd. 4. [LEASE OR RENTAL OF MOTOR VEHICLES, TRAILERS, 106.2 SEMITRAILERS, OR AIRCRAFT THAT DO NOT QUALIFY AS TRANSPORTATION 106.3 EQUIPMENT.] The lease or rental of motor vehicles, trailers, 106.4 semitrailers, or aircraft that do not qualify as transportation 106.5 equipment, as defined in subdivision 5, shall be sourced as 106.6 required in paragraphs (a) to (c). 106.7 (a) For a lease or rental that requires recurring periodic 106.8 payments, each periodic payment is sourced to the primary 106.9 property location. The primary property location must be as 106.10 indicated by an address for the property provided by the lessee 106.11 that is available to the lessor from its records maintained in 106.12 the ordinary course of business, when use of this address does 106.13 not constitute bad faith. This location must not be altered by 106.14 intermittent use at different locations. 106.15 (b) For a lease or rental that does not require recurring 106.16 periodic payments, the payment is sourced the same as a retail 106.17 sale in accordance with the provisions of subdivision 2. 106.18 (c) This subdivision does not affect the imposition or 106.19 computation of sales or use tax on leases or rentals based on a 106.20 lump sum or accelerated basis, or on the acquisition of property 106.21 for lease. 106.22 Subd. 5. [TRANSPORTATION EQUIPMENT.] (a) The retail sale, 106.23 including lease or rental, of transportation equipment shall be 106.24 sourced the same as a retail sale in accordance with the 106.25 provisions of subdivision 2, notwithstanding the exclusion of 106.26 lease or rental in subdivision 2. 106.27 (b) "Transportation equipment" means any of the following: 106.28 (1) locomotives and railcars that are utilized for the 106.29 carriage of persons or property in interstate commerce; and/or 106.30 (2) trucks and truck-tractors with a gross vehicle weight 106.31 rating (GVWR) of 10,001 pounds or greater, trailers, 106.32 semitrailers, or passenger buses that are: 106.33 (i) registered through the international registration plan; 106.34 and 106.35 (ii) operated under authority of a carrier authorized and 106.36 certified by the United States Department of Transportation or 107.1 another federal authority to engage in the carriage of persons 107.2 or property in interstate commerce. 107.3 Subd.2.6. [MULTIPLE POINTS OF USE.] (a) Notwithstanding 107.4 the provisions ofsubdivision 1subdivisions 2 to 5, a business 107.5 purchaser that is not a holder of a direct pay permit that knows 107.6 at the time of its purchase of a digital good, computer software 107.7 delivered electronically, or a service that the digital good, 107.8 computer software delivered electronically, or service will be 107.9 concurrently available for use in more than one taxing 107.10 jurisdiction shall deliver to the seller in conjunction with its 107.11 purchase a multiple points of use exemption certificate 107.12 disclosing this fact. 107.13 (b) Upon receipt of the multiple points of use exemption 107.14 certificate, the seller is relieved of the obligation to 107.15 collect, pay, or remit the applicable tax and the purchaser is 107.16 obligated to collect, pay, or remit the applicable tax on a 107.17 direct pay basis. 107.18 (c) A purchaser delivering the multiple points of use 107.19 exemption certificate may use any reasonable, but consistent and 107.20 uniform, method of apportionment that is supported by the 107.21 purchaser's business records as they exist at the time of the 107.22 consummation of the sale. 107.23 (d) The multiple points of use exemption certificate 107.24 remains in effect for all future sales by the seller to the 107.25 purchaser until it is revoked in writing, except as to the 107.26 subsequent sale's specific apportionment that is governed by the 107.27 principle of paragraph (c) and the facts existing at the time of 107.28 the sale. 107.29 (e) A holder of a direct pay permit is not required to 107.30 deliver a multiple points or use exemption certificate to the 107.31 seller. A direct pay permit holder shall follow the provisions 107.32 of paragraph (c) in apportioning the tax due on a digital good, 107.33 computer software delivered electronically, or a service that 107.34 will be concurrently available for use in more than one taxing 107.35 jurisdiction. 107.36Subd. 3. [DEFINITION OF TERMS.] For purposes of this108.1section, the terms "receive" and "receipt" mean taking108.2possession of tangible personal property, making first use of108.3services, or taking possession or making first use of digital108.4goods, whichever occurs first. The terms receive and receipt do108.5not include possession by a carrier for hire on behalf of the108.6purchaser.108.7 Subd. 7. [DIRECT MAIL.] (a) Notwithstanding other 108.8 subdivisions of this section, a purchaser of direct mail that is 108.9 not a holder of a direct pay permit shall provide to the seller, 108.10 in conjunction with the purchase, either a direct mail form or 108.11 information to show the jurisdictions to which the direct mail 108.12 is delivered to recipients. 108.13 (1) Upon receipt of the direct mail form, the seller is 108.14 relieved of all obligations to collect, pay, or remit the 108.15 applicable tax and the purchaser is obligated to pay or remit 108.16 the applicable tax on a direct pay basis. A direct mail form 108.17 remains in effect for all future sales of direct mail by the 108.18 seller to the purchaser until it is revoked in writing. 108.19 (2) Upon receipt of information from the purchaser showing 108.20 the jurisdictions to which the direct mail is delivered to 108.21 recipients, the seller shall collect the tax according to the 108.22 delivery information provided by the purchaser. In the absence 108.23 of bad faith, the seller is relieved of any further obligation 108.24 to collect tax on any transaction for which the seller has 108.25 collected tax pursuant to the delivery information provided by 108.26 the purchaser. 108.27 (b) If the purchaser of direct mail does not have a direct 108.28 pay permit and does not provide the seller with either a direct 108.29 mail form or delivery information, as required by paragraph (a), 108.30 the seller shall collect the tax according to subdivision 2, 108.31 paragraph (f). Nothing in this paragraph limits a purchaser's 108.32 obligation for sales or use tax to any state to which the direct 108.33 mail is delivered. 108.34 (c) If a purchaser of direct mail provides the seller with 108.35 documentation of direct pay authority, the purchaser is not 108.36 required to provide a direct mail form or delivery information 109.1 to the seller. 109.2 [EFFECTIVE DATE.] This section is effective for sales and 109.3 purchases made on or after January 1, 2004. 109.4 Sec. 24. [297A.669] [TELECOMMUNICATION SOURCING.] 109.5 Subdivision 1. [CALL-BY-CALL BASIS SOURCING.] Except for 109.6 the defined telecommunication services in subdivision 3, the 109.7 sale of telecommunication service sold on a call-by-call basis 109.8 shall be sourced to (1) each level of taxing jurisdiction where 109.9 the call originates and terminates in that jurisdiction; or (2) 109.10 each level of taxing jurisdiction where the call either 109.11 originates or terminates and in which the service address is 109.12 also located. 109.13 Subd. 2. [OTHER THAN CALL-BY-CALL BASIS SOURCING.] Except 109.14 for the defined telecommunication services in subdivision 3, a 109.15 sale of telecommunications services sold on a basis other than a 109.16 call-by-call basis is sourced to the customer's place of primary 109.17 use. 109.18 Subd. 3. [DEFINED TELECOMMUNICATIONS SERVICES 109.19 SOURCING.] The sale of the following telecommunication services 109.20 shall be sourced to each level of taxing jurisdiction in 109.21 paragraphs (a) to (d). 109.22 (a) A sale of mobile telecommunications services, other 109.23 than air-to-ground radiotelephone service and prepaid calling 109.24 service, is sourced to the customer's place of primary use as 109.25 required by the Mobile Telecommunications Sourcing Act. 109.26 (b) A sale of postpaid calling service is sourced to the 109.27 origination point of the telecommunications signal as first 109.28 identified by either: 109.29 (1) the seller's telecommunications system; or 109.30 (2) information received by the seller from its service 109.31 provider, where the system used to transport such signals is not 109.32 that of the seller. 109.33 (c) A sale of prepaid calling service is sourced in 109.34 accordance with section 297A.668, subdivision 2. However, in 109.35 the case of a sale of mobile telecommunications service that is 109.36 a prepaid telecommunications service, the rule provided in 110.1 section 297A.668, subdivision 2, paragraph (f), shall include as 110.2 an option the location associated with the mobile telephone 110.3 number. 110.4 (d) A sale of a private communication service is sourced as 110.5 follows: 110.6 (1) service for a separate charge related to a customer 110.7 channel termination point is sourced to each level of 110.8 jurisdiction in which the customer channel termination point is 110.9 located; 110.10 (2) service where all customer termination points are 110.11 located entirely within one jurisdiction or levels of 110.12 jurisdiction is sourced in such jurisdiction in which the 110.13 customer channel termination points are located; 110.14 (3) service for segments of a channel between two customer 110.15 channel termination points located in different jurisdictions 110.16 and which segment of channel are separately charged is sourced 110.17 50 percent in each level of jurisdiction in which the customer 110.18 channel termination points are located; and 110.19 (4) service for segments of a channel located in more than 110.20 one jurisdiction or levels of jurisdiction and which segments 110.21 are not separately billed is sourced in each jurisdiction based 110.22 on the percentage determined by dividing the number of customer 110.23 channel termination points in the jurisdiction by the total 110.24 number of customer channel termination points. 110.25 Subd. 4. [AIR-TO-GROUND RADIOTELEPHONE 110.26 SERVICE.] "Air-to-ground radiotelephone service," for purposes 110.27 of this section, means a radio service, as that term is defined 110.28 in Code of Federal Regulations, title 47, section 22.99, in 110.29 which common carriers are authorized to offer and provide radio 110.30 telecommunications service for hire to subscribers in aircraft. 110.31 Subd. 5. [CALL-BY-CALL BASIS.] "Call-by-call basis," for 110.32 purposes of this section, means any method of charging for 110.33 telecommunications services where the price is measured by 110.34 individual calls. 110.35 Subd. 6. [COMMUNICATIONS CHANNEL.] "Communications 110.36 channel," for purposes of this section, means a physical or 111.1 virtual path of communications over which signals are 111.2 transmitted between or among customer channel termination points. 111.3 Subd. 7. [CUSTOMER.] "Customer," for purposes of this 111.4 section, means the person or entity that contracts with the 111.5 seller of telecommunications services. If the end user of 111.6 telecommunications services is not the contracting party, the 111.7 end user of the telecommunications service is the customer of 111.8 the telecommunication service, but this sentence applies only 111.9 for the purpose of sourcing sales of telecommunications services 111.10 under this section. Customer does not include a reseller of 111.11 telecommunications service or for mobile telecommunications 111.12 service of a serving carrier under an agreement to serve the 111.13 customer outside the home service provider's licensed service 111.14 area. 111.15 Subd. 8. [CUSTOMER CHANNEL TERMINATION POINT.] "Customer 111.16 channel termination point," for purposes of this section, means 111.17 the location where the customer either inputs or receives the 111.18 communications. 111.19 Subd. 9. [END USER.] "End user," for purposes of this 111.20 section, means the person who utilizes the telecommunication 111.21 service. In the case of an entity, end user means the 111.22 individual who utilizes the service on behalf of the entity. 111.23 Subd. 10. [HOME SERVICE PROVIDER.] "Home service provider," 111.24 for purposes of this section, means the same as that term is 111.25 defined in Section 124(5) of Public Law 106-252 (Mobile 111.26 Telecommunications Sourcing Act). 111.27 Subd. 11. [MOBILE TELECOMMUNICATIONS SERVICE.] "Mobile 111.28 telecommunications service," for purposes of this section, means 111.29 the same as that term is defined in Section 124(1) of Public Law 111.30 106-252 (Mobile Telecommunications Sourcing Act). 111.31 Subd. 12. [PLACE OF PRIMARY USE.] "Place of primary use," 111.32 for purposes of this section, means the street address 111.33 representative of where the customer's use of the 111.34 telecommunications service primarily occurs, which must be the 111.35 residential street address or the primary business street 111.36 address of the customer. In the case of mobile 112.1 telecommunications services, place of primary use must be within 112.2 the licensed service area of the home service provider. 112.3 Subd. 13. [POSTPAID CALLING SERVICE.] "Postpaid calling 112.4 service," for purposes of this section, means the 112.5 telecommunications service obtained by making a payment on a 112.6 call-by-call basis either through the use of a credit card or 112.7 payment mechanism such as a bank card, travel card, credit card, 112.8 or debit card, or by a charge made to a telephone number that is 112.9 not associated with the origination or termination of the 112.10 telecommunications service. A postpaid calling service includes 112.11 a telecommunications service that would be a prepaid calling 112.12 service except it is not exclusively a telecommunication service. 112.13 Subd. 14. [PREPAID CALLING SERVICE.] "Prepaid calling 112.14 service," for purposes of this section, means the right to 112.15 access exclusively telecommunications services, which must be 112.16 paid for in advance and which enables the origination of calls 112.17 using an access number or authorization code, whether manually 112.18 or electronically dialed, and that is sold in predetermined 112.19 units or dollars of which the number declines with use in a 112.20 known amount. 112.21 Subd. 15. [PRIVATE COMMUNICATION SERVICES.] "Private 112.22 communication services," for purposes of this section, means the 112.23 same as that term is defined in section 297A.61, subdivision 26. 112.24 Subd. 16. [SERVICE ADDRESS.] "Service address," for 112.25 purposes of this section, means: 112.26 (1) the location of the telecommunications equipment to 112.27 which a customer's call is charged and from which the call 112.28 originates or terminates, regardless of where the call is billed 112.29 or paid; 112.30 (2) if the location in paragraph (a) is not known, service 112.31 address means the origination point of the signal of the 112.32 telecommunications services first identified by either the 112.33 seller's telecommunications system or in information received by 112.34 the seller from its service provider, where the system used to 112.35 transport the signals is not that of the seller; or 112.36 (3) if the location in paragraphs (a) and (b) is not known, 113.1 the service address means the location of the customer's place 113.2 of primary use. 113.3 [EFFECTIVE DATE.] This section is effective for sales and 113.4 purchases made on or after January 1, 2004. 113.5 Sec. 25. Minnesota Statutes 2002, section 297A.67, 113.6 subdivision 7, is amended to read: 113.7 Subd. 7. [MEDICINES; MEDICAL DEVICES.] (a) Sales of the 113.8 following medicines and medical devices are exempt: 113.9 (1) Prescribed drugsand medicine, and insulin,intended 113.10 forinternal or external use, in the cure, mitigation,113.11treatment, or prevention of illness or disease inhumanbeings113.12are exempt. "Prescribed drugs and medicine" includesuse, 113.13 including over-the-counter drugsor medicineprescribed by a 113.14 licensed health care professional.; 113.15(b) Nonprescription medicines consisting principally113.16(determined by the weight of all ingredients) of analgesics that113.17are approved by the United States Food and Drug Administration113.18for internal use by human beings are exempt. For purposes of113.19this subdivision, "principally" means greater than 50 percent113.20analgesics by weight.113.21(c) Prescription glasses, hospital beds, fever113.22thermometers, reusable(2) single use finger-pricking devices 113.23 for the extraction of blood, blood glucose monitoring machines,113.24 and other single use devices and diagnostic agents used in 113.25 diagnosing, monitoring, or treating diabetes, and therapeutic113.26and; 113.27 (3) insulin and medical oxygen for human use are also 113.28 exempt, regardless of whether it is prescribed or sold 113.29 over-the-counter; 113.30 (4) prosthetic devicesare exempt. "Therapeutic devices"113.31means devices that are attached or applied to the human body to113.32cure, heal, or alleviate injury, illness, or disease, either113.33directly or by administering a curative agent. "Prosthetic113.34devices" means devices that replace injured, diseased, or113.35missing parts of the human body, either temporarily or113.36permanently., if prescribed by a licensed health care 114.1 professional, or paid for by Medicare or Medicaid; 114.2 (5) durable medical equipment for home use only; and 114.3 (6) mobility enhancing equipment. 114.4 (b) For purposes of this subdivision: 114.5 (1) "Drug" means a compound, substance, or preparation, and 114.6 any component of a compound, substance, or preparation, other 114.7 than food and food ingredients, dietary supplements, or 114.8 alcoholic beverages that is: 114.9 (i) recognized in the official United States Pharmacopoeia, 114.10 official Homeopathic Pharmacopoeia of the United States, or 114.11 official National Formulary, and supplement to any of them; 114.12 (ii) intended for use in the diagnosis, cure, mitigation, 114.13 treatment, or prevention of disease; or 114.14 (iii) intended to affect the structure or any function of 114.15 the body. 114.16 (2) "Durable medical equipment" means equipment, including 114.17 repair and replacement parts, but not including mobility 114.18 enhancing equipment, that: 114.19 (i) can withstand repeated use; 114.20 (ii) is primarily and customarily used to serve a medical 114.21 purpose; 114.22 (iii) generally is not useful to a person in the absence of 114.23 illness or injury; and 114.24 (iv) is not worn in or on the body. 114.25 (3) "Mobility enhancing equipment" means equipment, 114.26 including repair and replacement parts, but not including 114.27 durable medical equipment, that: 114.28 (i) is primarily and customarily used to provide or 114.29 increase the ability to move from one place to another and that 114.30 is appropriate for use either in a home or a motor vehicle; 114.31 (ii) is not generally used by persons with normal mobility; 114.32 and 114.33 (iii) does not include any motor vehicle or equipment on a 114.34 motor vehicle normally provided by a motor vehicle manufacturer. 114.35 (4) "Over-the-counter drug" means a drug that contains a 114.36 label that identifies the product as a drug as required by Code 115.1 of Federal Regulations, title 21, section 201.66. The label 115.2 must include a "drug facts" panel or a statement of the active 115.3 ingredients with a list of those ingredients contained in the 115.4 compound, substance, or preparation. Grooming and hygiene 115.5 products such as soaps, cleaning solutions, shampoo, toothpaste, 115.6 mouthwash, antiperspirants, and suntan lotions and sunscreens 115.7 are not "over-the-counter drugs," regardless of whether they 115.8 otherwise meet the definition. 115.9 (5) "Prescribed" means a direction in the form of an order, 115.10 formula, or recipe issued in any form of oral, written, 115.11 electronic, or other means of transmission by a duly licensed 115.12 health care professional. 115.13 (6) "Prosthetic device" means a replacement, corrective, or 115.14 supportive device, including repair and replacement parts, worn 115.15 on or in the body to: 115.16 (i) artificially replace a missing portion of the body; 115.17 (ii) prevent or correct physical deformity or malfunction; 115.18 or 115.19 (iii) support a weak or deformed portion of the body. 115.20 [EFFECTIVE DATE.] This section is effective for sales and 115.21 purchases made on or after January 1, 2004. 115.22 Sec. 26. Minnesota Statutes 2002, section 297A.67, 115.23 subdivision 8, is amended to read: 115.24 Subd. 8. [CLOTHING.] (a) Clothing is exempt. For purposes 115.25 of this subdivision, "clothing" means all human wearing apparel 115.26 suitable for general use. 115.27 (b) Clothing includes, but is not limited to, aprons, 115.28 household and shop; athletic supporters; baby receiving 115.29 blankets; bathing suits and caps; beach capes and coats; belts 115.30 and suspenders; boots; coats and jackets; costumes; children and 115.31 adult diapers, including disposable; ear muffs; footlets; formal 115.32 wear; garters and garter belts; girdles; gloves and mittens for 115.33 general use; hats and caps; hosiery; insoles for shoes; lab 115.34 coats; neckties; overshoes; pantyhose; rainwear; rubber pants; 115.35 sandals; scarves; shoes and shoe laces; slippers; sneakers; 115.36 socks and stockings; steel-toed boots; underwear; uniforms, 116.1 athletic and nonathletic; and wedding apparel. 116.2 (c) Clothing does not include the following: 116.3 (1) belt buckles sold separately; 116.4 (2) costume masks sold separately; 116.5 (3) patches and emblems sold separately; 116.6 (4) sewing equipment and supplies, including but not 116.7 limited to, knitting needles, patterns, pins, scissors, sewing 116.8 machines, sewing needles, tape measures, and thimbles; 116.9 (5) sewing materials that become part of clothing, 116.10 including but not limited to, buttons, fabric, lace, thread, 116.11 yarn, and zippers; 116.12 (6) clothing accessories or equipment; 116.13 (7) sports or recreational equipment; and 116.14 (8) protective equipment. 116.15 Clothing also does not include apparel made from fur if a 116.16 uniform definition of "apparel made from fur" is developed by 116.17 the member states of the Streamlined Sales and Use Tax Agreement. 116.18 For purposes of this subdivision, "clothing accessories or 116.19 equipment" means incidental items worn on the person or in 116.20 conjunction with clothing. Clothing accessories and equipment 116.21 include, but are not limited to, briefcases; cosmetics; hair 116.22 notions, including barrettes, hair bows, and hairnets; handbags; 116.23 handkerchiefs; jewelry; nonprescription sunglasses; umbrellas; 116.24 wallets; watches; and wigs and hairpieces. "Sports or 116.25 recreational equipment" means items designed for human use and 116.26 worn in conjunction with an athletic or recreational activity 116.27 that are not suitable for general use. Sports and recreational 116.28 equipment includes, but is not limited to, ballet and tap shoes; 116.29 cleated or spiked athletic shoes; gloves, including, but not 116.30 limited to, baseball, bowling, boxing, hockey, and golf gloves; 116.31 goggles; hand and elbow guards; life preservers and vests; mouth 116.32 guards; roller and ice skates; shin guards; shoulder pads; ski 116.33 boots; waders; and wetsuits and fins. "Protective equipment" 116.34 means items for human wear and designed as protection of the 116.35 wearer against injury or disease or as protection against damage 116.36 or injury of other persons or property but not suitable for 117.1 general use. Protective equipment includes, but is not limited 117.2 to, breathing masks; clean room apparel and equipment; ear and 117.3 hearing protectors; face shields; finger guards; hard hats; 117.4 helmets; paint or dust respirators; protective gloves; safety 117.5 glasses and goggles; safety belts; tool belts; and welders 117.6 gloves and masks. 117.7 [EFFECTIVE DATE.] This section is effective for sales and 117.8 purchases made on or after January 1, 2004. 117.9 Sec. 27. Minnesota Statutes 2002, section 297A.67, is 117.10 amended by adding a subdivision to read: 117.11 Subd. 31. [SERVICE LOANER VEHICLE COVERED BY 117.12 WARRANTY.] The loan of a vehicle by a motor vehicle dealer to a 117.13 customer as a replacement for a vehicle being serviced or 117.14 repaired is exempt if the vehicle is loaned pursuant to a 117.15 warranty included in the original purchase price of the vehicle 117.16 being serviced or repaired. 117.17 [EFFECTIVE DATE.] This section is effective for vehicle 117.18 loans made after June 30, 2003. 117.19 Sec. 28. Minnesota Statutes 2002, section 297A.68, 117.20 subdivision 2, is amended to read: 117.21 Subd. 2. [MATERIALS CONSUMED IN INDUSTRIAL PRODUCTION.] 117.22 (a) Materials stored, used, or consumed in industrial production 117.23 of personal property intended to be sold ultimately at retail 117.24 are exempt, whether or not the item so used becomes an 117.25 ingredient or constituent part of the property produced. 117.26 Materials that qualify for this exemption include, but are not 117.27 limited to, the following: 117.28 (1) chemicals, including chemicals used for cleaning food 117.29 processing machinery and equipment; 117.30 (2) materials, including chemicals, fuels, and electricity 117.31 purchased by persons engaged in industrial production to treat 117.32 waste generated as a result of the production process; 117.33 (3) fuels, electricity, gas, and steam used or consumed in 117.34 the production process, except that electricity, gas, or steam 117.35 used for space heating, cooling, or lighting is exempt if (i) it 117.36 is in excess of the average climate control or lighting for the 118.1 production area, and (ii) it is necessary to produce that 118.2 particular product; 118.3 (4) petroleum products and lubricants; 118.4 (5) packaging materials, including returnable containers 118.5 used in packaging food and beverage products; 118.6 (6) accessory tools, equipment, and other items that are 118.7 separate detachable units with an ordinary useful life of less 118.8 than 12 months used in producing a direct effect upon the 118.9 product; and 118.10 (7) the following materials, tools, and equipment used in 118.11 metalcasting: crucibles, thermocouple protection sheaths and 118.12 tubes, stalk tubes, refractory materials, molten metal filters 118.13 and filter boxes, degassing lances, and base blocks. 118.14 (b) This exemption does not include: 118.15 (1) machinery, equipment, implements, tools, accessories, 118.16 appliances, contrivances and furniture and fixtures, except 118.17 those listed in paragraph (a), clause (6); and 118.18 (2) petroleum and special fuels used in producing or 118.19 generating power for propelling ready-mixed concrete trucks on 118.20 the public highways of this state. 118.21 (c) Industrial production includes, but is not limited to, 118.22 research, development, design or production of any tangible 118.23 personal property, manufacturing, processing (other than by 118.24 restaurants and consumers) of agricultural products (whether 118.25 vegetable or animal), commercial fishing, refining, smelting, 118.26 reducing, brewing, distilling, printing, mining, quarrying, 118.27 lumbering, generating electricityand, the production of road 118.28 building materials, and the research, development, design, or 118.29 production of computer software. Industrial production does not 118.30 include painting, cleaning, repairing or similar processing of 118.31 property except as part of the original manufacturing process. 118.32 [EFFECTIVE DATE.] This section is effective for sales and 118.33 purchases made on or after January 1, 2004. 118.34 Sec. 29. Minnesota Statutes 2002, section 297A.68, 118.35 subdivision 5, is amended to read: 118.36 Subd. 5. [CAPITAL EQUIPMENT.] (a) Capital equipment is 119.1 exempt. The tax must be imposed and collected as if the rate 119.2 under section 297A.62, subdivision 1, applied, and then refunded 119.3 in the manner provided in section 297A.75. 119.4 "Capital equipment" means machinery and equipment purchased 119.5 or leased, and used in this state by the purchaser or lessee 119.6 primarily for manufacturing, fabricating, mining, or refining 119.7 tangible personal property to be sold ultimately at retail if 119.8 the machinery and equipment are essential to the integrated 119.9 production process of manufacturing, fabricating, mining, or 119.10 refining. Capital equipment also includes machinery and 119.11 equipment used to electronically transmit results retrieved by a 119.12 customer of an online computerized data retrieval system. 119.13 (b) Capital equipment includes, but is not limited to: 119.14 (1) machinery and equipment used to operate, control, or 119.15 regulate the production equipment; 119.16 (2) machinery and equipment used for research and 119.17 development, design, quality control, and testing activities; 119.18 (3) environmental control devices that are used to maintain 119.19 conditions such as temperature, humidity, light, or air pressure 119.20 when those conditions are essential to and are part of the 119.21 production process; 119.22 (4) materials and supplies used to construct and install 119.23 machinery or equipment; 119.24 (5) repair and replacement parts, including accessories, 119.25 whether purchased as spare parts, repair parts, or as upgrades 119.26 or modifications to machinery or equipment; 119.27 (6) materials used for foundations that support machinery 119.28 or equipment; 119.29 (7) materials used to construct and install special purpose 119.30 buildings used in the production process;and119.31 (8) ready-mixed concrete trucks in which the ready-mixed 119.32 concrete is mixed as part of the delivery process; and 119.33 (9) machinery or equipment used for research, development, 119.34 design, or production of computer software. 119.35 (c) Capital equipment does not include the following: 119.36 (1) motor vehicles taxed under chapter 297B; 120.1 (2) machinery or equipment used to receive or store raw 120.2 materials; 120.3 (3) building materials, except for materials included in 120.4 paragraph (b), clauses (6) and (7); 120.5 (4) machinery or equipment used for nonproduction purposes, 120.6 including, but not limited to, the following: plant security, 120.7 fire prevention, first aid, and hospital stations; support 120.8 operations or administration; pollution control; and plant 120.9 cleaning, disposal of scrap and waste, plant communications, 120.10 space heating, cooling, lighting, or safety; 120.11 (5) farm machinery and aquaculture production equipment as 120.12 defined by section 297A.61, subdivisions 12 and 13; 120.13 (6) machinery or equipment purchased and installed by a 120.14 contractor as part of an improvement to real property; or 120.15 (7) any other item that is not essential to the integrated 120.16 process of manufacturing, fabricating, mining, or refining. 120.17 (d) For purposes of this subdivision: 120.18 (1) "Equipment" means independent devices or tools separate 120.19 from machinery but essential to an integrated production 120.20 process, including computers and computer software, used in 120.21 operating, controlling, or regulating machinery and equipment; 120.22 and any subunit or assembly comprising a component of any 120.23 machinery or accessory or attachment parts of machinery, such as 120.24 tools, dies, jigs, patterns, and molds. 120.25 (2) "Fabricating" means to make, build, create, produce, or 120.26 assemble components or property to work in a new or different 120.27 manner. 120.28 (3) "Machinery" means mechanical, electronic, or electrical 120.29 devices, including computers and computer software, that are 120.30 purchased or constructed to be used for the activities set forth 120.31 in paragraph (a), beginning with the removal of raw materials 120.32 from inventory through completion of the product, including 120.33 packaging of the product. 120.34 (4) "Machinery and equipment used for pollution control" 120.35 means machinery and equipment used solely to eliminate, prevent, 120.36 or reduce pollution resulting from an activity described in 121.1 paragraph (a). 121.2 (5) "Manufacturing" means an operation or series of 121.3 operations where raw materials are changed in form, composition, 121.4 or condition by machinery and equipment and which results in the 121.5 production of a new article of tangible personal property. For 121.6 purposes of this subdivision, "manufacturing" includes the 121.7 generation of electricity or steam to be sold at retail. 121.8 (6) "Mining" means the extraction of minerals, ores, stone, 121.9 or peat. 121.10 (7) "Online data retrieval system" means a system whose 121.11 cumulation of information is equally available and accessible to 121.12 all its customers. 121.13 (8) "Primarily" means machinery and equipment used 50 121.14 percent or more of the time in an activity described in 121.15 paragraph (a). 121.16 (9) "Refining" means the process of converting a natural 121.17 resource to a product, including the treatment of water to be 121.18 sold at retail. 121.19 [EFFECTIVE DATE.] This section is effective for sales and 121.20 purchases made on or after January 1, 2004. 121.21 Sec. 30. Minnesota Statutes 2002, section 297A.68, 121.22 subdivision 36, is amended to read: 121.23 Subd. 36. [DELIVERY OR DISTRIBUTION CHARGES;PRINTED121.24MATERIALSDIRECT MAIL.] Charges for the delivery or distribution 121.25 ofprinted materials, including individual account121.26information,direct mail are exempt if(1)the charges are 121.27 separately stated, (2) the delivery or distribution is to a mass121.28audience or to a mailing list provided at the direction of the121.29customer, and (3) the cost of the materials is not billed121.30directly to the recipients. 121.31 [EFFECTIVE DATE.] This section is effective for sales and 121.32 purchases made on or after January 1, 2004. 121.33 Sec. 31. Minnesota Statutes 2002, section 297A.68, is 121.34 amended by adding a subdivision to read: 121.35 Subd. 37. [DURABLE MEDICAL EQUIPMENT FOR NURSING 121.36 HOMES.] The purchase of durable medical equipment by nursing 122.1 homes is exempt. For purposes of this subdivision, "durable 122.2 medical equipment" has the meaning given in section 297A.67, 122.3 subdivision 7. 122.4 [EFFECTIVE DATE.] This section is effective for sales and 122.5 purchases made on or after January 1, 2004. 122.6 Sec. 32. Minnesota Statutes 2002, section 297A.70, 122.7 subdivision 8, is amended to read: 122.8 Subd. 8. [REGIONWIDE PUBLIC SAFETY RADIO COMMUNICATION 122.9 SYSTEM; PRODUCTS AND SERVICES.] Products and services including, 122.10 but not limited to, end user equipment used for construction, 122.11 ownership, operation, maintenance, and enhancement of the 122.12 backbone system of the regionwide public safety radio 122.13 communication system established under sections 473.891 to 122.14 473.905, are exempt. For purposes of this subdivision, backbone 122.15 system is defined in section 473.891, subdivision 9. This 122.16 subdivision is effective for purchases, sales, storage, use, or 122.17 consumption occurring before August 1,20032005, in the 122.18 counties of Anoka, Carver, Dakota, Hennepin, Ramsey, Scott, and 122.19 Washington. 122.20 [EFFECTIVE DATE.] This section is effective the day 122.21 following final enactment. 122.22 Sec. 33. Minnesota Statutes 2002, section 297A.70, 122.23 subdivision 16, is amended to read: 122.24 Subd. 16. [CAMP FEES.] Camp fees to camps or other 122.25 recreation facilities owned and operated by an exempt 122.26 organization under section 501(c)(3) of the Internal Revenue 122.27 Code are exemptifwhen the camps or facilities provide either: 122.28 (1) educationaland, religious, or rehabilitative 122.29 activities; or 122.30 (2) sports or social activities for young people primarily 122.31 age 18 and under. 122.32 [EFFECTIVE DATE.] This section is effective for sales and 122.33 purchases made after June 30, 2003. 122.34 Sec. 34. Minnesota Statutes 2002, section 297A.75, 122.35 subdivision 4, is amended to read: 122.36 Subd. 4. [INTEREST.] Interest must be paid on the refund 123.1 at the rate in section 270.76 fromthe date the refund claim is123.2filed for taxes paid under subdivision 1, clauses (1) to (3),123.3and (5), and from 60 days after the date the refund claim is123.4filed with the commissioner for claims filed under subdivision123.51, clauses (4), (6), (7), (8), and (9)90 days after the refund 123.6 claim is filed with the commissioner for taxes paid under 123.7 subdivision 1. 123.8 [EFFECTIVE DATE.] This section is effective for refund 123.9 claims filed on or after April 1, 2003. 123.10 Sec. 35. Minnesota Statutes 2002, section 297A.81, is 123.11 amended to read: 123.12 297A.81 [UNCOLLECTIBLE DEBTS; OFFSET AGAINST OTHER TAXES.] 123.13 Subdivision 1. [GENERAL.] The taxpayer may offset against 123.14 the taxes payable for any reporting period the amount of taxes 123.15 imposed by this chapter previously paid as a result of any 123.16 transaction the consideration for which became a debt owed to 123.17 the taxpayer that became uncollectible during the reporting 123.18 period, but only in proportion to the portion of the debt that 123.19 became uncollectible. Section 289A.40, subdivision 2, applies 123.20 to an offset under this section. 123.21 Subd. 2. [MANNER OF ALLOWING DEDUCTION FOR UNCOLLECTIBLE 123.22 DEBT.] (a) Uncollectible debt is allowed as a deduction in the 123.23 manner provided in this subdivision. 123.24 (b) If the uncollectible debt arose with respect to a sale 123.25 required to be included in gross receipts, subject to a tax 123.26 imposed under chapter 297A, the entire amount of the debt 123.27 remaining uncollected is allowed as a deduction. 123.28 (c) If the uncollectible debt arose with respect to a sale 123.29 partly subject to the tax imposed under chapter 297A and partly 123.30 exempt, the amount of the uncollectible debt allowed as a 123.31 deduction is the amount derived by multiplying the uncollectible 123.32 debt by the percentage that the taxable sale bears to the total 123.33 sales. 123.34 (d) If the uncollectible debt arose with respect to two or 123.35 more sales made at successive intervals, payments made before 123.36 the date the debt became uncollectible must be applied first to 124.1 the earliest sale upon which there is an unpaid balance, and to 124.2 following sales in successive order. 124.3 (e) If the books and records of the taxpayer claiming the 124.4 bad debt allowance support an allocation of the bad debts among 124.5 the member states of the streamlined sales and use tax 124.6 agreement, such an allocation shall be allowed. 124.7 Subd. 3. [CERTIFIED SERVICE PROVIDER.] A certified service 124.8 provider, as defined in section 297A.995, subdivision 2, on 124.9 behalf of a taxpayer who is its client, may offset against taxes 124.10 as provided by this section. 124.11 [EFFECTIVE DATE.] This section is effective for sales and 124.12 purchases made on or after January 1, 2004. 124.13 Sec. 36. Minnesota Statutes 2002, section 297A.82, 124.14 subdivision 4, is amended to read: 124.15 Subd. 4. [EXEMPTIONS.] (a) The following transactions are 124.16 exempt from the tax imposed in this chapter to the extent 124.17 provided. 124.18 (b) The purchase or use of aircraft previously registered 124.19 in Minnesota by a corporation or partnership is exempt if the 124.20 transfer constitutes a transfer within the meaning of section 124.21 351 or 721 of the Internal Revenue Code. 124.22 (c) The sale to or purchase, storage, use, or consumption 124.23 by a licensed aircraft dealer of an aircraft for which a 124.24 commercial use permit has been issued pursuant to section 124.25 360.654 is exempt, if the aircraft is resold while the permit is 124.26 in effect. 124.27 (d) Airflight equipment when sold to, or purchased, stored, 124.28 used, or consumed by airline companies, as defined in section 124.29 270.071, subdivision 4, is exempt. For purposes of this 124.30 subdivision, "airflight equipment" includes airplanes and parts 124.31 necessary for the repair and maintenance of such airflight 124.32 equipment, and flight simulators, but does not include airplanes 124.33 with a gross weight of less than 30,000 pounds that are used on 124.34 intermittent or irregularly timed flights. 124.35 (e) Sales of, and the storage, distribution, use, or 124.36 consumption of aircraft, as defined in section 360.511 and 125.1 approved by the Federal Aviation Administration, and which the 125.2 seller delivers to a purchaser outside Minnesota or which, 125.3 without intermediate use, is shipped or transported outside 125.4 Minnesota by the purchaser are exempt, but only if the purchaser 125.5 is not a resident of Minnesota and provided that the aircraft is 125.6 not thereafter returned to a point within Minnesota, except in 125.7 the course of interstate commerce or isolated and occasional 125.8 use, and will be registered in another state or country upon its 125.9 removal from Minnesota. This exemption applies even if the 125.10 purchaser takes possession of the aircraft in Minnesota and uses 125.11 the aircraft in the state exclusively for training purposes for 125.12 a period not to exceed ten days prior to removing the aircraft 125.13 from this state. 125.14 (f) The purchase, storage, use, or consumption by or the 125.15 sale to an airline company, as defined in section 270.071, 125.16 subdivision 4, of prepared food and beverages are exempt if the 125.17 prepared food and beverages are: 125.18 (1) prepared in Minnesota or shipped or brought into 125.19 Minnesota by a for-hire carrier; and 125.20 (2) kept, without use, for the purpose of being transported 125.21 outside of Minnesota. 125.22 [EFFECTIVE DATE.] This section is effective for sales and 125.23 purchases made after June 30, 2003. 125.24 Sec. 37. Minnesota Statutes 2002, section 297A.99, 125.25 subdivision 5, is amended to read: 125.26 Subd. 5. [TAX RATE.] (a) The tax rate is as specified in 125.27 the special law authorization and as imposed by the political 125.28 subdivision. 125.29 (b) The full political subdivision rate applies to any 125.30 sales that are taxed at a state rateless than or more than the125.31state general sales and use tax rate., and the political 125.32 subdivision must not have more than one local sales tax rate or 125.33 more than one local use tax rate. This paragraph does not apply 125.34 to sales or use taxes imposed on electricity, piped natural or 125.35 artificial gas, or other heating fuels delivered by the seller, 125.36 or the retail sale or transfer of motor vehicles, aircraft, 126.1 watercraft, modular homes, manufactured homes, or mobile homes. 126.2 [EFFECTIVE DATE.] This section is effective for sales and 126.3 purchases made on or after January 1, 2004. 126.4 Sec. 38. Minnesota Statutes 2002, section 297A.99, 126.5 subdivision 10, is amended to read: 126.6 Subd. 10. [USE OF ZIP CODE IN DETERMINING LOCATION OF 126.7 SALE.]To determine whether to impose the local tax, the126.8retailer may use zip codes if the zip code area is entirely126.9within the political subdivision. When a zip code area is not126.10entirely within a political subdivision, the retailer shall not126.11collect the local tax if the purchaser notifies the retailer126.12that the purchaser's delivery address is outside of the126.13political subdivision, unless the retailer verifies that the126.14delivery address is in the political subdivision using a means126.15other than the zip code.The lowest combined tax rate imposed 126.16 in the zip code area applies if the area includes more than one 126.17 tax rate in any level of taxing jurisdictions. If a nine-digit 126.18 zip code designation is not available for a street address or if 126.19 a seller is unable to determine the nine-digit zip code 126.20 designation of a purchaser after exercising due diligence to 126.21 determine the designation, the seller may apply the rate for the 126.22 five-digit zip code area. For the purposes of this subdivision, 126.23 there is a rebuttable presumption that a seller has exercised 126.24 due diligence if the seller has attempted to determine the 126.25 nine-digit zip code designation by utilizing software approved 126.26 by the governing board that makes this designation from the 126.27 street address and the five-digit zip code of the purchaser. 126.28 Notwithstanding subdivision 13, this subdivision applies to all 126.29 local sales taxes without regard to the date of 126.30 authorization. This subdivision does not apply when the 126.31 purchased product is received by the purchaser at the business 126.32 location of the seller. 126.33 [EFFECTIVE DATE.] This section is effective for sales and 126.34 purchases made on or after January 1, 2004. 126.35 Sec. 39. Minnesota Statutes 2002, section 297A.99, 126.36 subdivision 12, is amended to read: 127.1 Subd. 12. [EFFECTIVE DATES; NOTIFICATION.] (a) A political 127.2 subdivision may impose a tax under this section starting only on 127.3 the first day of a calendar quarter. A political subdivision 127.4 may repeal a tax under this section stopping only on the last 127.5 day of a calendar quarter. 127.6 (b) The political subdivision shall notify the commissioner 127.7 of revenue at least 90 days before imposing, changing the rate 127.8 of, or repealing a tax under this section. 127.9 (c) The political subdivision shall change the rate of tax 127.10 imposed under this section starting only on the first day of a 127.11 calendar quarter, and only after the commissioner has notified 127.12 sellers at least 60 days prior to the change. 127.13 (d) The political subdivision shall apply the rate change 127.14 for sales tax imposed under this section to purchases from 127.15 printed catalogs, wherein the purchaser computed the tax based 127.16 upon local tax rates published in the catalog, starting only on 127.17 the first day of a calendar quarter, and only after the 127.18 commissioner has notified sellers at least 120 days prior to the 127.19 change. 127.20 (e) The political subdivision shall apply local 127.21 jurisdiction boundary changes to taxes imposed under this 127.22 section starting only on the first day of a calendar quarter, 127.23 and only after the commissioner has notified sellers at least 60 127.24 days prior to the change. 127.25 [EFFECTIVE DATE.] This section is effective for sales and 127.26 purchases made on or after January 1, 2004. 127.27 Sec. 40. Minnesota Statutes 2002, section 297A.995, is 127.28 amended by adding a subdivision to read: 127.29 Subd. 10. [RELIEF FROM CERTAIN LIABILITY.] Notwithstanding 127.30 subdivision 9, sellers and certified service providers are 127.31 relieved from liability to the state for having charged and 127.32 collected the incorrect amount of sales or use tax resulting 127.33 from the seller or certified service provider (1) relying on 127.34 erroneous data provided by this state on tax rates, boundaries, 127.35 or taxing jurisdiction assignments, or (2) relying on erroneous 127.36 data provided by the state in its taxability matrix concerning 128.1 the taxability of products and services. 128.2 [EFFECTIVE DATE.] This section is effective for sales and 128.3 purchases made on or after January 1, 2004. 128.4 Sec. 41. Minnesota Statutes 2002, section 297B.01, 128.5 subdivision 7, is amended to read: 128.6 Subd. 7. [SALE, SELLS, SELLING, PURCHASE, PURCHASED, OR 128.7 ACQUIRED.] (a) "Sale," "sells," "selling," "purchase," 128.8 "purchased," or "acquired" means any transfer of title of any 128.9 motor vehicle, whether absolutely or conditionally, for a 128.10 consideration in money or by exchange or barter for any purpose 128.11 other than resale in the regular course of business. 128.12 (b) Any motor vehicle utilized by the owner only by leasing 128.13 such vehicle to others or by holding it in an effort to so lease 128.14 it, and which is put to no other use by the owner other than 128.15 resale after such lease or effort to lease, shall be considered 128.16 property purchased for resale. 128.17 (c) The terms also shall include any transfer of title or 128.18 ownership of a motor vehicle by other means, for or without 128.19 consideration, except that these terms shall not include: 128.20 (1) the acquisition of a motor vehicle by inheritance from 128.21 or by bequest of, a decedent who owned it; 128.22 (2) the transfer of a motor vehicle which was previously 128.23 licensed in the names of two or more joint tenants and 128.24 subsequently transferred without monetary consideration to one 128.25 or more of the joint tenants; 128.26 (3) the transfer of a motor vehicle by way of gift between 128.27 individuals, or gift from a limited used vehicle dealer licensed 128.28 under section 168.27, subdivision 4a, to an individual, when the 128.29 transfer is with no monetary or other consideration or 128.30 expectation of consideration and the parties to the transfer 128.31 submit an affidavit to that effect at the time the title 128.32 transfer is recorded; 128.33 (4) the voluntary or involuntary transfer of a motor 128.34 vehicle between a husband and wife in a divorce proceeding; or 128.35 (5) the transfer of a motor vehicle by way of a gift to an 128.36 organization that is exempt from federal income taxation under 129.1 section 501(c)(3) of the Internal Revenue Code, as amended 129.2 through December 31, 1996, when the motor vehicle will be used 129.3 exclusively for religious, charitable, or educational purposes. 129.4 [EFFECTIVE DATE.] This section is effective for sales made 129.5 after June 30, 2003. 129.6 Sec. 42. Minnesota Statutes 2002, section 297B.035, is 129.7 amended by adding a subdivision to read: 129.8 Subd. 5. [USE BY DEALER.] If a motor vehicle dealer uses a 129.9 vehicle, purchased for resale in the ordinary course of 129.10 business, other than for demonstration purposes, the dealer may 129.11 elect to pay the motor vehicle sales tax under this chapter or 129.12 the use tax under chapter 297A based on the reasonable rental 129.13 value of the vehicle. If the motor vehicle dealer fails to 129.14 report the use tax under chapter 297A, it is presumed that the 129.15 dealer elected to pay the motor vehicle sales tax under this 129.16 chapter. 129.17 [EFFECTIVE DATE.] This section is effective for sales made 129.18 after June 30, 2003. 129.19 Sec. 43. Laws 2001, First Special Session chapter 5, 129.20 article 12, section 95, as amended by Laws 2002, chapter 377, 129.21 article 3, section 24, is amended to read: 129.22 Sec. 95. [REPEALER.] 129.23 (a) Minnesota Statutes 2000, sections 297A.61, subdivision 129.24 16; 297A.68, subdivision 21; and 297A.71, subdivision 2, are 129.25 repealed effective for sales and purchases occurring after June 129.26 30, 2001, except that the repeal of section 297A.61, subdivision 129.27 16, paragraph (d), is effective for sales and purchases 129.28 occurring after July 31, 2001. 129.29 (b) Minnesota Statutes 2000, sections 297A.62, subdivision 129.30 2, and 297A.64, subdivision 1, are repealed effective for sales 129.31 and purchases made after December 31, 2005. 129.32 (c) Minnesota Statutes 2000, section 297A.71, subdivision 129.33 15, is repealed effective for sales and purchases made after 129.34 June 30, 2002. 129.35 (d)Minnesota Statutes 2000, section 289A.60, subdivision129.3615, is repealed effective for liabilities after January 1, 2004.130.1(e)Minnesota Statutes 2000, section 297A.71, subdivision 130.2 16, is repealed effective for sales and purchases occurring 130.3 after December 31, 2002. 130.4 Sec. 44. [STATE CONVENTION CENTER.] 130.5 Subdivision 1. [EXEMPTION.] Building materials, supplies, 130.6 or equipment used or consumed in constructing or equipping 130.7 improvements to a state convention center located in a city 130.8 outside the metropolitan area as defined in section 473.121, 130.9 subdivision 2, and governed by an 11-person board of which four 130.10 are appointed by the governor are exempt if the improvements are 130.11 financed in whole or in part by nonstate resources including, 130.12 but not limited to, revenue or general obligations issued by the 130.13 state convention center board of the city in which the center is 130.14 located. This exemption applies regardless of whether the items 130.15 are purchased by the owner or by a contractor, subcontractor, or 130.16 builder. 130.17 Subd. 2. [LEGISLATIVE INTENT.] This section is intended to 130.18 clarify the original intent of Minnesota Statutes, section 130.19 297A.71, subdivision 2. 130.20 [EFFECTIVE DATE.] This section is effective the day 130.21 following final enactment and applies retroactively to sales and 130.22 purchases made after June 30, 1995, and before July 1, 2001. 130.23 Sec. 45. [CITY OF NEWPORT; LODGING TAX.] 130.24 Subdivision 1. [LODGING TAX.] Notwithstanding Minnesota 130.25 Statutes, section 477A.016, or any ordinance, city charter, or 130.26 other provision of law, the city of Newport may, by ordinance, 130.27 impose a tax of up to four percent upon the gross receipts from 130.28 the sale of lodging for periods of less than 30 days in hotels 130.29 and motels located in the city. The tax does not apply to the 130.30 furnishing of lodging by a business having less than 25 lodging 130.31 rooms. The total amount of taxes imposed under this section and 130.32 under Minnesota Statutes, section 469.190, shall not exceed four 130.33 percent. 130.34 Subd. 2. [USE OF PROCEEDS.] The proceeds of any tax 130.35 imposed in subdivision 1 shall be used by the city to fund 130.36 economic development and redevelopment of the city. Authorized 131.1 expenses include, but are not limited to, acquisition and 131.2 development costs of open space, parks, and trails. 131.3 Subd. 3. [ENFORCEMENT, COLLECTION, AND 131.4 ADMINISTRATION.] The tax shall be collected and administered in 131.5 the same manner as local lodging taxes under Minnesota Statutes, 131.6 section 469.190. 131.7 [EFFECTIVE DATE.] This section is effective upon approval 131.8 by the Newport city council and compliance with Minnesota 131.9 Statutes, section 645.021, subdivision 3. 131.10 Sec. 46. [STUDY OF LOCAL SALES TAX.] 131.11 (a) The commissioner of revenue shall study the local sales 131.12 taxes in Minnesota and provide a written report and 131.13 recommendations to the legislature, in compliance with Minnesota 131.14 Statutes, sections 3.195 and 3.197, by February 1, 2004. The 131.15 study must report on: 131.16 (1) the authorized uses of revenue from local sales taxes 131.17 in effect, and the proposed uses of revenue from local sales 131.18 taxes recently proposed but not enacted; 131.19 (2) the local approval requirements for local sales taxes; 131.20 (3) the duration of local sales taxes and whether the full 131.21 duration authorized in law was necessary to provide sufficient 131.22 revenue for the authorized uses of the local sales tax; 131.23 (4) if the authorized uses of the local sales tax revenues 131.24 are regional in nature or limited in benefit to the jurisdiction 131.25 in which the tax is imposed; 131.26 (5) the estimated portion of revenue raised through the 131.27 local sales taxes that comes from (i) residents of the 131.28 jurisdiction in which the tax is imposed; (ii) Minnesota 131.29 residents who live outside the jurisdiction; and (iii) 131.30 non-Minnesota residents; 131.31 (6) the ability of jurisdictions to raise revenue by other 131.32 means, including the local property tax, and the extent to which 131.33 the jurisdictions assess property taxes in comparison to other 131.34 similar jurisdictions, and the state average, expressed in terms 131.35 of levy as a percent of adjusted net tax capacity; 131.36 (7) how jurisdictions that do not impose local sales taxes 132.1 raise revenue to fund projects similar to those funded through 132.2 local sales taxes; and 132.3 (8) the compatibility of local sales taxes with the 132.4 policies underlying the streamlined sales tax project. 132.5 (b) The study must make recommendations on: 132.6 (1) the appropriate role of local sales taxes as a part of 132.7 Minnesota's state and local revenue system, including: 132.8 (i) the appropriate uses of local sales taxes; and 132.9 (ii) whether local sales taxes should be limited to 132.10 jurisdictions that do not meet minimum thresholds of raising 132.11 revenue through other means, including local property tax; 132.12 (2) criteria to be used in evaluating local sales tax 132.13 proposals, designed to direct the use of local sales taxes 132.14 toward: 132.15 (i) projects that are regional in nature; 132.16 (ii) projects that require capital expenditures; and 132.17 (iii) projects in jurisdictions with inadequate fiscal 132.18 capacity to fund the projects through other means; and 132.19 (3) the feasibility of authorizing the commissioner of 132.20 revenue to approve or deny local sales taxes proposals based on 132.21 a uniform set of criteria, including the advisability of 132.22 requiring local approval by referendum or revocation by reverse 132.23 referendum, and if the referendum should be a criterion 132.24 necessary for a proposal to be considered for authorization or 132.25 should occur after authorization but as a condition of the tax 132.26 being implemented. 132.27 Sec. 47. [APPROPRIATION.] 132.28 $269,000 in fiscal year 2004 is appropriated to the 132.29 commissioner of revenue from the general fund for the cost of 132.30 administering the streamlined sales tax project provisions of 132.31 this article. 132.32 Sec. 48. [REPEALER.] 132.33 (a) Minnesota Statutes 2002, section 297A.61, subdivisions 132.34 14 and 15, are repealed and are effective for sales and 132.35 purchases made on or after January 1, 2004. 132.36 (b) Minnesota Statutes 2002, section 297A.69, subdivision 133.1 5, is repealed effective January 1, 2006. 133.2 (c) Minnesota Statutes 2002, section 37.13, subdivision 2, 133.3 is repealed effective July 1, 2003, but the repealer does not 133.4 apply to sales taxes retained on sales occurring before July 1, 133.5 2003. 133.6 (d) Minnesota Statutes 2002, section 325E.112, subdivision 133.7 2a, is repealed effective July 1, 2003. 133.8 ARTICLE 5 133.9 PROPERTY TAXES 133.10 Section 1. [123A.455] [REALIGNING SPLIT RESIDENTIAL 133.11 PARCELS.] 133.12 Subdivision 1. [DEFINITIONS.] "Split residential property 133.13 parcel" means a parcel of real estate that is located within the 133.14 boundaries of more than one school district and that is 133.15 classified as residential property under: 133.16 (1) section 273.13, subdivision 22, paragraph (a) or (b); 133.17 (2) section 273.13, subdivision 25, paragraph (b), clause 133.18 (1); or 133.19 (3) section 273.13, subdivision 25, paragraph (c), clause 133.20 (1). 133.21 Subd. 2. [PETITION.] The owner of a split residential 133.22 property parcel may petition the auditor of the county where the 133.23 split parcel is located to transfer that part into the adjoining 133.24 school district so the entire property will be located in the 133.25 same school district. The petition must contain: 133.26 (1) a correct description of the split parcel to be 133.27 affected by the transfer including supporting data on location 133.28 and title to the land; 133.29 (2) a list of the school districts in which the split 133.30 parcels currently lie; 133.31 (3) the school district into which the petitioner desires 133.32 to have the whole split parcel transferred; and 133.33 (4) the district of attendance of any students currently 133.34 residing on the property. 133.35 Subd. 3. [AUDITOR'S ORDER.] Within 60 days of receipt of 133.36 the petition, the auditor of the county in which the petition 134.1 was filed under subdivision 2 shall issue an order to transfer 134.2 the affected parcel to the district determined by the county 134.3 board. Orders issued on or before July 1 will be effective for 134.4 taxes payable in the following year. The auditor must notify 134.5 the affected school districts and the commissioner of the change 134.6 in school district boundaries. 134.7 Subd. 4. [COMMISSIONER.] The commissioner shall modify the 134.8 records of school district boundaries to conform to the order. 134.9 Subd. 5. [TAXABLE PROPERTY.] Upon the effective date of 134.10 the order, the whole split property parcel is transferred into a 134.11 single school district. Beginning in the next subsequent taxes 134.12 payable year, all taxable property in the whole split parcel is: 134.13 (1) relieved of all school district taxes from the district 134.14 in which the parcel is no longer located; and 134.15 (2) subject to all school district taxes in the district in 134.16 which the whole split parcel is now located. 134.17 [EFFECTIVE DATE.] This section is effective for petitions 134.18 filed on or after the day following final enactment. Orders 134.19 issued under subdivision 3 on or before September 15, 2003, are 134.20 effective for taxes payable in 2004. 134.21 Sec. 2. Minnesota Statutes 2002, section 161.465, is 134.22 amended to read: 134.23 161.465 [REIMBURSEMENT FOR FIRE SERVICES.] 134.24(a)Subdivision 1. [GRASS FIRES.] Ordinary expenses 134.25 incurred by a municipal or volunteer fire department in 134.26 extinguishing a grass fire within the right-of-way of a trunk 134.27 highway must be reimbursed upon certification to the 134.28 commissioner of transportation from the trunk highway fund. In 134.29 addition, ordinary expenses incurred by a municipal or volunteer 134.30 fire department in extinguishing a fire outside the right-of-way 134.31 of any trunk highway if the fire originated within the 134.32 right-of-way, upon approval of a police officer or an officer or 134.33 employee of the department of public safety must, upon 134.34 certification to the commissioner of transportation by the 134.35 proper official of the municipality or fire department within 60 134.36 days after the completion of the service, be reimbursed to the 135.1 municipality or fire department from funds in the trunk highway 135.2 fund. 135.3 Subd. 2. [MOTOR VEHICLE FIRES.] Ordinary expenses incurred 135.4 by a municipal or volunteer fire department in extinguishing a 135.5 motor vehicle fire within the right-of-way of a trunk highway or 135.6 interstate, to the extent these expenses are not reimbursed by 135.7 insurance, some other reasonable method of reimbursement, or 135.8 collected in accordance with section 366.012, may be reimbursed 135.9 by the commissioner from the motor vehicle fire revolving 135.10 account in the general fund up to $300 per fire call upon 135.11 certification to the commissioner. 135.12 Subd. 3. [FUND REIMBURSEMENT.] The commissioner of 135.13 transportation shall take action practicable to secure 135.14 reimbursement to the trunk highway fund or to the general fund 135.15 of money expended under this section from the person, firm, or 135.16 corporation responsible for the fire or danger of fire. A motor 135.17 vehicle fire revolving account is created in the general fund. 135.18 The commissioner shall deposit into the account all money 135.19 received by the commissioner in reimbursements from persons, 135.20 firms, or corporations for costs of extinguishing motor vehicle 135.21 fires within trunk highway rights-of-way. Money in the account 135.22 is appropriated to the commissioner for the purpose of making 135.23 reimbursements to municipal or volunteer fire departments under 135.24 subdivision 2. 135.25(b)Subd. 4. [NO ADMISSION OF LIABILITY.] The provisions 135.26 of this section shall not be construed to admit state liability 135.27 for damage or destruction to private property or for injury to 135.28 persons resulting from a fire originating within a trunk highway 135.29 or interstate right-of-way. 135.30 [EFFECTIVE DATE.] This section is effective for motor 135.31 vehicle fires after June 30, 2003. 135.32 Sec. 3. Minnesota Statutes 2002, section 168A.05, 135.33 subdivision 1a, is amended to read: 135.34 Subd. 1a. [MANUFACTURED HOME; STATEMENT OF PROPERTY TAX 135.35 PAYMENT.] In the case of a manufactured home as defined in 135.36 section 327.31, subdivision 6, the department shall not issue a 136.1 certificate of title unless the application under section 136.2 168A.04 is accompanied with a statement from the county auditor 136.3 or county treasurer where the manufactured home is presently 136.4 located, stating that all manufactured home personal property 136.5 taxes levied on the unitthat are due fromin the name of the 136.6 current owner at the time of transferfor which the application136.7applies,have been paid. 136.8 [EFFECTIVE DATE.] This section is effective for 136.9 certificates of title issued by the department on or after July 136.10 1, 2003. 136.11 Sec. 4. Minnesota Statutes 2002, section 216B.2424, 136.12 subdivision 5, is amended to read: 136.13 Subd. 5. [MANDATE.] (a) A public utility, as defined in 136.14 section 216B.02, subdivision 4, that operates a nuclear-powered 136.15 electric generating plant within this state must construct and 136.16 operate, purchase, or contract to construct and operate (1) by 136.17 December 31, 1998, 50 megawatts of electric energy installed 136.18 capacity generated by farm-grown closed-loop biomass scheduled 136.19 to be operational by December 31, 2001; and (2) by December 31, 136.20 1998, an additional 75 megawatts of installed capacity so 136.21 generated scheduled to be operational by December 31, 2002. 136.22 (b) Of the 125 megawatts of biomass electricity installed 136.23 capacity required under this subdivision, no more than 50 136.24 megawatts of this capacity may be provided by a facility that 136.25 uses poultry litter as its primary fuel source and any such 136.26 facility: 136.27 (1) need not use biomass that complies with the definition 136.28 in subdivision 1; 136.29 (2) must enter into a contract with the public utility for 136.30 such capacity, that has an average purchase price per megawatt 136.31 hour over the life of the contract that is equal to or less than 136.32 the average purchase price per megawatt hour over the life of 136.33 the contract in contracts approved by the public utilities 136.34 commission before April 1, 2000, to satisfy the mandate of this 136.35 section, and file that contract with the public utilities 136.36 commission prior to September 1, 2000; and 137.1 (3) must schedule such capacity to be operational by 137.2 December 31, 2002. 137.3 (c) Of the total 125 megawatts of biomass electric energy 137.4 installed capacity required under this section, no more than 75 137.5 megawatts may be provided by a single project. 137.6 (d) Of the 75 megawatts of biomass electric energy 137.7 installed capacity required under paragraph (a), clause (2), no 137.8 more than 25 megawatts of this capacity may be provided by a St. 137.9 Paul district heating and cooling system cogeneration facility 137.10 utilizing waste wood as a primary fuel source. The St. Paul 137.11 district heating and cooling system cogeneration facility need 137.12 not use biomass that complies with the definition in subdivision 137.13 1. 137.14 (e) The public utility must accept and consider on an equal 137.15 basis with other biomass proposals: 137.16 (1) a proposal to satisfy the requirements of this section 137.17 that includes a project that exceeds the megawatt capacity 137.18 requirements of either paragraph (a), clause (1) or (2), and 137.19 that proposes to sell the excess capacity to the public utility 137.20 or to other purchasers; and 137.21 (2) a proposal for a new facility to satisfy more than ten 137.22 but not more than 20 megawatts of the electrical generation 137.23 requirements by a small business-sponsored independent power 137.24 producer facility to be located within the northern quarter of 137.25 the state, which means the area located north of Constitutional 137.26 Route No. 8 as described in section 161.114, subdivision 2, and 137.27 that utilizes biomass residue wood, sawdust, bark, chipped wood, 137.28 or brush to generate electricity. A facility described in this 137.29 clause is not required to utilize biomass complying with the 137.30 definition in subdivision 1, but musthave the capacity required137.31by this clause operational by December 31, 2002be under 137.32 construction by July 1, 2005. 137.33 (f) If a public utility files a contract with the 137.34 commission for electric energy installed capacity that uses 137.35 poultry litter as its primary fuel source, the commission must 137.36 do a preliminary review of the contract to determine if it meets 138.1 the purchase price criteria provided in paragraph (b), clause 138.2 (2), of this subdivision. The commission shall perform its 138.3 review and advise the parties of its determination within 30 138.4 days of filing of such a contract by a public utility. A public 138.5 utility may submit by September 1, 2000, a revised contract to 138.6 address the commission's preliminary determination. 138.7 (g) The commission shall finally approve, modify, or 138.8 disapprove no later than July 1, 2001, all contracts submitted 138.9 by a public utility as of September 1, 2000, to meet the mandate 138.10 set forth in this subdivision. 138.11 (h) If a public utility subject to this section exercises 138.12 an option to increase the generating capacity of a project in a 138.13 contract approved by the commission prior to April 25, 2000, to 138.14 satisfy the mandate in this subdivision, the public utility must 138.15 notify the commission by September 1, 2000, that it has 138.16 exercised the option and include in the notice the amount of 138.17 additional megawatts to be generated under the option 138.18 exercised. Any review by the commission of the project after 138.19 exercise of such an option shall be based on the same criteria 138.20 used to review the existing contract. 138.21 (i) A facility specified in this subdivision qualifies for 138.22 exemption from property taxation under section 272.02, 138.23 subdivision 43. 138.24 [EFFECTIVE DATE.] This section is effective the day 138.25 following final enactment. 138.26 Sec. 5. Minnesota Statutes 2002, section 270B.12, is 138.27 amended by adding a subdivision to read: 138.28 Subd. 13. [COUNTY ASSESSORS; CLASS 1B HOMESTEADS.] The 138.29 commissioner may disclose to a county assessor, and to the 138.30 assessor's designated agents or employees, a listing of persons 138.31 and parcels of property qualifying for the class 1b property tax 138.32 classification under section 273.13, subdivision 22. 138.33 [EFFECTIVE DATE.] This section is effective the day 138.34 following final enactment. 138.35 Sec. 6. Minnesota Statutes 2002, section 272.02, 138.36 subdivision 31, is amended to read: 139.1 Subd. 31. [BUSINESS INCUBATOR PROPERTY.] Property owned by 139.2 a nonprofit charitable organization that qualifies for tax 139.3 exemption under section 501(c)(3) of the Internal Revenue Code 139.4 of 1986, as amended through December 31, 1997, that is intended 139.5 to be used as a business incubator in a high-unemployment 139.6 county, is exempt. As used in this subdivision, a "business 139.7 incubator" is a facility used for the development of nonretail 139.8 businesses, offering access to equipment, space, services, and 139.9 advice to the tenant businesses, for the purpose of encouraging 139.10 economic development, diversification, and job creation in the 139.11 area served by the organization, and "high-unemployment county" 139.12 is a county that had an average annual unemployment rate of 7.9 139.13 percent or greater in 1997. Property that qualifies for the 139.14 exemption under this subdivision is limited to no more than two 139.15 contiguous parcels and structures that do not exceed in the 139.16 aggregate 40,000 square feet. This exemption expires after 139.17 taxes payable in20052011. 139.18 [EFFECTIVE DATE.] This section is effective the day 139.19 following final enactment. 139.20 Sec. 7. Minnesota Statutes 2002, section 272.02, 139.21 subdivision 47, is amended to read: 139.22 Subd. 47. [POULTRY LITTER BIOMASS GENERATION FACILITY; 139.23 PERSONAL PROPERTY.] Notwithstanding subdivision 9, clause (a), 139.24 attached machinery and other personal property which is part of 139.25 an electrical generating facility that meets the requirements of 139.26 this subdivision is exempt. At the time of construction, the 139.27 facility must: 139.28 (1) be designed to utilize poultry litter as a primary fuel 139.29 source; and 139.30 (2) be constructed for the purpose of generating power at 139.31 the facility that will be sold pursuant to a contract approved 139.32 by the public utilities commission in accordance with the 139.33 biomass mandate imposed under section 216B.2424. 139.34 Construction of the facility must be commenced after 139.35 January 1,20002003, and before December 31,20022003. 139.36 Property eligible for this exemption does not include electric 140.1 transmission lines and interconnections or gas pipelines and 140.2 interconnections appurtenant to the property or the facility. 140.3 [EFFECTIVE DATE.] This section is effective for taxes 140.4 levied in 2004, payable in 2005, and thereafter. 140.5 Sec. 8. Minnesota Statutes 2002, section 272.02, 140.6 subdivision 48, is amended to read: 140.7 Subd. 48. [WASTE TIRE COGENERATION FACILITY; PERSONAL 140.8 PROPERTY.] Notwithstanding subdivision 9, clause (a), attached 140.9 machinery and other personal property which is part of an 140.10 electric generating facility that meets the requirements of this 140.11 subdivision is exempt. At the time of construction, the 140.12 facility must: 140.13 (1) be designed to utilize waste tires as a primary fuel 140.14 source; and 140.15 (2) be a cogeneration electric generating facility of 15 to 140.16 25 megawatts of installed capacity. 140.17 Construction of the facility must be commenced after 140.18 January 1, 2000, and before January 1,20042008. Property 140.19 eligible for this exemption does not include electric 140.20 transmission lines and interconnections or gas pipelines and 140.21 interconnections appurtenant to the property or the facility. 140.22 [EFFECTIVE DATE.] This section is effective the day 140.23 following final enactment. 140.24 Sec. 9. Minnesota Statutes 2002, section 272.02, 140.25 subdivision 53, is amended to read: 140.26 Subd. 53. [ELECTRIC GENERATION FACILITY; PERSONAL 140.27 PROPERTY.] Notwithstanding subdivision 9, clause (a), attached 140.28 machinery and other personal property which is part of a 3.2 140.29 megawatt run-of-the-river hydroelectric generation facility and 140.30 that meets the requirements of this subdivision is exempt. At 140.31 the time of construction, the facility must: 140.32 (1) utilize two turbine generators at a dam site existing 140.33 on March 31, 1994; 140.34 (2) be located on publicly owned land and within 1,500 feet 140.35 of a 13.8 kilovolt distribution substation; and 140.36 (3) be eligible to receive a renewable energy production 141.1 incentive payment under section 216C.41. 141.2 Construction of the facility must be commenced after 141.3 January 1, 2002, and before January 1,20042005. Property 141.4 eligible for this exemption does not include electric 141.5 transmission lines and interconnections or gas pipelines and 141.6 interconnections appurtenant to the property or the facility. 141.7 [EFFECTIVE DATE.] This section is effective the day 141.8 following final enactment. 141.9 Sec. 10. Minnesota Statutes 2002, section 272.02, is 141.10 amended by adding a subdivision to read: 141.11 Subd. 56. [ELECTRIC GENERATION FACILITY; PERSONAL 141.12 PROPERTY.] (a) Notwithstanding subdivision 9, clause (a), 141.13 attached machinery and other personal property which is part of 141.14 a combined-cycle combustion-turbine electric generation facility 141.15 that exceeds 550 megawatts of installed capacity and that meets 141.16 the requirements of this subdivision is exempt. At the time of 141.17 construction, the facility must: 141.18 (1) be designed to utilize natural gas as a primary fuel; 141.19 (2) not be owned by a public utility as defined in section 141.20 216B.02, subdivision 4; 141.21 (3) be located within five miles of an existing natural gas 141.22 pipeline and within four miles of an existing electrical 141.23 transmission substation; 141.24 (4) be located outside the metropolitan area as defined 141.25 under section 473.121, subdivision 2; and 141.26 (5) be designed to provide energy and ancillary services 141.27 and have received a certificate of need under section 216B.243. 141.28 (b) Construction of the facility must be commenced after 141.29 January 1, 2004, and before January 1, 2007. Property eligible 141.30 for this exemption does not include electric transmission lines 141.31 and interconnections or gas pipelines and interconnections 141.32 appurtenant to the property or the facility. 141.33 [EFFECTIVE DATE.] This section is effective for assessment 141.34 year 2005, taxes payable in 2006, and thereafter. 141.35 Sec. 11. Minnesota Statutes 2002, section 272.02, is 141.36 amended by adding a subdivision to read: 142.1 Subd. 57. [ELECTRIC GENERATION FACILITY; PERSONAL 142.2 PROPERTY.] (a) Notwithstanding subdivision 9, clause (a), 142.3 attached machinery and other personal property which is part of 142.4 a combined-cycle combustion-turbine electric generation facility 142.5 that exceeds 150 megawatts of installed capacity and that meets 142.6 the requirements of this subdivision is exempt. At the time of 142.7 construction, the facility must: 142.8 (1) utilize natural gas as a primary fuel; 142.9 (2) be owned by an electric generation and transmission 142.10 cooperative; 142.11 (3) be located within ten miles of parallel existing 142.12 24-inch and 30-inch natural gas pipelines and a 345-kilovolt 142.13 high-voltage electric transmission line; 142.14 (4) be designed to provide intermediate energy and 142.15 ancillary services, and have received a certificate of need 142.16 under section 216B.243, demonstrating demand for its capacity; 142.17 and 142.18 (5) have received by resolution, the approval from the 142.19 governing body of the county and city in which the proposed 142.20 facility is to be located for the exemption of personal property 142.21 under this subdivision. 142.22 (b) Construction of the facility must be commenced after 142.23 January 1, 2004, and before January 1, 2009. Property eligible 142.24 for this exemption does not include electric transmission lines 142.25 and interconnections or gas pipelines and interconnections 142.26 appurtenant to the property or the facility. 142.27 (c) The exemption under this section will take effect only 142.28 if the owner of the facility enters into agreements with the 142.29 governing bodies of the county and the city in which the 142.30 facility is located. The agreements may include a requirement 142.31 that the facility must pay a host fee to compensate the county 142.32 and city for hosting the facility. 142.33 [EFFECTIVE DATE.] This section is effective for assessment 142.34 year 2005, taxes payable in 2006, and thereafter. 142.35 Sec. 12. Minnesota Statutes 2002, section 273.01, is 142.36 amended to read: 143.1 273.01 [LISTING AND ASSESSMENT, TIME.] 143.2 All real property subject to taxation shall be listed and 143.3 at leastone-fourthone-fifth of the parcels listed shall be 143.4 appraised each year with reference to their value on January 2 143.5 preceding the assessment so that each parcel shall be 143.6 reappraised at maximum intervals offourfive years. All real 143.7 property becoming taxable in any year shall be listed with 143.8 reference to its value on January 2 of that year. Except as 143.9 provided in this section and section 274.01, subdivision 1, all 143.10 real property assessments shall be completed two weeks prior to 143.11 the date scheduled for the local board of review or 143.12 equalization. No changes in valuation or classification which 143.13 are intended to correct errors in judgment by the county 143.14 assessor may be made by the county assessor after the board of 143.15 review or the county board of equalization has adjourned; 143.16 however, corrections of errors that are merely clerical in 143.17 nature or changes that extend homestead treatment to property 143.18 are permitted after adjournment until the tax extension date for 143.19 that assessment year. Any changes made by the assessor after 143.20 adjournment must be fully documented and maintained in a file in 143.21 the assessor's office and shall be available for review by any 143.22 person. A copy of any changes made during this period shall be 143.23 sent to the county board no later than December 31 of the 143.24 assessment year. In the event a valuation and classification is 143.25 not placed on any real property by the dates scheduled for the 143.26 local board of review or equalization the valuation and 143.27 classification determined in the preceding assessment shall be 143.28 continued in effect and the provisions of section 273.13 shall, 143.29 in such case, not be applicable, except with respect to real 143.30 estate which has been constructed since the previous 143.31 assessment. Real property containing iron ore, the fee to which 143.32 is owned by the state of Minnesota, shall, if leased by the 143.33 state after January 2 in any year, be subject to assessment for 143.34 that year on the value of any iron ore removed under said lease 143.35 prior to January 2 of the following year. Personal property 143.36 subject to taxation shall be listed and assessed annually with 144.1 reference to its value on January 2; and, if acquired on that 144.2 day, shall be listed by or for the person acquiring it. 144.3 [EFFECTIVE DATE.] This section is effective for assessments 144.4 on or after January 2, 2004. 144.5 Sec. 13. Minnesota Statutes 2002, section 273.08, is 144.6 amended to read: 144.7 273.08 [ASSESSOR'S DUTIES.] 144.8 The assessor shall actually view, and determine the market 144.9 value of each tract or lot of real property listed for taxation, 144.10 including the value of all improvements and structures thereon, 144.11 at maximum intervals offourfive years and shall enter the 144.12 value opposite each description. 144.13 [EFFECTIVE DATE.] This section is effective for assessments 144.14 on or after January 2, 2004. 144.15 Sec. 14. Minnesota Statutes 2002, section 273.112, 144.16 subdivision 3, is amended to read: 144.17 Subd. 3. [REQUIREMENTS.] Real estate shall be entitled to 144.18 valuation and tax deferment under this section only if it is: 144.19 (a) actively and exclusively devoted to golf, skiing, lawn 144.20 bowling, croquet, auto racing, or archery or firearms range 144.21 recreational use or other recreational uses carried on at the 144.22 establishment; 144.23 (b) five acres in size or more, except in the case of a 144.24 lawn bowling or croquet green or an archery or firearms range; 144.25 (c)(1) operated by private individuals or, in the case of a 144.26 lawn bowling green,orcroquet green, or an auto racing track, 144.27 by private individuals or corporations, and open to the public; 144.28 or 144.29 (2) operated by firms or corporations for the benefit of 144.30 employees or guests; or 144.31 (3) operated by private clubs having a membership of 50 or 144.32 more or open to the public, provided that the club does not 144.33 discriminate in membership requirements or selection on the 144.34 basis of sex or marital status; and 144.35 (d) made available for use in the case of real estate 144.36 devoted to golf without discrimination on the basis of sex 145.1 during the time when the facility is open to use by the public 145.2 or by members, except that use for golf may be restricted on the 145.3 basis of sex no more frequently than one, or part of one, 145.4 weekend each calendar month for each sex and no more than two, 145.5 or part of two, weekdays each week for each sex. 145.6 If a golf club membership allows use of golf course 145.7 facilities by more than one adult per membership, the use must 145.8 be equally available to all adults entitled to use of the golf 145.9 course under the membership, except that use may be restricted 145.10 on the basis of sex as permitted in this section. Memberships 145.11 that permit play during restricted times may be allowed only if 145.12 the restricted times apply to all adults using the membership. 145.13 A golf club may not offer a membership or golfing privileges to 145.14 a spouse of a member that provides greater or less access to the 145.15 golf course than is provided to that person's spouse under the 145.16 same or a separate membership in that club, except that the 145.17 terms of a membership may provide that one spouse may have no 145.18 right to use the golf course at any time while the other spouse 145.19 may have either limited or unlimited access to the golf course. 145.20 A golf club may have or create an individual membership 145.21 category which entitles a member for a reduced rate to play 145.22 during restricted hours as established by the club. The club 145.23 must have on record a written request by the member for such 145.24 membership. 145.25 A golf club that has food or beverage facilities or 145.26 services must allow equal access to those facilities and 145.27 services for both men and women members in all membership 145.28 categories at all times. Nothing in this paragraph shall be 145.29 construed to require service or access to facilities to persons 145.30 under the age of 21 years or require any act that would violate 145.31 law or ordinance regarding sale, consumption, or regulation of 145.32 alcoholic beverages. 145.33 For purposes of this subdivision and subdivision 7a, 145.34 discrimination means a pattern or course of conduct and not 145.35 linked to an isolated incident. 145.36 [EFFECTIVE DATE.] This section is effective beginning in 146.1 assessment year 2003, except that for the 2003 assessment year, 146.2 the application for deferment under this section must be filed 146.3 with the county assessor in which the property is located within 146.4 60 days after final enactment of this act. 146.5 Sec. 15. Minnesota Statutes 2002, section 273.124, 146.6 subdivision 14, is amended to read: 146.7 Subd. 14. [AGRICULTURAL HOMESTEADS; SPECIAL PROVISIONS.] 146.8 (a) Real estate of less than ten acres that is the homestead of 146.9 its owner must be classified as class 2a under section 273.13, 146.10 subdivision 23, paragraph (a), if: 146.11 (1) the parcel on which the house is located is contiguous 146.12 on at least two sides to (i) agricultural land, (ii) land owned 146.13 or administered by the United States Fish and Wildlife Service, 146.14 or (iii) land administered by the department of natural 146.15 resources on which in lieu taxes are paid under sections 477A.11 146.16 to 477A.14; 146.17 (2) its owner also owns a noncontiguous parcel of 146.18 agricultural land that is at least 20 acres; 146.19 (3) the noncontiguous land is located not farther than four 146.20 townships or cities, or a combination of townships or cities 146.21 from the homestead; and 146.22 (4) the agricultural use value of the noncontiguous land 146.23 and farm buildings is equal to at least 50 percent of the market 146.24 value of the house, garage, and one acre of land. 146.25 Homesteads initially classified as class 2a under the 146.26 provisions of this paragraph shall remain classified as class 146.27 2a, irrespective of subsequent changes in the use of adjoining 146.28 properties, as long as the homestead remains under the same 146.29 ownership, the owner owns a noncontiguous parcel of agricultural 146.30 land that is at least 20 acres, and the agricultural use value 146.31 qualifies under clause (4). Homestead classification under this 146.32 paragraph is limited to property that qualified under this 146.33 paragraph for the 1998 assessment. 146.34 (b)(i) Agricultural property consisting of at least 40 146.35 acres shall be classified as the owner's homestead, to the same 146.36 extent as other agricultural homestead property, if all of the 147.1 following criteria are met: 147.2 (1) the owner, the owner's spouse, or the son or daughter 147.3 of the owner or owner's spouse, is actively farming the 147.4 agricultural property, either on the person's own behalf as an 147.5 individual or on behalf of a partnership operating a family 147.6 farm, family farm corporation, joint family farm venture, or 147.7 limited liability company of which the person is a partner, 147.8 shareholder, or member; 147.9 (2) both the owner of the agricultural property and the 147.10 person who is actively farming the agricultural property under 147.11 clause (1), are Minnesota residents; 147.12 (3) neither the owner nor the spouse of the owner claims 147.13 another agricultural homestead in Minnesota; and 147.14 (4) neither the owner nor the person actively farming the 147.15 property lives farther than four townships or cities, or a 147.16 combination of four townships or cities, from the agricultural 147.17 property, except that if the owner or the owner's spouse is 147.18 required to live in employer-provided housing, the owner or 147.19 owner's spouse, whichever is actively farming the agricultural 147.20 property, may live more than four townships or cities, or 147.21 combination of four townships or cities from the agricultural 147.22 property. 147.23 The relationship under this paragraph may be either by 147.24 blood or marriage. 147.25 (ii) Real property held by a trustee under a trust is 147.26 eligible for agricultural homestead classification under this 147.27 paragraph if the qualifications in clause (i) are met, except 147.28 that "owner" means the grantor of the trust. 147.29 (iii) Property containing the residence of an owner who 147.30 owns qualified property under clause (i) shall be classified as 147.31 part of the owner's agricultural homestead, if that property is 147.32 also used for noncommercial storage or drying of agricultural 147.33 crops. 147.34 (c) Noncontiguous land shall be included as part of a 147.35 homestead under section 273.13, subdivision 23, paragraph (a), 147.36 only if the homestead is classified as class 2a and the detached 148.1 land is located in the same township or city, or not farther 148.2 than four townships or cities or combination thereof from the 148.3 homestead. Any taxpayer of these noncontiguous lands must 148.4 notify the county assessor that the noncontiguous land is part 148.5 of the taxpayer's homestead, and, if the homestead is located in 148.6 another county, the taxpayer must also notify the assessor of 148.7 the other county. 148.8 (d) Agricultural land used for purposes of a homestead and 148.9 actively farmed by a person holding a vested remainder interest 148.10 in it must be classified as a homestead under section 273.13, 148.11 subdivision 23, paragraph (a). If agricultural land is 148.12 classified class 2a, any other dwellings on the land used for 148.13 purposes of a homestead by persons holding vested remainder 148.14 interests who are actively engaged in farming the property, and 148.15 up to one acre of the land surrounding each homestead and 148.16 reasonably necessary for the use of the dwelling as a home, must 148.17 also be assessed class 2a. 148.18 (e) Agricultural land and buildings that were class 2a 148.19 homestead property under section 273.13, subdivision 23, 148.20 paragraph (a), for the 1997 assessment shall remain classified 148.21 as agricultural homesteads for subsequent assessments if: 148.22 (1) the property owner abandoned the homestead dwelling 148.23 located on the agricultural homestead as a result of the April 148.24 1997 floods; 148.25 (2) the property is located in the county of Polk, Clay, 148.26 Kittson, Marshall, Norman, or Wilkin; 148.27 (3) the agricultural land and buildings remain under the 148.28 same ownership for the current assessment year as existed for 148.29 the 1997 assessment year and continue to be used for 148.30 agricultural purposes; 148.31 (4) the dwelling occupied by the owner is located in 148.32 Minnesota and is within 30 miles of one of the parcels of 148.33 agricultural land that is owned by the taxpayer; and 148.34 (5) the owner notifies the county assessor that the 148.35 relocation was due to the 1997 floods, and the owner furnishes 148.36 the assessor any information deemed necessary by the assessor in 149.1 verifying the change in dwelling. Further notifications to the 149.2 assessor are not required if the property continues to meet all 149.3 the requirements in this paragraph and any dwellings on the 149.4 agricultural land remain uninhabited. 149.5 (f) Agricultural land and buildings that were class 2a 149.6 homestead property under section 273.13, subdivision 23, 149.7 paragraph (a), for the 1998 assessment shall remain classified 149.8 agricultural homesteads for subsequent assessments if: 149.9 (1) the property owner abandoned the homestead dwelling 149.10 located on the agricultural homestead as a result of damage 149.11 caused by a March 29, 1998, tornado; 149.12 (2) the property is located in the county of Blue Earth, 149.13 Brown, Cottonwood, LeSueur, Nicollet, Nobles, or Rice; 149.14 (3) the agricultural land and buildings remain under the 149.15 same ownership for the current assessment year as existed for 149.16 the 1998 assessment year; 149.17 (4) the dwelling occupied by the owner is located in this 149.18 state and is within 50 miles of one of the parcels of 149.19 agricultural land that is owned by the taxpayer; and 149.20 (5) the owner notifies the county assessor that the 149.21 relocation was due to a March 29, 1998, tornado, and the owner 149.22 furnishes the assessor any information deemed necessary by the 149.23 assessor in verifying the change in homestead dwelling. For 149.24 taxes payable in 1999, the owner must notify the assessor by 149.25 December 1, 1998. Further notifications to the assessor are not 149.26 required if the property continues to meet all the requirements 149.27 in this paragraph and any dwellings on the agricultural land 149.28 remain uninhabited. 149.29 (g) Agricultural property consisting of at least 40 acres 149.30 of a family farm corporation, joint family farm venture, family 149.31 farm limited liability company, or partnership operating a 149.32 family farm as described under subdivision 8 shall be classified 149.33 homestead, to the same extent as other agricultural homestead 149.34 property, if all of the following criteria are met: 149.35 (1) a shareholder, member, or partner of that entity is 149.36 actively farming the agricultural property; 150.1 (2) that shareholder, member, or partner who is actively 150.2 farming the agricultural property is a Minnesota resident; 150.3 (3) neither that shareholder, member, or partner, nor the 150.4 spouse of that shareholder, member, or partner claims another 150.5 agricultural homestead in Minnesota; and 150.6 (4) that shareholder, member, or partner does not live 150.7 farther than four townships or cities, or a combination of four 150.8 townships or cities, from the agricultural property. 150.9 Homestead treatment applies under this paragraph for 150.10 property leased to a family farm corporation, joint farm 150.11 venture, limited liability company, or partnership operating a 150.12 family farm if legal title to the property is in the name of an 150.13 individual who is a member, shareholder, or partner in the 150.14 entity. 150.15 (h) To be eligible for the special agricultural homestead 150.16 under this subdivision, an initial full application must be 150.17 submitted to the county assessor where the property is located. 150.18 Owners and the persons who are actively farming the property 150.19 shall be required to complete only a one-page abbreviated 150.20 version of the application in each subsequent year provided that 150.21 none of the following items have changed since the initial 150.22 application: 150.23 (1) the day-to-day operation, administration, and financial 150.24 risks remain the same; 150.25 (2) the owners and the persons actively farming the 150.26 property continue to live within the four townships or city 150.27 criteria and are Minnesota residents; 150.28 (3) the same operator of the agricultural property is 150.29 listed with the farm service agency; 150.30 (4) a Schedule F or equivalent income tax form was filed 150.31 for the most recent year; 150.32 (5) the property's acreage is unchanged; and 150.33 (6) none of the property's acres have been enrolled in a 150.34 federal or state farm program since the initial application. 150.35 The owners and any persons who are actively farming the 150.36 property must include the appropriate social security numbers, 151.1 and sign and date the application. If any of the specified 151.2 information has changed since the full application was filed, 151.3 the owner must notify the assessor, and must complete a new 151.4 application to determine if the property continues to qualify 151.5 for the special agricultural homestead. The commissioner of 151.6 revenue shall prepare a standard reapplication form for use by 151.7 the assessors. 151.8 [EFFECTIVE DATE.] This section is effective for 151.9 applications filed for the 2004 assessment and thereafter. 151.10 Sec. 16. Minnesota Statutes 2002, section 273.13, 151.11 subdivision 22, is amended to read: 151.12 Subd. 22. [CLASS 1.] (a) Except as provided in subdivision 151.13 23 and in paragraphs (b) and (c), real estate which is 151.14 residential and used for homestead purposes is class 1a. In the 151.15 case of a duplex or triplex in which one of the units is used 151.16 for homestead purposes, the entire property is deemed to be used 151.17 for homestead purposes. The market value of class 1a property 151.18 must be determined based upon the value of the house, garage, 151.19 and land. 151.20 The first $500,000 of market value of class 1a property has 151.21 a net class rate of one percent of its market value; and the 151.22 market value of class 1a property that exceeds $500,000 has a 151.23 class rate of 1.25 percent of its market value. 151.24 (b) Class 1b property includes homestead real estate or 151.25 homestead manufactured homes used for the purposes of a 151.26 homestead by 151.27 (1) any blind person, or the blind person and the blind 151.28 person's spouse; or 151.29 (2) any person, hereinafter referred to as "veteran," who: 151.30 (i) served in the active military or naval service of the 151.31 United States; and 151.32 (ii) is entitled to compensation under the laws and 151.33 regulations of the United States for permanent and total 151.34 service-connected disability due to the loss, or loss of use, by 151.35 reason of amputation, ankylosis, progressive muscular 151.36 dystrophies, or paralysis, of both lower extremities, such as to 152.1 preclude motion without the aid of braces, crutches, canes, or a 152.2 wheelchair; and 152.3 (iii) has acquired a special housing unit with special 152.4 fixtures or movable facilities made necessary by the nature of 152.5 the veteran's disability, or the surviving spouse of the 152.6 deceased veteran for as long as the surviving spouse retains the 152.7 special housing unit as a homestead; or 152.8 (3) any person who: 152.9 (i) is permanently and totally disabled and 152.10 (ii) receives 90 percent or more of total household income, 152.11 as defined in section 290A.03, subdivision 5, from 152.12 (A) aid from any state as a result of that disability; or 152.13 (B) supplemental security income for the disabled; or 152.14 (C) workers' compensation based on a finding of total and 152.15 permanent disability; or 152.16 (D) social security disability, including the amount of a 152.17 disability insurance benefit which is converted to an old age 152.18 insurance benefit and any subsequent cost of living increases; 152.19 or 152.20 (E) aid under the federal Railroad Retirement Act of 1937, 152.21 United States Code Annotated, title 45, section 228b(a)5; or 152.22 (F) a pension from any local government retirement fund 152.23 located in the state of Minnesota as a result of that 152.24 disability; or 152.25 (G) pension, annuity, or other income paid as a result of 152.26 that disability from a private pension or disability plan, 152.27 including employer, employee, union, and insurance plans and 152.28 (iii) has household income as defined in section 290A.03, 152.29 subdivision 5, of $50,000 or less; or 152.30 (4) any person who is permanently and totally disabled and 152.31 whose household income as defined in section 290A.03, 152.32 subdivision 5, is 275 percent or less of the federal poverty 152.33 level. 152.34 Property is classified and assessed under clause (4) only 152.35 if the government agency or income-providing source certifies, 152.36 upon the request of the homestead occupant, that the homestead 153.1 occupant satisfies the disability requirements of this paragraph. 153.2 Property is classified and assessed pursuant to clause (1) 153.3 only if the commissioner ofeconomic securityrevenue certifies 153.4 to the assessor that the homestead occupant satisfies the 153.5 requirements of this paragraph. Once the initial application is 153.6 made and approved by the commissioner, no further applications 153.7 are required, unless the property is sold, there is a change in 153.8 occupancy, or the occupant's vision changes. Failure to notify 153.9 the commissioner within 60 days that the property no longer 153.10 qualifies shall result in a penalty provided under section 153.11 273.124, subdivision 13, computed on the basis of the class 1b 153.12 benefits for the property, and the property shall lose its 153.13 current class 1b classification. If the commissioner determines 153.14 that the homestead occupant no longer satisfies the requirements 153.15 of this paragraph, the commissioner shall notify the county 153.16 assessor. 153.17 Permanently and totally disabled for the purpose of this 153.18 subdivision means a condition which is permanent in nature and 153.19 totally incapacitates the person from working at an occupation 153.20 which brings the person an income. The first $32,000 market 153.21 value of class 1b property has a net class rate of .45 percent 153.22 of its market value. The remaining market value of class 1b 153.23 property has a class rate using the rates for class 1a or class 153.24 2a property, whichever is appropriate, of similar market value. 153.25 (c) Class 1c property is commercial use real property that 153.26 abuts a lakeshore line and is devoted to temporary and seasonal 153.27 residential occupancy for recreational purposes but not devoted 153.28 to commercial purposes for more than 250 days in the year 153.29 preceding the year of assessment, and that includes a portion 153.30 used as a homestead by the owner, which includes a dwelling 153.31 occupied as a homestead by a shareholder of a corporation that 153.32 owns the resortor, a partner in a partnership that owns the 153.33 resort, or a member of a limited liability company that owns the 153.34 resort even if the title to the homestead is held by the 153.35 corporationor, partnership, or limited liability company. For 153.36 purposes of this clause, property is devoted to a commercial 154.1 purpose on a specific day if any portion of the property, 154.2 excluding the portion used exclusively as a homestead, is used 154.3 for residential occupancy and a fee is charged for residential 154.4 occupancy. The first $500,000 of market value of class 1c 154.5 property has a class rate of one percent, and the remaining 154.6 market value of class 1c property has a class rate of one 154.7 percent, with the following limitation: the area of the 154.8 property must not exceed 100 feet of lakeshore footage for each 154.9 cabin or campsite located on the property up to a total of 800 154.10 feet and 500 feet in depth, measured away from the lakeshore. 154.11 If any portion of the class 1c resort property is classified as 154.12 class 4c under subdivision 25, the entire property must meet the 154.13 requirements of subdivision 25, paragraph (d), clause (1), to 154.14 qualify for class 1c treatment under this paragraph. 154.15 (d) Class 1d property includes structures that meet all of 154.16 the following criteria: 154.17 (1) the structure is located on property that is classified 154.18 as agricultural property under section 273.13, subdivision 23; 154.19 (2) the structure is occupied exclusively by seasonal farm 154.20 workers during the time when they work on that farm, and the 154.21 occupants are not charged rent for the privilege of occupying 154.22 the property, provided that use of the structure for storage of 154.23 farm equipment and produce does not disqualify the property from 154.24 classification under this paragraph; 154.25 (3) the structure meets all applicable health and safety 154.26 requirements for the appropriate season; and 154.27 (4) the structure is not salable as residential property 154.28 because it does not comply with local ordinances relating to 154.29 location in relation to streets or roads. 154.30 The market value of class 1d property has the same class 154.31 rates as class 1a property under paragraph (a). 154.32 [EFFECTIVE DATE.] Paragraph (b) is effective for taxes 154.33 payable in 2005 and thereafter. 154.34 Paragraph (c) is effective for taxes payable in 2004 and 154.35 thereafter. 154.36 Sec. 17. [273.1387] [TRANSITION PAYMENTS FOR PROPERTY TAX 155.1 BASE LOSS.] 155.2 Subdivision 1. [DEFINITIONS.] (a) For the purposes of this 155.3 section, the following terms have the meanings given them. 155.4 (b) "State" means a state agency, board, commission, or 155.5 authority. 155.6 (c) "Political subdivision" means the metropolitan council 155.7 or a metropolitan agency, county, statutory or home rule charter 155.8 city, township, school district, or any other political 155.9 subdivision with the authority to acquire real property. 155.10 (d) "Acquire" includes acquisition by purchase, gift, or 155.11 eminent domain. 155.12 Subd. 2. [PAYMENT REQUIRED.] (a) When the state or a 155.13 political subdivision acquires taxable real property and that 155.14 property becomes tax exempt upon acquisition, the state or 155.15 political subdivision must pay to all other taxing jurisdictions 155.16 levying property taxes on the property in the year in which it 155.17 is acquired an amount as follows: 155.18 (1) in the year in which the property is acquired, 100 155.19 percent of the taxes payable for that year on the acquired 155.20 property, less any amount of property taxes already collected 155.21 for that year on the property before the acquisition; 155.22 (2) in the first full year after acquisition, 80 percent of 155.23 the total amount that was due and payable in the year of 155.24 acquisition; 155.25 (3) in the second year after acquisition, 60 percent of the 155.26 total amount that was due and payable in the year of 155.27 acquisition; 155.28 (4) in the third year after acquisition, 40 percent of the 155.29 total amount that was due and payable in the year of 155.30 acquisition; and 155.31 (5) in the fourth year after acquisition, 20 percent of the 155.32 total amount that was due and payable in the year of acquisition. 155.33 (b) As an alternative to the payments required as provided 155.34 in paragraph (a), clauses (2) to (5), the state or political 155.35 subdivision may pay to any taxing jurisdiction a single payment 155.36 equal to 150 percent of the total taxes payable on the acquired 156.1 property in the year of acquisition. 156.2 (c) Payment under paragraph (a), clause (1), and under 156.3 paragraph (b) must be made at the time of acquisition and paid 156.4 directly to each taxing jurisdiction. Payments under paragraph 156.5 (a), clauses (2) to (5), must be made annually on or before May 156.6 15 of each year immediately following the year of acquisition. 156.7 Subd. 3. [WAIVER.] A statutory or home rule charter city, 156.8 county, town, or school district may waive payments required 156.9 under this section by resolution of the governing body. A 156.10 resolution to waive part or all of a payment must not be adopted 156.11 unless the waiver is identified as an item of business in a 156.12 meeting notice for the meeting at which the waiver will be 156.13 discussed and voted on. The notice must be provided at least 156.14 ten days before the meeting. 156.15 Subd. 4. [PAYMENTS RECEIVED ARE OUTSIDE LEVY LIMITS.] Any 156.16 payments received by a political subdivision under this section 156.17 are not included in the calculation of its overall levy limit 156.18 imposed under chapter 275. 156.19 Subd. 5. [COST OF ACQUISITION.] Payments made under this 156.20 section are a cost of acquisition of the property. 156.21 [EFFECTIVE DATE.] This section is effective for property 156.22 acquired on or after July 1, 2005. 156.23 Sec. 18. [274.014] [LOCAL BOARDS; APPEALS AND EQUALIZATION 156.24 COURSE AND MEETING REQUIREMENTS.] 156.25 Subdivision 1. [HANDBOOK FOR LOCAL BOARDS.] By no later 156.26 than January 1, 2005, the commissioner of revenue must develop a 156.27 handbook detailing procedures, responsibilities, and 156.28 requirements for local boards of appeal and equalization. The 156.29 handbook must include, but need not be limited to, the role of 156.30 the local board in the assessment process, the legal and policy 156.31 reasons for fair and impartial appeal and equalization hearings, 156.32 local board meeting procedures that foster fair and impartial 156.33 assessment reviews and other best practices recommendations, 156.34 quorum requirements for local boards, and explanations of 156.35 alternate methods of appeal. 156.36 Subd. 2. [APPEALS AND EQUALIZATION COURSE.] By no later 157.1 than January 1, 2006, and each year thereafter, there must be at 157.2 least one member at each meeting of a local board of appeal and 157.3 equalization who has attended an appeals and equalization course 157.4 developed or approved by the commissioner within the last four 157.5 years, as certified by the commissioner. The course may be 157.6 offered in conjunction with a meeting of the Minnesota League of 157.7 Cities or the Minnesota Association of Townships. The course 157.8 content must include, but need not be limited to, a review of 157.9 the handbook developed by the commissioner under subdivision 1. 157.10 Subd. 3. [PROOF OF COMPLIANCE; TRANSFER OF DUTIES.] Any 157.11 city or town that does not provide proof to the county assessor 157.12 by December 1, 2006, and each year thereafter, that it is in 157.13 compliance with the requirements of subdivision 2, and that it 157.14 had a quorum at each meeting of the board of appeal and 157.15 equalization in the prior year, is deemed to have transferred 157.16 its board of appeal and equalization powers to the county under 157.17 section 274.01, subdivision 3, for the following year's 157.18 assessment. 157.19 The county shall notify the taxpayers when the board of 157.20 appeal and equalization for a city or town has been transferred 157.21 to the county under this subdivision and, prior to the meeting 157.22 time of the county board of equalization, the county shall make 157.23 available to those taxpayers a procedure for a review of the 157.24 assessments, including, but not limited to, open book meetings. 157.25 This alternate review process shall take place in April and May. 157.26 A local board whose powers are transferred to the county 157.27 under this subdivision may be reinstated by resolution of the 157.28 governing body of the city or town and upon proof of compliance 157.29 with the requirements of subdivision 2. The resolution and 157.30 proofs must be provided to the county assessor by December 1 in 157.31 order to be effective for the following year's assessment. 157.32 [EFFECTIVE DATE.] This section is effective the day 157.33 following final enactment. 157.34 Sec. 19. Minnesota Statutes 2002, section 275.025, 157.35 subdivision 1, is amended to read: 157.36 Subdivision 1. [LEVY AMOUNT.] The state general levy is 158.1 levied against commercial-industrial property and seasonal 158.2 recreational property, as defined in this section. The state 158.3 general levy is $592,000,000 for taxes payable in 2002. For 158.4 taxes payable in subsequent years, the levy is increased each 158.5 year by multiplying the amount for the prior year by the sum of 158.6 one plus the rate of increase, if any, in the implicit price 158.7 deflator for government consumption expenditures and gross 158.8 investment for state and local governments prepared by the 158.9 Bureau of Economic Analysts of the United States Department of 158.10 Commerce for the 12-month period ending March 31 of the year 158.11 prior to the year the taxes are payable. The tax under this 158.12 section is not treated as a local tax rate under section 469.177 158.13 and is not the levy of a governmental unit under chapters 276A 158.14 and 473F.Beginning in fiscal year 2004, and in each year158.15thereafter, the commissioner of finance shall deposit in an158.16education reserve account, which account is hereby established,158.17the increased amount of the state general levy received for158.18deposit in the general fund for that year over the amount of the158.19state general levy received for deposit in the general fund in158.20fiscal year 2003. The amounts in the education reserve account158.21do not lapse or cancel each year, but remain until appropriated158.22by law for education aid or higher education funding.158.23 The commissioner shall increase or decrease the preliminary 158.24 or final rate for a year as necessary to account for errors and 158.25 tax base changes that affected a preliminary or final rate for 158.26 either of the two preceding years. Adjustments are allowed to 158.27 the extent that the necessary information is available to the 158.28 commissioner at the time the rates for a year must be certified, 158.29 and for the following reasons: 158.30 (1) an erroneous report of taxable value by a local 158.31 official; 158.32 (2) an erroneous calculation by the commissioner; and 158.33 (3) an increase or decrease in taxable value for 158.34 commercial-industrial or seasonal residential recreational 158.35 property reported on the abstracts of tax lists submitted under 158.36 section 275.29 that was not reported on the abstracts of 159.1 assessment submitted under section 270.11, subdivision 2, for 159.2 the same year. 159.3 The commissioner may, but need not, make adjustments if the 159.4 total difference in the tax levied for the year would be less 159.5 than $100,000. 159.6 [EFFECTIVE DATE.] This section is effective June 30, 2003. 159.7 Sec. 20. Minnesota Statutes 2002, section 278.01, 159.8 subdivision 4, is amended to read: 159.9 Subd. 4. [FILING OF APPEAL DEADLINE; EXCEPTION.] 159.10 Notwithstanding theMarch 31April 30 date in subdivision 1, 159.11 whenever the exempt status, valuation, or classification of real 159.12 or personal property is changed other than by an abatement or a 159.13 court decision, and the owner responsible for payment of the tax 159.14 is not given notice of the change until afterJanuary 31159.15 February 28 of the year the tax is payable or after July 1 in 159.16 the case of property subject to section 273.125, subdivision 4, 159.17 an eligible petitioner, as defined and limited in subdivision 1, 159.18 has 60 days from the date of mailing of the notice to initiate 159.19 an appeal of the property's exempt status, classification, or 159.20 valuation change under this chapter. 159.21 [EFFECTIVE DATE.] This section is effective for taxes 159.22 payable in 2003 and thereafter. 159.23 Sec. 21. Minnesota Statutes 2002, section 278.05, 159.24 subdivision 6, is amended to read: 159.25 Subd. 6. [DISMISSAL OF PETITION; EXCLUSION OF CERTAIN 159.26 EVIDENCE.] (a) Information, including income and expense 159.27 figures, verified net rentable areas, and anticipated income and 159.28 expenses, for income-producing property must be provided to the 159.29 county assessorwithin 60 days after the petition has been filed159.30under this chapterno later than 60 days after the applicable 159.31 filing deadline contained in section 278.01, subdivision 1 or 159.32 4. Failure to provide the information required in this 159.33 paragraph shall result in the dismissal of the petition, 159.34 unless (1) the failure to provide it was due to the 159.35 unavailability of the evidence atthatthe time that the 159.36 information was due, or (2) the petitioner was not aware of or 160.1 informed of the requirement to provide the information. 160.2 If the petitioner proves that the requirements under clause (2) 160.3 are met, the petitioner has an additional 30 days to provide the 160.4 information from the time the petitioner became aware of or was 160.5 informed of the requirement to provide the information, 160.6 otherwise the petition shall be dismissed. 160.7 (b) Provided that the information as contained in paragraph 160.8 (a) is timely submitted to the county assessor, the county 160.9 assessor shall furnish the petitioner at least five days before 160.10 the hearing under this chapter with the property's appraisal, if 160.11 any, which will be presented to the court at the hearing. The 160.12 petitioner shall furnish to the county assessor at least five 160.13 days before the hearing under this chapter with the property's 160.14 appraisal, if any, which will be presented to the court at the 160.15 hearing. An appraisal of the petitioner's property done by or 160.16 for the county shall not be admissible as evidence if the county 160.17 assessor does not comply with the provisions in this paragraph. 160.18 The petition shall be dismissed if the petitioner does not 160.19 comply with the provisions in this paragraph. 160.20 [EFFECTIVE DATE.] This section is effective for petitions 160.21 filed on or after July 1, 2003. 160.22 Sec. 22. Minnesota Statutes 2002, section 290A.03, 160.23 subdivision 8, is amended to read: 160.24 Subd. 8. [CLAIMANT.] (a) "Claimant" means a person, other 160.25 than a dependent, as defined under sections 151 and 152 of the 160.26 Internal Revenue Code disregarding section 152(b)(3) of the 160.27 Internal Revenue Code, who filed a claim authorized by this 160.28 chapter and who was a resident of this state as provided in 160.29 chapter 290 during the calendar year for which the claim for 160.30 relief was filed. 160.31 (b) In the case of a claim relating to rent constituting 160.32 property taxes, the claimant shall have resided in a rented or 160.33 leased unit on which ad valorem taxes or payments made in lieu 160.34 of ad valorem taxes, including payments of special assessments 160.35 imposed in lieu of ad valorem taxes, are payable at some time 160.36 during the calendar year covered by the claim. 161.1 (c) "Claimant" shall not include a resident of a nursing 161.2 home, intermediate care facility, or long-term residential 161.3 facility whose rent constituting property taxes is paid pursuant 161.4 to the supplemental security income program under title XVI of 161.5 the Social Security Act, the Minnesota supplemental aid program 161.6 under sections 256D.35 to 256D.54, the medical assistance 161.7 program pursuant to title XIX of the Social Security Act,orthe 161.8 general assistance medical care program pursuant to section 161.9 256D.03, subdivision 3; or the group residential housing program 161.10 under chapter 256I. 161.11 If only a portion of the rent constituting property taxes is 161.12 paid by these programs, the resident shall be a claimant for 161.13 purposes of this chapter, but the refund calculated pursuant to 161.14 section 290A.04 shall be multiplied by a fraction, the numerator 161.15 of which is income as defined in subdivision 3, paragraphs (1) 161.16 and (2), reduced by the total amount of income from the above 161.17 sources other than vendor payments under the medical assistance 161.18 program or the general assistance medical care program and the 161.19 denominator of which is income as defined in subdivision 3, 161.20 paragraphs (1) and (2), plus vendor payments under the medical 161.21 assistance program or the general assistance medical care 161.22 program, to determine the allowable refund pursuant to this 161.23 chapter. 161.24 (d) Notwithstanding paragraph (c), if the claimant was a 161.25 resident of the nursing home, intermediate care facilityor, 161.26 long-term residential facility, or facility for which the rent 161.27 was paid for the claimant by the group residential housing 161.28 program for only a portion of the calendar year covered by the 161.29 claim, the claimant may compute rent constituting property taxes 161.30 by disregarding the rent constituting property taxes from the 161.31 nursing home, intermediate care facility,orlong-term161.32residentialfacility and use only that amount of rent 161.33 constituting property taxes or property taxes payable relating 161.34 to that portion of the year when the claimant was not in the 161.35 facility. The claimant's household income is the income for the 161.36 entire calendar year covered by the claim. 162.1 (e) In the case of a claim for rent constituting property 162.2 taxes of a part-year Minnesota resident, the income and rental 162.3 reflected in this computation shall be for the period of 162.4 Minnesota residency only. Any rental expenses paid which may be 162.5 reflected in arriving at federal adjusted gross income cannot be 162.6 utilized for this computation. When two individuals of a 162.7 household are able to meet the qualifications for a claimant, 162.8 they may determine among them as to who the claimant shall be. 162.9 If they are unable to agree, the matter shall be referred to the 162.10 commissioner of revenue whose decision shall be final. If a 162.11 homestead property owner was a part-year Minnesota resident, the 162.12 income reflected in the computation made pursuant to section 162.13 290A.04 shall be for the entire calendar year, including income 162.14 not assignable to Minnesota. 162.15 (f) If a homestead is occupied by two or more renters, who 162.16 are not husband and wife, the rent shall be deemed to be paid 162.17 equally by each, and separate claims shall be filed by each. 162.18 The income of each shall be each renter's household income for 162.19 purposes of computing the amount of credit to be allowed. 162.20 [EFFECTIVE DATE.] This section is effective for claims 162.21 based on rent paid in 2003 and thereafter. 162.22 Sec. 23. Minnesota Statutes 2002, section 366.011, is 162.23 amended to read: 162.24 366.011 [CHARGES FOR EMERGENCY SERVICES; COLLECTION.] 162.25 A town may impose a reasonable service charge for emergency 162.26 services, including fire, rescue, medical, and related services 162.27 provided by the town or contracted for by the town. If the 162.28 service charge remains unpaid 30 days after a notice of 162.29 delinquency is sent to the recipient of the service or the 162.30 recipient's representative or estate, the town or its contractor 162.31 on behalf of the town may use any lawful means allowed to a 162.32 private party for the collection of an unsecured delinquent 162.33 debt. The town may also use the authority of section 366.012 to 162.34 collect unpaid service charges of this kind from delinquent 162.35 recipients of serviceswho are owners of taxable real property162.36in the town. 163.1 The powers conferred by this section are in addition and 163.2 supplemental to the powers conferred by any other law for a town 163.3 to impose a service charge or assessment for a service provided 163.4 by the town or contracted for by the town. 163.5 [EFFECTIVE DATE.] This section is effective for emergency 163.6 services rendered after June 30, 2003. 163.7 Sec. 24. Minnesota Statutes 2002, section 366.012, is 163.8 amended to read: 163.9 366.012 [COLLECTION OF UNPAID SERVICE CHARGES.] 163.10 If a town is authorized to impose a service chargeon the163.11owner, lessee, or occupant of property, or any of them,for a 163.12 governmental service provided by the town, the town board may 163.13 certify to the county auditor of the county in which the 163.14 recipient of the services owns real property, on or before 163.15 October 15 for each year, any unpaid service charges which shall 163.16 then be collected together with property taxes levied against 163.17 the property. The county auditor shall remit to the town all 163.18 service charges collected by the auditor on behalf of the town. 163.19 Charges collected under this section for motor vehicle fires, as 163.20 provided by section 161.465, subdivision 2, shall not exceed the 163.21 amount authorized in that subdivision, but a town may recover 163.22 expenses incurred for extinguishing a motor vehicle fire in 163.23 excess of that amount by any other authorized method. A charge 163.24 may be certified to the auditor only if, on or before September 163.25 15, the town has given written notice to the property owner of 163.26 its intention to certify the charge to the auditor. The service 163.27 charges shall be subject to the same penalties, interest, and 163.28 other conditions provided for the collection of property taxes. 163.29 This section is in addition to other law authorizing the 163.30 collection of unpaid costs and service charges. 163.31 [EFFECTIVE DATE.] This section is effective for taxes 163.32 payable in 2004 and thereafter. 163.33 Sec. 25. Minnesota Statutes 2002, section 473.167, 163.34 subdivision 3, is amended to read: 163.35 Subd. 3. [TAX.] The council may levy a tax on all taxable 163.36 property in the metropolitan area, as defined in section 164.1 473.121, to provide funds for loans made pursuant to 164.2 subdivisions 2 and 2a. This tax for the right-of-way 164.3 acquisition loan fund shall be certified by the council, levied, 164.4 and collected in the manner provided by section 473.13. The tax 164.5 shall be in addition to that authorized by section 473.249 and 164.6 any other law and shall not affect the amount or rate of taxes 164.7 which may be levied by the council or any metropolitan agency or 164.8 local governmental unit. The amount of the levy shall be as 164.9 determined and certified by the council, provided that the tax 164.10 levied by the metropolitan council for the right-of-way 164.11 acquisition loan fund shall not exceedthe product of (1) the164.12metropolitan council's property tax levy under this subdivision164.13for taxes payable in 1997 multiplied by (2) an index for market164.14valuation changes equal to the total market valuation of all164.15taxable property located within the metropolitan area for the164.16current taxes payable year divided by the total market valuation164.17of all taxable property located within the metropolitan area for164.18taxes payable in 1997.164.19For the purpose of determining the metropolitan council's164.20property tax levy limitation for the right-of-way acquisition164.21loan fund, "total market valuation" means the total market164.22valuation of all taxable property within the metropolitan area164.23without valuation adjustments for fiscal disparities (chapter164.24473F), tax increment financing (sections 469.174 to 469.179),164.25and high voltage transmission lines (section 273.425)$2,828,379 164.26 for taxes payable in 2004 and $2,828,379 for taxes payable in 164.27 2005. The amount of the levy for taxes payable in 2006 and 164.28 subsequent years shall not exceed the product of (1) the 164.29 metropolitan council's property tax levy limitation under this 164.30 subdivision for the previous year, multiplied by (2) one plus a 164.31 percentage equal to the growth in the implicit price deflator as 164.32 defined in section 275.70, subdivision 2. 164.33 [EFFECTIVE DATE; APPLICATION.] This section is effective 164.34 the day following final enactment and applies in the counties of 164.35 Anoka, Carver, Dakota, Hennepin, Ramsey, Scott, and Washington. 164.36 Sec. 26. Minnesota Statutes 2002, section 473.246, is 165.1 amended to read: 165.2 473.246 [COUNCIL'S SUBMISSIONS TO LEGISLATIVE COMMISSION.] 165.3 The metropolitan council shall submit to the legislative 165.4 commission on metropolitan government information on the 165.5 council's tax rates and dollar amounts levied for the current 165.6 year, proposed property tax rates and levies, operating and 165.7 capital budgets, work program, capital improvement program, and 165.8 any other information requested by the commission, for review by 165.9 the legislative commission, as provided in section 3.8841. The 165.10 council shall submit to the legislative commission a report on 165.11 property tax levies as approved by the council, detailing any 165.12 differences between the amounts originally proposed and the 165.13 amounts finally approved by the council, and providing 165.14 explanation where the approved levy amounts differ from 165.15 recommendations of the legislative commission. 165.16 [EFFECTIVE DATE; APPLICATION.] This section is effective 165.17 the day following final enactment and applies in the counties of 165.18 Anoka, Carver, Dakota, Hennepin, Ramsey, Scott, and Washington. 165.19 Sec. 27. Minnesota Statutes 2002, section 473.249, 165.20 subdivision 1, is amended to read: 165.21 Subdivision 1. [INDEXED LIMIT.] (a) The metropolitan 165.22 council may levy a tax on all taxable property in the 165.23 metropolitan area defined in section 473.121 to provide funds 165.24 for the purposes of sections 473.121 to 473.249 and for the 165.25 purpose of carrying out other responsibilities of the council as 165.26 provided by law. This tax for general purposes shall be levied 165.27 and collected in the manner provided by section 473.13. 165.28 (b) The property tax levied by the metropolitan council for 165.29 general purposes shall not exceed $10,117,123 for taxes payable 165.30 in 2004 and $9,331,123 for taxes payable in 2005. 165.31 (c) The property tax levy limitation for general purposes 165.32 for taxes payable in 2006 and subsequent years shall not exceed 165.33 the product of: (1) the metropolitan council's property tax 165.34 levy limitation for general purposes for the previous year 165.35 determined under this subdivision multiplied by (2)the lesser165.36of166.1(i) an index for market valuation changes equal to the166.2total market valuation of all taxable property located within166.3the metropolitan area for the current taxes payable year divided166.4by the total market valuation of all taxable property located166.5within the metropolitan area for the previous taxes payable166.6year;166.7(ii) an index equal to the implicit price deflator for166.8government consumption expenditures and gross investment for166.9state and local governments for the most recent month for which166.10data are available divided by the same implicit price deflator166.11for the same month of the previous year; or166.12(iii) 103 percent.166.13(c) For the purpose of determining the metropolitan166.14council's property tax levy limitation for general purposes,166.15"total market valuation" means the total market valuation of all166.16taxable property within the metropolitan area without valuation166.17adjustments for fiscal disparities (chapter 473F), tax increment166.18financing (sections 469.174 to 469.179), and high voltage166.19transmission lines (section 273.425)one plus a percentage equal 166.20 to the growth in the implicit price deflator as defined in 166.21 section 275.70, subdivision 2. 166.22 [EFFECTIVE DATE; APPLICATION.] This section is effective 166.23 the day following final enactment and applies in the counties of 166.24 Anoka, Carver, Dakota, Hennepin, Ramsey, Scott, and Washington. 166.25 Sec. 28. Minnesota Statutes 2002, section 473.253, 166.26 subdivision 1, is amended to read: 166.27 Subdivision 1. [SOURCES OF FUNDS.] The council shall 166.28 credit to the livable communities demonstration account the 166.29 revenues provided in this subdivision. This tax shall be levied 166.30 and collected in the manner provided by section 473.13. The 166.31 levy shall not exceed the following amount for the years 166.32 specified: 166.33 (a)(1) for taxes payable in 1996, 50 percent of (i) the 166.34 metropolitan mosquito control commission's property tax levy for 166.35 taxes payable in 1995 multiplied by (ii) an index for market 166.36 valuation changes equal to the total market valuation of all 167.1 taxable property located within the metropolitan area for the 167.2 current taxes payable year divided by the total market valuation 167.3 of all taxable property located in the metropolitan area for the 167.4 previous taxes payable year;and167.5 (2) for taxes payable in 1997and subsequent yearsthrough 167.6 2003, the product of (i) the property tax levy limit under this 167.7 subdivision for the previous year multiplied by (ii) an index 167.8 for market valuation changes equal to the total market valuation 167.9 of all taxable property located within the metropolitan area for 167.10 the current taxes payable year divided by the total market 167.11 valuation of all taxable property located in the metropolitan 167.12 area for the previous taxes payable year; 167.13 (3) for taxes payable in 2004 and 2005, $6,933,163; and 167.14 (4) for taxes payable in 2006 and subsequent years, the 167.15 product of (i) the property tax levy limit under this 167.16 subdivision for the previous year multiplied by (ii) one plus a 167.17 percentage equal to the growth in the implicit price deflator as 167.18 defined in section 275.70, subdivision 2. 167.19For the purposes of this subdivision, "total market167.20valuation" means the total market valuation of all taxable167.21property within the metropolitan area without valuation167.22adjustments for fiscal disparities under chapter 473F, tax167.23increment financing under sections 469.174 to 469.179, and high167.24voltage transmission lines under section 273.425.167.25 (b) The metropolitan council, for the purposes of the fund, 167.26 is considered a unique taxing jurisdiction for purposes of 167.27 receiving aid pursuant to section 273.1398. For aid to be 167.28 received in 1996, the fund's homestead and agricultural credit 167.29 base shall equal 50 percent of the metropolitan mosquito control 167.30 commission's certified homestead and agricultural credit aid for 167.31 1995, determined under section 273.1398, subdivision 2, less any 167.32 permanent aid reduction under section 477A.0132. For aid to be 167.33 received under section 273.1398 in 1997 and subsequent years, 167.34 the fund's homestead and agricultural credit base shall be 167.35 determined in accordance with section 273.1398, subdivision 1. 167.36 [EFFECTIVE DATE; APPLICATION.] This section is effective 168.1 the day following final enactment and applies in the counties of 168.2 Anoka, Carver, Dakota, Hennepin, Ramsey, Scott, and Washington. 168.3 Sec. 29. Minnesota Statutes 2002, section 473.702, is 168.4 amended to read: 168.5 473.702 [ESTABLISHMENT OF DISTRICT; PURPOSE; AREA; 168.6 GOVERNING BODY.] 168.7 A metropolitan mosquito control district is created to 168.8 control mosquitoes, disease vectoring ticks, and black gnats 168.9 (Simuliidae) in the metropolitan area. The area of the district 168.10 is the metropolitan area defined in section 473.121.The area168.11of the district is the metropolitan area excluding the part of168.12Carver county west of the west line of township 116N, range 24W,168.13township 115N, range 24W, and township 114N, range 24W.The 168.14 metropolitan mosquito control commission is created as the 168.15 governing body of the district, composed and exercising the 168.16 powers as prescribed in sections 473.701 to 473.716. 168.17 [EFFECTIVE DATE.] This section is effective for taxes 168.18 payable in 2004 and thereafter. 168.19 Sec. 30. Minnesota Statutes 2002, section 473.711, 168.20 subdivision 2a, is amended to read: 168.21 Subd. 2a. [TAX LEVY.] (a) The commission may levy a tax on 168.22 all taxable property in the district as defined in section 168.23 473.702 to provide funds for the purposes of sections 473.701 to 168.24 473.716. The tax shall not exceed the property tax levy 168.25 limitation determined in this subdivision. A participating 168.26 county may agree to levy an additional tax to be used by the 168.27 commission for the purposes of sections 473.701 to 473.716 but 168.28 the sum of the county's and commission's taxes may not exceed 168.29 the county's proportionate share of the property tax levy 168.30 limitation determined under this subdivision based on the ratio 168.31 of its total net tax capacity to the total net tax capacity of 168.32 the entire district as adjusted by section 270.12, subdivision 3. 168.33 The auditor of each county in the district shall add the amount 168.34 of the levy made by the district to other taxes of the county 168.35 for collection by the county treasurer with other taxes. When 168.36 collected, the county treasurer shall make settlement of the tax 169.1 with the district in the same manner as other taxes are 169.2 distributed to political subdivisions. No county shall levy any 169.3 tax for mosquito, disease vectoring tick, and black gnat 169.4 (Simuliidae) control except under this section. The levy shall 169.5 be in addition to other taxes authorized by law. 169.6 (b) The property tax levied by the metropolitan mosquito 169.7 control commission shall not exceedthe following amount for the169.8years specified:169.9(1) for taxes payable in 1996, the product of (i) the169.10commission's property tax levy limitation for taxes payable in169.111995 determined under this subdivision minus 50 percent of the169.12amount actually levied for taxes payable in 1995, multiplied by169.13(ii) an index for market valuation changes equal to the total169.14market valuation of all taxable property located within the169.15district for the current taxes payable year divided by the total169.16market valuation of all taxable property located within the169.17district for the previous taxes payable year;169.18(2) for taxes payable in 1997 and subsequent years,the 169.19 product of (i) the commission's property tax levy limitation for 169.20 the previous year determined under this subdivision multiplied 169.21 by (ii) an index for market valuation changes equal to the total 169.22 market valuation of all taxable property for the current tax 169.23 payable year located within the districtfor the current taxes169.24payable yearplus any area that has been added to the district 169.25 since the previous year, divided by the total market valuation 169.26 of all taxable property located within the district for the 169.27 previous taxes payable year; and. 169.28(3)(c) For the purpose of determining the commission's 169.29 property tax levy limitation under this subdivision, "total 169.30 market valuation" means the total market valuation of all 169.31 taxable property within the district without valuation 169.32 adjustments for fiscal disparities (chapter 473F), tax increment 169.33 financing (sections 469.174 to 469.179), and high voltage 169.34 transmission lines (section 273.425). 169.35 [EFFECTIVE DATE.] This section is effective for taxes 169.36 payable in 2004 and thereafter. 170.1 Sec. 31. [CITY OF MEDFORD.] 170.2 Subdivision 1. [SPECIAL TAXING AUTHORITY.] After published 170.3 notice and public hearing, the governing body of the city of 170.4 Medford may, by resolution, establish a special taxing area 170.5 within the boundaries of the city to finance a portion of the 170.6 cost of an expansion and improvement of the city's wastewater 170.7 treatment facility. The city may annually impose a levy on the 170.8 tax capacity of properties within the special taxing area. 170.9 Subd. 2. [TAXING AREA.] The city may include within the 170.10 special taxing area, as it determines appropriate, one or more 170.11 parcels of property classified under Minnesota Statutes, section 170.12 273.13, subdivision 24. 170.13 Subd. 3. [LEVY LIMIT.] The amount of the levy for a year 170.14 may not exceed 45 percent of the cost of principal and interest 170.15 payments on the financing for the expansion and improvement of 170.16 the wastewater treatment facility. Any levy imposed under this 170.17 section is not subject to any other levy limit that applies to 170.18 the city, notwithstanding any law to the contrary. 170.19 Subd. 4. [EXPIRATION.] This section expires upon repayment 170.20 of the financing, including any refinancing, for the wastewater 170.21 treatment facility. 170.22 Subd. 5. [EFFECTIVE DATE.] This section is effective upon 170.23 local approval under Minnesota Statutes, section 645.021 by the 170.24 governing body of the city of Medford. 170.25 Sec. 32. [APPROPRIATION.] 170.26 There is appropriated to the commissioner of revenue from 170.27 the general fund $16,000 in fiscal year 2003 and $8,000 in 170.28 fiscal year 2004 for printing and distributing the local boards 170.29 of appeals and equalization handbook under section 18. 170.30 Sec. 33. [REPEALER.] 170.31 Minnesota Statutes 2002, section 473.711, subdivision 2b, 170.32 is repealed. 170.33 [EFFECTIVE DATE.] This section is effective the day 170.34 following final enactment. 170.35 ARTICLE 6 170.36 INTERGOVERNMENTAL AIDS 171.1 Section 1. Minnesota Statutes 2002, section 4A.02, is 171.2 amended to read: 171.3 4A.02 [STATE DEMOGRAPHER.] 171.4 (a) The director shall appoint a state demographer. The 171.5 demographer must be professionally competent in demography and 171.6 must possess demonstrated ability based upon past performance. 171.7 (b) The demographer shall: 171.8 (1) continuously gather and develop demographic data 171.9 relevant to the state; 171.10 (2) design and test methods of research and data 171.11 collection; 171.12 (3) periodically prepare population projections for the 171.13 state and designated regions and periodically prepare 171.14 projections for each county or other political subdivision of 171.15 the state as necessary to carry out the purposes of this 171.16 section; 171.17 (4) review, comment on, and prepare analysis of population 171.18 estimates and projections made by state agencies, political 171.19 subdivisions, other states, federal agencies, or nongovernmental 171.20 persons, institutions, or commissions; 171.21 (5) serve as the state liaison with the United States 171.22 Bureau of the Census, coordinate state and federal demographic 171.23 activities to the fullest extent possible, and aid the 171.24 legislature in preparing a census data plan and form for each 171.25 decennial census; 171.26 (6) compile an annual study of population estimates on the 171.27 basis of county, regional, or other political or geographical 171.28 subdivisions as necessary to carry out the purposes of this 171.29 section and section 4A.03; 171.30 (7) by January 1 of each year, issue a report to the 171.31 legislature containing an analysis of the demographic 171.32 implications of the annual population study and population 171.33 projections; 171.34 (8) prepare maps for all counties in the state, all 171.35 municipalities with a population of 10,000 or more, and other 171.36 municipalities as needed for census purposes, according to scale 172.1 and detail recommended by the United States Bureau of the 172.2 Census, with the maps of cities showing precinct boundaries; 172.3 (9) prepare an estimate of population and of the number of 172.4 households for each governmental subdivision for which the 172.5 metropolitan council does not prepare an annual estimate, and 172.6 convey the estimates to the governing body of each political 172.7 subdivision by May 1 of each year; 172.8 (10) direct, under section 414.01, subdivision 14, and 172.9 certify population and household estimates of annexed or 172.10 detached areas of municipalities or towns after being notified 172.11 of the order or letter of approval by the Minnesota municipal 172.12 board;and172.13 (11) prepare, for any purpose for which a population 172.14 estimate is required by law or needed to implement a law, a 172.15 population estimate of a municipality or town whose population 172.16 is affected by action under section 379.02 or 414.01, 172.17 subdivision 14; and 172.18 (12) prepare an estimate of average household size for each 172.19 statutory or home rule charter city with a population of 2,500 172.20 or more by May 1 of each year. 172.21 (c) A governing body may challenge an estimate made under 172.22 paragraph (b) by filing their specific objections in writing 172.23 with the state demographer by June 10. If the challenge does 172.24 not result in an acceptable estimate by June 24, the governing 172.25 body may have a special census conducted by the United States 172.26 Bureau of the Census. The political subdivision must notify the 172.27 state demographer by July 1 of its intent to have the special 172.28 census conducted. The political subdivision must bear all costs 172.29 of the special census. Results of the special census must be 172.30 received by the state demographer by the next April 15 to be 172.31 used in that year's May 1 estimate to the political subdivision 172.32 under paragraph (b). 172.33 [EFFECTIVE DATE.] This section is effective beginning July 172.34 1, 2003. 172.35 Sec. 2. Minnesota Statutes 2002, section 273.1398, 172.36 subdivision 4a, is amended to read: 173.1 Subd. 4a. [AID OFFSET FOR COURT COSTS.] (a) In calendar 173.2 years 2004 and 2005, the commissioner of revenue shall pay the 173.3 amounts determined in this subdivision to the eligible counties 173.4 on the dates specified in subdivision 6. By July 15of the year173.5preceding the year in which the state assumes the cost of court173.6administration in the judicial district as specified under173.7section 480.183, 2003, the supreme court shall determine and 173.8 certify to the commissioner of revenue for each county the 173.9 county's share of the costs to be assumed in the judicial 173.10 districts specified under section 480.183, subdivision 1, during 173.11 each of the succeeding fiscalyearyears. 173.12 (b) The amount certified in paragraph (a) shall be equal to 173.13 the following: 173.14 (1) 103 percent of the required court administration 173.15 expenditures as defined under section 480.183, subdivision 3, 173.16 for calendar year 2003, as determined under subdivision 4b, 173.17 paragraph (a); plus 173.18 (2) an adjustment for any cumulative percentage increase in 173.19 salary expenditures as defined under section 480.183, 173.20 subdivision 2, in excess of a maintenance of effort increase of 173.21 six percent; less 173.22 (3) an amount equal to the county's share of transferred 173.23 fines collected by the district courts in the county duringthe173.24calendar year preceding certification2002, increased by two 173.25 percent for counties in districts one and three, and by 4.04 173.26 percent for counties in districts six and ten. 173.27 The court and the county may, if both parties agree, 173.28 negotiate and certify an amount higher than the amount 173.29 calculated under this paragraph. 173.30 (c) For purposes of this subdivision, the adjustment in 173.31 paragraph (b), clause (2), shall be equal to: 173.32 (1) the sum of the court administration expenditures as 173.33 defined under section 480.183, subdivision 3, required under 173.34 subdivision 4b, paragraph (a), plus the temporary aid payment 173.35 under subdivision 4c; multiplied by 173.36 (2) the difference between (i) the cumulative percentage 174.1 increase in actual and anticipated salary settlements for court 174.2 employees from July 1, 2001, until the date of the court 174.3 transfer and (ii) the percentage specified in subdivision 4b, 174.4 paragraph (a). 174.5 (d)Payments to a county under subdivision 2 or section174.6273.166 for the calendar year in which the state assumes the174.7cost of court administration as defined under section 480.183,174.8subdivision 3, in the judicial district must be permanently174.9reduced by an amount equal to 75 percent of the net cost to the174.10state for assumption of district court costs as certified in174.11paragraph (a).For calendar year 2004, each county in judicial 174.12 districts one and three shall receive an amount equal to 25 174.13 percent of the amount certified under paragraph (b), and each 174.14 county in judicial districts six and ten shall receive an amount 174.15 equal to the amount certified under paragraph (b). For calendar 174.16 year 2005, each county in judicial districts six and ten shall 174.17 receive an amount equal to 25 percent of the amount certified 174.18 under paragraph (b), and each county in judicial districts one 174.19 and three receives zero. 174.20(e) Payments to a county under subdivision 2 or section174.21273.166 for the calendar year after the calendar year in which174.22the state assumes the cost of court administration as defined174.23under section 480.183, subdivision 3, in the judicial district174.24must be permanently reduced by an amount equal to 25 percent of174.25the net cost to the state for assumption of district court costs174.26as certified in paragraph (a), provided that this amount must be174.27increased or decreased by an amount equal to the positive or174.28negative difference between the amount of fee and fine revenue174.29certified under paragraph (b), clause (3), and the actual amount174.30of fee and fine revenue of the county for the calendar year when174.31certification takes place.174.32(f) Payments to a county under subdivision 2 for calendar174.33year 2001 are permanently increased by an amount equal to 7.5174.34percent of the county's share of transferred fines collected by174.35the district courts in the county during calendar year 1998, as174.36determined under paragraph (a). If the amount determined in175.1paragraph (a) exceeds the amount of aid a county is scheduled to175.2be paid under subdivision 2 in 2000, then the county shall not175.3receive an aid increase under this paragraph.175.4(g) Payments to a county under subdivision 2 or section175.5273.166, for the cost of mandated services, as defined in175.6section 480.183, subdivision 4, in the judicial district, must175.7be permanently reduced in 2002 by an amount equal to the cost to175.8the state for assumption of mandated court services as defined175.9in section 480.183, subdivision 4. The supreme court shall175.10determine the amount for each county and certify it to the175.11commissioner of revenue by July 15, 2001.175.12 [EFFECTIVE DATE.] This section is effective for aid payable 175.13 in 2004 and 2005. 175.14 Sec. 3. Minnesota Statutes 2002, section 273.1398, 175.15 subdivision 4c, is amended to read: 175.16 Subd. 4c. [TEMPORARY AID; COURT ADMINISTRATION COSTS.] For 175.17 calendar years 2004 and 2005, each county in a judicial district 175.18 that has not been transferred to the state by January 1 of that 175.19 year shall receiveadditional homestead and agricultural175.20credittemporary court maintenance of effort cost aid. This 175.21 amount is in addition to the amount calculated under subdivision 175.22 2 and must not be included in the definition of homestead and 175.23 agricultural credit base under subdivision 1, paragraph (j). 175.24 The amount ofadditionalaid is equal to the difference between 175.25 (1) the amount budgeted for court administration costs in 2001 175.26 as determined under subdivision 4b, paragraph (b), multiplied by 175.27 the maintenance of effort percent for the calendar year as 175.28 determined under subdivision 4b, paragraph (a), and (2) the 175.29 amount calculated under subdivision 4b, paragraph (a), for 175.30 calendar year 2003, except that the payment under this section 175.31 is reduced by 50 percent in the calendar year in which the 175.32 district is transferred to the state. This additional aid must 175.33 be used only to fund court administration expenditures as 175.34 defined in section 480.183, subdivision 3. This amount must be 175.35 added to the state court's base budget in the year when the 175.36 court in that judicial district in which the county is located 176.1 is transferred to the state. 176.2 [EFFECTIVE DATE.] This section is effective for aid payable 176.3 in 2004 and 2005 for counties in judicial districts one, three, 176.4 six, and ten. 176.5 Sec. 4. Minnesota Statutes 2002, section 273.1398, 176.6 subdivision 6, is amended to read: 176.7 Subd. 6. [PAYMENT.] The commissioner shall certify the 176.8 aids provided in subdivisions2, 2b, 3,3 and 5 before September 176.9 1 of the year preceding the distribution year to the county 176.10 auditor of the affected local government. The aids provided in 176.11 subdivisions2, 2b,3, 4a, 4c, and 5 must be paid to local 176.12 governments other than school districts at the times provided in 176.13 section 477A.015 for payment of local government aid to taxing 176.14 jurisdictions, except that the first one-half payment of 176.15 disparity reduction aid provided in subdivision 3 must be paid 176.16 on or before August 31. The disparity reduction credit provided 176.17 in subdivision 4 must be paid to taxing jurisdictions other than 176.18 school districts at the time provided in section 473H.10, 176.19 subdivision 3. Aids and credit reimbursements to school 176.20 districts must be certified to the commissioner of children, 176.21 families, and learning and paid under section 273.1392. Payment 176.22 shall not be made to any taxing jurisdiction that has ceased to 176.23 levy a property tax. 176.24 [EFFECTIVE DATE.] This section is effective for aid payable 176.25 in 2004 and thereafter. 176.26 Sec. 5. Minnesota Statutes 2002, section 273.1398, 176.27 subdivision 8, is amended to read: 176.28 Subd. 8. [APPROPRIATION.](a)An amount sufficient to pay 176.29 the aids and credits provided under this section for school 176.30 districts, intermediate school districts, or any group of school 176.31 districts levying as a single taxing entity, is annually 176.32 appropriated from the general fund to the commissioner of 176.33 children, families, and learning. An amount sufficient to pay 176.34 the aids and credits provided under this section for counties, 176.35 cities, towns, and special taxing districts is annually 176.36 appropriated from the general fund to the commissioner of 177.1 revenue. A jurisdiction's aid amount may be increased or 177.2 decreased based on any prior year adjustments for homestead 177.3 credit or other property tax credit or aid programs. 177.4(b) The commissioner of finance shall bill the commissioner177.5of revenue for the cost of preparation of local impact notes as177.6required by section 3.987 only to the extent to which those177.7costs exceed those costs incurred in fiscal year 1997 and for177.8any other new costs attributable to the local impact note177.9function required by section 3.987, not to exceed $100,000 in177.10fiscal years 1998 and 1999 and $200,000 in fiscal year 2000 and177.11thereafter.177.12The commissioner of revenue shall deduct the amount billed177.13under this paragraph from aid payments to be made to cities and177.14counties under subdivision 2 on a pro rata basis. The amount177.15deducted under this paragraph is appropriated to the177.16commissioner of finance for the preparation of local impact177.17notes.177.18 [EFFECTIVE DATE.] This section is effective for aid payable 177.19 in 2004 and thereafter. 177.20 Sec. 6. Minnesota Statutes 2002, section 477A.011, 177.21 subdivision 34, is amended to read: 177.22 Subd. 34. [CITY REVENUE NEED.] (a) For a city with a 177.23 population equal to or greater than 2,500, "city revenue need" 177.24 is the sum of (1)3.4623125.0734098 times the pre-1940 housing 177.25 percentage; plus (2)2.093826 times the commercial industrial177.26percentage plus (3) 6.86255219.141678 times the population 177.27 decline percentage; plus(4) .00026 times the city177.28population(3) 2504.06334 times the road accidents factor; 177.29 plus(5) 152.0141(4) 355.0547; minus (5) the metropolitan area 177.30 factor; minus (6) 49.10638 times the household size. 177.31 (b) For a city with a population less than 2,500, "city 177.32 revenue need" is the sum of (1)1.7959192.387 times the 177.33 pre-1940 housing percentage; plus (2)1.5621382.67591 times the 177.34 commercial industrial percentage; plus (3)4.1775683.16042 177.35 times the population decline percentage; plus (4)1.040131.206 177.36 times the transformed population; minus (5)107.47562.772. 178.1 (c) The city revenue need cannot be less than zero. 178.2(d) For calendar year 1998 and subsequent years, the city178.3revenue need for a city, as determined in paragraphs (a) to (c),178.4is multiplied by the ratio of the annual implicit price deflator178.5for government consumption expenditures and gross investment for178.6state and local governments as prepared by the United States178.7Department of Commerce, for the most recently available year to178.8the 1993 implicit price deflator for state and local government178.9purchases.178.10 [EFFECTIVE DATE.] This section is effective for aid payable 178.11 in 2004 and thereafter. 178.12 Sec. 7. Minnesota Statutes 2002, section 477A.011, 178.13 subdivision 36, is amended to read: 178.14 Subd. 36. [CITY AID BASE.] (a) Except as otherwise 178.15 provided in this subdivision, "city aid base"means, for each178.16city, the sum of the local government aid and equalization aid178.17it was originally certified to receive in calendar year 1993178.18under Minnesota Statutes 1992, section 477A.013, subdivisions 3178.19and 5, and the amount of disparity reduction aid it received in178.20calendar year 1993 under Minnesota Statutes 1992, section178.21273.1398, subdivision 3is zero. 178.22 (b)For aids payable in 1996 and thereafter, a city that in178.231992 or 1993 transferred an amount from governmental funds to178.24its sewer and water fund, which amount exceeded its net levy for178.25taxes payable in the year in which the transfer occurred, has a178.26"city aid base" equal to the sum of (i) its city aid base, as178.27calculated under paragraph (a), and (ii) one-half of the178.28difference between its city aid distribution under section178.29477A.013, subdivision 9, for aids payable in 1995 and its city178.30aid base for aids payable in 1995.178.31(c)The city aid base for any city with a population less 178.32 than 500 is increased by $40,000 for aids payable in calendar 178.33 year 1995 and thereafter, and the maximum amount of total aid it 178.34 may receive under section 477A.013, subdivision 9, paragraph 178.35 (c), is also increased by $40,000 for aids payable in calendar 178.36 year 1995 only, provided that: 179.1 (i) the average total tax capacity rate for taxes payable 179.2 in 1995 exceeds 200 percent; 179.3 (ii) the city portion of the tax capacity rate exceeds 100 179.4 percent; and 179.5 (iii) its city aid base is less than $60 per capita. 179.6(d)(c) The city aid base for a city is increased by 179.7 $20,000 in 1998 and thereafter and the maximum amount of total 179.8 aid it may receive under section 477A.013, subdivision 9, 179.9 paragraph (c), is also increased by $20,000 in calendar year 179.10 1998 only, provided that: 179.11 (i) the city has a population in 1994 of 2,500 or more; 179.12 (ii) the city is located in a county, outside of the 179.13 metropolitan area, which contains a city of the first class; 179.14 (iii) the city's net tax capacity used in calculating its 179.15 1996 aid under section 477A.013 is less than $400 per capita; 179.16 and 179.17 (iv) at least four percent of the total net tax capacity, 179.18 for taxes payable in 1996, of property located in the city is 179.19 classified as railroad property. 179.20(e)(d) The city aid base for a city is increased by 179.21 $200,000 in 1999 and thereafter and the maximum amount of total 179.22 aid it may receive under section 477A.013, subdivision 9, 179.23 paragraph (c), is also increased by $200,000 in calendar year 179.24 1999 only, provided that: 179.25 (i) the city was incorporated as a statutory city after 179.26 December 1, 1993; 179.27 (ii) its city aid base does not exceed $5,600; and 179.28 (iii) the city had a population in 1996 of 5,000 or more. 179.29(f)(e) The city aid base for a city is increased by 179.30 $450,000 in 1999 to 2008 and the maximum amount of total aid it 179.31 may receive under section 477A.013, subdivision 9, paragraph 179.32 (c), is also increased by $450,000 in calendar year 1999 only, 179.33 provided that: 179.34 (i) the city had a population in 1996 of at least 50,000; 179.35 (ii) its population had increased by at least 40 percent in 179.36 the ten-year period ending in 1996; and 180.1 (iii) its city's net tax capacity for aids payable in 1998 180.2 is less than $700 per capita. 180.3(g)(f) Beginning in 2004, the city aid base for a city is 180.4 equal to the sum of its city aid base in 2003 and the amount of 180.5 additional aid it was certified to receive under section 477A.06 180.6 in 2003. For 2004 only, the maximum amount of total aid a city 180.7 may receive under section 477A.013, subdivision 9, paragraph 180.8 (c), is also increased by the amount it was certified to receive 180.9 under section 477A.06 in 2003. 180.10(h)(g) The city aid base for a city is increased by 180.11 $150,000 for aids payable in 2000 and thereafter, and the 180.12 maximum amount of total aid it may receive under section 180.13 477A.013, subdivision 9, paragraph (c), is also increased by 180.14 $150,000 in calendar year 2000 only, provided that: 180.15 (1) the city has a population that is greater than 1,000 180.16 and less than 2,500; 180.17 (2) its commercial and industrial percentage for aids 180.18 payable in 1999 is greater than 45 percent; and 180.19 (3) the total market value of all commercial and industrial 180.20 property in the city for assessment year 1999 is at least 15 180.21 percent less than the total market value of all commercial and 180.22 industrial property in the city for assessment year 1998. 180.23(i)(h) The city aid base for a city is increased by 180.24 $200,000 in 2000 and thereafter, and the maximum amount of total 180.25 aid it may receive under section 477A.013, subdivision 9, 180.26 paragraph (c), is also increased by $200,000 in calendar year 180.27 2000 only, provided that: 180.28 (1) the city had a population in 1997 of 2,500 or more; 180.29 (2) the net tax capacity of the city used in calculating 180.30 its 1999 aid under section 477A.013 is less than $650 per 180.31 capita; 180.32 (3) the pre-1940 housing percentage of the city used in 180.33 calculating 1999 aid under section 477A.013 is greater than 12 180.34 percent; 180.35 (4) the 1999 local government aid of the city under section 180.36 477A.013 is less than 20 percent of the amount that the formula 181.1 aid of the city would have been if the need increase percentage 181.2 was 100 percent; and 181.3 (5) the city aid base of the city used in calculating aid 181.4 under section 477A.013 is less than $7 per capita. 181.5(j) The city aid base for a city is increased by $225,000181.6in calendar years 2000 to 2002 and the maximum amount of total181.7aid it may receive under section 477A.013, subdivision 9,181.8paragraph (c), is also increased by $225,000 in calendar year181.92000 only, provided that:181.10(1) the city had a population of at least 5,000;181.11(2) its population had increased by at least 50 percent in181.12the ten-year period ending in 1997;181.13(3) the city is located outside of the Minneapolis-St. Paul181.14metropolitan statistical area as defined by the United States181.15Bureau of the Census; and181.16(4) the city received less than $30 per capita in aid under181.17section 477A.013, subdivision 9, for aids payable in 1999.181.18(k)(i) The city aid base for a city is increased by 181.19 $102,000 in 2000 and thereafter, and the maximum amount of total 181.20 aid it may receive under section 477A.013, subdivision 9, 181.21 paragraph (c), is also increased by $102,000 in calendar year 181.22 2000 only, provided that: 181.23 (1) the city has a population in 1997 of 2,000 or more; 181.24 (2) the net tax capacity of the city used in calculating 181.25 its 1999 aid under section 477A.013 is less than $455 per 181.26 capita; 181.27 (3) the net levy of the city used in calculating 1999 aid 181.28 under section 477A.013 is greater than $195 per capita; and 181.29 (4) the 1999 local government aid of the city under section 181.30 477A.013 is less than 38 percent of the amount that the formula 181.31 aid of the city would have been if the need increase percentage 181.32 was 100 percent. 181.33(l)(j) The city aid base for a city is increased by 181.34 $32,000 in 2001 and thereafter, and the maximum amount of total 181.35 aid it may receive under section 477A.013, subdivision 9, 181.36 paragraph (c), is also increased by $32,000 in calendar year 182.1 2001 only, provided that: 182.2 (1) the city has a population in 1998 that is greater than 182.3 200 but less than 500; 182.4 (2) the city's revenue need used in calculating aids 182.5 payable in 2000 was greater than $200 per capita; 182.6 (3) the city net tax capacity for the city used in 182.7 calculating aids available in 2000 was equal to or less than 182.8 $200 per capita; 182.9 (4) the city aid base of the city used in calculating aid 182.10 under section 477A.013 is less than $65 per capita; and 182.11 (5) the city's formula aid for aids payable in 2000 was 182.12 greater than zero. 182.13(m)(k) The city aid base for a city is increased by $7,200 182.14 in 2001 and thereafter, and the maximum amount of total aid it 182.15 may receive under section 477A.013, subdivision 9, paragraph 182.16 (c), is also increased by $7,200 in calendar year 2001 only, 182.17 provided that: 182.18 (1) the city had a population in 1998 that is greater than 182.19 200 but less than 500; 182.20 (2) the city's commercial industrial percentage used in 182.21 calculating aids payable in 2000 was less than ten percent; 182.22 (3) more than 25 percent of the city's population was 60 182.23 years old or older according to the 1990 census; 182.24 (4) the city aid base of the city used in calculating aid 182.25 under section 477A.013 is less than $15 per capita; and 182.26 (5) the city's formula aid for aids payable in 2000 was 182.27 greater than zero. 182.28(n)(l) The city aid base for a city is increased by 182.29 $45,000 in 2001 and thereafter and by an additional $50,000 in 182.30 calendar years 2002 to 2011, and the maximum amount of total aid 182.31 it may receive under section 477A.013, subdivision 9, paragraph 182.32 (c), is also increased by $45,000 in calendar year 2001 only, 182.33 and by $50,000 in calendar year 2002 only, provided that: 182.34 (1) the net tax capacity of the city used in calculating 182.35 its 2000 aid under section 477A.013 is less than $810 per 182.36 capita; 183.1 (2) the population of the city declined more than two 183.2 percent between 1988 and 1998; 183.3 (3) the net levy of the city used in calculating 2000 aid 183.4 under section 477A.013 is greater than $240 per capita; and 183.5 (4) the city received less than $36 per capita in aid under 183.6 section 477A.013, subdivision 9, for aids payable in 2000. 183.7(o)(m) The city aid base for a city with a population of 183.8 10,000 or more which is located outside of the seven-county 183.9 metropolitan area is increased in 2002 and thereafter, and the 183.10 maximum amount of total aid it may receive under section 183.11 477A.013, subdivision 9, paragraph (b) or (c), is also increased 183.12 in calendar year 2002 only, by an amount equal to the lesser of: 183.13 (1)(i) the total population of the city, as determined by 183.14 the United States Bureau of the Census, in the 2000 census, (ii) 183.15 minus 5,000, (iii) times 60; or 183.16 (2) $2,500,000. 183.17(p)(n) The city aid base is increased by $50,000 in 2002 183.18 and thereafter, and the maximum amount of total aid it may 183.19 receive under section 477A.013, subdivision 9, paragraph (c), is 183.20 also increased by $50,000 in calendar year 2002 only, provided 183.21 that: 183.22 (1) the city is located in the seven-county metropolitan 183.23 area; 183.24 (2) its population in 2000 is between 10,000 and 20,000; 183.25 and 183.26 (3) its commercial industrial percentage, as calculated for 183.27 city aid payable in 2001, was greater than 25 percent. 183.28(q)(o) The city aid base for a city is increased by 183.29 $150,000 in calendar years 2002 to 2011 and the maximum amount 183.30 of total aid it may receive under section 477A.013, subdivision 183.31 9, paragraph (c), is also increased by $150,000 in calendar year 183.32 2002 only, provided that: 183.33 (1) the city had a population of at least 3,000 but no more 183.34 than 4,000 in 1999; 183.35 (2) its home county is located within the seven-county 183.36 metropolitan area; 184.1 (3) its pre-1940 housing percentage is less than 15 184.2 percent; and 184.3 (4) its city net tax capacity per capita for taxes payable 184.4 in 2000 is less than $900 per capita. 184.5(r)(p) The city aid base for a city is increased by 184.6 $200,000 beginning in calendar year 2003 and the maximum amount 184.7 of total aid it may receive under section 477A.013, subdivision 184.8 9, paragraph (c), is also increased by $200,000 in calendar year 184.9 2003 only, provided that the city qualified for an increase in 184.10 homestead and agricultural credit aid under Laws 1995, chapter 184.11 264, article 8, section 18. 184.12 (q) The city aid base for a city is increased by $200,000 184.13 in 2004 and thereafter and the maximum amount of total aid it 184.14 may receive under section 477A.013, subdivision 9, is also 184.15 increased by $200,000 in calendar year 2004 only, if the city is 184.16 the site of a nuclear dry cask storage facility. 184.17 [EFFECTIVE DATE.] This section is effective beginning with 184.18 aids payable in 2004. 184.19 Sec. 8. Minnesota Statutes 2002, section 477A.011, is 184.20 amended by adding a subdivision to read: 184.21 Subd. 38. [HOUSEHOLD SIZE.] "Household size" means the 184.22 average number of persons per household in the jurisdiction as 184.23 most recently estimated and reported by the state demographer as 184.24 of July 1 of the aid calculation year. 184.25 [EFFECTIVE DATE.] This section is effective for aid payable 184.26 in 2004 and thereafter. 184.27 Sec. 9. Minnesota Statutes 2002, section 477A.011, is 184.28 amended by adding a subdivision to read: 184.29 Subd. 39. [ROAD ACCIDENTS FACTOR.] "Road accidents factor" 184.30 means the average annual number of vehicular accidents occurring 184.31 on public roads, streets, and alleys in the jurisdiction as 184.32 reported to the commissioner of revenue by the commissioner of 184.33 public safety by July 1 of the aid calculation year using the 184.34 most recent three-year period for which the commissioner of 184.35 public safety has complete information, divided by the 184.36 jurisdiction's population. 185.1 [EFFECTIVE DATE.] This section is effective for aid payable 185.2 in 2004 and thereafter. 185.3 Sec. 10. Minnesota Statutes 2002, section 477A.011, is 185.4 amended by adding a subdivision to read: 185.5 Subd. 40. [METROPOLITAN AREA FACTOR.] "Metropolitan area 185.6 factor" means 35.20915 for cities located in the metropolitan 185.7 area. 185.8 [EFFECTIVE DATE.] This section is effective for aid payable 185.9 in 2004 and thereafter. 185.10 Sec. 11. [477A.0124] [COUNTY PROGRAM AID.] 185.11 Subdivision 1. [CALENDAR YEAR 2004.] In 2004, each county 185.12 shall receive program aid in an amount equal to the sum of: 185.13 (1) the amount of county attached machinery aid computed 185.14 for the county for payment in 2003 under section 273.138 prior 185.15 to any reduction under laws enacted in 2003; 185.16 (2) the amount of county homestead and agricultural credit 185.17 aid computed for the county for payment in 2003 under section 185.18 273.1398, subdivision 2, prior to any reduction under laws 185.19 enacted in 2003, minus the amount certified under section 185.20 273.1398, subdivision 4a; and for counties located in judicial 185.21 districts two and four, minus 25 percent of the amount 185.22 calculated under section 273.1398, subdivision 4a; 185.23 (3) the amount of county manufactured home homestead and 185.24 agricultural credit aid computed for the county for payment in 185.25 2003 under section 273.166 prior to any reduction under laws 185.26 enacted in 2003; 185.27 (4) the amount of county criminal justice aid computed for 185.28 the county for payment in 2003 under section 477A.0121 prior to 185.29 any reduction under laws enacted in 2003; and 185.30 (5) the amount of county family preservation aid computed 185.31 for the county for payment in 2003 under section 477A.0122 prior 185.32 to any reduction under laws enacted in 2003. 185.33 Subd. 2. [DEFINITIONS.] (a) For the purposes of this 185.34 section, the following terms have the meaning given. 185.35 (b) "County program aid" means the sum of "county need aid" 185.36 plus "county tax base equalization aid." 186.1 (c) "Age adjusted population" means a county's population 186.2 multiplied by the county age index. 186.3 (d) "County age index" means the percentage of the 186.4 population over age 65 within the county divided by the 186.5 percentage of the population over age 65 within the state, 186.6 except that the age index for any county may not be greater than 186.7 1.8 nor less than 0.8. 186.8 (e) "Population over age 65" means the population over age 186.9 65 established as of July 1 in an aid calculation year by the 186.10 most recent federal census, by a special census conducted under 186.11 contract with the United States Bureau of the Census, by a 186.12 population estimate made by the metropolitan council, or by a 186.13 population estimate of the state demographer made pursuant to 186.14 section 4A.02, whichever is the most recent as to the stated 186.15 date of the count or estimate for the preceding calendar year. 186.16 (f) "Part I crimes" means the three-year average annual 186.17 number of Part I crimes reported for each county by the 186.18 department of public safety for the most recent years available. 186.19 By July 1 of each year the commissioner of public safety shall 186.20 certify to the commissioner of revenue the number of Part I 186.21 crimes reported for each county. 186.22 (g) "Households receiving food stamps" means the average 186.23 monthly number of households receiving food stamps for the three 186.24 most recent years for which data is available. By July 1 of 186.25 each year, the commissioner of human services must certify to 186.26 the commissioner of revenue the average monthly number of 186.27 households in the state and in each county that receive food 186.28 stamps, for the most recent calendar year. 186.29 (h) "County net tax capacity" means the net tax capacity of 186.30 the county, computed analogously to city net tax capacity under 186.31 section 477A.011, subdivision 20. 186.32 Subd. 3. [COUNTY NEED AID.] For 2005 and subsequent years, 186.33 the money appropriated to county need aid each calendar year 186.34 shall be allocated as follows: 40 percent based on each 186.35 county's share of age-adjusted population, 40 percent based on 186.36 each county's share of the state total of households receiving 187.1 food stamps, and 20 percent based on each county's share of the 187.2 state total of Part I crimes. 187.3 Subd. 4. [COUNTY TAX-BASE EQUALIZATION AID.] (a) For 2005 187.4 and subsequent years, the money appropriated to county tax-base 187.5 equalization aid each calendar year shall be apportioned among 187.6 the counties according to each county's tax-base equalization 187.7 aid factor. 187.8 (b) A county's tax-base equalization aid factor is equal to 187.9 the amount by which (i) $185 times the county's population, 187.10 exceeds (ii) 9.45 percent of the county's net tax capacity. 187.11 (c) In the case of a county with a population less than 187.12 10,000, the factor determined in paragraph (b) shall be 187.13 multiplied by a factor of three. 187.14 (d) In the case of a county with a population greater than 187.15 500,000, the factor determined in paragraph (b) shall be 187.16 multiplied by a factor of 0.3. 187.17 [EFFECTIVE DATE.] This section is effective for aids 187.18 payable in 2004 and subsequent years. 187.19 Sec. 12. Minnesota Statutes 2002, section 477A.013, 187.20 subdivision 8, is amended to read: 187.21 Subd. 8. [CITY FORMULA AID.] In calendar year19942004 187.22 and subsequent years, the formula aid for a city is equal to the 187.23 need increase percentage multiplied by the difference between 187.24 (1) the city's revenue need multiplied by its population, and 187.25 (2) the sum of the city's net tax capacity multiplied by the tax 187.26 effort rate, the taconite aids under sections 298.28 and 187.27 298.282, and 50 percent of the revenue raised in the city by a 187.28 local general sales tax subject to section 297A.99 for the 187.29 calendar year two years prior to the year in which the aid is 187.30 being calculated, if the local sales tax is still in effect for 187.31 the year in which the calculated aid will be paid. No city may 187.32 have a formula aid amount less than zero. The need increase 187.33 percentage must be the same for all cities. 187.34Notwithstanding the prior sentence, in 1995 only, the need187.35increase percentage for a city shall be twice the need increase187.36percentage applicable to other cities if:188.1(1) the city, in 1992 or 1993, transferred an amount from188.2governmental funds to their sewer and water fund, and188.3(2) the amount transferred exceeded their net levy for188.4taxes payable in the year in which the transfer occurred.188.5 The applicable need increase percentageor percentagesmust 188.6 be calculated by the department of revenue so that the total of 188.7 the aid under subdivision 9 equals the total amount available 188.8 for aid under section 477A.03 after the subtraction under 188.9 section 477A.014, subdivisions 4 and 5. 188.10 [EFFECTIVE DATE.] This section is effective for aid payable 188.11 in 2004 and thereafter. 188.12 Sec. 13. Minnesota Statutes 2002, section 477A.013, 188.13 subdivision 9, is amended to read: 188.14 Subd. 9. [CITY AID DISTRIBUTION.] (a) In calendar year 188.15 2002 and thereafter, each city shall receive an aid distribution 188.16 equal to the sum of (1) the city formula aid under subdivision 188.17 8, and (2) its city aid base. 188.18 (b) Thepercentage increaseaid for afirst classcity in 188.19 calendar year1995 and thereafter, except for 2002,2004 shall 188.20 not exceed thepercentage increase in the sum of the aid to all188.21cities under this section in the current calendar year compared188.22to the sum of the aid to all cities in the previous yearamount 188.23 of its aid in calendar year 2003 after the reductions under this 188.24 article.For aids payable in 2002 only, the amount of the aid188.25paid to a first class city shall not exceed the sum of its aid188.26amount for calendar year 2001 under this section and its aid188.27payment in calendar year 2001 under section 273.1398,188.28subdivision 2, by more than 2.5 percent.188.29 (c) For aids payable inall years except 20022005 and 188.30 thereafter, the total aid for any city,except a first class188.31city,shall not exceed the sum of (1) ten percent of the city's 188.32 net levy for the year prior to the aid distribution plus (2) its 188.33 total aid in the previous year.For aids payable in 2002 only,188.34the total aid for any city, except a first class city, shall not188.35exceed the sum of (1) 40 percent of the city's net levy for188.36taxes payable in the year prior to the aid distribution plus (2)189.140 percent of its total aid in the previous year under section189.2273.1398, subdivision 2, plus (3) its total aid in the previous189.3year under this section.For aids payable in 2005 and 189.4 thereafter, the total aid for any city with a population of 189.5 2,500 or more may not decrease from its total aid under this 189.6 section in the previous year by an amount greater than ten 189.7 percent of its net levy in the year prior to the aid 189.8 distribution. 189.9 (d) For aids payable in 2004 only, the total aid for a city 189.10 with a population less than 2,500 may not be less than the 189.11 amount it was certified to receive in 2003 minus the greater of 189.12 (1) the reduction to this aid payment in 2003 under this 189.13 article, or (2) five percent of its 2003 aid amount. For aids 189.14 payable in 2005 and thereafter, the total aid for a city with a 189.15 population less than 2,500 must not be less than the amount it 189.16 was certified to receive in the previous year minus five percent 189.17 of its 2003 certified aid amount. 189.18 [EFFECTIVE DATE.] This section is effective beginning with 189.19 aids payable in 2004. 189.20 Sec. 14. Minnesota Statutes 2002, section 477A.03, 189.21 subdivision 2, is amended to read: 189.22 Subd. 2. [ANNUAL APPROPRIATION.] (a) A sum sufficient to 189.23 discharge the duties imposed by sections 477A.011 to 477A.014 is 189.24 annually appropriated from the general fund to the commissioner 189.25 of revenue. 189.26 (b)Aid payments to counties under section 477A.0121 are189.27limited to $20,265,000 in 1996. Aid payments to counties under189.28section 477A.0121 are limited to $27,571,625 in 1997. For aid189.29payable in 1998 and thereafter, the total aids paid under189.30section 477A.0121 are the amounts certified to be paid in the189.31previous year, adjusted for inflation as provided under189.32subdivision 3.189.33(c)(i) For aids payable in 1998 and thereafter, the total189.34aids paid to counties under section 477A.0122 are the amounts189.35certified to be paid in the previous year, adjusted for189.36inflation as provided under subdivision 3.190.1(ii) Aid payments to counties under section 477A.0122 in190.22000 are further increased by an additional $20,000,000 in 2000.190.3(d) Aid payments to cities in 2002 under section 477A.013,190.4subdivision 9, are limited to the amounts certified to be paid190.5in the previous year, adjusted for inflation as provided in190.6subdivision 3, and increased by $140,000,000. For aids payable190.7in 2003, the total aids paid under section 477A.013, subdivision190.89, are the amounts certified to be paid in the previous year,190.9adjusted for inflation as provided under subdivision 3.For 190.10 aids payable in 2004,the total aids paid under section190.11477A.013, subdivision 9, are the amounts certified to be paid in190.12the previous year, adjusted for inflation as provided under190.13subdivision 3, and increased by the amount certified to be paid190.14in 2003 under section 477A.06. For aids payable in 2005 and190.15thereafter,the total aids paid under section 477A.013, 190.16 subdivision 9, arethe amounts certified to be paid in the190.17previous year, adjusted for inflation as provided under190.18subdivision 3. The additional amount authorized under190.19subdivision 4 is not included when calculating the appropriation190.20limits under this paragraphlimited to $390,000,000. For aids 190.21 payable in 2005 and thereafter, the total aids paid under 190.22 section 477A.013, subdivision 9, are increased to $406,602,000. 190.23(e) Reimbursements made to counties under section 477A.0123190.24in calendar year 2005 and thereafter are limited to an amount190.25equal to the maximum allowed appropriation under this section in190.26the previous year, multiplied by a percent to be established by190.27law. If no percent is established by law, the appropriation is190.28limited to the total amount appropriated for this purpose in the190.29previous year.(c) For aids payable in calendar year 2005 and 190.30 thereafter, the total aids paid to counties under section 190.31 477A.0124, subdivision 3, are limited to $100,500,000. Each 190.32 calendar year, $500,000 shall be retained by the commissioner of 190.33 revenue to make reimbursements to the commissioner of finance 190.34 for payments made under section 611.27. For calendar year 2004, 190.35 the amount shall be in addition to the payments authorized under 190.36 section 477A.0124, subdivision 1. For calendar year 2005 and 191.1 subsequent years, the amount shall be deducted from the 191.2 appropriation under this paragraph. The reimbursements shall be 191.3 to defray the additional costs associated with court-ordered 191.4 counsel under section 611.27. Any retained amounts not used for 191.5 reimbursement in a year shall be included in the next 191.6 distribution of county need aid that is certified to the county 191.7 auditors for the purpose of property tax reduction for the next 191.8 taxes payable year. 191.9 (d) For aids payable in 2005 and thereafter, the total aids 191.10 under section 477A.0124, subdivision 4, are limited to 191.11 $105,000,000. The commissioner of finance shall bill the 191.12 commissioner of revenue for the cost of preparation of local 191.13 impact notes as required by section 3.987, not to exceed 191.14 $207,000 in fiscal year 2004 and thereafter. The commissioner 191.15 of children, families, and learning shall bill the commissioner 191.16 of revenue for the cost of preparation of local impact notes for 191.17 school districts as required by section 3.987, not to exceed 191.18 $7,000 in fiscal year 2004 and thereafter. The commissioner of 191.19 revenue shall deduct the amounts billed under this paragraph 191.20 from the appropriation under this paragraph. The amounts 191.21 deducted are appropriated to the commissioner of finance and the 191.22 commissioner of children, families, and learning for the 191.23 preparation of local impact notes. 191.24 [EFFECTIVE DATE.] This section is effective for aid payable 191.25 in 2004 and thereafter. 191.26 Sec. 15. Minnesota Statutes 2002, section 611.27, 191.27 subdivision 13, is amended to read: 191.28 Subd. 13. [PUBLIC DEFENSE SERVICES; CORRECTIONAL FACILITY 191.29 INMATES.] All billings for services rendered and ordered under 191.30 subdivision 7 shall require the approval of the chief district 191.31 public defender before being forwarded on a monthly basis to the 191.32 state public defender. In cases where adequate representation 191.33 cannot be provided by the district public defender and where 191.34 counsel has been appointed under a court order, the state public 191.35 defender shall forward to the commissioner of finance all 191.36 billings for services rendered under the court order. The 192.1 commissioner shall pay for services from county criminal justice 192.2 aid retained by the commissioner of revenue for that purpose 192.3 under section 477A.0121, subdivision 4, or from county program 192.4 aid retained by the commissioner of revenue for that purpose 192.5 under section 477A.0124, subdivision 1, clause (4), or 477A.03, 192.6 subdivision 2, paragraph (c). 192.7 The costs of appointed counsel and associated services in 192.8 cases arising from new criminal charges brought against indigent 192.9 inmates who are incarcerated in a Minnesota state correctional 192.10 facility are the responsibility of the state board of public 192.11 defense. In such cases the state public defender may follow the 192.12 procedures outlined in this section for obtaining court-ordered 192.13 counsel. 192.14 [EFFECTIVE DATE.] This section is effective for payments in 192.15 2004 and subsequent years. 192.16 Sec. 16. Minnesota Statutes 2002, section 611.27, 192.17 subdivision 15, is amended to read: 192.18 Subd. 15. [COSTS OF TRANSCRIPTS.] In appeal cases and 192.19 postconviction cases where the state public defender's office 192.20 does not have sufficient funds to pay for transcripts and other 192.21 necessary expenses because it has spent or committed all of the 192.22 transcript funds in its annual budget, the state public defender 192.23 may forward to the commissioner of finance all billings for 192.24 transcripts and other necessary expenses. The commissioner 192.25 shall pay for these transcripts and other necessary expenses 192.26 from county criminal justice aid retained by the commissioner of 192.27 revenue under section 477A.0121, subdivision 4, or from county 192.28 program aid retained by the commissioner of revenue for that 192.29 purpose under section 477A.0124, subdivision 1, clause (4), or 192.30 477A.03, subdivision 2, paragraph (c). 192.31 [EFFECTIVE DATE.] This section is effective for payments in 192.32 2004 and subsequent years. 192.33 Sec. 17. [DEFINITIONS.] 192.34 (a) For purposes of sections 17 to 25, the following terms 192.35 have the meanings given them in this section. 192.36 (b) The 2003 and 2004 "levy plus aid revenue base" for a 193.1 city is the sum of that city's certified property tax levy for 193.2 taxes payable in 2003, plus the sum of the amounts the city was 193.3 certified to receive in 2003 as: 193.4 (1) local government aid under Minnesota Statutes, section 193.5 477A.013; 193.6 (2) existing low-income housing aid under Minnesota 193.7 Statutes, section 477A.06; 193.8 (3) new construction low-income housing aid under Minnesota 193.9 Statutes, section 477A.065; and 193.10 (4) taconite aids under Minnesota Statutes, sections 298.28 193.11 and 298.282, including any aid which was required to be placed 193.12 in a special fund for expenditure in the next succeeding year. 193.13 (c) The 2003 and 2004 "levy plus aid revenue base" for a 193.14 county is the sum of that county's certified property tax levy 193.15 for taxes payable in 2003, plus the sum of the amounts the 193.16 county was certified to receive in the designated calendar year 193.17 as: 193.18 (1) homestead and agricultural credit aid under Minnesota 193.19 Statutes, section 273.1398, subdivision 2, minus the amount 193.20 calculated under section 273.1398, subdivision 4a, paragraph 193.21 (b), for counties in judicial districts one, three, six, and 193.22 ten, and 25 percent of the amount calculated under section 193.23 273.1398, subdivision 4a, paragraph (b), for counties in 193.24 judicial districts two and four; 193.25 (2) the amount of county manufactured home homestead and 193.26 agricultural credit aid computed for the county for payment in 193.27 2003 under section 273.166 prior to any reduction under laws 193.28 enacted in 2003; 193.29 (3) criminal justice aid under Minnesota Statutes, section 193.30 477A.0121; 193.31 (4) family preservation aid under Minnesota Statutes, 193.32 section 477A.0122; 193.33 (5) taconite aids under Minnesota Statutes, sections 298.28 193.34 and 298.282, including any aid which was required to be placed 193.35 in a special fund for expenditure in the next succeeding year; 193.36 and 194.1 (6) county program aid under section 477A.0124. 194.2 (d) "Total revenue" for a city or county for a particular 194.3 year are the total revenue amount for that city or county, as 194.4 reported by the state auditor for the same year, or for the most 194.5 recent preceding year for which the state auditor has reported, 194.6 excluding grants between political subdivisions and amounts 194.7 borrowed by the city or county but including net transfers from 194.8 an enterprise fund. 194.9 [EFFECTIVE DATE.] This section is effective the day 194.10 following final enactment. 194.11 Sec. 18. [2003 CITY AID REDUCTIONS.] 194.12 The commissioner of revenue shall compute an aid reduction 194.13 amount for each city for 2003 equal to 9.3 percent of the city's 194.14 levy plus aid revenue base for 2003. 194.15 The reduction amount is limited to 3.7 percent of the 194.16 city's total revenues for 2003 if a city has a population under 194.17 1,000 or if the city has a three-year levy plus aid revenue base 194.18 increase average of less than two percent. For all other 194.19 cities, the reduction amount is limited to 5.25 percent of the 194.20 city's total revenues for 2003. 194.21 The reduction is further limited to the sum of the city's 194.22 payable 2003 distribution pursuant to Minnesota Statutes, 194.23 section 477A.013, and related sections, and the city's payable 194.24 2003 reimbursement under Minnesota Statutes, section 273.1384. 194.25 The reduction is applied first to the city's distribution 194.26 pursuant to Minnesota Statutes, section 477A.013, and then if 194.27 necessary to the city's reimbursements pursuant to Minnesota 194.28 Statutes, section 273.1384. 194.29 To the extent that sufficient information is available on 194.30 each successive payment date within the year, the commissioner 194.31 of revenue shall pay any remaining 2003 distribution or 194.32 reimbursement amount reduced under this section in equal 194.33 installments on the payment dates provided in law. 194.34 [EFFECTIVE DATE.] This section is effective the day 194.35 following final enactment. 194.36 Sec. 19. [2003 COUNTY AID REDUCTIONS.] 195.1 The commissioner of revenue shall compute an aid reduction 195.2 amount for each county for 2003 equal to 3.16 percent of the 195.3 county's levy plus aid revenue base for 2003. 195.4 The reduction is limited to the sum of the county's payable 195.5 2003 distributions pursuant to Minnesota Statutes, sections 195.6 273.138; 273.1384; 273.1398, subdivision 2; 273.166; 477A.0121; 195.7 and 477A.0122. 195.8 The aid reduction is applied first to reduce the county's 195.9 2003 distribution pursuant to Minnesota Statutes, section 195.10 273.138, then to reduce, in this sequence, the aid payable in 195.11 2003 under Minnesota Statutes, sections 273.1398, subdivision 2; 195.12 273.166; 477A.0121; and 477A.0122. Then, if necessary, the 195.13 county's reimbursements pursuant to Minnesota Statutes, section 195.14 273.1384, are to be reduced. 195.15 To the extent that sufficient information is available on 195.16 each successive payment date within the year, the commissioner 195.17 of revenue shall pay any remaining 2003 distribution or 195.18 reimbursement amount reduced under this section in equal 195.19 installments on the payment dates provided in law. 195.20 [EFFECTIVE DATE.] This section is effective the day 195.21 following final enactment. 195.22 Sec. 20. [2003 TOWNSHIP AID REDUCTIONS.] 195.23 The commissioner of revenue shall compute an aid reduction 195.24 amount for each township for 2003 equal to one percent of the 195.25 town's certified levy for taxes payable in 2003. 195.26 The reduction is limited to the amount of the town's 195.27 payable 2003 reimbursement pursuant to Minnesota Statutes, 195.28 section 273.1384. 195.29 To the extent that sufficient information is available on 195.30 each successive payment date within the year, the commissioner 195.31 of revenue shall pay any remaining 2003 reimbursement amount for 195.32 the town in equal installments on the payment dates provided in 195.33 law. 195.34 [EFFECTIVE DATE.] This section is effective the day 195.35 following final enactment. 195.36 Sec. 21. [2003 SPECIAL TAXING DISTRICT AID REDUCTIONS.] 196.1 The commissioner of revenue shall compute an aid reduction 196.2 amount for each special taxing district for 2003 equal to 0.75 196.3 percent of the district's certified levy for taxes payable in 196.4 2003. 196.5 The reduction is limited to the amount of the district's 196.6 payable 2003 reimbursement pursuant to Minnesota Statutes, 196.7 section 237.1384. 196.8 To the extent that sufficient information is available on 196.9 each successive payment date within the year, the commissioner 196.10 of revenue shall pay any remaining 2003 reimbursement amount for 196.11 the district in equal installments on the payment dates provided 196.12 in law. 196.13 [EFFECTIVE DATE.] This section is effective the day 196.14 following final enactment. 196.15 Sec. 22. [2004 CITY AID REDUCTIONS.] 196.16 The commissioner of revenue shall compute an aid reduction 196.17 amount for 2004 for each city as provided in this section. 196.18 The initial aid reduction amount for each city is the 196.19 amount by which the city's aid distribution under Minnesota 196.20 Statutes, section 477A.013, and related provisions payable in 196.21 2003 exceeds the city's 2004 distribution under those provisions. 196.22 The minimum aid reduction amount for a city is the amount 196.23 of its reduction in 2003 under section 18. If a city receives 196.24 an increase to its city aid base under section 477A.011, 196.25 subdivision 36, its minimum aid reduction is reduced by an equal 196.26 amount. 196.27 The maximum aid reduction amount for a city is an amount 196.28 equal to 18 percent of the city's total 2004 levy plus aid 196.29 revenue base, except that if the city has a city net tax 196.30 capacity for aids payable in 2004, as defined in section 196.31 477A.011, subdivision 20, of $700 per capita or less, the 196.32 maximum aid reduction shall not exceed an amount equal to 13 196.33 percent of the city's total 2004 levy plus aid revenue base. 196.34 If the initial aid reduction amount for a city is less than 196.35 the minimum aid reduction amount for that city, the final aid 196.36 reduction amount for the city is the sum of the initial aid 197.1 reduction amount and the lesser of the amount of the city's 197.2 payable 2004 reimbursement under Minnesota Statutes, section 197.3 273.1384, or the difference between the minimum and initial aid 197.4 reduction amounts for the city. 197.5 If the initial aid reduction amount for a city is greater 197.6 than the maximum aid reduction amount for the city, the city 197.7 receives an additional distribution under this section equal to 197.8 the result of subtracting the maximum aid reduction amount from 197.9 the initial aid reduction amount. This distribution shall be 197.10 paid in equal installments in 2004 on the dates specified in 197.11 Minnesota Statutes, section 477A.015. The amount necessary for 197.12 these additional distributions is appropriated to the 197.13 commissioner of revenue from the general fund in fiscal year 197.14 2005. 197.15 The initial aid reduction is applied to the city's 197.16 distribution pursuant to Minnesota Statutes, section 477A.013, 197.17 and any aid reduction in excess of the initial aid reduction is 197.18 applied to the city's reimbursements pursuant to Minnesota 197.19 Statutes, section 273.1384. 197.20 To the extent that sufficient information is available on 197.21 each payment date in 2004, the commissioner of revenue shall pay 197.22 the reimbursements reduced under this section in equal 197.23 installments on the payment dates provided in law. 197.24 [EFFECTIVE DATE.] This section is effective the day 197.25 following final enactment. 197.26 Sec. 23. [2004 COUNTY AID REDUCTIONS.] 197.27 The commissioner of revenue shall compute an aid reduction 197.28 amount for 2004 for each county as provided in this section. 197.29 The commissioner of revenue shall compute an aid reduction 197.30 amount for each county for 2004 equal to 5.27 percent of the 197.31 county's levy plus aid revenue base for 2004. 197.32 The reduction is further limited to the sum of the county's 197.33 payable 2004 distributions under Minnesota Statutes, sections 197.34 477A.0124 and 273.1384. 197.35 The aid reduction is applied first to the county's 197.36 distributions pursuant to Minnesota Statutes, section 477A.0124, 198.1 and then, if necessary, to reduce the county's reimbursements 198.2 pursuant to Minnesota Statutes, section 273.1384. 198.3 To the extent that sufficient information is available on 198.4 each payment date in 2004, the commissioner of revenue shall pay 198.5 any remaining 2004 distribution or reimbursement amount reduced 198.6 under this section in equal installments on the payment dates 198.7 provided in law. 198.8 [EFFECTIVE DATE.] This section is effective the day 198.9 following final enactment. 198.10 Sec. 24. [2004 TOWNSHIP AID REDUCTIONS.] 198.11 The commissioner of revenue shall compute an aid reduction 198.12 amount for each township for 2004 equal to 1.5 percent of the 198.13 town's certified levy for taxes payable in 2003. 198.14 The reduction is limited to the amount of the town's 198.15 payable 2004 reimbursement pursuant to Minnesota Statutes, 198.16 section 273.1384. 198.17 To the extent that sufficient information is available on 198.18 each successive payment date within the year, the commissioner 198.19 of revenue shall pay any remaining 2004 reimbursement amount for 198.20 the town in equal installments on the payment dates provided in 198.21 law. 198.22 [EFFECTIVE DATE.] This section is effective the day 198.23 following final enactment. 198.24 Sec. 25. [2004 SPECIAL TAXING DISTRICT AID REDUCTIONS.] 198.25 The commissioner of revenue shall compute an aid reduction 198.26 amount for each special taxing district for 2004 equal to one 198.27 percent of the district's certified levy for taxes payable in 198.28 2003. 198.29 The reduction is limited to the amount of the district's 198.30 payable 2004 reimbursement pursuant to Minnesota Statutes, 198.31 section 273.1384. 198.32 To the extent that sufficient information is available on 198.33 each successive payment date within the year, the commissioner 198.34 of revenue shall pay any remaining 2004 reimbursement amount for 198.35 the district in equal installments on the payment dates provided 198.36 in law. 199.1 [EFFECTIVE DATE.] This section is effective the day 199.2 following final enactment. 199.3 Sec. 26. [HACA ADJUSTMENT; COURT TAKEOVER ERROR.] 199.4 In calendar years 2003 and 2004, any county whose 2002 aid 199.5 reduction, related to the state assumption of funding for 199.6 mandated court services, was based on costs not assumed by the 199.7 state shall receive the following aid adjustments; 199.8 (1) in calendar year 2003, a permanent increase of $50,000 199.9 in its aid payment under Minnesota Statutes, section 273.1398, 199.10 subdivision 2, above its certified 2003 aid amount; and 199.11 (2) in calendar year 2004, a permanent increase of an 199.12 additional $50,000 in its county program aid payment under 199.13 Minnesota Statutes, section 477A.0124, subdivision 1, clause (2). 199.14 [EFFECTIVE DATE.] This section is effective for aids 199.15 payable in 2003 and 2004. 199.16 Sec. 27. [REPEALER.] 199.17 (a) Minnesota Statutes 2002, sections 273.138, subdivision 199.18 2, and the parts of subdivisions 5 and 7 relating to counties; 199.19 273.1398, subdivisions 2, 2c, 4, and 4d; 273.166; 477A.011, 199.20 subdivision 37; 477A.0121; 477A.0122; 477A.0123; 477A.0132; 199.21 477A.03, subdivisions 3 and 4; 477A.06; 477A.065; and 477A.07, 199.22 are repealed effective for aid payable in 2004 and thereafter. 199.23 (b) Minnesota Statutes 2002, section 273.138, subdivisions 199.24 3 and 6, and the parts of subdivisions 5 and 7 relating to 199.25 school districts are repealed effective for calendar year 2003. 199.26 ARTICLE 7 199.27 LEVY LIMITS 199.28 Section 1. Minnesota Statutes 2002, section 275.70, 199.29 subdivision 5, is amended to read: 199.30 Subd. 5. [SPECIAL LEVIES.] "Special levies" means those 199.31 portions of ad valorem taxes levied by a local governmental unit 199.32 for the following purposes or in the following manner: 199.33 (1) to pay the costs of the principal and interest on 199.34 bonded indebtedness or to reimburse for the amount of liquor 199.35 store revenues used to pay the principal and interest due on 199.36 municipal liquor store bonds in the year preceding the year for 200.1 which the levy limit is calculated; 200.2 (2) to pay the costs of principal and interest on 200.3 certificates of indebtedness issued for any corporate purpose 200.4 except for the following: 200.5 (i) tax anticipation or aid anticipation certificates of 200.6 indebtedness; 200.7 (ii) certificates of indebtedness issued under sections 200.8 298.28 and 298.282; 200.9 (iii) certificates of indebtedness used to fund current 200.10 expenses or to pay the costs of extraordinary expenditures that 200.11 result from a public emergency; or 200.12 (iv) certificates of indebtedness used to fund an 200.13 insufficiency in tax receipts or an insufficiency in other 200.14 revenue sources; 200.15 (3) to provide for the bonded indebtedness portion of 200.16 payments made to another political subdivision of the state of 200.17 Minnesota; 200.18 (4) to fund payments made to the Minnesota state armory 200.19 building commission under section 193.145, subdivision 2, to 200.20 retire the principal and interest on armory construction bonds; 200.21 (5) property taxes approved by voters which are levied 200.22 against the referendum market value as provided under section 200.23 275.61; 200.24 (6) to fund matching requirements needed to qualify for 200.25 federal or state grants or programs to the extent that either 200.26 (i) the matching requirement exceeds the matching requirement in 200.27 calendar year 2001, or (ii) it is a new matching requirement 200.28 that did not exist prior to 2002; 200.29 (7) to pay the expenses reasonably and necessarily incurred 200.30 in preparing for or repairing the effects of natural disaster 200.31 including the occurrence or threat of widespread or severe 200.32 damage, injury, or loss of life or property resulting from 200.33 natural causes, in accordance with standards formulated by the 200.34 emergency services division of the state department of public 200.35 safety, as allowed by the commissioner of revenue under section 200.36 275.74, subdivision 2; 201.1 (8) pay amounts required to correct an error in the levy 201.2 certified to the county auditor by a city or county in a levy 201.3 year, but only to the extent that when added to the preceding 201.4 year's levy it is not in excess of an applicable statutory, 201.5 special law or charter limitation, or the limitation imposed on 201.6 the governmental subdivision by sections 275.70 to 275.74 in the 201.7 preceding levy year; 201.8 (9) to pay an abatement under section 469.1815; 201.9 (10) to pay any costs attributable to increases in the 201.10 employer contribution rates under chapter 353 that are effective 201.11 after June 30, 2001; 201.12 (11) to pay the operating or maintenance costs of a county 201.13 jail as authorized in section 641.01 or 641.262, or of a 201.14 correctional facility as defined in section 241.021, subdivision 201.15 1, paragraph (5), to the extent that the county can demonstrate 201.16 to the commissioner of revenue that the amount has been included 201.17 in the county budget as a direct result of a rule, minimum 201.18 requirement, minimum standard, or directive of the department of 201.19 corrections, or to pay the operating or maintenance costs of a 201.20 regional jail as authorized in section 641.262. For purposes of 201.21 this clause, a district court order is not a rule, minimum 201.22 requirement, minimum standard, or directive of the department of 201.23 corrections. If the county utilizes this special levy, any 201.24 amount levied by the county in the previous levy year for the 201.25 purposes specified under this clause and included in the 201.26 county's previous year's levy limitation computed under section 201.27 275.71, shall be deducted from the levy limit base under section 201.28 275.71, subdivision 2, when determining the county's current 201.29 year levy limitation. The county shall provide the necessary 201.30 information to the commissioner of revenue for making this 201.31 determination; 201.32 (12) to pay for operation of a lake improvement district, 201.33 as authorized under section 103B.555. If the county utilizes 201.34 this special levy, any amount levied by the county in the 201.35 previous levy year for the purposes specified under this clause 201.36 and included in the county's previous year's levy limitation 202.1 computed under section 275.71 shall be deducted from the levy 202.2 limit base under section 275.71, subdivision 2, when determining 202.3 the county's current year levy limitation. The county shall 202.4 provide the necessary information to the commissioner of revenue 202.5 for making this determination; 202.6 (13) to repay a state or federal loan used to fund the 202.7 direct or indirect required spending by the local government due 202.8 to a state or federal transportation project or other state or 202.9 federal capital project. This authority may only be used if the 202.10 project is not a local government initiative; 202.11 (14)for counties only, to pay the costs reasonably202.12expected to be incurred in 2002 related to the redistricting of202.13election districts and establishment of election precincts under202.14sections 204B.135 and 204B.14, the notice required by section202.15204B.14, subdivision 4, and the reassignment of voters in the202.16statewide registration system, not to exceed $1 per capita,202.17provided that the county shall distribute a portion of the202.18amount levied under this clause equal to 25 cents times the202.19population of the city to all cities in the county with a202.20population of 30,000 or more;202.21(15)to pay for court administration costs as required 202.22 under section 273.1398, subdivision 4b, less the (i) county's 202.23 share of transferred fines and fees collected by the district 202.24 courts in the county for calendar year 2001 and (ii) the aid 202.25 amount certified to be paid to the county in 2004 under section 202.26 273.1398, subdivision 4c; however, for taxes levied to pay for 202.27 these costs in the year in which the court financing is 202.28 transferred to the state, the amount under thissectionclause 202.29 is limited toone-third of the aid reductionthe amount of aid 202.30 the county is certified to receive under section 273.1398, 202.31 subdivision 4a; and 202.32(16)(15) to fund a police or firefighters relief 202.33 association as required under section 69.77 to the extent that 202.34 the required amount exceeds the amount levied for this purpose 202.35 in 2001. 202.36 [EFFECTIVE DATE.] This section is effective for taxes 203.1 payable in 2004 and thereafter. 203.2 Sec. 2. Minnesota Statutes 2002, section 275.71, 203.3 subdivision 2, is amended to read: 203.4 Subd. 2. [LEVY LIMIT BASE.] (a) If a local government unit 203.5 was not subject to levy limits under this section for taxes 203.6 levied in 2002, the levy limit base forathe local governmental 203.7 unit for taxes levied in2001 is equal to the greater of:203.8(1) the sum of its adjusted levy limit base for taxes203.9levied in 1999 plus the amount it levied in 1999 under Minnesota203.10Statutes 1999 Supplement, section 275.70, subdivision 5, clauses203.11(8) and (13), multiplied by:203.12(i) one plus the percentage growth in the implicit price203.13deflator for the 12-month period ending March 30, 2000;203.14(ii) one plus a percentage equal to the annual percentage203.15increase in the estimated number of households, if any, for the203.16most recent 12-month period that was available on July 1, 2000;203.17and203.18(iii) one plus a percentage equal to 50 percent of the203.19percentage increase in the taxable market value of the203.20jurisdiction due to new construction of class 3 property, as203.21defined in section 273.13, subdivision 24, except for203.22state-assessed utility and railroad operating property, for the203.23most recent year for which data was available as of July 1,203.242000; or203.25(2)2003 is an amount equal to: 203.26 (i) the sum of the amount it levied in20002002 plus the 203.27 amount of aids it was certified to receive in calendar year2001203.28 2003 under sections 273.1398, 298.282, 477A.011 to 477A.03, 203.29 prior to any aid reductions under section 273.1399, subdivision 203.30 5, 477A.06, and 477A.065, after any reductions to these aids 203.31 under article 6; less 203.32 (ii) the amount it levied in20002002 that would qualify 203.33 as special levies under section 275.70, subdivision 6, for taxes 203.34 levied in 2001. The local governmental unit shall provide the 203.35 commissioner of revenue with sufficient information to make this 203.36 calculation. 204.1 (b)If the governmental unit was not subject to levy limits204.2for taxes levied in 1999, its levy limit base for taxes levied204.3in 2001 is equal to the amount calculated under paragraph (a),204.4clause (2).204.5(c)The levy limit base for a local governmental unit not 204.6 included in paragraph (a) for taxes levied in20022003 is equal 204.7 to its adjusted levy limit base in the previous year,plus the204.8amount of tree growth tax it received in calendar year 2001204.9under sections 270.31 to 270.39, and plus, in the case of a204.10city, the amount it was certified to receive in calendar year204.112001 under section 273.166,subject to any adjustments under 204.12 section 275.72, and less (1) any cuts in 2003 payments to aids 204.13 under sections 273.1398 and 477A.011 to 477A.03, (2) 65 percent 204.14 of the difference between its levy limit under subdivision 5 for 204.15 taxes levied in 2002 and the amount it actually levied under 204.16 that subdivision in that year, and (3) certified property tax 204.17 replacement aid payable in 2003 under section 174.242. 204.18 (c) The levy limit base for a local governmental unit for 204.19 taxes levied in 2004 is equal to its adjusted levy limit base in 204.20 the previous year, subject to any adjustments under section 204.21 275.72. 204.22 [EFFECTIVE DATE.] This section is effective for taxes 204.23 levied in 2003 and 2004. 204.24 Sec. 3. Minnesota Statutes 2002, section 275.71, 204.25 subdivision 4, is amended to read: 204.26 Subd. 4. [ADJUSTED LEVY LIMIT BASE.](a)For taxes levied 204.27 in2001 and 20022003 and 2004, the adjusted levy limit base is 204.28 equal to the levy limit base computed under subdivisions 2 and 3 204.29 or section 275.72, multiplied by:204.30 (1)one plus a percentage equal to the percentage growth in204.31the implicit price deflator;204.32(2)one plus a percentage equal to the percentage increase 204.33 in number of households, if any, for the most recent 12-month 204.34 period for which data is available; and 204.35(3)(2) one plus a percentage equal to 50 percent of the 204.36 percentage increase in the taxable market value of the 205.1 jurisdiction due to new construction of class 3 property, as 205.2 defined in section 273.13, subdivision 24,except for205.3state-assessed utility and railroad operating property,for the 205.4 most recent year for which data is available. 205.5(b) For counties only, for taxes levied in 2001 and 2002,205.6the adjusted levy limit base is also reduced by any amount of205.7levy reduction required under section 275.07, subdivision 1,205.8paragraph (b), clause (ii).205.9 [EFFECTIVE DATE.] This section is effective for taxes 205.10 payable in 2004 and thereafter. 205.11 Sec. 4. Minnesota Statutes 2002, section 275.71, 205.12 subdivision 5, is amended to read: 205.13 Subd. 5. [PROPERTY TAX LEVY LIMIT.]Notwithstanding any205.14other provision of a municipal charter which limits ad valorem205.15taxes to a lesser amount, or which would require a separate205.16voter approval for any increase,For taxes levied in2001 and205.1720022003 and 2004, the property tax levy limit for a local 205.18 governmental unit is equal to its adjusted levy limit base 205.19 determined under subdivision 4 plus any additional levy 205.20 authorized under section 275.73, which is levied against net tax 205.21 capacity, reduced by the sum of (i) the total amount of aids and 205.22 reimbursements that the local governmental unit is certified to 205.23 receive under sections 477A.011 to 477A.014, except for the 205.24 increases in city aid bases in calendar year 2002 under section 205.25 477A.011, subdivision 36, paragraphs (n), (p), and (q), (ii) 205.26 homestead and agricultural aids it is certified to receive under 205.27 section 273.1398, (iii) taconite aids under sections 298.28 and 205.28 298.282 including any aid which was required to be placed in a 205.29 special fund for expenditure in the next succeeding year,(iv)205.30low-income housing aid under sections 477A.06 and 477A.065, and205.31(v) property tax replacement aids under section 174.242and (iv) 205.32 estimated payments to the local governmental unit under section 205.33 272.029, adjusted for any error in estimation in the preceding 205.34 year. 205.35 [EFFECTIVE DATE.] This section is effective for taxes 205.36 payable in 2004 and thereafter. 206.1 Sec. 5. Minnesota Statutes 2002, section 275.71, 206.2 subdivision 6, is amended to read: 206.3 Subd. 6. [LEVIES IN EXCESS OF LEVY LIMITS.](a)If the 206.4 levy made by a city or county exceeds the levy limit provided in 206.5 sections 275.70 to 275.74, except when the excess levy is due to 206.6 the rounding of the rate in accordance with section 275.28, the 206.7 county auditor shall only extend the amount of taxes permitted 206.8 under sections 275.70 to 275.74, as provided for in section 206.9 275.16. 206.10(b) For taxes levied in 2002, payable in 2003 only, if an206.11error was made in calculating the levy limit adjustment related206.12to a special levy for jails authorized under section 275.70,206.13subdivision 5, clause (11), in the previous year, the following206.14adjustments must be made:206.15(1) the county's levy limit base for taxes levied in 2002206.16must be based on the corrected adjusted levy limit base for206.17taxes levied in 2001; and206.18(2) the county's final levy limit for taxes levied in 2002,206.19payable in 2003, must also be temporarily reduced by an amount206.20equal to the amount of county levy spread in the previous year206.21in excess of the total recalculated levy limit plus authorized206.22special levies for taxes levied in 2001, payable in 2002.206.23(c) The commissioner of revenue shall inform counties206.24affected by paragraph (b) of the levy error and levy adjustments206.25required under this provision by June 15, 2002. The county may206.26provide additional information to the commissioner indicating206.27why these adjustments may be in error by July 15, 2002. The206.28commissioner shall certify the final levy adjustment to the206.29affected counties by August 1, 2002. The levy reduction imposed206.30under paragraph (b), clause (2), may be spread over a period not206.31to exceed three years, upon agreement between the county and the206.32commissioner.206.33 [EFFECTIVE DATE.] This section is effective for taxes 206.34 payable in 2004 and thereafter. 206.35 Sec. 6. Minnesota Statutes 2002, section 275.72, 206.36 subdivision 3, is amended to read: 207.1 Subd. 3. [ADJUSTMENTS FOR CHANGES IN SERVICE LEVELS.] If a 207.2 local governmental unit, as a result of an annexation 207.3 agreementprior to January 1, 1999,has different tax rates in 207.4 various parts of the jurisdiction due to different service 207.5 levels, it may petition the commissioner of revenue to adjust 207.6 its levy limits established under section 275.71. The 207.7 commissioner shall adjust the levy limits to reflect scheduled 207.8 changes in tax rates related to increasing service levels in 207.9 areas currently receiving less city services. The local 207.10 governmental unit shall provide the commissioner with any 207.11 information the commissioner deems necessary in making the levy 207.12 limit adjustment. 207.13 [EFFECTIVE DATE.] This section is effective for taxes 207.14 levied in 2003, payable in 2004 and thereafter. 207.15 Sec. 7. Minnesota Statutes 2002, section 275.73, 207.16 subdivision 2, is amended to read: 207.17 Subd. 2. [LEVY EFFECTIVE DATE.] An additional levy 207.18 approved under subdivision 1 at a general or special election 207.19 heldprior to September 1on or before the first Tuesday in 207.20 November in any levy year may be levied in that same levy year 207.21 and subsequent levy years. An additional levy approved under 207.22 subdivision 1 at a general or special election held afterAugust207.2331the first Tuesday in November in any levy year shall not be 207.24 levied in that same levy but may be levied in subsequent levy 207.25 years. 207.26 [EFFECTIVE DATE.] This section is effective for taxes 207.27 payable in 2004 and thereafter. 207.28 Sec. 8. Minnesota Statutes 2002, section 275.74, 207.29 subdivision 3, is amended to read: 207.30 Subd. 3. [INFORMATION NECESSARY TO CALCULATETHE 2001LEVY 207.31 LIMIT BASE.] A local governmental unit must provide the 207.32 commissioner with the information required to calculate the 207.33alternative 2001 levy limit baseamount under section 275.71, 207.34 subdivision 2, paragraph (a),clause (2),by July 20, 2001of 207.35 the levy year. If the information is not received by the 207.36 commissioner by that date, or is not deemed sufficient to make 208.1 the calculation under that clause, the commissioner has the 208.2 discretion to set the local governmental unit's2001levy limit 208.3 for all purposes including those purposes for which special 208.4 levies may be made,baseequal to the amountcalculated under208.5section 275.71, subdivision 2, paragraph (a), clause (1)of the 208.6 local governmental unit's certified levy for the prior year. 208.7 [EFFECTIVE DATE.] This section is effective for taxes 208.8 payable in 2004 and thereafter. 208.9 Sec. 9. [275.75] [CHARTER EXEMPTION FOR AID LOSS.] 208.10 Notwithstanding any other provision of a municipal charter 208.11 which limits ad valorem taxes to a lesser amount, or which would 208.12 require voter approval for any increase, a municipality may 208.13 increase its levy in any payable year by an amount equal to the 208.14 reduction in the amount of aid it is certified to receive under 208.15 sections 477A.011 to 477A.03 for that same payable year compared 208.16 to the amount certified in the previous year. The levy increase 208.17 is a permanent increase in the municipality's levy authority. 208.18 [EFFECTIVE DATE.] This section is effective for aids levied 208.19 in calendar year 2003, payable in 2004, and thereafter. 208.20 ARTICLE 8 208.21 TRUTH IN TAXATION AND REVERSE REFERENDUM 208.22 Section 1. Minnesota Statutes 2002, section 275.065, 208.23 subdivision 1, is amended to read: 208.24 Subdivision 1. [PROPOSED LEVY.] (a) Notwithstanding any 208.25 law or charter to the contrary, on or before September151, 208.26 each taxing authority, other than a school district, shall adopt 208.27 a proposed budget and shall certify to the county auditor the 208.28 proposed or, in the case of a town, the final property tax levy 208.29 for taxes payable in the following year. 208.30 (b) On or before September301, each school district shall 208.31 certify to the county auditor the proposed property tax levy for 208.32 taxes payable in the following year. The school district shall 208.33 certify the proposed levy as: 208.34 (1) the state determined school levy amount as prescribed 208.35 under section 126C.13, subdivision 2; 208.36 (2) voter approved referendum and debt levies; and 209.1 (3) the sum of the remaining school levies, or the maximum 209.2 levy limitation certified by the commissioner of children, 209.3 families, and learning according to section 126C.48, subdivision 209.4 1, less the amounts levied under clauses (1) and (2). 209.5 (c) If the board of estimate and taxation or any similar 209.6 board that establishes maximum tax levies for taxing 209.7 jurisdictions within a first class city certifies the maximum 209.8 property tax levies for funds under its jurisdiction by charter 209.9 to the county auditor by September151, the city shall be 209.10 deemed to have certified its levies for those taxing 209.11 jurisdictions. 209.12 (d) For purposes of this section, "taxing authority" 209.13 includes all home rule and statutory cities, towns, counties, 209.14 school districts, and special taxing districts as defined in 209.15 section 275.066. Intermediate school districts that levy a tax 209.16 under chapter 124 or 136D, joint powers boards established under 209.17 sections 123A.44 to 123A.446, and common school districts No. 209.18 323, Franconia, and No. 815, Prinsburg, are also special taxing 209.19 districts for purposes of this section. 209.20 [EFFECTIVE DATE.] This section is effective for taxes 209.21 payable in 2006 and thereafter. 209.22 Sec. 2. Minnesota Statutes 2002, section 275.065, 209.23 subdivision 1a, is amended to read: 209.24 Subd. 1a. [OVERLAPPING JURISDICTIONS.] In the case of a 209.25 taxing authority lying in two or more counties, the home county 209.26 auditor shall certify the proposed levy and the proposed local 209.27 tax rate to the other county auditor by September205. The 209.28 home county auditor must estimate the levy or rate in preparing 209.29 the notices required in subdivision 3, if the other county has 209.30 not certified the appropriate information. If requested by the 209.31 home county auditor, the other county auditor must furnish an 209.32 estimate to the home county auditor. 209.33 [EFFECTIVE DATE.] This section is effective for taxes 209.34 payable in 2006 and thereafter. 209.35 Sec. 3. Minnesota Statutes 2002, section 275.065, 209.36 subdivision 1c, is amended to read: 210.1 Subd. 1c. [LEVY; SHARED, MERGED, CONSOLIDATED SERVICES.] 210.2 If two or more taxing authorities are in the process of 210.3 negotiating an agreement for sharing, merging, or consolidating 210.4 services between those taxing authorities at the time the 210.5 proposed levy is to be certified under subdivision 1, each 210.6 taxing authority involved in the negotiation shall certify its 210.7 total proposed levy as provided in that subdivision, including a 210.8 notification to the county auditor of the specific service 210.9 involved in the agreement which is not yet finalized. The 210.10 affected taxing authorities may amend their proposed levies 210.11 under subdivision 1 untilOctoberSeptember 10 for levy amounts 210.12 relating only to the specific service involved. 210.13 [EFFECTIVE DATE.] This section is effective for taxes 210.14 payable in 2006 and thereafter. 210.15 Sec. 4. Minnesota Statutes 2002, section 275.065, 210.16 subdivision 3, is amended to read: 210.17 Subd. 3. [NOTICE OF PROPOSED PROPERTY TAXES.] (a) The 210.18 county auditor shall prepare and the county treasurer shall 210.19 deliver afterNovemberOctober 10 and on or beforeNovember210.20 October 24 each year, by first class mail to each taxpayer at 210.21 the address listed on the county's current year's assessment 210.22 roll, a notice of proposed property taxes. 210.23 (b) The commissioner of revenue shall prescribe the form of 210.24 the notice. 210.25 (c) The notice must inform taxpayers that it contains the 210.26 amount of property taxes each taxing authority proposes to 210.27 collect for taxes payable the following year. In the case of a 210.28 town, or in the case of the state general tax, the final tax 210.29 amount will be its proposed tax. In the case of taxing 210.30 authorities required to hold a public meeting under subdivision 210.31 6, the notice must clearly state that each taxing authority, 210.32 including regional library districts established under section 210.33 134.201, and including the metropolitan taxing districts as 210.34 defined in paragraph (i), but excluding all other special taxing 210.35 districts and towns, will hold a public meeting to receive 210.36 public testimony on the proposed budget and proposed or final 211.1 property tax levy, or, in case of a school district, on the 211.2 current budget and proposed property tax levy. It must clearly 211.3 state the time and place of each taxing authority's meeting, a 211.4 telephone number for the taxing authority that taxpayers may 211.5 call if they have questions related to the notice, and an 211.6 address where comments will be received by mail. 211.7 (d) The notice must state for each parcel: 211.8 (1) the market value of the property as determined under 211.9 section 273.11, and used for computing property taxes payable in 211.10 the following year and for taxes payable in the current year as 211.11 each appears in the records of the county assessor onNovember211.12 October 1 of the current year; and, in the case of residential 211.13 property, whether the property is classified as homestead or 211.14 nonhomestead. The notice must clearly inform taxpayers of the 211.15 years to which the market values apply and that the values are 211.16 final values; 211.17 (2) the items listed below, shown separately by county, 211.18 city or town, and state general tax, net of the residential and 211.19 agricultural homestead credit under section 273.1384, voter 211.20 approved school levy, other local school levy, and the sum of 211.21 the special taxing districts, and as a total of all taxing 211.22 authorities: 211.23 (i) the actual tax for taxes payable in the current year; 211.24(ii) the tax change due to spending factors, defined as the211.25proposed tax minus the constant spending tax amount;211.26(iii) the tax change due to other factors, defined as the211.27constant spending tax amount minus the actual current year tax;211.28 and 211.29(iv)(ii) the proposed tax amount. 211.30 If the county levy under clause (2) includes an amount for 211.31 a lake improvement district as defined under sections 103B.501 211.32 to 103B.581, the amount attributable for that purpose must be 211.33 separately stated from the remaining county levy amount. 211.34 In the case of a town or the state general tax, the final 211.35 tax shall also be its proposed tax unless the town changes its 211.36 levy at a special town meeting under section 365.52. If a 212.1 school district has certified under section 126C.17, subdivision 212.2 9, that a referendum will be held in the school district at the 212.3 November general election, the county auditor must note next to 212.4 the school district's proposed amount that a referendum is 212.5 pending and that, if approved by the voters, the tax amount may 212.6 be higher than shown on the notice. In the case of the city of 212.7 Minneapolis, the levy for the Minneapolis library board and the 212.8 levy for Minneapolis park and recreation shall be listed 212.9 separately from the remaining amount of the city's levy. In the 212.10 case of the city of St. Paul, the levy for the St. Paul library 212.11 agency must be listed separately from the remaining amount of 212.12 the city's levy. In the case of a parcel where tax increment or 212.13 the fiscal disparities areawide tax under chapter 276A or 473F 212.14 applies, the proposed tax levy on the captured value or the 212.15 proposed tax levy on the tax capacity subject to the areawide 212.16 tax must each be stated separately and not included in the sum 212.17 of the special taxing districts; and 212.18 (3) the increase or decrease between the total taxes 212.19 payable in the current year and the total proposed taxes, 212.20 expressed as a percentage. 212.21 For purposes of this section, the amount of the tax on 212.22 homesteads qualifying under the senior citizens' property tax 212.23 deferral program under chapter 290B is the total amount of 212.24 property tax before subtraction of the deferred property tax 212.25 amount. 212.26 (e) The notice must clearly state that the proposed or 212.27 final taxes do not include the following: 212.28 (1) special assessments; 212.29 (2) levies approved by the voters after the date the 212.30 proposed taxes are certified, including bond referenda,and 212.31 school district levy referenda, and; 212.32 (3) a levy limit increasereferendaapproved by the voters 212.33 by the first Tuesday in November of the levy year as provided 212.34 under section 275.73; 212.35(3)(4) amounts necessary to pay cleanup or other costs due 212.36 to a natural disaster occurring after the date the proposed 213.1 taxes are certified; 213.2(4)(5) amounts necessary to pay tort judgments against the 213.3 taxing authority that become final after the date the proposed 213.4 taxes are certified; and 213.5(5)(6) the contamination tax imposed on properties which 213.6 received market value reductions for contamination. 213.7 (f) Except as provided in subdivision 7, failure of the 213.8 county auditor to prepare or the county treasurer to deliver the 213.9 notice as required in this section does not invalidate the 213.10 proposed or final tax levy or the taxes payable pursuant to the 213.11 tax levy. 213.12 (g) If the notice the taxpayer receives under this section 213.13 lists the property as nonhomestead, and satisfactory 213.14 documentation is provided to the county assessor by the 213.15 applicable deadline, and the property qualifies for the 213.16 homestead classification in that assessment year, the assessor 213.17 shall reclassify the property to homestead for taxes payable in 213.18 the following year. 213.19 (h) In the case of class 4 residential property used as a 213.20 residence for lease or rental periods of 30 days or more, the 213.21 taxpayer must either: 213.22 (1) mail or deliver a copy of the notice of proposed 213.23 property taxes to each tenant, renter, or lessee; or 213.24 (2) post a copy of the notice in a conspicuous place on the 213.25 premises of the property. 213.26 The notice must be mailed or posted by the taxpayer by 213.27NovemberOctober 27 or within three days of receipt of the 213.28 notice, whichever is later. A taxpayer may notify the county 213.29 treasurer of the address of the taxpayer, agent, caretaker, or 213.30 manager of the premises to which the notice must be mailed in 213.31 order to fulfill the requirements of this paragraph. 213.32 (i) For purposes of this subdivision, subdivisions 5a and 213.33 6, "metropolitan special taxing districts" means the following 213.34 taxing districts in the seven-county metropolitan area that levy 213.35 a property tax for any of the specified purposes listed below: 213.36 (1) metropolitan council under section 473.132, 473.167, 214.1 473.249, 473.325, 473.446, 473.521, 473.547, or 473.834; 214.2 (2) metropolitan airports commission under section 473.667, 214.3 473.671, or 473.672; and 214.4 (3) metropolitan mosquito control commission under section 214.5 473.711. 214.6 For purposes of this section, any levies made by the 214.7 regional rail authorities in the county of Anoka, Carver, 214.8 Dakota, Hennepin, Ramsey, Scott, or Washington under chapter 214.9 398A shall be included with the appropriate county's levy and 214.10 shall be discussed at that county's public hearing. 214.11(j) If a statutory or home rule charter city or a town has214.12exercised the local levy option provided by section 473.388,214.13subdivision 7, it may include in the notice of its proposed214.14taxes the amount of its proposed taxes attributable to its214.15exercise of the option. In the first year of the city or town's214.16exercise of this option, the statement shall include an estimate214.17of the reduction of the metropolitan council's tax on the parcel214.18due to exercise of that option. The metropolitan council's levy214.19shall be adjusted accordingly.214.20 [EFFECTIVE DATE.] This section is effective for notices 214.21 prepared in 2005 for taxes payable in 2006, and thereafter, 214.22 except that the changes made to paragraph (d), clause (2), and 214.23 paragraphs (e) and (j) are effective for notices prepared in 214.24 2003 for taxes payable in 2004, and thereafter. 214.25 Sec. 5. Minnesota Statutes 2002, section 275.065, 214.26 subdivision 6, is amended to read: 214.27 Subd. 6. [PUBLIC HEARING; ADOPTION OF BUDGET AND LEVY.] 214.28 (a) For purposes of this section, the following terms shall have 214.29 the meanings given: 214.30 (1) "Initial hearing" means the first and primary hearing 214.31 held to discuss the taxing authority's proposed budget and 214.32 proposed property tax levy for taxes payable in the following 214.33 year, or, for school districts, the current budget and the 214.34 proposed property tax levy for taxes payable in the following 214.35 year. 214.36 (2) "Continuation hearing" means a hearing held to complete 215.1 the initial hearing, if the initial hearing is not completed on 215.2 its scheduled date. 215.3 (3) "Subsequent hearing" means the hearing held to adopt 215.4 the taxing authority's final property tax levy, and, in the case 215.5 of taxing authorities other than school districts, the final 215.6 budget, for taxes payable in the following year. 215.7 (b) Between November299 and December201, the governing 215.8 bodies of a city that has a population over 500, county, 215.9 metropolitan special taxing districts as defined in subdivision 215.10 3, paragraph (i), and regional library districts shall each hold 215.11 an initial public hearing to discuss and seek public comment on 215.12 its final budget and property tax levy for taxes payable in the 215.13 following year, and the governing body of the school district 215.14 shall hold an initial public hearing to review its current 215.15 budget and proposed property tax levy for taxes payable in the 215.16 following year. The metropolitan special taxing districts shall 215.17 be required to hold only a single joint initial public hearing, 215.18 the location of which will be determined by the affected 215.19 metropolitan agencies. A city, county, metropolitan special 215.20 taxing district as defined in subdivision 3, paragraph (i), 215.21 regional library district established under section 134.201, or 215.22 school district is not required to hold a public hearing under 215.23 this subdivision unless its proposed property tax levy for taxes 215.24 payable in the following year, as certified under subdivision 1, 215.25 has increased over its final property tax levy for taxes payable 215.26 in the current year by a percentage that is greater than the 215.27 percentage increase in the implicit price deflator for 215.28 government consumption expenditures and gross investment for 215.29 state and local governments prepared by the Bureau of Economic 215.30 Analysts of the United States Department of Commerce for the 215.31 12-month period ending March 31 of the current year. 215.32 (c) The initial hearing must be held after 5:00 p.m. if 215.33 scheduled on a day other than Saturday. No initial hearing may 215.34 be held on a Sunday. 215.35 (d) At the initial hearing under this subdivision, the 215.36 percentage increase in property taxes proposed by the taxing 216.1 authority, if any, and the specific purposes for which property 216.2 tax revenues are being increased must be discussed. During the 216.3 discussion, the governing body shall hear comments regarding a 216.4 proposed increase and explain the reasons for the proposed 216.5 increase. The public shall be allowed to speak and to ask 216.6 questions. At the public hearing, the school district must also 216.7 provide and discuss information on the distribution of its 216.8 revenues by revenue source, and the distribution of its spending 216.9 by program area. 216.10 (e) If the initial hearing is not completed on its 216.11 scheduled date, the taxing authority must announce, prior to 216.12 adjournment of the hearing, the date, time, and place for the 216.13 continuation of the hearing. The continuation hearing must be 216.14 held at least five business days but no more than 14 business 216.15 days after the initial hearing. A continuation hearing may not 216.16 be held later than December 20 except as provided in paragraphs 216.17 (f) and (g). A continuation hearing must be held after 5:00 216.18 p.m. if scheduled on a day other than Saturday. No continuation 216.19 hearing may be held on a Sunday. 216.20 (f) The governing body of a county shall hold its initial 216.21 hearing on thefirstsecond Thursday inDecemberNovember each 216.22 year, and may hold additional initial hearings on other dates on 216.23 or before December201 if necessary for the convenience of 216.24 county residents. If the county needs a continuation of its 216.25 hearing, the continuation hearing shall be held on the third 216.26 Tuesday inDecember. If the third Tuesday in December falls on216.27December 21, the county's continuation hearing shall be held on216.28Monday, December 20November. 216.29 (g) The metropolitan special taxing districts shall hold a 216.30 joint initial public hearing on thefirstsecond Wednesday of 216.31DecemberNovember. A continuation hearing, if necessary, shall 216.32 be held on thesecondthird Wednesday ofDecember even if that216.33second Wednesday is after December 10November. 216.34 (h) The county auditor shall provide for the coordination 216.35 of initial and continuation hearing dates for all school 216.36 districts and cities within the county to prevent conflicts 217.1 under clauses (i) and (j). 217.2 (i) By August 10, each school board and the board of the 217.3 regional library district shall certify to the county auditors 217.4 of the counties in which the school district or regional library 217.5 district is located the dates on which it elects to hold its 217.6 initial hearing and any continuation hearing. If a school board 217.7 or regional library district does not certify these dates by 217.8 August 10, the auditor will assign the initial and continuation 217.9 hearing dates. The dates elected or assigned must not conflict 217.10 with the initial and continuation hearing dates of the county or 217.11 the metropolitan special taxing districts. 217.12 (j) By August 20, the county auditor shall notify the 217.13 clerks of the cities within the county of the dates on which 217.14 school districts and regional library districts have elected to 217.15 hold their initial and continuation hearings. At the time a 217.16 city certifies its proposed levy under subdivision 1 it shall 217.17 certify the dates on which it elects to hold its initial hearing 217.18 and any continuation hearing. Until September 15, thefirst and217.19 secondMondaysMonday ofDecember areNovember is reserved for 217.20 the use of the cities. If a city does not certify its hearing 217.21 dates by September 15, the auditor shall assign the initial and 217.22 continuation hearing dates. The dates elected or assigned for 217.23 the initial hearing must not conflict with the initial hearing 217.24 dates of the county, metropolitan special taxing districts, 217.25 regional library districts, or school districts within which the 217.26 city is located. To the extent possible, the dates of the 217.27 city's continuation hearing should not conflict with the 217.28 continuation hearing dates of the county, metropolitan special 217.29 taxing districts, regional library districts, or school 217.30 districts within which the city is located. This paragraph does 217.31 not apply to cities of 500 population or less. 217.32 (k) The county initial hearing date and the city, 217.33 metropolitan special taxing district, regional library district, 217.34 and school district initial hearing dates must be designated on 217.35 the notices required under subdivision 3. The continuation 217.36 hearing dates need not be stated on the notices. 218.1 (l) At a subsequent hearing, each county, school district, 218.2 city over 500 population, and metropolitan special taxing 218.3 district may amend its proposed property tax levy and must adopt 218.4 a final property tax levy. Each county, city over 500 218.5 population, and metropolitan special taxing district may also 218.6 amend its proposed budget and must adopt a final budget at the 218.7 subsequent hearing. The final property tax levy must be adopted 218.8 prior to adopting the final budget. A school district is not 218.9 required to adopt its final budget at the subsequent hearing. 218.10 The subsequent hearing of a taxing authority must be held on a 218.11 date subsequent to the date of the taxing authority's initial 218.12 public hearing. If a continuation hearing is held, the 218.13 subsequent hearing must be held either immediately following the 218.14 continuation hearing or on a date subsequent to the continuation 218.15 hearing. The subsequent hearing may be held at a regularly 218.16 scheduled board or council meeting or at a special meeting 218.17 scheduled for the purposes of the subsequent hearing. The 218.18 subsequent hearing of a taxing authority does not have to be 218.19 coordinated by the county auditor to prevent a conflict with an 218.20 initial hearing, a continuation hearing, or a subsequent hearing 218.21 of any other taxing authority. All subsequent hearings must be 218.22 held prior to five working days after December201 of the levy 218.23 year. The date, time, and place of the subsequent hearing must 218.24 be announced at the initial public hearing or at the 218.25 continuation hearing. 218.26 (m) The property tax levy certified under section 275.07 by 218.27 a city of any population, county, metropolitan special taxing 218.28 district, regional library district, or school district must not 218.29 exceed the proposed levy determined under subdivision 1, except 218.30 by an amount up to the sum of the following amounts: 218.31 (1) the amount of a school district levy whose voters 218.32 approved a referendum to increase taxes under section 123B.63, 218.33 subdivision 3, or 126C.17, subdivision 9, after the proposed 218.34 levy was certified; 218.35 (2) the amount of a city or county levy approved by the 218.36 voters after the proposed levy was certified; 219.1 (3) the amount of a levy to pay principal and interest on 219.2 bonds approved by the voters under section 475.58 after the 219.3 proposed levy was certified; 219.4 (4) the amount of a levy to pay costs due to a natural 219.5 disaster occurring after the proposed levy was certified, if 219.6 that amount is approved by the commissioner of revenue under 219.7 subdivision 6a; 219.8 (5) the amount of a levy to pay tort judgments against a 219.9 taxing authority that become final after the proposed levy was 219.10 certified, if the amount is approved by the commissioner of 219.11 revenue under subdivision 6a; 219.12 (6) the amount of an increase in levy limits certified to 219.13 the taxing authority by the commissioner of children, families, 219.14 and learning or the commissioner of revenue after the proposed 219.15 levy was certified; and 219.16 (7) the amount required under section 126C.55. 219.17 (n) This subdivision does not apply to towns and special 219.18 taxing districts other than regional library districts and 219.19 metropolitan special taxing districts. 219.20 (o) Notwithstanding the requirements of this section, the 219.21 employer is required to meet and negotiate over employee 219.22 compensation as provided for in chapter 179A. 219.23 [EFFECTIVE DATE.] This section is effective for hearings 219.24 held in 2005 for taxes payable in 2006, and thereafter. 219.25 Sec. 6. Minnesota Statutes 2002, section 275.065, 219.26 subdivision 8, is amended to read: 219.27 Subd. 8. [HEARING.] Notwithstanding any other provision of 219.28 law, Ramsey county, the city of St. Paul, and independent school 219.29 district No. 625 are authorized to and shall hold their initial 219.30 public hearing jointly. The hearing must be held on the second 219.31 Tuesday ofDecemberNovember each year. The advertisement 219.32 required in subdivision 5a may be a joint advertisement. The 219.33 hearing is otherwise subject to the requirements of this section. 219.34 Ramsey county is authorized to hold an additional initial 219.35 hearing or hearings as provided under this section, provided 219.36 that any additional hearings must not conflict with the initial 220.1 or continuation hearing dates of the other taxing districts. 220.2 However, if Ramsey county elects not to hold such additional 220.3 initial hearing or hearings, the joint initial hearing required 220.4 by this subdivision must be held in a St. Paul location 220.5 convenient to residents of Ramsey county. 220.6 [EFFECTIVE DATE.] This section is effective for hearings 220.7 held in 2005 for property taxes payable in 2006, and thereafter. 220.8 Sec. 7. Minnesota Statutes 2002, section 275.065, is 220.9 amended by adding a subdivision to read: 220.10 Subd. 9. [REVERSE REFERENDUM.] (a) The reverse referendum 220.11 procedure in this subdivision applies only in the case of a 220.12 county, or a city that has a population of more than 2,500, that 220.13 has adopted a property tax levy increase over the property tax 220.14 levy amount certified under section 275.07, subdivision 1, for 220.15 the previous year. 220.16 (b) If, within 21 days after the public hearing and 220.17 adoption of a levy under subdivision 6, a petition signed by 220.18 voters equal in number to five percent of the votes cast in the 220.19 county or city in the last general state election requesting a 220.20 referendum on the levy increase is filed with the county auditor 220.21 or the city clerk, the levy increase shall not be effective 220.22 until it has been submitted to the voters at a special election 220.23 to be held on the second Tuesday in January, and a majority of 220.24 votes cast on the question of approving the levy increase are in 220.25 the affirmative. The commissioner of revenue shall prepare the 220.26 form of the question to be presented at the referendum, which 220.27 shall reference only the amount of the property tax levy 220.28 increase over the previous year. 220.29 (c) The county or city shall notify the county auditor of 220.30 the results of the referendum. If the majority of the votes 220.31 cast on the question are in the affirmative, the property tax 220.32 levy adopted under subdivision 6 shall be certified to the 220.33 county auditor under section 275.07, subdivision 1. If the 220.34 majority of the votes cast on the question are in the negative, 220.35 an amount equal to the preceding year's property tax levy shall 220.36 be certified to the county auditor for purposes of section 221.1 275.07, subdivision 1; provided that if the current year adopted 221.2 levy includes any levy for the payment of bonded indebtedness or 221.3 judgments, such levies for bonded indebtedness and judgments 221.4 shall be extended in full and the remainder of the levies shall 221.5 be reduced so that the total, including levies for bonds and 221.6 judgments, does not exceed the preceding year's levy. 221.7 (d) For purposes of this subdivision "property tax levy" 221.8 shall not include the levy required to pay any general 221.9 obligation bonds. 221.10 [EFFECTIVE DATE.] This section is effective for taxes 221.11 levied in 2005 for taxes payable in 2006, and thereafter. 221.12 Sec. 8. Minnesota Statutes 2002, section 275.07, 221.13 subdivision 1, is amended to read: 221.14 Subdivision 1. [CERTIFICATION OF LEVY.] (a) Except as 221.15 provided under paragraph (b) or (c), the taxes voted by cities, 221.16 counties, school districts, and special districts shall be 221.17 certified by the proper authorities to the county auditor on or 221.18 before five working days after December201 in each year. A 221.19 town must certify the levy adopted by the town board to the 221.20 county auditor by September151 each year. If the town board 221.21 modifies the levy at a special town meeting after September15221.22 1, the town board must recertify its levy to the county auditor 221.23 on or before five working days after December201. The taxes 221.24 certified shall not be reduced by the county auditor by the aid 221.25 received under section 273.1398, subdivision 2, but shall be 221.26 reduced by the county auditor by the aid received under section 221.27 273.1398, subdivision 3. If a city, town, county, school 221.28 district, or special district fails to certify its levy by that 221.29 date, its levy shall be the amount levied by it for the 221.30 preceding year. 221.31 (b)(i) The taxes voted by counties under sections 103B.241, 221.32 103B.245, and 103B.251 shall be separately certified by the 221.33 county to the county auditor on or before five working days 221.34 after December201 in each year. The taxes certified shall not 221.35 be reduced by the county auditor by the aid received under 221.36 section 273.1398, subdivisions 2 and 3. If a county fails to 222.1 certify its levy by that date, its levy shall be the amount 222.2 levied by it for the preceding year. 222.3 (ii) For purposes of the proposed property tax notice under 222.4 section 275.065 and the property tax statement under section 222.5 276.04, for the first year in which the county implements the 222.6 provisions of this paragraph, the county auditor shall reduce 222.7 the county's levy for the preceding year to reflect any amount 222.8 levied for water management purposes under clause (i) included 222.9 in the county's levy. 222.10 (c) A county or city to which the reverse referendum 222.11 provisions under section 275.065, subdivision 9, apply shall 222.12 certify the taxes to the county auditor by December 10, except 222.13 that any county or city for which a petition has been filed 222.14 under section 275.065, subdivision 9, must certify the day 222.15 immediately following the election under that subdivision. 222.16 [EFFECTIVE DATE.] This section is effective for taxes 222.17 levied in 2005 for taxes payable in 2006, and thereafter. 222.18 Sec. 9. [REPEALER.] 222.19 (a) Minnesota Statutes 2002, section 275.065, subdivision 222.20 3a, is repealed effective for notices prepared in 2003, payable 222.21 in 2004 and thereafter. 222.22 (b) Minnesota Statutes 2002, section 275.065, subdivision 222.23 4, is repealed the day following final enactment. 222.24 ARTICLE 9 222.25 LOCAL ECONOMIC DEVELOPMENT 222.26 Section 1. Minnesota Statutes 2002, section 469.169, is 222.27 amended by adding a subdivision to read: 222.28 Subd. 16. [ADDITIONAL BORDER CITY ALLOCATIONS.] (a) In 222.29 addition to tax reductions authorized in subdivisions 7 to 15, 222.30 the commissioner shall allocate $750,000 for tax reductions to 222.31 border city enterprise zones in cities located on the western 222.32 border of the state. The commissioner shall make allocations to 222.33 zones in cities on the western border on a per capita basis. 222.34 Allocations made under this subdivision may be used for tax 222.35 reductions as provided in section 469.171, or for other offsets 222.36 of taxes imposed on or remitted by businesses located in the 223.1 enterprise zone, but only if the municipality determines that 223.2 the granting of the tax reduction or offset is necessary in 223.3 order to retain a business within or attract a business to the 223.4 zone. Any portion of the allocation provided in this paragraph 223.5 may alternatively be used for tax reductions under section 223.6 469.1732 or 469.1734. 223.7 (b) The commissioner shall allocate $750,000 for tax 223.8 reductions under section 469.1732 or 469.1734 to cities with 223.9 border city enterprise zones located on the western border of 223.10 the state. The commissioner shall allocate this amount among 223.11 the cities on a per capita basis. Any portion of the allocation 223.12 provided in this paragraph may alternatively be used for tax 223.13 reductions as provided in section 469.171. 223.14 [EFFECTIVE DATE.] This section is effective the day 223.15 following final enactment. 223.16 Sec. 2. Minnesota Statutes 2002, section 469.1731, 223.17 subdivision 3, is amended to read: 223.18 Subd. 3. [FILING.] The city must file a copy of the 223.19 resolution and development plan with the commissioner of trade 223.20 and economic development. The designation takes effectfor the223.21first calendar year that begins more than 9030 days after the 223.22 filing. 223.23 [EFFECTIVE DATE.] This section is effective the day 223.24 following final enactment. 223.25 Sec. 3. Minnesota Statutes 2002, section 469.174, 223.26 subdivision 3, is amended to read: 223.27 Subd. 3. [BONDS.] (a) "Bonds" means any bonds, including223.28refunding bonds, notes, interim certificates, debentures,223.29interfund loans or advances,or other obligations issued: 223.30 (1) by an authority under section 469.178; orwhich were223.31issued223.32 (2) in aid of a project under any other law, except revenue 223.33 bonds issued pursuant to sections 469.152 to 469.165, prior to 223.34 August 1, 1979. 223.35 (b) Bonds or other obligations include: 223.36 (1) refunding bonds; 224.1 (2) notes; 224.2 (3) interim certificates; 224.3 (4) debentures; and 224.4 (5) interfund loans or advances qualifying under section 224.5 469.178, subdivision 7. 224.6 [EFFECTIVE DATE.] This section is effective at the same 224.7 time as provided by Laws 2001, First Special Session chapter 5, 224.8 article 15, section 3. 224.9 Sec. 4. Minnesota Statutes 2002, section 469.174, 224.10 subdivision 6, is amended to read: 224.11 Subd. 6. [MUNICIPALITY.] "Municipality" meansanythe 224.12 city, however organized,and with respect toin which the 224.13 district is located, with the following exceptions: 224.14 (1) for a project undertaken pursuant to sections 469.152 224.15 to 469.165, "municipality" has the meaning given in sections 224.16 469.152 to 469.165, and with respect to; and 224.17 (2) for a project undertaken pursuant to sections 469.142 224.18 to 469.151, or a county or multicounty project undertaken 224.19 pursuant to sections 469.004 to 469.008, "municipality"also224.20includes anymeans the county in which the district is located. 224.21 [EFFECTIVE DATE.] This section is effective for districts 224.22 for which the request for certification was made after July 31, 224.23 1979. 224.24 Sec. 5. Minnesota Statutes 2002, section 469.174, 224.25 subdivision 10, is amended to read: 224.26 Subd. 10. [REDEVELOPMENT DISTRICT.] (a) "Redevelopment 224.27 district" means a type of tax increment financing district 224.28 consisting of a project, or portions of a project, within which 224.29 the authority finds by resolution that one or more of the 224.30 following conditions, reasonably distributed throughout the 224.31 district, exists: 224.32 (1) parcels consisting of 70 percent of the area of the 224.33 district are occupied by buildings, streets, utilities, paved or 224.34 gravel parking lots, or other similar structures and more than 224.35 50 percent of the buildings, not including outbuildings, are 224.36 structurally substandard to a degree requiring substantial 225.1 renovation or clearance; or 225.2 (2) the property consists of vacant, unused, underused, 225.3 inappropriately used, or infrequently used railyards, rail 225.4 storage facilities, or excessive or vacated railroad 225.5 rights-of-way; or 225.6 (3) tank facilities, or property whose immediately previous 225.7 use was for tank facilities, as defined in section 115C.02, 225.8 subdivision 15, if the tank facilities: 225.9 (i) have or had a capacity of more than 1,000,000 gallons; 225.10 (ii) are located adjacent to rail facilities; and 225.11 (iii) have been removed or are unused, underused, 225.12 inappropriately used, or infrequently used. 225.13 (b) For purposes of this subdivision, "structurally 225.14 substandard" shall mean containing defects in structural 225.15 elements or a combination of deficiencies in essential utilities 225.16 and facilities, light and ventilation, fire protection including 225.17 adequate egress, layout and condition of interior partitions, or 225.18 similar factors, which defects or deficiencies are of sufficient 225.19 total significance to justify substantial renovation or 225.20 clearance. 225.21 (c) A building is not structurally substandard if it is in 225.22 compliance with the building code applicable to new buildings or 225.23 could be modified to satisfy the building code at a cost of less 225.24 than 15 percent of the cost of constructing a new structure of 225.25 the same square footage and type on the site. The municipality 225.26 may find that a building is not disqualified as structurally 225.27 substandard under the preceding sentence on the basis of 225.28 reasonably available evidence, such as the size, type, and age 225.29 of the building, the average cost of plumbing, electrical, or 225.30 structural repairs, or other similar reliable evidence. The 225.31 municipality may not make such a determination without an 225.32 interior inspection of the property, but need not have an 225.33 independent, expert appraisal prepared of the cost of repair and 225.34 rehabilitation of the building. An interior inspection of the 225.35 property is not required, if the municipality finds that (1) the 225.36 municipality or authority is unable to gain access to the 226.1 property after using its best efforts to obtain permission from 226.2 the party that owns or controls the property; and (2) the 226.3 evidence otherwise supports a reasonable conclusion that the 226.4 building is structurally substandard. Items of evidence that 226.5 support such a conclusion include recent fire or police 226.6 inspections, on-site property tax appraisals or housing 226.7 inspections, exterior evidence of deterioration, or other 226.8 similar reliable evidence. Written documentation of the 226.9 findings and reasons why an interior inspection was not 226.10 conducted must be made and retained under section 469.175, 226.11 subdivision 3, clause (1). Failure of a building to be 226.12 disqualified under the provisions of this paragraph is a 226.13 necessary, but not a sufficient, condition to determining that 226.14 the building is substandard. 226.15 (d) A parcel is deemed to be occupied by a structurally 226.16 substandard building for purposes of the finding under paragraph 226.17 (a) if all of the following conditions are met: 226.18 (1) the parcel was occupied by a substandard building 226.19 within three years of the filing of the request for 226.20 certification of the parcel as part of the district with the 226.21 county auditor; 226.22 (2) the substandard building was demolished or removed by 226.23 the authority or the demolition or removal was financed by the 226.24 authority or was done by a developer under a development 226.25 agreement with the authority; 226.26 (3) the authority found by resolution before the demolition 226.27 or removal that the parcel was occupied by a structurally 226.28 substandard building and that after demolition and clearance the 226.29 authority intended to include the parcel within a district; and 226.30 (4) upon filing the request for certification of the tax 226.31 capacity of the parcel as part of a district, the authority 226.32 notifies the county auditor that the original tax capacity of 226.33 the parcel must be adjusted as provided by section 469.177, 226.34 subdivision 1, paragraph(h)(f). 226.35 (e) For purposes of this subdivision, a parcel is not 226.36 occupied by buildings, streets, utilities, paved or gravel 227.1 parking lots, or other similar structures unless 15 percent of 227.2 the area of the parcel contains buildings, streets, utilities, 227.3 paved or gravel parking lots, or other similar structures. 227.4 (f) For districts consisting of two or more noncontiguous 227.5 areas, each area must qualify as a redevelopment district under 227.6 paragraph (a) to be included in the district, and the entire 227.7 area of the district must satisfy paragraph (a). 227.8 [EFFECTIVE DATE.] The amendment to Minnesota Statutes, 227.9 section 469.174, subdivision 10, paragraph (c), confirms the 227.10 intent of the legislature with regard to the original provisions 227.11 of the language contained in Minnesota Statutes 2002, section 227.12 469.174, subdivision 10, paragraph (c), and is retroactive to 227.13 the effective date of the original language. The amendment to 227.14 Minnesota Statutes, section 469.174, subdivision 10, paragraph 227.15 (d), is effective for districts for which the request for 227.16 certification was received by the county after June 30, 2002. 227.17 Sec. 6. Minnesota Statutes 2002, section 469.174, 227.18 subdivision 25, is amended to read: 227.19 Subd. 25. [INCREMENT.] "Increment," "tax increment," "tax 227.20 increment revenues," "revenues derived from tax increment," and 227.21 other similar terms for a district include: 227.22 (1) taxes paid by the captured net tax capacity, but 227.23 excluding any excess taxes, as computed under section 469.177; 227.24 (2) the proceeds from the sale or lease of property, 227.25 tangible or intangible, purchased by the authority with tax 227.26 increments; 227.27 (3)repayments ofprincipal and interest received on loans 227.28 or other advances made by the authority with tax increments; and 227.29 (4) interest or other investment earnings on or from tax 227.30 increments. 227.31 [EFFECTIVE DATE.] This section is effective for districts 227.32 for which the request for certification was made after June 30, 227.33 1982, and payments of principal and interest received on loans 227.34 or other advances that were made after June 30, 1997. 227.35 Sec. 7. Minnesota Statutes 2002, section 469.174, is 227.36 amended by adding a subdivision to read: 228.1 Subd. 29. [QUALIFIED HOUSING DISTRICT.] "Qualified housing 228.2 district" means: 228.3 (1) a housing district for a residential rental project or 228.4 projects in which the only properties receiving assistance from 228.5 revenues derived from tax increments from the district meet the 228.6 rent restriction requirements and the low-income occupancy test 228.7 for a qualified low-income housing project under section 42(g) 228.8 of the Internal Revenue Code of 1986, as amended through 228.9 December 31, 2002, regardless of whether the project actually 228.10 receives a low-income housing credit; or 228.11 (2) a housing district for a single-family homeownership 228.12 project or projects, if 95 percent or more of the homes 228.13 receiving assistance from tax increments from the district are 228.14 purchased by qualified purchasers. A qualified purchaser means 228.15 the first purchaser of a home after the tax increment assistance 228.16 is provided whose income is at or below 85 percent of the median 228.17 gross income for a family of the same size as the purchaser. 228.18 Median gross income is the greater of (i) area median gross 228.19 income, or (ii) the statewide median gross income, as determined 228.20 by the secretary of Housing and Urban Development. 228.21 [EFFECTIVE DATE.] This section applies to all districts for 228.22 which the request for certification was made on or after January 228.23 1, 2002, and to all districts to which the definition of 228.24 qualified housing districts under Minnesota Statutes 2000, 228.25 section 273.1399, applied. 228.26 Sec. 8. Minnesota Statutes 2002, section 469.175, 228.27 subdivision 1, is amended to read: 228.28 Subdivision 1. [TAX INCREMENT FINANCING PLAN.] A tax 228.29 increment financing plan shall contain: 228.30 (1) a statement of objectives of an authority for the 228.31 improvement of a project; 228.32 (2) a statement as to the development program for the 228.33 project, including the property within the project, if any, that 228.34 the authority intends to acquire; 228.35 (3) a list of any development activities that the plan 228.36 proposes to take place within the project, for which contracts 229.1 have been entered into at the time of the preparation of the 229.2 plan, including the names of the parties to the contract, the 229.3 activity governed by the contract, the cost stated in the 229.4 contract, and the expected date of completion of that activity; 229.5 (4) identification or description of the type of any other 229.6 specific development reasonably expected to take place within 229.7 the project, and the date when the development is likely to 229.8 occur; 229.9 (5) estimates of the following: 229.10 (i) cost of the project, includingadministration229.11 administrative expenses, except that if part of the cost of the 229.12 project is paid or financed with increment from the tax 229.13 increment financing district, the tax increment financing plan 229.14 for the district must contain an estimate of the amount of the 229.15 cost of the project, including administrative expenses, that 229.16 will be paid or financed with tax increments from the district; 229.17 (ii) amount of bonded indebtedness to be incurred; 229.18 (iii) sources of revenue to finance or otherwise pay public 229.19 costs; 229.20 (iv) the most recent net tax capacity of taxable real 229.21 property within the tax increment financing district and within 229.22 any subdistrict; 229.23 (v) the estimated captured net tax capacity of the tax 229.24 increment financing district at completion; and 229.25 (vi) the duration of the tax increment financing district's 229.26 and any subdistrict's existence; 229.27 (6) statements of the authority's alternate estimates of 229.28 the impact of tax increment financing on the net tax capacities 229.29 of all taxing jurisdictions in which the tax increment financing 229.30 district is located in whole or in part. For purposes of one 229.31 statement, the authority shall assume that the estimated 229.32 captured net tax capacity would be available to the taxing 229.33 jurisdictions without creation of the district, and for purposes 229.34 of the second statement, the authority shall assume that none of 229.35 the estimated captured net tax capacity would be available to 229.36 the taxing jurisdictions without creation of the district or 230.1 subdistrict; 230.2 (7) identification and description of studies and analyses 230.3 used to make the determination set forth in subdivision 3, 230.4 clause (2); and 230.5 (8) identification of all parcels to be included in the 230.6 district or any subdistrict. 230.7 [EFFECTIVE DATE.] This section applies to districts for 230.8 which the request for certification was made after July 31, 230.9 1979, and is effective for tax increment financing plans and 230.10 modifications approved after June 30, 2003. 230.11 Sec. 9. Minnesota Statutes 2002, section 469.175, 230.12 subdivision 3, is amended to read: 230.13 Subd. 3. [MUNICIPALITY APPROVAL.] (a) A county auditor 230.14 shall not certify the original net tax capacity of a tax 230.15 increment financing district until the tax increment financing 230.16 plan proposed for that district has been approved by the 230.17 municipality in which the district is located. If an authority 230.18 that proposes to establish a tax increment financing district 230.19 and the municipality are not the same, the authority shall apply 230.20 to the municipality in which the district is proposed to be 230.21 located and shall obtain the approval of its tax increment 230.22 financing plan by the municipality before the authority may use 230.23 tax increment financing. The municipality shall approve the tax 230.24 increment financing plan only after a public hearing thereon 230.25 after published notice in a newspaper of general circulation in 230.26 the municipality at least once not less than ten days nor more 230.27 than 30 days prior to the date of the hearing. The published 230.28 notice must include a map of the area of the district from which 230.29 increments may be collected and, if the project area includes 230.30 additional area, a map of the project area in which the 230.31 increments may be expended. The hearing may be held before or 230.32 after the approval or creation of the project or it may be held 230.33 in conjunction with a hearing to approve the project. 230.34 (b) Before or at the time of approval of the tax increment 230.35 financing plan, the municipality shall make the following 230.36 findings, and shall set forth in writing the reasons and 231.1 supporting facts for each determination: 231.2 (1) that the proposed tax increment financing district is a 231.3 redevelopment district, a renewal or renovation district, a 231.4 housing district, a soils condition district, or an economic 231.5 development district; if the proposed district is a 231.6 redevelopment district or a renewal or renovation district, the 231.7 reasons and supporting facts for the determination that the 231.8 district meets the criteria of section 469.174, subdivision 10, 231.9 paragraph (a), clauses (1) and (2), or subdivision 10a, must be 231.10 documented in writing and retained and made available to the 231.11 public by the authority until the district has been terminated; 231.12 (2) thatthe proposed development or redevelopment, in the 231.13 opinion of the municipality,: 231.14 (i) the proposed development or redevelopment would not 231.15 reasonably be expected to occur solely through private 231.16 investment within the reasonably foreseeable future; andthat231.17 (ii) the increased market value of the site that could 231.18 reasonably be expected to occur without the use of tax increment 231.19 financing would be less than the increase in the market value 231.20 estimated to result from the proposed development after 231.21 subtracting the present value of the projected tax increments 231.22 for the maximum duration of the district permitted by the plan. 231.23 In computing present values for purposes of this subdivision, 231.24 the municipality must use a discount rate that does not exceed 231.25 the greater of the rate specified under section 270.75 or 549.09 231.26 for the last business day of the calendar month ending before 231.27 publication of the notice under this subdivision. The 231.28 requirements of thisclauseitem do not apply if the district is 231.29 a qualified housing district, as defined in section 273.1399,231.30subdivision 1; 231.31 (3) that the tax increment financing plan conforms to the 231.32 general plan for the development or redevelopment of the 231.33 municipality as a whole; 231.34 (4) that the tax increment financing plan will afford 231.35 maximum opportunity, consistent with the sound needs of the 231.36 municipality as a whole, for the development or redevelopment of 232.1 the project by private enterprise; 232.2 (5) that the municipality elects the method of tax 232.3 increment computation set forth in section 469.177, subdivision 232.4 3, clause (b), if applicable. 232.5 (c) When the municipality and the authority are not the 232.6 same, the municipality shall approve or disapprove the tax 232.7 increment financing plan within 60 days of submission by the 232.8 authority. When the municipality and the authority are not the 232.9 same, the municipality may not amend or modify a tax increment 232.10 financing plan except as proposed by the authority pursuant to 232.11 subdivision 4. Once approved, the determination of the 232.12 authority to undertake the project through the use of tax 232.13 increment financing and the resolution of the governing body 232.14shall be conclusive of the findings therein and of the public232.15need for the financingis presumed valid. The determination of 232.16 the authority is subject to judicial review under section 232.17 469.1771 as to whether it was: 232.18 (1) in excess of or contrary to the statutory authority; or 232.19 (2) arbitrary and capricious. 232.20 (d) For a district that is subject to the requirements of 232.21 paragraph (b), clause (2), item (ii), the municipality's 232.22 statement of reasons and supporting facts must include all of 232.23 the following: 232.24 (1) an estimate of the amount by which the market value of 232.25 the site will increase without the use of tax increment 232.26 financing; 232.27 (2) an estimate of the increase in the market value that 232.28 will result from the development or redevelopment to be assisted 232.29 with tax increment financing; and 232.30 (3) the present value of the projected tax increments for 232.31 the maximum duration of the district permitted by the tax 232.32 increment financing plan. 232.33 (e) For purposes of this subdivision, "site" means the 232.34 parcels on which the development or redevelopment to be assisted 232.35 with tax increment financing will be located. 232.36 [EFFECTIVE DATE.] This section is effective for 233.1 determinations made after June 30, 2003, except the provisions 233.2 of paragraph (e) apply to requests for certification of tax 233.3 increment districts made after June 30, 1995. 233.4 Sec. 10. Minnesota Statutes 2002, section 469.175, 233.5 subdivision 4, is amended to read: 233.6 Subd. 4. [MODIFICATION OF PLAN.] (a) A tax increment 233.7 financing plan may be modified by an authority, provided that. 233.8 (b) The authority may make the following modifications only 233.9 upon the notice and after the discussion, public hearing, and 233.10 findings required for approval of the original plan: 233.11 (1) any reduction or enlargement of geographic area of the 233.12 project or tax increment financing district,that does not meet 233.13 the requirements of paragraph (e); 233.14 (2) increase in amount of bonded indebtedness to be 233.15 incurred, including; 233.16 (3) a determination to capitalize interest on the debt if 233.17 that determination was not a part of the original plan, or to 233.18 increase or decrease the amount of interest on the debt to be 233.19 capitalized,; 233.20 (4) increase in the portion of the captured net tax 233.21 capacity to be retained by the authority,; 233.22 (5) increase intotal estimated tax increment233.23expendituresthe estimate of the cost of the project, including 233.24 administrative expenses, that will be paid or financed with tax 233.25 increment from the district; or 233.26 (6) designation of additional property to be acquired by 233.27 the authorityshall be approved upon the notice and after the233.28discussion, public hearing, and findings required for approval233.29of the original plan; provided that. 233.30 (c) If an authority changes the type of districtfrom233.31housing, redevelopment, or economic developmentto another type 233.32 of district, this changeshallis notbe considereda 233.33 modification butshall requirerequires the authority to follow 233.34 the procedure set forth in sections 469.174 to 469.179 for 233.35 adoption of a new plan, including certification of the net tax 233.36 capacity of the district by the county auditor. 234.1 (d) If a redevelopment district or a renewal and renovation 234.2 district is enlarged, the reasons and supporting facts for the 234.3 determination that the addition to the district meets the 234.4 criteria of section 469.174, subdivision 10, paragraph (a), 234.5 clauses (1) and (2), or subdivision 10a, must be documented. 234.6 (e) The requirements ofthisparagraph (b) do not apply if 234.7 (1) the only modification is elimination of parcels from the 234.8 project or district and (2)(A) the current net tax capacity of 234.9 the parcels eliminated from the district equals or exceeds the 234.10 net tax capacity of those parcels in the district's original net 234.11 tax capacity or (B) the authority agrees that, notwithstanding 234.12 section 469.177, subdivision 1, the original net tax capacity 234.13 will be reduced by no more than the current net tax capacity of 234.14 the parcels eliminated from the district. The authority must 234.15 notify the county auditor of any modification that reduces or 234.16 enlarges the geographic area of a district or a project area. 234.17(b)(f) The geographic area of a tax increment financing 234.18 district may be reduced, but shall not be enlarged after five 234.19 years following the date of certification of the original net 234.20 tax capacity by the county auditor or after August 1, 1984, for 234.21 tax increment financing districts authorized prior to August 1, 234.22 1979. 234.23 [EFFECTIVE DATE.] This section applies to districts for 234.24 which the request for certification was made after June 30, 234.25 2003. The development authority may elect to have this section 234.26 apply to a tax increment financing plan or modification that was 234.27 approved before July 1, 2004, by adopting before January 1, 234.28 2004, a modification of the plan that states the amount of the 234.29 cost of the project, including administrative expenses, that 234.30 will be paid or financed with tax increments from the district. 234.31 Section 469.175, subdivision 4, paragraph (b), does not apply to 234.32 a modification adopted under this section if the modification is 234.33 exclusively for the purpose of stating the amount of the cost of 234.34 the project, including administrative expenses, that will be 234.35 paid or financed with tax increment from the district. For 234.36 districts for which the request for certification was made after 235.1 July 31, 1979, and for which this section is not effective, the 235.2 total estimated tax increment expenditures are determined by 235.3 considering all of the information in the tax increment 235.4 financing plan and exhibits to the plan about estimated sources 235.5 and uses of funds. 235.6 For districts for which certification was requested after 235.7 June 30, 1982, and before July 1, 2003, and for which the plan 235.8 has not been amended after July 1, 2003, the limit on 235.9 administrative expenses equals the greater of (1) nine percent 235.10 of the increments for the district or (2) the amount determined 235.11 under section 469.176, subdivision 3, and the tax increment 235.12 financing plan. 235.13 Sec. 11. Minnesota Statutes 2002, section 469.175, 235.14 subdivision 6, is amended to read: 235.15 Subd. 6. [ANNUAL FINANCIAL REPORTING.] (a) The state 235.16 auditor shall develop a uniform system of accounting and 235.17 financial reporting for tax increment financing districts. The 235.18 system of accounting and financial reporting shall, as nearly as 235.19 possible: 235.20 (1) provide for full disclosure of the sources and uses of 235.21 public funds in the district; 235.22 (2) permit comparison and reconciliation with the affected 235.23 local government's accounts and financial reports; 235.24 (3) permit auditing of the funds expended on behalf of a 235.25 district, including a single district that is part of a 235.26 multidistrict project or that is funded in part or whole through 235.27 the use of a development account funded with tax increments from 235.28 other districts or with other public money; 235.29 (4) be consistent with generally accepted accounting 235.30 principles. 235.31 (b) The authority must annually submit to the state auditor 235.32 a financial report in compliance with paragraph (a). Copies of 235.33 the report must also be provided to the county auditor and to 235.34 the governing body of the municipality, if the authority is not 235.35 the municipality. To the extent necessary to permit compliance 235.36 with the requirement of financial reporting, the county and any 236.1 other appropriate local government unit or private entity must 236.2 provide the necessary records or information to the authority or 236.3 the state auditor as provided by the system of accounting and 236.4 financial reporting developed pursuant to paragraph (a). The 236.5 authority must submit the annual report for a year on or before 236.6 August 1 of the next year. 236.7 (c) The annual financial report must also include the 236.8 following items: 236.9 (1) the original net tax capacity of the district and any 236.10 subdistrict under section 469.177, subdivision 1; 236.11 (2) the net tax capacity for the reporting period of the 236.12 district and any subdistrict; 236.13 (3) the captured net tax capacity of the district; 236.14 (4) any fiscal disparity deduction from the captured net 236.15 tax capacity under section 469.177, subdivision 3; 236.16 (5) the captured net tax capacity retained for tax 236.17 increment financing under section 469.177, subdivision 2, 236.18 paragraph (a), clause (1); 236.19 (6) any captured net tax capacity distributed among 236.20 affected taxing districts under section 469.177, subdivision 2, 236.21 paragraph (a), clause (2); 236.22 (7) the type of district; 236.23 (8) the date the municipality approved the tax increment 236.24 financing plan and the date of approval of any modification of 236.25 the tax increment financing plan, the approval of which requires 236.26 notice, discussion, a public hearing, and findings under 236.27 subdivision 4, paragraph (a); 236.28 (9) the date the authority first requested certification of 236.29 the original net tax capacity of the district and the date of 236.30 the request for certification regarding any parcel added to the 236.31 district; 236.32 (10) the date the county auditor first certified the 236.33 original net tax capacity of the district and the date of 236.34 certification of the original net tax capacity of any parcel 236.35 added to the district; 236.36 (11) the month and year in which the authority has received 237.1 or anticipates it will receive the first increment from the 237.2 district; 237.3 (12) the date the district must be decertified; 237.4 (13) for the reporting period and prior years of the 237.5 district, the actual amount received from, at least, the 237.6 following categories: 237.7 (i) tax increments paid by the captured net tax capacity 237.8 retained for tax increment financing under section 469.177, 237.9 subdivision 2, paragraph (a), clause (1), but excluding any 237.10 excess taxes; 237.11 (ii) tax increments that are interest or other investment 237.12 earnings on or from tax increments; 237.13 (iii) tax increments that are proceeds from the sale or 237.14 lease of property, tangible or intangible, purchased by the 237.15 authority with tax increments; 237.16 (iv) tax increments that are repayments of loans or other 237.17 advances made by the authority with tax increments; 237.18 (v) bond or loan proceeds; 237.19 (vi) special assessments; 237.20 (vii) grants; and 237.21 (viii) transfers from funds not exclusively associated with 237.22 the district; 237.23 (14) for the reporting period and for the prior years of 237.24 the district,the amount budgeted under the tax increment237.25financing plan, andthe actual amount expended for, at least, 237.26 the following categories: 237.27 (i) acquisition of land and buildings through condemnation 237.28 or purchase; 237.29 (ii) site improvements or preparation costs; 237.30 (iii) installation of public utilities, parking facilities, 237.31 streets, roads, sidewalks, or other similar public improvements; 237.32 (iv) administrative costs, including the allocated cost of 237.33 the authority; 237.34 (v) public park facilities, facilities for social, 237.35 recreational, or conference purposes, or other similar public 237.36 improvements; and 238.1 (vi) transfers to funds not exclusively associated with the 238.2 district; 238.3 (15) for properties sold to developers, the total cost of 238.4 the property to the authority and the price paid by the 238.5 developer; 238.6 (16) the amount of any payments and the value of any 238.7 in-kind benefits, such as physical improvements and the use of 238.8 building space, that are paid or financed with tax increments 238.9 and are provided to another governmental unit other than the 238.10 municipality during the reporting period; 238.11 (17) the amount of any payments for activities and 238.12 improvements located outside of the district that are paid for 238.13 or financed with tax increments; 238.14 (18) the amount of payments of principal and interest that 238.15 are made during the reporting period on any nondefeased: 238.16 (i) general obligation tax increment financing bonds; 238.17 (ii) other tax increment financing bonds; and 238.18 (iii) notes and pay-as-you-go contracts; 238.19 (19) the principal amount, at the end of the reporting 238.20 period, of any nondefeased: 238.21 (i) general obligation tax increment financing bonds; 238.22 (ii) other tax increment financing bonds; and 238.23 (iii) notes and pay-as-you-go contracts; 238.24 (20) the amount of principal and interest payments that are 238.25 due for the current calendar year on any nondefeased: 238.26 (i) general obligation tax increment financing bonds; 238.27 (ii) other tax increment financing bonds; and 238.28 (iii) notes and pay-as-you-go contracts; 238.29 (21) if the fiscal disparities contribution under chapter 238.30 276A or 473F for the district is computed under section 469.177, 238.31 subdivision 3, paragraph (a), the amount of increased property 238.32 taxes imposed on other properties in the municipality that 238.33 approved the tax increment financing plan as a result of the 238.34 fiscal disparities contribution; 238.35 (22) whether the tax increment financing plan or other 238.36 governing document permits increment revenues to be expended: 239.1 (i) to pay bonds, the proceeds of which were or may be 239.2 expended on activities outside of the district; 239.3 (ii) for deposit into a common bond fund from which money 239.4 may be expended on activities located outside of the district; 239.5 or 239.6 (iii) to otherwise finance activities located outside of 239.7 the tax increment financing district;and239.8 (23) the estimate, if any, contained in the tax increment 239.9 financing plan of the amount of the cost of the project, 239.10 including administrative expenses, that will be paid or financed 239.11 with tax increment; and 239.12 (24) any additional information the state auditor may 239.13 require. 239.14 (d) The commissioner of revenue shall prescribe the method 239.15 of calculating the increased property taxes under paragraph (c), 239.16 clause (21), and the form of the statement disclosing this 239.17 information on the annual statement under subdivision 5. 239.18 (e) The reporting requirements imposed by this subdivision 239.19 apply to districts certified before, on, and after August 1, 239.20 1979. 239.21 [EFFECTIVE DATE.] This section is effective beginning with 239.22 the reports due in calendar year 2004. 239.23 Sec. 12. Minnesota Statutes 2002, section 469.176, 239.24 subdivision 1c, is amended to read: 239.25 Subd. 1c. [DURATION LIMITS; PRE-1979 DISTRICTS.] (a) For 239.26 tax increment financing districts created prior to August 1, 239.27 1979, no tax increment shall be paid to the authority after 239.28 April 1, 2001, or the term of a nondefeased bond or obligation 239.29 outstanding on April 1, 1990, secured by increments from the 239.30 district or project area, whichever time is greater, provided 239.31 that in no case will a tax increment be paid to an authority 239.32 after August 1, 2009, from such a district. If a district's 239.33 termination date is extended beyond April 1, 2001, because bonds 239.34 were outstanding on April 1, 1990, with maturities extending 239.35 beyond April 1, 2001, the following restrictions apply. No 239.36 increment collected from the district may be expended after 240.1 April 1, 2001, except to pay or defease(i): 240.2 (1) bonds issued before April 1, 1990, or (ii); 240.3 (2) bonds issued to refund the principal of the outstanding 240.4 bonds and pay associated issuance costs, provided the average240.5maturity of the refunding bonds does not exceed the bonds240.6refunded; 240.7 (3) administrative expenses of the district required to be 240.8 paid under section 469.176, subdivision 4h, paragraph (a); 240.9 (4) transfers of increment permitted under section 240.10 469.1763, subdivision 6; and 240.11 (5) to repay any advance or payment made by the 240.12 municipality or the authority after June 1, 2002, to pay any 240.13 bonds listed in clause (1) or (2). 240.14 (b) Each year, any increments from a district subject to 240.15 this subdivision must be first applied to pay or defease 240.16 obligations listed under paragraph (a), clauses (1) and (2), and 240.17 administrative expenses under paragraph (a), clause (3). Any 240.18 remaining increments may be used for transfers of increments 240.19 permitted under section 469.1763, subdivision 6. 240.20 (c) When sufficient money has been received to pay in full 240.21 or defease bonds under paragraph (a), clauses (1) and (2), the 240.22 tax increment project or district must be decertified. 240.23 [EFFECTIVE DATE.] This section is effective the day 240.24 following final enactment and applies to tax increment financing 240.25 districts for which the request for certification was made 240.26 before August 1, 1979. 240.27 Sec. 13. Minnesota Statutes 2002, section 469.176, 240.28 subdivision 2, is amended to read: 240.29 Subd. 2. [EXCESSTAXINCREMENTS.]In any year in which the240.30tax increment exceeds the amount necessary to pay the costs240.31authorized by the tax increment financing plan, including the240.32amount necessary to cancel any tax levy as provided in section240.33475.61, subdivision 3,(a) The authority shall annually 240.34 determine the amount of excess increments for a district, if 240.35 any. This determination must be based on the tax increment 240.36 financing plan in effect on December 31 of the year and the 241.1 increments and other revenues received as of December 31 of the 241.2 year. 241.3 (b) For purposes of this subdivision, "excess increments" 241.4 equals the excess of: 241.5 (1) total increments collected from the district since its 241.6 certification, reduced by any excess increments paid under 241.7 paragraph (c), clause (4), for a prior year, over 241.8 (2) the total costs authorized by the tax increment 241.9 financing plan to be paid with increments from the district, 241.10 reduced, but not below zero, by the sum of: 241.11 (i) the amounts of those authorized costs that have been 241.12 paid from sources other than tax increments from the district; 241.13 (ii) revenues, other than tax increments from the district, 241.14 that are dedicated for or otherwise required to be used to pay 241.15 those authorized costs and that the authority has received and 241.16 that are not included in item (i); and 241.17 (iii) the amount of principal and interest obligations due 241.18 on outstanding bonds after December 31 of the year and not 241.19 prepaid under paragraph (c) in a prior year. 241.20 (c) The authority shall usethe excess amount to do any241.21ofexcess increment only to do one or more of the following: 241.22 (1) prepay any outstanding bonds,; 241.23 (2) discharge the pledge of tax incrementtherefor,for any 241.24 outstanding bonds; 241.25 (3) pay into an escrow account dedicated to the paymentof241.26such bond,; or 241.27 (4) return the excess amount to the county auditor who 241.28 shall distribute the excess amount to themunicipalitycity or 241.29 town, county, and school district in which the tax increment 241.30 financing district is located in direct proportion to their 241.31 respective local tax rates. 241.32 (d) The county auditor must report to the commissioner of 241.33 children, families, and learning the amount of any excess tax 241.34 increment distributed to a school district within 30 days of the 241.35 distribution. 241.36 [EFFECTIVE DATE.] This section is effective for all tax 242.1 increment financing districts, regardless of whether the request 242.2 for certification was made before, on, or after August 1, 1979, 242.3 and applies after August 1, 2003, except the amendment to 242.4 paragraph (c), clause (4), applies retroactively to August 1, 242.5 1979. 242.6 Sec. 14. Minnesota Statutes 2002, section 469.176, 242.7 subdivision 3, is amended to read: 242.8 Subd. 3. [LIMITATION ON ADMINISTRATIVE EXPENSES.] (a) For 242.9 districts for which certification was requested before August 1, 242.10 1979, or after June 30, 1982 and before August 1, 2001, no tax 242.11 increment shall be used to pay any administrative expenses for a 242.12 project which exceed ten percent of the total estimated tax 242.13 increment expenditures authorized by the tax increment financing 242.14 plan or the total tax increment expenditures for the project, 242.15 whichever is less. 242.16 (b) For districts for which certification was requested 242.17 after July 31, 1979, and before July 1, 1982, no tax increment 242.18 shall be used to pay administrative expenses, as defined in 242.19 Minnesota Statutes 1980, section 273.73, for a district which 242.20 exceeds five percent of the total tax increment expenditures 242.21 authorized by the tax increment financing plan or the 242.22 total estimated tax increment expenditures for the district, 242.23 whichever is less. 242.24 (c) For districts for which certification was requested 242.25 after July 31, 2001, no tax increment may be used to pay any 242.26 administrative expenses for a project which exceed ten percent 242.27 of total estimated tax increment expenditures authorized by the 242.28 tax increment financing plan or the total tax increments, as 242.29 defined in section 469.174, subdivision 25, clause (1), from the 242.30 district, whichever is less. 242.31 [EFFECTIVE DATE.] This section is effective for districts 242.32 for which the request for certification was made before, on, or 242.33 after August 1, 1979. 242.34 Sec. 15. Minnesota Statutes 2002, section 469.176, 242.35 subdivision 4d, is amended to read: 242.36 Subd. 4d. [HOUSING DISTRICTS.] Revenue derived from tax 243.1 increment from a housing district must be used solely to finance 243.2 the cost of housing projects as defined in section 469.174, 243.3 subdivision 11. The cost ofpublic improvements directly243.4related to the housing projects and the allocated administrative243.5expenses of the authority may be included in the cost ofa 243.6 housing project includes expenditures on: 243.7 (1) public improvements directly related to a housing 243.8 project; 243.9 (2) public or private housing units, but not to exceed an 243.10 amount equal to the average cost of all the units in the project 243.11 multiplied by the number of units that are pledged to be income 243.12 restricted; and 243.13 (3) allocated administrative expenses of the authority. 243.14 [EFFECTIVE DATE.] The provisions of this section apply to 243.15 all districts, regardless of when the request for certification 243.16 was made, and to expenditures of increments, regardless of 243.17 whether they were made before or after the date of enactment. 243.18 Sec. 16. Minnesota Statutes 2002, section 469.176, 243.19 subdivision 4l, is amended to read: 243.20 Subd. 4l. [PROHIBITED FACILITIES.] (a) No tax increment 243.21 from any district may be usedfor: 243.22 (1) for a commons area used as a public park;or243.23 (2) for a facility used for social, recreational, or 243.24 conference purposes; or 243.25 (3) to assist a development by paying costs the developer 243.26 or owner otherwise would pay, if the developer or owner: 243.27 (i) requested platting or subdivision of the parcel or 243.28 parcels on which the development is located within two years 243.29 before the authority approves the assistance; and 243.30 (ii) did not disclose on or before making the request an 243.31 intent to seek or accept assistance funded with tax increments. 243.32 (b)This subdivision doesParagraph (a), clauses (1) and 243.33 (2) do not apply to a privately owned facility for conference 243.34 purposes or a parking structure. 243.35 [EFFECTIVE DATE.] This section is effective for tax 243.36 increment financing assistance provided under developer 244.1 agreements entered into after June 30, 2003. 244.2 Sec. 17. Minnesota Statutes 2002, section 469.176, 244.3 subdivision 7, is amended to read: 244.4 Subd. 7. [PARCELS NOT INCLUDABLE IN DISTRICTS.] (a) The 244.5 authority may request inclusion in a tax increment financing 244.6 district and the county auditor may certify the original tax 244.7 capacity of a parcel or a part of a parcel that qualified under 244.8 the provisions of section 273.111 or 273.112 or chapter 473H for 244.9 taxes payable in any of the five calendar years before the 244.10 filing of the request for certification only for: 244.11 (1) a district in which 85 percent or more of the planned 244.12 buildings and facilities (determined on the basis of square 244.13 footage) are a qualified manufacturing facility or a qualified 244.14 distribution facility or a combination of both; or 244.15 (2) a qualified housing districtas defined in section244.16273.1399, subdivision 1. 244.17 (b)(1) A distribution facility means buildings and other 244.18 improvements to real property that are used to conduct 244.19 activities in at least each of the following categories: 244.20 (i) to store or warehouse tangible personal property; 244.21 (ii) to take orders for shipment, mailing, or delivery; 244.22 (iii) to prepare personal property for shipment, mailing, 244.23 or delivery; and 244.24 (iv) to ship, mail, or deliver property. 244.25 (2) A manufacturing facility includes space used for 244.26 manufacturing or producing tangible personal property, including 244.27 processing resulting in the change in condition of the property, 244.28 and space necessary for and related to the manufacturing 244.29 activities. 244.30 (3) To be a qualified facility, the owner or operator of a 244.31 manufacturing or distribution facility must agree to pay and pay 244.32 90 percent or more of the employees of the facility at a rate 244.33 equal to or greater than 160 percent of the federal minimum wage 244.34 for individuals over the age of 20. 244.35 [EFFECTIVE DATE.] This section applies to all districts for 244.36 which the request for certification was made on or after January 245.1 1, 2002, and to all districts to which the definition of 245.2 qualified housing districts under Minnesota Statutes 2000, 245.3 section 273.1399, applied. 245.4 Sec. 18. Minnesota Statutes 2002, section 469.1763, 245.5 subdivision 1, is amended to read: 245.6 Subdivision 1. [DEFINITIONS.] (a) For purposes of this 245.7 section, the following terms have the meanings given. 245.8 (b) "Activities" means acquisition of property, clearing of 245.9 land, site preparation, soils correction, removal of hazardous 245.10 waste or pollution, installation of utilities, construction of 245.11 public or private improvements, and other similar activities, 245.12 but only to the extent that tax increment revenues may be spent 245.13 for such purposes under other law. 245.14 (c) "Third party" means an entity other than (1) the person 245.15 receiving the benefit of assistance financed with tax 245.16 increments, or (2) the municipality or the development authority 245.17 or other person substantially under the control of the 245.18 municipality. 245.19 (d) "Revenues derived from tax increments paid by 245.20 properties in the district" means only tax increment as defined 245.21 in section 469.174, subdivision 25, clause (1), and does not 245.22 include tax increment as defined in section 469.174, subdivision 245.23 25, clauses (2), (3), and (4). 245.24 [EFFECTIVE DATE.] This section is effective for districts 245.25 for which the request for certification was made after April 30, 245.26 1990. 245.27 Sec. 19. Minnesota Statutes 2002, section 469.1763, 245.28 subdivision 2, is amended to read: 245.29 Subd. 2. [EXPENDITURES OUTSIDE DISTRICT.] (a) For each tax 245.30 increment financing district, an amount equal to at least 75 245.31 percent of the total revenue derived from tax increments paid by 245.32 properties in the district must be expended on activities in the 245.33 district or to pay bonds, to the extent that the proceeds of the 245.34 bonds were used to finance activities in the district or to pay, 245.35 or secure payment of, debt service on credit enhanced bonds. 245.36 For districts, other than redevelopment districts for which the 246.1 request for certification was made after June 30, 1995, the 246.2 in-district percentage for purposes of the preceding sentence is 246.3 80 percent. Not more than 25 percent of the total revenue 246.4 derived from tax increments paid by properties in the district 246.5 may be expended, through a development fund or otherwise, on 246.6 activities outside of the district but within the defined 246.7 geographic area of the project except to pay, or secure payment 246.8 of, debt service on credit enhanced bonds. For districts, other 246.9 than redevelopment districts for which the request for 246.10 certification was made after June 30, 1995, the pooling 246.11 percentage for purposes of the preceding sentence is 20 246.12 percent. The revenue derived from tax increments for the 246.13 district that are expended on costs under section 469.176, 246.14 subdivision 4h, paragraph (b), may be deducted first before 246.15 calculating the percentages that must be expended within and 246.16 without the district. 246.17 (b) In the case of a housing district, a housing project, 246.18 as defined in section 469.174, subdivision 11, is an activity in 246.19 the district. 246.20 (c) All administrative expenses are for activities outside 246.21 of the district. 246.22 (d) The authority may elect, in the tax increment financing 246.23 plan for the district, to increase by up to ten percentage 246.24 points the permitted amount of expenditures for activities 246.25 located outside the geographic area of the district under 246.26 paragraph (a). As permitted by section 469.176, subdivision 4k, 246.27 the expenditures, including the permitted expenditures under 246.28 paragraph (a), need not be made within the geographic area of 246.29 the project. Expenditures that meet the requirements of this 246.30 paragraph are legally permitted expenditures of the district, 246.31 notwithstanding section 469.176, subdivisions 4b, 4c, and 4j. 246.32 To qualify for the increase under this paragraph, the 246.33 expenditures must: 246.34 (1) be used exclusively to assist housing that meets the 246.35 requirement for a qualified low-income building, as that term is 246.36 used in section 42 of the Internal Revenue Code; 247.1 (2) not exceed the qualified basis of the housing, as 247.2 defined under section 42(c) of the Internal Revenue Code, less 247.3 the amount of any credit allowed under section 42 of the 247.4 Internal Revenue Code; and 247.5 (3) be used to: 247.6 (i) acquire and prepare the site of the housing; 247.7 (ii) acquire, construct, or rehabilitate the housing; or 247.8 (iii) make public improvements directly related to the 247.9 housing. 247.10 [EFFECTIVE DATE.] This section is effective for districts 247.11 for which the request for certification was made after April 30, 247.12 1990. 247.13 Sec. 20. Minnesota Statutes 2002, section 469.1763, 247.14 subdivision 3, is amended to read: 247.15 Subd. 3. [FIVE-YEAR RULE.] (a) Revenues derived from tax 247.16 increments are considered to have been expended on an activity 247.17 within the district under subdivision 2 only if one of the 247.18 following occurs: 247.19 (1) before or within five years after certification of the 247.20 district, the revenues are actually paid to a third party with 247.21 respect to the activity; 247.22 (2) bonds, the proceeds of which must be used to finance 247.23 the activity, are issued and sold to a third party before or 247.24 within five years after certification, the revenues are spent to 247.25 repay the bonds, and the proceeds of the bonds either are, on 247.26 the date of issuance, reasonably expected to be spent before the 247.27 end of the later of (i) the five-year period, or (ii) a 247.28 reasonable temporary period within the meaning of the use of 247.29 that term under section 148(c)(1) of the Internal Revenue Code, 247.30 or are deposited in a reasonably required reserve or replacement 247.31 fund; 247.32 (3) binding contracts with a third party are entered into 247.33 for performance of the activity before or within five years 247.34 after certification of the district and the revenues are spent 247.35 under the contractual obligation;or247.36 (4) costs with respect to the activity are paid before or 248.1 within five years after certification of the district and the 248.2 revenues are spent to reimburse a party for payment of the 248.3 costs, including interest on unreimbursed costs; or 248.4 (5) expenditures are made for housing purposes as permitted 248.5 by subdivision 2, paragraph (b). 248.6 (b) For purposes of this subdivision, bonds include 248.7 subsequent refunding bonds if the original refunded bonds meet 248.8 the requirements of paragraph (a), clause (2). 248.9 [EFFECTIVE DATE.] This section is effective for 248.10 expenditures made after June 30, 2003. 248.11 Sec. 21. Minnesota Statutes 2002, section 469.1763, 248.12 subdivision 4, is amended to read: 248.13 Subd. 4. [USE OF REVENUES FOR DECERTIFICATION.] (a) In 248.14 each year beginning with the sixth year following certification 248.15 of the district, if the applicable in-district percent of the 248.16 revenues derived from tax increments paid by properties in the 248.17 districtthat remain afterexceeds the amount of expenditures 248.18 that have been made for costs permitted under subdivision 3, an 248.19 amount equal to the difference between the in-district percent 248.20 of the revenues derived from tax increments paid by properties 248.21 in the district and the amount of expenditures that have been 248.22 made for costs permitted under subdivision 3 must be used and 248.23 only used to pay or defease the following or be set aside to pay 248.24 the following: 248.25 (1) outstanding bonds, as defined in subdivision 3, 248.26 paragraphs (a), clause (2), and (b); 248.27 (2) contracts, as defined in subdivision 3, paragraph (a), 248.28 clauses (3) and (4); or 248.29 (3) credit enhanced bonds to which the revenues derived 248.30 from tax increments are pledged, but only to the extent that 248.31 revenues of the district for which the credit enhanced bonds 248.32 were issued are insufficient to pay the bonds and to the extent 248.33 that the increments from the applicable pooling percent share 248.34 for the district are insufficient. 248.35 (b) When the outstanding bonds have been defeased and when 248.36 sufficient money has been set aside to pay contractual 249.1 obligations as defined in subdivision 3, paragraph (a), clauses 249.2 (3) and (4), the district must be decertified and the pledge of 249.3 tax increment discharged. 249.4 [EFFECTIVE DATE.] This section is effective for districts 249.5 for which the request for certification was made after April 30, 249.6 1990. 249.7 Sec. 22. Minnesota Statutes 2002, section 469.1763, 249.8 subdivision 6, is amended to read: 249.9 Subd. 6. [POOLING PERMITTED FOR DEFICITS.] (a) This 249.10 subdivision applies only to districts for which the request for 249.11 certification was made before August 1, 2001, and without regard 249.12 to whether the request for certification was made prior to 249.13 August 1, 1979. 249.14 (b) The municipality for the district may transfer 249.15 available increments from another tax increment financing 249.16 district located in the municipality, if the transfer is 249.17 necessary to eliminate a deficit in the district to which the 249.18 increments are transferred. A deficit in the district for 249.19 purposes of this subdivision means the lesser of the following 249.20 two amounts: 249.21 (1)(i) the amount due during the calendar year to pay 249.22 preexisting obligations of the district; minus 249.23 (ii) the total increments collected or to be collected from 249.24 properties located within the district that are available for 249.25 the calendar year including amounts collected in prior years 249.26 that are currently available; plus 249.27 (iii) total increments from properties located in other 249.28 districts in the municipality including amounts collected in 249.29 prior years that are available to be used to meet the district's 249.30 obligations under this section, excluding this subdivision, or 249.31 other provisions of law (but excluding a special tax under 249.32 section 469.1791 and the grant program under Laws 1997, chapter 249.33 231, article 1, section 19, or Laws 2001, First Special Session 249.34 chapter 5); or 249.35 (2) the reduction in increments collected from properties 249.36 located in the district for the calendar year as a result of the 250.1 changes in class rates in Laws 1997, chapter 231, article 1; 250.2 Laws 1998, chapter 389, article 2; and Laws 1999, chapter 243, 250.3 and Laws 2001, First Special Session chapter 5, or the 250.4 elimination of the general education tax levy under Laws 2001, 250.5 First Special Session chapter 5. 250.6 (c) A preexisting obligation means: 250.7 (1) bonds issued and sold before August 1, 2001, or bonds 250.8 issued pursuant to a binding contract requiring the issuance of 250.9 bonds entered into before July 1, 2001, and bonds issued to 250.10 refund such bonds or to reimburse expenditures made in 250.11 conjunction with a signed contractual agreement entered into 250.12 before August 1, 2001, to the extent that the bonds are secured 250.13 by a pledge of increments from the tax increment financing 250.14 district; and 250.15 (2) binding contracts entered into before August 1, 2001, 250.16 to the extent that the contracts require payments secured by a 250.17 pledge of increments from the tax increment financing district. 250.18 (d) The municipality may require a development authority, 250.19 other than a seaway port authority, to transfer available 250.20 increments including amounts collected in prior years that are 250.21 currently available for any of its tax increment financing 250.22 districts in the municipality to make up an insufficiency in 250.23 another district in the municipality, regardless of whether the 250.24 district was established by the development authority or another 250.25 development authority. This authority applies notwithstanding 250.26 any law to the contrary, but applies only to a development 250.27 authority that: 250.28 (1) was established by the municipality; or 250.29 (2) the governing body of which is appointed, in whole or 250.30 part, by the municipality or an officer of the municipality or 250.31 which consists, in whole or part, of members of the governing 250.32 body of the municipality. The municipality may use this 250.33 authority only after it has first used all available increments 250.34 of the receiving development authority to eliminate the 250.35 insufficiency and exercised any permitted action under section 250.36 469.1792, subdivision 3, for preexisting districts of the 251.1 receiving development authority to eliminate the insufficiency. 251.2 (e) The authority under this subdivision to spend tax 251.3 increments outside of the area of the district from which the 251.4 tax increments were collected: 251.5 (1)may only be exercised after obtaining approval of the251.6use of the increments, in writing, by the commissioner of251.7revenue;251.8(2)is an exception to the restrictions under section 251.9 469.176, subdivision 4i, and the other provisions of this 251.10 section, and the percentage restrictions under subdivision 2 251.11 must be calculated after deducting increments spent under this 251.12 subdivision from the total increments for the district; and 251.13(3)(2) applies notwithstanding the provisions of the Tax 251.14 Increment Financing Act in effect for districts for which the 251.15 request for certification was made before June 30, 1982, or any 251.16 other law to the contrary. 251.17 (f) If a preexisting obligation requires the development 251.18 authority to pay an amount that is limited to the increment from 251.19 the district or a specific development within the district and 251.20 if the obligation requires paying a higher amount to the extent 251.21 that increments are available, the municipality may determine 251.22 that the amount due under the preexisting obligation equals the 251.23 higher amount and may authorize the transfer of increments under 251.24 this subdivision to pay up to the higher amount. The existence 251.25 of a guarantee of obligations by the individual or entity that 251.26 would receive the payment under this paragraph is disregarded in 251.27 the determination of eligibility to pool under this 251.28 subdivision. The authority to transfer increments under this 251.29 paragraph may only be used to the extent that the payment of all 251.30 other preexisting obligations in the municipality due during the 251.31 calendar year have been satisfied. 251.32 [EFFECTIVE DATE.] This section is effective retroactively 251.33 to January 2, 2002, and thereafter. 251.34 Sec. 23. Minnesota Statutes 2002, section 469.177, 251.35 subdivision 1, is amended to read: 251.36 Subdivision 1. [ORIGINAL NET TAX CAPACITY.] (a) Upon or 252.1 after adoption of a tax increment financing plan, the auditor of 252.2 any county in which the district is situated shall, upon request 252.3 of the authority, certify the original net tax capacity of the 252.4 tax increment financing district and that portion of the 252.5 district overlying any subdistrict as described in the tax 252.6 increment financing plan and shall certify in each year 252.7 thereafter the amount by which the original net tax capacity has 252.8 increased or decreased as a result of a change in tax exempt 252.9 status of property within the district and any subdistrict, 252.10 reduction or enlargement of the district or changes pursuant to 252.11 subdivision 4. 252.12 (b)For districts approved under section 469.175,252.13subdivision 3, or parcels added to existing districts after May252.141, 1988,If the classification under section 273.13 of property 252.15 located in a district changes to a classification that has a 252.16 different assessment ratio, the original net tax capacity of 252.17 that property must be redetermined at the time when its use is 252.18 changed as if the property had originally been classified in the 252.19 same class in which it is classified after its use is changed. 252.20 (c) The amount to be added to the original net tax capacity 252.21 of the district as a result of previously tax exempt real 252.22 property within the district becoming taxable equals the net tax 252.23 capacity of the real property as most recently assessed pursuant 252.24 to section 273.18 or, if that assessment was made more than one 252.25 year prior to the date of title transfer rendering the property 252.26 taxable, the net tax capacity assessed by the assessor at the 252.27 time of the transfer. If improvements are made to tax exempt 252.28 property after certification of the district and before the 252.29 parcel becomes taxable, the assessor shall, at the request of 252.30 the authority, separately assess the estimated market value of 252.31 the improvements. If the property becomes taxable, the county 252.32 auditor shall add to original net tax capacity, the net tax 252.33 capacity of the parcel, excluding the separately assessed 252.34 improvements. If substantial taxable improvements were made to 252.35 a parcel after certification of the district and if the property 252.36 later becomes tax exempt, in whole or part, as a result of the 253.1 authority acquiring the property through foreclosure or exercise 253.2 of remedies under a lease or other revenue agreement or as a 253.3 result of tax forfeiture, the amount to be added to the original 253.4 net tax capacity of the district as a result of the property 253.5 again becoming taxable is the amount of the parcel's value that 253.6 was included in original net tax capacity when the parcel was 253.7 first certified. The amount to be added to the original net tax 253.8 capacity of the district as a result of enlargements equals the 253.9 net tax capacity of the added real property as most recently 253.10 certified by the commissioner of revenue as of the date of 253.11 modification of the tax increment financing plan pursuant to 253.12 section 469.175, subdivision 4. 253.13 (d)For districts approved under section 469.175,253.14subdivision 3, or parcels added to existing districts after May253.151, 1988,If the net tax capacity of a property increases because 253.16 the property no longer qualifies under the Minnesota 253.17 Agricultural Property Tax Law, section 273.111; the Minnesota 253.18 Open Space Property Tax Law, section 273.112; or the 253.19 Metropolitan Agricultural Preserves Act, chapter 473H, or 253.20 because platted, unimproved property is improved or three years 253.21 pass after approval of the plat under section 273.11, 253.22 subdivision 1, the increase in net tax capacity must be added to 253.23 the original net tax capacity. 253.24 (e) The amount to be subtracted from the original net tax 253.25 capacity of the district as a result of previously taxable real 253.26 property within the district becoming tax exempt, or a reduction 253.27 in the geographic area of the district, shall be the amount of 253.28 original net tax capacity initially attributed to the property 253.29 becoming tax exempt or being removed from the district. If the 253.30 net tax capacity of property located within the tax increment 253.31 financing district is reduced by reason of a court-ordered 253.32 abatement, stipulation agreement, voluntary abatement made by 253.33 the assessor or auditor or by order of the commissioner of 253.34 revenue, the reduction shall be applied to the original net tax 253.35 capacity of the district when the property upon which the 253.36 abatement is made has not been improved since the date of 254.1 certification of the district and to the captured net tax 254.2 capacity of the district in each year thereafter when the 254.3 abatement relates to improvements made after the date of 254.4 certification. The county auditor may specify reasonable form 254.5 and content of the request for certification of the authority 254.6 and any modification thereof pursuant to section 469.175, 254.7 subdivision 4. 254.8 (f) If a parcel of property contained a substandard 254.9 building that was demolished or removed and if the authority 254.10 elects to treat the parcel as occupied by a substandard building 254.11 under section 469.174, subdivision 10, paragraph (b), the 254.12 auditor shall certify the original net tax capacity of the 254.13 parcel using the greater of (1) the current net tax capacity of 254.14 the parcel, or (2) the estimated market value of the parcel for 254.15 the year in which the building was demolished or removed, but 254.16 applying the class rates for the current year. 254.17 [EFFECTIVE DATE.] The provisions of this section apply to 254.18 all districts, regardless of when the request for certification 254.19 was made, beginning for taxes payable in 2004. The provisions 254.20 only apply to classification changes enacted after January 1, 254.21 2001, and for changes in use occurring after December 31, 2002. 254.22 Sec. 24. Minnesota Statutes 2002, section 469.177, 254.23 subdivision 12, is amended to read: 254.24 Subd. 12. [DECERTIFICATION OF TAX INCREMENT FINANCING 254.25 DISTRICT.] The county auditor shall decertify a tax increment 254.26 financing district when the earliest of the following times is 254.27 reached: 254.28 (1) the applicable maximum duration limit under section 254.29 469.176, subdivisions 1a to 1g; 254.30 (2) the maximum duration limit, if any, provided by the 254.31 municipality pursuant to section 469.176, subdivision 1; 254.32 (3) the time of decertification specified in section 254.33 469.1761, subdivision 4, if the commissioner of revenue issues 254.34 an order of noncompliance and the maximum duration limit for 254.35 economic development districts has been exceeded; 254.36 (4) upon completion of the required actions to allow 255.1 decertification under section 469.1763, subdivision 4; or 255.2 (5) upon the later of receipt by the county auditor of a 255.3 written request for decertification from the authority that 255.4 requested certification of the original net tax capacity of the 255.5 district or its successor or the decertification date specified 255.6 in the request. 255.7 [EFFECTIVE DATE.] This section is effective for all 255.8 districts regardless of whether the request for certification 255.9 was made before, on, or after August 1, 1979. 255.10 Sec. 25. Minnesota Statutes 2002, section 469.1771, 255.11 subdivision 4, is amended to read: 255.12 Subd. 4. [LIMITATIONS.] (a) If the increments are pledged 255.13 to repay bonds that were issued before the lawsuit was filed 255.14 under this section, the damages under this section may not 255.15 exceed the greater of (1) ten percent of the expenditures or 255.16 revenues derived from increment, or (2) the amount of available 255.17 revenues after paying debt services due on the bonds. 255.18 (b) The court may abate all or part of the amount if it 255.19 determines the unauthorized action or failure to perform the 255.20 required action was taken in good faith and the payment would 255.21 work an undue hardship on the authority or municipality. 255.22 [EFFECTIVE DATE.] This section is effective for violations 255.23 occurring after December 31, 1990. 255.24 Sec. 26. Minnesota Statutes 2002, section 469.1771, is 255.25 amended by adding a subdivision to read: 255.26 Subd. 7. [LIMITATIONS ON ACTIONS.] An action under 255.27 subdivision 1, paragraph (a), contesting the validity of a 255.28 determination by an authority under section 469.175, subdivision 255.29 3, must be commenced within the later of: 255.30 (1) 180 days after the municipality's approval under 255.31 section 469.175, subdivision 3; or 255.32 (2) 90 days after the request for certification of the 255.33 district is filed with the county auditor under section 469.177, 255.34 subdivision 1. 255.35 [EFFECTIVE DATE.] This section is effective for actions 255.36 filed after the day following final enactment. 256.1 Sec. 27. Minnesota Statutes 2002, section 469.178, 256.2 subdivision 7, is amended to read: 256.3 Subd. 7. [INTERFUND LOANS.] The authority or municipality 256.4 may advance or loan money to finance expenditures under section 256.5 469.176, subdivision 4, from its general fund or any other fund 256.6 under which it has legal authority to do so. The loan or 256.7 advance must beapprovedauthorized, by resolution of the 256.8 governing body, before money is transferred, advanced, or spent, 256.9 whichever is earliest. The resolution may generally grant to 256.10 the authority the power to make interfund loans under one or 256.11 more tax increment financing plans or for one or more 256.12 districts. The terms and conditions for repayment of the loan 256.13 must be provided in writing and include, at a minimum, the 256.14 principal amount, the interest rate, and maximum term. The 256.15 maximum rate of interest permitted to be charged is limited to 256.16 the greater of the rates specified under section 270.75 or 256.17 549.09 as of the date or advance is made, unless the written 256.18 agreement states that the maximum interest rate will fluctuate 256.19 as the interest rates specified under section 270.75 or 549.09 256.20 are from time to time adjusted. 256.21 [EFFECTIVE DATE.] This section is effective for loans and 256.22 advances made after July 31, 2001, and for districts for which 256.23 the request for certification was made after July 31, 1979. 256.24 Sec. 28. Minnesota Statutes 2002, section 469.1791, 256.25 subdivision 3, is amended to read: 256.26 Subd. 3. [PRECONDITIONS TO ESTABLISH DISTRICT.] (a) A city 256.27 may establish a special taxing district within a tax increment 256.28 financing district under this section only if the conditions 256.29 under paragraphs (b) and (c) are met or if the city elects to 256.30 exercise the authority under paragraph (d). 256.31 (b) The city has determined that: 256.32 (1) total tax increments from the district, including 256.33 unspent increments from previous years and increments 256.34 transferred under paragraph (c), will be insufficient to pay the 256.35 amounts due in a year on preexisting obligations; and 256.36 (2) this insufficiency of increments resulted from the 257.1 reduction in property tax class rates enacted in the 1997 and 257.2 1998 legislative sessions. 257.3 (c) The city has agreed to transfer any available 257.4 increments from other tax increment financing districts in the 257.5 city to pay the preexisting obligations of the district under 257.6 section 469.1763, subdivision 6. This requirement does not 257.7 apply to any available increments of a qualified housing 257.8 district, as defined in section 273.1399, subdivision 1. 257.9 (d) If a tax increment financing district does not qualify 257.10 under paragraphs (b) and (c), the governing body may elect to 257.11 establish a special taxing district under this section. If the 257.12 city elects to exercise this authority, increments from the tax 257.13 increment financing district and the proceeds of the tax imposed 257.14 under this section may only be used to pay preexisting 257.15 obligations and reasonable administrative expenses of the 257.16 authority for the tax increment financing district. The tax 257.17 increment financing district must be decertified when all 257.18 preexisting obligations have been paid. 257.19 [EFFECTIVE DATE.] This section applies to all districts for 257.20 which the request for certification was made on or after January 257.21 1, 2002, and to all districts to which the definition of 257.22 qualified housing districts under Minnesota Statutes 2002, 257.23 section 273.1399, applied. 257.24 Sec. 29. Minnesota Statutes 2002, section 469.1792, 257.25 subdivision 1, is amended to read: 257.26 Subdivision 1. [SCOPE.] This section applies only to an 257.27 authority with a preexisting district for which: 257.28 (1) the increments from the district were insufficient to 257.29 pay preexisting obligations as a result of the class rate 257.30 changes or the elimination of the state-determined general 257.31 education property tax levy under this act, or both; or 257.32 (2)(i) the development authority has a binding contract, 257.33 entered into before August 1, 2001, with a person requiring the 257.34 authority to pay to the person an amount that may not exceed the 257.35 increment from the district or a specific development within the 257.36 district; and 258.1 (ii) the authority is unable to pay the full amount under 258.2 the contract from the pledged increments or other increments 258.3 from the district that would have been due if the class rate 258.4 changes or elimination of the state-determined general education 258.5 property tax levy or both had not been made under Laws 2001, 258.6 First Special Session chapter 5. 258.7 [EFFECTIVE DATE.] This section is effective retroactively 258.8 to the effective date of the original enactment of section 258.9 469.1792, subdivision 1, and applies to all districts for which 258.10 the request for certification was made after July 1, 1979. 258.11 Sec. 30. Minnesota Statutes 2002, section 469.1792, 258.12 subdivision 2, is amended to read: 258.13 Subd. 2. [DEFINITIONS.] (a) For purposes of this section, 258.14 the following terms have the meanings given. 258.15 (b) "Preexisting district" means a tax increment financing 258.16 district for which the request for certification was made before 258.17 August 1, 2001. 258.18 (c) "Preexisting obligation" means a bond or binding 258.19 contract that: 258.20 (1)(i) was issued or approved before August 1, 2001, or was 258.21 issued pursuant to a binding contract entered into beforeAugust258.22 July 1, 2001; or 258.23 (ii) was issued to refinance an obligation under item (i), 258.24 if the refinancing does not increase the present value of the 258.25 debt service; and 258.26 (2) is secured by increments from a preexisting district. 258.27 [EFFECTIVE DATE.] This section is effective the day 258.28 following final enactment and applies to districts for which the 258.29 request for certification was made on, before, or after August 258.30 1, 1979, and before August 1, 2001. 258.31 Sec. 31. Minnesota Statutes 2002, section 469.1792, 258.32 subdivision 3, is amended to read: 258.33 Subd. 3. [ACTIONS AUTHORIZED.] (a) An authority with a 258.34 district qualifying under this section may take either or both 258.35 of the following actions for any or all of its preexisting 258.36 districts: 259.1 (1) the authority may elect that the original local tax 259.2 rate under section 469.177, subdivision 1a, does not apply to 259.3 the district; and 259.4 (2) the authority may elect the fiscal disparities 259.5 contribution will be computed under section 469.177, subdivision 259.6 3, paragraph (a), regardless of the election that was made for 259.7 the district or if the district is an economic development 259.8 district for which the request for certification was made after 259.9 June 30, 1997. 259.10 (b) The authority may take action under this subdivision 259.11 only after the municipality approves the action, by resolution, 259.12 after notice and public hearing in the manner provided under 259.13 section 469.175, subdivision23. 259.14 [EFFECTIVE DATE.] This section is effective the day 259.15 following final enactment and applies to districts for which the 259.16 request for certification was made on, before, or after August 259.17 1, 1979, and before August 1, 2001. 259.18 Sec. 32. [469.1794] [DURATION EXTENSION TO OFFSET 259.19 DEFICITS.] 259.20 Subdivision 1. [AUTHORITY.] Subject to the conditions and 259.21 limitations imposed by this section, an authority may, by 259.22 resolution, extend the duration limit under section 469.176, 259.23 subdivision 1b, 1c, 1e, or 1g, that applies to a preexisting 259.24 district by up to the maximum number of years permitted under 259.25 subdivision 5, plus any amount authorized by the commissioner of 259.26 revenue under subdivision 6. 259.27 Subd. 2. [DEFINITIONS.] (a) For purposes of this section, 259.28 the following terms have the meanings given. 259.29 (b) "Extended district" means a tax increment financing 259.30 district whose duration limit is extended under this section. 259.31 (c) "Preexisting district" has the meaning given in section 259.32 469.1792, subdivision 2. 259.33 (d) "Preexisting obligation" has the meaning given in 259.34 section 469.1792, subdivision 2. 259.35 (e) "Qualifying obligation" means: 259.36 (1) a preexisting obligation that is: 260.1 (i) a general obligation bond of the municipality; 260.2 (ii) a general obligation bond of the authority; 260.3 (iii) a revenue bond of the authority to which other 260.4 revenues or money of the authority in addition to tax increments 260.5 are pledged to pay; or 260.6 (iv) an interfund loan, including an advance or payment 260.7 made by the municipality or authority after June 1, 2002, to pay 260.8 an obligation listed in items (i) to (iii); or 260.9 (2) a bond issued to refinance a preexisting obligation 260.10 under clause (1). 260.11 Subd. 3. [PRECONDITIONS.] Before an authority may extend 260.12 the duration of district under this section, the following 260.13 conditions must be met with regard to the district: 260.14 (1) the original local tax rate under section 469.177, 260.15 subdivision 1a, does not apply under an election made under 260.16 section 469.1792, subdivision 3, or under other operation of 260.17 law; 260.18 (2) for a district in the metropolitan area or taconite tax 260.19 relief area, the fiscal disparities contribution is computed 260.20 under section 469.177, subdivision 3, paragraph (a); 260.21 (3) the municipality has transferred any available 260.22 increments in other districts to pay qualified obligations of 260.23 the district or other districts in the municipality under 260.24 section 469.1763, subdivision 6; and 260.25 (4) the authority finds that, taking into account all of 260.26 the increments that are available to pay qualifying obligations 260.27 for the district, the increments from the district will be 260.28 insufficient to pay the amount of qualifying obligations and 260.29 that the insufficiency is a result of (i) the changes in the 260.30 class rates and (ii) elimination of the state-determined general 260.31 education property tax levy under Laws 2001, First Special 260.32 Session chapter 5. 260.33 Subd. 4. [NOTICE; HEARING; AND APPROVALS.] The authority 260.34 may extend the duration of a district under this section only 260.35 after: 260.36 (1) the municipality has approved the extension after 261.1 providing public notice and holding a hearing in the manner 261.2 provided under section 469.175, subdivision 3; and 261.3 (2) the governing bodies of the county and school district 261.4 in which the district is located have approved the extension by 261.5 resolution. 261.6 Subd. 5. [MAXIMUM EXTENSION.] (a) The maximum extension 261.7 for a district under this subdivision equals the lesser of: 261.8 (1) four years; or 261.9 (2) the tax reform percentage for the district, determined 261.10 under paragraph (b), multiplied by the remaining duration of the 261.11 district rounded to the nearest whole number. Fractions in 261.12 excess of one-third are rounded up. 261.13 (b) The tax reform percentage for the district, as 261.14 estimated by the county auditor, equals: 261.15 (1)(i) the total taxes paid by the original tax capacity 261.16 for the district for taxes payable in 2001, minus 261.17 (ii) the average of the total taxes paid by the original 261.18 tax capacity for the district for taxes payable in 2002 and in 261.19 2003, divided by 261.20 (2) the total taxes paid by the original tax capacity for 261.21 the district for taxes payable in 2001. 261.22 (c) In the resolution approving the extension, the 261.23 municipality may elect to treat all preexisting obligations as 261.24 qualified obligations for purposes of this section. If the 261.25 municipality makes an election under this paragraph, the maximum 261.26 duration is reduced by one-half of the amount otherwise 261.27 permitted under paragraph (a). 261.28 (d) The remaining duration of a district is the number of 261.29 calendar years, beginning after December 31, 2001, in which the 261.30 district may collect increment under its duration limit under 261.31 section 469.176, subdivision 1b, 1c, 1e, or 1g, or a special law 261.32 approved before January 1, 2002, as applicable. 261.33 (e) For purposes of this subdivision, "taxes" exclude taxes 261.34 levied against market value, rather than tax capacity, and the 261.35 state general tax under section 275.025. 261.36 Subd. 6. [COMMISSIONER AUTHORITY.] (a) If the municipality 262.1 determines that the extension permitted under subdivision 5 will 262.2 not provide sufficient revenue to pay in full the amount of 262.3 qualifying obligations, the municipality may apply to the 262.4 commissioner of revenue for an additional duration extension. 262.5 The commissioner may authorize an extension of the duration of 262.6 the district of up to two years after determining that: 262.7 (1) the insufficiency of revenues to pay the qualifying 262.8 obligations, which will be offset by the additional extension of 262.9 the duration limit, result from (i) the changes in the class 262.10 rates and (ii) elimination of the state-determined general 262.11 education property tax levy under Laws 2001, First Special 262.12 Session chapter 5; 262.13 (2) the municipality has or is transferring all available 262.14 increments from other preexisting districts and after August 1, 262.15 2001, has not entered into new obligations or authorized new 262.16 spending that reduced the amount of those increments that are 262.17 available for transfer to pay qualifying obligations; and 262.18 (3) increases in increments over the term of the district 262.19 are unlikely to eliminate the insufficiency. 262.20 (b) The commissioner may: 262.21 (1) establish the form of and time for applications under 262.22 this subdivision; and 262.23 (2) require the municipality to provide the information 262.24 that the commissioner determines is necessary or useful in 262.25 evaluating the application. 262.26 (c) This subdivision does not apply to a district if the 262.27 authority has made an election under subdivision 5, paragraph 262.28 (c). 262.29 (d) Applications for extensions under this subdivision may 262.30 not be made more than three calendar years before the end of the 262.31 maximum duration limit under subdivision 5 for the district. 262.32 Subd. 7. [LIMITS ON USE OF INCREMENTS.] (a) Tax increments 262.33 of an extended district may only be used to pay preexisting 262.34 obligations of the district and administrative expenses, 262.35 effective upon the final required approval of the extension 262.36 under this section. All tax increments that are attributable to 263.1 an extension of the duration of a district under this section 263.2 must be used only to pay qualified obligations of the district. 263.3 If increments from a district subject to this subdivision are 263.4 pledged to pay preexisting obligations that are not qualified 263.5 obligations, increments received under the duration limit, 263.6 determined without regard to this section, must be used to pay 263.7 qualified obligations and preexisting obligations that are not 263.8 qualified obligations in proportion to their relative shares of 263.9 all payments due on all preexisting obligations. 263.10 (b) If the authority elects to extend the duration of a 263.11 district under this section and if increments from one or more 263.12 other districts are pledged to pay preexisting obligations of 263.13 the extended district, increments from all of the districts may 263.14 only be used to pay preexisting obligations and administrative 263.15 expenses. 263.16 Subd. 8. [DECERTIFICATION.] An extended district must be 263.17 decertified at the end of the first calendar year when 263.18 sufficient increments have been received to pay the qualified 263.19 obligations of the extended district. Any remaining unspent 263.20 increments must be distributed as excess increments under 263.21 section 469.176, subdivision 2, clause (4). 263.22 [EFFECTIVE DATE.] This section is effective the day 263.23 following final enactment and applies to districts for which the 263.24 request for certification was made on, before, or after August 263.25 1, 1979, and before August 1, 2001. 263.26 Sec. 33. Minnesota Statutes 2002, section 469.1813, 263.27 subdivision 8, is amended to read: 263.28 Subd. 8. [LIMITATION ON ABATEMENTS.] In any year, the 263.29 total amount of property taxes abated by a political subdivision 263.30 under this section may not exceed (1) five percent of the 263.31 current levy, or (2) $100,000, whichever is greater. The limit 263.32 under this subdivision does not apply to an uncollected 263.33 abatement from a prior year that is added to the abatement levy. 263.34 [EFFECTIVE DATE.] This section is effective beginning with 263.35 property taxes levied in 2003, payable in 2004. 263.36 Sec. 34. Minnesota Statutes 2002, section 469.1815, 264.1 subdivision 1, is amended to read: 264.2 Subdivision 1. [INCLUSION IN PROPOSED AND FINAL LEVIES.] 264.3 The political subdivision must add to its levy amount for the 264.4 current year under sections 275.065 and 275.07 the total 264.5 estimated amount of all current year abatements granted. If all 264.6 or a portion of an abatement levy for a prior year was 264.7 uncollected, the political subdivision may add the uncollected 264.8 amount to its abatement levy for the current year. The tax 264.9 amounts shown on the proposed notice under section 275.065, 264.10 subdivision 3, and on the property tax statement under section 264.11 276.04, subdivision 2, are the total amounts before the 264.12 reduction of any abatements that will be granted on the property. 264.13 [EFFECTIVE DATE.] This section is effective beginning with 264.14 property taxes levied in 2003, payable in 2004. 264.15 Sec. 35. Laws 1997, chapter 231, article 10, section 25, 264.16 is amended to read: 264.17 Sec. 25. [EFFECTIVE DATE.] 264.18 Sections 1, 3 to 6, 7, and 10, are effective for districts 264.19 for which the requests for certification are made after June 30, 264.20 1997. 264.21 Section 2,clausesclause (1)andis effective for all 264.22 districts, regardless of whether the request for certification 264.23 was made before, on, or after August 1, 1979. Section 2, 264.24 clause (4),areis effective for districts for which the 264.25 requests for certification were made after July 31, 1979, and 264.26 for payments and investment earnings received after July 1, 264.27 1997. Section 2, clauses (2) and (3), are effective for 264.28 districts for which the request for certification was made after 264.29 June 30, 1982, and proceeds from sales and leases of properties 264.30 purchased by the authority after June 30, 1997, and repayments 264.31 of advances and loans that were made after June 30, 1997. 264.32 Sections 8 and 9 apply to all tax increment districts, 264.33 whenever certified, insofar as the underlying law applies to 264.34 them, and any uses of tax increment expended prior to the date 264.35 of enactment of this act which are in compliance with the 264.36 provisions of those sections are deemed valid. 265.1 Sections 12 and 13 are effective on the day the chief 265.2 clerical officer of the city of Columbia Heights complies with 265.3 Minnesota Statutes, sections 645.021, subdivision 3. 265.4 Sections 17 to 20 are effective the day following final 265.5 enactment and upon compliance by the governing body with 265.6 Minnesota Statutes, section 645.021, subdivision 3. 265.7 Section 24 is effective the day following final enactment. 265.8 [EFFECTIVE DATE.] This section is effective the day 265.9 following final enactment. 265.10 Sec. 36. Laws 2002, chapter 377, article 7, section 3, the 265.11 effective date, is amended to read: 265.12 [EFFECTIVE DATE.] This section is effective forincrements265.13payable in 2002deficits occurring in calendar year 2000 and 265.14 thereafter. 265.15 Sec. 37. Laws 2002, chapter 377, article 11, section 1, is 265.16 amended to read: 265.17 Section 1. [CITY OF MOORHEAD; TAX LEVY AUTHORIZED.] 265.18 (a) Each year the city of Moorhead may impose a tax on all 265.19 class 3a and class 3b property located in the city in an amount 265.20 which the city determines is equal to the reduction in revenues 265.21 from increment from all tax increment financing districts in the 265.22 city resulting from the class rate changes and the elimination 265.23 of the state-determined general education property levy under 265.24 Laws 2001, First Special Session chapter 5. The proceeds of 265.25 this tax and increments from the district may only be used to 265.26 pay preexisting obligations as defined in Minnesota Statutes, 265.27 section 469.1763, subdivision 6, whether general obligations or 265.28 payable wholly from tax increments. The tax must be levied and 265.29 collected in the same manner and as part of the property tax 265.30 levied by the city and is subject to the same administrative, 265.31 penalty, and enforcement provisions. A tax imposed under this 265.32 section is a special levy and is not subject to levy limitations 265.33 under Minnesota Statutes, section 275.71. 265.34 (b) This section expires December 31,20052010. 265.35 [EFFECTIVE DATE.] This section is effective upon approval 265.36 by and compliance with Minnesota Statutes, section 645.021, 266.1 subdivision 3, by the governing body of the city of Moorhead. 266.2 Sec. 38. [CITY OF DULUTH; TAX INCREMENT FINANCING 266.3 DISTRICT.] 266.4 Subdivision 1. [AUTHORIZATION.] Upon approval of the 266.5 governing body of the city of Duluth, the Duluth economic 266.6 development authority may create an economic development tax 266.7 increment financing district for aircraft related facilities. 266.8 The authority may establish a district only after entering a 266.9 development agreement, which provides for construction of an 266.10 aircraft maintenance facility with a minimum square footage of 266.11 150,000 and requires employment of a minimum of 200 individuals 266.12 with average annual compensation in excess of $30,000. Except 266.13 as otherwise provided in this section, the provisions of 266.14 Minnesota Statutes, sections 469.174 to 469.179 apply to the 266.15 district. 266.16 Subd. 2. [SPECIAL RULES.] (a) Notwithstanding the 266.17 provisions of Minnesota Statutes, section 469.176, subdivision 266.18 1b, paragraph (a), clause (3), no tax increment shall in any 266.19 event be paid to the authority after 25 years after receipt by 266.20 the authority of the first tax increment for the district 266.21 authorized by this section. 266.22 (b) The development in the district authorized by this 266.23 section shall be deemed to be a purpose authorized under 266.24 Minnesota Statutes, section 469.176, subdivision 4c, paragraph 266.25 (a). 266.26 (c) For purposes of Minnesota Statutes, section 469.177, 266.27 subdivision 12, the applicable maximum duration limit of the 266.28 district authorized by this section is as set forth in paragraph 266.29 (a). 266.30 [EFFECTIVE DATE.] This section is effective upon compliance 266.31 with the requirements of Minnesota Statutes, sections 469.1782 266.32 and 645.021. 266.33 Sec. 39. [HOPKINS TAX INCREMENT FINANCING DISTRICT.] 266.34 Subdivision 1. [DISTRICT EXTENSION.] (a) The governing 266.35 body of the city of Hopkins may elect to extend the duration of 266.36 its redevelopment tax increment financing district 2-11 by up to 267.1 four additional years. 267.2 (b) Notwithstanding any law to the contrary, effective upon 267.3 approval of this subdivision, no increments may be spent on 267.4 activities located outside of the area of the district, other 267.5 than to pay administrative expenses. 267.6 Subd. 2. [FIVE-YEAR RULE.] The requirements of Minnesota 267.7 Statutes, section 469.1763, subdivision 3, that activities must 267.8 be undertaken within a five-year period from the date of 267.9 certification of tax increment financing district must be 267.10 considered to be met for the city of Hopkins redevelopment tax 267.11 increment district 2-11, if the activities are undertaken within 267.12 nine years from the date of certification of the district. 267.13 [EFFECTIVE DATE.] Subdivision 1 is effective upon 267.14 compliance with the provisions of Minnesota Statutes, sections 267.15 469.1782, subdivision 2, and 645.021. Subdivision 2 is 267.16 effective upon compliance by the governing body of the city of 267.17 Hopkins with the provisions of Minnesota Statutes, section 267.18 645.021. 267.19 ARTICLE 10 267.20 MINERALS 267.21 Section 1. Minnesota Statutes 2002, section 272.02, is 267.22 amended by adding a subdivision to read: 267.23 Subd. 56. [PROPERTY USED IN THE BUSINESS OF MINING SUBJECT 267.24 TO THE NET PROCEEDS TAX.] The following property used in the 267.25 business of mining subject to the net proceeds tax under section 267.26 298.015 is exempt: 267.27 (1) deposits of ores, metals, and minerals and the lands in 267.28 which they are contained; 267.29 (2) all real and personal property used in mining, 267.30 producing, or refining ores, minerals, or metals, including 267.31 lands occupied by or used in connection with the mining, 267.32 quarrying, production, or refining facilities; and 267.33 (3) concentrate or direct reduced ore. 267.34 This exemption applies for each year that a person subject to 267.35 tax under section 298.015 uses the property for mining, 267.36 quarrying, producing, or refining ores, metals, or minerals. 268.1 [EFFECTIVE DATE.] This section is effective for taxes 268.2 payable in 2004 and thereafter. 268.3 Sec. 2. Minnesota Statutes 2002, section 290.05, 268.4 subdivision 1, is amended to read: 268.5 Subdivision 1. [EXEMPT ENTITIES.] The following 268.6 corporations, individuals, estates, trusts, and organizations 268.7 shall be exempted from taxation under this chapter, provided 268.8 that every such person or corporation claiming exemption under 268.9 this chapter, in whole or in part, must establish to the 268.10 satisfaction of the commissioner the taxable status of any 268.11 income or activity: 268.12 (a) corporations, individuals, estates, and trusts engaged 268.13 in the business of mining or producing iron ore and mining, 268.14 producing, or refining other ores, metals, and minerals, the 268.15 miningor, production, or refining of which is subject to the 268.16 occupation tax imposed by section 298.01; but if any such 268.17 corporation, individual, estate, or trust engages in any other 268.18 business or activity or has income from any property not used in 268.19 such business it shall be subject to this tax computed on the 268.20 net income from such property or such other business or 268.21 activity. Royalty shall not be considered as income from the 268.22 business of mining or producing iron ore within the meaning of 268.23 this section; 268.24 (b) the United States of America, the state of Minnesota or 268.25 any political subdivision of either agencies or 268.26 instrumentalities, whether engaged in the discharge of 268.27 governmental or proprietary functions; and 268.28 (c) any insurance company. 268.29 [EFFECTIVE DATE.] This section is effective for taxable 268.30 years beginning after December 31, 2002. 268.31 Sec. 3. Minnesota Statutes 2002, section 290.17, 268.32 subdivision 4, is amended to read: 268.33 Subd. 4. [UNITARY BUSINESS PRINCIPLE.] (a) If a trade or 268.34 business conducted wholly within this state or partly within and 268.35 partly without this state is part of a unitary business, the 268.36 entire income of the unitary business is subject to 269.1 apportionment pursuant to section 290.191. Notwithstanding 269.2 subdivision 2, paragraph (c), none of the income of a unitary 269.3 business is considered to be derived from any particular source 269.4 and none may be allocated to a particular place except as 269.5 provided by the applicable apportionment formula. The 269.6 provisions of this subdivision do not apply to business income 269.7 subject to subdivision 5, income of an insurance company,or269.8 income of an investment company determined under section 290.36, 269.9 or income of a mine or mineral processing facility subject to 269.10 tax under section 298.01. 269.11 (b) The term "unitary business" means business activities 269.12 or operations which result in a flow of value between them. The 269.13 term may be applied within a single legal entity or between 269.14 multiple entities and without regard to whether each entity is a 269.15 sole proprietorship, a corporation, a partnership or a trust. 269.16 (c) Unity is presumed whenever there is unity of ownership, 269.17 operation, and use, evidenced by centralized management or 269.18 executive force, centralized purchasing, advertising, 269.19 accounting, or other controlled interaction, but the absence of 269.20 these centralized activities will not necessarily evidence a 269.21 nonunitary business. Unity is also presumed when business 269.22 activities or operations are of mutual benefit, dependent upon 269.23 or contributory to one another, either individually or as a 269.24 group. 269.25 (d) Where a business operation conducted in Minnesota is 269.26 owned by a business entity that carries on business activity 269.27 outside the state different in kind from that conducted within 269.28 this state, and the other business is conducted entirely outside 269.29 the state, it is presumed that the two business operations are 269.30 unitary in nature, interrelated, connected, and interdependent 269.31 unless it can be shown to the contrary. 269.32 (e) Unity of ownership is not deemed to exist when a 269.33 corporation is involved unless that corporation is a member of a 269.34 group of two or more business entities and more than 50 percent 269.35 of the voting stock of each member of the group is directly or 269.36 indirectly owned by a common owner or by common owners, either 270.1 corporate or noncorporate, or by one or more of the member 270.2 corporations of the group. For this purpose, the term "voting 270.3 stock" shall include membership interests of mutual insurance 270.4 holding companies formed under section 60A.077. 270.5 (f) The net income and apportionment factors under section 270.6 290.191 or 290.20 of foreign corporations and other foreign 270.7 entities which are part of a unitary business shall not be 270.8 included in the net income or the apportionment factors of the 270.9 unitary business. A foreign corporation or other foreign entity 270.10 which is required to file a return under this chapter shall file 270.11 on a separate return basis. The net income and apportionment 270.12 factors under section 290.191 or 290.20 of foreign operating 270.13 corporations shall not be included in the net income or the 270.14 apportionment factors of the unitary business except as provided 270.15 in paragraph (g). 270.16 (g) The adjusted net income of a foreign operating 270.17 corporation shall be deemed to be paid as a dividend on the last 270.18 day of its taxable year to each shareholder thereof, in 270.19 proportion to each shareholder's ownership, with which such 270.20 corporation is engaged in a unitary business. Such deemed 270.21 dividend shall be treated as a dividend under section 290.21, 270.22 subdivision 4. 270.23 Dividends actually paid by a foreign operating corporation 270.24 to a corporate shareholder which is a member of the same unitary 270.25 business as the foreign operating corporation shall be 270.26 eliminated from the net income of the unitary business in 270.27 preparing a combined report for the unitary business. The 270.28 adjusted net income of a foreign operating corporation shall be 270.29 its net income adjusted as follows: 270.30 (1) any taxes paid or accrued to a foreign country, the 270.31 commonwealth of Puerto Rico, or a United States possession or 270.32 political subdivision of any of the foregoing shall be a 270.33 deduction; and 270.34 (2) the subtraction from federal taxable income for 270.35 payments received from foreign corporations or foreign operating 270.36 corporations under section 290.01, subdivision 19d, clause (10), 271.1 shall not be allowed. 271.2 If a foreign operating corporation incurs a net loss, 271.3 neither income nor deduction from that corporation shall be 271.4 included in determining the net income of the unitary business. 271.5 (h) For purposes of determining the net income of a unitary 271.6 business and the factors to be used in the apportionment of net 271.7 income pursuant to section 290.191 or 290.20, there must be 271.8 included only the income and apportionment factors of domestic 271.9 corporations or other domestic entities other than foreign 271.10 operating corporations that are determined to be part of the 271.11 unitary business pursuant to this subdivision, notwithstanding 271.12 that foreign corporations or other foreign entities might be 271.13 included in the unitary business. 271.14 (i) Deductions for expenses, interest, or taxes otherwise 271.15 allowable under this chapter that are connected with or 271.16 allocable against dividends, deemed dividends described in 271.17 paragraph (g), or royalties, fees, or other like income 271.18 described in section 290.01, subdivision 19d, clause (10), shall 271.19 not be disallowed. 271.20 (j) Each corporation or other entity, except a sole 271.21 proprietorship, that is part of a unitary business must file 271.22 combined reports as the commissioner determines. On the 271.23 reports, all intercompany transactions between entities included 271.24 pursuant to paragraph (h) must be eliminated and the entire net 271.25 income of the unitary business determined in accordance with 271.26 this subdivision is apportioned among the entities by using each 271.27 entity's Minnesota factors for apportionment purposes in the 271.28 numerators of the apportionment formula and the total factors 271.29 for apportionment purposes of all entities included pursuant to 271.30 paragraph (h) in the denominators of the apportionment formula. 271.31 (k) If a corporation has been divested from a unitary 271.32 business and is included in a combined report for a fractional 271.33 part of the common accounting period of the combined report: 271.34 (1) its income includable in the combined report is its 271.35 income incurred for that part of the year determined by 271.36 proration or separate accounting; and 272.1 (2) its sales, property, and payroll included in the 272.2 apportionment formula must be prorated or accounted for 272.3 separately. 272.4 [EFFECTIVE DATE.] This section is effective for taxable 272.5 years beginning after December 31, 2002. 272.6 Sec. 4. Minnesota Statutes 2002, section 290.191, 272.7 subdivision 1, is amended to read: 272.8 Subdivision 1. [GENERAL RULE.] (a) Except as otherwise 272.9 provided in section 290.17, subdivision 5, the net income from a 272.10 trade or business carried on partly within and partly without 272.11 this state must be apportioned to this state as provided in this 272.12 section. To the extent that an entity is exempt from taxation 272.13 under this chapter as provided in section 290.05, the 272.14 apportionment factors associated with the entity's exempt 272.15 activities are excluded from the apportionment formula under 272.16 this section. 272.17 (b) For purposes of this section, "state" means a state of 272.18 the United States, the District of Columbia, the commonwealth of 272.19 Puerto Rico, or any territory or possession of the United States 272.20 or any foreign country. 272.21 [EFFECTIVE DATE.] This section is effective for taxable 272.22 years beginning after December 31, 2002. 272.23 Sec. 5. Minnesota Statutes 2002, section 297A.68, 272.24 subdivision 4, is amended to read: 272.25 Subd. 4. [TACONITE, OTHER ORES, METALS, OR MINERALS; 272.26 PRODUCTION MATERIALS.] Mill liners, grinding rods, and grinding 272.27 balls that are substantially consumed in the production of 272.28 taconite or other ores, metals, or minerals are exempt when sold 272.29 to or stored, used, or consumed by persons taxed under the 272.30 in-lieu provisions of chapter 298. 272.31 [EFFECTIVE DATE.] This section is effective for sales and 272.32 purchases made after June 30, 2005. 272.33 Sec. 6. Minnesota Statutes 2002, section 297A.71, is 272.34 amended by adding a subdivision to read: 272.35 Subd. 32. [CONSTRUCTION MATERIALS AND EQUIPMENT; 272.36 NONFERROUS METALS AND MINERALS FACILITY.] Materials and supplies 273.1 used or consumed in, and equipment incorporated into, the 273.2 improvement or construction of an existing taconite ore 273.3 processing facility to extract and refine nonferrous ores, 273.4 metals, and minerals, including the construction, improvement, 273.5 or expansion of a hydrometallurgical processing facility, are 273.6 exempt. This exemption includes any delivery or installation 273.7 charges relating to materials, supplies, and equipment exempt 273.8 under this section. 273.9 [EFFECTIVE DATE.] This section is effective for sales and 273.10 purchases made after June 30, 2005, and before July 1, 2012. 273.11 Sec. 7. Minnesota Statutes 2002, section 298.001, is 273.12 amended by adding a subdivision to read: 273.13 Subd. 9. [REFINING.] "Refining" means and is limited to 273.14 refining: 273.15 (1) of ores, metals, or mineral products, the mining, 273.16 extraction, or quarrying of which were subject to tax under 273.17 section 298.015; and 273.18 (2) carried on by the entity, or an affiliated entity, that 273.19 mined or extracted the metal or mineral products. 273.20 [EFFECTIVE DATE.] This section is effective for taxable 273.21 years beginning after December 31, 2002. 273.22 Sec. 8. Minnesota Statutes 2002, section 298.01, 273.23 subdivision 3, is amended to read: 273.24 Subd. 3. [OCCUPATION TAX; OTHER ORES.] Every person 273.25 engaged in the business of mining, refining, or producing ores, 273.26 metals, or minerals in this state, except iron ore or taconite 273.27 concentrates, shall pay an occupation tax to the state of 273.28 Minnesota as provided in this subdivision. For purposes of this 273.29 subdivision, mining includes the application of 273.30 hydrometallurgical processes. The tax is determined in the same 273.31 manner as the tax imposed by section 290.02, except that 273.32 sections 290.05, subdivision 1, clause (a), 290.0921, and 273.33 290.17, subdivision 4, do not apply. Except as provided in 273.34 section 290.05, subdivision 1, paragraph (a), the tax is in 273.35 addition to all other taxes. 273.36 [EFFECTIVE DATE.] This section is effective for taxable 274.1 years beginning after December 31, 2002. 274.2 Sec. 9. Minnesota Statutes 2002, section 298.01, 274.3 subdivision 3a, is amended to read: 274.4 Subd. 3a. [GROSS INCOME.] (a) For purposes of determining 274.5 a person's taxable income under subdivision 3, gross income is 274.6 determined by the amount of gross proceeds from mining in this 274.7 state under section 298.016 and includes any gain or loss 274.8 recognized from the sale or disposition of assets used in the 274.9 business in this state. 274.10 (b) In applying section 290.191, subdivision 5, transfers 274.11 of ores, metals, or minerals that are subject to this chapter 274.12 are deemed to be sales outside this state if the ores, metals, 274.13 or minerals are transported out of this state after the ores 274.14 have been converted to a commercially marketable quality. 274.15 [EFFECTIVE DATE.] This section is effective for taxable 274.16 years beginning after December 31, 2002. 274.17 Sec. 10. Minnesota Statutes 2002, section 298.01, 274.18 subdivision 4, is amended to read: 274.19 Subd. 4. [OCCUPATION TAX; IRON ORE; TACONITE 274.20 CONCENTRATES.] A person engaged in the business of mining or 274.21 producing of iron ore, taconite concentrates or direct reduced 274.22 ore in this state shall pay an occupation tax to the state of 274.23 Minnesota. The tax is determined in the same manner as the tax 274.24 imposed by section 290.02, except that sections 290.05, 274.25 subdivision 1, clause (a), 290.0921, and 290.17, subdivision 4, 274.26 do not apply. The tax is in addition to all other taxes. 274.27 [EFFECTIVE DATE.] This section is effective for taxable 274.28 years beginning after December 31, 2002. 274.29 Sec. 11. Minnesota Statutes 2002, section 298.015, 274.30 subdivision 1, is amended to read: 274.31 Subdivision 1. [TAX IMPOSED.] A person engaged in the 274.32 business of mining shall pay to the state of Minnesota for 274.33 distribution as provided in section 298.018 a net proceeds tax 274.34 equal to two percent of the net proceeds from mining in 274.35 Minnesota. The tax applies to allmineral and energy resources274.36 ores, metals, and minerals minedor, extracted, produced, or 275.1 refined within the state of Minnesota except for sand, silica 275.2 sand, gravel, building stone, crushed rock, limestone, granite, 275.3 dimension granite, dimension stone, horticultural peat, clay, 275.4 soil, iron ore, and taconite concentrates. Except as provided 275.5 in section 272.02, subdivision 56, the tax is in addition to all 275.6 other taxes provided for by law. 275.7 [EFFECTIVE DATE.] This section is effective for taxes 275.8 payable in 2004 and thereafter. 275.9 Sec. 12. Minnesota Statutes 2002, section 298.015, 275.10 subdivision 2, is amended to read: 275.11 Subd. 2. [NET PROCEEDS.] For purposes of this section, the 275.12 term "net proceeds" means the gross proceeds from mining, as 275.13 defined in section 298.016, less the same deductions allowedin275.14section 298.017for purposes of determining taxable income under 275.15 section 298.01, subdivision 3b. No other credits or deductions 275.16 shall apply to this taxexcept for those provided in section275.17298.017. 275.18 [EFFECTIVE DATE.] This section is effective for taxes 275.19 payable in 2004 and thereafter. 275.20 Sec. 13. Minnesota Statutes 2002, section 298.016, 275.21 subdivision 4, is amended to read: 275.22 Subd. 4. [DEFINITIONS.] For the purposes of sections 275.23 298.015 and 298.017, the terms defined in this subdivision have 275.24 the meaning given them unless the context clearly indicates 275.25 otherwise. 275.26 (a) "Ores, metal, or mineral products" means all those 275.27mineral and energy resourcesores, metals, and minerals subject 275.28 to the tax provided in section 298.015. 275.29 (b) "Exploration" means activities designed and engaged in 275.30 to ascertain the existence, location, extent, or quality of any 275.31 deposit of metal or mineral products prior to the development of 275.32 a mining site. 275.33 (c) "Development" means activities designed and engaged in 275.34 to prepare or develop a potential mining site for mining after 275.35 the existence of metal or mineral products in commercially 275.36 marketable quantities has been disclosed including, but not 276.1 limited to, the clearing of forestation, the building of roads, 276.2 removal of overburden, or the sinking of shafts. 276.3 (d) "Research" means activities designed and engaged in to 276.4 create new or improved methods of mining, producing, processing, 276.5 beneficiating, smelting, or refining metal or mineral products. 276.6 [EFFECTIVE DATE.] This section is effective for taxable 276.7 years beginning after December 31, 2004. 276.8 Sec. 14. Minnesota Statutes 2002, section 298.018, is 276.9 amended to read: 276.10 298.018 [DISTRIBUTION OF PROCEEDS.] 276.11 Subdivision 1. [WITHIN TACONITE TAX RELIEF AREAGENERAL 276.12 ALLOCATION.] (a) The commissioner of revenue shall deposit the 276.13 proceeds of the tax paid under sections 298.015 to 298.017on276.14minerals and energy resources mined or extracted within the276.15taconite tax relief area defined in section 273.134, paragraph276.16(b), shall be allocated as follows:276.17(1) five percent to the city or town within which the276.18minerals or energy resources are mined or extracted;276.19(2) ten percent to the taconite municipal aid account to be276.20distributed as provided in section 298.282;276.21(3) ten percent to the school district within which the276.22minerals or energy resources are mined or extracted;276.23(4) 20 percent to a group of school districts comprised of276.24those school districts wherein the mineral or energy resource276.25was mined or extracted or in which there is a qualifying276.26municipality as defined by section 273.134, paragraph (b), in276.27direct proportion to school district indexes as follows: for276.28each school district, its pupil units determined under section276.29126C.05 for the prior school year shall be multiplied by the276.30ratio of the average adjusted net tax capacity per pupil unit276.31for school districts receiving aid under this clause as276.32calculated pursuant to chapters 122A, 126C, and 127A for the276.33school year ending prior to distribution to the adjusted net tax276.34capacity per pupil unit of the district. Each district shall276.35receive that portion of the distribution which its index bears276.36to the sum of the indices for all school districts that receive277.1the distributions;277.2(5) 20 percent to the county within which the minerals or277.3energy resources are mined or extracted;277.4(6) 20 percent to St. Louis county acting as the counties'277.5fiscal agent to be distributed as provided in sections 273.134277.6to 273.136;277.7(7) five percent to the iron range resources and277.8rehabilitation board for the purposes of section 298.22;277.9(8) five percent to the northeast Minnesota economic277.10protection trust fund; and277.11(9) five percent to the taconite environmental protection277.12fundin the general fund. The proceeds of the tax must be 277.13 allocated between the state general fund and local taxing 277.14 districts as provided in this section. 277.15 (b) The proceeds of the tax shall be distributed on July 15 277.16 each year. 277.17 Subd. 2. [OUTSIDE TACONITE TAX RELIEF AREAGENERAL FUND 277.18 SHARE.] Theproceeds of the tax paid under sections 298.015 to277.19298.017 on minerals and energy resources mined or extracted277.20outside of the taconite tax relief area defined in section277.21273.134, paragraph (b), shall be deposited in thegeneral fund 277.22 share equals the amount of the proceeds for the taxable year 277.23 multiplied by a fraction, the numerator of which is the rate 277.24 under the state general tax under section 275.025 and the 277.25 denominator of which is the average total property tax rate 277.26 applicable to property assessed under section 273.13, 277.27 subdivision 24, for the unique areas in which the ores, metals, 277.28 minerals, and processing facilities of the taxpayer are located. 277.29 Subd. 3. [FISCAL DISPARITIES SHARE.] If the ores, metals, 277.30 minerals, or processing facility are located in the taconite tax 277.31 relief area, as defined in section 276A.01, subdivision 2, or in 277.32 the area, as defined in section 473F.02, subdivision 2, the 277.33 commissioner of revenue shall pay 40 percent of the remainder of 277.34 the proceeds after deducting the general fund share as a fiscal 277.35 disparities share to the administrative auditor for the area 277.36 under section 276A.02 or 473F.03. The administrative auditor 278.1 shall apportion the fiscal disparities share among the 278.2 governmental units in proportion to each unit's distribution 278.3 levy determined under section 276A.06, subdivision 3, paragraph 278.4 (a), or 473F.08, subdivision 3, paragraph (a). 278.5 Subd. 4. [LOCAL TAXING DISTRICT SHARES.] (a) The 278.6 commissioner shall pay the proceeds, less the general fund share 278.7 under subdivision 2 and less any fiscal disparities share under 278.8 subdivision 3, to the county auditor of the county in which the 278.9 ores, metals, minerals, or processing facility are located. If 278.10 the ores, metals, minerals, or processing facilities of the 278.11 taxpayer are located in two or more counties, the commissioner 278.12 shall divide the proceeds between the counties based on their 278.13 relative shares of the estimated market value of the ores, 278.14 metals, minerals, and minerals processing facility, as 278.15 determined under subdivision 5. 278.16 (b) The county auditor shall allocate the proceeds of the 278.17 tax among the taxing districts in which the ores, metals, 278.18 minerals, and minerals processing facilities are located in the 278.19 same proportions that property taxes are distributed. If the 278.20 ores, metals, minerals, or processing facilities are located 278.21 within two or more unique taxing areas, the auditor shall use 278.22 the estimated market values for the ores, metals, minerals, and 278.23 property, determined under subdivision 5, to allocate the 278.24 proceeds among the unique taxing areas. 278.25 Subd. 5. [MARKET VALUE ALLOCATION.] If the metals, 278.26 minerals, and processing facilities of a taxpayer are located in 278.27 two or more unique taxing areas, the commissioner shall 278.28 determine the estimated market value of the taxpayer's ores, 278.29 metals, minerals, and processing facilities that are in each 278.30 taxing area. In making this determination, the commissioner may 278.31 use any data the commissioner determines is reliable, including 278.32 information provided by the taxpayer. 278.33 Subd. 6. [TAX CAPACITY FOR STATE AID.] For each city, 278.34 county, and school district that receives distributions under 278.35 this section, the commissioner shall annually determine an 278.36 adjusted net tax capacity equivalent amount, based on the 279.1 distributions received under subdivisions 3 and 4 and its 279.2 property tax rate. These amounts must be used in the 279.3 distribution of state aid under a formula using adjusted net tax 279.4 capacity as a variable or factor in the distribution formula. 279.5 Subd. 7. [UNIQUE TAXING AREA.] For the purposes of this 279.6 section, "unique taxing area" means the geographic area subject 279.7 to the same set of local tax rates. 279.8 [EFFECTIVE DATE.] This section is effective for 279.9 distributions required to be made after July 15, 2003. 279.10 Sec. 15. Minnesota Statutes 2002, section 298.24, 279.11 subdivision 1, is amended to read: 279.12 Subdivision 1. (a)For concentrate produced in 2001, 2002,279.13and 2003,There is imposed upon taconite and iron sulphides, and 279.14 upon the mining and quarrying thereof, and upon the production 279.15 of iron ore concentrate therefrom, and upon the concentrate so 279.16 produced, a tax of$2.103$1.85 per gross ton of merchantable 279.17 iron ore concentrate producedtherefromfor concentrate produced 279.18 in 2003, and $1.75 per gross ton for concentrate produced in 279.19 2004 and thereafter. 279.20 (b)For concentrates produced in 2004 and subsequent years,279.21the tax rate shall be equal to the preceding year's tax rate279.22plus an amount equal to the preceding year's tax rate multiplied279.23by the percentage increase in the implicit price deflator from279.24the fourth quarter of the second preceding year to the fourth279.25quarter of the preceding year. "Implicit price deflator" means279.26the implicit price deflator for the gross domestic product279.27prepared by the bureau of economic analysis of the United States279.28Department of Commerce.279.29(c)On concentrates produced in 1997 and thereafter, an 279.30 additional tax is imposed equal to three cents per gross ton of 279.31 merchantable iron ore concentrate for each one percent that the 279.32 iron content of the product exceeds 72 percent, when dried at 279.33 212 degrees Fahrenheit. 279.34(d)(c) The tax shall be imposed on the average of the 279.35 production for the current year and the previous two years. The 279.36 rate of the tax imposed will be the current year's tax rate. 280.1 This clause shall not apply in the case of the closing of a 280.2 taconite facility if the property taxes on the facility would be 280.3 higher if this clause and section 298.25 were not applicable. 280.4(e)(d) If the tax or any part of the tax imposed by this 280.5 subdivision is held to be unconstitutional, a tax 280.6 of$2.103$1.85 per gross ton of merchantable iron ore 280.7 concentrate produced for calendar year 2003, and $1.75 for 280.8 calendar year 2004 and thereafter shall be imposed. 280.9(f)(e) Consistent with the intent of this subdivision to 280.10 impose a tax based upon the weight of merchantable iron ore 280.11 concentrate, the commissioner of revenue may indirectly 280.12 determine the weight of merchantable iron ore concentrate 280.13 included in fluxed pellets by subtracting the weight of the 280.14 limestone, dolomite, or olivine derivatives or other basic flux 280.15 additives included in the pellets from the weight of the 280.16 pellets. For purposes of this paragraph, "fluxed pellets" are 280.17 pellets produced in a process in which limestone, dolomite, 280.18 olivine, or other basic flux additives are combined with 280.19 merchantable iron ore concentrate. No subtraction from the 280.20 weight of the pellets shall be allowed for binders, mineral and 280.21 chemical additives other than basic flux additives, or moisture. 280.22(g)(f) (1) Notwithstanding any other provision of this 280.23 subdivision, for the first two years of a plant's production of 280.24 direct reduced ore, no tax is imposed under this section. As 280.25 used in this paragraph, "direct reduced ore" is ore that results 280.26 in a product that has an iron content of at least 75 percent. 280.27 For the third year of a plant's production of direct reduced 280.28 ore, the rate to be applied to direct reduced ore is 25 percent 280.29 of the rate otherwise determined under this subdivision. For 280.30 the fourth such production year, the rate is 50 percent of the 280.31 rate otherwise determined under this subdivision; for the fifth 280.32 such production year, the rate is 75 percent of the rate 280.33 otherwise determined under this subdivision; and for all 280.34 subsequent production years, the full rate is imposed. 280.35 (2) Subject to clause (1), production of direct reduced ore 280.36 in this state is subject to the tax imposed by this section, but 281.1 if that production is not produced by a producer of taconite or 281.2 iron sulfides, the production of taconite or iron sulfides 281.3 consumed in the production of direct reduced iron in this state 281.4 is not subject to the tax imposed by this section on taconite or 281.5 iron sulfides. 281.6 [EFFECTIVE DATE.] This section is effective for 281.7 concentrates produced after January 1, 2003. 281.8 Sec. 16. Minnesota Statutes 2002, section 298.27, is 281.9 amended to read: 281.10 298.27 [COLLECTION AND PAYMENT OF TAX.] 281.11 The taxes provided by section 298.24 shall be paid directly 281.12 to each eligible county and the iron range resources and 281.13 rehabilitation board. The commissioner of revenue shall notify 281.14 each producer of the amount to be paid each recipient prior to 281.15 February 15. Every person subject to taxes imposed by section 281.16 298.24 shall file a correct report covering the preceding year. 281.17 The report must contain the information required by the 281.18 commissioner. The report shall be filed by each producer on or 281.19 before February 1. A remittance equal to 50 percent of the 281.20 total tax required to be paid hereunderin 2003 and 100 percent281.21of the total tax required to be paid hereunder in 2004 and281.22thereaftershall be paid on or before February 24. A remittance 281.23 equal to the remaining total tax required to be paid hereunder 281.24in 2003shall be paid on or before August 24. On or before 281.25 February 25,andin 2003,August 25, the county auditor shall 281.26 make distribution of the payments previously received by the 281.27 county in the manner provided by section 298.28. Reports shall 281.28 be made and hearings held upon the determination of the tax in 281.29 accordance with procedures established by the commissioner of 281.30 revenue. The commissioner of revenue shall have authority to 281.31 make reasonable rules as to the form and manner of filing 281.32 reports necessary for the determination of the tax hereunder, 281.33 and by such rules may require the production of such information 281.34 as may be reasonably necessary or convenient for the 281.35 determination and apportionment of the tax. All the provisions 281.36 of the occupation tax law with reference to the assessment and 282.1 determination of the occupation tax, including all provisions 282.2 for appeals from or review of the orders of the commissioner of 282.3 revenue relative thereto, but not including provisions for 282.4 refunds, are applicable to the taxes imposed by section 298.24 282.5 except in so far as inconsistent herewith. If any person 282.6 subject to section 298.24 shall fail to make the report provided 282.7 for in this section at the time and in the manner herein 282.8 provided, the commissioner of revenue shall in such case, upon 282.9 information possessed or obtained, ascertain the kind and amount 282.10 of ore mined or produced and thereon find and determine the 282.11 amount of the tax due from such person. There shall be added to 282.12 the amount of tax due a penalty for failure to report on or 282.13 before February 1, which penalty shall equal ten percent of the 282.14 tax imposed and be treated as a part thereof. 282.15 If any person responsible for making a tax payment at the 282.16 time and in the manner herein provided fails to do so, there 282.17 shall be imposed a penalty equal to ten percent of the amount so 282.18 due, which penalty shall be treated as part of the tax due. 282.19 In the case of any underpayment of the tax payment required 282.20 herein, there may be added and be treated as part of the tax due 282.21 a penalty equal to ten percent of the amount so underpaid. 282.22 A person having a liability of $120,000 or more during a 282.23 calendar year must remit all liabilities by means of a funds 282.24 transfer as defined in section 336.4A-104, paragraph (a). The 282.25 funds transfer payment date, as defined in section 336.4A-401, 282.26 must be on or before the date the tax is due. If the date the 282.27 tax is due is not a funds transfer business day, as defined in 282.28 section 336.4A-105, paragraph (a), clause (4), the payment date 282.29 must be on or before the funds transfer business day next 282.30 following the date the tax is due. 282.31 [EFFECTIVE DATE.] This section is effective for taxes 282.32 payable in 2004 and thereafter. 282.33 Sec. 17. Minnesota Statutes 2002, section 298.28, 282.34 subdivision 9a, is amended to read: 282.35 Subd. 9a. [TACONITE ECONOMIC DEVELOPMENT FUND.] (a) 30.1 282.36 cents per ton for distributions in 2002 and thereafter must be 283.1 paid to the taconite economic development fund.No distribution283.2shall be made under this paragraph in 2004 or any subsequent283.3year in which total industry production falls below 30 million283.4tons.Distribution shall only be made to a taconite producer's 283.5 fund under section 298.227 if the producer timely pays its tax 283.6 under section 298.24 by the dates provided under section 298.27, 283.7 or pursuant to the due dates provided by an administrative 283.8 agreement with the commissioner. 283.9 (b) An amount equal to 50 percent of the tax under section 283.10 298.24 for concentrate sold in the form of pellet chips and 283.11 fines not exceeding 5/16 inch in size and not including crushed 283.12 pellets shall be paid to the taconite economic development 283.13 fund. The amount paid shall not exceed $700,000 annually for 283.14 all companies. If the initial amount to be paid to the fund 283.15 exceeds this amount, each company's payment shall be prorated so 283.16 the total does not exceed $700,000. 283.17 [EFFECTIVE DATE.] This section is effective for 283.18 concentrates produced after January 1, 2003. 283.19 Sec. 18. Minnesota Statutes 2002, section 298.28, 283.20 subdivision 11, is amended to read: 283.21 Subd. 11. [REMAINDER.] (a) The proceeds of the tax imposed 283.22 by section 298.24 which remain after the distributions and 283.23 payments in subdivisions 2 to 10a, as certified by the 283.24 commissioner of revenue, and paragraphs (b), (c), (d), and (e) 283.25 have been made, together with interest earned on all money 283.26 distributed under this section prior to distribution, shall be 283.27 divided between the taconite environmental protection fund 283.28 created in section 298.223 and the northeast Minnesota economic 283.29 protection trust fund created in section 298.292 as follows: 283.30 Two-thirds to the taconite environmental protection fund and 283.31 one-third to the northeast Minnesota economic protection trust 283.32 fund. The proceeds shall be placed in the respective special 283.33 accounts. 283.34 (b) There shall be distributed to each city, town, and 283.35 county the amount that it received under section 294.26 in 283.36 calendar year 1977; provided, however, that the amount 284.1 distributed in 1981 to the unorganized territory number 2 of 284.2 Lake county and the town of Beaver Bay based on the 284.3 between-terminal trackage of Erie Mining Company will be 284.4 distributed in 1982 and subsequent years to the unorganized 284.5 territory number 2 of Lake county and the towns of Beaver Bay 284.6 and Stony River based on the miles of track of Erie Mining 284.7 Company in each taxing district. 284.8 (c)There shall be distributed to the iron range resources284.9and rehabilitation board the amounts it received in 1977 under284.10section 298.22. The amount distributed under this paragraph284.11shall be expended within or for the benefit of the tax relief284.12area defined in section 273.134.284.13(d)There shall be distributed to each school district 62 284.14 percent of the amount that it received under section 294.26 in 284.15 calendar year 1977. 284.16(e)(d) In 2003 only, $100,000 must be distributed to a 284.17 township located in a taconite tax relief area as defined in 284.18 section 273.134, paragraph (a), that received $119,259 of 284.19 homestead and agricultural credit aid and $182,014 in local 284.20 government aid in 2001. 284.21 [EFFECTIVE DATE.] This section is effective for 284.22 concentrates produced after January 1, 2003. 284.23 Sec. 19. Minnesota Statutes 2002, section 298.75, 284.24 subdivision 1, is amended to read: 284.25 Subdivision 1. [DEFINITIONS.] Except as may otherwise be 284.26 provided, the following words, when used in this section, shall 284.27 have the meanings herein ascribed to them. 284.28 (1) "Aggregate material" shall mean nonmetallic natural 284.29 mineral aggregate including, but not limited to sand, silica 284.30 sand, gravel, crushed rock, limestone, granite, and borrow, but 284.31 only if the borrow is transported on a public road, street, or 284.32 highway. Aggregate material shall not include dimension stone 284.33 and dimension granite. Aggregate material must be measured or 284.34 weighed after it has been extracted from the pit, quarry, or 284.35 deposit. 284.36 (2) "Person" shall mean any individual, firm, partnership, 285.1 corporation, organization, trustee, association, or other entity. 285.2 (3) "Operator" shall mean any person engaged in the 285.3 business of removing aggregate material from the surface or 285.4 subsurface of the soil, for the purpose of sale, either directly 285.5 or indirectly, through the use of the aggregate material in a 285.6 marketable product or service. 285.7 (4) "Extraction site" shall mean a pit, quarry, or deposit 285.8 containing aggregate material and any contiguous property to the 285.9 pit, quarry, or deposit which is used by the operator for 285.10 stockpiling the aggregate material. 285.11 (5) "Importer" shall mean any person who buys aggregate 285.12 material produced from a county not listed in paragraph (6) or 285.13 another state and causes the aggregate material to be imported 285.14 into a county in this state which imposes a tax on aggregate 285.15 material. 285.16 (6) "County" shall mean the counties of Pope, Stearns, 285.17 Benton, Sherburne, Carver, Scott, Dakota, Le Sueur, Kittson, 285.18 Marshall, Pennington, Red Lake, Polk, Norman, Mahnomen, Clay, 285.19 Becker, Carlton, St. Louis, Rock, Murray, Wilkin, Big Stone, 285.20 Sibley, Hennepin, Washington, Chisago, and Ramsey. County also 285.21 means any other county whose board has voted after a public 285.22 hearing to impose the tax under this section and has notified 285.23 the commissioner of revenue of the imposition of the tax. 285.24 (7) "Borrow" shall mean granular borrow, consisting of 285.25 durable particles of gravel and sand, crushed quarry or mine 285.26 rock, crushed gravel or stone, or any combination thereof, the 285.27 ratio of the portion passing the (#200) sieve divided by the 285.28 portion passing the (1 inch) sieve may not exceed 20 percent by 285.29 mass. 285.30 [EFFECTIVE DATE.] This section is effective for borrow 285.31 removed and transported on a public road, street, or highway on 285.32 or after July 1, 2003. 285.33 Sec. 20. [TRANSITION PROVISION.] 285.34 Each person with an alternative minimum tax credit on 285.35 December 31, 2002, pursuant to Minnesota Statutes 2002, section 285.36 298.01, may take that credit against occupation tax under the 286.1 provisions of Minnesota Statutes 2002, section 298.01, 286.2 subdivision 3d or 4e. 286.3 [EFFECTIVE DATE.] This section is effective the day 286.4 following final enactment. 286.5 Sec. 21. [REPEALER.] 286.6 (a) Minnesota Statutes 2002, section 298.01, subdivisions 286.7 3c, 3d, 4d, and 4e, are repealed effective for taxable years 286.8 beginning after December 31, 2002. 286.9 (b) Minnesota Statutes 2002, section 298.017, is repealed 286.10 effective for taxes payable in 2004 and thereafter. 286.11 (c) Minnesota Statutes 2002, sections 298.24, subdivision 286.12 3; 298.28, subdivisions 9, 9b, and 10; 298.2961; and 298.297, 286.13 are repealed effective for concentrates produced after January 286.14 1, 2003. 286.15 (d) Laws 1984, chapter 652, section 2, is repealed. This 286.16 paragraph is effective for Benton county the day after the 286.17 governing body of Benton county and its chief clerical officer 286.18 timely complete their compliance with Minnesota Statutes, 286.19 section 645.021, subdivisions 2 and 3. This paragraph is 286.20 effective for Stearns county the day after the governing body of 286.21 Stearns county and its chief clerical officer timely complete 286.22 their compliance with Minnesota Statutes, section 645.021, 286.23 subdivisions 2 and 3. 286.24 ARTICLE 11 286.25 SPECIAL TAXES 286.26 Section 1. Minnesota Statutes 2002, section 270.60, 286.27 subdivision 4, is amended to read: 286.28 Subd. 4. [PAYMENTS TO COUNTIES.] (a) The commissioner 286.29 shall pay to a county in which an Indian gaming casino is 286.30 located: 286.31 (1) ten percent of the state share of all taxes generated 286.32 from activities on reservations and collected under a tax 286.33 agreement under this section with the tribal government for the 286.34 reservation located in the county; or 286.35 (2) five percent of excise taxes collected by the state 286.36 that are determined by the department of revenue to have been 287.1 generated from activities on a reservation located in the 287.2 county, the tribal government of which does not have a tax 287.3 agreement under this section and did not have a tax agreement on 287.4 June 30, 2003. 287.5 If the tribe has casinos located in more than one county, 287.6 the payment must be divided equally among the counties in which 287.7 the casinos are located. 287.8 (b) The commissioner shall make the payments required under 287.9 this subdivision by February 28 of the year following the year 287.10 the taxes are collected. 287.11 (c) An amount sufficient to make the payments authorized by 287.12 this subdivision is annually appropriated from the general fund 287.13 to the commissioner. 287.14 [EFFECTIVE DATE.] This section is effective for taxes 287.15 collected after June 30, 2003. 287.16 Sec. 2. Minnesota Statutes 2002, section 287.12, is 287.17 amended to read: 287.18 287.12 [TAXES, HOW APPORTIONED.] 287.19 (a) All taxes paid to the county treasurer under the 287.20 provisions of sections 287.01 to 287.12 must be apportioned, 97 287.21 percent to the general fund of the state, and three percent to 287.22 the county revenue fund. 287.23 (b) On or before the 20th day of each month the county 287.24 treasurer shall determine and pay to the commissioner of revenue 287.25 for deposit in the state treasury and credit to the general fund 287.26 the state's portion of the receipts from the mortgage registry 287.27 tax during the preceding month subject to the electronic payment 287.28 requirements of section 270.771. The county treasurer shall 287.29 provide any related reports requested by the commissioner of 287.30 revenue. 287.31 (c) Counties must remit the state's portion of the June 287.32 receipts collected through June 25 and the estimated state's 287.33 portion of the receipts to be collected during the remainder of 287.34 the month to the commissioner of revenue two business days 287.35 before June 30 of each year. The remaining amount of the June 287.36 receipts is due on August 20. 288.1 [EFFECTIVE DATE.] This section is effective January 1, 2004. 288.2 Sec. 3. Minnesota Statutes 2002, section 287.29, 288.3 subdivision 1, is amended to read: 288.4 Subdivision 1. [APPOINTMENT AND PAYMENT OF TAX PROCEEDS.] 288.5 (a) The proceeds of the taxes levied and collected under 288.6 sections 287.21 to 287.39 must be apportioned, 97 percent to the 288.7 general fund of the state, and three percent to the county 288.8 revenue fund. 288.9 (b) On or before the 20th day of each month, the county 288.10 treasurer shall determine and pay to the commissioner of revenue 288.11 for deposit in the state treasury and credit to the general fund 288.12 the state's portion of the receipts for deed tax from the 288.13 preceding month subject to the electronic transfer requirements 288.14 of section 270.771. The county treasurer shall provide any 288.15 related reports requested by the commissioner of revenue. 288.16 (c) Counties must remit the state's portion of the June 288.17 receipts collected through June 25 and the estimated state's 288.18 portion of the receipts to be collected during the remainder of 288.19 the month to the commissioner of revenue two business days 288.20 before June 30 of each year. The remaining amount of the June 288.21 receipts is due on August 20. 288.22 [EFFECTIVE DATE.] This section is effective January 1, 2004. 288.23 Sec. 4. Minnesota Statutes 2002, section 287.31, is 288.24 amended by adding a subdivision to read: 288.25 Subd. 3. [UNDERPAYMENTS OF ACCELERATED PAYMENT OF JUNE TAX 288.26 RECEIPTS.] If a county fails to timely remit the state portion 288.27 of the actual June tax receipts at the time required by section 288.28 287.12 or 287.29, the county shall pay a penalty equal to ten 288.29 percent of the state portion of actual June receipts less the 288.30 amount remitted to the commissioner of revenue in June. The 288.31 penalty must not be imposed, however, if the amount remitted in 288.32 June equals either: 288.33 (1) 90 percent of the state's portion of the preceding 288.34 May's receipts; or 288.35 (2) 90 percent of the average monthly amount of the state's 288.36 portion for the previous calendar year. 289.1 [EFFECTIVE DATE.] This section is effective January 1, 2004. 289.2 Sec. 5. Minnesota Statutes 2002, section 295.58, is 289.3 amended to read: 289.4 295.58 [DEPOSIT OF REVENUES AND PAYMENT OF REFUNDS.] 289.5 The commissioner shall deposit all revenues, including 289.6 penalties and interest, derived from the taxes imposed by 289.7 sections 295.50 to 295.57 and from the insurance premiums tax 289.8 imposed by section 297I.05, subdivision 5, on health maintenance 289.9 organizations, community integrated service networks, and 289.10 nonprofit health service plan corporations in the health care 289.11 access fund. There is annually appropriated from the health 289.12 care access fund to the commissioner of revenue the amount 289.13 necessary to make refunds under this chapter. Beginning July 1, 289.14 2005, the commissioner shall deposit all revenues, including 289.15 penalties and interest, derived from the taxes imposed by 289.16 sections 295.50 to 295.57 and from the insurance premiums tax 289.17 imposed by section 297I.05, subdivision 5, on health maintenance 289.18 organizations, community integrated service networks, and 289.19 nonprofit health service plan corporations in the general fund. 289.20 There is annually appropriated from the general fund to the 289.21 commissioner of revenue the amount necessary to make refunds 289.22 under this chapter. 289.23 Sec. 6. Minnesota Statutes 2002, section 297F.05, 289.24 subdivision 1, is amended to read: 289.25 Subdivision 1. [RATES; CIGARETTES.] A tax is imposed upon 289.26 the sale of cigarettes in this state, upon having cigarettes in 289.27 possession in this state with intent to sell, upon any person 289.28 engaged in business as a distributor, and upon the use or 289.29 storage by consumers, at the following rates, subject to the289.30discount provided in this chapter: 289.31 (1) on cigarettes weighing not more than three pounds per 289.32 thousand, 24 mills on each such cigarette; and 289.33 (2) on cigarettes weighing more than three pounds per 289.34 thousand, 48 mills on each such cigarette. 289.35 [EFFECTIVE DATE.] This section is effective for sales of 289.36 stamps made after June 30, 2003. 290.1 Sec. 7. Minnesota Statutes 2002, section 297F.08, 290.2 subdivision 7, is amended to read: 290.3 Subd. 7. [PRICE OF STAMPS.] The commissioner shall sell 290.4 stamps to any person licensed as a distributorat a discount of290.51.0 percent from the face amount of the stamps for the first290.6$1,500,000 of such stamps purchased in any fiscal year; and at a290.7discount of 0.6 percent on the remainder of such stamps290.8purchased in any fiscal year. The commissioner shall not sell 290.9 stamps to any other person. The commissioner may prescribe the 290.10 method of shipment of the stamps to the distributor as well as 290.11 the quantities of stamps purchased. 290.12 [EFFECTIVE DATE.] This section is effective for sales of 290.13 stamps made after June 30, 2003. 290.14 Sec. 8. Minnesota Statutes 2002, section 297F.09, 290.15 subdivision 1, is amended to read: 290.16 Subdivision 1. [MONTHLY RETURN; CIGARETTE DISTRIBUTOR.] On 290.17 or before the 18th day of each calendar month, a distributor 290.18 with a place of business in this state shall file a return with 290.19 the commissioner showing the quantity of cigarettes manufactured 290.20 or brought in from outside the state or purchased during the 290.21 preceding calendar month and the quantity of cigarettes sold or 290.22 otherwise disposed of in this state and outside this state 290.23 during that month. A licensed distributor outside this state 290.24 shall in like manner file a return showing the quantity of 290.25 cigarettes shipped or transported into this state during the 290.26 preceding calendar month. Returns must be made in the form and 290.27 manner prescribed by the commissioner and must contain any other 290.28 information required by the commissioner. The return must be 290.29 accompanied by a remittance for the full unpaid tax liability 290.30 shown by it. The return for the May liability and 85 percent of 290.31 the estimated June liability is due on the date payment of the 290.32 tax is due. 290.33 [EFFECTIVE DATE.] This section is effective January 1, 2004. 290.34 Sec. 9. Minnesota Statutes 2002, section 297F.09, 290.35 subdivision 2, is amended to read: 290.36 Subd. 2. [MONTHLY RETURN; TOBACCO PRODUCTS DISTRIBUTOR.] 291.1 On or before the 18th day of each calendar month, a distributor 291.2 with a place of business in this state shall file a return with 291.3 the commissioner showing the quantity and wholesale sales price 291.4 of each tobacco product: 291.5 (1) brought, or caused to be brought, into this state for 291.6 sale; and 291.7 (2) made, manufactured, or fabricated in this state for 291.8 sale in this state, during the preceding calendar month. 291.9 Every licensed distributor outside this state shall in like 291.10 manner file a return showing the quantity and wholesale sales 291.11 price of each tobacco product shipped or transported to 291.12 retailers in this state to be sold by those retailers, during 291.13 the preceding calendar month. Returns must be made in the form 291.14 and manner prescribed by the commissioner and must contain any 291.15 other information required by the commissioner. The return must 291.16 be accompanied by a remittance for the full tax liability shown,291.17less 1.5 percent of the liability as compensation to reimburse291.18the distributor for expenses incurred in the administration of291.19this chapter. The return for the May liability and 85 percent 291.20 of the estimated June liability is due on the date payment of 291.21 the tax is due. 291.22 [EFFECTIVE DATE.] The part of this section abolishing the 291.23 1.5 percent reimbursement is effective for sales made after June 291.24 30, 2003. The rest of this section is effective January 1, 2004. 291.25 Sec. 10. Minnesota Statutes 2002, section 297F.09, is 291.26 amended by adding a subdivision to read: 291.27 Subd. 10. [ACCELERATED TAX PAYMENT; CIGARETTE OR TOBACCO 291.28 PRODUCTS DISTRIBUTOR.] A cigarette or tobacco products 291.29 distributor having a liability of $120,000 or more during a 291.30 fiscal year ending June 30, shall remit the June liability for 291.31 the next year in the following manner: 291.32 (a) Two business days before June 30 of the year, the 291.33 distributor shall remit the actual May liability and 85 percent 291.34 of the estimated June liability to the commissioner and file the 291.35 return in the form and manner prescribed by the commissioner. 291.36 (b) On or before August 18 of the year, the distributor 292.1 shall submit a return showing the actual June liability and pay 292.2 any additional amount of tax not remitted in June. A penalty is 292.3 imposed equal to ten percent of the amount of June liability 292.4 required to be paid in June, less the amount remitted in June. 292.5 However, the penalty is not imposed if the amount remitted in 292.6 June equals the lesser of: 292.7 (1) 85 percent of the actual June liability; or 292.8 (2) 85 percent of the preceding May's liability. 292.9 [EFFECTIVE DATE.] This section is effective for taxpayers 292.10 having a liability of $120,000 or more during the fiscal year 292.11 ending June 30, 2003, and each fiscal year thereafter, and for 292.12 accelerated payments becoming due in 2004 and thereafter. 292.13 Sec. 11. Minnesota Statutes 2002, section 297F.10, 292.14 subdivision 1, is amended to read: 292.15 Subdivision 1. [TAX AND USE TAX ON CIGARETTES.] Revenue 292.16 received from cigarette taxes, as well as related penalties, 292.17 interest, license fees, and miscellaneous sources of revenue 292.18 shall be deposited by the commissioner in the state treasury and 292.19 credited as follows: 292.20 (a) first to the general obligation special tax bond debt 292.21 service account in each fiscal year the amount required to 292.22 increase the balance on hand in the account on each December 1 292.23 to an amount equal to the full amount of principal and interest 292.24 to come due on all outstanding bonds whose debt service is 292.25 payable primarily from the proceeds of the tax to and including 292.26 the second following July 1; and 292.27 (b) after the requirements of paragraph (a) have been met: 292.28 (1) the revenue produced byone mill3.25 mills of the tax 292.29 on cigarettes weighing not more than three pounds a thousand and 292.30two6.5 mills of the tax on cigarettes weighing more than three 292.31 pounds a thousand must be credited to theMinnesota future292.32resources fundacademic health center special revenue fund 292.33 hereby created; and 292.34 (2) the revenue produced by 1.25 mills of the tax on 292.35 cigarettes weighing not more than three pounds a thousand and 292.36 2.5 mills of the tax on cigarettes weighing more than three 293.1 pounds a thousand must be credited to the medical education and 293.2 research costs account hereby created in the special revenue 293.3 fund; and 293.4 (3) the balance of the revenues derived from taxes, 293.5 penalties, and interest (under this chapter) and from license 293.6 fees and miscellaneous sources of revenue shall be credited to 293.7 the general fund. 293.8 [EFFECTIVE DATE.] This section is effective for all 293.9 revenues received after June 30, 2003. 293.10 Sec. 12. [297F.24] [FEE IN LIEU OF SETTLEMENT.] 293.11 Subdivision 1. [FEE IMPOSED.] (a) A fee is imposed upon 293.12 the sale of nonsettlement cigarettes in this state, upon having 293.13 nonsettlement cigarettes in possession in this state with intent 293.14 to sell, upon any person engaged in business as a distributor, 293.15 and upon the use or storage by consumers of nonsettlement 293.16 cigarettes. The fee equals a rate of 1.75 cents per cigarette. 293.17 (b) The purpose of this fee is to: 293.18 (1) ensure that manufacturers of nonsettlement cigarettes 293.19 pay fees to the state that are comparable to costs attributable 293.20 to the use of the cigarettes; 293.21 (2) prevent manufacturers of nonsettlement cigarettes from 293.22 undermining the state's policy of discouraging underage smoking 293.23 by offering nonsettlement cigarettes at prices substantially 293.24 below the cigarettes of other manufacturers; and 293.25 (3) fund such other purposes as the legislature determines 293.26 appropriate. 293.27 Subd. 2. [NONSETTLEMENT CIGARETTES.] For purposes of this 293.28 section, a "nonsettlement cigarette" means a cigarette 293.29 manufactured by a person other than a manufacturer that: 293.30 (1) is making annual payments to the state of Minnesota 293.31 under a settlement of the lawsuit styled as State v. Philip 293.32 Morris Inc., No. C1-94-8565 (Minnesota District Court, Second 293.33 Judicial District), if the style of cigarettes is included in 293.34 computation of the payments under the agreement; or 293.35 (2) has voluntarily entered into an agreement with the 293.36 state of Minnesota, approved by the attorney general, agreeing 294.1 to terms similar to those contained in the settlement agreement, 294.2 identified in clause (1) including making annual payments to the 294.3 state, with respect to its national sales of the style of 294.4 cigarettes, equal to at least 75 percent of the payments that 294.5 would apply if the manufacturer was one of the four original 294.6 parties to the settlement agreement required to make annual 294.7 payments to the state. 294.8 Subd. 3. [COLLECTION AND ADMINISTRATION.] The commissioner 294.9 shall administer the fee under this section in the same manner 294.10 as the excise tax imposed under section 297F.05 and all of the 294.11 provisions of this chapter apply as if the fee were a tax 294.12 imposed under section 297F.05. The commissioner shall deposit 294.13 the proceeds of the fee in the general fund. 294.14 [EFFECTIVE DATE.] This section is effective for sales of 294.15 nonsettlement cigarettes made after June 30, 2003. 294.16 Sec. 13. Minnesota Statutes 2002, section 297G.01, is 294.17 amended by adding a subdivision to read: 294.18 Subd. 21. [LOW-ALCOHOL DAIRY COCKTAIL.] "Low-alcohol dairy 294.19 cocktail" means a premixed cocktail, or any other product except 294.20 liqueur-filled candy, that: 294.21 (1) consists primarily of milk products; 294.22 (2) contains distilled spirits; 294.23 (3) is drinkable as a beverage or is promoted as an 294.24 alcoholic product; and 294.25 (4) contains less than 3.2 percent alcohol by volume. 294.26 [EFFECTIVE DATE.] This section is effective for sales made 294.27 after June 30, 2003. 294.28 Sec. 14. Minnesota Statutes 2002, section 297G.03, 294.29 subdivision 1, is amended to read: 294.30 Subdivision 1. [GENERAL RATE; DISTILLED SPIRITS AND WINE.] 294.31 The following excise tax is imposed on all distilled spirits and 294.32 wine manufactured, imported, sold, or possessed in this state: 294.33 Standard Metric 294.34 (a) Distilled spirits, $5.03 per gallon $1.33 per liter 294.35 liqueurs, cordials, 294.36 and specialties regardless 295.1 of alcohol content 295.2 (excluding ethyl alcohol) 295.3 (b) Wine containing $ .30 per gallon $ .08 per liter 295.4 14 percent or less 295.5 alcohol by volume 295.6 (except cider as defined 295.7 in section 297G.01, 295.8 subdivision 3a) 295.9 (c) Wine containing $ .95 per gallon $ .25 per liter 295.10 more than 14 percent 295.11 but not more than 21 295.12 percent alcohol by volume 295.13 (d) Wine containing more $1.82 per gallon $ .48 per liter 295.14 than 21 percent but not 295.15 more than 24 percent 295.16 alcohol by volume 295.17 (e) Wine containing more $3.52 per gallon $ .93 per liter 295.18 than 24 percent alcohol 295.19 by volume 295.20 (f) Natural and $1.82 per gallon $ .48 per liter 295.21 artificial sparkling wines 295.22 containing alcohol 295.23 (g) Cider as defined in $ .15 per gallon $ .04 per liter 295.24 section 297G.01, 295.25 subdivision 3a 295.26 (h) Low alcohol dairy $ .08 per gallon $ .02 per liter 295.27 cocktails 295.28 In computing the tax on a package of distilled spirits or 295.29 wine, a proportional tax at a like rate on all fractional parts 295.30 of a gallon or liter must be paid, except that the tax on a 295.31 fractional part of a gallon less than 1/16 of a gallon is the 295.32 same as for 1/16 of a gallon. 295.33 [EFFECTIVE DATE.] This section is effective for sales made 295.34 after June 30, 2003. 295.35 Sec. 15. Minnesota Statutes 2002, section 297G.09, is 295.36 amended by adding a subdivision to read: 296.1 Subd. 9. [ACCELERATED TAX PAYMENT; PENALTY.] A person 296.2 liable for tax under this chapter having a liability of $120,000 296.3 or more during a fiscal year ending June 30, shall remit the 296.4 June liability for the next year in the following manner: 296.5 (a) Two business days before June 30 of the year, the 296.6 taxpayer shall remit the actual May liability and 85 percent of 296.7 the estimated June liability to the commissioner and file the 296.8 return in the form and manner prescribed by the commissioner. 296.9 (b) On or before August 18 of the year, the taxpayer shall 296.10 submit a return showing the actual June liability and pay any 296.11 additional amount of tax not remitted in June. A penalty is 296.12 imposed equal to ten percent of the amount of June liability 296.13 required to be paid in June less the amount remitted in June. 296.14 However, the penalty is not imposed if the amount remitted in 296.15 June equals the lesser of: 296.16 (1) 85 percent of the actual June liability; or 296.17 (2) 85 percent of the preceding May liability. 296.18 [EFFECTIVE DATE.] This section is effective for taxpayers 296.19 having a liability of $120,000 or more during the fiscal year 296.20 ending June 30, 2003, and each fiscal year thereafter, and for 296.21 accelerated payments becoming due in 2004 and thereafter. 296.22 Sec. 16. Minnesota Statutes 2002, section 325D.421, is 296.23 amended by adding a subdivision to read: 296.24 Subd. 1a. [CIGARETTES IN INTERSTATE COMMERCE.] (a) A 296.25 person may not transport or cause to be transported from this 296.26 state cigarettes for sale in another state without first 296.27 affixing to the cigarettes the stamp required by the state in 296.28 which the cigarettes are to be sold or paying any other excise 296.29 tax on the cigarettes imposed by the state in which the 296.30 cigarettes are to be sold. 296.31 (b) A person may not affix to cigarettes the stamp required 296.32 by another state or pay any other excise tax on the cigarettes 296.33 imposed by another state if the other state prohibits stamps 296.34 from being affixed to the cigarettes, prohibits the payment of 296.35 any other excise tax on the cigarettes, or prohibits the sale of 296.36 the cigarettes. 297.1 (c) Not later than 15 days after the end of each calendar 297.2 quarter, a person who transports or causes to be transported 297.3 from this state cigarettes for sale in another state shall 297.4 submit to the attorney general a report identifying the quantity 297.5 and style of each brand of the cigarettes transported or caused 297.6 to be transported in the preceding calendar quarter, and the 297.7 name and address of each recipient of the cigarettes. 297.8 (d) For purposes of this subdivision, "person" has the 297.9 meaning given in section 297F.01, subdivision 12, and includes a 297.10 common or contract carrier or a public warehouse only if the 297.11 carrier or warehouse is owned, in whole or in part, directly or 297.12 indirectly, by such a person. 297.13 [EFFECTIVE DATE.] This section is effective the day 297.14 following final enactment. 297.15 Sec. 17. Minnesota Statutes 2002, section 325D.421, 297.16 subdivision 2, is amended to read: 297.17 Subd. 2. [PRIVATE CAUSE OF ACTION.] (a) In addition to any 297.18 other private remedy provided by law, any person that sustains 297.19 economic damages or commercial injury as a result of any 297.20 violation of subdivision 1 or 1a may bring an action for 297.21 appropriate injunctive or other equitable relief, actual 297.22 damages, if any, sustained by reason of the violation, and, as 297.23 determined by the court, interest on the damages from the date 297.24 of the complaint, taxable costs, and reasonable attorney fees. 297.25 (b) If the trier of fact finds that the violation is 297.26 egregious, it may increase the recovery to an amount not in 297.27 excess of three times the actual damages sustained by reason of 297.28 the violation. The trier of fact may, in addition, award 297.29 exemplary damages for violations of subdivision 1, paragraph 297.30 (c), equal to the difference between the permitted legal price 297.31 and the actual price for the sales. 297.32 [EFFECTIVE DATE.] This section is effective the day 297.33 following final enactment. 297.34 Sec. 18. Minnesota Statutes 2002, section 349.16, is 297.35 amended by adding a subdivision to read: 297.36 Subd. 11. [AGREEMENT TO PAY TAXES.] An organization which 298.1 is recognized by federal law, regulation, or other ruling as a 298.2 quasi-governmental organization that would otherwise be exempt 298.3 from one or more taxes under chapter 297E must agree to pay all 298.4 taxes under chapter 297E on lawful gambling conducted by the 298.5 organization as a condition of receiving or renewing a license 298.6 or premises permit. 298.7 ARTICLE 12 298.8 DEPARTMENT INCOME, CORPORATE FRANCHISE, AND 298.9 ESTATE TAX INITIATIVES 298.10 Section 1. Minnesota Statutes 2002, section 289A.19, 298.11 subdivision 4, is amended to read: 298.12 Subd. 4. [ESTATE TAX RETURNS.] When in the commissioner's 298.13 judgment good cause exists, the commissioner may extend the time 298.14 for filing an estate tax return for not more than six months. 298.15 When an extension to file the federal estate tax return has been 298.16 granted under section 6081 of the Internal Revenue Code, the 298.17 time for filing the estate tax return is extended for that 298.18 period. 298.19 [EFFECTIVE DATE.] This section is effective for estates of 298.20 decedents dying after December 31, 2001. 298.21 Sec. 2. Minnesota Statutes 2002, section 289A.31, is 298.22 amended by adding a subdivision to read: 298.23 Subd. 8. [LIABILITY OF VENDOR FOR REPAYMENT OF REFUND.] If 298.24 an individual income tax refund resulting from claiming an 298.25 education credit under section 290.0674 is paid by means of 298.26 directly depositing the proceeds of the refund into a bank 298.27 account controlled by the vendor of the product or service upon 298.28 which the education credit is based, and the commissioner 298.29 subsequently disallows the credit, the commissioner may seek 298.30 repayment of the refund from the vendor. The amount of the 298.31 repayment must be assessed and collected in the same time and 298.32 manner as an erroneous refund under section 289A.37, subdivision 298.33 2. 298.34 [EFFECTIVE DATE.] This section is effective for refunds 298.35 paid to accounts controlled by a vendor on or after the day 298.36 following final enactment. 299.1 Sec. 3. Minnesota Statutes 2002, section 289A.56, 299.2 subdivision 3, is amended to read: 299.3 Subd. 3. [WITHHOLDING TAX, ENTERTAINER WITHHOLDING TAX, 299.4 WITHHOLDING FROM PAYMENTS TO OUT-OF-STATE CONTRACTORS, ESTATE 299.5 TAX, AND SALES TAX OVERPAYMENTS.] When a refund is due for 299.6 overpayments of withholding tax, entertainer withholding tax, or 299.7 withholding from payments to out-of-state contractors,or estate299.8tax,interest is computed from the date of payment to the date 299.9 the refund is paid or credited. For purposes of this 299.10 subdivision, the date of payment is the later of the date the 299.11 tax was finally due or was paid. 299.12 For the purposes of computing interest on estate tax 299.13 refunds, interest is paid from the later of the date of 299.14 overpayment, the date the estate tax return is due, or the date 299.15 the original estate tax return is filed to the date the refund 299.16 is paid. 299.17 For purposes of computing interest on sales and use tax 299.18 refunds, interest is paid from the date of payment to the date 299.19 the refund is paid or credited, if the refund claim includes a 299.20 detailed schedule reflecting the tax periods covered in the 299.21 claim. If the refund claim submitted does not include a 299.22 detailed schedule reflecting the tax periods covered in the 299.23 claim, interest is computed from the date the claim was filed. 299.24 [EFFECTIVE DATE.] This section is effective for estates of 299.25 decedents dying after December 31, 2003. 299.26 Sec. 4. Minnesota Statutes 2002, section 289A.60, 299.27 subdivision 7, is amended to read: 299.28 Subd. 7. [PENALTY FOR FRIVOLOUS RETURN.] If a taxpayer 299.29 files what purports to be a tax return or a claim for refund but 299.30 which does not contain information on which the substantial 299.31 correctness of the purported return or claim for refund may be 299.32 judged or contains information that on its face shows that the 299.33 purported return or claim for refund is substantially incorrect 299.34 and the conduct is due to a position that is frivolous or a 299.35 desire that appears on the purported return or claim for refund 299.36 to delay or impede the administration of Minnesota tax laws, 300.1 then the individual shall pay a penalty of$500the greater of 300.2 $1,000 or 25 percent of the amount of tax required to be shown 300.3 on the return. In a proceeding involving the issue of whether 300.4 or not a person is liable for this penalty, the burden of proof 300.5 is on the commissioner. 300.6 [EFFECTIVE DATE.] This section is effective for returns 300.7 filed after December 31, 2003. 300.8 Sec. 5. Minnesota Statutes 2002, section 290.01, 300.9 subdivision 19a, is amended to read: 300.10 Subd. 19a. [ADDITIONS TO FEDERAL TAXABLE INCOME.] For 300.11 individuals, estates, and trusts, there shall be added to 300.12 federal taxable income: 300.13 (1)(i) interest income on obligations of any state other 300.14 than Minnesota or a political or governmental subdivision, 300.15 municipality, or governmental agency or instrumentality of any 300.16 state other than Minnesota exempt from federal income taxes 300.17 under the Internal Revenue Code or any other federal statute; 300.18 and 300.19 (ii) exempt-interest dividends as defined in section 300.20 852(b)(5) of the Internal Revenue Code, except the portion of 300.21 the exempt-interest dividends derived from interest income on 300.22 obligations of the state of Minnesota or its political or 300.23 governmental subdivisions, municipalities, governmental agencies 300.24 or instrumentalities, but only if the portion of the 300.25 exempt-interest dividends from such Minnesota sources paid to 300.26 all shareholders represents 95 percent or more of the 300.27 exempt-interest dividends that are paid by the regulated 300.28 investment company as defined in section 851(a) of the Internal 300.29 Revenue Code, or the fund of the regulated investment company as 300.30 defined in section 851(g) of the Internal Revenue Code, making 300.31 the payment; and 300.32 (iii) for the purposes of items (i) and (ii), interest on 300.33 obligations of an Indian tribal government described in section 300.34 7871(c) of the Internal Revenue Code shall be treated as 300.35 interest income on obligations of the state in which the tribe 300.36 is located; 301.1 (2) the amount of income taxes paid or accrued within the 301.2 taxable year under this chapter and income taxes paid to any 301.3 other state or to any province or territory of Canada, to the 301.4 extent allowed as a deduction under section 63(d) of the 301.5 Internal Revenue Code, but the addition may not be more than the 301.6 amount by which the itemized deductions as allowed under section 301.7 63(d) of the Internal Revenue Code exceeds the amount of the 301.8 standard deduction as defined in section 63(c) of the Internal 301.9 Revenue Code. For the purpose of this paragraph, the 301.10 disallowance of itemized deductions under section 68 of the 301.11 Internal Revenue Code of 1986, income tax is the last itemized 301.12 deduction disallowed; 301.13 (3) the capital gain amount of a lump sum distribution to 301.14 which the special tax under section 1122(h)(3)(B)(ii) of the Tax 301.15 Reform Act of 1986, Public Law Number 99-514, applies; 301.16 (4) the amount of income taxes paid or accrued within the 301.17 taxable year under this chapter and income taxes paid to any 301.18 other state or any province or territory of Canada, to the 301.19 extent allowed as a deduction in determining federal adjusted 301.20 gross income. For the purpose of this paragraph, income taxes 301.21 do not include the taxes imposed by sections 290.0922, 301.22 subdivision 1, paragraph (b), 290.9727, 290.9728, and 290.9729; 301.23 (5) the amount of expense, interest, or taxes disallowed 301.24 pursuant to section 290.10; 301.25 (6) the amount of a partner's pro rata share of net income 301.26 which does not flow through to the partner because the 301.27 partnership elected to pay the tax on the income under section 301.28 6242(a)(2) of the Internal Revenue Code; and 301.29 (7) 80 percent of the depreciation deduction allowed under 301.30 section 168(k) of the Internal Revenue Code. For purposes of 301.31 this clause, if the taxpayer has an activity that in the taxable 301.32 year generates a deduction for depreciation under section 168(k) 301.33 and the activity generates a loss for the taxable year that the 301.34 taxpayer is not allowed to claim for the taxable year, "the 301.35 depreciation allowed under section 168(k)" for the taxable year 301.36 is limited to excess of the depreciation claimed by the activity 302.1 under section 168(k) over the amount of the loss from the 302.2 activity that is not allowed in the taxable year. In succeeding 302.3 taxable years when the losses not allowed in the taxable year 302.4 are allowed, the depreciation under section 168(k) is allowed. 302.5 [EFFECTIVE DATE.] This section is effective for taxable 302.6 years ending after September 10, 2001. 302.7 Sec. 6. Minnesota Statutes 2002, section 290.01, 302.8 subdivision 19b, is amended to read: 302.9 Subd. 19b. [SUBTRACTIONS FROM FEDERAL TAXABLE INCOME.] For 302.10 individuals, estates, and trusts, there shall be subtracted from 302.11 federal taxable income: 302.12 (1) interest income on obligations of any authority, 302.13 commission, or instrumentality of the United States to the 302.14 extent includable in taxable income for federal income tax 302.15 purposes but exempt from state income tax under the laws of the 302.16 United States; 302.17 (2) if included in federal taxable income, the amount of 302.18 any overpayment of income tax to Minnesota or to any other 302.19 state, for any previous taxable year, whether the amount is 302.20 received as a refund or as a credit to another taxable year's 302.21 income tax liability; 302.22 (3) the amount paid to others, less the amount used to 302.23 claim the credit allowed under section 290.0674, not to exceed 302.24 $1,625 for each qualifying child in grades kindergarten to 6 and 302.25 $2,500 for each qualifying child in grades 7 to 12, for tuition, 302.26 textbooks, and transportation of each qualifying child in 302.27 attending an elementary or secondary school situated in 302.28 Minnesota, North Dakota, South Dakota, Iowa, or Wisconsin, 302.29 wherein a resident of this state may legally fulfill the state's 302.30 compulsory attendance laws, which is not operated for profit, 302.31 and which adheres to the provisions of the Civil Rights Act of 302.32 1964 and chapter 363. For the purposes of this clause, 302.33 "tuition" includes fees or tuition as defined in section 302.34 290.0674, subdivision 1, clause (1). As used in this clause, 302.35 "textbooks" includes books and other instructional materials and 302.36 equipment purchased or leased for use in elementary and 303.1 secondary schools in teaching only those subjects legally and 303.2 commonly taught in public elementary and secondary schools in 303.3 this state. Equipment expenses qualifying for deduction 303.4 includes expenses as defined and limited in section 290.0674, 303.5 subdivision 1, clause (3). "Textbooks" does not include 303.6 instructional books and materials used in the teaching of 303.7 religious tenets, doctrines, or worship, the purpose of which is 303.8 to instill such tenets, doctrines, or worship, nor does it 303.9 include books or materials for, or transportation to, 303.10 extracurricular activities including sporting events, musical or 303.11 dramatic events, speech activities, driver's education, or 303.12 similar programs. For purposes of the subtraction provided by 303.13 this clause, "qualifying child" has the meaning given in section 303.14 32(c)(3) of the Internal Revenue Code; 303.15 (4) income as provided under section 290.0802; 303.16 (5) to the extent included in federal adjusted gross 303.17 income, income realized on disposition of property exempt from 303.18 tax under section 290.491; 303.19 (6)to the extent not deducted in determining federal303.20taxable income or used to claim the long-term care insurance303.21credit under section 290.0672, the amount paid for health303.22insurance of self-employed individuals as determined under303.23section 162(l) of the Internal Revenue Code, except that the303.24percent limit does not apply. If the individual deducted303.25insurance payments under section 213 of the Internal Revenue303.26Code of 1986, the subtraction under this clause must be reduced303.27by the lesser of:303.28(i) the total itemized deductions allowed under section303.2963(d) of the Internal Revenue Code, less state, local, and303.30foreign income taxes deductible under section 164 of the303.31Internal Revenue Code and the standard deduction under section303.3263(c) of the Internal Revenue Code; or303.33(ii) the lesser of (A) the amount of insurance qualifying303.34as "medical care" under section 213(d) of the Internal Revenue303.35Code to the extent not deducted under section 162(1) of the303.36Internal Revenue Code or excluded from income or (B) the total304.1amount deductible for medical care under section 213(a);304.2(7) the exemption amount allowed under Laws 1995, chapter304.3255, article 3, section 2, subdivision 3;304.4(8)to the extent included in federal taxable income, 304.5 postservice benefits for youth community service under section 304.6 124D.42 for volunteer service under United States Code, title 304.7 42, sections 12601 to 12604; 304.8(9)(7) to the extent not deducted in determining federal 304.9 taxable income by an individual who does not itemize deductions 304.10 for federal income tax purposes for the taxable year, an amount 304.11 equal to 50 percent of the excess of charitable contributions 304.12 allowable as a deduction for the taxable year under section 304.13 170(a) of the Internal Revenue Code over $500; 304.14(10)(8) for taxable years beginning before January 1, 304.15 2008, the amount of the federal small ethanol producer credit 304.16 allowed under section 40(a)(3) of the Internal Revenue Code 304.17 which is included in gross income under section 87 of the 304.18 Internal Revenue Code; 304.19(11)(9) for individuals who are allowed a federal foreign 304.20 tax credit for taxes that do not qualify for a credit under 304.21 section 290.06, subdivision 22, an amount equal to the carryover 304.22 of subnational foreign taxes for the taxable year, but not to 304.23 exceed the total subnational foreign taxes reported in claiming 304.24 the foreign tax credit. For purposes of this clause, "federal 304.25 foreign tax credit" means the credit allowed under section 27 of 304.26 the Internal Revenue Code, and "carryover of subnational foreign 304.27 taxes" equals the carryover allowed under section 904(c) of the 304.28 Internal Revenue Code minus national level foreign taxes to the 304.29 extent they exceed the federal foreign tax credit; and 304.30(12)(10) in each of the five tax years immediately 304.31 following the tax year in which an addition is required under 304.32 subdivision 19a, clause (7), an amount equal to one-fifth of the 304.33 delayed depreciation. For purposes of this clause, "delayed 304.34 depreciation" means the amount of the addition made by the 304.35 taxpayer under subdivision 19a, clause (7), minus the positive 304.36 value of any net operating loss under section 172 of the 305.1 Internal Revenue Code generated for the tax year of the 305.2 addition. The resulting delayed depreciation cannot be less 305.3 than zero. 305.4 [EFFECTIVE DATE.] This section is effective for tax years 305.5 beginning after December 31, 2003. 305.6 Sec. 7. Minnesota Statutes 2002, section 290.01, 305.7 subdivision 19c, is amended to read: 305.8 Subd. 19c. [CORPORATIONS; ADDITIONS TO FEDERAL TAXABLE 305.9 INCOME.] For corporations, there shall be added to federal 305.10 taxable income: 305.11 (1) the amount of any deduction taken for federal income 305.12 tax purposes for income, excise, or franchise taxes based on net 305.13 income or related minimum taxes, including but not limited to 305.14 the tax imposed under section 290.0922, paid by the corporation 305.15 to Minnesota, another state, a political subdivision of another 305.16 state, the District of Columbia, or any foreign country or 305.17 possession of the United States; 305.18 (2) interest not subject to federal tax upon obligations 305.19 of: the United States, its possessions, its agencies, or its 305.20 instrumentalities; the state of Minnesota or any other state, 305.21 any of its political or governmental subdivisions, any of its 305.22 municipalities, or any of its governmental agencies or 305.23 instrumentalities; the District of Columbia; or Indian tribal 305.24 governments; 305.25 (3) exempt-interest dividends received as defined in 305.26 section 852(b)(5) of the Internal Revenue Code; 305.27 (4) the amount of any net operating loss deduction taken 305.28 for federal income tax purposes under section 172 or 832(c)(10) 305.29 of the Internal Revenue Code or operations loss deduction under 305.30 section 810 of the Internal Revenue Code; 305.31 (5) the amount of any special deductions taken for federal 305.32 income tax purposes under sections 241 to 247 of the Internal 305.33 Revenue Code; 305.34 (6) losses from the business of mining, as defined in 305.35 section 290.05, subdivision 1, clause (a), that are not subject 305.36 to Minnesota income tax; 306.1 (7) the amount of any capital losses deducted for federal 306.2 income tax purposes under sections 1211 and 1212 of the Internal 306.3 Revenue Code; 306.4 (8) the exempt foreign trade income of a foreign sales 306.5 corporation under sections 921(a) and 291 of the Internal 306.6 Revenue Code; 306.7 (9) the amount of percentage depletion deducted under 306.8 sections 611 through 614 and 291 of the Internal Revenue Code; 306.9 (10) for certified pollution control facilities placed in 306.10 service in a taxable year beginning before December 31, 1986, 306.11 and for which amortization deductions were elected under section 306.12 169 of the Internal Revenue Code of 1954, as amended through 306.13 December 31, 1985, the amount of the amortization deduction 306.14 allowed in computing federal taxable income for those 306.15 facilities; 306.16 (11) the amount of any deemed dividend from a foreign 306.17 operating corporation determined pursuant to section 290.17, 306.18 subdivision 4, paragraph (g); 306.19 (12) the amount of any environmental tax paid under section 306.20 59(a) of the Internal Revenue Code; 306.21 (13) the amount of a partner's pro rata share of net income 306.22 which does not flow through to the partner because the 306.23 partnership elected to pay the tax on the income under section 306.24 6242(a)(2) of the Internal Revenue Code; 306.25 (14) the amount of net income excluded under section 114 of 306.26 the Internal Revenue Code; 306.27 (15) any increase in subpart F income, as defined in 306.28 section 952(a) of the Internal Revenue Code, for the taxable 306.29 year when subpart F income is calculated without regard to the 306.30 provisions of section 614 of Public Law Number 107-147; and 306.31 (16) 80 percent of the depreciation deduction allowed under 306.32 section 168(k) of the Internal Revenue Code. For purposes of 306.33 this clause, if the taxpayer has an activity that in the taxable 306.34 year generates a deduction for depreciation under section 168(k) 306.35 and the activity generates a loss for the taxable year that the 306.36 taxpayer is not allowed to claim for the taxable year, "the 307.1 depreciation allowed under section 168(k)" for the taxable year 307.2 is limited to excess of the depreciation claimed by the activity 307.3 under section 168(k) over the amount of the loss from the 307.4 activity that is not allowed in the taxable year. In succeeding 307.5 taxable years when the losses not allowed in the taxable year 307.6 are allowed, the depreciation under section 168(k) is allowed. 307.7 [EFFECTIVE DATE.] This section is effective for taxable 307.8 years ending after September 10, 2001. 307.9 Sec. 8. Minnesota Statutes 2002, section 290.01, 307.10 subdivision 19d, is amended to read: 307.11 Subd. 19d. [CORPORATIONS; MODIFICATIONS DECREASING FEDERAL 307.12 TAXABLE INCOME.] For corporations, there shall be subtracted 307.13 from federal taxable income after the increases provided in 307.14 subdivision 19c: 307.15 (1) the amount of foreign dividend gross-up added to gross 307.16 income for federal income tax purposes under section 78 of the 307.17 Internal Revenue Code; 307.18 (2) the amount of salary expense not allowed for federal 307.19 income tax purposes due to claiming the federal jobs credit 307.20 under section 51 of the Internal Revenue Code; 307.21 (3) any dividend (not including any distribution in 307.22 liquidation) paid within the taxable year by a national or state 307.23 bank to the United States, or to any instrumentality of the 307.24 United States exempt from federal income taxes, on the preferred 307.25 stock of the bank owned by the United States or the 307.26 instrumentality; 307.27 (4) amounts disallowed for intangible drilling costs due to 307.28 differences between this chapter and the Internal Revenue Code 307.29 in taxable years beginning before January 1, 1987, as follows: 307.30 (i) to the extent the disallowed costs are represented by 307.31 physical property, an amount equal to the allowance for 307.32 depreciation under Minnesota Statutes 1986, section 290.09, 307.33 subdivision 7, subject to the modifications contained in 307.34 subdivision 19e; and 307.35 (ii) to the extent the disallowed costs are not represented 307.36 by physical property, an amount equal to the allowance for cost 308.1 depletion under Minnesota Statutes 1986, section 290.09, 308.2 subdivision 8; 308.3 (5) the deduction for capital losses pursuant to sections 308.4 1211 and 1212 of the Internal Revenue Code, except that: 308.5 (i) for capital losses incurred in taxable years beginning 308.6 after December 31, 1986, capital loss carrybacks shall not be 308.7 allowed; 308.8 (ii) for capital losses incurred in taxable years beginning 308.9 after December 31, 1986, a capital loss carryover to each of the 308.10 15 taxable years succeeding the loss year shall be allowed; 308.11 (iii) for capital losses incurred in taxable years 308.12 beginning before January 1, 1987, a capital loss carryback to 308.13 each of the three taxable years preceding the loss year, subject 308.14 to the provisions of Minnesota Statutes 1986, section 290.16, 308.15 shall be allowed; and 308.16 (iv) for capital losses incurred in taxable years beginning 308.17 before January 1, 1987, a capital loss carryover to each of the 308.18 five taxable years succeeding the loss year to the extent such 308.19 loss was not used in a prior taxable year and subject to the 308.20 provisions of Minnesota Statutes 1986, section 290.16, shall be 308.21 allowed; 308.22 (6) an amount for interest and expenses relating to income 308.23 not taxable for federal income tax purposes, if (i) the income 308.24 is taxable under this chapter and (ii) the interest and expenses 308.25 were disallowed as deductions under the provisions of section 308.26 171(a)(2), 265 or 291 of the Internal Revenue Code in computing 308.27 federal taxable income; 308.28 (7) in the case of mines, oil and gas wells, other natural 308.29 deposits, and timber for which percentage depletion was 308.30 disallowed pursuant to subdivision 19c, clause (11), a 308.31 reasonable allowance for depletion based on actual cost. In the 308.32 case of leases the deduction must be apportioned between the 308.33 lessor and lessee in accordance with rules prescribed by the 308.34 commissioner. In the case of property held in trust, the 308.35 allowable deduction must be apportioned between the income 308.36 beneficiaries and the trustee in accordance with the pertinent 309.1 provisions of the trust, or if there is no provision in the 309.2 instrument, on the basis of the trust's income allocable to 309.3 each; 309.4 (8) for certified pollution control facilities placed in 309.5 service in a taxable year beginning before December 31, 1986, 309.6 and for which amortization deductions were elected under section 309.7 169 of the Internal Revenue Code of 1954, as amended through 309.8 December 31, 1985, an amount equal to the allowance for 309.9 depreciation under Minnesota Statutes 1986, section 290.09, 309.10 subdivision 7; 309.11 (9) amounts included in federal taxable income that are due 309.12 to refunds of income, excise, or franchise taxes based on net 309.13 income or related minimum taxes paid by the corporation to 309.14 Minnesota, another state, a political subdivision of another 309.15 state, the District of Columbia, or a foreign country or 309.16 possession of the United States to the extent that the taxes 309.17 were added to federal taxable income under section 290.01, 309.18 subdivision 19c, clause (1), in a prior taxable year; 309.19 (10) 80 percent of royalties, fees, or other like income 309.20 accrued or received from a foreign operating corporation or a 309.21 foreign corporation which is part of the same unitary business 309.22 as the receiving corporation; 309.23 (11) income or gains from the business of mining as defined 309.24 in section 290.05, subdivision 1, clause (a), that are not 309.25 subject to Minnesota franchise tax; 309.26 (12) the amount of handicap access expenditures in the 309.27 taxable year which are not allowed to be deducted or capitalized 309.28 under section 44(d)(7) of the Internal Revenue Code; 309.29 (13) the amount of qualified research expenses not allowed 309.30 for federal income tax purposes under section 280C(c) of the 309.31 Internal Revenue Code, but only to the extent that the amount 309.32 exceeds the amount of the credit allowed under section 290.068; 309.33 (14) the amount of salary expenses not allowed for federal 309.34 income tax purposes due to claiming the Indian employment credit 309.35 under section 45A(a) of the Internal Revenue Code; 309.36 (15) the amount of any refund of environmental taxes paid 310.1 under section 59A of the Internal Revenue Code; 310.2 (16) for taxable years beginning before January 1, 2008, 310.3 the amount of the federal small ethanol producer credit allowed 310.4 under section 40(a)(3) of the Internal Revenue Code which is 310.5 included in gross income under section 87 of the Internal 310.6 Revenue Code; 310.7 (17) for a corporation whose foreign sales corporation, as 310.8 defined in section 922 of the Internal Revenue Code, constituted 310.9 a foreign operating corporation during any taxable year ending 310.10 before January 1, 1995, and a return was filed by August 15, 310.11 1996, claiming the deduction underthissection 290.21, 310.12 subdivision 4, for income received from the foreign operating 310.13 corporation, an amount equal to 1.23 multiplied by the amount of 310.14 income excluded under section 114 of the Internal Revenue Code, 310.15 provided the income is not income of a foreign operating 310.16 company; 310.17 (18) any decrease in subpart F income, as defined in 310.18 section 952(a) of the Internal Revenue Code, for the taxable 310.19 year when subpart F income is calculated without regard to the 310.20 provisions of section 614 of Public Law Number 107-147; and 310.21 (19) in each of the five tax years immediately following 310.22 the tax year in which an addition is required under subdivision 310.23 19c, clause (16), an amount equal to one-fifth of the delayed 310.24 depreciation. For purposes of this clause, "delayed 310.25 depreciation" means the amount of the addition made by the 310.26 taxpayer under subdivision 19c, clause (16). The resulting 310.27 delayed depreciation cannot be less than zero. 310.28 [EFFECTIVE DATE.] This section is effective the day 310.29 following final enactment. 310.30 Sec. 9. Minnesota Statutes 2002, section 290.06, 310.31 subdivision 2c, is amended to read: 310.32 Subd. 2c. [SCHEDULES OF RATES FOR INDIVIDUALS, ESTATES, 310.33 AND TRUSTS.] (a) The income taxes imposed by this chapter upon 310.34 married individuals filing joint returns and surviving spouses 310.35 as defined in section 2(a) of the Internal Revenue Code must be 310.36 computed by applying to their taxable net income the following 311.1 schedule of rates: 311.2 (1) On the first $25,680, 5.35 percent; 311.3 (2) On all over $25,680, but not over $102,030, 7.05 311.4 percent; 311.5 (3) On all over $102,030, 7.85 percent. 311.6 Married individuals filing separate returns, estates, and 311.7 trusts must compute their income tax by applying the above rates 311.8 to their taxable income, except that the income brackets will be 311.9 one-half of the above amounts. 311.10 (b) The income taxes imposed by this chapter upon unmarried 311.11 individuals must be computed by applying to taxable net income 311.12 the following schedule of rates: 311.13 (1) On the first $17,570, 5.35 percent; 311.14 (2) On all over $17,570, but not over $57,710, 7.05 311.15 percent; 311.16 (3) On all over $57,710, 7.85 percent. 311.17 (c) The income taxes imposed by this chapter upon unmarried 311.18 individuals qualifying as a head of household as defined in 311.19 section 2(b) of the Internal Revenue Code must be computed by 311.20 applying to taxable net income the following schedule of rates: 311.21 (1) On the first $21,630, 5.35 percent; 311.22 (2) On all over $21,630, but not over $86,910, 7.05 311.23 percent; 311.24 (3) On all over $86,910, 7.85 percent. 311.25 (d) In lieu of a tax computed according to the rates set 311.26 forth in this subdivision, the tax of any individual taxpayer 311.27 whose taxable net income for the taxable year is less than an 311.28 amount determined by the commissioner must be computed in 311.29 accordance with tables prepared and issued by the commissioner 311.30 of revenue based on income brackets of not more than $100. The 311.31 amount of tax for each bracket shall be computed at the rates 311.32 set forth in this subdivision, provided that the commissioner 311.33 may disregard a fractional part of a dollar unless it amounts to 311.34 50 cents or more, in which case it may be increased to $1. 311.35 (e) An individual who is not a Minnesota resident for the 311.36 entire year must compute the individual's Minnesota income tax 312.1 as provided in this subdivision. After the application of the 312.2 nonrefundable credits provided in this chapter, the tax 312.3 liability must then be multiplied by a fraction in which: 312.4 (1) the numerator is the individual's Minnesota source 312.5 federal adjusted gross income as defined in section 62 of the 312.6 Internal Revenue Code and increased by the additions required 312.7 under section 290.01, subdivision 19a, clauses (1), (5), and 312.8 (6), and reduced by the Minnesota assignable portion of the 312.9 subtraction for United States government interest under section 312.10 290.01, subdivision 19b, clause (1), after applying the 312.11 allocation and assignability provisions of section 290.081, 312.12 clause (a), or 290.17; and 312.13 (2) the denominator is the individual's federal adjusted 312.14 gross income as defined in section 62 of the Internal Revenue 312.15 Code of 1986, increased by the amounts specified in section 312.16 290.01, subdivision 19a, clauses (1), (5), and (6), and reduced 312.17 by the amounts specified in section 290.01, subdivision 19b, 312.18 clause (1). 312.19 [EFFECTIVE DATE.] This section is effective for tax years 312.20 beginning after December 31, 2002. 312.21 Sec. 10. Minnesota Statutes 2002, section 290.0671, 312.22 subdivision 1, is amended to read: 312.23 Subdivision 1. [CREDIT ALLOWED.] (a) An individual is 312.24 allowed a credit against the tax imposed by this chapter equal 312.25 to a percentage of earned income. To receive a credit, a 312.26 taxpayer must be eligible for a credit under section 32 of the 312.27 Internal Revenue Code. 312.28 (b) For individuals with no qualifying children, the credit 312.29 equals 1.9125 percent of the first $4,620 of earned income. The 312.30 credit is reduced by 1.9125 percent of earned income or modified 312.31 adjusted gross income, whichever is greater, in excess of 312.32 $5,770, but in no case is the credit less than zero. 312.33 (c) For individuals with one qualifying child, the credit 312.34 equals 8.5 percent of the first $6,920 of earned income and 8.5 312.35 percent of earned income over $12,080 but less than $13,450. 312.36 The credit is reduced by 5.73 percent of earned income or 313.1 modified adjusted gross income, whichever is greater, in excess 313.2 of $15,080, but in no case is the credit less than zero. 313.3 (d) For individuals with two or more qualifying children, 313.4 the credit equals ten percent of the first $9,720 of earned 313.5 income and 20 percent of earned income over $14,860 but less 313.6 than $16,800. The credit is reduced by 10.3 percent of earned 313.7 income or modified adjusted gross income, whichever is greater, 313.8 in excess of $17,890, but in no case is the credit less than 313.9 zero. 313.10 (e) For a nonresident or part-year resident, the credit 313.11 must be allocated based on the percentage calculated under 313.12 section 290.06, subdivision 2c, paragraph (e). 313.13 (f) For a person who was a resident for the entire tax year 313.14 and has earned income not subject to tax under this chapter, the 313.15 credit must be allocated based on the ratio of federal adjusted 313.16 gross income reduced by the earned income not subject to tax 313.17 under this chapter over federal adjusted gross income. 313.18 (g) For tax years beginning after December 31, 2001, and 313.19 before December 31, 2004, the $5,770 in paragraph (b)is313.20increased to $6,770, the $15,080 in paragraph (c)is increased313.21to $16,080, and the $17,890 in paragraph (d)is increased to313.22$18,890, after being adjusted for inflation under subdivision 7, 313.23 are each increased by $1,000 for married taxpayers filing joint 313.24 returns. 313.25 (h) For tax years beginning after December 31, 2004, and 313.26 before December 31, 2007, the $5,770 in paragraph (b)is313.27increased to $7,770, the $15,080 in paragraph (c)is increased313.28to $17,080, and the $17,890 in paragraph (d)is increased to313.29$19,890, after being adjusted for inflation under subdivision 7, 313.30 are each increased by $2,000 for married taxpayers filing joint 313.31 returns. 313.32 (i) For tax years beginning after December 31, 2007, and 313.33 before December 31, 2010, the $5,770 in paragraph (b)is313.34increased to $8,770, the $15,080 in paragraph (c)is increased313.35to $18,080, and the $17,890 in paragraph (d)is increased to313.36$20,890, after being adjusted for inflation under subdivision 7, 314.1 are each increased by $3,000 for married taxpayers filing joint 314.2 returns. For tax years beginning after December 31, 2008, the 314.3 $3,000 is adjusted annually for inflation under subdivision 7. 314.4 (j) The commissioner shall construct tables showing the 314.5 amount of the credit at various income levels and make them 314.6 available to taxpayers. The tables shall follow the schedule 314.7 contained in this subdivision, except that the commissioner may 314.8 graduate the transition between income brackets. 314.9 [EFFECTIVE DATE.] This section is effective for tax years 314.10 beginning after December 31, 2002. 314.11 Sec. 11. Minnesota Statutes 2002, section 290.0675, 314.12 subdivision 2, is amended to read: 314.13 Subd. 2. [CREDIT ALLOWED.] A married couple filing a joint 314.14 return is allowed a credit against the tax imposed under section 314.15 290.06. 314.16The minimum taxable income for the married couple to be314.17eligible for the credit is $25,680, and the minimum earned314.18income in order for the couple to be eligible for the credit is314.19$14,250 for each spouse.314.20 [EFFECTIVE DATE.] This section is effective for tax years 314.21 beginning after December 31, 2002. 314.22 Sec. 12. Minnesota Statutes 2002, section 290.0675, 314.23 subdivision 3, is amended to read: 314.24 Subd. 3. [CREDIT AMOUNT.] The credit amount is the 314.25 difference between the tax on the couple's joint Minnesota 314.26 taxable income under the rates and income levels in section 314.27 290.06, subdivision 2c, paragraph (a), as adjusted for the 314.28 taxable year by section 290.06, subdivision 2d, and the sum of 314.29 the tax under the rates and income levels of section 290.06, 314.30 subdivision 2c, paragraph (b), as adjusted for the taxable year 314.31 by section 290.06, subdivision 2d, on the earned income of the 314.32 lesser-earning spouse, and the tax under the rates and income 314.33 levels of section 290.06, subdivision 2c, paragraph (b), as 314.34 adjusted for the taxable year by section 290.06, subdivision 2d, 314.35 on the couple's joint Minnesota taxable income, minus the earned 314.36 income of the lesser-earning spouse. 315.1 The commissioner of revenue shall prepare and make 315.2 available to taxpayers a comprehensive table showing the credit 315.3 under this section at brackets of earnings of the lesser-earning 315.4 spouse and joint taxable income. The brackets of earnings shall 315.5 not be more than $2,000. 315.6 [EFFECTIVE DATE.] This section is effective for tax years 315.7 beginning after December 31, 2002. 315.8 Sec. 13. Minnesota Statutes 2002, section 290.0679, 315.9 subdivision 2, is amended to read: 315.10 Subd. 2. [CONDITIONS FOR ASSIGNMENT.] A qualifying 315.11 taxpayer may assign all or part of an anticipated refund for the 315.12 current and future taxable years to a financial institution or a 315.13 qualifying organization. A financial institution or qualifying 315.14 organization accepting assignment must pay the amount secured by 315.15 the assignment to a third-party vendor. The commissioner of 315.16 children, families, and learning shallprovide a list of315.17categories of, upon request from a third-party vendor, certify 315.18 that the vendor's products and servicesthatqualify for the 315.19 education creditto financial institutions and qualifying315.20organizations. A denial of a certification is subject to the 315.21 contested case procedure under chapter 14. A financial 315.22 institution or qualifying organization that accepts assignments 315.23 under this section must verify as part of the assignment 315.24 documentation that the product or service to be provided by the 315.25 third-party vendorqualifieshas been certified by the 315.26 commissioner of children, families, and learning as qualifying 315.27 for the education credit. The amount assigned for the current 315.28 and future taxable years may not exceed the maximum allowable 315.29 education credit for the current taxable year. Both the 315.30 taxpayer and spouse must consent to the assignment of a refund 315.31 from a joint return. 315.32 [EFFECTIVE DATE.] This section is effective for assignments 315.33 made on or after the day following final enactment. 315.34 Sec. 14. Minnesota Statutes 2002, section 290.0802, 315.35 subdivision 1, is amended to read: 315.36 Subdivision 1. [DEFINITIONS.] For purposes of this 316.1 section, the following terms have the meanings given. 316.2 (a) "Adjusted gross income" means federal adjusted gross 316.3 income as used in section 22(d) of the Internal Revenue Code for 316.4 the taxable year, plus a lump sum distribution as defined in 316.5 section 402(e)(3) of the Internal Revenue Code, and less any 316.6 pension, annuity, or disability benefits included in federal 316.7 gross income but not subject to state taxation other than the 316.8 subtraction allowed under section 290.01, subdivision 19b, 316.9 clause (4). 316.10 (b) "Disability income" means disability income as defined 316.11 in section 22(c)(2)(B)(iii) of the Internal Revenue Code. 316.12 (c) "Nontaxable retirement and disability benefits" means 316.13 the amount of pension, annuity, or disability benefits that 316.14 would be included in the reduction under section 22(c)(3) of the 316.15 Internal Revenue Code and pension, annuity, or disability 316.16 benefits included in federal gross income but not subject to 316.17 state taxationother than the subtraction allowed under section316.18290.01, subdivision 19b, clause (4). 316.19 (d) "Qualified individual" means a qualified individual as 316.20 defined in section 22(b) of the Internal Revenue Code. 316.21(e) "Social security benefits above the second federal316.22threshold" means the amount of social security benefits included316.23in federal taxable income due to the provisions of section 13215316.24of the Omnibus Budget Reconciliation Act of 1993, Public Law316.25Number 103-66.316.26 [EFFECTIVE DATE.] This section is effective for tax years 316.27 beginning after December 31, 2002. 316.28 Sec. 15. Minnesota Statutes 2002, section 291.005, 316.29 subdivision 1, is amended to read: 316.30 Subdivision 1. Unless the context otherwise clearly 316.31 requires, the following terms used in this chapter shall have 316.32 the following meanings: 316.33 (1) "Federal gross estate" means the gross estate of a 316.34 decedent as valued and otherwise determined for federal estate 316.35 tax purposes by federal taxing authorities pursuant to the 316.36 provisions of the Internal Revenue Code. 317.1 (2) "Minnesota gross estate" means the federal gross estate 317.2 of a decedent after (a) excluding therefrom any property 317.3 included therein which has its situs outside Minnesotaand317.4pensions exempt from tax under this chapter pursuant to section317.5352.15, subdivision 1; 353.15, subdivision 1; 354.10,317.6subdivision 1; 354B.30; or 354C.165, and (b) including therein 317.7 any property omitted from the federal gross estate which is 317.8 includable therein, has its situs in Minnesota, and was not 317.9 disclosed to federal taxing authorities. 317.10 (3) "Personal representative" means the executor, 317.11 administrator or other person appointed by the court to 317.12 administer and dispose of the property of the decedent. If 317.13 there is no executor, administrator or other person appointed, 317.14 qualified, and acting within this state, then any person in 317.15 actual or constructive possession of any property having a situs 317.16 in this state which is included in the federal gross estate of 317.17 the decedent shall be deemed to be a personal representative to 317.18 the extent of the property and the Minnesota estate tax due with 317.19 respect to the property. 317.20 (4) "Resident decedent" means an individual whose domicile 317.21 at the time of death was in Minnesota. 317.22 (5) "Nonresident decedent" means an individual whose 317.23 domicile at the time of death was not in Minnesota. 317.24 (6) "Situs of property" means, with respect to real 317.25 property, the state or country in which it is located; with 317.26 respect to tangible personal property, the state or country in 317.27 which it was normally kept or located at the time of the 317.28 decedent's death; and with respect to intangible personal 317.29 property, the state or country in which the decedent was 317.30 domiciled at death. 317.31 (7) "Commissioner" means the commissioner of revenue or any 317.32 person to whom the commissioner has delegated functions under 317.33 this chapter. 317.34 (8) "Internal Revenue Code" means the United States 317.35 Internal Revenue Code of 1986, as amended through December 31, 317.3620002002. 318.1 [EFFECTIVE DATE.] This section is effective for estates of 318.2 decedents dying after December 31, 2002. 318.3 Sec. 16. Minnesota Statutes 2002, section 291.03, 318.4 subdivision 1, is amended to read: 318.5 Subdivision 1. [TAX AMOUNT.] The tax imposed shall be an 318.6 amount equal to the proportion of the maximum credit computed 318.7 under section 2011 of the Internal Revenue Code, as amended 318.8 through December 31, 2000, for state death taxes as the 318.9 Minnesota gross estate bears to the value of the federal gross 318.10 estate.For a resident decedent, the tax shall be the maximum318.11credit computed under section 2011 of the Internal Revenue Code318.12reduced by the amount of the death tax paid the other state and318.13credited against the federal estate tax if this results in a318.14larger amount of tax than the proportionate amount of the318.15credit.The tax determined under this paragraph shall not be 318.16 greater than the federal estate tax computed under section 2001 318.17 of the Internal Revenue Code after the allowance of the federal 318.18 credits allowed under section 2010 of the Internal Revenue Code 318.19 of 1986, as amended through December 31, 2000. For the purposes 318.20 of this section, expenses which are deducted for federal income 318.21 tax purposes under section 642(g) of the Internal Revenue Code 318.22 as amended through December 31, 2002, are not allowable in 318.23 computing the tax under this chapter. 318.24 [EFFECTIVE DATE.] This section is effective for estates of 318.25 decedents dying after December 31, 2002. 318.26 Sec. 17. Minnesota Statutes 2002, section 352.15, 318.27 subdivision 1, is amended to read: 318.28 Subdivision 1. [EXEMPTION; EXCEPTIONS.] None of the money, 318.29 annuities, or other benefits mentioned in this chapter is 318.30 assignable either in law or in equity or subject tostate estate318.31tax, or toexecution, levy, attachment, garnishment, or other 318.32 legal process, except as provided in subdivision 1a or section 318.33 518.58, 518.581, or 518.6111. 318.34 [EFFECTIVE DATE.] This section is effective for estates of 318.35 decedents dying after December 31, 2002. 318.36 Sec. 18. Minnesota Statutes 2002, section 353.15, 319.1 subdivision 1, is amended to read: 319.2 Subdivision 1. [EXEMPTION; EXCEPTIONS.] No money, annuity, 319.3 or benefit provided for in this chapter is assignable or subject 319.4to any state estate tax, orto execution, levy, attachment, 319.5 garnishment, or legal process, except as provided in subdivision 319.6 2 or section 518.58, 518.581, or 518.6111. 319.7 [EFFECTIVE DATE.] This section is effective for estates of 319.8 decedents dying after December 31, 2002. 319.9 Sec. 19. Minnesota Statutes 2002, section 354.10, 319.10 subdivision 1, is amended to read: 319.11 Subdivision 1. [EXEMPTION; EXCEPTIONS.] The right of a 319.12 teacher to take advantage of the benefits provided by this 319.13 chapter, is a personal right only and is not assignable. All 319.14 money to the credit of a teacher's account in the fund or any 319.15 money payable to the teacher from the fund belongs to the state 319.16 of Minnesota until actually paid to the teacher or a beneficiary 319.17 under this chapter. The association may acknowledge a properly 319.18 completed power of attorney form. An assignment or attempted 319.19 assignment of a teacher's interest in the fund, or of the 319.20 beneficiary's interest in the fund, by a teacher or a 319.21 beneficiary is void and exemptfrom taxation under chapter 291319.22andfrom garnishment or levy under attachment or execution, 319.23 except as provided in subdivision 2 or 3, or section 518.58, 319.24 518.581, or 518.6111. 319.25 [EFFECTIVE DATE.] This section is effective for estates of 319.26 decedents dying after December 31, 2002. 319.27 Sec. 20. Minnesota Statutes 2002, section 354B.30, is 319.28 amended to read: 319.29 354B.30 [PROHIBITION ON LOANS OR PRETERMINATION 319.30 DISTRIBUTIONS.] 319.31 (a) No participant may obtain a loan from the plan or 319.32 obtain any distribution from the plan at a time before the 319.33 participant terminates the employment that gave rise to plan 319.34 coverage. 319.35 (b) No amounts to the credit of the plan are assignable 319.36 either in law or in equity,are subject to state estate tax,or 320.1 are subject to execution, levy, attachment, garnishment, or 320.2 other legal process, except as provided in section 518.58, 320.3 518.581, or 518.6111. 320.4 [EFFECTIVE DATE.] This section is effective for estates of 320.5 decedents dying after December 31, 2002. 320.6 Sec. 21. Minnesota Statutes 2002, section 354C.165, is 320.7 amended to read: 320.8 354C.165 [PROHIBITION ON LOANS OR PRETERMINATION 320.9 DISTRIBUTIONS.] 320.10 (a) Except as provided in paragraph (c), no participant may 320.11 obtain a loan or any distribution from the plan before the 320.12 participant terminates the employment that gave rise to plan 320.13 coverage. 320.14 (b) No amounts to the credit of the plan are assignable 320.15 either in law or in equity,are subject to state estate tax,or 320.16 are subject to execution, levy, attachment, garnishment, or 320.17 other legal process, except as provided in section 518.58, 320.18 518.581, or 518.6111. 320.19 (c) Unless prohibited by or subject to a penalty under 320.20 federal law, a teacher who is a participant in the supplemental 320.21 retirement plan may request, in writing, a transfer of all or a 320.22 portion of the funds accumulated in the person's supplemental 320.23 plan account to the teachers retirement association to purchase 320.24 service credit under sections 354.53, 354.533, 354.534, 354.535, 320.25 354.536, 354.537, and 354.538 or to the teachers retirement fund 320.26 association to purchase service credit under sections 354A.097, 320.27 354A.098, 354A.099, 354A.101, 354A.102, 354A.103, and 354A.104. 320.28 Upon receipt of a valid request, the board shall execute the 320.29 transfer. The transfer must be a fund-to-fund transfer, and in 320.30 no event shall the participant directly receive any of the funds 320.31 while still employed by the board. In no event may the board 320.32 transfer more than the participant's account balance. The 320.33 board, in cooperation with the executive director of the 320.34 teachers retirement association, shall develop the forms for 320.35 requesting a transfer and the procedures for executing the 320.36 requested transfers. 321.1 [EFFECTIVE DATE.] This section is effective for estates of 321.2 decedents dying after December 31, 2002. 321.3 Sec. 22. Laws 2001, First Special Session chapter 5, 321.4 article 9, section 12, the effective date, is amended to read: 321.5 [EFFECTIVE DATE.] This section is effective for assignment 321.6 of refunds filed with the commissioner after December 31, 2001. 321.7The time period for filing assignments expires December 31,321.82003, but assignments filed on or before that date remain in321.9effect until satisfied or canceled.321.10 Sec. 23. [REPEALER.] 321.11 (a) Minnesota Statutes 2002, sections 290.0671, subdivision 321.12 3; and 290.0675, subdivision 5, are repealed effective for tax 321.13 years beginning after December 31, 2002. 321.14 (b) Minnesota Rules, parts 8007.0300, subpart 3; 8009.7100; 321.15 8009.7200; 8009.7300; 8009.7400; and 8092.1000, are repealed 321.16 effective the day following final enactment. 321.17 ARTICLE 13 321.18 FEDERAL UPDATE 321.19 Section 1. Minnesota Statutes 2002, section 289A.02, 321.20 subdivision 7, is amended to read: 321.21 Subd. 7. [INTERNAL REVENUE CODE.] Unless specifically 321.22 defined otherwise, "Internal Revenue Code" means the Internal 321.23 Revenue Code of 1986, as amended throughMarch 15December 31, 321.24 2002. 321.25 [EFFECTIVE DATE.] This section is effective the day 321.26 following final enactment. 321.27 Sec. 2. Minnesota Statutes 2002, section 290.01, 321.28 subdivision 19, is amended to read: 321.29 Subd. 19. [NET INCOME.] The term "net income" means the 321.30 federal taxable income, as defined in section 63 of the Internal 321.31 Revenue Code of 1986, as amended through the date named in this 321.32 subdivision, incorporating any elections made by the taxpayer in 321.33 accordance with the Internal Revenue Code in determining federal 321.34 taxable income for federal income tax purposes, and with the 321.35 modifications provided in subdivisions 19a to 19f. 321.36 In the case of a regulated investment company or a fund 322.1 thereof, as defined in section 851(a) or 851(g) of the Internal 322.2 Revenue Code, federal taxable income means investment company 322.3 taxable income as defined in section 852(b)(2) of the Internal 322.4 Revenue Code, except that: 322.5 (1) the exclusion of net capital gain provided in section 322.6 852(b)(2)(A) of the Internal Revenue Code does not apply; 322.7 (2) the deduction for dividends paid under section 322.8 852(b)(2)(D) of the Internal Revenue Code must be applied by 322.9 allowing a deduction for capital gain dividends and 322.10 exempt-interest dividends as defined in sections 852(b)(3)(C) 322.11 and 852(b)(5) of the Internal Revenue Code; and 322.12 (3) the deduction for dividends paid must also be applied 322.13 in the amount of any undistributed capital gains which the 322.14 regulated investment company elects to have treated as provided 322.15 in section 852(b)(3)(D) of the Internal Revenue Code. 322.16 The net income of a real estate investment trust as defined 322.17 and limited by section 856(a), (b), and (c) of the Internal 322.18 Revenue Code means the real estate investment trust taxable 322.19 income as defined in section 857(b)(2) of the Internal Revenue 322.20 Code. 322.21 The net income of a designated settlement fund as defined 322.22 in section 468B(d) of the Internal Revenue Code means the gross 322.23 income as defined in section 468B(b) of the Internal Revenue 322.24 Code. 322.25 The provisions of sections 1113(a), 1117, 1206(a), 1313(a), 322.26 1402(a), 1403(a), 1443, 1450, 1501(a), 1605, 1611(a), 1612, 322.27 1616, 1617, 1704(l), and 1704(m) of the Small Business Job 322.28 Protection Act, Public Law Number 104-188, the provisions of 322.29 Public Law Number 104-117, the provisions of sections 313(a) and 322.30 (b)(1), 602(a), 913(b), 941, 961, 971, 1001(a) and (b), 1002, 322.31 1003, 1012, 1013, 1014, 1061, 1062, 1081, 1084(b), 1086, 1087, 322.32 1111(a), 1131(b) and (c), 1211(b), 1213, 1530(c)(2), 1601(f)(5) 322.33 and (h), and 1604(d)(1) of the Taxpayer Relief Act of 1997, 322.34 Public Law Number 105-34, the provisions of section 6010 of the 322.35 Internal Revenue Service Restructuring and Reform Act of 1998, 322.36 Public Law Number 105-206, the provisions of section 4003 of the 323.1 Omnibus Consolidated and Emergency Supplemental Appropriations 323.2 Act, 1999, Public Law Number 105-277, and the provisions of 323.3 section 318 of the Consolidated Appropriation Act of 2001, 323.4 Public Law Number 106-554, shall become effective at the time 323.5 they become effective for federal purposes. 323.6 The Internal Revenue Code of 1986, as amended through 323.7 December 31, 1996, shall be in effect for taxable years 323.8 beginning after December 31, 1996. 323.9 The provisions of sections 202(a) and (b), 221(a), 225, 323.10 312, 313, 913(a), 934, 962, 1004, 1005, 1052, 1063, 1084(a) and 323.11 (c), 1089, 1112, 1171, 1204, 1271(a) and (b), 1305(a), 1306, 323.12 1307, 1308, 1309, 1501(b), 1502(b), 1504(a), 1505, 1527, 1528, 323.13 1530, 1601(d), (e), (f), and (i) and 1602(a), (b), (c), and (e) 323.14 of the Taxpayer Relief Act of 1997, Public Law Number 105-34, 323.15 the provisions of sections 6004, 6005, 6012, 6013, 6015, 6016, 323.16 7002, and 7003 of the Internal Revenue Service Restructuring and 323.17 Reform Act of 1998, Public Law Number 105-206, the provisions of 323.18 section 3001 of the Omnibus Consolidated and Emergency 323.19 Supplemental Appropriations Act, 1999, Public Law Number 323.20 105-277, the provisions of section 3001 of the Miscellaneous 323.21 Trade and Technical Corrections Act of 1999, Public Law Number 323.22 106-36, and the provisions of section 316 of the Consolidated 323.23 Appropriation Act of 2001, Public Law Number 106-554, shall 323.24 become effective at the time they become effective for federal 323.25 purposes. 323.26 The Internal Revenue Code of 1986, as amended through 323.27 December 31, 1997, shall be in effect for taxable years 323.28 beginning after December 31, 1997. 323.29 The provisions of sections 5002, 6009, 6011, and 7001 of 323.30 the Internal Revenue Service Restructuring and Reform Act of 323.31 1998, Public Law Number 105-206, the provisions of section 9010 323.32 of the Transportation Equity Act for the 21st Century, Public 323.33 Law Number 105-178, the provisions of sections 1004, 4002, and 323.34 5301 of the Omnibus Consolidation and Emergency Supplemental 323.35 Appropriations Act, 1999, Public Law Number 105-277, the 323.36 provision of section 303 of the Ricky Ray Hemophilia Relief Fund 324.1 Act of 1998, Public Law Number 105-369, the provisions of 324.2 sections 532, 534, 536, 537, and 538 of the Ticket to Work and 324.3 Work Incentives Improvement Act of 1999, Public Law Number 324.4 106-170, the provisions of the Installment Tax Correction Act of 324.5 2000, Public Law Number 106-573, and the provisions of section 324.6 309 of the Consolidated Appropriation Act of 2001, Public Law 324.7 Number 106-554, shall become effective at the time they become 324.8 effective for federal purposes. 324.9 The Internal Revenue Code of 1986, as amended through 324.10 December 31, 1998, shall be in effect for taxable years 324.11 beginning after December 31, 1998. 324.12 The provisions of the FSC Repeal and Extraterritorial 324.13 Income Exclusion Act of 2000, Public Law Number 106-519, and the 324.14 provision of section 412 of the Job Creation and Worker 324.15 Assistance Act of 2002, Public Law Number 107-147, shall become 324.16 effective at the time it became effective for federal purposes. 324.17 The Internal Revenue Code of 1986, as amended through 324.18 December 31, 1999, shall be in effect for taxable years 324.19 beginning after December 31, 1999. The provisions of sections 324.20 306 and 401 of the Consolidated Appropriation Act of 2001, 324.21 Public Law Number 106-554, and the provision of section 324.22 632(b)(2)(A) of the Economic Growth and Tax Relief 324.23 Reconciliation Act of 2001, Public Law Number 107-16, and 324.24 provisions of sections 101 and 402 of the Job Creation and 324.25 Worker Assistance Act of 2002, Public Law Number 107-147, shall 324.26 become effective at the same time it became effective for 324.27 federal purposes. 324.28 The Internal Revenue Code of 1986, as amended through 324.29 December 31, 2000, shall be in effect for taxable years 324.30 beginning after December 31, 2000. The provisions of sections 324.31 659a and 671 of the Economic Growth and Tax Relief 324.32 Reconciliation Act of 2001, Public Law Number 107-16, the 324.33 provisions of sections 104, 105, and 111 of the Victims of 324.34 Terrorism Tax Relief Act of 2001, Public Law Number 107-134, and 324.35 the provisions of sections 201, 403, 413, and 606 of the Job 324.36 Creation and Worker Assistance Act of 2002, Public Law Number 325.1 107-147, shall become effective at the same time it became 325.2 effective for federal purposes. 325.3 The Internal Revenue Code of 1986, as amended through March 325.4 15, 2002, shall be in effect for taxable years beginning after 325.5 December 31, 2001. 325.6 The provisions of sections 101 and 102 of the Victims of 325.7 Terrorism Tax Relief Act of 2001, Public Law Number 107-134, 325.8 shall become effective at the same time it becomes effective for 325.9 federal purposes. 325.10 The Internal Revenue Code of 1986, as amended through 325.11 December 31, 2002, shall be in effect for taxable years 325.12 beginning after December 31, 2002. 325.13 Except as otherwise provided, references to the Internal 325.14 Revenue Code in subdivisions 19a to 19g mean the code in effect 325.15 for purposes of determining net income for the applicable year. 325.16 [EFFECTIVE DATE.] This section is effective the day 325.17 following final enactment. 325.18 Sec. 3. Minnesota Statutes 2002, section 290.01, 325.19 subdivision 31, is amended to read: 325.20 Subd. 31. [INTERNAL REVENUE CODE.] Unless specifically 325.21 defined otherwise, "Internal Revenue Code" means the Internal 325.22 Revenue Code of 1986, as amended throughMarch 15December 31, 325.23 2002. 325.24 [EFFECTIVE DATE.] This section is effective the day 325.25 following final enactment. 325.26 Sec. 4. Minnesota Statutes 2002, section 290A.03, 325.27 subdivision 15, is amended to read: 325.28 Subd. 15. [INTERNAL REVENUE CODE.] "Internal Revenue Code" 325.29 means the Internal Revenue Code of 1986, as amended 325.30 throughMarch 15December 31, 2002. 325.31 [EFFECTIVE DATE.] This section is effective for refunds 325.32 payable for rents paid in 2003 and thereafter and property taxes 325.33 payable in 2004 and thereafter. 325.34 ARTICLE 14 325.35 DEPARTMENT PROPERTY TAX INITIATIVES 325.36 Section 1. Minnesota Statutes 2002, section 270.06, is 326.1 amended to read: 326.2 270.06 [POWERS AND DUTIES.] 326.3 The commissioner of revenue shall: 326.4 (1) have and exercise general supervision over the 326.5 administration of the assessment and taxation laws of the state, 326.6 over assessors, town, county, and city boards of review and 326.7 equalization, and all other assessing officers in the 326.8 performance of their duties, to the end that all assessments of 326.9 property be made relatively just and equal in compliance with 326.10 the laws of the state; 326.11 (2) confer with, advise, and give the necessary 326.12 instructions and directions to local assessors and local boards 326.13 of review throughout the state as to their duties under the laws 326.14 of the state; 326.15 (3) direct proceedings, actions, and prosecutions to be 326.16 instituted to enforce the laws relating to the liability and 326.17 punishment of public officers and officers and agents of 326.18 corporations for failure or negligence to comply with the 326.19 provisions of the laws of this state governing returns of 326.20 assessment and taxation of property, and cause complaints to be 326.21 made against local assessors, members of boards of equalization, 326.22 members of boards of review, or any other assessing or taxing 326.23 officer, to the proper authority, for their removal from office 326.24 for misconduct or negligence of duty; 326.25 (4) require county attorneys to assist in the commencement 326.26 of prosecutions in actions or proceedings for removal, 326.27 forfeiture and punishment for violation of the laws of this 326.28 state in respect to the assessment and taxation of property in 326.29 their respective districts or counties; 326.30 (5) require town, city, county, and other public officers 326.31 to report information as to the assessment of property, 326.32 collection of taxes received from licenses and other sources, 326.33 and such other information as may be needful in the work of the 326.34 department of revenue, in such form and upon such blanks as the 326.35 commissioner may prescribe; 326.36 (6) require individuals, copartnerships, companies, 327.1 associations, and corporations to furnish information concerning 327.2 their capital, funded or other debt, current assets and 327.3 liabilities, earnings, operating expenses, taxes, as well as all 327.4 other statements now required by law for taxation purposes; 327.5 (7) subpoena witnesses, at a time and place reasonable 327.6 under the circumstances, to appear and give testimony, and to 327.7 produce books, records, papers and documents for inspection and 327.8 copying relating to any matter which the commissioner may have 327.9 authority to investigate or determine; 327.10 (8) issue a subpoena which does not identify the person or 327.11 persons with respect to whose liability the subpoena is issued, 327.12 but only if (a) the subpoena relates to the investigation of a 327.13 particular person or ascertainable group or class of persons, 327.14 (b) there is a reasonable basis for believing that such person 327.15 or group or class of persons may fail or may have failed to 327.16 comply with any law administered by the commissioner, (c) the 327.17 information sought to be obtained from the examination of the 327.18 records (and the identity of the person or persons with respect 327.19 to whose liability the subpoena is issued) is not readily 327.20 available from other sources, (d) the subpoena is clear and 327.21 specific as to the information sought to be obtained, and (e) 327.22 the information sought to be obtained is limited solely to the 327.23 scope of the investigation. Provided further that the party 327.24 served with a subpoena which does not identify the person or 327.25 persons with respect to whose tax liability the subpoena is 327.26 issued shall have the right, within 20 days after service of the 327.27 subpoena, to petition the district court for the judicial 327.28 district in which lies the county in which that party is located 327.29 for a determination as to whether the commissioner of revenue 327.30 has complied with all the requirements in (a) to (e), and thus, 327.31 whether the subpoena is enforceable. If no such petition is 327.32 made by the party served within the time prescribed, the 327.33 subpoena shall have the force and effect of a court order; 327.34 (9) cause the deposition of witnesses residing within or 327.35 without the state, or absent therefrom, to be taken, upon notice 327.36 to the interested party, if any, in like manner that depositions 328.1 of witnesses are taken in civil actions in the district court, 328.2 in any matter which the commissioner may have authority to 328.3 investigate or determine; 328.4 (10) investigate the tax laws of other states and countries 328.5 and to formulate and submit to the legislature such legislation 328.6 as the commissioner may deem expedient to prevent evasions of 328.7 assessment and taxing laws, and secure just and equal taxation 328.8 and improvement in the system of assessment and taxation in this 328.9 state; 328.10 (11) consult and confer with the governor upon the subject 328.11 of taxation, the administration of the laws in regard thereto, 328.12 and the progress of the work of the department of revenue, and 328.13 furnish the governor, from time to time, such assistance and 328.14 information as the governor may require relating to tax matters; 328.15 (12) transmit to the governor, on or before the third 328.16 Monday in December of each even-numbered year, and to each 328.17 member of the legislature, on or before November 15 of each 328.18 even-numbered year, the report of the department of revenue for 328.19 the preceding years, showing all the taxable property in the 328.20 state and the value of the same, in tabulated form; 328.21 (13) inquire into the methods of assessment and taxation 328.22 and ascertain whether the assessors faithfully discharge their 328.23 duties, particularly as to their compliance with the laws 328.24 requiring the assessment of all property not exempt from 328.25 taxation; 328.26 (14) administer and enforce the assessment and collection 328.27 of state taxes and fees, including the use of any remedy 328.28 available to nongovernmental creditors, and, from time to time, 328.29 make, publish, and distribute rules for the administration and 328.30 enforcement ofassessments and feeslaws administered by the 328.31 commissioner and state tax laws. The rules have the force of 328.32 law; 328.33 (15) prepare blank forms for the returns required by state 328.34 tax law and distribute them throughout the state, furnishing 328.35 them subject to charge on application; 328.36 (16) prescribe rules governing the qualification and 329.1 practice of agents, attorneys, or other persons representing 329.2 taxpayers before the commissioner. The rules may require that 329.3 those persons, agents, and attorneys show that they are of good 329.4 character and in good repute, have the necessary qualifications 329.5 to give taxpayers valuable services, and are otherwise competent 329.6 to advise and assist taxpayers in the presentation of their case 329.7 before being recognized as representatives of taxpayers. After 329.8 due notice and opportunity for hearing, the commissioner may 329.9 suspend and bar from further practice before the commissioner 329.10 any person, agent, or attorney who is shown to be incompetent or 329.11 disreputable, who refuses to comply with the rules, or who with 329.12 intent to defraud, willfully or knowingly deceives, misleads, or 329.13 threatens a taxpayer or prospective taxpayer, by words, 329.14 circular, letter, or by advertisement. This clause does not 329.15 curtail the rights of individuals to appear in their own behalf 329.16 or partners or corporations' officers to appear in behalf of 329.17 their respective partnerships or corporations; 329.18 (17) appoint agents as the commissioner considers necessary 329.19 to make examinations and determinations. The agents have the 329.20 rights and powers conferred on the commissioner to subpoena, 329.21 examine, and copy books, records, papers, or memoranda, subpoena 329.22 witnesses, administer oaths and affirmations, and take 329.23 testimony. In addition to administrative subpoenas of the 329.24 commissioner and the agents, upon demand of the commissioner or 329.25 an agent, the court administrator of any district court shall 329.26 issue a subpoena for the attendance of a witness or the 329.27 production of books, papers, records, or memoranda before the 329.28 agent for inspection and copying. Disobedience of a court 329.29 administrator's subpoena shall be punished by the district court 329.30 of the district in which the subpoena is issued, or in the case 329.31 of a subpoena issued by the commissioner or an agent, by the 329.32 district court of the district in which the party served with 329.33 the subpoena is located, in the same manner as contempt of the 329.34 district court; 329.35 (18) appoint and employ additional help, purchase supplies 329.36 or materials, or incur other expenditures in the enforcement of 330.1 state tax laws as considered necessary. The salaries of all 330.2 agents and employees provided for in this chapter shall be fixed 330.3 by the appointing authority, subject to the approval of the 330.4 commissioner of administration; 330.5 (19) execute and administer any agreement with the 330.6 secretary of the treasury of the United States or a 330.7 representative of another state regarding the exchange of 330.8 information and administration of the tax laws; 330.9 (20) authorize the use of unmarked motor vehicles to 330.10 conduct seizures or criminal investigations pursuant to the 330.11 commissioner's authority; and 330.12 (21) exercise other powers and perform other duties 330.13 required of or imposed upon the commissioner of revenue by law. 330.14 [EFFECTIVE DATE.] This section is effective the day 330.15 following final enactment. 330.16 Sec. 2. Minnesota Statutes 2002, section 270.10, 330.17 subdivision 1a, is amended to read: 330.18 Subd. 1a. [NOTIFICATION TO TAXPAYER.] At the same time 330.19 that notice of the assessment, determination, or order of the 330.20 commissioner is given to a taxpayer, the taxpayer must be 330.21 notified in writing of the right to appeal to the tax court, and 330.22 if applicable, to the small claims division. Except in the case 330.23 of mathematical or clerical errors, the notice must contain a 330.24 description of the basis for, including applicable law and other 330.25 factors considered in the determination, and a listing of the 330.26 amounts of tax due, interest, additions to tax, and penalties. 330.27 Failure to provide all the required information does not 330.28 invalidate the notice for purposes of satisfying statutory 330.29 notice requirements if the notice contains sufficient 330.30 information to advise the taxpayer that an assessment, order, or 330.31 other determination has been made. The taxpayer may request 330.32 further clarification within the time provided for appealing the 330.33 determination.In any notice of assessment, determination, or330.34order dealing with property valuation or assessment for property330.35tax purposes by the commissioner of revenue or a local unit of330.36government, the taxpayer must be notified in writing that a331.1taxpayer must appeal to the town or city board of equalization331.2and to the county board of equalization before appealing to the331.3small claims division of the tax court, except for those331.4taxpayers whose original assessments are determined by the331.5commissioner of revenue.331.6 [EFFECTIVE DATE.] This section is effective the day 331.7 following final enactment. 331.8 Sec. 3. Minnesota Statutes 2002, section 272.02, is 331.9 amended by adding a subdivision to read: 331.10 Subd. 56. [COMPREHENSIVE HEALTH ASSOCIATION.] All property 331.11 owned by the comprehensive health association is exempt to the 331.12 extent provided in section 62E.10, subdivision 1. 331.13 [EFFECTIVE DATE.] This section is effective the day 331.14 following final enactment. 331.15 Sec. 4. Minnesota Statutes 2002, section 272.02, is 331.16 amended by adding a subdivision to read: 331.17 Subd. 57. [PRIVATE CEMETERIES.] All property owned by 331.18 private cemeteries is exempt to the extent provided in section 331.19 307.09. 331.20 [EFFECTIVE DATE.] This section is effective the day 331.21 following final enactment. 331.22 Sec. 5. Minnesota Statutes 2002, section 272.02, is 331.23 amended by adding a subdivision to read: 331.24 Subd. 58. [WESTERN LAKE SUPERIOR SANITARY BOARD.] All 331.25 property owned, leased, controlled, used, or occupied for 331.26 public, governmental, and municipal purposes by the Western Lake 331.27 Superior Sanitary Board is exempt to the extent provided in 331.28 section 458D.23. 331.29 [EFFECTIVE DATE.] This section is effective the day 331.30 following final enactment. 331.31 Sec. 6. Minnesota Statutes 2002, section 272.02, is 331.32 amended by adding a subdivision to read: 331.33 Subd. 59. [UNFINISHED SALE OR RENTAL PROJECTS.] Unfinished 331.34 sale or rental projects are exempt to the extent provided in 331.35 section 469.155, subdivision 17. 331.36 [EFFECTIVE DATE.] This section is effective the day 332.1 following final enactment. 332.2 Sec. 7. Minnesota Statutes 2002, section 272.02, is 332.3 amended by adding a subdivision to read: 332.4 Subd. 60. [SKYWAYS.] The pedestrian skyway system, 332.5 underground pedestrian concourse, the people mover system, and 332.6 publicly owned parking structures are exempt to the extent 332.7 provided in section 469.127. 332.8 [EFFECTIVE DATE.] This section is effective the day 332.9 following final enactment. 332.10 Sec. 8. Minnesota Statutes 2002, section 272.02, is 332.11 amended by adding a subdivision to read: 332.12 Subd. 61. [MUNICIPAL RECREATION FACILITIES.] All property 332.13 acquired and used by a city is exempt to the extent provided in 332.14 section 471.191, subdivision 4. 332.15 [EFFECTIVE DATE.] This section is effective the day 332.16 following final enactment. 332.17 Sec. 9. Minnesota Statutes 2002, section 272.02, is 332.18 amended by adding a subdivision to read: 332.19 Subd. 62. [WATER AND WASTEWATER TREATMENT 332.20 FACILITIES.] Related facilities owned by water and wastewater 332.21 treatment providers who have contracted with a municipality to 332.22 provide capital intensive public services to the municipality 332.23 are exempt to the extent provided in section 471A.05. 332.24 [EFFECTIVE DATE.] This section is effective the day 332.25 following final enactment. 332.26 Sec. 10. Minnesota Statutes 2002, section 272.12, is 332.27 amended to read: 332.28 272.12 [CONVEYANCES, TAXES PAID BEFORE RECORDING.] 332.29 When: 332.30 (a) a deed or other instrument conveying land, 332.31 (b) a plat of any town site or addition thereto, 332.32 (c) a survey required pursuant to section 508.47, 332.33 (d) a condominium plat subject to chapter 515 or 515A or a 332.34 declaration that contains such a plat, or 332.35 (e) a common interest community plat subject to chapter 332.36 515B or a declaration that contains such a plat, 333.1 is presented to the county auditor for transfer, the auditor 333.2 shall ascertain from the records if there be taxes delinquent 333.3 upon the land described therein, or if it has been sold for 333.4 taxes. An assignment of a sheriff's or referee's certificate of 333.5 sale, when the certificate of sale describes real estate, and 333.6 certificates of redemption from mortgage or lien foreclosure 333.7 sales, when the certificate of redemption encompasses real 333.8 estate and is issued to a junior creditor, are considered 333.9 instruments conveying land for the purposes of this section and 333.10 section 272.121. If there are taxes delinquent, the auditor 333.11 shall certify to the same; and upon payment of such taxes, or in 333.12 case no taxes are delinquent, shall transfer the land upon the 333.13 books of the auditor's office, and note upon the instrument, 333.14 over official signature, the words, "no delinquent taxes and 333.15 transfer entered," or, if the land described has been sold or 333.16 assigned to an actual purchaser for taxes, the words "paid by 333.17 sale of land described within;" and, unless such statement is 333.18 made upon such instrument, the county recorder or the registrar 333.19 of titles shall refuse to receive or record the same; provided, 333.20 that sheriff's or referees' certificates of sale on execution or 333.21 foreclosure of a lien or mortgage, certificates of redemption 333.22 from mortgage or lien foreclosure sales issued to the redeeming 333.23 mortgagor or lienee, deeds of distribution made by a personal 333.24 representative in probate proceedings, decrees and judgments, 333.25 receivers receipts, patents, and copies of town or statutory 333.26 city plats, in case the original plat filed in the office of the 333.27 county recorder has been lost or destroyed, and the instruments 333.28 releasing, removing and discharging reversionary and forfeiture 333.29 provisions affecting title to land and instruments releasing, 333.30 removing or discharging easement rights in land or building or 333.31 other restrictions, may be recorded without such certificate; 333.32 and, provided that instruments conveying land and, as 333.33 appurtenant thereto an easement over adjacent tract or tracts of 333.34 land, may be recorded without such certificate as to the land 333.35 covered by such easement; and provided further, that any 333.36 instrument granting an easement made in favor of any public 334.1 utility or pipe line for conveying gas, liquids or solids in 334.2 suspension, in the nature of a right-of-way over, along, across 334.3 or under a tract of land may be recorded without such 334.4 certificate as to the land covered by such easement.Any334.5instrument amending or restating the declarations, bylaws,334.6plats, or other enablingDocuments governing homeowners 334.7 associations of condominiums, townhouses, common interest 334.8 ownership communities, and other planned unit developments may 334.9 be recorded without the auditor's certificate to the extent 334.10 provided in section 515B.1-116(f). 334.11 A deed of distribution made by a personal representative in 334.12 a probate proceeding, a decree, or a judgment that conveys land 334.13 shall be presented to the county auditor, who shall transfer the 334.14 land upon the books of the auditor's office and note upon the 334.15 instrument, over official signature, the words, "transfer 334.16 entered", and the instrument may then be recorded. A decree or 334.17 judgment that affects title to land but does not convey land may 334.18 be recorded without presentation to the auditor. 334.19 A violation of this section by the county recorder or the 334.20 registrar of titles shall be a gross misdemeanor, and, in 334.21 addition to the punishment therefor, the recorder or registrar 334.22 shall be liable to the grantee of any instrument so recorded for 334.23 the amount of any damages sustained. 334.24 When, as a condition to permitting the recording of deed or 334.25 other instrument affecting the title to real estate previously 334.26 forfeited to the state under the provisions of sections 281.16 334.27 to 281.25, county officials, after such real estate has been 334.28 purchased or repurchased, have required the payment of taxes 334.29 erroneously assumed to have accrued against such real estate 334.30 after forfeiture and before the date of purchase or repurchase, 334.31 the sum required to be so paid shall be refunded to the persons 334.32 entitled thereto out of moneys in the funds in which the sum so 334.33 paid was placed. Delinquent taxes are those taxes deemed 334.34 delinquent under section 279.02. 334.35 [EFFECTIVE DATE.] This section is effective for deeds or 334.36 instruments accepted for recording or registration on or after 335.1 July 1, 2003. 335.2 Sec. 11. Minnesota Statutes 2002, section 273.05, 335.3 subdivision 1, is amended to read: 335.4 Subdivision 1. [APPOINTMENT OF TOWN AND CITY ASSESSORS.] 335.5 Notwithstanding any other provision of law all town assessors 335.6 shall be appointed by the town board, and notwithstanding any 335.7 charter provisions to the contrary, all city assessors shall be 335.8 appointed by the city council or other appointing authority as 335.9 provided by law or charter.Such assessors shall be residents335.10of the state but need not be a resident of the town or city for335.11which they are appointed.They shall be selected and appointed 335.12 because of their knowledge and training in the field of property 335.13 taxation. All town and statutory city assessors shall be 335.14 appointed for indefinite terms. A town or statutory city 335.15 assessor who is an employee may be dismissed by the appointing 335.16 authority for cause. The term of the town or city assessors may 335.17 be terminated at any time by the town board or city council on 335.18 charges by the commissioner of revenue of inefficiency or 335.19 neglect of duty. Vacancies in the office of town or city 335.20 assessor shall be filled within 90 days by appointment of the 335.21 respective appointing authority indicated above. If the vacancy 335.22 is not filled within 90 days, the office shall be terminated. 335.23 When a vacancy in the office of town or city assessor is not 335.24 filled by appointment, and it is imperative that the office of 335.25 assessor be filled, the county auditor shall appoint some 335.26 resident of the county as assessor for such town or city. The 335.27 county auditor may appoint the county assessor as assessor for 335.28 such town or city, in which case the town or city shall pay to 335.29 the county treasurer the amount determined by the county auditor 335.30 to be due for the services performed and expenses incurred by 335.31 the county assessor in acting as assessor for such town or 335.32 city. The term of any town or statutory city assessor in a 335.33 county electing in accordance with section 273.052 shall be 335.34 terminated as provided in section 273.055. 335.35 The commissioner of revenue may recommend to the state 335.36 board of assessors the nonrenewal, suspension, or revocation of 336.1 an assessor's license as provided in sections 270.41 to 270.53. 336.2 [EFFECTIVE DATE.] This section is effective the day 336.3 following final enactment and applies to every town or city 336.4 assessor whether that assessor was appointed before, on, or 336.5 after the effective date. 336.6 Sec. 12. Minnesota Statutes 2002, section 273.061, is 336.7 amended by adding a subdivision to read: 336.8 Subd. 1a. [COMPATIBLE OFFICES.] A person appointed as the 336.9 county assessor also may serve as the county auditor, county 336.10 treasurer, or county auditor-treasurer if those offices are 336.11 appointive, provided that the person in the combined appointed 336.12 office must not serve on the county board of appeal and 336.13 equalization under section 274.13. In a county in which the 336.14 functions of the county assessor are combined with those of the 336.15 county auditor or county auditor-treasurer, the county board may 336.16 not delegate any authority, power, or responsibility under 336.17 section 375.192, subdivision 4. 336.18 [EFFECTIVE DATE.] This section is effective January 2, 2004. 336.19 Sec. 13. Minnesota Statutes 2002, section 273.061, is 336.20 amended by adding a subdivision to read: 336.21 Subd. 1b. [COMPATIBLE OFFICES IN COUNTIES CHANGING TO 336.22 APPOINTED AUDITOR.] In a county in which the office of auditor, 336.23 treasurer, or auditor-treasurer is an elective position, a 336.24 person appointed as the county assessor also may serve as the 336.25 county auditor, county treasurer, or county auditor-treasurer if 336.26 a proposal to make the affected office appointive has been 336.27 approved as required by other law and will be effective within 336.28 five years. 336.29 [EFFECTIVE DATE.] This section is effective January 2, 2004. 336.30 Sec. 14. Minnesota Statutes 2002, section 273.061, is 336.31 amended by adding a subdivision to read: 336.32 Subd. 1c. [INCOMPATIBLE OFFICES.] The person appointed as 336.33 the county assessor must not also be the county attorney, a 336.34 county board member, an elected county auditor, an elected 336.35 county treasurer, an elected county auditor-treasurer, a town 336.36 board supervisor for a town in the same county, or a city mayor 337.1 or council member for a city in the same county. The person 337.2 appointed as the city assessor must not also be a city council 337.3 member or mayor for the same city. A person appointed as the 337.4 town assessor must not also be a town board supervisor for the 337.5 same town. Except as provided in subdivision 1b, an assessor 337.6 who accepts a position that is incompatible with the office of 337.7 assessor is deemed to have resigned from the assessor position. 337.8 [EFFECTIVE DATE.] This section is effective January 2, 2004. 337.9 Sec. 15. Minnesota Statutes 2002, section 273.11, 337.10 subdivision 1a, is amended to read: 337.11 Subd. 1a. [LIMITED MARKET VALUE.] In the case of all 337.12 property classified as agricultural homestead or nonhomestead, 337.13 residential homestead or nonhomestead, timber, or noncommercial 337.14 seasonal residential recreationalresidential, the assessor 337.15 shall compare the value with the taxable portion of the value 337.16 determined in the preceding assessment. 337.17 For assessment year 2002, the amount of the increase shall 337.18 not exceed the greater of (1) ten percent of the value in the 337.19 preceding assessment, or (2) 15 percent of the difference 337.20 between the current assessment and the preceding assessment. 337.21 For assessment year 2003, the amount of the increase shall 337.22 not exceed the greater of (1) 12 percent of the value in the 337.23 preceding assessment, or (2) 20 percent of the difference 337.24 between the current assessment and the preceding assessment. 337.25 For assessment year 2004, the amount of the increase shall 337.26 not exceed the greater of (1) 15 percent of the value in the 337.27 preceding assessment, or (2) 25 percent of the difference 337.28 between the current assessment and the preceding assessment. 337.29 For assessment year 2005, the amount of the increase shall 337.30 not exceed the greater of (1) 15 percent of the value in the 337.31 preceding assessment, or (2) 33 percent of the difference 337.32 between the current assessment and the preceding assessment. 337.33 For assessment year 2006, the amount of the increase shall 337.34 not exceed the greater of (1) 15 percent of the value in the 337.35 preceding assessment, or (2) 50 percent of the difference 337.36 between the current assessment and the preceding assessment. 338.1 This limitation shall not apply to increases in value due 338.2 to improvements. For purposes of this subdivision, the term 338.3 "assessment" means the value prior to any exclusion under 338.4 subdivision 16. 338.5 The provisions of this subdivision shall be in effect 338.6 through assessment year 2006 as provided in this subdivision. 338.7 For purposes of the assessment/sales ratio study conducted 338.8 under section 127A.48, and the computation of state aids paid 338.9 under chapters 122A, 123A, 123B, 124D, 125A, 126C, 127A, and 338.10 477A, market values and net tax capacities determined under this 338.11 subdivision and subdivision 16, shall be used. 338.12 [EFFECTIVE DATE.] This section is effective the day 338.13 following final enactment. 338.14 Sec. 16. Minnesota Statutes 2002, section 273.124, 338.15 subdivision 1, is amended to read: 338.16 Subdivision 1. [GENERAL RULE.] (a) Residential real estate 338.17 that is occupied and used for the purposes of a homestead by its 338.18 owner, who must be a Minnesota resident, is a residential 338.19 homestead. 338.20 Agricultural land, as defined in section 273.13, 338.21 subdivision 23, that is occupied and used as a homestead by its 338.22 owner, who must be a Minnesota resident, is an agricultural 338.23 homestead. 338.24 Dates for establishment of a homestead and homestead 338.25 treatment provided to particular types of property are as 338.26 provided in this section. 338.27 Property held by a trustee under a trust is eligible for 338.28 homestead classification if the requirements under this chapter 338.29 are satisfied. 338.30 The assessor shall require proof, as provided in 338.31 subdivision 13, of the facts upon which classification as a 338.32 homestead may be determined. Notwithstanding any other law, the 338.33 assessor may at any time require a homestead application to be 338.34 filed in order to verify that any property classified as a 338.35 homestead continues to be eligible for homestead status. 338.36 Notwithstanding any other law to the contrary, the department of 339.1 revenue may, upon request from an assessor, verify whether an 339.2 individual who is requesting or receiving homestead 339.3 classification has filed a Minnesota income tax return as a 339.4 resident for the most recent taxable year for which the 339.5 information is available. 339.6 When there is a name change or a transfer of homestead 339.7 property, the assessor may reclassify the property in the next 339.8 assessment unless a homestead application is filed to verify 339.9 that the property continues to qualify for homestead 339.10 classification. 339.11 (b) For purposes of this section, homestead property shall 339.12 include property which is used for purposes of the homestead but 339.13 is separated from the homestead by a road, street, lot, 339.14 waterway, or other similar intervening property. The term "used 339.15 for purposes of the homestead" shall include but not be limited 339.16 to uses for gardens, garages, or other outbuildings commonly 339.17 associated with a homestead, but shall not include vacant land 339.18 held primarily for future development. In order to receive 339.19 homestead treatment for the noncontiguous property, the owner 339.20 must use the property for the purposes of the homestead, and 339.21 must apply to the assessor, both by the deadlines given in 339.22 subdivision 9. After initial qualification for the homestead 339.23 treatment, additional applications for subsequent years are not 339.24 required. 339.25 (c) Residential real estate that is occupied and used for 339.26 purposes of a homestead by a relative of the owner is a 339.27 homestead but only to the extent of the homestead treatment that 339.28 would be provided if the related owner occupied the property. 339.29 For purposes of this paragraph and paragraph (g), "relative" 339.30 means a parent, stepparent, child, stepchild, grandparent, 339.31 grandchild, brother, sister, uncle, aunt, nephew, or niece. 339.32 This relationship may be by blood or marriage. Property that 339.33 has been classified as seasonal residential recreational 339.34residentialproperty at any time during which it has been owned 339.35 by the current owner or spouse of the current owner will not be 339.36 reclassified as a homestead unless it is occupied as a homestead 340.1 by the owner; this prohibition also applies to property that, in 340.2 the absence of this paragraph, would have been classified as 340.3 seasonal residential recreationalresidentialproperty at the 340.4 time when the residence was constructed. Neither the related 340.5 occupant nor the owner of the property may claim a property tax 340.6 refund under chapter 290A for a homestead occupied by a 340.7 relative. In the case of a residence located on agricultural 340.8 land, only the house, garage, and immediately surrounding one 340.9 acre of land shall be classified as a homestead under this 340.10 paragraph, except as provided in paragraph (d). 340.11 (d) Agricultural property that is occupied and used for 340.12 purposes of a homestead by a relative of the owner, is a 340.13 homestead, only to the extent of the homestead treatment that 340.14 would be provided if the related owner occupied the property, 340.15 and only if all of the following criteria are met: 340.16 (1) the relative who is occupying the agricultural property 340.17 is a son, daughter, grandson, granddaughter, father, or mother 340.18 of the owner of the agricultural property or a son, daughter, 340.19 grandson, or granddaughter of the spouse of the owner of the 340.20 agricultural property; 340.21 (2) the owner of the agricultural property must be a 340.22 Minnesota resident; 340.23 (3) the owner of the agricultural property must not receive 340.24 homestead treatment on any other agricultural property in 340.25 Minnesota; and 340.26 (4) the owner of the agricultural property is limited to 340.27 only one agricultural homestead per family under this paragraph. 340.28 Neither the related occupant nor the owner of the property 340.29 may claim a property tax refund under chapter 290A for a 340.30 homestead occupied by a relative qualifying under this 340.31 paragraph. For purposes of this paragraph, "agricultural 340.32 property" means the house, garage, other farm buildings and 340.33 structures, and agricultural land. 340.34 Application must be made to the assessor by the owner of 340.35 the agricultural property to receive homestead benefits under 340.36 this paragraph. The assessor may require the necessary proof 341.1 that the requirements under this paragraph have been met. 341.2 (e) In the case of property owned by a property owner who 341.3 is married, the assessor must not deny homestead treatment in 341.4 whole or in part if only one of the spouses occupies the 341.5 property and the other spouse is absent due to: (1) marriage 341.6 dissolution proceedings, (2) legal separation, (3) employment or 341.7 self-employment in another location, or (4) other personal 341.8 circumstances causing the spouses to live separately, not 341.9 including an intent to obtain two homestead classifications for 341.10 property tax purposes. To qualify under clause (3), the 341.11 spouse's place of employment or self-employment must be at least 341.12 50 miles distant from the other spouse's place of employment, 341.13 and the homesteads must be at least 50 miles distant from each 341.14 other. Homestead treatment, in whole or in part, shall not be 341.15 denied to the owner's spouse who previously occupied the 341.16 residence with the owner if the absence of the owner is due to 341.17 one of the exceptions provided in this paragraph. 341.18 (f) The assessor must not deny homestead treatment in whole 341.19 or in part if: 341.20 (1) in the case of a property owner who is not married, the 341.21 owner is absent due to residence in a nursing home, boarding 341.22 care facility, or an elderly assisted living facility property 341.23 as defined in section 273.13, subdivision 25a, and the property 341.24 is not otherwise occupied; or 341.25 (2) in the case of a property owner who is married, the 341.26 owner or the owner's spouse or both are absent due to residence 341.27 in a nursing home, boarding care facility, or an elderly 341.28 assisted living facility property as defined in section 273.13, 341.29 subdivision 25a, and the property is not occupied or is occupied 341.30 only by the owner's spouse. 341.31 (g) If an individual is purchasing property with the intent 341.32 of claiming it as a homestead and is required by the terms of 341.33 the financing agreement to have a relative shown on the deed as 341.34 a coowner, the assessor shall allow a full homestead 341.35 classification. This provision only applies to first-time 341.36 purchasers, whether married or single, or to a person who had 342.1 previously been married and is purchasing as a single individual 342.2 for the first time. The application for homestead benefits must 342.3 be on a form prescribed by the commissioner and must contain the 342.4 data necessary for the assessor to determine if full homestead 342.5 benefits are warranted. 342.6 (h) If residential or agricultural real estate is occupied 342.7 and used for purposes of a homestead by a child of a deceased 342.8 owner and the property is subject to jurisdiction of probate 342.9 court, the child shall receive relative homestead classification 342.10 under paragraph (c) or (d) to the same extent they would be 342.11 entitled to it if the owner was still living, until the probate 342.12 is completed. For purposes of this paragraph, "child" includes 342.13 a relationship by blood or by marriage. 342.14 [EFFECTIVE DATE.] This section is effective the day 342.15 following final enactment. 342.16 Sec. 17. Minnesota Statutes 2002, section 273.13, 342.17 subdivision 25, is amended to read: 342.18 Subd. 25. [CLASS 4.] (a) Class 4a is residential real 342.19 estate containing four or more units and used or held for use by 342.20 the owner or by the tenants or lessees of the owner as a 342.21 residence for rental periods of 30 days or more. Class 4a also 342.22 includes hospitals licensed under sections 144.50 to 144.56, 342.23 other than hospitals exempt under section 272.02, and contiguous 342.24 property used for hospital purposes, without regard to whether 342.25 the property has been platted or subdivided. The market value 342.26 of class 4a property has a class rate of 1.8 percent for taxes 342.27 payable in 2002, 1.5 percent for taxes payable in 2003, and 1.25 342.28 percent for taxes payable in 2004 and thereafter, except that 342.29 class 4a property consisting of a structure for which 342.30 construction commenced after June 30, 2001, has a class rate of 342.31 1.25 percent of market value for taxes payable in 2003 and 342.32 subsequent years. 342.33 (b) Class 4b includes: 342.34 (1) residential real estate containing less than four units 342.35 that does not qualify as class 4bb, other than seasonal 342.36 residential, andrecreational property; 343.1 (2) manufactured homes not classified under any other 343.2 provision; 343.3 (3) a dwelling, garage, and surrounding one acre of 343.4 property on a nonhomestead farm classified under subdivision 23, 343.5 paragraph (b) containing two or three units; and 343.6 (4) unimproved property that is classified residential as 343.7 determined under subdivision 33. 343.8 The market value of class 4b property has a class rate of 343.9 1.5 percent for taxes payable in 2002, and 1.25 percent for 343.10 taxes payable in 2003 and thereafter. 343.11 (c) Class 4bb includes: 343.12 (1) nonhomestead residential real estate containing one 343.13 unit, other than seasonal residential, andrecreational 343.14 property; and 343.15 (2) a single family dwelling, garage, and surrounding one 343.16 acre of property on a nonhomestead farm classified under 343.17 subdivision 23, paragraph (b). 343.18 Class 4bb property has the same class rates as class 1a 343.19 property under subdivision 22. 343.20 Property that has been classified as seasonalrecreational343.21 residential recreational property at any time during which it 343.22 has been owned by the current owner or spouse of the current 343.23 owner does not qualify for class 4bb. 343.24 (d) Class 4c property includes: 343.25 (1) except as provided in subdivision 22, paragraph (c), 343.26 real property devoted to temporary and seasonal residential 343.27 occupancy for recreation purposes, including real property 343.28 devoted to temporary and seasonal residential occupancy for 343.29 recreation purposes and not devoted to commercial purposes for 343.30 more than 250 days in the year preceding the year of 343.31 assessment. For purposes of this clause, property is devoted to 343.32 a commercial purpose on a specific day if any portion of the 343.33 property is used for residential occupancy, and a fee is charged 343.34 for residential occupancy. In order for a property to be 343.35 classified as class 4c, seasonal residential recreational 343.36residentialfor commercial purposes, at least 40 percent of the 344.1 annual gross lodging receipts related to the property must be 344.2 from business conducted during 90 consecutive days and either 344.3 (i) at least 60 percent of all paid bookings by lodging guests 344.4 during the year must be for periods of at least two consecutive 344.5 nights; or (ii) at least 20 percent of the annual gross receipts 344.6 must be from charges for rental of fish houses, boats and 344.7 motors, snowmobiles, downhill or cross-country ski equipment, or 344.8 charges for marina services, launch services, and guide 344.9 services, or the sale of bait and fishing tackle. For purposes 344.10 of this determination, a paid booking of five or more nights 344.11 shall be counted as two bookings. Class 4c also includes 344.12 commercial use real property used exclusively for recreational 344.13 purposes in conjunction with class 4c property devoted to 344.14 temporary and seasonal residential occupancy for recreational 344.15 purposes, up to a total of two acres, provided the property is 344.16 not devoted to commercial recreational use for more than 250 344.17 days in the year preceding the year of assessment and is located 344.18 within two miles of the class 4c property with which it is 344.19 used. Class 4c property classified in this clause also includes 344.20 the remainder of class 1c resorts provided that the entire 344.21 property including that portion of the property classified as 344.22 class 1c also meets the requirements for class 4c under this 344.23 clause; otherwise the entire property is classified as class 3. 344.24 Owners of real property devoted to temporary and seasonal 344.25 residential occupancy for recreation purposes and all or a 344.26 portion of which was devoted to commercial purposes for not more 344.27 than 250 days in the year preceding the year of assessment 344.28 desiring classification as class 1c or 4c, must submit a 344.29 declaration to the assessor designating the cabins or units 344.30 occupied for 250 days or less in the year preceding the year of 344.31 assessment by January 15 of the assessment year. Those cabins 344.32 or units and a proportionate share of the land on which they are 344.33 located will be designated class 1c or 4c as otherwise 344.34 provided. The remainder of the cabins or units and a 344.35 proportionate share of the land on which they are located will 344.36 be designated as class 3a. The owner of property desiring 345.1 designation as class 1c or 4c property must provide guest 345.2 registers or other records demonstrating that the units for 345.3 which class 1c or 4c designation is sought were not occupied for 345.4 more than 250 days in the year preceding the assessment if so 345.5 requested. The portion of a property operated as a (1) 345.6 restaurant, (2) bar, (3) gift shop, and (4) other nonresidential 345.7 facility operated on a commercial basis not directly related to 345.8 temporary and seasonal residential occupancy for recreation 345.9 purposes shall not qualify for class 1c or 4c; 345.10 (2) qualified property used as a golf course if: 345.11 (i) it is open to the public on a daily fee basis. It may 345.12 charge membership fees or dues, but a membership fee may not be 345.13 required in order to use the property for golfing, and its green 345.14 fees for golfing must be comparable to green fees typically 345.15 charged by municipal courses; and 345.16 (ii) it meets the requirements of section 273.112, 345.17 subdivision 3, paragraph (d). 345.18 A structure used as a clubhouse, restaurant, or place of 345.19 refreshment in conjunction with the golf course is classified as 345.20 class 3a property; 345.21 (3) real property up to a maximum of one acre of land owned 345.22 by a nonprofit community service oriented organization; provided 345.23 that the property is not used for a revenue-producing activity 345.24 for more than six days in the calendar year preceding the year 345.25 of assessment and the property is not used for residential 345.26 purposes on either a temporary or permanent basis. For purposes 345.27 of this clause, a "nonprofit community service oriented 345.28 organization" means any corporation, society, association, 345.29 foundation, or institution organized and operated exclusively 345.30 for charitable, religious, fraternal, civic, or educational 345.31 purposes, and which is exempt from federal income taxation 345.32 pursuant to section 501(c)(3), (10), or (19) of the Internal 345.33 Revenue Code of 1986, as amended through December 31, 1990. For 345.34 purposes of this clause, "revenue-producing activities" shall 345.35 include but not be limited to property or that portion of the 345.36 property that is used as an on-sale intoxicating liquor or 3.2 346.1 percent malt liquor establishment licensed under chapter 340A, a 346.2 restaurant open to the public, bowling alley, a retail store, 346.3 gambling conducted by organizations licensed under chapter 349, 346.4 an insurance business, or office or other space leased or rented 346.5 to a lessee who conducts a for-profit enterprise on the 346.6 premises. Any portion of the property which is used for 346.7 revenue-producing activities for more than six days in the 346.8 calendar year preceding the year of assessment shall be assessed 346.9 as class 3a. The use of the property for social events open 346.10 exclusively to members and their guests for periods of less than 346.11 24 hours, when an admission is not charged nor any revenues are 346.12 received by the organization shall not be considered a 346.13 revenue-producing activity; 346.14 (4) post-secondary student housing of not more than one 346.15 acre of land that is owned by a nonprofit corporation organized 346.16 under chapter 317A and is used exclusively by a student 346.17 cooperative, sorority, or fraternity for on-campus housing or 346.18 housing located within two miles of the border of a college 346.19 campus; 346.20 (5) manufactured home parks as defined in section 327.14, 346.21 subdivision 3; 346.22 (6) real property that is actively and exclusively devoted 346.23 to indoor fitness, health, social, recreational, and related 346.24 uses, is owned and operated by a not-for-profit corporation, and 346.25 is located within the metropolitan area as defined in section 346.26 473.121, subdivision 2; 346.27 (7) a leased or privately owned noncommercial aircraft 346.28 storage hangar not exempt under section 272.01, subdivision 2, 346.29 and the land on which it is located, provided that: 346.30 (i) the land is on an airport owned or operated by a city, 346.31 town, county, metropolitan airports commission, or group 346.32 thereof; and 346.33 (ii) the land lease, or any ordinance or signed agreement 346.34 restricting the use of the leased premise, prohibits commercial 346.35 activity performed at the hangar. 346.36 If a hangar classified under this clause is sold after June 347.1 30, 2000, a bill of sale must be filed by the new owner with the 347.2 assessor of the county where the property is located within 60 347.3 days of the sale; and 347.4 (8) residential real estate, a portion of which is used by 347.5 the owner for homestead purposes, and that is also a place of 347.6 lodging, if all of the following criteria are met: 347.7 (i) rooms are provided for rent to transient guests that 347.8 generally stay for periods of 14 or fewer days; 347.9 (ii) meals are provided to persons who rent rooms, the cost 347.10 of which is incorporated in the basic room rate; 347.11 (iii) meals are not provided to the general public except 347.12 for special events on fewer than seven days in the calendar year 347.13 preceding the year of the assessment; and 347.14 (iv) the owner is the operator of the property. 347.15 The market value subject to the 4c classification under this 347.16 clause is limited to five rental units. Any rental units on the 347.17 property in excess of five, must be valued and assessed as class 347.18 3a. The portion of the property used for purposes of a 347.19 homestead by the owner must be classified as class 1a property 347.20 under subdivision 22. 347.21 Class 4c property has a class rate of 1.5 percent of market 347.22 value, except that (i) each parcel of seasonal residential 347.23 recreational property not used for commercial purposes has the 347.24 same class rates as class 4bb property, (ii) manufactured home 347.25 parks assessed under clause (5) have the same class rate as 347.26 class 4b property, (iii) commercial-use seasonal residential 347.27 recreational property has a class rate of one percent for the 347.28 first $500,000 of market value, which includes any market value 347.29 receiving the one percent rate under subdivision 22, and 1.25 347.30 percent for the remaining market value, (iv) the market value of 347.31 property described in clause (4) has a class rate of one 347.32 percent, (v) the market value of property described in clauses 347.33 (2) and (6) has a class rate of 1.25 percent, and (vi) that 347.34 portion of the market value of property in clause (8) qualifying 347.35 for class 4c property has a class rate of 1.25 percent. 347.36 (e) Class 4d property is qualifying low-income rental 348.1 housing certified to the assessor by the housing finance agency 348.2 under sections 273.126 and 462A.071. Class 4d includes land in 348.3 proportion to the total market value of the building that is 348.4 qualifying low-income rental housing. For all properties 348.5 qualifying as class 4d, the market value determined by the 348.6 assessor must be based on the normal approach to value using 348.7 normal unrestricted rents. 348.8 Class 4d property has a class rate of 0.9 percent for taxes 348.9 payable in 2002, and one percent for taxes payable in 2003 and 348.10 1.25 percent for taxes payable in 2004 and thereafter. 348.11 [EFFECTIVE DATE.] This section is effective the day 348.12 following final enactment. 348.13 Sec. 18. Minnesota Statutes 2002, section 273.1398, 348.14 subdivision 4b, is amended to read: 348.15 Subd. 4b. [COURT EXPENDITURES; MAINTENANCE OF EFFORT.] (a) 348.16 Until the costs of court administration as defined under section 348.17 480.183, subdivision 3, in a county have been transferred to the 348.18 state, each county in a judicial district transferring court 348.19 administration costs to state funding after July 1, 2001, shall 348.20 budget for the funding of these costs an amount at least equal 348.21 to the certified budget amount for calendar year 2001, increased 348.22 by six percent for each year from 2001 to 2003 and by eight 348.23 percent from 2004 to the year of the transfer. The county shall 348.24 budget, fund, and authorize expenditures not less than the 348.25 amount calculated under this paragraphplus the temporary aid348.26amount under subdivision 4c for maintenance of effort of348.27administrative costs. 348.28 (b) By July 15, 2001, the court shall certify to each 348.29 county in the judicial district its cost of court administration 348.30 as defined under section 480.183, subdivision 3, based on 2001 348.31 budgets. In making that determination, the court shall exclude 348.32 the budget costs of the county for the following categories: 348.33 (1) rent; 348.34 (2) examiner of titles; 348.35 (3) civil court appointed attorneys for civil matters; 348.36 (4) hospitalization costs; and 349.1 (5) cost of maintaining vital statistics. 349.2 The amount of funding provided by a county for courts that 349.3 is increased by the maintenance of effort requirement may not be 349.4 used by a county to pay the costs described in clauses (1) to 349.5 (5). 349.6 [EFFECTIVE DATE.] This section is effective the day 349.7 following final enactment. 349.8 Sec. 19. Minnesota Statutes 2002, section 273.372, is 349.9 amended to read: 349.10 273.372 [PROCEEDINGS AND APPEALS; UTILITY OR RAILROAD 349.11 VALUATIONS.] 349.12 An appeal by a utility or railroad company concerning the 349.13 exemption, valuation, or classificationonof property for which 349.14 the commissioner of revenue has provided the city or county 349.15 assessor withcommissioner's ordersvaluations by order, or for 349.16 which the commissioner has recommended values to the city or 349.17 county assessor, must be brought against the commissioner in tax 349.18 court or in district court of the county where the property is 349.19 located, and not against the county or taxing district where the 349.20 property is located. If the appeal toacourt isoffrom an 349.21 order of the commissioner, it must be brought under chapter 349.22 271. If the appeal is from the exemption, valuation, 349.23 classification, or tax that results from implementation of the 349.24 commissioner's order or recommendation, it must be brought under 349.25 chapter 278, and theproceduresprovisions in that chapter 349.26 apply, except that service shall be on the commissioner only and 349.27 not on the county officials specified in section 278.01, 349.28 subdivision 1. This provision applies to the propertycontained349.29underdescribed in sections 273.33, 273.35, 273.36, and 273.37, 349.30 but only if the appealed values have remained unchanged from 349.31 those provided to the city or county by the commissioner. If 349.32 the exemption, valuation, or classification being appealed has 349.33 been changed by the city or county, then the action must be 349.34 brought under chapter 278 in the county where the property is 349.35 located and proper service must be made upon the county 349.36 officials as specified in section 278.01, subdivision 1. 350.1 Upon filing of any appeal by a utility company or railroad 350.2 against the commissioner, the commissioner shall give notice by 350.3 first class mail to each county which would be affected by the 350.4 appeal. 350.5 Companies that submit the reports under section 270.82 or 350.6 273.371 by the date specified in that section, or by the date 350.7 specified by the commissioner in an extension, may appeal 350.8 administratively to the commissioner under the procedures in 350.9 section 270.11, subdivision 6, prior to bringing an action in 350.10 tax court or in district court, however, instituting an 350.11 administrative appeal with the commissioner does not change or 350.12 modify the deadline in section 271.06 for appealing an order of 350.13 the commissioner in tax court or the deadline in section 278.01 350.14 forbringing an actionfiling a property tax claim or objection 350.15 in tax court or district court. 350.16 [EFFECTIVE DATE.] This section is effective the day 350.17 following final enactment. 350.18 Sec. 20. Minnesota Statutes 2002, section 273.42, 350.19 subdivision 2, is amended to read: 350.20 Subd. 2. Owners of land that is an agricultural or 350.21 nonagricultural homestead, nonhomestead agricultural land, 350.22 rental residential property, and both commercial and 350.23 noncommercial seasonal residential recreational property, as 350.24 those terms are defined in section 273.13 listed on records of 350.25 the county auditor or county treasurer over which runs a high 350.26 voltage transmission lineas defined in section 116C.52,350.27subdivision 3with a capacity of 200 kilovolts or more, except a 350.28 high voltage transmission line the construction of which was 350.29 commenced prior to July 1, 1974, shall receive a property tax 350.30 credit in an amount determined by multiplying a fraction, the 350.31 numerator of which is the length of high voltage transmission 350.32 line which runs over that parcel and the denominator of which is 350.33 the total length of that particular line running over all 350.34 property within the city or township by ten percent of the 350.35 transmission line tax revenue derived from the tax on that 350.36 portion of the line within the city or township pursuant to 351.1 section 273.36. In the case of property owners in unorganized 351.2 townships, the property tax credit shall be determined by 351.3 multiplying a fraction, the numerator of which is the length of 351.4 the qualifying high voltage transmission line which runs over 351.5 the parcel and the denominator of which is the total length of 351.6 the qualifying high voltage transmission line running over all 351.7 property within all the unorganized townships within the county, 351.8 by the total utility property tax credit fund amount available 351.9 within the county for that year pursuant to subdivision 1. 351.10 Where a right-of-way width is shared by more than one property 351.11 owner, the numerator shall be adjusted by multiplying the length 351.12 of line on the parcel by the proportion of the total width on 351.13 the parcel owned by that property owner. The amount of credit 351.14 for which the property qualifies shall not exceed 20 percent of 351.15 the total gross tax on the parcel prior to deduction of the 351.16 state paid agricultural credit and the state paid homestead 351.17 credit, provided that, if the property containing the 351.18 right-of-way is included in a parcel which exceeds 40 acres, the 351.19 total gross tax on the parcel shall be multiplied by a fraction, 351.20 the numerator of which is the sum of the number of acres in each 351.21 quarter-quarter section or portion thereof which contains a 351.22 right-of-way and the denominator of which is the total number of 351.23 acres in the parcel set forth on the tax statement, and the 351.24 maximum credit shall be 20 percent of the product of that 351.25 computation, prior to deduction of those credits. The auditor 351.26 of the county in which the affected parcel is located shall 351.27 calculate the amount of the credit due for each parcel and 351.28 transmit that information to the county treasurer. The county 351.29 auditor, in computing the credit received pursuant to section 351.30 273.135, shall reduce the gross tax by the amount of the credit 351.31 received pursuant to this section, unless the amount of the 351.32 credit would be less than $10. 351.33 If, after the county auditor has computed the credit to 351.34 those qualifying property owners in unorganized townships, there 351.35 is money remaining in the utility property tax credit fund, then 351.36 that excess amount in the fund shall be returned to the general 352.1 school fund of the county. 352.2 [EFFECTIVE DATE.] This section is effective the day 352.3 following final enactment. 352.4 Sec. 21. Minnesota Statutes 2002, section 274.01, 352.5 subdivision 1, is amended to read: 352.6 Subdivision 1. [ORDINARY BOARD; MEETINGS, DEADLINES, 352.7 GRIEVANCES.] (a) The town board of a town, or the council or 352.8 other governing body of a city, is the board of appeal and 352.9 equalization except (1) in cities whose charters provide for a 352.10 board of equalization or (2) in any city or town that has 352.11 transferred its local board of review power and duties to the 352.12 county board as provided in subdivision 3. The county assessor 352.13 shall fix a day and time when the board or the board of 352.14 equalization shall meet in the assessment districts of the 352.15 county. Notwithstanding any law or city charter to the 352.16 contrary, a city board of equalization shall be referred to as a 352.17 board of appeal and equalization. On or before February 15 of 352.18 each year the assessor shall give written notice of the time to 352.19 the city or town clerk. Notwithstanding the provisions of any 352.20 charter to the contrary, the meetings must be held between April 352.21 1 and May 31 each year. The clerk shall give published and 352.22 posted notice of the meeting at least ten days before the date 352.23 of the meeting. 352.24 The board shall meet at the office of the clerk to review 352.25 the assessment and classification of property in the town or 352.26 city. No changes in valuation or classification which are 352.27 intended to correct errors in judgment by the county assessor 352.28 may be made by the county assessor after the board has adjourned 352.29 in those cities or towns that hold a local board of review; 352.30 however, corrections of errors that are merely clerical in 352.31 nature or changes that extend homestead treatment to property 352.32 are permitted after adjournment until the tax extension date for 352.33 that assessment year. The changes must be fully documented and 352.34 maintained in the assessor's office and must be available for 352.35 review by any person. A copy of the changes made during this 352.36 period in those cities or towns that hold a local board of 353.1 review must be sent to the county board no later than December 353.2 31 of the assessment year. 353.3 (b) The board shall determine whether the taxable property 353.4 in the town or city has been properly placed on the list and 353.5 properly valued by the assessor. If real or personal property 353.6 has been omitted, the board shall place it on the list with its 353.7 market value, and correct the assessment so that each tract or 353.8 lot of real property, and each article, parcel, or class of 353.9 personal property, is entered on the assessment list at its 353.10 market value. No assessment of the property of any person may 353.11 be raised unless the person has been duly notified of the intent 353.12 of the board to do so. On application of any person feeling 353.13 aggrieved, the board shall review the assessment or 353.14 classification, or both, and correct it as appears just. The 353.15 board may not make an individual market value adjustment or 353.16 classification change that would benefit the property in cases 353.17 where the owner or other person having control over the property 353.18 will not permit the assessor to inspect the property and the 353.19 interior of any buildings or structures. 353.20 (c) A local board may reduce assessments upon petition of 353.21 the taxpayer but the total reductions must not reduce the 353.22 aggregate assessment made by the county assessor by more than 353.23 one percent. If the total reductions would lower the aggregate 353.24 assessments made by the county assessor by more than one 353.25 percent, none of the adjustments may be made. The assessor 353.26 shall correct any clerical errors or double assessments 353.27 discovered by the board without regard to the one percent 353.28 limitation. 353.29 (d) A local board does not have authority to grant an 353.30 exemption or to order property removed from the tax rolls. 353.31 (e) A majority of the members may act at the meeting, and 353.32 adjourn from day to day until they finish hearing the cases 353.33 presented. The assessor shall attend, with the assessment books 353.34 and papers, and take part in the proceedings, but must not 353.35 vote. The county assessor, or an assistant delegated by the 353.36 county assessor shall attend the meetings. The board shall list 354.1 separately, on a form appended to the assessment book, all 354.2 omitted property added to the list by the board and all items of 354.3 property increased or decreased, with the market value of each 354.4 item of property, added or changed by the board, placed opposite 354.5 the item. The county assessor shall enter all changes made by 354.6 the board in the assessment book. 354.7(e)(f) Except as provided in subdivision 3, if a person 354.8 fails to appear in person, by counsel, or by written 354.9 communication before the board after being duly notified of the 354.10 board's intent to raise the assessment of the property, or if a 354.11 person feeling aggrieved by an assessment or classification 354.12 fails to apply for a review of the assessment or classification, 354.13 the person may not appear before the county board of appeal and 354.14 equalization for a review of the assessment or classification. 354.15 This paragraph does not apply if an assessment was made after 354.16 the local board meeting, as provided in section 273.01, or if 354.17 the person can establish not having received notice of market 354.18 value at least five days before the local board meeting. 354.19(f)(g) The local board must complete its work and adjourn 354.20 within 20 days from the time of convening stated in the notice 354.21 of the clerk, unless a longer period is approved by the 354.22 commissioner of revenue. No action taken after that date is 354.23 valid. All complaints about an assessment or classification 354.24 made after the meeting of the board must be heard and determined 354.25 by the county board of equalization. A nonresident may, at any 354.26 time, before the meeting of the board file written objections to 354.27 an assessment or classification with the county assessor. The 354.28 objections must be presented to the board at its meeting by the 354.29 county assessor for its consideration. 354.30 [EFFECTIVE DATE.] This section is effective the day 354.31 following final enactment. 354.32 Sec. 22. Minnesota Statutes 2002, section 274.13, 354.33 subdivision 1, is amended to read: 354.34 Subdivision 1. [MEMBERS; MEETINGS; RULES FOR EQUALIZING 354.35 ASSESSMENTS.] The county commissioners, or a majority of them, 354.36 with the county auditor, or, if the auditor cannot be present, 355.1 the deputy county auditor, or, if there is no deputy, the court 355.2 administrator of the district court, shall form a board for the 355.3 equalization of the assessment of the property of the county, 355.4 including the property of all cities whose charters provide for 355.5 a board of equalization. This board shall be referred to as the 355.6 county board of appeal and equalization. The board shall meet 355.7 annually, on the date specified in section 274.14, at the office 355.8 of the auditor. Each member shall take an oath to fairly and 355.9 impartially perform duties as a member. The board shall examine 355.10 and compare the returns of the assessment of property of the 355.11 towns or districts, and equalize them so that each tract or lot 355.12 of real property and each article or class of personal property 355.13 is entered on the assessment list at its market value, subject 355.14 to the following rules: 355.15 (1) The board shall raise the valuation of each tract or 355.16 lot of real property which in its opinion is returned below its 355.17 market value to the sum believed to be its market value. The 355.18 board must first give notice of intention to raise the valuation 355.19 to the person in whose name it is assessed, if the person is a 355.20 resident of the county. The notice must fix a time and place 355.21 for a hearing. 355.22 (2) The board shall reduce the valuation of each tract or 355.23 lot which in its opinion is returned above its market value to 355.24 the sum believed to be its market value. 355.25 (3) The board shall raise the valuation of each class of 355.26 personal property which in its opinion is returned below its 355.27 market value to the sum believed to be its market value. It 355.28 shall raise the aggregate value of the personal property of 355.29 individuals, firms, or corporations, when it believes that the 355.30 aggregate valuation, as returned, is less than the market value 355.31 of the taxable personal property possessed by the individuals, 355.32 firms, or corporations, to the sum it believes to be the market 355.33 value. The board must first give notice to the persons of 355.34 intention to do so. The notice must set a time and place for a 355.35 hearing. 355.36 (4) The board shall reduce the valuation of each class of 356.1 personal property that is returned above its market value to the 356.2 sum it believes to be its market value. Upon complaint of a 356.3 party aggrieved, the board shall reduce the aggregate valuation 356.4 of the individual's personal property, or of any class of 356.5 personal property for which the individual is assessed, which in 356.6 its opinion has been assessed at too large a sum, to the sum it 356.7 believes was the market value of the individual's personal 356.8 property of that class. 356.9 (5) The board must not reduce the aggregate value of all 356.10 the property of its county, as submitted to the county board of 356.11 equalization, with the additions made by the auditor under this 356.12 chapter, by more than one percent of its whole valuation. The 356.13 board may raise the aggregate valuation of real property, and of 356.14 each class of personal property, of the county, or of any town 356.15 or district of the county, when it believes it is below the 356.16 market value of the property, or class of property, to the 356.17 aggregate amount it believes to be its market value. 356.18 (6) The board shall change the classification of any 356.19 property which in its opinion is not properly classified. 356.20 (7) The board does not have the authority to grant an 356.21 exemption or to order property removed from the tax rolls. 356.22 [EFFECTIVE DATE.] This section is effective the day 356.23 following final enactment. 356.24 Sec. 23. Minnesota Statutes 2002, section 275.025, 356.25 subdivision 1, is amended to read: 356.26 Subdivision 1. [LEVY AMOUNT.] The state general levy is 356.27 levied against commercial-industrial property and 356.28 seasonal residential recreational property, as defined in this 356.29 section. The state general levy base amount is $592,000,000 for 356.30 taxes payable in 2002. For taxes payable in subsequent years, 356.31 the levy base amount is increased each year by multiplying the 356.32 levy base amount for the prior year by the sum of one plus the 356.33 rate of increase, if any, in the implicit price deflator for 356.34 government consumption expenditures and gross investment for 356.35 state and local governments prepared by the Bureau of Economic 356.36 Analysts of the United States Department of Commerce for the 357.1 12-month period ending March 31 of the year prior to the year 357.2 the taxes are payable. The tax under this section is not 357.3 treated as a local tax rate under section 469.177 and is not the 357.4 levy of a governmental unit under chapters 276A and 473F. 357.5 Beginning in fiscal year 2004, and in each year thereafter, the 357.6 commissioner of finance shall deposit in an education reserve 357.7 account, which account is hereby established, the increased 357.8 amount of the state general levy received for deposit in the 357.9 general fund for that year over the amount of the state general 357.10 levy received for deposit in the general fund in fiscal year 357.11 2003. The amounts in the education reserve account do not lapse 357.12 or cancel each year, but remain until appropriated by law for 357.13 education aid or higher education funding. 357.14 [EFFECTIVE DATE.] This section is effective for taxes 357.15 payable in 2004 and thereafter, except that the change from 357.16 "seasonal recreational property" to "seasonal residential 357.17 recreational property" is effective the day following final 357.18 enactment. 357.19 Sec. 24. Minnesota Statutes 2002, section 275.025, 357.20 subdivision 3, is amended to read: 357.21 Subd. 3. [SEASONAL RESIDENTIAL RECREATIONAL TAX CAPACITY.] 357.22 For the purposes of this section, "seasonal residential 357.23 recreational tax capacity" means the tax capacity of all class 357.24 4c(1) property under section 273.13, subdivision 25, except that 357.25 the first $76,000 of market value of each noncommercial class 357.26 4c(1) property has a tax capacity for this purpose equal to 40 357.27 percent of its tax capacity under section 273.13. 357.28 [EFFECTIVE DATE.] This section is effective the day 357.29 following final enactment. 357.30 Sec. 25. Minnesota Statutes 2002, section 275.025, 357.31 subdivision 4, is amended to read: 357.32 Subd. 4. [APPORTIONMENT AND LEVY OF STATE GENERAL TAX.] 357.33 The state general tax must be distributed among the counties by 357.34 applying a uniform rate to each county's commercial-industrial 357.35 tax capacity and its seasonal residential recreational tax 357.36 capacity. Within each county, the tax must be levied by 358.1 applying a uniform rate against commercial-industrial tax 358.2 capacity and seasonal residential recreational tax capacity.By358.3November 1On or before October 10 each year, the commissioner 358.4 of revenue shall certifythea preliminary state general levy 358.5 rate to each county auditor that must be used to prepare the 358.6 notices of proposed property taxes for taxes payable in the 358.7 following year. By January 1 of each year, the commissioner 358.8 shall certify the final state general levy rate to each county 358.9 auditor that shall be used in spreading taxes. 358.10 [EFFECTIVE DATE.] This section is effective for taxes 358.11 payable in 2004 and thereafter, except that the change from 358.12 "seasonal recreational tax capacity" to "seasonal residential 358.13 recreational tax capacity" is effective the day following final 358.14 enactment. 358.15 Sec. 26. Minnesota Statutes 2002, section 276.10, is 358.16 amended to read: 358.17 276.10 [APPORTIONMENT AND DISTRIBUTION OF FUNDS.] 358.18 On the settlement day determined in section 276.09 for each 358.19 year, the county auditor and county treasurer shall distribute 358.20 all undistributed funds in the treasury. The funds must be 358.21 apportioned as provided by law, and credited to thestate,town, 358.22 city, school district, special district and each county fund. 358.23 Within 20 days after the distribution is completed, the county 358.24 auditor shall report to the state auditor in the form prescribed 358.25 by the state auditor. The county auditor shall issue a warrant 358.26 for the payment of money in the county treasury to the credit of 358.27 thestate,town, city, school district, or special districts on 358.28 application of the persons entitled to receive the payment. The 358.29 county auditor may apply the local tax rate from the year before 358.30 the year of distribution when apportioning and distributing 358.31 delinquent tax proceeds, if the composition of the previous 358.32 year's local tax rate between taxing districts is not 358.33 significantly different from the local tax rate that existed for 358.34 the year of the delinquency. 358.35 [EFFECTIVE DATE.] This section is effective for taxes 358.36 payable in 2004 and thereafter. 359.1 Sec. 27. Minnesota Statutes 2002, section 276.11, 359.2 subdivision 1, is amended to read: 359.3 Subdivision 1. [GENERALLY.] As soon as practical after the 359.4 settlement day determined in section 276.09, the county 359.5 treasurer shall pay tothe state treasurer orthe treasurer of a 359.6 town, city, school district, or special district, on the warrant 359.7 of the county auditor, all receipts of taxes levied by the 359.8 taxing district and deliver up all orders and other evidences of 359.9 indebtedness of the taxing district, taking triplicate receipts 359.10 for them. The treasurer shall file one of the receipts with the 359.11 county auditor, and shall return one by mail on the day of its 359.12 receipt to the clerk of the town, city, school district, or 359.13 special district to which payment was made. The clerk shall 359.14 keep the receipt in the clerk's office. Upon written request of 359.15 the taxing district, to the extent practicable, the county 359.16 treasurer shall make partial payments of amounts collected 359.17 periodically in advance of the next settlement and 359.18 distribution. A statement prepared by the county treasurer must 359.19 accompany each payment. It must state the years for which taxes 359.20 included in the payment were collected and, for each year, the 359.21 amount of the taxes and any penalties on the tax. Upon written 359.22 request of a taxing district, except school districts, the 359.23 county treasurer shall pay at least 70 percent of the estimated 359.24 collection within 30 days after the settlement date determined 359.25 in section 276.09. Within seven business days after the due 359.26 date, or 28 calendar days after the postmark date on the 359.27 envelopes containing real or personal property tax statements, 359.28 whichever is latest, the county treasurer shall pay to the 359.29 treasurer of the school districts 50 percent of the estimated 359.30 collections arising from taxes levied by and belonging to the 359.31 school district, unless the school district elects to receive 50 359.32 percent of the estimated collections arising from taxes levied 359.33 by and belonging to the school district after making a 359.34 proportionate reduction to reflect any loss in collections as 359.35 the result of any delay in mailing tax statements. In that 359.36 case, 50 percent of those adjusted, estimated collections shall 360.1 be paid by the county treasurer to the treasurer of the school 360.2 district within seven business days of the due date. The 360.3 remaining 50 percent of the estimated collections must be paid 360.4 to the treasurer of the school district within the next seven 360.5 business days of the later of the dates in the preceding 360.6 sentence, unless the school district elects to receive the 360.7 remainder of its estimated collections after a proportionate 360.8 reduction has been made to reflect any loss in collections as 360.9 the result of any delay in mailing tax statements. In that 360.10 case, the remaining 50 percent of those adjusted, estimated 360.11 collections shall be paid by the county treasurer to the 360.12 treasurer of the school district within 14 days of the due 360.13 date. The treasurer shall pay the balance of the amounts 360.14 collectedto the state before June 30, orto a municipal 360.15 corporation or other body within 60 days after the settlement 360.16 date determined in section 276.09. After 45 days interest at an 360.17 annual rate of eight percent accrues and must be paid to the 360.18 taxing district. Interest must be paid upon appropriation from 360.19 the general revenue fund of the county. If not paid, it may be 360.20 recovered by the taxing district, in a civil action. 360.21 [EFFECTIVE DATE.] This section is effective for taxes 360.22 payable in 2004 and thereafter. 360.23 Sec. 28. [276.112] [STATE PROPERTY TAXES; COUNTY 360.24 TREASURER.] 360.25 On or before January 25 each year, for the period ending 360.26 December 31 of the prior year, and on or before June 29 each 360.27 year, for the period ending on the most recent settlement day 360.28 determined in section 276.09, the county treasurer must make 360.29 full settlement with the county auditor according to sections 360.30 276.09, 276.10, and 276.111 for all receipts of state property 360.31 taxes levied under section 275.025, and must transmit those 360.32 receipts to the commissioner of revenue by electronic means. 360.33 [EFFECTIVE DATE.] This section is effective the day 360.34 following final enactment. 360.35 Sec. 29. Minnesota Statutes 2002, section 277.20, 360.36 subdivision 2, is amended to read: 361.1 Subd. 2. [FILING OF LIEN FOR ENFORCEABILITY.] The lien 361.2 imposed by subdivision 1 is not enforceable against any 361.3 purchaser, mortgagee, pledgee, holder of a Uniform Commercial 361.4 Code security interest, mechanic's lienor, or judgment lien 361.5 creditor until a notice of lien has been filed by the county 361.6 treasurer in the office of the county recorder of the county in 361.7 which the property is situated, or, in the case of personal 361.8 propertybelonging to an individual who is not a resident of361.9this state, or that is a corporation, partnership, or other361.10organization, in the office of the secretary of state. Priority 361.11 of a lien created under Laws 1991, chapter 291, article 15, 361.12 shall be determined in accordance with the provisions of section 361.13 507.34. Liens filed in the office of the county recorder shall 361.14 be filed with the state tax liens filed pursuant to section 361.15 270.69, and the index shall indicate the name of the county for 361.16 which the lien was filed. If the land is registered, the notice 361.17 of lien shall be filed in the office of the registrar of titles 361.18 of the county in which the property is registered. 361.19 Notwithstanding any other law to the contrary, the county 361.20 treasurer is exempt from the payment of fees when the lien is 361.21 offered for filing or recording; the fee for filing or recording 361.22 the lien must be paid at the time the release of lien is offered 361.23 for filing or recording. Notwithstanding any law to the 361.24 contrary, the fee for filing or recording the lien or the 361.25 release of lien is $15. 361.26 [EFFECTIVE DATE.] This section is effective for liens filed 361.27 on or after the day following final enactment. 361.28 Sec. 30. Minnesota Statutes 2002, section 279.06, 361.29 subdivision 1, is amended to read: 361.30 Subdivision 1. [LIST AND NOTICE.] Within five days after 361.31 the filing of such list, the court administrator shall return a 361.32 copy thereof to the county auditor, with a notice prepared and 361.33 signed by the court administrator, and attached thereto, which 361.34 may be substantially in the following form: 361.35 State of Minnesota ) 361.36 ) ss. 362.1 County of ............... ) 362.2 District Court 362.3 .......... Judicial District. 362.4 The state of Minnesota, to all persons, companies, or 362.5 corporations who have or claim any estate, right, title, or 362.6 interest in, claim to, or lien upon, any of the several parcels 362.7 of land described in the list hereto attached: 362.8 The list of taxes and penalties on real property for the 362.9 county of ............................... remaining delinquent 362.10 on the first Monday in January, ......., has been filed in the 362.11 office of the court administrator of the district court of said 362.12 county, of which that hereto attached is a copy. Therefore, 362.13 you, and each of you, are hereby required to file in the office 362.14 of said court administrator, on or before the 20th day after the 362.15 publication of this notice and list, your answer, in writing, 362.16 setting forth any objection or defense you may have to the 362.17 taxes, or any part thereof, upon any parcel of land described in 362.18 the list, in, to, or on which you have or claim any estate, 362.19 right, title, interest, claim, or lien, and, in default thereof, 362.20 judgment will be entered against such parcel of land for the 362.21 taxes on such list appearing against it, and for all penalties, 362.22 interest, and costs. Based upon said judgment, the land shall 362.23 be sold to the state of Minnesota on the second Monday in May, 362.24 ....... The period of redemption for all lands sold to the 362.25 state at a tax judgment sale shall be three years from the date 362.26 of sale to the state of Minnesota if the land is within an 362.27 incorporated area unless it is: 362.28 (a) nonagricultural homesteaded land as defined in section 362.29 273.13, subdivision 22; 362.30 (b) homesteaded agricultural land as defined in section 362.31 273.13, subdivision 23, paragraph (a); 362.32 (c) seasonal residential recreational land as defined in 362.33 section 273.13, subdivisions 22, paragraph (c), and 25, 362.34 paragraph(c)(d), clause(5)(1), in which event the period of 362.35 redemption is five years from the date of sale to the state of 362.36 Minnesota; 363.1 (d) abandoned property and pursuant to section 281.173 a 363.2 court order has been entered shortening the redemption period to 363.3 five weeks; or 363.4 (e) vacant property as described under section 281.174, 363.5 subdivision 2, and for which a court order is entered shortening 363.6 the redemption period under section 281.174. 363.7 The period of redemption for all other lands sold to the 363.8 state at a tax judgment sale shall be five years from the date 363.9 of sale. 363.10 Inquiries as to the proceedings set forth above can be made 363.11 to the county auditor of ..... county whose address is ..... . 363.12 (Signed) ............................................., 363.13 Court Administrator of the District Court of the County 363.14 of .................................................... 363.15 (Here insert list.) 363.16 The list referred to in the notice shall be substantially 363.17 in the following form: 363.18 List of real property for the county of 363.19 ......................., on which taxes remain delinquent on the 363.20 first Monday in January, .......: 363.21 Town of (Fairfield), 363.22 Township (40), Range (20), 363.23 Names (and 363.24 Current Filed 363.25 Addresses) for 363.26 the Taxpayers 363.27 and Fee Owners 363.28 and in Addition 363.29 Those Parties 363.30 Who Have Filed 363.31 Their Addresses Tax 363.32 Pursuant to Subdivision of Parcel Total Tax 363.33 section 276.041 Section Section Number and Penalty 363.34 $ cts. 363.35 John Jones S.E. 1/4 of S.W. 1/4 10 23101 2.20 363.36 (825 Fremont 364.1 Fairfield, MN 364.2 55000) 364.3 Bruce Smith That part of N.E. 1/4 364.4 (2059 Hand of S.W. 1/4 desc. as 364.5 Fairfield, follows: Beg. at the 364.6 MN 55000) S.E. corner of said 364.7 and N.E. 1/4 of S.W. 1/4; 364.8 Fairfield thence N. along the E. 364.9 State Bank line of said N.E. 1/4 364.10 (100 Main of S.W. 1/4 a distance 364.11 Street of 600 ft.; thence W. 364.12 Fairfield, parallel with the S. 364.13 MN 55000) line of said N.E. 1/4 364.14 of S.W. 1/4 a distance 364.15 of 600 ft.; thence S. 364.16 parallel with said E. 364.17 line a distance of 600 364.18 ft. to S. line of said 364.19 N.E. 1/4 of S.W. 1/4; 364.20 thence E. along said S. 364.21 line a distance of 600 364.22 ft. to the point of 364.23 beg. ............... 21 33211 3.15 364.24 As to platted property, the form of heading shall conform 364.25 to circumstances and be substantially in the following form: 364.26 City of (Smithtown) 364.27 Brown's Addition, or Subdivision 364.28 Names (and 364.29 Current Filed 364.30 Addresses) for 364.31 the Taxpayers 364.32 and Fee Owners 364.33 and in Addition 364.34 Those Parties 364.35 Who have Filed 364.36 Their Addresses Tax 365.1 Pursuant to Parcel Total Tax 365.2 section 276.041 Lot Block Number and Penalty 365.3 $ cts. 365.4 John Jones 15 9 58243 2.20 365.5 (825 Fremont 365.6 Fairfield, 365.7 MN 55000) 365.8 Bruce Smith 16 9 58244 3.15 365.9 (2059 Hand 365.10 Fairfield, 365.11 MN 55000) 365.12 and 365.13 Fairfield 365.14 State Bank 365.15 (100 Main Street 365.16 Fairfield, 365.17 MN 55000) 365.18 The names, descriptions, and figures employed in 365.19 parentheses in the above forms are merely for purposes of 365.20 illustration. 365.21 The name of the town, township, range or city, and addition 365.22 or subdivision, as the case may be, shall be repeated at the 365.23 head of each column of the printed lists as brought forward from 365.24 the preceding column. 365.25 Errors in the list shall not be deemed to be a material 365.26 defect to affect the validity of the judgment and sale. 365.27 [EFFECTIVE DATE.] This section is effective the day 365.28 following final enactment. 365.29 Sec. 31. Minnesota Statutes 2002, section 281.17, is 365.30 amended to read: 365.31 281.17 [PERIOD FOR REDEMPTION.] 365.32 Except for properties for which the period of redemption 365.33 has been limited under sections 281.173 and 281.174, the 365.34 following periods for redemption apply. 365.35 The period of redemption for all lands sold to the state at 365.36 a tax judgment sale shall be three years from the date of sale 366.1 to the state of Minnesota if the land is within an incorporated 366.2 area unless it is: (a) nonagricultural homesteaded land as 366.3 defined in section 273.13, subdivision 22; (b) homesteaded 366.4 agricultural land as defined in section 273.13, subdivision 23, 366.5 paragraph (a); or (c) seasonal residential recreational land as 366.6 defined in section 273.13, subdivision 22, paragraph (c), or 25, 366.7 paragraph (d), clause (1), for which the period of redemption is 366.8 five years from the date of sale to the state of Minnesota. 366.9 The period of redemption for homesteaded lands as defined 366.10 in section 273.13, subdivision 22, located in a targeted 366.11 neighborhood as defined in Laws 1987, chapter 386, article 6, 366.12 section 4, and sold to the state at a tax judgment sale is three 366.13 years from the date of sale. The period of redemption for all 366.14 lands located in a targeted neighborhood as defined in Laws 366.15 1987, chapter 386, article 6, section 4, except (1) homesteaded 366.16 lands as defined in section 273.13, subdivision 22, and (2) for 366.17 periods of redemption beginning after June 30, 1991, but before 366.18 July 1, 1996, lands located in the Loring Park targeted 366.19 neighborhood on which a notice of lis pendens has been served, 366.20 and sold to the state at a tax judgment sale is one year from 366.21 the date of sale. 366.22 The period of redemption for all real property constituting 366.23 a mixed municipal solid waste disposal facility that is a 366.24 qualified facility under section 115B.39, subdivision 1, is one 366.25 year from the date of the sale to the state of Minnesota. 366.26 The period of redemption for all other lands sold to the 366.27 state at a tax judgment sale shall be five years from the date 366.28 of sale, except that the period of redemption for nonhomesteaded 366.29 agricultural land as defined in section 273.13, subdivision 23, 366.30 paragraph (b), shall be two years from the date of sale if at 366.31 that time that property is owned by a person who owns one or 366.32 more parcels of property on which taxes are delinquent, and the 366.33 delinquent taxes are more than 25 percent of the prior year's 366.34 school district levy. 366.35 [EFFECTIVE DATE.] This section is effective the day 366.36 following final enactment. 367.1 Sec. 32. Minnesota Statutes 2002, section 282.01, 367.2 subdivision 7a, is amended to read: 367.3 Subd. 7a. [CITY SALES; ALTERNATE PROCEDURES.] Land located 367.4 in a home rule charter or statutory city, or in a town which 367.5 cannot be improved because of noncompliance with local 367.6 ordinances regarding minimum area, shape, frontage or access may 367.7 be sold by the county auditor pursuant to this subdivision if 367.8 the auditor determines that a nonpublic sale will encourage the 367.9 approval of sale of the land by the city or town and promote its 367.10 return to the tax rolls. If the physical characteristics of the 367.11 land indicate that its highest and best use will be achieved by 367.12 combining it with an adjoining parcel and the city or town has 367.13 not adopted a local ordinance governing minimum area, shape, 367.14 frontage, or access, the land may also be sold pursuant to this 367.15 subdivision. If the property consists of an undivided interest 367.16 in land or land and improvements, the property may also be sold 367.17 to the other owners under this subdivision. The sale of land 367.18 pursuant to this subdivision shall be subject to any conditions 367.19 imposed by the county board pursuant to section 282.03. The 367.20 governing body of the city or town may recommend to the county 367.21 board conditions to be imposed on the sale. The county auditor 367.22 may restrict the sale to owners of lands adjoining the land to 367.23 be sold. The county auditor shall conduct the sale by sealed 367.24 bid or may select another means of sale. The land shall be sold 367.25 to the highest bidder but in no event shall the land be sold for 367.26 less than its appraised value. All owners of land adjoining the 367.27 land to be sold shall be given a written notice at least 30 days 367.28 prior to the sale. 367.29 This subdivision shall be liberally construed to encourage 367.30 the sale and utilization of tax-forfeited land, to eliminate 367.31 nuisances and dangerous conditions and to increase compliance 367.32 with land use ordinances. 367.33 [EFFECTIVE DATE.] This section is effective for sales 367.34 occurring on or after the day following final enactment. 367.35 Sec. 33. Minnesota Statutes 2002, section 282.08, is 367.36 amended to read: 368.1 282.08 [APPORTIONMENT OF PROCEEDS TO TAXING DISTRICTS.] 368.2 The net proceeds from the sale or rental of any parcel of 368.3 forfeited land, or from the sale of products from the forfeited 368.4 land, must be apportioned by the county auditor to the taxing 368.5 districts interested in the land, as follows: 368.6 (1) the amounts necessary to pay the state general tax levy 368.7 against the parcel for taxes payable in the year for which the 368.8 tax judgment was entered, and for each subsequent payable year 368.9 up to and including the year of forfeiture, must be apportioned 368.10 to the state; 368.11 (2) the portion required to pay any amounts included in the 368.12 appraised value under section 282.01, subdivision 3, as 368.13 representing increased value due to any public improvement made 368.14 after forfeiture of the parcel to the state, but not exceeding 368.15 the amount certified by the clerk of the municipality must be 368.16 apportioned to the municipal subdivision entitled to it; 368.17(2)(3) the portion required to pay any amount included in 368.18 the appraised value under section 282.019, subdivision 5, 368.19 representing increased value due to response actions taken after 368.20 forfeiture of the parcel to the state, but not exceeding the 368.21 amount of expenses certified by the pollution control agency or 368.22 the commissioner of agriculture, must be apportioned to the 368.23 agency or the commissioner of agriculture and deposited in the 368.24 fund from which the expenses were paid; 368.25(3)(4) the portion of the remainder required to discharge 368.26 any special assessment chargeable against the parcel for 368.27 drainage or other purpose whether due or deferred at the time of 368.28 forfeiture, must be apportioned to the municipal subdivision 368.29 entitled to it; and 368.30(4)(5) any balance must be apportioned as follows: 368.31 (i) The county board may annually by resolution set aside 368.32 no more than 30 percent of the receipts remaining to be used for 368.33 timber development on tax-forfeited land and dedicated memorial 368.34 forests, to be expended under the supervision of the county 368.35 board. It must be expended only on projects approved by the 368.36 commissioner of natural resources. 369.1 (ii) The county board may annually by resolution set aside 369.2 no more than 20 percent of the receipts remaining to be used for 369.3 the acquisition and maintenance of county parks or recreational 369.4 areas as defined in sections 398.31 to 398.36, to be expended 369.5 under the supervision of the county board. 369.6 (iii) Any balance remaining must be apportioned as 369.7 follows: county, 40 percent; town or city, 20 percent; and 369.8 school district, 40 percent, provided, however, that in 369.9 unorganized territory that portion which would have accrued to 369.10 the township must be administered by the county board of 369.11 commissioners. 369.12 [EFFECTIVE DATE.] This section is effective for taxes 369.13 payable in 2004 and thereafter. 369.14 Sec. 34. Minnesota Statutes 2002, section 290C.02, 369.15 subdivision 3, is amended to read: 369.16 Subd. 3. [CLAIMANT.] "Claimant" means a person, as that 369.17 term is defined in section 290.01, subdivision 2, who owns 369.18 forest land in Minnesota and files an application authorized by 369.19 the Sustainable Forest Incentive Act. For purposes of section 369.20 290C.11, claimant also includes any person bound by the covenant 369.21 required in section 290C.04. No more than one claimant is 369.22 entitled to a payment under this chapter with respect to any 369.23 tract, parcel, or piece of land enrolled under this chapter that 369.24 has been assigned the same parcel identification number. When 369.25 enrolled forest land is owned by two or more persons, the owners 369.26 must determine between them which person may claim the payments 369.27 provided under sections 290C.01 to 290C.11. 369.28 [EFFECTIVE DATE.] This section is effective the day 369.29 following final enactment. 369.30 Sec. 35. Minnesota Statutes 2002, section 290C.02, 369.31 subdivision 7, is amended to read: 369.32 Subd. 7. [FOREST MANAGEMENT PLAN.] "Forest management 369.33 plan" means a written document providing a framework for 369.34 site-specific healthy, productive, and sustainable forest 369.35 resources. A forest management plan must include at least the 369.36 following: (i) owner-specific forest management goals for the 370.1propertyland; (ii) a reliable field inventory of the individual 370.2 forest cover types, their age, and density; (iii) a description 370.3 of the soil type and quality; (iv) an aerial photo and/or map of 370.4 the vegetation and other natural features of thepropertyland 370.5 clearly indicating the boundaries of thepropertyland and of 370.6 the forest land; (v) the proposed future conditions of the 370.7propertyland; (vi) prescriptions to meet proposed future 370.8 conditions of thepropertyland; (vii) a recommended timetable 370.9 for implementing the prescribed activities; and (viii) a legal 370.10 description of theparcelsland encompassing the parcels 370.11 included in the plan. All management activities prescribed in a 370.12 plan must be in accordance with the recommended timber 370.13 harvesting and forest management guidelines. The commissioner 370.14 of natural resources shall provide a framework for plan content 370.15 and updating and revising plans. 370.16 [EFFECTIVE DATE.] This section is effective the day 370.17 following final enactment. 370.18 Sec. 36. Minnesota Statutes 2002, section 290C.03, is 370.19 amended to read: 370.20 290C.03 [ELIGIBILITY REQUIREMENTS.] 370.21 (a)PropertyLand may be enrolled in the sustainable forest 370.22 incentive program under this chapter if all of the following 370.23 conditions are met: 370.24 (1)propertythe land consists of at least 20 contiguous 370.25 acres and at least 50 percent of the land must meet the 370.26 definition of forest land in section 88.01, subdivision 7, 370.27 during the enrollment; 370.28 (2) a forest management plan for thepropertyland must be 370.29 prepared by an approved plan writer and implemented during the 370.30 period in which the land is enrolled; 370.31 (3) timber harvesting and forest management guidelines must 370.32 be used in conjunction with any timber harvesting or forest 370.33 management activities conducted on the land during the period in 370.34 which the land is enrolled; 370.35 (4) thepropertyland must be enrolled for a minimum of 370.36 eight years; 371.1 (5) there are no delinquent property taxes on theproperty371.2 land; and 371.3 (6) claimants enrolling more than 1,920 acres in the 371.4 sustainable forest incentive program must allow year-round, 371.5 nonmotorized access to fish and wildlife resources on enrolled 371.6 land except within one-fourth mile of a permanent dwelling or 371.7 during periods of high fire hazard as determined by the 371.8 commissioner of natural resources. 371.9 (b) Claimants required to allow access under paragraph (a), 371.10 clause (6), do not by that action: 371.11 (1) extend any assurance that the land is safe for any 371.12 purpose; 371.13 (2) confer upon the person the legal status of an invitee 371.14 or licensee to whom a duty of care is owed; or 371.15 (3) assume responsibility for or incur liability for any 371.16 injury to the person or property caused by an act or omission of 371.17 the person. 371.18 [EFFECTIVE DATE.] This section is effective the day 371.19 following final enactment. 371.20 Sec. 37. Minnesota Statutes 2002, section 290C.07, is 371.21 amended to read: 371.22 290C.07 [CALCULATION OF INCENTIVE PAYMENT.] 371.23 An approved claimant under the sustainable forest incentive 371.24 program is eligible to receive an annual payment. The payment 371.25 shall equal the greater of: 371.26 (1) the difference between the property tax that would be 371.27 paid on thepropertyland using the previous year's statewide 371.28 average total township tax rate and the class rate for class 2b 371.29 timberland under section 273.13, subdivision 23, paragraph (b), 371.30 if thepropertyland were valued at (i) the average statewide 371.31 timberland market value per acre calculated under section 371.32 290C.06, and (ii) the average statewide timberland current use 371.33 value per acre calculated under section 290C.02, subdivision 5; 371.34 (2) two-thirds of the property tax amount determined by 371.35 using the previous year's statewide average total township tax 371.36 rate, the estimated market value per acre as calculated in 372.1 section 290C.06, and the class rate for 2b timberland under 372.2 section 273.13, subdivision 23, paragraph (b); or 372.3 (3) $1.50 per acre for each acre enrolled in the 372.4 sustainable forest incentive program. 372.5 [EFFECTIVE DATE.] This section is effective the day 372.6 following final enactment. 372.7 Sec. 38. Minnesota Statutes 2002, section 290C.09, is 372.8 amended to read: 372.9 290C.09 [REMOVAL FOR PROPERTY TAX DELINQUENCY.] 372.10 The commissioner shall immediately remove anypropertyland 372.11 enrolled in the sustainable forest incentive program for which 372.12 taxes are determined to be delinquent as provided in chapter 279 372.13 and shall notify the claimant of such action. Lands terminated 372.14 from the sustainable forest incentive program under this section 372.15 are not entitled to any payments provided in this chapter and 372.16 are subject to removal penalties prescribed in section 290C.11. 372.17 The claimant has 60 days from the receipt of notice from the 372.18 commissioner under this section to pay the delinquent taxes. If 372.19 the delinquent taxes are paid within this 60-day period, the 372.20 lands shall be reinstated in the program as if they had not been 372.21 withdrawn and without the payment of a penalty. 372.22 [EFFECTIVE DATE.] This section is effective the day 372.23 following final enactment. 372.24 Sec. 39. Minnesota Statutes 2002, section 290C.10, is 372.25 amended to read: 372.26 290C.10 [WITHDRAWAL PROCEDURES.] 372.27 An approved claimant under the sustainable forest incentive 372.28 program for a minimum of four years may notify the commissioner 372.29 of the intent to terminate enrollment. Within 90 days of 372.30 receipt of notice to terminate enrollment, the commissioner 372.31 shall inform the claimant in writing, acknowledging receipt of 372.32 this notice and indicating the effective date of termination 372.33 from the sustainable forest incentive program. Termination of 372.34 enrollment in the sustainable forest incentive program occurs on 372.35 January 1 of the fifth calendar year that begins after receipt 372.36 by the commissioner of the termination notice. After the 373.1 commissioner issues an effective date of termination, a claimant 373.2 wishing to continue theproperty'sland's enrollment in the 373.3 sustainable forest incentive program beyond the termination date 373.4 must apply for enrollment as prescribed in section 290C.04. A 373.5 claimant who withdraws a parcel of land from this program may 373.6 not reenroll the parcel for a period of three years. Within 90 373.7 days after the termination date, the commissioner shall execute 373.8 and acknowledge a document releasing the land from the covenant 373.9 required under this chapter. The document must be mailed to the 373.10 claimant and is entitled to be recorded. The commissioner may 373.11 allow early withdrawal from the Sustainable Forest Incentive Act 373.12 without penalty in cases of condemnation for a public purpose 373.13 notwithstanding the provisions of this section. 373.14 [EFFECTIVE DATE.] This section is effective the day 373.15 following final enactment. 373.16 Sec. 40. Minnesota Statutes 2002, section 290C.11, is 373.17 amended to read: 373.18 290C.11 [PENALTIES FOR REMOVAL.] 373.19 (a) If the commissioner determines thatpropertyland 373.20 enrolled in the sustainable forest incentive program is in 373.21 violation of the conditions for enrollment as specified in 373.22 section 290C.03, the commissioner shall notify the claimant of 373.23 the intent to remove all enrolled land from the sustainable 373.24 forest incentive program. The claimant has 60 days to appeal 373.25 this determination. The appeal must be made in writing to the 373.26 commissioner, who shall, within 60 days, notify the claimant as 373.27 to the outcome of the appeal. Within 60 days after the 373.28 commissioner denies an appeal, or within 120 days after the 373.29 commissioner received a written appeal if the commissioner has 373.30 not made a determination in that time, the owner may appeal to 373.31 tax court under chapter 271 as if the appeal is from an order of 373.32 the commissioner. 373.33 (b) If the commissioner determines thepropertyland is to 373.34 be removed from the sustainable forest incentive program, the 373.35 claimant is liable for payment to the commissioner in the amount 373.36 equal to the payments received under this chapter for the 374.1 previous four-year period, plus interest. The claimant has 90 374.2 days to satisfy the payment for removal of land from the 374.3 sustainable forest incentive program under this section. If the 374.4 penalty is not paid within the 90-day period under this 374.5 paragraph, the commissioner shall certify the amount to the 374.6 county auditor for collection as a part of the general ad 374.7 valorem real property taxes on the land in the following taxes 374.8 payable year. 374.9 [EFFECTIVE DATE.] This section is effective the day 374.10 following final enactment. 374.11 Sec. 41. [290C.12] [DEATH OF CLAIMANT.] 374.12 Within one year after the death of the claimant, the 374.13 claimant's heir, devisee, or estate must either: 374.14 (1) notify the commissioner of election to terminate 374.15 enrollment in the sustainable forest incentive program; or 374.16 (2) make an application under this chapter to continue 374.17 enrollment of the land in the program. 374.18 Upon notification under clause (1), the commissioner shall 374.19 terminate the enrollment and issue a document releasing the land 374.20 from the covenant as provided in section 290C.04, paragraph 374.21 (c). Penalties under section 290C.11 shall not apply. If the 374.22 application under clause (2) is approved, the land is enrolled 374.23 in the program without a break. If the commissioner does not 374.24 receive notification within one year after the date of death, 374.25 enrollment in the program shall be terminated and penalties 374.26 under section 290C.11 shall not apply. 374.27 [EFFECTIVE DATE.] This section is effective the day 374.28 following final enactment, except in the case of claimants dying 374.29 prior to the day following final enactment, heirs, devisees, or 374.30 estates may make the election either six months after the 374.31 effective date of this provision or one year after the death of 374.32 the claimant, whichever is later. 374.33 Sec. 42. Minnesota Statutes 2002, section 469.1792, 374.34 subdivision 3, is amended to read: 374.35 Subd. 3. [ACTIONS AUTHORIZED.] (a) An authority with a 374.36 district qualifying under this section may take either or both 375.1 of the following actions for any or all of its preexisting 375.2 districts: 375.3 (1) the authority may elect that the original local tax 375.4 rate under section 469.177, subdivision 1a, does not apply to 375.5 the district; and 375.6 (2) the authority may elect the fiscal disparities 375.7 contribution will be computed under section 469.177, subdivision 375.8 3, paragraph (a), regardless of the election that was made for 375.9 the district. 375.10 (b) The authority may take action under this subdivision 375.11 only after the municipality approves the action, by resolution, 375.12 after notice and public hearing in the manner provided under 375.13 section 469.175, subdivision 2. To be effective for taxes 375.14 payable in the following year, the resolution must be adopted 375.15 and the county auditor must be notified of the adoption on or 375.16 before July 1. 375.17 [EFFECTIVE DATE.] This section is effective for taxes 375.18 payable in 2004 and thereafter. 375.19 Sec. 43. Minnesota Statutes 2002, section 473F.07, 375.20 subdivision 4, is amended to read: 375.21 Subd. 4. [DISTRIBUTION NET TAX CAPACITY.] The 375.22 administrative auditor shall determine the proportion which the 375.23 index of each municipality bears to the sum of the indices of 375.24 all municipalities and shall then multiply this proportion in 375.25 the case of each municipality, by the areawide net tax capacity,375.26provided that if the distribution net tax capacity for a375.27municipality is less than 95 percent of the municipality's375.28previous year distribution net tax capacity, and more than ten375.29percent of the municipality's fiscal capacity consists of375.30manufactured home property, the municipality's distribution net375.31tax capacity will be increased to 95 percent of the previous375.32year net tax capacity and the distribution net tax capacity of375.33other municipalities in the area will be proportionately reduced. 375.34 [EFFECTIVE DATE.] This section is effective for taxes 375.35 payable in 2004 and subsequent years. 375.36 Sec. 44. Minnesota Statutes 2002, section 515B.1-116, is 376.1 amended to read: 376.2 515B.1-116 [RECORDING.] 376.3 (a) A declaration, bylaws, any amendment to a declaration 376.4 or bylaws, and any other instrument affecting a common interest 376.5 community shall be entitled to be recorded. In those counties 376.6 which have a tract index, the county recorder shall enter the 376.7 declaration in the tract index for each unit affected. The 376.8 registrar of titles shall file the declaration in accordance 376.9 with section 508.351 or 508A.351. 376.10 (b) The recording officer shall upon request promptly 376.11 assign a number (CIC number) to a common interest community to 376.12 be formed or to a common interest community resulting from the 376.13 merger of two or more common interest communities. 376.14 (c) Documents recorded pursuant to this chapter shall in 376.15 the case of registered land be filed, and references to the 376.16 recording of documents shall mean filed in the case of 376.17 registered land. 376.18 (d) Subject to any specific requirements of this chapter, 376.19 if a recorded document relating to a common interest community 376.20 purports to require a certain vote or signatures approving any 376.21 restatement or amendment of the document by a certain number or 376.22 percentage of unit owners or secured parties, and if the 376.23 amendment or restatement is to be recorded pursuant to this 376.24 chapter, an affidavit of the president or secretary of the 376.25 association stating that the required vote or signatures have 376.26 been obtained shall be attached to the document to be recorded 376.27 and shall constitute prima facie evidence of the representations 376.28 contained therein. 376.29 (e) If a common interest community is located on registered 376.30 land, the recording fee for any document affecting two or more 376.31 units shall be the then-current fee for registering the document 376.32 on the certificates of title for the first ten affected 376.33 certificates and one-third of the then-current fee for each 376.34 additional affected certificate. This provision shall not apply 376.35 to recording fees for deeds of conveyance, with the exception of 376.36 deeds given pursuant to sections 515B.2-119 and 515B.3-112. 377.1 (f) Except as permitted under this subsection, a recording 377.2 officer shall not file or record a declaration creating a new 377.3 common interest community, unless the county treasurer has 377.4 certified that the property taxes payable in the current year 377.5 for the real estate included in the proposed common interest 377.6 community have been paid. This certification is in addition to 377.7 the certification for delinquent taxes required by section 377.8 272.12. In the case of preexisting common interest communities, 377.9 the recording officer shall accept, file, and record the 377.10 following instruments, without requiring a certification as to 377.11 the current or delinquent taxes on any of the units in the 377.12 common interest community: (i) a declaration subjecting the 377.13 common interest community to this chapter; (ii) a declaration 377.14 changing the form of a common interest community pursuant to 377.15 section 515B.2-123; or (iii) an amendment to or restatement of 377.16 the declaration, bylaws, or CIC plat. In order forthe377.17instrumentsan instrument to be accepted and recorded under the 377.18 preceding sentence, theassessor must certify or otherwise377.19inform the recording officer that, for taxes payable in the377.20current year, the assessor has allocated taxable values to each377.21unit or has separately assessed each unitinstrument must not 377.22 create or change unit or common area boundaries. 377.23 [EFFECTIVE DATE.] This section is effective for deeds or 377.24 instruments accepted for recording or registration on or after 377.25 July 1, 2003. 377.26 Sec. 45. Laws 2001, First Special Session chapter 5, 377.27 article 3, section 61, the effective date, is amended to read: 377.28 [EFFECTIVE DATE.] This section is effective August 1, 2001, 377.29 for deeds issued on or after August 1, 2001. This section is 377.30 effective August 1, 2006, for deeds issued before August 1, 2001. 377.31 Sec. 46. Laws 2001, First Special Session chapter 5, 377.32 article 3, section 63, the effective date, is amended to read: 377.33 [EFFECTIVE DATE.] This section is effective August 1, 2001, 377.34 for deeds issued on or after August 1, 2001. This section is 377.35 effective August 1, 2006, for deeds issued before August 1, 2001. 377.36 Sec. 47. Laws 2002, chapter 377, article 6, section 4, the 378.1 effective date, is amended to read: 378.2 [EFFECTIVE DATE.] This section is effectivefor aids378.3payable in 2004May 16, 2002, and thereafter. 378.4 Sec. 48. [PRE-1940 HOUSING PERCENTAGE.] 378.5 For the purposes of determining local government aid 378.6 payment amounts for aids payable in 2003, the "pre-1940 housing 378.7 percentage" factor shall be based upon the 1990 federal census, 378.8 notwithstanding Minnesota Statutes 2002, section 477A.011, 378.9 subdivision 30. 378.10 [EFFECTIVE DATE.] This section is effective for aids 378.11 payable in 2003 only. 378.12 Sec. 49. [REPEALER.] 378.13 (a) Minnesota Statutes 2002, section 274.04, is repealed. 378.14 (b) Minnesota Statutes 2002, section 477A.065, is repealed 378.15 effective for aid payable in 2004 and thereafter. 378.16 (c) Minnesota Rules, parts 8106.0100, subparts 11, 15, and 378.17 16; and 8106.0200, are repealed effective the day following 378.18 final enactment. 378.19 ARTICLE 15 378.20 DEPARTMENT SALES AND USE TAX INITIATIVES 378.21 Section 1. Minnesota Statutes 2002, section 289A.50, 378.22 subdivision 2a, is amended to read: 378.23 Subd. 2a. [REFUND OF SALES TAX TO PURCHASERS.] (a) If a 378.24 vendor has collected from a purchaser a tax on a transaction 378.25 that is not subject to the tax imposed by chapter 297A, the 378.26 purchaser may apply directly to the commissioner for a refund 378.27 under this section if: 378.28(a)(1) the purchaser is currently registered or was 378.29 registered during the period of the claim, to collect and remit 378.30 the sales tax or to remit the use tax; and 378.31 (2) either 378.32(b)(i) the amount of the refund to be applied for exceeds 378.33 $500, or 378.34 (ii) the amount of the refund to be applied for does not 378.35 exceed $500, but the purchaser also applies for a capital 378.36 equipment claim at the same time, and the total of the two 379.1 refunds exceeds $500. 379.2 (b) The purchaser may not file more than two applications 379.3 for refund under this subdivision in a calendar year. 379.4 [EFFECTIVE DATE.] This section is effective for claims 379.5 filed on or after the day following final enactment. 379.6 Sec. 2. Minnesota Statutes 2002, section 289A.60, is 379.7 amended by adding a subdivision to read: 379.8 Subd. 25. [PENALTY FOR FAILURE TO PROPERLY COMPLETE SALES 379.9 TAX RETURN.] A person who fails to report local sales tax on a 379.10 sales tax return or who fails to report local sales tax on 379.11 separate tax lines on the sales tax return is subject to a 379.12 penalty of five percent of the amount of tax not properly 379.13 reported on the return. A person who files a consolidated tax 379.14 return but fails to report location information is subject to a 379.15 $500 penalty for each return not containing location 379.16 information. In addition, the commissioner may revoke the 379.17 privilege for a taxpayer to file consolidated returns and may 379.18 require the taxpayer to separately register each location and to 379.19 file a tax return for each location. 379.20 [EFFECTIVE DATE.] This section is effective for returns 379.21 filed after June 30, 2003. 379.22 Sec. 3. Minnesota Statutes 2002, section 297A.61, 379.23 subdivision 3, is amended to read: 379.24 Subd. 3. [SALE AND PURCHASE.] (a) "Sale" and "purchase" 379.25 include, but are not limited to, each of the transactions listed 379.26 in this subdivision. 379.27 (b) Sale and purchase include: 379.28 (1) any transfer of title or possession, or both, of 379.29 tangible personal property, whether absolutely or conditionally, 379.30 for a consideration in money or by exchange or barter; and 379.31 (2) the leasing of or the granting of a license to use or 379.32 consume, for a consideration in money or by exchange or barter, 379.33 tangible personal property, other than a manufactured home used 379.34 for residential purposes for a continuous period of 30 days or 379.35 more. 379.36 (c) Sale and purchase include the production, fabrication, 380.1 printing, or processing of tangible personal property for a 380.2 consideration for consumers who furnish either directly or 380.3 indirectly the materials used in the production, fabrication, 380.4 printing, or processing. 380.5 (d) Sale and purchase include the preparing for a 380.6 consideration of food. Notwithstanding section 297A.67, 380.7 subdivision 2, taxable food includes, but is not limited to, the 380.8 following: 380.9 (1) prepared food sold by the retailer; 380.10 (2) soft drinks; 380.11 (3) candy; and 380.12 (4) all food sold through vending machines. 380.13 (e) A sale and a purchase includes the furnishing for a 380.14 consideration of electricity, gas, water, or steam for use or 380.15 consumption within this state. 380.16 (f) A sale and a purchase includes the transfer for a 380.17 consideration of computer software. 380.18 (g) A sale and a purchase includes the furnishing for a 380.19 consideration of the following services: 380.20 (1) the privilege of admission to places of amusement, 380.21 recreational areas, or athletic events, and the making available 380.22 of amusement devices, tanning facilities, reducing salons, steam 380.23 baths, turkish baths, health clubs, and spas or athletic 380.24 facilities; 380.25 (2) lodging and related services by a hotel, rooming house, 380.26 resort, campground, motel, or trailer camp and the granting of 380.27 any similar license to use real property other than the renting 380.28 or leasing of it for a continuous period of 30 days or more; 380.29 (3) nonresidential parking services, whether on a 380.30 contractual, hourly, or other periodic basis, except for parking 380.31 at a meter; 380.32 (4) the granting of membership in a club, association, or 380.33 other organization if: 380.34 (i) the club, association, or other organization makes 380.35 available for the use of its members sports and athletic 380.36 facilities, without regard to whether a separate charge is 381.1 assessed for use of the facilities; and 381.2 (ii) use of the sports and athletic facility is not made 381.3 available to the general public on the same basis as it is made 381.4 available to members. 381.5 Granting of membership means both onetime initiation fees and 381.6 periodic membership dues. Sports and athletic facilities 381.7 include golf courses; tennis, racquetball, handball, and squash 381.8 courts; basketball and volleyball facilities; running tracks; 381.9 exercise equipment; swimming pools; and other similar athletic 381.10 or sports facilities; 381.11 (5) delivery of aggregate materials and concrete block by a 381.12 third party if the delivery would be subject to the sales tax if 381.13 provided by the seller of the aggregate material or concrete 381.14 block; and 381.15 (6) services as provided in this clause: 381.16 (i) laundry and dry cleaning services including cleaning, 381.17 pressing, repairing, altering, and storing clothes, linen 381.18 services and supply, cleaning and blocking hats, and carpet, 381.19 drapery, upholstery, and industrial cleaning. Laundry and dry 381.20 cleaning services do not include services provided by coin 381.21 operated facilities operated by the customer; 381.22 (ii) motor vehicle washing, waxing, and cleaning services, 381.23 including services provided by coin operated facilities operated 381.24 by the customer, and rustproofing, undercoating, and towing of 381.25 motor vehicles; 381.26 (iii) building and residential cleaning, maintenance, and 381.27 disinfecting and exterminating services; 381.28 (iv) detective, security, burglar, fire alarm, and armored 381.29 car services; but not including services performed within the 381.30 jurisdiction they serve by off-duty licensed peace officers as 381.31 defined in section 626.84, subdivision 1, or services provided 381.32 by a nonprofit organization for monitoring and electronic 381.33 surveillance of persons placed on in-home detention pursuant to 381.34 court order or under the direction of the Minnesota department 381.35 of corrections; 381.36 (v) pet grooming services; 382.1 (vi) lawn care, fertilizing, mowing, spraying and sprigging 382.2 services; garden planting and maintenance; tree, bush, and shrub 382.3 pruning, bracing, spraying, and surgery; indoor plant care; 382.4 tree, bush, shrub, and stump removal; and tree trimming for 382.5 public utility lines. Services performed under a construction 382.6 contract for the installation of shrubbery, plants, sod, trees, 382.7 bushes, and similar items are not taxable; 382.8 (vii) massages, except when provided by a licensed health 382.9 care facility or professional or upon written referral from a 382.10 licensed health care facility or professional for treatment of 382.11 illness, injury, or disease; and 382.12 (viii) the furnishing of lodging, board, and care services 382.13 for animals in kennels and other similar arrangements, but 382.14 excluding veterinary and horse boarding services. 382.15 In applying the provisions of this chapter, the terms 382.16 "tangible personal property" and "sales at retail" include 382.17 taxable services listed in clause (6), items (i) to (vi) and 382.18 (viii) and the provision of these taxable services, unless 382.19 specifically provided otherwise. Services performed by an 382.20 employee for an employer are not taxable. Services performed by 382.21 a partnership or association for another partnership or 382.22 association are not taxable if one of the entities owns or 382.23 controls more than 80 percent of the voting power of the equity 382.24 interest in the other entity. Services performed between 382.25 members of an affiliated group of corporations are not taxable. 382.26 For purposes ofthis sectionthe preceding sentence, "affiliated 382.27 group of corporations" includes those entities that would be 382.28 classified as members of an affiliated group under United States 382.29 Code, title 26, section 1504, and that are eligible to file a 382.30 consolidated tax return for federal income tax purposes. 382.31 (h) A sale and a purchase includes the furnishing for a 382.32 consideration of tangible personal property or taxable services 382.33 by the United States or any of its agencies or 382.34 instrumentalities, or the state of Minnesota, its agencies, 382.35 instrumentalities, or political subdivisions. 382.36 (i) A sale and a purchase includes the furnishing for a 383.1 consideration of telecommunications services, including cable 383.2 television services and direct satellite services. 383.3 Telecommunications services are taxed to the extent allowed 383.4 under federal law if those services: 383.5 (1) either (i) originate and terminate in this state; or 383.6 (ii) originate in this state and terminate outside the state and 383.7 the service is charged to atelephone numbertelecommunications 383.8 customer located in this state or to the account of any 383.9 transmission instrument in this state; or (iii) originate 383.10 outside this state and terminate in this state and the service 383.11 is charged to atelephone numbertelecommunications customer 383.12 located in this state or to the account of any transmission 383.13 instrument in this state; or 383.14 (2) are rendered by providing a private communications 383.15 service for which the customer has one or more locations within 383.16 Minnesota connected to the service and the service is charged to 383.17 atelephone numbertelecommunications customer located in this 383.18 state or to the account of any transmission instrument in this 383.19 state. 383.20 All charges for mobile telecommunications services, as 383.21 defined in United States Code, title 4, section 124, are deemed 383.22 to be provided by the customer's home service provider and 383.23 sourced to the customer's place of primary use and are subject 383.24 to tax based upon the customer's place of primary use in 383.25 accordance with the Mobile Telecommunications Sourcing Act, 383.26 United States Code, title 4, sections 116 to 126. All other 383.27 definitions and provisions of the Mobile Telecommunications 383.28 Sourcing Act as provided in United States Code, title 4, are 383.29 hereby adopted. 383.30 (j) A sale and a purchase includes the furnishing for a 383.31 consideration of installation if the installation charges would 383.32 be subject to the sales tax if the installation were provided by 383.33 the seller of the item being installed. 383.34 [EFFECTIVE DATE.] This section is effective the day 383.35 following final enactment. 383.36 Sec. 4. Minnesota Statutes 2002, section 297A.61, 384.1 subdivision 12, is amended to read: 384.2 Subd. 12. [FARM MACHINERY.] (a) "Farm machinery" means new 384.3 or used machinery, equipment, implements, accessories, and 384.4 contrivances used directly and principally intheagricultural 384.5 productionfor sale, but not including the processing, of384.6livestock, dairy animals, dairy products, poultry and poultry384.7products, fruits, vegetables, trees and shrubs, plants, forage,384.8grains, and bees and apiary products.384.9(b) Farm machinery includesincluding, but not limited to: 384.10 (1) machinery for the preparation, seeding, or cultivation 384.11 of soil for growing agricultural cropsand sod, for the384.12harvesting and threshing of agricultural products, or for the384.13harvesting or mowing of sod; 384.14 (2) barn cleaners, milking systems, grain dryers, feeding 384.15 systems including stationary feed bunks, and similar 384.16 installations, whether or not the equipment is installed by the 384.17 seller and becomes part of the real property; and 384.18 (3) irrigation equipment sold for exclusively agricultural 384.19 use, including pumps, pipe fittings, valves, sprinklers, and 384.20 other equipment necessary to the operation of an irrigation 384.21 system when sold as part of an irrigation system, whether or not 384.22 the equipment is installed by the seller and becomes part of the 384.23 real property;. 384.24(4) logging equipment, including chain saws used for384.25commercial logging;384.26(5) fencing used for the containment of farmed cervidae, as384.27defined in section 17.451, subdivision 2;384.28(6) primary and backup generator units used to generate384.29electricity for the purpose of operating farm machinery, as384.30defined in this subdivision, or providing light or space heating384.31necessary for the production of livestock, dairy animals, dairy384.32products, or poultry and poultry products;384.33(7) aquaculture production equipment as defined in384.34subdivision 13; and384.35(8) equipment used for maple syrup harvesting.384.36(c)(b) Farm machinery does not include: 385.1 (1) repair or replacement parts; 385.2 (2) tools, shop equipment, grain bins, fencing material 385.3except fencing material covered by paragraph (b), clause (5), 385.4 communication equipment, and other farm supplies; 385.5 (3) motor vehicles taxed under chapter 297B; 385.6 (4) snowmobiles or snow blowers;or385.7 (5) lawn mowers except those used in the production of sod 385.8 for sale, or garden-type tractors or garden tillers; or 385.9 (6) machinery, equipment, implements, accessories, and 385.10 contrivances used directly in the production of horses not 385.11 raised for slaughter, fur-bearing animals, or research animals. 385.12 [EFFECTIVE DATE.] This section is effective for sales and 385.13 purchases made after June 30, 2003. 385.14 Sec. 5. Minnesota Statutes 2002, section 297A.61, 385.15 subdivision 34, is amended to read: 385.16 Subd. 34. [FOOD SOLD THROUGH VENDING MACHINES.] "Food sold 385.17 through vending machines" means food dispensed from a machine or 385.18 othermechanicaldevice that accepts payment including honor 385.19 payments. 385.20 [EFFECTIVE DATE.] This section is effective for sales and 385.21 purchases made on or after the day following final enactment. 385.22 Sec. 6. Minnesota Statutes 2002, section 297A.61, is 385.23 amended by adding a subdivision to read: 385.24 Subd. 35. [AGRICULTURAL PRODUCTION.] "Agricultural 385.25 production" includes, but is not limited to, horticulture, 385.26 floriculture, maple syrup harvesting, and the raising of pets, 385.27 livestock as defined in section 17A.03, subdivision 5, poultry, 385.28 dairy and poultry products, bees and apiary products, 385.29 agricultural crops, sod, fur-bearing animals, research animals, 385.30 and horses. 385.31 [EFFECTIVE DATE.] This section is effective for sales and 385.32 purchases made after June 30, 2003. 385.33 Sec. 7. Minnesota Statutes 2002, section 297A.665, is 385.34 amended to read: 385.35 297A.665 [PRESUMPTION OF TAX; BURDEN OF PROOF.] 385.36 (a) For the purpose of the proper administration of this 386.1 chapter and to prevent evasion of the tax, until the contrary is 386.2 established, it is presumed that: 386.3 (1) all gross receipts are subject to the tax; and 386.4 (2) all retail sales for delivery in Minnesota are for 386.5 storage, use, or other consumption in Minnesota. 386.6 (b) The burden of proving that a sale is not a taxable 386.7 retail sale is on the seller. However, the seller may take from 386.8 the purchaser at the time of the saleana fully completed 386.9 exemption certificateclaiming that the property purchased is386.10for resale or that the sale is otherwise exempt from the tax386.11imposed by this chapterwhich conclusively relieves the seller 386.12 from collecting and remitting the tax. This relief from 386.13 liability does not apply to a seller who fraudulently fails to 386.14 collect the tax or solicits purchasers to participate in the 386.15 unlawful claim of an exemption. If a seller claiming that 386.16 certain sales are exempt, who doesis notpossessin possession 386.17 of the required exemption certificates, must acquire the386.18certificateswithin 60 days after receiving written notice from 386.19 the commissioner that the certificates are required, deductions 386.20 claimed by the seller that required delivery of the certificates 386.21 must be disallowed. If the certificates arenot386.22obtaineddelivered to the commissioner within the 60-day period, 386.23 thesales are considered taxable sales under this386.24chapter.commissioner may verify the reason or basis for the 386.25 exemption claimed in the certificates before allowing any 386.26 deductions. A deduction must not be granted on the basis of 386.27 certificates delivered to the commissioner after the 60-day 386.28 period. 386.29 (c) A purchaser of tangible personal property or any items 386.30 listed in section 297A.63 that are shipped or brought to 386.31 Minnesota by the purchaser has the burden of proving that the 386.32 property was not purchased from a retailer for storage, use, or 386.33 consumption in Minnesota. 386.34 [EFFECTIVE DATE.] This section is effective for exemption 386.35 certificates received for sales occurring after June 30, 2003. 386.36 Sec. 8. Minnesota Statutes 2002, section 297A.67, 387.1 subdivision 2, is amended to read: 387.2 Subd. 2. [FOOD AND FOOD INGREDIENTS.] Food and food 387.3 ingredients are exempt. For purposes of this subdivision, 387.4 "food" and "food ingredients" mean substances, whether in 387.5 liquid, concentrated, solid, frozen, dried, or dehydrated form, 387.6 that are sold for ingestion or chewing by humans and are 387.7 consumed for their taste or nutritional value. Food and food 387.8 ingredients exempt under this subdivision do not include candy, 387.9 soft drinks, food sold through vending machines, and prepared 387.10 foods. Food and food ingredients do not include alcoholic 387.11 beverages, dietary supplements, and tobacco. For purposes of 387.12 this subdivision, "alcoholic beverages" means beverages that are 387.13 suitable for human consumption and contain one-half of one 387.14 percent or more of alcohol by volume. For purposes of this 387.15 subdivision, "tobacco" means cigarettes, cigars, chewing or pipe 387.16 tobacco, or any other item that contains tobacco. For purposes 387.17 of this subdivision, "dietary supplements" means any product, 387.18 other than tobacco, intended to supplement the diet that: 387.19 (1) contains one or more of the following dietary 387.20 ingredients: 387.21 (i) a vitamin; 387.22 (ii) a mineral; 387.23 (iii) an herb or other botanical; 387.24 (iv) an amino acid; 387.25 (v) a dietary substance for use by humans to supplement the 387.26 diet by increasing the total dietary intake; and 387.27 (vi) a concentrate, metabolite, constituent, extract, or 387.28 combination of any ingredient described in items (i) to (v); 387.29 (2) is intended for ingestion in tablet, capsule, powder, 387.30 softgel, gelcap, or liquid form, or if not intended for 387.31 ingestion in such form, is not represented as conventional food 387.32 and is not represented for use as a sole item of a meal or of 387.33 the diet; and 387.34 (3) is required to be labeled as a dietary supplement, 387.35 identifiable by the supplement facts box found on the label and 387.36 as required pursuant to Code of Federal Regulations, title 21, 388.1 section 101.36. 388.2 [EFFECTIVE DATE.] This section is effective the day 388.3 following final enactment. 388.4 Sec. 9. Minnesota Statutes 2002, section 297A.68, 388.5 subdivision 5, is amended to read: 388.6 Subd. 5. [CAPITAL EQUIPMENT.] (a) Capital equipment is 388.7 exempt. The tax must be imposed and collected as if the rate 388.8 under section 297A.62, subdivision 1, applied, and then refunded 388.9 in the manner provided in section 297A.75. 388.10 "Capital equipment" means machinery and equipment purchased 388.11 or leased, and used in this state by the purchaser or lessee 388.12 primarily for manufacturing, fabricating, mining, or refining 388.13 tangible personal property to be sold ultimately at retail if 388.14 the machinery and equipment are essential to the integrated 388.15 production process of manufacturing, fabricating, mining, or 388.16 refining. Capital equipment also includes machinery and 388.17 equipment used to electronically transmit results retrieved by a 388.18 customer of an online computerized data retrieval system. 388.19 (b) Capital equipment includes, but is not limited to: 388.20 (1) machinery and equipment used to operate, control, or 388.21 regulate the production equipment; 388.22 (2) machinery and equipment used for research and 388.23 development, design, quality control, and testing activities; 388.24 (3) environmental control devices that are used to maintain 388.25 conditions such as temperature, humidity, light, or air pressure 388.26 when those conditions are essential to and are part of the 388.27 production process; 388.28 (4) materials and supplies used to construct and install 388.29 machinery or equipment; 388.30 (5) repair and replacement parts, including accessories, 388.31 whether purchased as spare parts, repair parts, or as upgrades 388.32 or modifications to machinery or equipment; 388.33 (6) materials used for foundations that support machinery 388.34 or equipment; 388.35 (7) materials used to construct and install special purpose 388.36 buildings used in the production process; and 389.1 (8) ready-mixed concretetrucksequipment in which the 389.2 ready-mixed concrete is mixed as part of the delivery 389.3 process regardless if mounted on a chassis and leases of 389.4 ready-mixed concrete trucks. 389.5 (c) Capital equipment does not include the following: 389.6 (1) motor vehicles taxed under chapter 297B; 389.7 (2) machinery or equipment used to receive or store raw 389.8 materials; 389.9 (3) building materials, except for materials included in 389.10 paragraph (b), clauses (6) and (7); 389.11 (4) machinery or equipment used for nonproduction purposes, 389.12 including, but not limited to, the following: plant security, 389.13 fire prevention, first aid, and hospital stations; support 389.14 operations or administration; pollution control; and plant 389.15 cleaning, disposal of scrap and waste, plant communications, 389.16 space heating, cooling, lighting, or safety; 389.17 (5) farm machinery and aquaculture production equipment as 389.18 defined by section 297A.61, subdivisions 12 and 13; 389.19 (6) machinery or equipment purchased and installed by a 389.20 contractor as part of an improvement to real property; or 389.21 (7) any other item that is not essential to the integrated 389.22 process of manufacturing, fabricating, mining, or refining. 389.23 (d) For purposes of this subdivision: 389.24 (1) "Equipment" means independent devices or tools separate 389.25 from machinery but essential to an integrated production 389.26 process, including computers and computer software, used in 389.27 operating, controlling, or regulating machinery and equipment; 389.28 and any subunit or assembly comprising a component of any 389.29 machinery or accessory or attachment parts of machinery, such as 389.30 tools, dies, jigs, patterns, and molds. 389.31 (2) "Fabricating" means to make, build, create, produce, or 389.32 assemble components or property to work in a new or different 389.33 manner. 389.34 (3) "Integrated production process" means a process or 389.35 series of operations through which tangible personal property is 389.36 manufactured, fabricated, mined, or refined. For purposes of 390.1 this clause, (i) manufacturing begins with the removal of raw 390.2 materials from inventory and ends when the last process prior to 390.3 loading for shipment has been completed; (ii) fabricating begins 390.4 with the removal from storage or inventory of the property to be 390.5 assembled, processed, altered, or modified and ends with the 390.6 creation or production of the new or changed product; (iii) 390.7 mining begins with the removal of overburden from the site of 390.8 the ores, minerals, stone, peat deposit, or surface materials 390.9 and ends when the last process before stockpiling is completed; 390.10 and (iv) refining begins with the removal from inventory or 390.11 storage of a natural resource and ends with the conversion of 390.12 the item to its completed form. 390.13 (4) "Machinery" means mechanical, electronic, or electrical 390.14 devices, including computers and computer software, that are 390.15 purchased or constructed to be used for the activities set forth 390.16 in paragraph (a), beginning with the removal of raw materials 390.17 from inventory through completion of the product, including 390.18 packaging of the product. 390.19(4)(5) "Machinery and equipment used for pollution control" 390.20 means machinery and equipment used solely to eliminate, prevent, 390.21 or reduce pollution resulting from an activity described in 390.22 paragraph (a). 390.23(5)(6) "Manufacturing" means an operation or series of 390.24 operations where raw materials are changed in form, composition, 390.25 or condition by machinery and equipment and which results in the 390.26 production of a new article of tangible personal property. For 390.27 purposes of this subdivision, "manufacturing" includes the 390.28 generation of electricity or steam to be sold at retail. 390.29(6)(7) "Mining" means the extraction of minerals, ores, 390.30 stone, or peat. 390.31(7)(8) "Online data retrieval system" means a system whose 390.32 cumulation of information is equally available and accessible to 390.33 all its customers. 390.34(8)(9) "Primarily" means machinery and equipment used 50 390.35 percent or more of the time in an activity described in 390.36 paragraph (a). 391.1(9)(10) "Refining" means the process of converting a 391.2 natural resource toaan intermediate or finished product, 391.3 including the treatment of water to be sold at retail. 391.4 [EFFECTIVE DATE.] This section is effective for sales and 391.5 purchases made after December 31, 2003. 391.6 Sec. 10. Minnesota Statutes 2002, section 297A.68, is 391.7 amended by adding a subdivision to read: 391.8 Subd. 39. [PREEXISTING BIDS OR CONTRACTS.] (a) The sale of 391.9 tangible personal property or services is exempt from tax for a 391.10 period of six months from the effective date of the law change 391.11 that results in the imposition of the tax under this chapter if: 391.12 (1) the act imposing the tax does not have transitional 391.13 effective date language for existing construction contracts and 391.14 construction bids; and 391.15 (2) the requirements of paragraph (b) are met. 391.16 (b) A sale is tax exempt under paragraph (a) if it meets 391.17 the requirements of either clause (1) or (2): 391.18 (1) For a construction contract: 391.19 (i) the goods or services sold must be used for the 391.20 performance of a bona fide written lump sum or fixed price 391.21 construction contract; 391.22 (ii) the contract must be entered into before the date the 391.23 goods or services become subject to the sales tax; 391.24 (iii) the contract must not provide for allocation of 391.25 future taxes; and 391.26 (iv) for each qualifying contract the contractor must give 391.27 the seller documentation of the contract on which an exemption 391.28 is to be claimed. 391.29 (2) For a bid: 391.30 (i) the goods or services sold must be used pursuant to an 391.31 obligation of a bid or bids; 391.32 (ii) the bid or bids must be submitted and accepted before 391.33 the date the goods or services became subject to the sales tax; 391.34 (iii) the bid or bids must not be able to be withdrawn, 391.35 modified, or changed without forfeiting a bond; and 391.36 (iv) for each qualifying bid, the contractor must give the 392.1 seller documentation of the bid on which an exemption is to be 392.2 claimed. 392.3 [EFFECTIVE DATE.] This section is effective the day 392.4 following final enactment. 392.5 Sec. 11. Minnesota Statutes 2002, section 297A.69, 392.6 subdivision 2, is amended to read: 392.7 Subd. 2. [MATERIALS CONSUMED IN AGRICULTURAL PRODUCTION.] 392.8(a)Materials stored, used, or consumed in agricultural 392.9 production of personal property intended to be sold ultimately 392.10 at retail are exempt, whether or not the item becomes an 392.11 ingredient or constituent part of the property produced. 392.12 Materials that qualify for this exemption include, but are not 392.13 limited to, the following: 392.14 (1) feeds, seeds, trees, fertilizers, and herbicides, 392.15 including when purchased for use by farmers in a federal or 392.16 state farm or conservation program; 392.17 (2) materials sold to a veterinarian to be used or consumed 392.18 in the care, medication, and treatment of agricultural 392.19 production animals and horses; 392.20 (3) chemicals, including chemicals used for cleaning food 392.21 processing machinery and equipment; 392.22 (4) materials, including chemicals, fuels, and electricity 392.23 purchased by persons engaged in agricultural production to treat 392.24 waste generated as a result of the production process; 392.25 (5) fuels, electricity, gas, and steam used or consumed in 392.26 the production process, except that electricity, gas, or steam 392.27 used for space heating, cooling, or lighting is exempt if (i) it 392.28 is in excess of the average climate control or lighting for the 392.29 production area, and (ii) it is necessary to produce that 392.30 particular product; 392.31 (6) petroleum products and lubricants; 392.32 (7) packaging materials, including returnable containers 392.33 used in packaging food and beverage products; and 392.34 (8) accessory tools and equipment that are separate 392.35 detachable units with an ordinary useful life of less than 12 392.36 months used in producing a direct effect upon the product. 393.1 Machinery, equipment, implements, tools, accessories, 393.2 appliances, contrivances, and furniture and fixtures, except 393.3 those listed in this clause are not included within this 393.4 exemption. 393.5(b) For purposes of this subdivision, "agricultural393.6production" includes, but is not limited to, horticulture,393.7floriculture, maple syrup harvesting, and the raising of pets,393.8fur-bearing animals, research animals, horses, farmed cervidae393.9as defined in section 17.451, subdivision 2, llamas as defined393.10in section 17.455, subdivision 2, and ratitae as defined in393.11section 17.453, subdivision 3.393.12 [EFFECTIVE DATE.] This section is effective for sales and 393.13 purchases made after December 31, 2003. 393.14 Sec. 12. Minnesota Statutes 2002, section 297A.69, 393.15 subdivision 3, is amended to read: 393.16 Subd. 3. [FARM MACHINERYREPAIR AND REPLACEMENT PARTS.] 393.17 Repair and replacement parts, except tires, used for maintenance 393.18 or repair of farm machinery, logging equipment, and aquaculture 393.19 production equipment are exempt, if the part replaces afarm393.20 machinery part assigned a specific or generic part number by the 393.21 manufacturer of thefarmmachinery. 393.22 [EFFECTIVE DATE.] This section is effective for sales and 393.23 purchases made after June 30, 2003. 393.24 Sec. 13. Minnesota Statutes 2002, section 297A.69, 393.25 subdivision 4, is amended to read: 393.26 Subd. 4. [FARMMACHINERY, EQUIPMENT, AND FENCING.] The 393.27 following machinery, equipment, and fencing is exempt: 393.28 (1) farm machineryis exempt.; 393.29 (2) logging equipment, including chain saws used for 393.30 commercial logging; 393.31 (3) fencing used for the containment of farmed cervidae, as 393.32 defined in section 17.451, subdivision 2; 393.33 (4) primary and backup generator units used to generate 393.34 electricity for the purpose of operating farm machinery, 393.35 aquacultural production equipment, or logging equipment, or 393.36 providing light or space heating necessary for the production of 394.1 livestock, dairy animals, dairy products, or poultry and poultry 394.2 products; and 394.3 (5) aquaculture production equipment. 394.4 [EFFECTIVE DATE.] This section is effective for sales and 394.5 purchases made after June 30, 2003. 394.6 Sec. 14. Minnesota Statutes 2002, section 297B.025, 394.7 subdivision 1, is amended to read: 394.8 Subdivision 1. [NONCOLLECTOR VEHICLE.] Purchase or use of 394.9 a passenger automobile as defined in section 168.011, 394.10 subdivision 7, shall be taxed pursuant to section 297B.02, 394.11 subdivision 2, if the passenger automobileis(1) is in the 394.12 tenth or subsequent year of vehicle life, and (2)is not an394.13above-market automobile as designated by the registrar of motor394.14vehiclesdoes not have a resale value of $3,000 or more, as 394.15 determined using nationally recognized sources of information on 394.16 automobile resale values, as designated by the registrar of 394.17 motor vehicles. 394.18The registrar of motor vehicles shall prepare, and394.19distribute to all deputy motor vehicle registrars by July 15,394.201985, a listing by make, model, and year of above-market394.21automobiles. Except as provided by subdivision 2, the registrar394.22must include in the list all automobiles with a resale value of394.23$3,000 or more, as determined using nationally recognized394.24sources of information on automobile resale values. The394.25registrar shall revise the list by February 1 of each year. The394.26initial list and all subsequent revisions must include only394.27those automobiles which are in the tenth or subsequent year of394.28vehicle life.394.29 [EFFECTIVE DATE.] This section is effective for vehicles 394.30 purchased after June 30, 2003. 394.31 Sec. 15. Minnesota Statutes 2002, section 297B.025, 394.32 subdivision 2, is amended to read: 394.33 Subd. 2. [COLLECTOR VEHICLE.] A passenger automobile that 394.34 is registered under section 168.10, subdivision 1a, 1b, 1c, 1d, 394.35 or 1h, or a fire truck registered under section 168.10, 394.36 subdivision 1c, shall be taxed under section 297B.02, 395.1 subdivision 3, and the registrar shall not designate as an395.2above-market automobile a passenger automobile or a fire truck395.3registered under those subdivisions. If the vehicle is 395.4 subsequently registered in another class not under section 395.5 168.10, subdivision 1a, 1b, 1c, 1d, or 1h, within one year of 395.6 the date of registration under those subdivisions, it shall be 395.7 subject to the full excise tax imposed under subdivision 1. 395.8 [EFFECTIVE DATE.] This section is effective for vehicles 395.9 purchased after December 31, 2003. 395.10 Sec. 16. Minnesota Statutes 2002, section 297B.035, 395.11 subdivision 1, is amended to read: 395.12 Subdivision 1. [ORDINARY COURSE OF BUSINESS.] Except as 395.13 provided in this section, motor vehicles purchased for resale in 395.14 the ordinary course of businessor usedby any motor vehicle 395.15 dealer, as defined in section 168.011, subdivision 21, who is 395.16 licensed under section 168.27, subdivision 2 or 3, which bear 395.17 dealer plates as authorized by section 168.27, subdivision 16, 395.18 shall be exempt from the provisions of this chapter. 395.19 [EFFECTIVE DATE.] This section is effective the day 395.20 following final enactment. 395.21 Sec. 17. [REPEALER.] 395.22 (a) Minnesota Statutes 2002, section 297A.72, subdivision 395.23 1, is repealed effective for exemption certificates received for 395.24 sales occurring after June 30, 2003. 395.25 (b) Minnesota Statutes 2002, section 297A.97, is repealed 395.26 effective for sales and purchases occurring after December 31, 395.27 2003. 395.28 (c) Minnesota Rules, parts 8130.0800, subparts 5 and 12; 395.29 8130.1300; 8130.1600, subpart 5; 8130.1700, subparts 3 and 4; 395.30 8130.4800, subpart 2; 8130.7500, subpart 5; 8130.8000; and 395.31 8130.8300, are repealed effective the day following final 395.32 enactment. 395.33 ARTICLE 16 395.34 DEPARTMENT SPECIAL TAXES INITIATIVES 395.35 Section 1. Minnesota Statutes 2002, section 115B.24, 395.36 subdivision 8, is amended to read: 396.1 Subd. 8. [PENALTIES; ENFORCEMENT.] The audit, penalty and 396.2 enforcement provisions applicable to corporate franchise taxes 396.3 imposed under chapter 290 apply to the taxes imposed under 396.4 section 115B.22 and those provisions shall be administered by 396.5 the commissioner. 396.6 [EFFECTIVE DATE.] This section is effective the day 396.7 following final enactment. 396.8 Sec. 2. Minnesota Statutes 2002, section 295.50, 396.9 subdivision 9b, is amended to read: 396.10 Subd. 9b. [PATIENT SERVICES.] (a) "Patient services" means 396.11 inpatient and outpatient services and other goods and services 396.12 provided by hospitals, surgical centers, or health care 396.13 providers. They include the following health care goods and 396.14 services provided to a patient or consumer: 396.15 (1) bed and board; 396.16 (2) nursing services and other related services; 396.17 (3) use of hospitals, surgical centers, or health care 396.18 provider facilities; 396.19 (4) medical social services; 396.20 (5) drugs, biologicals, supplies, appliances, and 396.21 equipment; 396.22 (6) other diagnostic or therapeutic items or services; 396.23 (7) medical or surgical services; 396.24 (8) items and services furnished to ambulatory patients not 396.25 requiring emergency care; 396.26 (9) emergency services; and 396.27 (10) covered services listed in section 256B.0625 and in 396.28 Minnesota Rules, parts 9505.0170 to 9505.0475. 396.29 (b) "Patient services" does not include: 396.30 (1) services provided to nursing homes licensed under 396.31 chapter 144A;and396.32 (2) examinations for purposes of utilization reviews, 396.33 insurance claims or eligibility, litigation, and employment, 396.34 including reviews of medical records for those purposes; 396.35 (3) services provided by community residential mental 396.36 health facilities licensed under Minnesota Rules, parts 397.1 9520.0500 to 9520.0690; 397.2 (4) services provided by community support programs and 397.3 family community support programs approved under Minnesota 397.4 Rules, parts 9535.1700 to 9535.1760; 397.5 (5) services provided by community mental health centers as 397.6 defined in section 245.62, subdivision 2; 397.7 (6) services provided by assisted living programs and 397.8 congregate housing programs; and 397.9 (7) hospice care services. 397.10 [EFFECTIVE DATE.] This section is effective for gross 397.11 revenues received after December 31, 2002. 397.12 Sec. 3. Minnesota Statutes 2002, section 295.53, 397.13 subdivision 1, is amended to read: 397.14 Subdivision 1. [EXEMPTIONS.] (a) The following payments 397.15 are excluded from the gross revenues subject to the hospital, 397.16 surgical center, or health care provider taxes under sections 397.17 295.50 to295.57295.59: 397.18 (1) payments received for services provided under the 397.19 Medicare program, including payments received from the 397.20 government, and organizations governed by sections 1833 and 1876 397.21 of title XVIII of the federal Social Security Act, United States 397.22 Code, title 42, section 1395, and enrollee deductibles, 397.23 coinsurance, and copayments, whether paid by the Medicare 397.24 enrollee or by a Medicare supplemental coverage as defined in 397.25 section 62A.011, subdivision 3, clause (10). Payments for 397.26 services not covered by Medicare are taxable; 397.27 (2) medical assistance payments including payments received 397.28 directly from the government or from a prepaid plan; 397.29 (3) payments received for home health care services; 397.30 (4) payments received from hospitals or surgical centers 397.31 for goods and services on which liability for tax is imposed 397.32 under section 295.52 or the source of funds for the payment is 397.33 exempt under clause (1), (2), (7), (8), (10), (13), 397.34 or(20)(17); 397.35 (5) payments received from health care providers for goods 397.36 and services on which liability for tax is imposed under this 398.1 chapter or the source of funds for the payment is exempt under 398.2 clause (1), (2), (7), (8), (10), (13), or(20)(17); 398.3 (6) amounts paid for legend drugs, other than nutritional 398.4 products, to a wholesale drug distributor who is subject to tax 398.5 under section 295.52, subdivision 3, reduced by reimbursements 398.6 received for legend drugs otherwise exempt under this chapter; 398.7 (7) payments received under the general assistance medical 398.8 care program including payments received directly from the 398.9 government or from a prepaid plan; 398.10 (8) payments received for providing services under the 398.11 MinnesotaCare program including payments received directly from 398.12 the government or from a prepaid plan and enrollee deductibles, 398.13 coinsurance, and copayments. For purposes of this clause, 398.14 coinsurance means the portion of payment that the enrollee is 398.15 required to pay for the covered service; 398.16 (9) payments received by a health care provider or the 398.17 wholly owned subsidiary of a health care provider for care 398.18 provided outside Minnesota; 398.19 (10) payments received from the chemical dependency fund 398.20 under chapter 254B; 398.21 (11) payments received in the nature of charitable 398.22 donations that are not designated for providing patient services 398.23 to a specific individual or group; 398.24 (12) payments received for providing patient services 398.25 incurred through a formal program of health care research 398.26 conducted in conformity with federal regulations governing 398.27 research on human subjects. Payments received from patients or 398.28 from other persons paying on behalf of the patients are subject 398.29 to tax; 398.30 (13) payments received from any governmental agency for 398.31 services benefiting the public, not including payments made by 398.32 the government in its capacity as an employer or insurer; 398.33(14) payments received for services provided by community398.34residential mental health facilities licensed under Minnesota398.35Rules, parts 9520.0500 to 9520.0690, community support programs398.36and family community support programs approved under Minnesota399.1Rules, parts 9535.1700 to 9535.1760, and community mental health399.2centers as defined in section 245.62, subdivision 2;399.3(15)(14) government payments received by a regional 399.4 treatment center; 399.5(16) payments received for hospice care services;399.6(17)(15) payments received by a health care provider for 399.7 hearing aids and related equipment or prescription eyewear 399.8 delivered outside of Minnesota; 399.9(18)(16) payments received by an educational institution 399.10 from student tuition, student activity fees, health care service 399.11 fees, government appropriations, donations, or grants. Fee for 399.12 service payments and payments for extended coverage are taxable; 399.13 and 399.14(19) payments received for services provided by: assisted399.15living programs and congregate housing programs; and399.16(20)(17) payments received under the federal Employees 399.17 Health Benefits Act, United States Code, title 5, section 399.18 8909(f), as amended by the Omnibus Reconciliation Act of 1990. 399.19 (b) Payments received by wholesale drug distributors for 399.20 legend drugs sold directly to veterinarians or veterinary bulk 399.21 purchasing organizations are excluded from the gross revenues 399.22 subject to the wholesale drug distributor tax under sections 399.23 295.50 to 295.59. 399.24 [EFFECTIVE DATE.] This section is effective for gross 399.25 revenues received after December 31, 2002. 399.26 Sec. 4. Minnesota Statutes 2002, section 297F.01, 399.27 subdivision 21a, is amended to read: 399.28 Subd. 21a. [UNLICENSED SELLER.] "Unlicensed seller" means 399.29 anyone who is not licensed under section 297F.03or 461.12to 399.30 sell the particular product to the purchaser or possessor of the 399.31 product. 399.32 [EFFECTIVE DATE.] This section is effective July 1, 2003. 399.33 Sec. 5. Minnesota Statutes 2002, section 297F.01, 399.34 subdivision 23, is amended to read: 399.35 Subd. 23. [WHOLESALE SALES PRICE.] "Wholesale sales price" 399.36 means theestablishedprice stated on the price list in effect 400.1 at the time of sale for which a manufacturer or person sells a 400.2 tobacco product to a distributor, exclusive of any discount, 400.3 promotional offer, or other reduction. For purposes of this 400.4 subdivision, "price list" means the manufacturer's price at 400.5 which tobacco products are made available for sale to all 400.6 distributors on an ongoing basis. 400.7 [EFFECTIVE DATE.] This section is effective July 1, 2003. 400.8 Sec. 6. Minnesota Statutes 2002, section 297F.06, 400.9 subdivision 4, is amended to read: 400.10 Subd. 4. [TOBACCO PRODUCTS USE TAX.] The tobacco products 400.11 use tax does not apply to the possession, use, or storage of 400.12 tobacco productsin quantities of:that have an aggregate cost 400.13 in any calendar month to the consumer of $100 or less. 400.14(1) not more than 50 cigars;400.15(2) not more than ten ounces snuff or snuff powder;400.16(3) not more than one pound smoking or chewing tobacco or400.17any other tobacco product in the possession of any one consumer.400.18 [EFFECTIVE DATE.] This section is effective July 1, 2003. 400.19 Sec. 7. Minnesota Statutes 2002, section 297F.20, 400.20 subdivision 1, is amended to read: 400.21 Subdivision 1. [PENALTIES FOR FAILURE TO FILE OR PAY.] (a) 400.22 A person or consumer required to file a return, report, or other 400.23 document with the commissioner who fails to do so is guilty of a 400.24 misdemeanor. 400.25 (b) A person or consumer required to pay or to collect and 400.26 remit a tax under this chapter, who fails to do so when 400.27 required, is guilty of a misdemeanor. 400.28 [EFFECTIVE DATE.] This section is effective for acts 400.29 committed on or after July 1, 2003. 400.30 Sec. 8. Minnesota Statutes 2002, section 297F.20, 400.31 subdivision 2, is amended to read: 400.32 Subd. 2. [PENALTIES FOR KNOWING FAILURE TO FILE OR PAY.] 400.33 (a) A person or consumer required to file a return, report, or 400.34 other document with the commissioner, who knowingly, rather than 400.35 accidentally, inadvertently, or negligently, fails to file it 400.36 when required, is guilty of a gross misdemeanor. 401.1 (b) A person or consumer required to pay or to collect and 401.2 remit a tax under this chapter, who knowingly, rather than 401.3 accidentally, inadvertently, or negligently, fails to file it 401.4 when required, is guilty of a gross misdemeanor. 401.5 [EFFECTIVE DATE.] This section is effective for acts 401.6 committed on or after July 1, 2003. 401.7 Sec. 9. Minnesota Statutes 2002, section 297F.20, 401.8 subdivision 3, is amended to read: 401.9 Subd. 3. [FALSE OR FRAUDULENT RETURNS; PENALTIES.] (a) A 401.10 person or consumer who files with the commissioner a return, 401.11 report, or other document, or who maintains or provides invoices 401.12 subject to review by the commissioner under this chapter, known 401.13 by the person or consumer to be fraudulent or false concerning a 401.14 material matter, is guilty of a felony. 401.15 (b) A person or consumer who knowingly aids or assists in, 401.16 or advises in the preparation or presentation of a return, 401.17 report, invoice, or other document that is fraudulent or false 401.18 concerning a material matter, whether or not the falsity or 401.19 fraud is committed with the knowledge or consent of the 401.20 person or consumer authorized or required to present the return, 401.21 report, invoice, or other document, is guilty of a felony. 401.22 [EFFECTIVE DATE.] This section is effective for acts 401.23 committed on or after July 1, 2003. 401.24 Sec. 10. Minnesota Statutes 2002, section 297F.20, 401.25 subdivision 6, is amended to read: 401.26 Subd. 6. [UNSTAMPED CIGARETTES; UNTAXED TOBACCO PRODUCTS.] 401.27 (a) A person, other than a licensed distributor or a consumer, 401.28 who possesses, receives, or transportsmore than 200 butfewer 401.29 than 5,000 unstamped cigarettes, or up to$100$350 worth of 401.30 untaxed tobacco products is guilty of a misdemeanor. 401.31 (b) A person, other than a licensed distributor or a 401.32 consumer, who possesses, receives, or transports 5,000 or more, 401.33 but fewer than 20,001 unstamped cigarettes, orup to $500more 401.34 than $350 but less than $1,400 worth of untaxed tobacco products 401.35 is guilty of a gross misdemeanor. 401.36 (c) A person, other than a licensed distributor or a 402.1 consumer, who possesses, receives, or transports more than 402.2 20,000 unstamped cigarettes, or$500$1,400 or more worth of 402.3 untaxed tobacco products is guilty of a felony. 402.4 (d) For purposes of this subdivision, an individual in 402.5 possession of more than 4,999 unstamped cigarettes, or more than 402.6 $350 worth of untaxed tobacco products, is presumed not to be a 402.7 consumer. 402.8 [EFFECTIVE DATE.] This section is effective for acts 402.9 committed on or after July 1, 2003. 402.10 Sec. 11. Minnesota Statutes 2002, section 297F.20, 402.11 subdivision 9, is amended to read: 402.12 Subd. 9. [PURCHASES FROM UNLICENSED SELLERS.] (a) No 402.13 retailer or subjobber shall purchase cigarettes or tobacco 402.14 products from any person who is not licensed under section 402.15 297F.03 as a licensed distributor or subjobber. 402.16 (b) A retailer,or subjobber, or consumerwho purchases 402.17 from an unlicensed sellermore than 200 butfewer than 5,000 402.18 cigarettes or up to$100$350 worth of tobacco products is 402.19 guilty of a misdemeanor. 402.20(b)(c) A retailer,or subjobber, or consumerwho 402.21 purchases from an unlicensed seller 5,000 or more, but fewer 402.22 than 20,001 cigarettes orup to $500more than $350 but less 402.23 than $1,400 worth ofuntaxedtobacco products is guilty of a 402.24 gross misdemeanor. 402.25(c)(d) A retailer,or subjobber, or consumerwho 402.26 purchases from an unlicensed seller more than 20,000 cigarettes 402.27 or$500$1,400 or more worth of tobacco products is guilty of a 402.28 felony. 402.29 [EFFECTIVE DATE.] This section is effective for acts 402.30 committed on or after July 1, 2003. 402.31 Sec. 12. Minnesota Statutes 2002, section 297I.01, 402.32 subdivision 9, is amended to read: 402.33 Subd. 9. [GROSS PREMIUMS.] "Gross premiums" means total 402.34 premiums paid by policyholders and applicants of policies, 402.35 whether received in the form of money or other valuable 402.36 consideration, on property, persons, lives, interests and other 403.1 risks located, resident, or to be performed in this state, but 403.2 excluding consideration and premiums for reinsurance assumed 403.3 from other insurance companies. The term "gross premiums" 403.4 includes the total consideration paid to bail bond agents for 403.5 bail bonds. For title insurance companies, "gross premiums" 403.6 means the charge for title insurance made by a title insurance 403.7 company or its agents according to the company's rate filing 403.8 approved by the commissioner of commerce without a deduction for 403.9 commissions paid to or retained by the agent. Gross premiums of 403.10 a title insurance company does not include any other charge or 403.11 fee for abstracting, searching, or examining the title, or 403.12 escrow, closing, or other related services. The term "gross 403.13 premiums" includes any workers' compensation special 403.14 compensation fund premium surcharge pursuant to section 176.129. 403.15 [EFFECTIVE DATE.] This section is effective the day 403.16 following final enactment. 403.17 Sec. 13. Minnesota Statutes 2002, section 297I.20, is 403.18 amended to read: 403.19 297I.20 [GUARANTY ASSOCIATION ASSESSMENT OFFSETOFFSETS 403.20 AGAINST PREMIUM TAXES.] 403.21 Subdivision 1. [GUARANTY ASSOCIATION ASSESSMENT OFFSETS.] 403.22 (a) An insurance company may offset against its premium tax 403.23 liability to this state any amount paid for assessments made for 403.24 insolvencies which occur after July 31, 1994, under sections 403.25 60C.01 to 60C.22; and any amount paid for assessments made after 403.26 July 31, 1994, under Minnesota Statutes 1992, sections 61B.01 to 403.27 61B.16, or under sections 61B.18 to 61B.32 as follows: 403.28 (1) Each such assessment shall give rise to an amount of 403.29 offset equal to 20 percent of the amount of the assessment for 403.30 each of the five calendar years following the year in which the 403.31 assessment was paid. 403.32 (2) The amount of offset initially determined for each 403.33 taxable year is the sum of the amounts determined under clause 403.34 (1) for that taxable year. 403.35 (b)(1) Each year the commissioner shall compare total 403.36 guaranty association assessments levied over the preceding five 404.1 calendar years to the sum of all premium tax and corporate 404.2 franchise tax revenues collected from insurance companies, 404.3 without reduction for any guaranty association assessment offset 404.4 in the preceding calendar year, referred to in this subdivision 404.5 as "preceding year insurance tax revenues." 404.6 (2) If total guaranty association assessments levied over 404.7 the preceding five years exceed the preceding year insurance tax 404.8 revenues, insurance companies must be allowed only a 404.9 proportionate part of the premium tax offset calculated under 404.10 paragraph (a) for the current calendar year. 404.11 (3) The proportionate part of the premium tax offset 404.12 allowed in the current calendar year is determined by 404.13 multiplying the amount calculated under paragraph (a) by a 404.14 fraction. The numerator of the fraction equals the preceding 404.15 year insurance tax revenues, and its denominator equals total 404.16 guaranty association assessments levied over the preceding 404.17 five-year period. 404.18 (4) The proportionate part of the premium tax offset that 404.19 is not allowed must be carried forward to subsequent tax years 404.20 and added to the amount of premium tax offset calculated under 404.21 paragraph (a) prior to application of the limitation imposed by 404.22 this paragraph. 404.23 (5) Any amount carried forward from prior years must be 404.24 allowed before allowance of the offset for the current year 404.25 calculated under paragraph (a). 404.26 (6) The premium tax offset limitation must be calculated 404.27 separately for (i) insurance companies subject to assessment 404.28 under sections 60C.01 to 60C.22, and (ii) insurance companies 404.29 subject to assessment under Minnesota Statutes 1992, sections 404.30 61B.01 to 61B.16, or 61B.18 to 61B.32. 404.31 (7) When the premium tax offset is limited by this 404.32 provision, the commissioner shall notify affected insurance 404.33 companies on a timely basis for purposes of completing premium 404.34 and corporate franchise tax returns. 404.35 (8) The guaranty associations created under sections 60C.01 404.36 to 60C.22, Minnesota Statutes 1992, sections 61B.01 to 61B.16, 405.1 and 61B.18 to 61B.32, shall provide the commissioner with the 405.2 necessary information on guaranty association assessments. 405.3 (c)(1) If the offset determined by the application of 405.4 paragraphs (a) and (b) exceeds the insurance company's premium 405.5 tax liability under this section prior to allowance of the 405.6 credit for premium taxes, then the insurance company may carry 405.7 forward the excess, referred to in this subdivision as the 405.8 "carryforward credit" to subsequent taxable years. 405.9 (2) The carryforward credit is allowed as an offset against 405.10 premium tax liability for the first succeeding year to the 405.11 extent that the premium tax liability for that year exceeds the 405.12 amount of the allowable offset for the year determined under 405.13 paragraphs (a) and (b). 405.14 (3) The carryforward credit must be reduced, but not below 405.15 zero, by the amount of the carryforward credit allowed as an 405.16 offset against the premium tax under this paragraph. The 405.17 remainder, if any, of the carryforward credit must be carried 405.18 forward to succeeding taxable years until the entire 405.19 carryforward credit has been credited against the insurance 405.20 company's liability for premium tax under this chapter if 405.21 applicable for that taxable year. 405.22 (d) When an insurer has offset against taxes its payment of 405.23 an assessment of the Minnesota life and health guaranty 405.24 association, and the association pays the insurer a refund with 405.25 respect to the assessment under Minnesota Statutes 1992, section 405.26 61B.07, subdivision 6, or 61B.24, subdivision 6, then the refund 405.27 reduces the insurer's carryforward credit under paragraph (c). 405.28 If the refund exceeds the amount of the carryforward credit, the 405.29 excess amount must be repaid to the state by the insurers to the 405.30 extent of the offset in the manner the commissioner requires. 405.31 Subd. 2. [JOINT UNDERWRITING ASSOCIATION OFFSET.] An 405.32 assessment made pursuant to section 62I.06, subdivision 6, shall 405.33 be deductible by the member from past or future premium taxes 405.34 due the state. 405.35 [EFFECTIVE DATE.] This section is effective the day 405.36 following final enactment. 406.1 Sec. 14. [REVISOR'S INSTRUCTION.] 406.2 In the next edition of Minnesota Rules, the revisor shall 406.3 delete any references to the sections repealed in section 15, 406.4 paragraph (a). 406.5 Sec. 15. [REPEALER.] 406.6 (a) Minnesota Statutes 2002, sections 294.01; 294.02; 406.7 294.021; 294.03; 294.06; 294.07; 294.08; 294.09; 294.10; 294.11; 406.8 and 294.12, are repealed effective the day following final 406.9 enactment. 406.10 (b) Minnesota Rules, parts 8125.1000; 8125.1300, subpart 1; 406.11 and 8125.1400, are repealed effective the day following final 406.12 enactment. 406.13 ARTICLE 17 406.14 DEPARTMENT COLLECTIONS AND COMPLIANCE INITIATIVES 406.15 Section 1. [270.278] [PENALTY FOR FILING CERTAIN DOCUMENTS 406.16 AGAINST DEPARTMENT OF REVENUE EMPLOYEES.] 406.17 Subdivision 1. [DEFINITIONS.] (a) "Recording office" means 406.18 a county recorder, registrar of titles, or secretary of state in 406.19 this state or another state. 406.20 (b) "Filing party" means the person or persons requesting 406.21 or causing another person to request that the recording office 406.22 accept documents or instruments for recording or filing. 406.23 Subd. 2. [INVALID DOCUMENTS NAMING THE COMMISSIONER OR 406.24 DEPARTMENT OF REVENUE EMPLOYEES.] Filing a document, including a 406.25 nonconsensual common law lien under section 514.99, that 406.26 purports to create a claim against the commissioner of revenue 406.27 or an employee of the department of revenue based on performance 406.28 or nonperformance of duties by the commissioner or employee is 406.29 invalid unless accompanied by a specific order from a court of 406.30 competent jurisdiction authorizing the filing of the document or 406.31 unless a specific statute authorizes the filing of the document. 406.32 Subd. 3. [CIVIL PENALTY.] If a filing party causes a 406.33 document described in subdivision 2 to be recorded in a 406.34 recording office, the commissioner may assess a penalty against 406.35 the filing party of $1,000 per document filed, payable to the 406.36 general fund. An order assessing a penalty under this section 407.1 is reviewable administratively under section 289A.65 and is 407.2 appealable to tax court under chapter 271. The penalty is 407.3 collected and paid in the same manner as income tax. The 407.4 penalty is in addition to any other remedy available to the 407.5 commissioner of revenue or to an employee of the department of 407.6 revenue against whom the document has been filed. 407.7 [EFFECTIVE DATE.] This section is effective for documents 407.8 filed on or after July 1, 2003. 407.9 Sec. 2. Minnesota Statutes 2002, section 270.69, is 407.10 amended by adding a subdivision to read: 407.11 Subd. 16. [ATTACHMENT TO PROCEEDS OF PROPERTY.] Any lien 407.12 imposed under this section attaches to the proceeds of property 407.13 with the same priority that the lien has with respect to the 407.14 property itself. "Proceeds of property" means proceeds from the 407.15 sale, lease, license, exchange, or other disposition of the 407.16 property, including insurance proceeds arising from the loss or 407.17 destruction of the property. 407.18 [EFFECTIVE DATE.] This section is effective for all liens, 407.19 whether imposed prior to, on, or after the day following final 407.20 enactment. 407.21 Sec. 3. Minnesota Statutes 2002, section 270.701, 407.22 subdivision 2, is amended to read: 407.23 Subd. 2. [NOTICE OF SALE.] The commissioner shall as soon 407.24 as practicable after the seizure of the property give notice of 407.25 sale of the property to the owner, in the manner of service 407.26 prescribed in subdivision 1. In the case of personal property, 407.27 the notice shall be served at least 10 days prior to the sale. 407.28 In the case of real property, the notice shall be served at 407.29 least four weeks prior to the sale. The commissioner shall also 407.30 cause public notice of each sale to be made. In the case of 407.31 personal property, notice shall be posted at least 10 days prior 407.32 to the sale at the county courthouse for the county where the 407.33 seizure is made, and in not less than two other public 407.34 places. For purposes of this requirement, the Internet is a 407.35 public place for posting the information. In the case of real 407.36 property, six weeks' published notice shall be given prior to 408.1 the sale, in a newspaper published or generally circulated in 408.2 the county. The notice of sale provided in this subdivision 408.3 shall specify the property to be sold, and the time, place, 408.4 manner and conditions of the sale. Whenever levy is made 408.5 without regard to the 30-day period provided in section 270.70, 408.6 subdivision 2, public notice of sale of the property seized 408.7 shall not be made within the 30-day period unless section 408.8 270.702 (relating to sale of perishable goods) is applicable. 408.9 [EFFECTIVE DATE.] This section is effective for notices of 408.10 sales posted on or after the day following final enactment. 408.11 Sec. 4. Minnesota Statutes 2002, section 270.701, is 408.12 amended by adding a subdivision to read: 408.13 Subd. 7. [SALE OF SEIZED SECURITIES.] (a) At the time of 408.14 levy on securities, the commissioner shall provide notice to the 408.15 taxpayer that the securities may be sold after ten days from the 408.16 date of seizure. 408.17 (b) If the commissioner levies upon nonexempt publicly 408.18 traded securities and the value of the securities is less than 408.19 or equal to the total obligation for which the levy is done, 408.20 after ten days the person who possesses or controls the 408.21 securities shall liquidate the securities in a commercially 408.22 reasonable manner. After liquidation, the person shall transfer 408.23 the proceeds to the commissioner, less any applicable 408.24 commissions or fees, or both, which are charged in the normal 408.25 course of business. 408.26 (c) If the commissioner levies upon nonexempt publicly 408.27 traded securities and the value of the securities exceeds the 408.2