HF 2142

as introduced - 85th Legislature (2007 - 2008) Posted on 12/15/2009 12:00am

A bill for an act
relating to taxation; property tax; changing class rates; extending time for certain
refunds; requiring certain information to be included on certificates of real
estate value and used in sales ratio studies; creating a property classification
for rural woodlands; establishing a seasonal recreational property tax deferral
program; providing a market value exclusion for improvements made to
certain older homes; providing for homeowners to make monthly property tax
payments; appropriating money; amending Minnesota Statutes 2006, sections
127A.48, subdivision 3; 272.115, subdivision 1; 273.11, by adding a subdivision;
273.13, subdivisions 22, 23, 25, 33; 279.01, by adding a subdivision; 289A.40,
subdivision 4; proposing coding for new law as Minnesota Statutes, chapter
290D.

BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA:

Section 1.

Minnesota Statutes 2006, section 127A.48, subdivision 3, is amended to
read:

Subd. 3.

Agricultural lands.

For purposes of determining the adjusted net tax
capacity of agricultural lands for the calculation of adjusted net tax capacities, the
market value of agricultural lands must be the price for which the property would sell in
an arm's-length transaction. new text begin When agricultural land is sold and the purchaser changes
its use in a manner that would result in a change of classification of the property, the
assessment/sales tax rates study under this section must take into account that changed
classification as soon as practicable.
new text end

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for the first study prepared following
the day following final enactment.
new text end

Sec. 2.

Minnesota Statutes 2006, section 272.115, subdivision 1, is amended to read:

Subdivision 1.

Requirement.

Except as otherwise provided in subdivision 5,
whenever any real estate is sold for a consideration in excess of $1,000, whether by
warranty deed, quitclaim deed, contract for deed or any other method of sale, the grantor,
grantee or the legal agent of either shall file a certificate of value with the county auditor
in the county in which the property is located when the deed or other document is
presented for recording. Contract for deeds are subject to recording under section 507.235,
subdivision 1. Value shall, in the case of any deed not a gift, be the amount of the full
actual consideration thereof, paid or to be paid, including the amount of any lien or liens
assumed. The items and value of personal property transferred with the real property
must be listed and deducted from the sale price. The certificate of value shall include the
classification to which the property belongs for the purpose of determining the fair market
value of the property new text begin , and shall include any proposed change in use of the property known
to the person filing the certificate that could change the classification of the property new text end . The
certificate shall include financing terms and conditions of the sale which are necessary
to determine the actual, present value of the sale price for purposes of the sales ratio
study. The commissioner of revenue shall promulgate administrative rules specifying the
financing terms and conditions which must be included on the certificate. Pursuant to the
authority of the commissioner of revenue in section 270C.306, the certificate of value
must include the Social Security number or the federal employer identification number
of the grantors and grantees. The identification numbers of the grantors and grantees are
private data on individuals or nonpublic data as defined in section 13.02, subdivisions 9
and 12, but, notwithstanding that section, the private or nonpublic data may be disclosed to
the commissioner of revenue for purposes of tax administration. The information required
to be shown on the certificate of value is limited to the information required as of the date
of the acknowledgment on the deed or other document to be recorded.

Sec. 3.

Minnesota Statutes 2006, section 273.11, is amended by adding a subdivision to
read:

new text begin Subd. 16a. new text end

new text begin Valuation exclusion for certain improvements. new text end

new text begin Improvements to
homestead property made after January 2, 2008, shall be fully or partially excluded from
the value of the property for assessment purposes provided that (1) the house is at least 50
years old at the time of the improvement and (2) the assessor's estimated market value of
the house on January 2 of the current year does not exceed $400,000.
new text end

new text begin For purposes of determining this eligibility, "house" means land and buildings.
new text end

new text begin The age of a residence is the number of years since the original year of its
construction. In the case of a residence that is relocated, the relocation must be from a
location within the state and the only improvements eligible for exclusion under this
subdivision are (1) those for which building permits were issued to the homeowner after
the residence was relocated to its present site, and (2) those undertaken during or after the
year the residence is initially occupied by the homeowner, excluding any market value
increase relating to basic improvements that are necessary to install the residence on its
foundation and connect it to utilities at its present site. In the case of an owner-occupied
duplex or triplex, the improvement is eligible regardless of which portion of the property
was improved.
new text end

new text begin If the property lies in a jurisdiction that is subject to a building permit process, a
building permit must have been issued prior to commencement of the improvement. The
improvements for a single project or in any one year must add at least $15,000 to the value
of the property to be eligible for exclusion under this subdivision. Only improvements to
the structure which is the residence of the qualifying homesteader, or construction of or
improvements to no more than one two-car garage per residence, qualify for the provisions
of this subdivision. Whenever a building permit is issued for property currently classified
as homestead, the issuing jurisdiction shall notify the property owner of the possibility
of valuation exclusion under this subdivision. The assessor shall require an application,
including documentation of the age of the house from the owner, if unknown by the
assessor. The application is filed subsequent to the date of the building permit provided
that the application must be filed within two years of the date the building permit was
issued for the improvement. If the property lies in a jurisdiction that is not subject to a
building permit process, the application must be filed within two years of the date the
improvement was made. The assessor may require proof from the taxpayer of the date
the improvement was made. Applications must be received prior to July 1 of any year in
order to be effective for taxes payable in the following year.
new text end

new text begin No exclusion for an improvement may be granted by a local board of review or
county board of equalization, and no abatement of the taxes for qualifying improvements
may be granted by the county board unless (1) a building permit was issued prior to the
commencement of the improvement if the jurisdiction requires a building permit, and
(2) an application was completed.
new text end

new text begin The assessor shall note the qualifying value of each improvement on the property's
record, and the sum of those amounts must be subtracted from the value of the property in
each year for ten years after the improvement has been made. After ten years, the amount
of the qualifying value shall be added back as follows:
new text end

new text begin (1) 50 percent in the two subsequent assessment years if the qualifying value is equal
to or less than $20,000 market value; or
new text end

new text begin (2) 33-1/3 percent in the three subsequent assessment years if the qualifying value is
greater than $20,000 market value.
new text end

new text begin If an application is filed after the first assessment date at which an improvement could
have been subject to the valuation exclusion under this subdivision, the ten-year period
during which the value is subject to exclusion is reduced by the number of years that
have elapsed since the property would have qualified initially. The valuation exclusion
terminates whenever (1) the property is sold, or (2) the property is reclassified to a class
that does not qualify for treatment under this subdivision. Improvements made by an
occupant who is the purchaser of the property under a conditional purchase contract do not
qualify under this subdivision unless the seller of the property is a governmental entity.
The qualifying value of the property must be computed based upon the increase from that
structure's market value as of January 2 preceding the acquisition of the property by
the governmental entity.
new text end

new text begin The total qualifying value for a homestead may not exceed $75,000. The term
"qualifying value" means the increase in estimated market value resulting from the
improvement. The maximum qualifying value under this subdivision may result from no
more than two separate improvements to the homestead.
new text end

new text begin If 50 percent or more of the square footage of a structure is voluntarily razed or
removed, the valuation increase attributable to any subsequent improvements to the
remaining structure does not qualify for the exclusion under this subdivision. If a structure
is unintentionally or accidentally destroyed by a natural disaster, the property is eligible
for an exclusion under this subdivision provided that the structure was not completely
destroyed. The qualifying value on property destroyed by a natural disaster shall be
computed based upon the increase from that structure's market value as determined on
January 2 of the year in which the disaster occurred. A property receiving benefits under
the homestead disaster provisions under section 273.123 is not disqualified from receiving
an exclusion under this subdivision. If any combination of improvements made to a
structure after January 1, 2008, increase the size of the structure by 100 percent or more,
the valuation increase attributable to the portion of the improvement that causes the
structure's size to exceed 100 percent does not qualify for exclusion under this subdivision.
new text end

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for improvements made after January
2, 2008.
new text end

Sec. 4.

Minnesota Statutes 2006, section 273.13, subdivision 22, is amended to read:

Subd. 22.

Class 1.

(a) Except as provided in subdivision 23 and in paragraphs (b)
and (c), real estate which is residential and used for homestead purposes is class 1a. In the
case of a duplex or triplex in which one of the units is used for homestead purposes, the
entire property is deemed to be used for homestead purposes. The market value of class 1a
property must be determined based upon the value of the house, garage, and land.

The first $500,000 of market value of class 1a property has a net class rate of
one percent of its market value; and the market value of class 1a property that exceeds
$500,000 has a class rate of 1.25 percent of its market value.

(b) Class 1b property includes homestead real estate or homestead manufactured
homes used for the purposes of a homestead by

(1) any person who is blind as defined in section 256D.35, or the blind person and
the blind person's spouse; or

(2) any person, hereinafter referred to as "veteran," who:

(i) served in the active military or naval service of the United States; and

(ii) is entitled to compensation under the laws and regulations of the United States
for permanent and total service-connected disability due to the loss, or loss of use, by
reason of amputation, ankylosis, progressive muscular dystrophies, or paralysis, of both
lower extremities, such as to preclude motion without the aid of braces, crutches, canes, or
a wheelchair; and

(iii) has acquired a special housing unit with special fixtures or movable facilities
made necessary by the nature of the veteran's disability, or the surviving spouse of the
deceased veteran for as long as the surviving spouse retains the special housing unit
as a homestead; or

(3) any person who is permanently and totally disabled.

Property is classified and assessed under clause (3) only if the government agency or
income-providing source certifies, upon the request of the homestead occupant, that the
homestead occupant satisfies the disability requirements of this paragraph.

Property is classified and assessed pursuant to clause (1) only if the commissioner of
revenue certifies to the assessor that the homestead occupant satisfies the requirements of
this paragraph.

Permanently and totally disabled for the purpose of this subdivision means a
condition which is permanent in nature and totally incapacitates the person from working
at an occupation which brings the person an income. The first deleted text begin $32,000 deleted text end new text begin $50,000 new text end market
value of class 1b property has a net class rate of .45 percent of its market value. The
remaining market value of class 1b property has a class rate using the rates for class 1a or
class 2a property, whichever is appropriate, of similar market value.

(c) Class 1c property is commercial use real property that abuts a lakeshore line and
is devoted to temporary and seasonal residential occupancy for recreational purposes but
not devoted to commercial purposes for more than 250 days in the year preceding the
year of assessment, and that includes a portion used as a homestead by the owner, which
includes a dwelling occupied as a homestead by a shareholder of a corporation that owns
the resort, a partner in a partnership that owns the resort, or a member of a limited liability
company that owns the resort even if the title to the homestead is held by the corporation,
partnership, or limited liability company. For purposes of this clause, property is devoted
to a commercial purpose on a specific day if any portion of the property, excluding the
portion used exclusively as a homestead, is used for residential occupancy and a fee is
charged for residential occupancy. The portion of the property used as a homestead is class
1a property under paragraph (a). The remainder of the property is classified as follows:
the first $500,000 of market value is tier I, the next $1,700,000 of market value is tier II,
and any remaining market value is tier III. The class rates for class 1c are: tier I, 0.55
percent; tier II, 1.0 percent; and tier III, 1.25 percent. If a class 1c resort property has any
market value in tier III, the entire property must meet the requirements of subdivision 25,
paragraph (d), clause (1), to qualify for class 1c treatment under this paragraph.

(d) Class 1d property includes structures that meet all of the following criteria:

(1) the structure is located on property that is classified as agricultural property under
section 273.13, subdivision 23;

(2) the structure is occupied exclusively by seasonal farm workers during the time
when they work on that farm, and the occupants are not charged rent for the privilege of
occupying the property, provided that use of the structure for storage of farm equipment
and produce does not disqualify the property from classification under this paragraph;

(3) the structure meets all applicable health and safety requirements for the
appropriate season; and

(4) the structure is not salable as residential property because it does not comply
with local ordinances relating to location in relation to streets or roads.

The market value of class 1d property has the same class rates as class 1a property
under paragraph (a).

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for assessment year 2007 and
thereafter, for taxes payable in 2008 and thereafter.
new text end

Sec. 5.

Minnesota Statutes 2006, section 273.13, subdivision 23, is amended to read:

Subd. 23.

Class 2.

(a) Class 2a property is agricultural land including any
improvements that is homesteaded. The market value of the house and garage and
immediately surrounding one acre of land has the same class rates as class 1a property
under subdivision 22. The value of the remaining land including improvements up to
the first tier valuation limit of agricultural homestead property has a net class rate of
0.55 percent of market value. The remaining property over the first tier has a class rate
of one percent of market value. For purposes of this subdivision, the "first tier valuation
limit of agricultural homestead property" and "first tier" means the limit certified under
section 273.11, subdivision 23.

(b) Class 2b property is (1) new text begin unplatted new text end real estate, rural in character deleted text begin and used
exclusively for growing trees for timber, lumber, and wood and wood products; (2)
real estate deleted text end new text begin , new text end that is not improved with a structure deleted text begin and is used exclusively for growing
trees for timber, lumber, and wood and wood products, if the owner has participated or
is participating in a cost-sharing program for afforestation, reforestation, or timber stand
improvement on that particular property, administered or coordinated by the commissioner
of natural resources; (3) deleted text end new text begin and that consists of at least ten acres, including land used for
growing trees for timber, lumber, and wood products, but not including land used for
agricultural purposes, provided that the presence of a minor, ancillary nonresidential
structure does not disqualify property from the classification under this clause; (2) new text end real
estate that is nonhomestead agricultural land; or deleted text begin (4) deleted text end new text begin (3) new text end a landing area or public access
area of a privately owned public use airport. Class 2b property has a net class rate of one
percent of market value.

(c) Agricultural land as used in this section means contiguous acreage of ten acres or
more, used during the preceding year for agricultural purposes. "Agricultural purposes" as
used in this section means the raising or cultivation of agricultural products. "Agricultural
purposes" also includes enrollment in the Reinvest in Minnesota program under sections
103F.501 to 103F.535 or the federal Conservation Reserve Program as contained in Public
Law 99-198 if the property was classified as agricultural (i) under this subdivision for
the assessment year 2002 or (ii) in the year prior to its enrollment. Contiguous acreage
on the same parcel, or contiguous acreage on an immediately adjacent parcel under the
same ownership, may also qualify as agricultural land, but only if it is pasture, timber,
waste, unusable wild land, or land included in state or federal farm programs. Agricultural
classification for property shall be determined excluding the house, garage, and
immediately surrounding one acre of land, and shall not be based upon the market value of
any residential structures on the parcel or contiguous parcels under the same ownership.

(d) Real estate, excluding the house, garage, and immediately surrounding one acre
of land, of less than ten acres which is exclusively and intensively used for raising or
cultivating agricultural products, shall be considered as agricultural land.

Land shall be classified as agricultural even if all or a portion of the agricultural use
of that property is the leasing to, or use by another person for agricultural purposes.

Classification under this subdivision is not determinative for qualifying under
section 273.111.

The property classification under this section supersedes, for property tax purposes
only, any locally administered agricultural policies or land use restrictions that define
minimum or maximum farm acreage.

(e) The term "agricultural products" as used in this subdivision includes production
for sale of:

(1) livestock, dairy animals, dairy products, poultry and poultry products, fur-bearing
animals, horticultural and nursery stock, fruit of all kinds, vegetables, forage, grains,
bees, and apiary products by the owner;

(2) fish bred for sale and consumption if the fish breeding occurs on land zoned
for agricultural use;

(3) the commercial boarding of horses if the boarding is done in conjunction with
raising or cultivating agricultural products as defined in clause (1);

(4) property which is owned and operated by nonprofit organizations used for
equestrian activities, excluding racing;

(5) game birds and waterfowl bred and raised for use on a shooting preserve licensed
under section 97A.115;

(6) insects primarily bred to be used as food for animals;

(7) trees, grown for sale as a crop, and not sold for timber, lumber, wood, or wood
products; and

(8) maple syrup taken from trees grown by a person licensed by the Minnesota
Department of Agriculture under chapter 28A as a food processor.

(f) If a parcel used for agricultural purposes is also used for commercial or industrial
purposes, including but not limited to:

(1) wholesale and retail sales;

(2) processing of raw agricultural products or other goods;

(3) warehousing or storage of processed goods; and

(4) office facilities for the support of the activities enumerated in clauses (1), (2),
and (3),

the assessor shall classify the part of the parcel used for agricultural purposes as class
1b, 2a, or 2b, whichever is appropriate, and the remainder in the class appropriate to its
use. The grading, sorting, and packaging of raw agricultural products for first sale is
considered an agricultural purpose. A greenhouse or other building where horticultural
or nursery products are grown that is also used for the conduct of retail sales must be
classified as agricultural if it is primarily used for the growing of horticultural or nursery
products from seed, cuttings, or roots and occasionally as a showroom for the retail sale of
those products. Use of a greenhouse or building only for the display of already grown
horticultural or nursery products does not qualify as an agricultural purpose.

The assessor shall determine and list separately on the records the market value of
the homestead dwelling and the one acre of land on which that dwelling is located. If any
farm buildings or structures are located on this homesteaded acre of land, their market
value shall not be included in this separate determination.

(g) To qualify for classification under paragraph (b), clause deleted text begin (4) deleted text end new text begin (3) new text end , a privately
owned public use airport must be licensed as a public airport under section 360.018. For
purposes of paragraph (b), clause deleted text begin (4) deleted text end new text begin (3) new text end , "landing area" means that part of a privately
owned public use airport properly cleared, regularly maintained, and made available to the
public for use by aircraft and includes runways, taxiways, aprons, and sites upon which
are situated landing or navigational aids. A landing area also includes land underlying
both the primary surface and the approach surfaces that comply with all of the following:

(i) the land is properly cleared and regularly maintained for the primary purposes of
the landing, taking off, and taxiing of aircraft; but that portion of the land that contains
facilities for servicing, repair, or maintenance of aircraft is not included as a landing area;

(ii) the land is part of the airport property; and

(iii) the land is not used for commercial or residential purposes.

The land contained in a landing area under paragraph (b), clause deleted text begin (4) deleted text end new text begin (3) new text end , must be described
and certified by the commissioner of transportation. The certification is effective until
it is modified, or until the airport or landing area no longer meets the requirements of
paragraph (b), clause deleted text begin (4) deleted text end new text begin (3) new text end . For purposes of paragraph (b), clause deleted text begin (4) deleted text end new text begin (3) new text end , "public access
area" means property used as an aircraft parking ramp, apron, or storage hangar, or an
arrival and departure building in connection with the airport.

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for assessment year 2007 and
thereafter, for taxes payable in 2008 and thereafter.
new text end

Sec. 6.

Minnesota Statutes 2006, section 273.13, subdivision 25, is amended to read:

Subd. 25.

Class 4.

(a) Class 4a is residential real estate containing four or more
units and used or held for use by the owner or by the tenants or lessees of the owner
as a residence for rental periods of 30 days or more, excluding property qualifying for
class 4d. Class 4a also includes hospitals licensed under sections 144.50 to 144.56, other
than hospitals exempt under section 272.02, and contiguous property used for hospital
purposes, without regard to whether the property has been platted or subdivided. The
market value of class 4a property has a class rate of 1.25 percent.

(b) Class 4b includes:

(1) residential real estate containing less than four units that does not qualify as class
4bb, other than seasonal residential recreational property;

(2) manufactured homes not classified under any other provision;

(3) a dwelling, garage, and surrounding one acre of property on a nonhomestead
farm classified under subdivision 23, paragraph (b) containing two or three units; and

(4) unimproved property that is classified residential as determined under subdivision
33.

The market value of class 4b property has a class rate of 1.25 percent.

(c) Class 4bb includes:

(1) nonhomestead residential real estate containing one unit, other than seasonal
residential recreational property; and

(2) a single family dwelling, garage, and surrounding one acre of property on a
nonhomestead farm classified under subdivision 23, paragraph (b).

Class 4bb property has the same class rates as class 1a property under subdivision 22.

Property that has been classified as seasonal residential recreational property at
any time during which it has been owned by the current owner or spouse of the current
owner does not qualify for class 4bb.

(d) Class 4c property includes:

(1) except as provided in subdivision 22, paragraph (c), new text begin or subdivision 23, paragraph
(b), clause (1), new text end real property devoted to temporary and seasonal residential occupancy for
recreation purposes, including real property devoted to temporary and seasonal residential
occupancy for recreation purposes and not devoted to commercial purposes for more
than 250 days in the year preceding the year of assessment. For purposes of this clause,
property is devoted to a commercial purpose on a specific day if any portion of the
property is used for residential occupancy, and a fee is charged for residential occupancy.
In order for a property to be classified as class 4c, seasonal residential recreational for
commercial purposes, at least 40 percent of the annual gross lodging receipts related to the
property must be from business conducted during 90 consecutive days and either (i) at
least 60 percent of all paid bookings by lodging guests during the year must be for periods
of at least two consecutive nights; or (ii) at least 20 percent of the annual gross receipts
must be from charges for rental of fish houses, boats and motors, snowmobiles, downhill
or cross-country ski equipment, or charges for marina services, launch services, and guide
services, or the sale of bait and fishing tackle. For purposes of this determination, a paid
booking of five or more nights shall be counted as two bookings. Class 4c also includes
commercial use real property used exclusively for recreational purposes in conjunction
with class 4c property devoted to temporary and seasonal residential occupancy for
recreational purposes, up to a total of two acres, provided the property is not devoted to
commercial recreational use for more than 250 days in the year preceding the year of
assessment and is located within two miles of the class 4c property with which it is used.
Owners of real property devoted to temporary and seasonal residential occupancy for
recreation purposes and all or a portion of which was devoted to commercial purposes for
not more than 250 days in the year preceding the year of assessment desiring classification
as class 1c or 4c, must submit a declaration to the assessor designating the cabins or units
occupied for 250 days or less in the year preceding the year of assessment by January
15 of the assessment year. Those cabins or units and a proportionate share of the land
on which they are located will be designated class 1c or 4c as otherwise provided. The
remainder of the cabins or units and a proportionate share of the land on which they are
located will be designated as class 3a. The owner of property desiring designation as class
1c or 4c property must provide guest registers or other records demonstrating that the units
for which class 1c or 4c designation is sought were not occupied for more than 250 days in
the year preceding the assessment if so requested. The portion of a property operated as
a (1) restaurant, (2) bar, (3) gift shop, and (4) other nonresidential facility operated on a
commercial basis not directly related to temporary and seasonal residential occupancy
for recreation purposes shall not qualify for class 1c or 4c;

(2) qualified property used as a golf course if:

(i) it is open to the public on a daily fee basis. It may charge membership fees or
dues, but a membership fee may not be required in order to use the property for golfing,
and its green fees for golfing must be comparable to green fees typically charged by
municipal courses; and

(ii) it meets the requirements of section 273.112, subdivision 3, paragraph (d).

A structure used as a clubhouse, restaurant, or place of refreshment in conjunction
with the golf course is classified as class 3a property;

(3) real property up to a maximum of one acre of land owned by a nonprofit
community service oriented organization; provided that the property is not used for a
revenue-producing activity for more than six days in the calendar year preceding the year
of assessment and the property is not used for residential purposes on either a temporary
or permanent basis. For purposes of this clause, a "nonprofit community service oriented
organization" means any corporation, society, association, foundation, or institution
organized and operated exclusively for charitable, religious, fraternal, civic, or educational
purposes, and which is exempt from federal income taxation pursuant to section 501(c)(3),
(10), or (19) of the Internal Revenue Code of 1986, as amended through December 31,
1990. For purposes of this clause, "revenue-producing activities" shall include but not be
limited to property or that portion of the property that is used as an on-sale intoxicating
liquor or 3.2 percent malt liquor establishment licensed under chapter 340A, a restaurant
open to the public, bowling alley, a retail store, gambling conducted by organizations
licensed under chapter 349, an insurance business, or office or other space leased or
rented to a lessee who conducts a for-profit enterprise on the premises. Any portion of
the property which is used for revenue-producing activities for more than six days in the
calendar year preceding the year of assessment shall be assessed as class 3a. The use of
the property for social events open exclusively to members and their guests for periods of
less than 24 hours, when an admission is not charged nor any revenues are received by the
organization shall not be considered a revenue-producing activity;

(4) postsecondary student housing of not more than one acre of land that is owned by
a nonprofit corporation organized under chapter 317A and is used exclusively by a student
cooperative, sorority, or fraternity for on-campus housing or housing located within two
miles of the border of a college campus;

(5) manufactured home parks as defined in section 327.14, subdivision 3;

(6) real property that is actively and exclusively devoted to indoor fitness, health,
social, recreational, and related uses, is owned and operated by a not-for-profit corporation,
and is located within the metropolitan area as defined in section 473.121, subdivision 2;

(7) a leased or privately owned noncommercial aircraft storage hangar not exempt
under section 272.01, subdivision 2, and the land on which it is located, provided that:

(i) the land is on an airport owned or operated by a city, town, county, Metropolitan
Airports Commission, or group thereof; and

(ii) the land lease, or any ordinance or signed agreement restricting the use of the
leased premise, prohibits commercial activity performed at the hangar.

If a hangar classified under this clause is sold after June 30, 2000, a bill of sale must
be filed by the new owner with the assessor of the county where the property is located
within 60 days of the sale;

(8) a privately owned noncommercial aircraft storage hangar not exempt under
section 272.01, subdivision 2, and the land on which it is located, provided that:

(i) the land abuts a public airport; and

(ii) the owner of the aircraft storage hangar provides the assessor with a signed
agreement restricting the use of the premises, prohibiting commercial use or activity
performed at the hangar; and

(9) residential real estate, a portion of which is used by the owner for homestead
purposes, and that is also a place of lodging, if all of the following criteria are met:

(i) rooms are provided for rent to transient guests that generally stay for periods
of 14 or fewer days;

(ii) meals are provided to persons who rent rooms, the cost of which is incorporated
in the basic room rate;

(iii) meals are not provided to the general public except for special events on fewer
than seven days in the calendar year preceding the year of the assessment; and

(iv) the owner is the operator of the property.

The market value subject to the 4c classification under this clause is limited to five rental
units. Any rental units on the property in excess of five, must be valued and assessed as
class 3a. The portion of the property used for purposes of a homestead by the owner must
be classified as class 1a property under subdivision 22.

Class 4c property has a class rate of 1.5 percent of market value, except that (i) each
parcel of seasonal residential recreational property not used for commercial purposes has
the same class rates as class 4bb property, (ii) manufactured home parks assessed under
clause (5) have the same class rate as class 4b property, (iii) commercial-use seasonal
residential recreational property has a class rate of one percent for the first $500,000 of
market value, and 1.25 percent for the remaining market value, (iv) the market value of
property described in clause (4) has a class rate of one percent, (v) the market value of
property described in clauses (2) and (6) has a class rate of 1.25 percent, and (vi) that
portion of the market value of property in clause (9) qualifying for class 4c property
has a class rate of 1.25 percent.

(e) Class 4d property is qualifying low-income rental housing certified to the assessor
by the Housing Finance Agency under section 273.128, subdivision 3. If only a portion
of the units in the building qualify as low-income rental housing units as certified under
section 273.128, subdivision 3, only the proportion of qualifying units to the total number
of units in the building qualify for class 4d. The remaining portion of the building shall be
classified by the assessor based upon its use. Class 4d also includes the same proportion of
land as the qualifying low-income rental housing units are to the total units in the building.
For all properties qualifying as class 4d, the market value determined by the assessor must
be based on the normal approach to value using normal unrestricted rents.

Class 4d property has a class rate of 0.75 percent.

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for assessment year 2007 and
thereafter, for taxes payable in 2008 and thereafter.
new text end

Sec. 7.

Minnesota Statutes 2006, section 273.13, subdivision 33, is amended to read:

Subd. 33.

Classification of unimproved property.

(a) All real property that is not
improved with a structure must be classified according to its current use.

(b) new text begin Except as provided in subdivision 23, paragraph (b), clause (1), new text end real property that
is not improved with a structure and for which there is no identifiable current use must be
classified according to its highest and best use permitted under the local zoning ordinance.
If the ordinance permits more than one use, the land must be classified according to the
highest and best use permitted under the ordinance. If no such ordinance exists, the
assessor shall consider the most likely potential use of the unimproved land based upon
the use made of surrounding land or land in proximity to the unimproved land.

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for assessment year 2007 and
thereafter, for taxes payable in 2008 and thereafter.
new text end

Sec. 8.

Minnesota Statutes 2006, section 279.01, is amended by adding a subdivision
to read:

new text begin Subd. 5. new text end

new text begin Homestead property; monthly payment option. new text end

new text begin (a) In the case of class
1, 1c, or 2a homestead property as defined in section 273.13, a homeowner may apply
to make payments in eight equal monthly installments on the 15th day of each month
from May through December. A homeowner desiring to utilize this option must apply
to the county by April 15 of the year that the taxes are payable, following procedures
established by the county.
new text end

new text begin (b) Each county must establish procedures allowing homeowners the option of
paying the current year's property taxes on a monthly basis. The procedures must address
how homeowners apply to participate in the program, how taxpayers can make payments,
including the possibility of automatic bank withdrawals, how and whether the taxpayer is
notified of each payment due date, whether to require annual applications, how to modify
the property tax settlement process, and any other procedures the county board deems
necessary to implement this subdivision. The proposed procedures must be submitted to
the commissioner of revenue by November 1, 2007. The commissioner must review the
procedures and approve them or notify the county of changes that must be made to the
proposed procedures by January 1, 2008.
new text end

new text begin (c) The application procedure must be included in the property tax statement mailing.
new text end

new text begin (d) Penalties on unpaid taxes on property under the monthly payment program
must be computed by equating the number of days that any of the monthly payments are
overdue to the penalty for the corresponding number of days after May 15 that a payment
is overdue under subdivision 1.
new text end

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for taxes payable in 2008 and
thereafter.
new text end

Sec. 9.

Minnesota Statutes 2006, section 289A.40, subdivision 4, is amended to read:

Subd. 4.

Property tax refund claims.

A property tax refund claim under chapter
290A is not allowed if the initial claim is filed more than new text begin (1) new text end one year after the original due
date for filing the claim new text begin for refunds under section 290A.04, subdivision 2h; or (2) three
years after the original due date for filing the claim for refunds under section 290A.04,
subdivisions 2 and 2a new text end .

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for property taxes payable in 2006
and thereafter and rent paid in 2005 and thereafter.
new text end

Sec. 10.

new text begin [290D.01] CITATION.
new text end

new text begin This program shall be named the "seasonal recreational property tax deferral
program."
new text end

Sec. 11.

new text begin [290D.02] TERMS.
new text end

new text begin Subdivision 1. new text end

new text begin Terms. new text end

new text begin For purposes of sections 290D.01 to 290D.08, the terms
defined in this section have the meanings given them.
new text end

new text begin Subd. 2. new text end

new text begin Primary property owner. new text end

new text begin "Primary property owner" means a person who
(1) has been the owner, or one of the owners, of the eligible property for at least 15 years
prior to the year the application is filed under section 290D.04; and (2) applies for the
deferral of property taxes under section 290D.04.
new text end

new text begin Subd. 3. new text end

new text begin Secondary property owner. new text end

new text begin "Secondary property owner" means any
person, other than the primary property owner, who has been an owner of the eligible
property for at least 15 years prior to the year the initial application is filed for deferral
of property taxes under section 290D.04.
new text end

new text begin Subd. 4. new text end

new text begin Eligible property. new text end

new text begin "Eligible property" means a parcel of property or
contiguous parcels of property under the same ownership classified as noncommercial
seasonal residential recreational 4c(1) property under section 273.13, subdivision 25.
new text end

new text begin Subd. 5. new text end

new text begin Base property tax amount. new text end

new text begin "Base property tax amount" means the total
property taxes levied by all taxing jurisdictions, including special assessments, on the
eligible property in the year prior to the year that the initial application is approved under
section 290D.04 and payable in the year of the application.
new text end

new text begin Subd. 6. new text end

new text begin Special assessments. new text end

new text begin "Special assessments" mean any assessment, fee, or
other charge that may be made by law, and that appears on the property tax statement for
the property for collection under the laws applicable to the enforcement of real estate taxes.
new text end

new text begin Subd. 7. new text end

new text begin Commissioner. new text end

new text begin "Commissioner" means the commissioner of revenue.
new text end

Sec. 12.

new text begin [290D.03] QUALIFICATIONS FOR DEFERRAL.
new text end

new text begin In order for an eligible property to qualify for treatment under this program:
new text end

new text begin (1) the eligible property must have been owned solely by the primary property owner,
or jointly with others, for at least 15 years prior to the year the initial application is filed;
new text end

new text begin (2) there must be no state or federal tax liens or judgment liens on the eligible
property;
new text end

new text begin (3) there must be no mortgages or other liens on the eligible property that secure
future advances, except for those subject to credit limits that result in compliance with
clause (4); and
new text end

new text begin (4) the total unpaid balances of debts secured by mortgages and other liens on the
eligible property, including unpaid and delinquent special assessments and interest and
any delinquent property taxes, penalties, and interest, but not including property taxes
payable during the year, must not exceed 60 percent of the assessor's estimated market
value for the current assessment year.
new text end

Sec. 13.

new text begin [290D.04] APPLICATION FOR DEFERRAL.
new text end

new text begin Subdivision 1. new text end

new text begin Initial application. new text end

new text begin (a) A primary owner of a property meeting
the qualifications under section 290D.03 may apply to the commissioner for deferral
of taxes on the eligible property. Applications are due on or before July 1 for deferral
of any taxes payable in the following year. The application, which must be prescribed
by the commissioner, shall include the following items and any other information the
commissioner deems necessary:
new text end

new text begin (1) the name, address, and Social Security number of the primary property owner
and secondary property owners, if any;
new text end

new text begin (2) a copy of the property tax statement for the current taxes payable year for the
eligible property;
new text end

new text begin (3) the initial year of ownership of the primary property owner and any second
property owners of the eligible property;
new text end

new text begin (4) information on any mortgage loans or other amounts secured by mortgages or
other liens against the eligible property, for which purpose the commissioner may require
the applicant to provide a copy of the mortgage note, the mortgage, or a statement of the
balance owing on the mortgage loan provided by the mortgage holder. The commissioner
may require the appropriate documents in connection with obtaining and confirming
information on unpaid amounts secured by other liens; and
new text end

new text begin (5) the signatures of the primary property owner and all other owners, if any, stating
that each owner agrees to enroll the eligible property in the program to defer property
taxes under this chapter.
new text end

new text begin The application must state that program participation is voluntary. The application
must also state that program participation includes authorization for the annual deferred
amount. The deferred property tax calculated by the county and the cumulative deferred
property tax amount is public data.
new text end

new text begin (b) As part of the initial application process, if the property is abstract property, the
commissioner may require the applicant to obtain at the applicant's cost a report prepared
by a licensed abstracter showing the last deed and any unsatisfied mortgages, liens,
judgments, and state and federal tax lien notices which were recorded on or after the date
of that last deed with respect to the eligible property or to the applicant.
new text end

new text begin The certificate or report need not include references to any documents filed or
recorded more than 40 years prior to the date of the certification or report. The certification
or report must be as of a date not more than 30 days prior to submission of the application
under this section.
new text end

new text begin The commissioner may also require the county recorder or county registrar of the
county where the eligible property is located to provide copies of recorded documents
related to the applicant of the eligible property, for which the recorder or registrar shall
not charge a fee. The commissioner may use any information available to determine or
verify eligibility under this section.
new text end

new text begin Subd. 2. new text end

new text begin Approval; recording. new text end

new text begin The commissioner shall approve all initial
applications that qualify under this chapter and shall notify the primary property owner on
or before December 1. The commissioner may investigate the facts or require confirmation
in regard to an application. The commissioner shall record or file a notice of qualification
for deferral, including the names of the primary and any secondary property owners and a
legal description of the eligible property, in the office of the county recorder, or registrar of
titles, whichever is applicable, in the county where the eligible property is located. The
notice must state that it serves as a notice of lien and that it includes deferrals under this
section for future years. The primary property owner shall pay the recording or filing fees
for the notice, which, notwithstanding section 357.18, shall be paid by that owner at the
time of satisfaction of the lien.
new text end

new text begin Subd. 3. new text end

new text begin Penalty for failure; investigations. new text end

new text begin (a) The commissioner shall assess
a penalty equal to 20 percent of the property taxes improperly deferred in the case of a
false application. The commissioner shall assess a penalty equal to 50 percent of the
property taxes improperly deferred if the taxpayer knowingly filed a false application. The
commissioner shall assess penalties under this section through the issuance of an order
under the provisions of chapter 270C. Persons affected by a commissioner's order issued
under this section may appeal as provided in chapter 270C.
new text end

new text begin (b) The commissioner may conduct investigations related to initial applications
required under this chapter within the period ending 3-1/2 years from the due date of
the application.
new text end

new text begin Subd. 4. new text end

new text begin Annual certification to commissioner. new text end

new text begin Annually on or before July 1,
the primary property owner must certify to the commissioner that the person continues
to qualify as a primary property owner. If the primary owner has died or has transferred
the property in the preceding year, a certification may be filed by the primary owner's
spouse, or by one of the secondary owners, provided that the person is currently an
owner of the property. In this case, the primary owner's spouse or the secondary owner
shall be considered the primary owner from that point forward. If neither the primary
owner, the primary owner's spouse, or a secondary owner is eligible to file the required
annual certification for the property, the property's participation in the program shall be
terminated, and the procedures in section 290D.08 apply.
new text end

new text begin Subd. 5. new text end

new text begin Annual notice to primary property owner. new text end

new text begin Annually, on or before
September 1, the commissioner shall notify each primary property owner, in writing, of
the total cumulative deferred taxes and accrued interest on the qualifying property as of
that date.
new text end

Sec. 14.

new text begin [290D.05] DEFERRED PROPERTY TAX AMOUNT.
new text end

new text begin Subdivision 1. new text end

new text begin Calculation of deferred property tax amount. new text end

new text begin Each year after
the county auditor has determined the final property tax rates under section 275.08, the
"deferred property tax amount" must be calculated on each eligible property. The deferred
property tax amount is equal to 50 percent of the amount of the difference between (1) the
total amount of property taxes and special assessments levied upon the eligible property
for the current year by all taxing jurisdictions and (2) the eligible property's base property
tax amount. Any tax attributable to new improvements made to the eligible property after
the initial application has been approved under section 290D.04, subdivision 2, must be
excluded in determining the deferred property tax amount. The eligible property's total
current year's tax less the deferred property tax amount for the current year must be listed
on the property tax statement and is the amount due to the county under chapter 276.
Reference that the property is enrolled in the seasonal recreational property tax deferral
program under this chapter and a state lien has been recorded must be clearly printed on
the statement.
new text end

new text begin Subd. 2. new text end

new text begin Certification to commissioner. new text end

new text begin The county auditor shall annually, on or
before April 15, certify to the commissioner the property tax deferral amounts determined
under this section for each eligible property in the county. The commissioner shall
prescribe the information that is necessary to identify the eligible properties.
new text end

new text begin Subd. 3. new text end

new text begin Limitation on total amount of deferred taxes. new text end

new text begin The total amount of
deferred taxes and interest on a property, when added to (1) the balance owed on any
mortgages on the property at the time of initial application; (2) other amounts secured by
liens on the property at the time of the initial application; and (3) any unpaid and delinquent
special assessments and interest and any delinquent property taxes, penalties, and interest,
but not including property taxes payable during the year, must not exceed 60 percent of
the assessor's estimated market value of the property for the current assessment year.
new text end

Sec. 15.

new text begin [290D.06] LIEN; DEFERRED PORTION.
new text end

new text begin (a) Payment by the state to the county treasurer of property taxes, penalties, interest,
or special assessments and interest, deferred under this chapter is deemed a loan from the
state to the program participant. The commissioner shall compute the interest as provided
in section 270C.40, subdivision 5, but not to exceed two percent over the maximum
interest rate provided in section 290B.07, paragraph (a), and maintain records of the total
deferred amount and interest for each participant. Interest accrues beginning September 1
of the payable year for which the taxes are deferred. Any deferral made under this chapter
must not be construed as delinquent property taxes.
new text end

new text begin The lien created under section 272.31 continues to secure payment by the taxpayer,
or by the taxpayer's successors or assigns, of the amount deferred, including interest, with
respect to all years for which amounts are deferred. The lien for deferred taxes and interest
has the same priority as any other lien under section 272.31, except that liens, including
mortgages, recorded or filed prior to the recording or filing of the notice under section
290D.04, subdivision 2, have priority over the lien for deferred taxes and interest. A
seller's interest in a contract for deed, in which a qualifying owner is the purchaser or an
assignee of the purchaser, has priority over deferred taxes and interest on deferred taxes,
regardless of whether the contract for deed is recorded or filed. The lien for deferred taxes
and interest for future years has the same priority as the lien for deferred taxes and interest
for the first year, which is always higher in priority than any mortgages or other liens filed,
recorded, or created after the notice recorded or filed under section 290D.04, subdivision
2. The county treasurer or auditor shall maintain records of the deferred portion and shall
list the amount of deferred taxes for the year and the cumulative deferral and interest for
all previous years as a lien against the eligible property. In any certification of unpaid
taxes for a tax parcel, the county auditor shall clearly distinguish between taxes payable in
the current year, deferred taxes and interest, and delinquent taxes. Payment of the deferred
portion becomes due and owing at the time specified in section 290D.07. Upon receipt of
the payment, the commissioner shall issue a receipt to the person making the payment
upon request and shall notify the auditor of the county in which the parcel is located,
within ten days, identifying the parcel to which the payment applies. Upon receipt by the
commissioner of collected funds in the amount of the deferral, the state's loan to the
program participant is deemed paid in full.
new text end

new text begin (b) If eligible property for which taxes have been deferred under this chapter forfeits
under chapter 281 for nonpayment of a nondeferred property tax amount, or because
of nonpayment of amounts previously deferred following a termination under section
290D.07, the lien for the taxes deferred under this chapter, plus interest and costs, shall be
canceled by the county auditor as provided in section 282.07. However, notwithstanding
any other law to the contrary, any proceeds from a subsequent sale of the eligible property
under chapter 282 or another law, must be used to first reimburse the county's forfeited
tax sale fund for any direct costs of selling the eligible property or any costs directly
related to preparing the eligible property for sale, and then to reimburse the state for
the amount of the canceled lien. Within 90 days of the receipt of any sale proceeds to
which the state is entitled under these provisions, the county auditor must pay those funds
to the commissioner by warrant for deposit in the general fund. No other deposit, use,
distribution, or release of gross sale proceeds or receipts may be made by the county until
payments sufficient to fully reimburse the state for the canceled lien amount have been
transmitted to the commissioner.
new text end

Sec. 16.

new text begin [290D.07] TERMINATION OF DEFERRAL; PAYMENT OF
DEFERRED TAXES.
new text end

new text begin Subdivision 1. new text end

new text begin Termination. new text end

new text begin (a) The deferral of taxes granted under this chapter
terminates when one of the following occurs:
new text end

new text begin (1) the eligible property is sold or transferred to someone other than the primary
owner's spouse or a secondary owner;
new text end

new text begin (2) the death of the primary owner, or in the case of a married couple, after the
death of both spouses, provided that there is not a secondary owner eligible to become
the primary owner;
new text end

new text begin (3) the primary property owner notifies the commissioner, in writing, that all owners,
including any secondary property owners, desire to discontinue the deferral; or
new text end

new text begin (4) the eligible property no longer qualifies under section 290D.03.
new text end

new text begin (b) An eligible property is not terminated from the program because no deferred
property tax amount is determined for any given year after the eligible property's initial
enrollment into the program.
new text end

new text begin (c) An eligible property is not terminated from the program if the eligible property
subsequently becomes the homestead of one or more of the property owners and the
property and the owners qualify for, and are immediately enrolled in, the senior deferral
program under chapter 290B.
new text end

new text begin Subd. 2. new text end

new text begin Payment upon termination. new text end

new text begin Upon the termination of the deferral under
subdivision 1, the amount of deferred taxes, penalties, interest, and special assessments
and interest, plus the recording or filing fees under this subdivision and section 290D.04,
subdivision 2, becomes due and payable to the commissioner within 90 days of termination
of the deferral for terminations under subdivision 1, paragraph (a), clauses (1) and (2),
and within one year of termination of the deferral for terminations under subdivision 1,
paragraph (a), clauses (3) and (4). No additional interest is due on the deferral if timely
paid. On receipt of payment, the commissioner shall, within ten days, notify the auditor
of the county in which the parcel is located, identifying the parcel to which the payment
applies and shall remit the recording or filing fees under this subdivision and section
290D.04, subdivision 2, to the auditor. A notice of termination of deferral, containing the
legal description and the recording or filing data for the notice of qualification for deferral
under section 290D.04, subdivision 2, shall be prepared and recorded or filed by the
county auditor in the same office in which the notice of qualification for deferral under
section 290D.04, subdivision 2, was recorded or filed, and the county auditor shall mail a
copy of the notice of termination to the property owner. The property owner shall pay the
recording or filing fees. Upon recording or filing of the notice of termination of deferral,
the notice of qualification for deferral under section 290D.04, subdivision 2, and the lien
created by it are discharged. If the deferral is not timely paid, the penalty, interest, lien,
forfeiture, and other rules for the collection of ad valorem property taxes apply.
new text end

Sec. 17.

new text begin [290D.08] STATE REIMBURSEMENT.
new text end

new text begin Subdivision 1. new text end

new text begin Determination; payment. new text end

new text begin The county auditor shall determine the
total current year's deferred amount of property tax under this chapter in the county, and
submit those amounts as part of the abstracts of tax lists submitted by the county auditors
under section 275.29. The commissioner may make changes in the abstracts of tax lists as
deemed necessary. The commissioner, after such review, shall pay the deferred amount of
property tax to each county treasurer on or before August 31.
new text end

new text begin The county treasurer shall distribute as part of the October settlement the funds
received as if they had been collected as part of the property tax.
new text end

new text begin Subd. 2. new text end

new text begin Appropriation. new text end

new text begin An amount sufficient to pay the total amount of property
tax determined under subdivision 1, plus any amounts paid under section 290D.04,
subdivision 4, is annually appropriated from the general fund to the commissioner.
new text end

Sec. 18. new text begin EFFECTIVE DATE.
new text end

new text begin Sections 10 to 17 are effective for applications filed July 1, 2008, and thereafter.
new text end