3rd Engrossment - 80th Legislature (1997 - 1998) Posted on 12/15/2009 12:00am
Engrossments | ||
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Introduction | Posted on 04/23/1997 | |
1st Engrossment | Posted on 04/24/1997 | |
2nd Engrossment | Posted on 04/26/1997 | |
3rd Engrossment | Posted on 05/20/1997 |
1.1 A bill for an act 1.2 relating to the financing and operation of state and 1.3 local government; providing property tax class rate 1.4 reform; dedicating future state revenues to property 1.5 tax reform; providing a property tax rebate; providing 1.6 for calculation of rent constituting property taxes; 1.7 changing truth-in-taxation requirements; imposing levy 1.8 limits on cities and counties for taxes levied in 1997 1.9 and 1998; authorizing deferral of property taxes by 1.10 senior citizens; changing fiscal note requirements for 1.11 state mandates; requiring periodic review of 1.12 administrative rules; making miscellaneous property, 1.13 income, and sales tax changes; changing and modifying 1.14 the application of tax increment financing provisions; 1.15 authorizing certain local governments to exercise 1.16 certain powers; authorizing local tax levies, 1.17 abatements, and assessments; modifying certain local 1.18 aids; conforming certain income tax laws with changes 1.19 in federal law; modifying certain income tax 1.20 definitions and formulas; providing income tax 1.21 credits; modifying the application of sales and excise 1.22 taxes; exempting certain purchases from the sales tax; 1.23 modifying waste management tax and minerals tax 1.24 provisions; increasing the budget reserve; revising 1.25 the law governing regional development commissions; 1.26 modifying certain provisions relating to insurance 1.27 companies; requiring studies; requiring reports; 1.28 appropriating money; repealing an appropriation; 1.29 amending Minnesota Statutes 1996, sections 6.76; 1.30 16A.152, subdivision 2; 60A.075, subdivisions 1, 8, 1.31 and 9; 60A.077, subdivisions 1, 2, 3, 5, 6, 7, 8, 9, 1.32 10, 11, and by adding a subdivision; 69.021, 1.33 subdivision 7; 93.41; 103D.905, subdivisions 4, 5, and 1.34 by adding a subdivision; 115A.554; 117.155; 121.15, by 1.35 adding a subdivision; 124.195, subdivisions 7 and 10; 1.36 124.239, subdivision 5, and by adding subdivisions; 1.37 161.45, by adding a subdivision; 216B.16, by adding a 1.38 subdivision; 270.60, by adding a subdivision; 270B.01, 1.39 subdivision 8; 270B.02, by adding a subdivision; 1.40 270B.12, by adding a subdivision; 271.01, subdivision 1.41 5; 271.19; 272.02, subdivision 1, and by adding a 1.42 subdivision; 272.115; 273.11, subdivisions 1, 1a, and 1.43 16; 273.111, subdivisions 3 and 6; 273.112, 1.44 subdivisions 2, 3, and 4; 273.12; 273.121; 273.124, 1.45 subdivision 1, and by adding a subdivision; 273.13, 1.46 subdivisions 22, 23, 24, 25, 31, 32, and by adding a 2.1 subdivision; 273.1393; 273.1398, subdivision 8; 2.2 273.18; 274.01; 274.13, by adding subdivisions; 2.3 275.065, subdivisions 1, 3, 5a, 6, 8, and by adding 2.4 subdivisions; 275.07, subdivision 4; 275.16; 275.62, 2.5 subdivision 1; 276.04, subdivision 2; 278.07; 281.13; 2.6 281.23, subdivision 6, and by adding a subdivision; 2.7 281.273; 281.276; 282.01, subdivision 8; 282.04, 2.8 subdivision 1; 287.22; 289A.02, subdivision 7; 2.9 289A.56, subdivision 4; 290.01, subdivisions 19, 19a, 2.10 19b, 19c, 19d, 19f, 19g, 31, and by adding a 2.11 subdivision; 290.014, subdivisions 2 and 3; 290.015, 2.12 subdivisions 3 and 5; 290.06, subdivision 22, and by 2.13 adding a subdivision; 290.067, subdivision 1; 290.068, 2.14 subdivision 1; 290.0922, subdivision 1; 290.17, 2.15 subdivisions 1 and 4; 290.191, subdivision 4; 290.371, 2.16 subdivision 2; 290.92, by adding a subdivision; 2.17 290.9725; 290.9727, subdivision 1; 290.9728, 2.18 subdivision 1; 290A.03, subdivisions 7, 11, and 13; 2.19 290A.04, by adding a subdivision; 290A.19; 291.005, 2.20 subdivision 1; 296.141, subdivision 4; 296.18, 2.21 subdivision 1; 297A.01, subdivisions 3, 4, 7, 11, and 2.22 16; 297A.09; 297A.15, subdivision 7; 297A.211, 2.23 subdivision 1; 297A.25, subdivisions 2, 3, 5, 7, 11, 2.24 16, 56, 59, and by adding subdivisions; 297A.44, 2.25 subdivision 1; 297B.01, subdivisions 7 and 8; 298.24, 2.26 subdivision 1; 298.28, subdivision 9a, and by adding a 2.27 subdivision; 298.296, subdivision 4; 298.2961, 2.28 subdivision 1; 298.75, subdivisions 1, 4, and by 2.29 adding a subdivision; 308A.705, subdivision 1; 2.30 325D.33, subdivision 3; 349.154, subdivision 2; 2.31 349.19, subdivision 2a; 349.191, subdivision 1b; 2.32 373.40, subdivision 7; 375.192, subdivision 2; 2.33 383A.75, subdivision 3; 398A.04, subdivision 1; 2.34 462.381; 462.383; 462.384, subdivision 5; 462.385, 2.35 subdivisions 1 and 3; 462.386, subdivision 1; 462.387; 2.36 462.388; 462.389, subdivisions 1, 3, and 4; 462.39, 2.37 subdivisions 2 and 3; 462.391, subdivision 5, and by 2.38 adding subdivisions; 462.393; 462.394; 462.396, 2.39 subdivisions 1, 3, and 4; 462.398; 465.71; 465.81, 2.40 subdivisions 1 and 3; 465.82, subdivisions 1, 2, and 2.41 by adding a subdivision; 465.87, subdivisions 1a and 2.42 2; 465.88; 469.012, subdivision 1; 469.033, 2.43 subdivision 6; 469.040, subdivision 3; 469.169, by 2.44 adding a subdivision; 469.174, subdivision 10, and by 2.45 adding subdivisions; 469.175, subdivision 3; 469.176, 2.46 subdivisions 1b, 4c, 4j, and 5; 469.177, subdivisions 2.47 1 and 3; 473.39, by adding a subdivision; 477A.011, 2.48 subdivision 36; 477A.05; Laws 1992, chapter 511, 2.49 article 2, section 52; Laws 1993, chapter 375, 2.50 articles 7, section 29, and 9, sections 45, 2.51 subdivisions 2, 3, 4, and by adding a subdivision, and 2.52 46, subdivision 2; Laws 1995, chapters 255, article 3, 2.53 section 2, subdivision 1, as amended, and 264, article 2.54 5, sections 44, subdivision 4, as amended, and 45, 2.55 subdivision 1, as amended; and Laws 1997, chapters 34, 2.56 section 2, and 75, section 2; proposing coding for new 2.57 law in Minnesota Statutes, chapters 3; 14; 16A; 273; 2.58 275; 287; 290; 297A; 383A; 383B; 458D; 462A; 465; and 2.59 469; proposing coding for new law as Minnesota 2.60 Statutes, chapters 290B; and 297F; repealing Minnesota 2.61 Statutes 1996, sections 3.982; 116.07, subdivision 10; 2.62 121.904, subdivision 4d; 124.2134; 270B.12, 2.63 subdivision 11; 273.1317; 273.1318; 276.012; 276.20; 2.64 276.21; 290A.03, subdivisions 12a and 14; 290A.055; 2.65 290A.26; 297A.01, subdivisions 20 and 21; 297A.02, 2.66 subdivision 5; 297A.45, as amended; 462.384, 2.67 subdivision 7; 462.385, subdivision 2; 462.389, 2.68 subdivision 5; 462.391, subdivisions 1, 2, 3, 4, 6, 7, 2.69 8, and 9; 462.392; 469.181; Laws 1995, chapter 264, 2.70 article 4, as amended; and H.F. 2158, article 1, 2.71 section 25, if enacted. 3.1 BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA: 3.2 ARTICLE 1 3.3 PROPERTY TAX REFORM 3.4 Section 1. Minnesota Statutes 1996, section 124.239, is 3.5 amended by adding a subdivision to read: 3.6 Subd. 3a. [DEBT SERVICE COSTS QUALIFYING FOR AID.] Annual 3.7 debt service costs up to an amount equal to the 1997 debt 3.8 service costs for bonds outstanding on the effective date of 3.9 this act qualify for alternative facilities aid under 3.10 subdivision 5. 3.11 Sec. 2. Minnesota Statutes 1996, section 124.239, 3.12 subdivision 5, is amended to read: 3.13 Subd. 5. [LEVY AUTHORIZED.] A district, after local board 3.14 approval, may levy for costs related to an approved facility 3.15 plan as follows: 3.16 (a) if the district has indicated to the commissioner that 3.17 bonds will be issued, the district may levy for the principal 3.18 and interest payments on outstanding bonds issued according to 3.19 subdivision 3 after reduction for any alternative facilities aid 3.20 received under subdivision 5; or 3.21 (b) if the district has indicated to the commissioner that 3.22 the plan will be funded through levy, the district may levy 3.23 according to the schedule approved in the plan. 3.24 Sec. 3. Minnesota Statutes 1996, section 124.239, is 3.25 amended by adding a subdivision to read: 3.26 Subd. 5a. [ALTERNATIVE FACILITIES AID.] A district's 3.27 alternative facilities aid is the amount equal to the district's 3.28 annual debt service costs qualifying for aid under subdivision 3.29 3a. 3.30 Sec. 4. [273.126] [QUALIFYING LOW-INCOME RENTAL HOUSING.] 3.31 Subdivision 1. [QUALIFYING RULES.] The market value of a 3.32 rental housing unit qualifies for assessment under class 4d if: 3.33 (1) it is occupied by individuals meeting the income limits 3.34 under subdivision 2; 3.35 (2) a rent restriction agreement under subdivision 3 3.36 applies; 4.1 (3) the unit meets the minimum housing quality standards 4.2 under subdivision 4; and 4.3 (4) the Minnesota housing finance agency certifies to the 4.4 local assessor that the unit qualifies. 4.5 Subd. 2. [INCOME LIMITS.] (a) In order to qualify under 4.6 class 4d, a unit must be occupied by an individual or 4.7 individuals whose income is at or below 60 percent of the median 4.8 area gross income. If the resident's income met the requirement 4.9 when the resident first occupied the unit, the income of the 4.10 resident continues to qualify. If an individual first occupied 4.11 a unit before January 1, 1998, the individual's income for 4.12 purposes of the preceding sentence is the income for calendar 4.13 year 1996. 4.14 (b) For purposes of this section, "median area gross income" 4.15 means the greater of (1) the median gross income for the area 4.16 determined under section 42 of the Internal Revenue Code of 4.17 1986, as amended through December 31, 1996, or (2) the median 4.18 gross income for the state. 4.19 (c) The median gross income must be adjusted for family 4.20 size. 4.21 (d) Vacant units qualify as meeting the requirements of 4.22 this subdivision in the same proportion that total units in the 4.23 building are subject to rent restriction agreements under 4.24 subdivision 3 and meet minimum housing standards under 4.25 subdivision 4. This paragraph applies only to the extent that 4.26 units subject to a rent restriction agreement and meeting the 4.27 minimum housing quality standards are vacant. 4.28 (e) The owner or manager of the property may comply with 4.29 this subdivision by obtaining written statements from the 4.30 residents that their incomes are at or below the limit. 4.31 Subd. 3. [RENT RESTRICTIONS.] (a) In order to qualify 4.32 under class 4d, a unit must be subject to a rent restriction 4.33 agreement with the housing finance agency for a period of at 4.34 least five years. The agreement must be in effect and apply to 4.35 the rents to be charged for the year in which the property taxes 4.36 are payable. The agreement must provide that the restrictions 5.1 apply to each year of the period, regardless of whether the unit 5.2 is occupied by an individual with qualifying income or whether 5.3 class 4d applies. The rent restriction agreement must provide 5.4 for rents for the unit to be no higher than 30 percent of 60 5.5 percent of the median gross income. The definition of median 5.6 gross income specified in this section applies. "Rent" means 5.7 "gross rent" as defined in section 42(g)(2)(B) of the Internal 5.8 Revenue Code of 1986, as amended through December 31, 1996. 5.9 (b) Notwithstanding the maximum rent levels permitted, 20 5.10 percent of the units in the metropolitan area and ten percent of 5.11 the units in greater Minnesota qualifying under class 4d must be 5.12 made available to a family with a section 8 certificate. 5.13 (c) The rent restriction agreement runs with the land and 5.14 binds any successor to title to the property, without regard to 5.15 whether the successor had actual notice or knowledge of the 5.16 agreement. The owner must promptly record the agreement in the 5.17 office of the county recorder or must file it in the office of 5.18 the registrar of titles, in the county where the property is 5.19 located. If the agreement is not recorded, class 4d does not 5.20 apply to the property. 5.21 Subd. 4. [MINIMUM HOUSING STANDARDS.] In order to qualify 5.22 under class 4d, a unit must be certified by the housing finance 5.23 agency to meet the minimum housing standards established under 5.24 section 462A.071. 5.25 Subd. 5. [MONITORING RENT LEVELS.] The housing finance 5.26 agency is directed to monitor changes in rent levels and the use 5.27 of section 8 certificates in units qualifying under class 4d. 5.28 Subd. 6. [PENALTIES.] Notwithstanding the provisions of 5.29 section 273.01, 274.01, or any other law, if the Minnesota 5.30 housing finance agency notifies the assessor that the provisions 5.31 of this section have not been met for any period during which a 5.32 unit was classified under class 4d, a penalty is imposed as 5.33 provided in section 462A.071, subdivision 8. 5.34 Sec. 5. [273.127] [TRANSITION CLASS RATES; LOW-INCOME 5.35 HOUSING.] 5.36 Subdivision 1. [TAXES PAYABLE IN 1998.] For taxes payable 6.1 in 1998, low-income housing property classified as class 4c 6.2 shall have a class rate of two percent, and property classified 6.3 as class 4d shall have a class rate of 1.9 percent. 6.4 Subd. 2. [APPLICATION.] (a) The class rates under 6.5 subdivisions 3 and 4 apply to the market value of properties: 6.6 (1)(i) which were classified as class 4c or class 4d for 6.7 taxes payable in 1998; or 6.8 (ii) which are constructed or substantially rehabilitated 6.9 during calendar year 1997 and would have qualified as class 4c 6.10 or class 4d for taxes payable in 1999 absent the amendments to 6.11 those classes in section 8; and 6.12 (2) which do not qualify as class 4d property as a result 6.13 of the eligibility criteria specified in section 273.126. 6.14 (b) To qualify for the class rates under this section, the 6.15 building's owner must annually certify to the assessor in 6.16 writing that the property, building, or unit continues to 6.17 qualify under the laws in effect and applicable to its 6.18 classification for taxes payable in 1998. 6.19 (c) A property no longer qualifies under this section: 6.20 (1) if it is transferred or sold; or 6.21 (2) if loans, that have a principal amount equal to more 6.22 than 25 percent of the property's market value and that are 6.23 secured by the property, are refinanced. 6.24 Subd. 3. [CLASS 4C PROPERTIES.] For the market value of 6.25 properties that meet the criteria of subdivision 2, paragraph 6.26 (a), and which no longer qualify as a result of the eligibility 6.27 criteria specified in section 273.126, a class rate of 2.4 6.28 percent applies for taxes payable in 1999 and a class rate of 6.29 2.6 percent applies for taxes payable in 2000. 6.30 Subd. 4. [CLASS 4D PROPERTIES.] For the market value of 6.31 properties that meet the criteria of subdivision 2, paragraph 6.32 (a), and which no longer qualify as a result of the eligibility 6.33 criteria specified in section 273.126, a class rate of 2.2 6.34 percent applies for taxes payable in 1999 and a class rate of 6.35 2.5 applies for taxes payable in 2000. 6.36 Sec. 6. Minnesota Statutes 1996, section 273.13, 7.1 subdivision 22, is amended to read: 7.2 Subd. 22. [CLASS 1.] (a) Except as provided in subdivision 7.3 23, real estate which is residential and used for homestead 7.4 purposes is class 1. The market value of class 1a property must 7.5 be determined based upon the value of the house, garage, and 7.6 land. 7.7 For taxes payable in 1998 and thereafter, the first 7.8$72,000$75,000 of market value of class 1a property has a net 7.9 class rate of one percent of its market valueand a gross class7.10rate of 2.17 percent of its market value. For taxes payable in7.111992,; and the market value of class 1a property that 7.12 exceeds$72,000 but does not exceed $115,000$75,000 has a class 7.13 rate oftwo1.85 percent of its market value; and the market7.14value of class 1a property that exceeds $115,000 has a class7.15rate of 2.5 percent of its market value. For taxes payable in7.161993 and thereafter, the market value of class 1a property that7.17exceeds $72,000 has a class rate of two percent. 7.18 (b) Class 1b property includes homestead real estate or 7.19 homestead manufactured homes used for the purposes of a 7.20 homestead by 7.21 (1) any blind person, or the blind person and the blind 7.22 person's spouse; or 7.23 (2) any person, hereinafter referred to as "veteran," who: 7.24 (i) served in the active military or naval service of the 7.25 United States; and 7.26 (ii) is entitled to compensation under the laws and 7.27 regulations of the United States for permanent and total 7.28 service-connected disability due to the loss, or loss of use, by 7.29 reason of amputation, ankylosis, progressive muscular 7.30 dystrophies, or paralysis, of both lower extremities, such as to 7.31 preclude motion without the aid of braces, crutches, canes, or a 7.32 wheelchair; and 7.33 (iii) has acquired a special housing unit with special 7.34 fixtures or movable facilities made necessary by the nature of 7.35 the veteran's disability, or the surviving spouse of the 7.36 deceased veteran for as long as the surviving spouse retains the 8.1 special housing unit as a homestead; or 8.2 (3) any person who: 8.3 (i) is permanently and totally disabled and 8.4 (ii) receives 90 percent or more of total income from 8.5 (A) aid from any state as a result of that disability; or 8.6 (B) supplemental security income for the disabled; or 8.7 (C) workers' compensation based on a finding of total and 8.8 permanent disability; or 8.9 (D) social security disability, including the amount of a 8.10 disability insurance benefit which is converted to an old age 8.11 insurance benefit and any subsequent cost of living increases; 8.12 or 8.13 (E) aid under the federal Railroad Retirement Act of 1937, 8.14 United States Code Annotated, title 45, section 228b(a)5; or 8.15 (F) a pension from any local government retirement fund 8.16 located in the state of Minnesota as a result of that 8.17 disability; or 8.18 (G) pension, annuity, or other income paid as a result of 8.19 that disability from a private pension or disability plan, 8.20 including employer, employee, union, and insurance plans and 8.21 (iii) has household income as defined in section 290A.03, 8.22 subdivision 5, of $50,000 or less; or 8.23 (4) any person who is permanently and totally disabled and 8.24 whose household income as defined in section 290A.03, 8.25 subdivision 5, is150275 percent or less of the federal poverty 8.26 level. 8.27 Property is classified and assessed under clause (4) only 8.28 if the government agency or income-providing source certifies, 8.29 upon the request of the homestead occupant, that the homestead 8.30 occupant satisfies the disability requirements of this paragraph. 8.31 Property is classified and assessed pursuant to clause (1) 8.32 only if the commissioner of economic security certifies to the 8.33 assessor that the homestead occupant satisfies the requirements 8.34 of this paragraph. 8.35 Permanently and totally disabled for the purpose of this 8.36 subdivision means a condition which is permanent in nature and 9.1 totally incapacitates the person from working at an occupation 9.2 which brings the person an income. The first $32,000 market 9.3 value of class 1b property has a net class rate of .45 percent 9.4 of its market valueand a gross class rate of .87 percent of its9.5market value. The remaining market value of class 1b property 9.6 hasa gross ornet class rate using the rates for class 1 or 9.7 class 2a property, whichever is appropriate, of similar market 9.8 value. 9.9 (c) Class 1c property is commercial use real property that 9.10 abuts a lakeshore line and is devoted to temporary and seasonal 9.11 residential occupancy for recreational purposes but not devoted 9.12 to commercial purposes for more than 250 days in the year 9.13 preceding the year of assessment, and that includes a portion 9.14 used as a homestead by the owner, which includes a dwelling 9.15 occupied as a homestead by a shareholder of a corporation that 9.16 owns the resort or a partner in a partnership that owns the 9.17 resort, even if the title to the homestead is held by the 9.18 corporation or partnership. For purposes of this clause, 9.19 property is devoted to a commercial purpose on a specific day if 9.20 any portion of the property, excluding the portion used 9.21 exclusively as a homestead, is used for residential occupancy 9.22 and a fee is charged for residential occupancy. In order for a 9.23 property to be classified as class 1c, at least 40 percent of 9.24 the annual gross lodging receipts related to the property must 9.25 be from business conducted between Memorial Day weekend and 9.26 Labor Day weekend, and at least 60 percent of all bookings by 9.27 lodging guests during the year must be for periods of at least 9.28 two consecutive nights. Class 1c property has a class rate of 9.29 one percent of total market valuefor taxes payable in 1993 and9.30thereafterwith the following limitation: the area of the 9.31 property must not exceed 100 feet of lakeshore footage for each 9.32 cabin or campsite located on the property up to a total of 800 9.33 feet and 500 feet in depth, measured away from the lakeshore. 9.34 (d) Class 1d property includes structures that meet all of 9.35 the following criteria: 9.36 (1) the structure is located on property that is classified 10.1 as agricultural property under section 273.13, subdivision 23; 10.2 (2) the structure is occupied exclusively by seasonal farm 10.3 workers during the time when they work on that farm, and the 10.4 occupants are not charged rent for the privilege of occupying 10.5 the property, provided that use of the structure for storage of 10.6 farm equipment and produce does not disqualify the property from 10.7 classification under this paragraph; 10.8 (3) the structure meets all applicable health and safety 10.9 requirements for the appropriate season; and 10.10 (4) the structure is not saleable as residential property 10.11 because it does not comply with local ordinances relating to 10.12 location in relation to streets or roads. 10.13 The market value of class 1d property has the same class 10.14 rates as class 1a property under paragraph (a). 10.15 Sec. 7. Minnesota Statutes 1996, section 273.13, 10.16 subdivision 24, is amended to read: 10.17 Subd. 24. [CLASS 3.] (a) Commercial and industrial 10.18 property and utility real and personal property, except class 5 10.19 property as identified in subdivision 31, clause (1), is class 10.20 3a.ItEach parcel has a class rate ofthree2.7 percent of the 10.21 first$100,000tier of market valuefor taxes payable in 199310.22and thereafter, and5.064.0 percent of the remaining market 10.23 valueover $100,000, except that in the case of contiguous 10.24 parcels of commercial and industrial property owned by the same 10.25 person or entity, only the value equal to the first-tier value 10.26 of the contiguous parcels qualifies for the reduced class rate. 10.27 For the purposes of this subdivision, the first tier means the 10.28 first $150,000 of market value.In the case of state-assessed10.29commercial, industrial, and utility property owned by one person10.30or entity, only one parcel has a reduced class rate on the first10.31$100,000 of market value.In the case ofother commercial,10.32industrial, andutility property owned by one person or entity, 10.33 only one parcel in each county has a reduced class rate on the 10.34 first$100,000tier of market value, except that:. 10.35(1) if the market value of the parcel is less than10.36$100,000, and additional parcels are owned by the same person or11.1entity in the same city or town within that county, the reduced11.2class rate shall be applied up to a combined total market value11.3of $100,000 for all parcels owned by the same person or entity11.4in the same city or town within the county;11.5(2) in the case of grain, fertilizer, and feed elevator11.6facilities, as defined in section 18C.305, subdivision 1, or11.7232.21, subdivision 8, the limitation to one parcel per owner11.8per county for the reduced class rate shall not apply, but there11.9shall be a limit of $100,000 of preferential value per site of11.10contiguous parcels owned by the same person or entity. Only the11.11value of the elevator portion of each parcel shall qualify for11.12treatment under this clause. For purposes of this subdivision,11.13contiguous parcels include parcels separated only by a railroad11.14or public road right-of-way; and11.15(3) in the case of property owned by a nonprofit charitable11.16organization that qualifies for tax exemption under section11.17501(c)(3) of the Internal Revenue Code of 1986, as amended11.18through December 31, 1993, if the property is used as a business11.19incubator, the limitation to one parcel per owner per county for11.20the reduced class rate shall not apply, provided that the11.21reduced rate applies only to the first $100,000 of value per11.22parcel owned by the organization. As used in this clause, a11.23"business incubator" is a facility used for the development of11.24nonretail businesses, offering access to equipment, space,11.25services, and advice to the tenant businesses, for the purpose11.26of encouraging economic development, diversification, and job11.27creation in the area served by the organization.11.28To receive the reduced class rate on additional parcels11.29under clause (1), (2), or (3), the taxpayer must notify the11.30county assessor that the taxpayer owns more than one parcel that11.31qualifies under clause (1), (2), or (3).11.32 For purposes of this paragraph, parcels are considered to 11.33 be contiguous even if they are separated from each other by a 11.34 road, street, vacant lot, waterway, or other similar intervening 11.35 type of property. 11.36 (b) Employment property defined in section 469.166, during 12.1 the period provided in section 469.170, shall constitute class 12.2 3b and has a class rate of 2.3 percent of the first $50,000 of 12.3 market value and 3.6 percent of the remainder, except that for 12.4 employment property located in a border city enterprise zone 12.5 designated pursuant to section 469.168, subdivision 4, paragraph 12.6 (c), the class rate of the first$100,000tier of market value 12.7 and the class rate of the remainder is determined under 12.8 paragraph (a), unless the governing body of the city designated 12.9 as an enterprise zone determines that a specific parcel shall be 12.10 assessed pursuant to the first clause of this sentence. The 12.11 governing body may provide for assessment under the first clause 12.12 of the preceding sentence only for property which is located in 12.13 an area which has been designated by the governing body for the 12.14 receipt of tax reductions authorized by section 469.171, 12.15 subdivision 1. 12.16 (c) Structures which are (i) located on property classified 12.17 as class 3a, (ii) constructed under an initial building permit 12.18 issued after January 2, 1996, (iii) located in a transit zone as 12.19 defined under section 473.3915, subdivision 3, (iv) located 12.20 within the boundaries of a school district, and (v) not 12.21 primarily used for retail or transient lodging purposes, shall 12.22 have a class rateof fourequal to 85 percent of the class rate 12.23 of the second tier of the commercial property rate under 12.24 paragraph (a) onthatany portion of the market valuein excess12.25of $100,000 and any market value under $100,000that does not 12.26 qualify for thethree percentfirst tier class rate under 12.27 paragraph (a). As used in item (v), a structure is primarily 12.28 used for retail or transient lodging purposes if over 50 percent 12.29 of its square footage is used for those purposes. The four 12.30 percent rate shall also apply to improvements to existing 12.31 structures that meet the requirements of items (i) to (v) if the 12.32 improvements are constructed under an initial building permit 12.33 issued after January 2, 1996, even if the remainder of the 12.34 structure was constructed prior to January 2, 1996. For the 12.35 purposes of this paragraph, a structure shall be considered to 12.36 be located in a transit zone if any portion of the structure 13.1 lies within the zone. If any property once eligible for 13.2 treatment under this paragraph ceases to remain eligible due to 13.3 revisions in transit zone boundaries, the property shall 13.4 continue to receive treatment under this paragraph for a period 13.5 of three years. 13.6 Sec. 8. Minnesota Statutes 1996, section 273.13, 13.7 subdivision 25, is amended to read: 13.8 Subd. 25. [CLASS 4.] (a) Class 4a is residential real 13.9 estate containing four or more units and used or held for use by 13.10 the owner or by the tenants or lessees of the owner as a 13.11 residence for rental periods of 30 days or more. Class 4a also 13.12 includes hospitals licensed under sections 144.50 to 144.56, 13.13 other than hospitals exempt under section 272.02, and contiguous 13.14 property used for hospital purposes, without regard to whether 13.15 the property has been platted or subdivided. Class 4a property 13.16 in a city with a population of 5,000 or less, that is (1) 13.17 located outside of the metropolitan area, as defined in section 13.18 473.121, subdivision 2, or outside any county contiguous to the 13.19 metropolitan area, and (2) whose city boundary is at least 15 13.20 miles from the boundary of any city with a population greater 13.21 than 5,000 has a class rate of 2.3 percent of market valuefor13.22taxes payable in 1996 and thereafter. All other class 4a 13.23 property has a class rate of3.42.9 percent of market valuefor13.24taxes payable in 1996 and thereafter. For purposes of this 13.25 paragraph, population has the same meaning given in section 13.26 477A.011, subdivision 3. 13.27 (b) Class 4b includes: 13.28 (1) residential real estate containing less than four units 13.29 that does not qualify as class 4bb, other than seasonal 13.30 residential, and recreational; 13.31 (2) manufactured homes not classified under any other 13.32 provision; 13.33 (3) a dwelling, garage, and surrounding one acre of 13.34 property on a nonhomestead farm classified under subdivision 23, 13.35 paragraph (b) containing two or three units; 13.36 (4) unimproved property that is classified residential as 14.1 determined under section 273.13, subdivision 33. 14.2 Class 4b property has a class rate of2.8 percent of market14.3value for taxes payable in 1992, 2.5 percent of market value for14.4taxes payable in 1993, and 2.32.1 percent of market valuefor14.5taxes payable in 1994 and thereafter. 14.6 (c) Class 4bb includes: 14.7 (1) nonhomestead residential real estate containing one 14.8 unit, other than seasonal residential, and recreational; and 14.9 (2) a single family dwelling, garage, and surrounding one 14.10 acre of property on a nonhomestead farm classified under 14.11 subdivision 23, paragraph (b). 14.12 Class 4bb has a class rate of 1.9 percent on the first 14.13 $75,000 of market value and a class rate of 2.1 percent of its 14.14 market value that exceeds $75,000. 14.15 Property that has been classified as seasonal recreational 14.16 residential property at any time during which it has been owned 14.17 by the current owner or spouse of the current owner does not 14.18 qualify for class 4bb. 14.19(c)(d) Class 4c property includes: 14.20 (1)a structure that is:14.21(i) situated on real property that is used for housing for14.22the elderly or for low- and moderate-income families as defined14.23in Title II, as amended through December 31, 1990, of the14.24National Housing Act or the Minnesota housing finance agency law14.25of 1971, as amended, or rules promulgated by the agency and14.26financed by a direct federal loan or federally insured loan made14.27pursuant to Title II of the Act; or14.28(ii) situated on real property that is used for housing the14.29elderly or for low- and moderate-income families as defined by14.30the Minnesota housing finance agency law of 1971, as amended, or14.31rules adopted by the agency pursuant thereto and financed by a14.32loan made by the Minnesota housing finance agency pursuant to14.33the provisions of the act.14.34This clause applies only to property of a nonprofit or14.35limited dividend entity. Property is classified as class 4c14.36under this clause for 15 years from the date of the completion15.1of the original construction or substantial rehabilitation, or15.2for the original term of the loan.15.3(2) a structure that is:15.4(i) situated upon real property that is used for housing15.5lower income families or elderly or handicapped persons, as15.6defined in section 8 of the United States Housing Act of 1937,15.7as amended; and15.8(ii) owned by an entity which has entered into a housing15.9assistance payments contract under section 8 which provides15.10assistance for 100 percent of the dwelling units in the15.11structure, other than dwelling units intended for management or15.12maintenance personnel. Property is classified as class 4c under15.13this clause for the term of the housing assistance payments15.14contract, including all renewals, or for the term of its15.15permanent financing, whichever is shorter; and15.16(3) a qualified low-income building as defined in section15.1742(c)(2) of the Internal Revenue Code of 1986, as amended15.18through December 31, 1990, that (i) receives a low-income15.19housing credit under section 42 of the Internal Revenue Code of15.201986, as amended through December 31, 1990; or (ii) meets the15.21requirements of that section and receives public financing,15.22except financing provided under sections 469.174 to 469.179,15.23which contains terms restricting the rents; or (iii) meets the15.24requirements of section 273.1317. Classification pursuant to15.25this clause is limited to a term of 15 years. The public15.26financing received must be from at least one of the following15.27sources: government issued bonds exempt from taxes under15.28section 103 of the Internal Revenue Code of 1986, as amended15.29through December 31, 1993, the proceeds of which are used for15.30the acquisition or rehabilitation of the building; programs15.31under section 221(d)(3), 202, or 236, of Title II of the15.32National Housing Act; rental housing program funds under Section15.338 of the United States Housing Act of 1937 or the market rate15.34family graduated payment mortgage program funds administered by15.35the Minnesota housing finance agency that are used for the15.36acquisition or rehabilitation of the building; public financing16.1provided by a local government used for the acquisition or16.2rehabilitation of the building, including grants or loans from16.3federal community development block grants, HOME block grants,16.4or residential rental bonds issued under chapter 474A; or other16.5rental housing program funds provided by the Minnesota housing16.6finance agency for the acquisition or rehabilitation of the16.7building.16.8For all properties described in clauses (1), (2), and (3)16.9and in paragraph (d), the market value determined by the16.10assessor must be based on the normal approach to value using16.11normal unrestricted rents unless the owner of the property16.12elects to have the property assessed under Laws 1991, chapter16.13291, article 1, section 55. If the owner of the property elects16.14to have the market value determined on the basis of the actual16.15restricted rents, as provided in Laws 1991, chapter 291, article16.161, section 55, the property will be assessed at the rate16.17provided for class 4a or class 4b property, as appropriate.16.18Properties described in clauses (1)(ii), (3), and (4) may apply16.19to the assessor for valuation under Laws 1991, chapter 291,16.20article 1, section 55. The land on which these structures are16.21situated has the class rate given in paragraph (b) if the16.22structure contains fewer than four units, and the class rate16.23given in paragraph (a) if the structure contains four or more16.24units. This clause applies only to the property of a nonprofit16.25or limited dividend entity.16.26(4) a parcel of land, not to exceed one acre, and its16.27improvements or a parcel of unimproved land, not to exceed one16.28acre, if it is owned by a neighborhood real estate trust and at16.29least 60 percent of the dwelling units, if any, on all land16.30owned by the trust are leased to or occupied by lower income16.31families or individuals. This clause does not apply to any16.32portion of the land or improvements used for nonresidential16.33purposes. For purposes of this clause, a lower income family is16.34a family with an income that does not exceed 65 percent of the16.35median family income for the area, and a lower income individual16.36is an individual whose income does not exceed 65 percent of the17.1median individual income for the area, as determined by the17.2United States Secretary of Housing and Urban Development. For17.3purposes of this clause, "neighborhood real estate trust" means17.4an entity which is certified by the governing body of the17.5municipality in which it is located to have the following17.6characteristics:17.7(a) it is a nonprofit corporation organized under chapter17.8317A;17.9(b) it has as its principal purpose providing housing for17.10lower income families in a specific geographic community17.11designated in its articles or bylaws;17.12(c) it limits membership with voting rights to residents of17.13the designated community; and17.14(d) it has a board of directors consisting of at least17.15seven directors, 60 percent of whom are members with voting17.16rights and, to the extent feasible, 25 percent of whom are17.17elected by resident members of buildings owned by the trust; and17.18(5)except as provided in subdivision 22, paragraph (c), 17.19 real property devoted to temporary and seasonal residential 17.20 occupancy for recreation purposes, including real property 17.21 devoted to temporary and seasonal residential occupancy for 17.22 recreation purposes and not devoted to commercial purposes for 17.23 more than 250 days in the year preceding the year of 17.24 assessment. For purposes of this clause, property is devoted to 17.25 a commercial purpose on a specific day if any portion of the 17.26 property is used for residential occupancy, and a fee is charged 17.27 for residential occupancy. In order for a property to be 17.28 classified as class 4c, seasonal recreational residential for 17.29 commercial purposes, at least 40 percent of the annual gross 17.30 lodging receipts related to the property must be from business 17.31 conducted between Memorial Day weekend and Labor Day weekend and 17.32 at least 60 percent of all bookings by lodging guests during the 17.33 year must be for periods of at least two consecutive nights. 17.34 Class 4c also includes commercial use real property used 17.35 exclusively for recreational purposes in conjunction with class 17.36 4c property devoted to temporary and seasonal residential 18.1 occupancy for recreational purposes, up to a total of two acres, 18.2 provided the property is not devoted to commercial recreational 18.3 use for more than 250 days in the year preceding the year of 18.4 assessment and is located within two miles of the class 4c 18.5 property with which it is used. Class 4c property classified in 18.6 this clause also includes the remainder of class 1c resorts. 18.7 Owners of real property devoted to temporary and seasonal 18.8 residential occupancy for recreation purposes and all or a 18.9 portion of which was devoted to commercial purposes for not more 18.10 than 250 days in the year preceding the year of assessment 18.11 desiring classification as class 1c or 4c, must submit a 18.12 declaration to the assessor designating the cabins or units 18.13 occupied for 250 days or less in the year preceding the year of 18.14 assessment by January 15 of the assessment year. Those cabins 18.15 or units and a proportionate share of the land on which they are 18.16 located will be designated class 1c or 4c as otherwise 18.17 provided. The remainder of the cabins or units and a 18.18 proportionate share of the land on which they are located will 18.19 be designated as class 3a.The first $100,000 of the market18.20value of the remainder of the cabins or units and a18.21proportionate share of the land on which they are located shall18.22have a class rate of three percent.The owner of property 18.23 desiring designation as class 1c or 4c property must provide 18.24 guest registers or other records demonstrating that the units 18.25 for which class 1c or 4c designation is sought were not occupied 18.26 for more than 250 days in the year preceding the assessment if 18.27 so requested. The portion of a property operated as a (1) 18.28 restaurant, (2) bar, (3) gift shop, and (4) other nonresidential 18.29 facility operated on a commercial basis not directly related to 18.30 temporary and seasonal residential occupancy for recreation 18.31 purposes shall not qualify for class 1c or 4c; 18.32 (2) qualified property used as a golf course if: 18.33 (i) any portion of the property is located within a county 18.34 that has a population of less than 50,000, or within a county 18.35 containing a golf course owned by a municipality or the county; 18.36 (ii) it is open to the public on a daily fee basis. It may 19.1 charge membership fees or dues, but a membership fee may not be 19.2 required in order to use the property for golfing, and its green 19.3 fees for golfing must be comparable to green fees typically 19.4 charged by municipal courses; and 19.5 (iii) it meets the requirements of section 273.112, 19.6 subdivision 3, paragraph (d). 19.7 A structure used as a clubhouse, restaurant, or place of 19.8 refreshment in conjunction with the golf course is classified as 19.9 class 3a property. 19.10(6)(3) real property up to a maximum of one acre of land 19.11 owned by a nonprofit community service oriented organization; 19.12 provided that the property is not used for a revenue-producing 19.13 activity for more than six days in the calendar year preceding 19.14 the year of assessment and the property is not used for 19.15 residential purposes on either a temporary or permanent basis. 19.16 For purposes of this clause, a "nonprofit community service 19.17 oriented organization" means any corporation, society, 19.18 association, foundation, or institution organized and operated 19.19 exclusively for charitable, religious, fraternal, civic, or 19.20 educational purposes, and which is exempt from federal income 19.21 taxation pursuant to section 501(c)(3), (10), or (19) of the 19.22 Internal Revenue Code of 1986, as amended through December 31, 19.23 1990. For purposes of this clause, "revenue-producing 19.24 activities" shall include but not be limited to property or that 19.25 portion of the property that is used as an on-sale intoxicating 19.26 liquor or 3.2 percent malt liquor establishment licensed under 19.27 chapter 340A, a restaurant open to the public, bowling alley, a 19.28 retail store, gambling conducted by organizations licensed under 19.29 chapter 349, an insurance business, or office or other space 19.30 leased or rented to a lessee who conducts a for-profit 19.31 enterprise on the premises. Any portion of the property which 19.32 is used for revenue-producing activities for more than six days 19.33 in the calendar year preceding the year of assessment shall be 19.34 assessed as class 3a. The use of the property for social events 19.35 open exclusively to members and their guests for periods of less 19.36 than 24 hours, when an admission is not charged nor any revenues 20.1 are received by the organization shall not be considered a 20.2 revenue-producing activity; 20.3(7)(4) post-secondary student housing of not more than one 20.4 acre of land that is owned by a nonprofit corporation organized 20.5 under chapter 317A and is used exclusively by a student 20.6 cooperative, sorority, or fraternity for on-campus housing or 20.7 housing located within two miles of the border of a college 20.8 campus; and 20.9(8)(5) manufactured home parks as defined in section 20.10 327.14, subdivision 3. 20.11 Class 4c property has a class rate of2.32.1 percent of 20.12 market value, except that (i) for each parcel of seasonal 20.13 residential recreational property not used for commercial 20.14 purposesunder clause (5)the first$72,000$75,000 of market 20.15 valueon each parcelhas a class rate of1.75 percent for taxes20.16payable in 1997 and 1.51.4 percentfor taxes payable in 199820.17and thereafter, and the market valueof each parcelthat exceeds 20.18$72,000$75,000 has a class rate of 2.5 percent, and (ii) 20.19 manufactured home parks assessed under clause(8)(5) have a 20.20 class rate of two percentfor taxes payable in 1996, and20.21thereafter. 20.22(d)(e) Class 4d propertyincludes:20.23(1) a structure that is:20.24(i) situated on real property that is used for housing for20.25the elderly or for low and moderate income families as defined20.26by the Farmers Home Administration;20.27(ii) located in a municipality of less than 10,00020.28population; and20.29(iii) financed by a direct loan or insured loan from the20.30Farmers Home Administration. Property is classified under this20.31clause for 15 years from the date of the completion of the20.32original construction or for the original term of the loan.20.33The class rates in paragraph (c), clauses (1), (2), and (3)20.34and this clause apply to the properties described in them, only20.35in proportion to occupancy of the structure by elderly or20.36handicapped persons or low and moderate income families as21.1defined in the applicable laws unless construction of the21.2structure had been commenced prior to January 1, 1984; or the21.3project had been approved by the governing body of the21.4municipality in which it is located prior to June 30, 1983; or21.5financing of the project had been approved by a federal or state21.6agency prior to June 30, 1983. For those properties, 4c or 4d21.7classification is available only for those units meeting the21.8requirements of section 273.1318.21.9Classification under this clause is only available to21.10property of a nonprofit or limited dividend entity.21.11In the case of a structure financed or refinanced under any21.12federal or state mortgage insurance or direct loan program21.13exclusively for housing for the elderly or for housing for the21.14handicapped, a unit shall be considered occupied so long as it21.15is actually occupied by an elderly or handicapped person or, if21.16vacant, is held for rental to an elderly or handicapped person.21.17(2) For taxes payable in 1992, 1993, and 1994, only,21.18buildings and appurtenances, together with the land upon which21.19they are located, leased by the occupant under the community21.20lending model lease-purchase mortgage loan program administered21.21by the Federal National Mortgage Association, provided the21.22occupant's income is no greater than 60 percent of the county or21.23area median income, adjusted for family size and the building21.24consists of existing single family or duplex housing. The lease21.25agreement must provide for a portion of the lease payment to be21.26escrowed as a nonrefundable down payment on the housing. To21.27qualify under this clause, the taxpayer must apply to the county21.28assessor by May 30 of each year. The application must be21.29accompanied by an affidavit or other proof required by the21.30assessor to determine qualification under this clause.21.31(3) Qualifying buildings and appurtenances, together with21.32the land upon which they are located, leased for a period of up21.33to five years by the occupant under a lease-purchase program21.34administered by the Minnesota housing finance agency or a21.35housing and redevelopment authority authorized under sections21.36469.001 to 469.047, provided the occupant's income is no greater22.1than 80 percent of the county or area median income, adjusted22.2for family size, and the building consists of two or less22.3dwelling units. The lease agreement must provide for a portion22.4of the lease payment to be escrowed as a nonrefundable down22.5payment on the housing. The administering agency shall verify22.6the occupants income eligibility and certify to the county22.7assessor that the occupant meets the income criteria under this22.8paragraph. To qualify under this clause, the taxpayer must22.9apply to the county assessor by May 30 of each year. For22.10purposes of this section, "qualifying buildings and22.11appurtenances" shall be defined as one or two unit residential22.12buildings which are unoccupied and have been abandoned and22.13boarded for at least six monthsis qualifying low-income rental 22.14 housing certified to the assessor by the housing finance agency 22.15 under sections 273.126 and 462A.071. Class 4d includes land in 22.16 proportion to the total market value of the building that is 22.17 qualifying low-income rental housing. For all properties 22.18 qualifying as class 4d, the market value determined by the 22.19 assessor must be based on the normal approach to value using 22.20 normal unrestricted rents. 22.21 Class 4d property has a class rate oftwoone percent of 22.22 market valueexcept that property classified under clause (3),22.23shall have the same class rate as class 1a property. 22.24(e) Residential rental property that would otherwise be22.25assessed as class 4 property under paragraph (a); paragraph (b),22.26clauses (1) and (3); paragraph (c), clause (1), (2), (3), or22.27(4), is assessed at the class rate applicable to it under22.28Minnesota Statutes 1988, section 273.13, if it is found to be a22.29substandard building under section 273.1316. Residential rental22.30property that would otherwise be assessed as class 4 property22.31under paragraph (d) is assessed at 2.3 percent of market value22.32if it is found to be a substandard building under section22.33273.1316.22.34 (f) Class 4e property consists of the residential portion 22.35 of any structure located within a city that was converted from 22.36 nonresidential use to residential use, provided that: 23.1 (1) the structure had formerly been used as a warehouse; 23.2 (2) the structure was originally constructed prior to 1940; 23.3 (3) the conversion was done after December 31, 1995, but 23.4 before January 1, 2003; and 23.5 (4) the conversion involved an investment of at least 23.6 $25,000 per residential unit. 23.7 Class 4e property has a class rate of 2.3 percent, provided 23.8 that a structure is eligible for class 4e classification only in 23.9 the 12 assessment years immediately following the conversion. 23.10 Sec. 9. Minnesota Statutes 1996, section 273.13, 23.11 subdivision 31, is amended to read: 23.12 Subd. 31. [CLASS 5.] Class 5 property includes: 23.13 (1) tools, implements, and machinery of an electric 23.14 generating, transmission, or distribution system or a pipeline 23.15 system transporting or distributing water, gas, crude oil, or 23.16 petroleum products or mains and pipes used in the distribution 23.17 of steam or hot or chilled water for heating or cooling 23.18 buildings, which are fixtures; 23.19 (2) unmined iron ore and low-grade iron-bearing formations 23.20 as defined in section 273.14; and 23.21 (3) all other property not otherwise classified. 23.22 Class 5 property has a class rate of5.064.0 percent of 23.23 market value for taxes payable in 1998 and thereafter. 23.24 Sec. 10. Minnesota Statutes 1996, section 273.13, 23.25 subdivision 32, is amended to read: 23.26 Subd. 32. [TARGET CLASSRATERATES.] (a) All classes of 23.27 property with a class rate of5.064 percent have a target class 23.28 rate offour3.5 percent. Class 4a shall have a target class 23.29 rate of 2.5 percent. Class 4bb has a target class rate of 1.25 23.30 percent of the first $75,000 of market value and a target class 23.31 rate of 1.85 percent of the market value in excess of $75,000. 23.32 (b) By the fourth Tuesday in January of 1998 and at the 23.33 time of submission of the biennial budget under section 23.34 16A.11 in each biennium thereafter, the governorshallmust 23.35 recommend theeffectiveclass rate schedule for all properties 23.36 for taxes payable in 1999 for the schedule submitted in 1998 and 24.1 for the following two calendar yearsby designating a "phase-in24.2percentage," equal to the proportion of the effective class rate24.3that will be based on the target class rate of four percent,24.4with the remaining proportion based on the class rate of 5.0624.5percentin each biennium thereafter. The class rate schedule 24.6 must include reductions in the class rates of the classes 24.7 designated in paragraph (a) until such time as the target class 24.8 rates are reached unless the governor recommends no change in 24.9 the class rate schedule for all properties. As part of the 24.10 recommendation, the governor shallidentifyrecommend 24.11 appropriation of monies from the property tax reform account 24.12 under section 16A.1521 and include within the budget additional 24.13 fundingfor the increased expendituresfor the education 24.14 homesteadand agriculturalcreditaid over the amount of24.15expenditures for homestead and agricultural credit aid provided24.16in Laws 1989, First Special Session chapter 1, that are24.17estimated to result from the recommendation. At that time, the 24.18 property tax refund under chapter 290A and education aids under 24.19 chapters 124 and 124A to the extent those aids will be used to 24.20 reduce property tax levies. The governor may propose 24.21 alternative programsother than homestead and agricultural24.22credit aidto preventother taxpayers'the taxes of classes 24.23 other than those designated in paragraph (a) from increasing as 24.24 a result of the governor's recommendedincrease in the phase-in24.25percentage. The effective net class rate is the sum of the24.26products of:24.27(1) the phase-in percentage adopted by the legislature24.28multiplied by four percent; and24.29(2) 100 percent minus the phase-in percentage multiplied by24.305.06 percent.24.31The phase-in percentage in any year cannot be less than it24.32was in the prior year. The phase-in percentage is ten percent24.33for taxes payable in 1991, 29.2 percent for taxes payable in24.341992, 34.0 percent for taxes payable in 1993, and 43.4 percent24.35for taxes payable in 1994 and thereafter.24.36Beginning in 1991, the commissioner of revenue shall25.1annually set the effective class rate to use for taxes payable25.2in the following year as provided in this subdivision and25.3announce it by June 1. For purposes of any aid, levy25.4limitation, debt limit, or salary limitation, and property tax25.5administration, net tax capacity must be computed with reference25.6to the effective class rate for the properties affected by this25.7subdivisionclass rate schedule. 25.8 Sec. 11. [273.1319] [SINGLE FAMILY HOUSING; NONCOMPLIANCE; 25.9 MINNEAPOLIS AND ST. PAUL.] 25.10 (a) If the city determines that a residential rental 25.11 property classified as class 4bb under section 273.13, 25.12 subdivision 25, is not in compliance with the city's applicable 25.13 rental licensing requirements and housing codes, the city shall 25.14 notify the property owner of the specific items that are not in 25.15 compliance. The owner has 60 days to correct the noncompliance 25.16 items identified by the city. If they have not been corrected 25.17 within the 60-day time period to the satisfaction of the city, 25.18 the city shall notify the assessor that the property is out of 25.19 compliance and is no longer eligible for the class 4bb property 25.20 classification. Notwithstanding any other provision of law, the 25.21 assessor shall reclassify the property for the current 25.22 assessment year, for taxes payable in the following year as 25.23 class 4b property. The assessor shall notify the property owner 25.24 of the action. 25.25 (b) This section applies only to property located in the 25.26 cities of Minneapolis and St. Paul. 25.27 (c) This section is effective for each of the cities of 25.28 Minneapolis and St. Paul upon compliance with Minnesota 25.29 Statutes, section 645.021, subdivision 3, by the governing body 25.30 of the city. 25.31 Sec. 12. [273.1382] [EDUCATION HOMESTEAD CREDIT.] 25.32 Subdivision 1. [EDUCATION HOMESTEAD CREDIT.] Each year, 25.33 beginning with property taxes payable in 1998, the respective 25.34 county auditors shall determine the local tax rate for each 25.35 school district for the general education levy certified under 25.36 section 124A.23, subdivision 2 or 3. That rate shall be the 26.1 general education homestead credit local tax rate for the 26.2 district. The auditor shall then determine a general education 26.3 homestead credit for each homestead within the county equal to 26.4 32 percent of the general education homestead credit local tax 26.5 rate times the net tax capacity of the homestead for the taxes 26.6 payable year. The amount of general education homestead credit 26.7 for a homestead may not exceed $225. In the case of an 26.8 agricultural homestead, only the net tax capacity of the house, 26.9 garage, and surrounding one acre of land shall be used in 26.10 determining the property's education homestead credit. 26.11 Subd. 2. [CREDIT REIMBURSEMENTS.] (a) The commissioner of 26.12 revenue shall determine the tax reductions allowed under this 26.13 section for each taxes payable year, and for each school 26.14 district based upon a review of the abstracts of tax lists 26.15 submitted by the county auditors under section 275.29, and from 26.16 any other information which the commissioner deems relevant. 26.17 The commissioner of revenue shall generally compute the tax 26.18 reductions at the unique taxing jurisdiction level, however the 26.19 commissioner may compute the tax reductions at a higher 26.20 geographic level if that would have a negligible impact, or if 26.21 changes in the composition of unique taxing jurisdictions do not 26.22 permit computation at the unique taxing jurisdiction level. The 26.23 commissioner's determinations under this paragraph are not rules. 26.24 (b) The commissioner of revenue shall certify the total of 26.25 the tax reductions granted under this section for each taxes 26.26 payable year within each school district to the commissioner of 26.27 children, families, and learning after July 1 and on or before 26.28 August 1 of the taxes payable year. The commissioner of 26.29 children, families, and learning shall reimburse each affected 26.30 school district for the amount of the property tax reductions 26.31 allowed under this section as provided in section 273.1392. The 26.32 commissioner of children, families, and learning shall treat the 26.33 reimbursement payments as entitlements for the same state fiscal 26.34 year as certified, including with each district's initial 26.35 payment all amounts that would have been paid up to that date, 26.36 computed as if 90 percent of the annual reimbursement amount for 27.1 the district were being paid one-twelfth in each month of the 27.2 fiscal year. 27.3 Subd. 3. [APPROPRIATION.] An amount sufficient to make the 27.4 payments required by this section is annually appropriated from 27.5 the general fund to the commissioner of children, families, and 27.6 learning. 27.7 Sec. 13. Minnesota Statutes 1996, section 273.1393, is 27.8 amended to read: 27.9 273.1393 [COMPUTATION OF NET PROPERTY TAXES.] 27.10 Notwithstanding any other provisions to the contrary, "net" 27.11 property taxes are determined by subtracting the credits in the 27.12 order listed from the gross tax: 27.13 (1) disaster credit as provided in section 273.123; 27.14 (2) powerline credit as provided in section 273.42; 27.15 (3) agricultural preserves credit as provided in section 27.16 473H.10; 27.17 (4) enterprise zone credit as provided in section 469.171; 27.18 (5) disparity reduction credit; 27.19 (6) conservation tax credit as provided in section 273.119; 27.20 (7) education homestead credit as provided in section 27.21 273.1382; 27.22 (8) taconite homestead credit as provided in section 27.23 273.135; and 27.24(8)(9) supplemental homestead credit as provided in 27.25 section 273.1391. 27.26 The combination of all property tax credits must not exceed 27.27 the gross tax amount. 27.28 Sec. 14. Minnesota Statutes 1996, section 290A.03, 27.29 subdivision 13, is amended to read: 27.30 Subd. 13. [PROPERTY TAXES PAYABLE.] "Property taxes 27.31 payable" means the property tax exclusive of special 27.32 assessments, penalties, and interest payable on a claimant's 27.33 homesteadbefore reductions made under section 273.13 butafter 27.34 deductions made under sections 273.135, 273.1391, 273.1382, 27.35 273.42, subdivision 2, and any other state paid property tax 27.36 credits in any calendar year. In the case of a claimant who 28.1 makes ground lease payments, "property taxes payable" includes 28.2 the amount of the payments directly attributable to the property 28.3 taxes assessed against the parcel on which the house is 28.4 located. No apportionment or reduction of the "property taxes 28.5 payable" shall be required for the use of a portion of the 28.6 claimant's homestead for a business purpose if the claimant does 28.7 not deduct any business depreciation expenses for the use of a 28.8 portion of the homestead in the determination of federal 28.9 adjusted gross income. For homesteads which are manufactured 28.10 homes as defined in section 273.125, subdivision 8, and for 28.11 homesteads which are park trailers taxed as manufactured homes 28.12 under section 168.012, subdivision 9, "property taxes payable" 28.13 shall also include the amount of the gross rent paid in the 28.14 preceding year for the site on which the homestead is located, 28.15 which is attributable to the net tax paid on the site. The 28.16 amount attributable to property taxes shall be determined by 28.17 multiplying the net tax on the parcel by a fraction, the 28.18 numerator of which is the gross rent paid for the calendar year 28.19 for the site and the denominator of which is the gross rent paid 28.20 for the calendar year for the parcel. When a homestead is owned 28.21 by two or more persons as joint tenants or tenants in common, 28.22 such tenants shall determine between them which tenant may claim 28.23 the property taxes payable on the homestead. If they are unable 28.24 to agree, the matter shall be referred to the commissioner of 28.25 revenue whose decision shall be final. Property taxes are 28.26 considered payable in the year prescribed by law for payment of 28.27 the taxes. 28.28 In the case of a claim relating to "property taxes 28.29 payable," the claimant must have owned and occupied the 28.30 homestead on January 2 of the year in which the tax is payable 28.31 and (i) the property must have been classified as homestead 28.32 property pursuant to section 273.13, subdivision 22 or 23, on or 28.33 before December 15 of the assessment year to which the "property 28.34 taxes payable" relate; or (ii) the claimant must provide 28.35 documentation from the local assessor that application for 28.36 homestead classification has been made on or before December 15 29.1 of the year in which the "property taxes payable" were payable 29.2 and that the assessor has approved the application. 29.3 Sec. 15. [462A.071] [CERTIFICATION OF HOUSING QUALIFYING 29.4 FOR REDUCED PROPERTY TAX RATE.] 29.5 Subdivision 1. [CERTIFICATION.] By June 30 of each year, 29.6 the agency must certify to local assessors the units of 29.7 low-income rental properties that qualify for class 4d under 29.8 sections 273.126 and 273.13. In making these certifications, 29.9 the agency may rely on the application and supporting 29.10 information supplied by the property owner as to compliance with 29.11 the income limits under section 273.126, subdivision 2, and 29.12 satisfaction of the minimum housing quality standards under 29.13 subdivision 4. 29.14 Subd. 2. [APPLICATION.] (a) In order to qualify for 29.15 certification under subdivision 1, the owner or manager of the 29.16 property must annually apply to the agency. The application 29.17 must be in the form prescribed by the agency, contain the 29.18 information required by the agency, and be submitted by the date 29.19 and time specified by the agency. 29.20 (b) Each application must include: 29.21 (1) the property tax identification number; 29.22 (2) the number, type, and size of units the applicant seeks 29.23 to qualify as low-income housing under class 4d; 29.24 (3) the number, type, and size of units in the property for 29.25 which the applicant is not seeking qualification, if any; 29.26 (4) a certification that the property has been inspected by 29.27 a qualified inspector within the past three years and meets the 29.28 minimum housing quality standards or is exempt from the 29.29 inspection requirement under subdivision 4; 29.30 (5) a statement indicating the building is in compliance 29.31 with the income limits; 29.32 (6) an executed agreement to restrict rents meeting the 29.33 requirements specified by the agency or executed leases for the 29.34 units for which qualification as low-income housing as class 4d 29.35 under section 273.13 is sought and the rent schedule; and 29.36 (7) any additional information the agency deems appropriate 30.1 to require. 30.2 (c) The applicant must pay a per-unit application fee to be 30.3 set by the agency. The application fee charged by the agency 30.4 must approximately equal the costs of processing and reviewing 30.5 the applications. The fee must be deposited in the general fund. 30.6 Subd. 3. [AGREEMENT TO RESTRICT RENTS.] The agency may 30.7 prescribe one or more standard form agreements to restrict rents 30.8 that meet the requirements of section 273.126, subdivision 3. 30.9 The agreements must be in recordable form. The agency may 30.10 require applicants to execute a rent restriction agreement in 30.11 this form as a condition of entering an agreement to restrict 30.12 rents. 30.13 Subd. 4. [MINIMUM HOUSING QUALITY STANDARDS.] (a) To 30.14 qualify for taxation under class 4d under section 273.13, a unit 30.15 must meet both the housing maintenance code of the local unit of 30.16 government in which the unit is located, if such a code has been 30.17 adopted, and the housing quality standards adopted by the United 30.18 States Department of Housing and Urban Development. 30.19 (b) In order to meet the minimum housing quality standards, 30.20 a building must be inspected by an independent designated 30.21 inspector at least once every three years. The inspector must 30.22 certify that the building complies with the minimum standards. 30.23 The property owner must pay the cost of the inspection. 30.24 (c) The agency may exempt from the inspection requirement 30.25 housing units that are financed by a governmental entity and 30.26 subject to regular inspection or other compliance checks with 30.27 regard to minimum housing quality. Written certification must 30.28 be supplied to show that these exempt units have been inspected 30.29 within the last three years and comply with the requirements 30.30 under the public financing or local requirements. 30.31 Subd. 5. [HOUSING INSPECTORS.] (a) Housing inspections 30.32 required by this section may be conducted only by persons 30.33 designated by the agency. The agency may designate one or more 30.34 persons to conduct inspections for all or part of the state. A 30.35 designated inspector may charge a fee for an inspection up to a 30.36 maximum amount approved by the agency. The inspector must be 31.1 independent of the owner or manager of the inspected property. 31.2 (b) The agency must maintain a list of persons eligible to 31.3 conduct housing inspections under this section. 31.4 Subd. 6. [SECTION 8 AND TAX CREDIT UNITS.] (a) The agency 31.5 may deem units as meeting the requirements of section 273.126 31.6 and this section, if the units either: 31.7 (1) are subject to a housing assistance payments contract 31.8 under section 8 of the United States Housing Act of 1937, as 31.9 amended; or 31.10 (2) are rent and income restricted units of a qualified 31.11 low-income housing project receiving tax credits under section 31.12 42(g) of the Internal Revenue Code of 1986, as amended. 31.13 (b) The agency may certify these deemed units under 31.14 subdivision 1 based on a simplified application procedure that 31.15 verifies the unit's qualifications under paragraph (a). 31.16 Subd. 7. [MONITORING COMPLIANCE.] (a) The agency must 31.17 monitor compliance by building owners with the requirements of 31.18 section 273.126 and this section. The agency must annually 31.19 conduct on-site examinations of a sample of the buildings 31.20 receiving class 4d taxation to monitor compliance. The agency 31.21 may contract with third parties to monitor compliance. 31.22 (b) An inspector, designated by the agency under 31.23 subdivision 5, shall notify the agency if, in conducting an 31.24 inspection under subdivision 4, the inspector finds that: 31.25 (1) a unit is receiving class 4d taxation; 31.26 (2) the unit is not in compliance with the requirements of 31.27 subdivision 4; and 31.28 (3) the owner or manager fails or refuses to cure the 31.29 violations within a reasonable time after receiving notification 31.30 of the violation. 31.31 Subd. 8. [PENALTIES.] (a) The penalties provided by this 31.32 subdivision apply to each unit that received class 4d taxation 31.33 for a year and failed to meet the requirements of section 31.34 273.126 and this section. 31.35 (b) If the owner or manager does not comply with the rent 31.36 restriction agreement, or does not comply with the income 32.1 restrictions or minimum housing quality standards, a penalty 32.2 applies equal to the increased taxes that would have been 32.3 imposed if the property had not been classified under class 4d 32.4 for the year in which restrictions were violated. 32.5 (c) If the agency finds that the violations were 32.6 inadvertent and insubstantial, a penalty of $50 per unit per 32.7 year applies in lieu of the penalty specified under paragraph 32.8 (b). In order to qualify under this paragraph, violations of 32.9 the minimum housing quality standards must be corrected within a 32.10 reasonable period of time and rent charged in excess of the 32.11 agreement must be rebated to the tenants. 32.12 (d) The agency may abate the penalties under this 32.13 subdivision for reasonable cause. 32.14 (e) Penalties assessed under paragraph (c) are payable to 32.15 the agency and must be deposited in the general fund. If an 32.16 owner or manager fails to timely pay a penalty imposed under 32.17 paragraph (c), the agency may choose to: 32.18 (1) impose the penalty under paragraph (b); or 32.19 (2) certify the penalty under paragraph (c) to the auditor 32.20 for collection as additional taxes. 32.21 The agency shall certify to the county auditor penalties 32.22 assessed under paragraph (b) and clause (2). The auditor shall 32.23 impose and collect the certified penalties as additional taxes 32.24 which will be distributed to taxing districts in the same manner 32.25 as property taxes on the property. 32.26 Subd. 9. [TAX COURT REVIEW.] (a) An owner may appeal to 32.27 tax court as provided in section 271.06: 32.28 (1) a denial of a request for certification of a property 32.29 as qualifying for class 4d taxation; 32.30 (2) imposition of a penalty under this section; or 32.31 (3) denial of a request to abate a penalty. 32.32 (b) The county attorney shall represent the public in 32.33 opposing the appeal. 32.34 Subd. 10. [INTERAGENCY CONTRACTING AUTHORITY.] The agency 32.35 may contract with the department of revenue or any other state 32.36 agency or a private entity to carry out administrative functions 33.1 under this section. 33.2 Subd. 11. [RULEMAKING.] (a) The agency may adopt 33.3 administrative rules under chapter 14 to carry out the 33.4 provisions of this section, including establishing standards for 33.5 abating penalties, violations that are inadvertent and 33.6 insubstantial, selection of inspectors, selection of persons to 33.7 monitor compliance, and establishing rent restriction agreement 33.8 terms. 33.9 (b) Pending final rulemaking, and in order to implement 33.10 this section by January 1, 1998, the agency shall be allowed to 33.11 make determinations regarding selection of inspectors, rent 33.12 restriction agreement terms, fees, application information, 33.13 application deadlines, required documentation, exemptions from 33.14 inspection requirements, and deeming of eligibility. Any 33.15 determinations adopted under this authority expire on January 1, 33.16 1999. 33.17 Sec. 16. [PROPERTY TAX REBATE.] 33.18 (a) A credit is allowed against the tax imposed on an 33.19 individual under Minnesota Statutes, chapter 290 equal to 20 33.20 percent of the qualified property tax paid in calendar year 1997 33.21 for taxes assessed in 1996. 33.22 (b) For property owned and occupied by the taxpayer, 33.23 qualified tax means property taxes payable as defined in 33.24 Minnesota Statutes, section 290A.03, subdivision 13, assessed in 33.25 1996 and payable in 1997. 33.26 (c) For a renter, the qualified property tax means the 33.27 amount of rent constituting property taxes under Minnesota 33.28 Statutes, section 290A.03, subdivision 11, based on rent paid in 33.29 1997. If two or more renters could be claimants under Minnesota 33.30 Statutes, chapter 290A with regard to the rent constituting 33.31 property taxes, the rules under Minnesota Statutes, section 33.32 290A.03, subdivision 8, paragraph (f), applies to determine the 33.33 amount of the credit for the individual. 33.34 (d) For an individual who both owned and rented principal 33.35 residences in calendar year 1997, qualified taxes are the sum of 33.36 the amounts under paragraphs (a) and (b). 34.1 (e) If the amount of the credit under this subdivision 34.2 exceeds the taxpayer's tax liability under this chapter, the 34.3 commissioner shall refund the excess. 34.4 (f) To claim a credit under this subdivision, the taxpayer 34.5 must attach a copy of the property tax statement and certificate 34.6 of rent paid, as applicable, and provide any additional 34.7 information the commissioner requires. 34.8 (g) An amount sufficient to pay refunds under this 34.9 subdivision is appropriated to the commissioner from the general 34.10 fund. 34.11 (h) This credit applies to taxable years beginning after 34.12 December 31, 1996, and before January 1, 1998. 34.13 Sec. 17. [GENERAL EDUCATION LEVY REDUCTION.] 34.14 Notwithstanding the provisions of Minnesota Statutes, 34.15 section 124A.23, subdivision 1, the general education levy shall 34.16 be reduced by $93,000,000 for taxes payable in 1998 and 34.17 subsequent years. The amount necessary to offset the costs of 34.18 the levy reductions contained in this section is annually 34.19 appropriated from the general fund to the commissioner of 34.20 children, families, and learning. 34.21 Sec. 18. [TEMPORARY EXEMPTIONS FROM INSPECTION 34.22 REQUIREMENTS.] 34.23 (a) The Minnesota housing finance agency may provide a 34.24 temporary exemption to the inspection requirement under 34.25 Minnesota Statutes, sections 273.126, subdivision 4, and 34.26 462A.071, if the agency finds that: 34.27 (1) the property owner made a good faith effort to obtain 34.28 an inspection; and 34.29 (2) the owner was unable to obtain an inspection in time to 34.30 apply because the designated inspectors were unable to conduct 34.31 all the requested inspections. 34.32 (b) If a unit that is exempted under this section does not 34.33 ultimately obtain a certification from a designated inspector 34.34 that it is in compliance with the minimum housing quality 34.35 standards, the additional taxes under Minnesota Statutes, 34.36 section 273.126, subdivision 5, apply. 35.1 (c) Procedures or rules for granting exemptions under this 35.2 section are not subject to the administrative rulemaking under 35.3 Minnesota Statutes, chapter 14. 35.4 (d) The authority under this section expires December 31, 35.5 2000. 35.6 Sec. 19. [TIF GRANTS; APPROPRIATIONS.] 35.7 Subdivision 1. [TIF GRANTS.] (a) The commissioner of 35.8 revenue shall pay grants to municipalities for deficits in tax 35.9 increment financing districts caused by the changes in class 35.10 rates under this act. Municipalities must submit applications 35.11 for the grants in a form prescribed by the commissioner by no 35.12 later than March 1 for grants payable during the calendar year. 35.13 The maximum grant equals the lesser of: 35.14 (1) for taxes payable in the year before the grant is paid, 35.15 the reduction in the tax increment financing district's revenues 35.16 derived from increment resulting from the class rate changes in 35.17 this article; or 35.18 (2) the municipality's total tax increments, including 35.19 unspent increments from previous years, less the amount due 35.20 during the calendar year to pay (i) bonds issued and sold before 35.21 the day following final enactment of this act and (ii) binding 35.22 contracts entered into before the day following final enactment 35.23 of this act. 35.24 (b) The commissioner of revenue may require applicants for 35.25 grants or pooling authority under this section to provide any 35.26 information the commissioner deems appropriate. The 35.27 commissioner shall calculate the amount under paragraph (a), 35.28 clause (2), based on the reports for the tax increment financing 35.29 district or districts filed with the state auditor on or before 35.30 July 1 of the year before the year in which the grant is to be 35.31 paid. 35.32 (c) This subdivision applies only to deficits in tax 35.33 increment financing districts for which: 35.34 (1) the request for certification was made before the 35.35 enactment date of this act; and 35.36 (2) all timely reports have been filed with the state 36.1 auditor, as required by Minnesota Statutes, section 469.175. 36.2 (d) The commissioner shall pay the grants under this 36.3 subdivision by December 26 of the year. 36.4 (e) $2,000,000 is appropriated to the commissioner of 36.5 revenue to make grants under this section. This appropriation 36.6 is available until expended or this section expires under 36.7 subdivision 3, whichever is earlier. If the amount of grant 36.8 entitlements for a year exceed the appropriation, the 36.9 commissioner shall reduce each grant proportionately so the 36.10 total equals the amount available. 36.11 Subd. 2. [ADDITIONAL POOLING AUTHORITY.] Notwithstanding 36.12 the provisions of Minnesota Statutes, section 469.1763, 36.13 subdivision 2, and the provisions of the tax increment financing 36.14 act in effect for districts for which the request for 36.15 certification was made before June 30, 1982, revenues derived 36.16 from increments may be spent on activities located outside of 36.17 the district to pay binding obligations entered into before the 36.18 day following final enactment. The amount qualifying under this 36.19 subdivision to be spent outside the district is limited to an 36.20 amount necessary to meet a binding obligation of the other 36.21 district that cannot be paid by the other district because of 36.22 the reduction in class rates under this section. Use of 36.23 increments under this authority must be approved, in writing, by 36.24 the commissioner of revenue. 36.25 Subd. 3. [EXPIRATION.] This section expires on January 1, 36.26 2001. 36.27 Sec. 20. [APPROPRIATION.] 36.28 (a) $450,000 is appropriated for fiscal year 1998 from the 36.29 general fund to the housing finance agency for purposes of 36.30 administering the certification of qualifying low-income 36.31 residential properties for property taxation under class 4d. 36.32 The cost ceiling for the Minnesota housing finance agency, 36.33 as otherwise provided by legislation enacted in 1997 without 36.34 regard to whether the legislation is enacted before or after 36.35 this act, is increased by $142,000 for fiscal year 1998 and by 36.36 $118,000 for fiscal year 1999. 37.1 (b) $15,300,000 is appropriated from the general fund to 37.2 the commissioner of children, families, and learning for fiscal 37.3 year 1999 for alternative facilities aid under section 3. 37.4 Sec. 21. [REPEALER.] 37.5 (a) Minnesota Statutes, section 124.2134, is repealed. 37.6 (b) Minnesota Statutes, sections 273.1317; and 273.1318, 37.7 are repealed. 37.8 Sec. 22. [EFFECTIVE DATES.] 37.9 Sections 1, 2, 5, 6, 7, 8, 9, 11, 12, 13, 14, 17, and 21, 37.10 paragraph (a), are effective for taxes levied in 1997, payable 37.11 in 1998 and subsequent years, except that the low-income housing 37.12 provisions in class 4c and 4d are effective for taxes payable in 37.13 1999 and thereafter and the provisions in sections 6 and 8 37.14 relating to class 1c and 4c seasonal residential property that 37.15 specify percentages of lodging receipts and bookings of at least 37.16 two consecutive nights are effective for taxes payable in 1999 37.17 and thereafter. 37.18 Sections 4, 15, and 21, paragraph (b), are effective for 37.19 taxes payable in 1999 and subsequent years. 37.20 Sections 3 and 20 are effective July 1, 1997. 37.21 Section 19 is effective for taxes payable in 1998, 1999, 37.22 and 2000. 37.23 ARTICLE 2 37.24 PROPERTY TAX 37.25 Section 1. Minnesota Statutes 1996, section 69.021, 37.26 subdivision 7, is amended to read: 37.27 Subd. 7. [APPORTIONMENT OF FIRE STATE AID TO 37.28 MUNICIPALITIES AND RELIEF ASSOCIATIONS.] (a) The commissioner 37.29 shall apportion the fire state aid relative to the premiums 37.30 reported on the Minnesota Firetown Premium Reports filed under 37.31 this chapter to each municipality and/or firefighters' relief 37.32 association. 37.33 (b) The commissioner shall calculate an initial fire state 37.34 aid allocation amount for each municipality or fire department 37.35 under paragraph (c) and a minimum fire state aid allocation 37.36 amount for each municipality or fire department under paragraph 38.1 (d). The municipality or fire department must receive the 38.2 larger fire state aid amount. 38.3 (c) The initial fire state aid allocation amount is the 38.4 amount available for apportionment as fire state aid under 38.5 subdivision 5, without inclusion of any additional funding 38.6 amount to support a minimum fire state aid amount under section 38.7 423A.02, subdivision 3, allocated one-half in proportion to the 38.8 population as shown in the last official statewide federal 38.9 census for each fire town and one-half in proportion to the 38.10 market value of each fire town, including (1) the market value 38.11 of tax exempt property and (2) the market value of natural 38.12 resources lands receiving in lieu payments under sections 38.13 477A.11 to 477A.14, but excluding the market value of minerals. 38.14 In the case of incorporated or municipal fire departments 38.15 furnishing fire protection to other cities, towns, or townships 38.16 as evidenced by valid fire service contracts filed with the 38.17 commissioner, the distribution must be adjusted proportionately 38.18 to take into consideration the crossover fire protection 38.19 service. Necessary adjustments shall be made to subsequent 38.20 apportionments. In the case of municipalities or independent 38.21 fire departments qualifying for the aid, the commissioner shall 38.22 calculate the state aid for the municipality or relief 38.23 association on the basis of the population and the market value 38.24 of the area furnished fire protection service by the fire 38.25 department as evidenced by duly executed and valid fire service 38.26 agreements filed with the commissioner. If one or more fire 38.27 departments are furnishing contracted fire service to a city, 38.28 town, or township, only the population and market value of the 38.29 area served by each fire department may be considered in 38.30 calculating the state aid and the fire departments furnishing 38.31 service shall enter into an agreement apportioning among 38.32 themselves the percent of the population and the market value of 38.33 each service area. The agreement must be in writing and must be 38.34 filed with the commissioner. 38.35 (d) The minimum fire state aid allocation amount is the 38.36 amount in addition to the initial fire state allocation amount 39.1 that is derived from any additional funding amount to support a 39.2 minimum fire state aid amount under section 423A.02, subdivision 39.3 3, and allocated to municipalities with volunteer firefighter 39.4 relief associations based on the number of active volunteer 39.5 firefighters who are members of the relief association as 39.6 reported in the annual financial reporting for the calendar year 39.7 1993 to the office of the state auditor, but not to exceed 30 39.8 active volunteer firefighters, so that all municipalities or 39.9 fire departments with volunteer firefighter relief associations 39.10 receive in total at least a minimum fire state aid amount per 39.11 1993 active volunteer firefighter to a maximum of 30 39.12 firefighters. 39.13 (e) The fire state aid must be paid to the treasurer of the 39.14 municipality where the fire department is located and the 39.15 treasurer of the municipality shall, within 30 days of receipt 39.16 of the fire state aid, transmit the aid to the relief 39.17 association if the relief association has filed a financial 39.18 report with the treasurer of the municipality and has met all 39.19 other statutory provisions pertaining to the aid apportionment. 39.20 (f) The commissioner may make rules to permit the 39.21 administration of the provisions of this section. Any 39.22 adjustments needed to correct prior misallocations must be made 39.23 to subsequent apportionments. 39.24 Sec. 2. Minnesota Statutes 1996, section 103D.905, 39.25 subdivision 4, is amended to read: 39.26 Subd. 4. [BOND FUND.] A bond fund consists of the proceeds 39.27 of special assessments, storm water charges, loan repayments, 39.28 and ad valorem tax levies pledged by the watershed district for 39.29 the payment of bonds or notes issued by the watershed district 39.30secured by the property of the watershed district that is39.31producing or is likely to produce a regular income. The bond 39.32 fund is to be used for the payment of thepurchase price of the39.33property or the value of the property as determined by the court39.34in proper proceedings and for the improvement and development of39.35the propertyprincipal of, premium or administrative surcharge, 39.36 if any, and interest on the bonds and notes issued by the 40.1 watershed district and for payments required to be made to the 40.2 federal government under section 148(f) of the Internal Revenue 40.3 Code of 1986, as amended through December 31, 1996. 40.4 Sec. 3. Minnesota Statutes 1996, section 103D.905, 40.5 subdivision 5, is amended to read: 40.6 Subd. 5. [CONSTRUCTION OR IMPLEMENTATION FUND.] (a) A 40.7 construction or implementation fund consists of: 40.8 (1) the proceeds of watershed district bonds or notes or of 40.9 the sale of county bonds; 40.10 (2) construction or implementation loans from the pollution 40.11 control agency under sections 103F.701 to 103F.761, or from any 40.12 agency of the federal government; and 40.13 (3) special assessments, storm water charges, loan 40.14 repayments, and ad valorem tax levies levied or to be levied to 40.15 supply funds for the construction or implementation of the 40.16 projects of the watershed district, including reservoirs, 40.17 ditches, dikes, canals, channels, storm water facilities, sewage 40.18 treatment facilities, wells, and other works, and the expenses 40.19 incident to and connected with the construction or 40.20 implementation. 40.21 (b) Construction or implementation loans from the pollution 40.22 control agency under sections 103F.701 to 103F.761, or from an 40.23 agency of the federal government may be repaid frommoney40.24collected bythe proceeds of watershed district bonds or notes 40.25 or from the collections of storm water charges, loan repayments, 40.26 ad valorem tax levies, or special assessments on properties 40.27 benefited by the project. 40.28 Sec. 4. Minnesota Statutes 1996, section 103D.905, is 40.29 amended by adding a subdivision to read: 40.30 Subd. 9. [PROJECT TAX LEVY.] In addition to other tax 40.31 levies provided in this section or in any other law, a watershed 40.32 district may levy a tax: 40.33 (1) to pay the costs of projects undertaken by the 40.34 watershed district which are to be funded, in whole or in part, 40.35 with the proceeds of grants or construction or implementation 40.36 loans under sections 103F.701 to 103F.761; 41.1 (2) to pay the principal of, or premium or administrative 41.2 surcharge, if any, and interest on, the bonds and notes issued 41.3 by the watershed district pursuant to section 103F.725; or 41.4 (3) to repay the construction or implementation loans under 41.5 sections 103F.701 to 103F.761. 41.6 Taxes levied with respect to payment of bonds and notes 41.7 shall comply with section 475.61. 41.8 Sec. 5. Minnesota Statutes 1996, section 216B.16, is 41.9 amended by adding a subdivision to read: 41.10 Subd. 6d. [WIND ENERGY; PROPERTY TAX.] An owner of a wind 41.11 energy conversion facility which is required to pay property 41.12 taxes under section 272.02, subdivision 1, paragraph (21), or a 41.13 public utility regulated by the public utilities commission 41.14 which purchases the wind generated electricity may petition the 41.15 commission to include in any power purchase agreement between 41.16 the owner of the facility and the public utility the amount of 41.17 property taxes paid by the owner of the facility. The public 41.18 utilities commission shall require the public utility to amend 41.19 the power purchase agreement to include the property taxes paid 41.20 by the owner of the facility in the price paid by the utility 41.21 for wind generated electricity if the commission finds: 41.22 (a) the owner of the facility has paid the property taxes 41.23 required by this subdivision; 41.24 (b) the power purchase agreement between the public utility 41.25 and the owner does not already require the utility to pay the 41.26 amount of property taxes the owner has paid under this 41.27 subdivision; and 41.28 (c) the commission has approved a rate schedule containing 41.29 provisions for the automatic adjustment of charges for utility 41.30 service in direct relation to the charges ordered by the 41.31 commission under section 272.02, subdivision 1, paragraph (21). 41.32 Sec. 6. Minnesota Statutes 1996, section 271.01, 41.33 subdivision 5, is amended to read: 41.34 Subd. 5. [JURISDICTION.] The tax court shall have 41.35 statewide jurisdiction. Except for an appeal to the supreme 41.36 court or any other appeal allowed under this subdivision, the 42.1 tax court shall be the sole, exclusive, and final authority for 42.2 the hearing and determination of all questions of law and fact 42.3 arising under the tax laws of the state, as defined in this 42.4 subdivision, in those cases that have been appealed to the tax 42.5 court and in any case that has been transferred by the district 42.6 court to the tax court. The tax court shall have no 42.7 jurisdiction in any case that does not arise under the tax laws 42.8 of the state or in any criminal case or in any case determining 42.9 or granting title to real property or in any case that is under 42.10 the probate jurisdiction of the district court. The small 42.11 claims division of the tax court shall have no jurisdiction in 42.12 any case dealing with property valuation or assessment for 42.13 property tax purposes until the taxpayer has appealed the 42.14 valuation or assessment to the county board of equalization, and 42.15 in those towns and cities which have not transferred their 42.16 duties to the county, the town or city board of equalizationand42.17to the county board of equalization, except for those taxpayers 42.18 whose original assessments are determined by the commissioner of 42.19 revenue. The tax court shall have no jurisdiction in any case 42.20 involving an order of the state board of equalization unless a 42.21 taxpayer contests the valuation of property. Laws governing 42.22 taxes, aids, and related matters administered by the 42.23 commissioner of revenue, laws dealing with property valuation, 42.24 assessment or taxation of property for property tax purposes, 42.25 and any other laws that contain provisions authorizing review of 42.26 taxes, aids, and related matters by the tax court shall be 42.27 considered tax laws of this state subject to the jurisdiction of 42.28 the tax court. This subdivision shall not be construed to 42.29 prevent an appeal, as provided by law, to an administrative 42.30 agency, board of equalization, review under section 274.13, 42.31 subdivision 1c, or to the commissioner of revenue. Wherever 42.32 used in this chapter, the term commissioner shall mean the 42.33 commissioner of revenue, unless otherwise specified. 42.34 Sec. 7. Minnesota Statutes 1996, section 272.02, 42.35 subdivision 1, is amended to read: 42.36 Subdivision 1. All property described in this section to 43.1 the extent herein limited shall be exempt from taxation: 43.2 (1) All public burying grounds. 43.3 (2) All public schoolhouses. 43.4 (3) All public hospitals. 43.5 (4) All academies, colleges, and universities, and all 43.6 seminaries of learning. 43.7 (5) All churches, church property, and houses of worship. 43.8 (6) Institutions of purely public charity except parcels of 43.9 property containing structures and the structures described in 43.10 section 273.13, subdivision 25, paragraph (c), clauses (1), (2), 43.11 and (3), or paragraph (d), other than those that qualify for 43.12 exemption under clause (25). 43.13 (7) All public property exclusively used for any public 43.14 purpose. 43.15 (8) Except for the taxable personal property enumerated 43.16 below, all personal property and the property described in 43.17 section 272.03, subdivision 1, paragraphs (c) and (d), shall be 43.18 exempt. 43.19 The following personal property shall be taxable: 43.20 (a) personal property which is part of an electric 43.21 generating, transmission, or distribution system or a pipeline 43.22 system transporting or distributing water, gas, crude oil, or 43.23 petroleum products or mains and pipes used in the distribution 43.24 of steam or hot or chilled water for heating or cooling 43.25 buildings and structures; 43.26 (b) railroad docks and wharves which are part of the 43.27 operating property of a railroad company as defined in section 43.28 270.80; 43.29 (c) personal property defined in section 272.03, 43.30 subdivision 2, clause (3); 43.31 (d) leasehold or other personal property interests which 43.32 are taxed pursuant to section 272.01, subdivision 2; 273.124, 43.33 subdivision 7; or 273.19, subdivision 1; or any other law 43.34 providing the property is taxable as if the lessee or user were 43.35 the fee owner; 43.36 (e) manufactured homes and sectional structures, including 44.1 storage sheds, decks, and similar removable improvements 44.2 constructed on the site of a manufactured home, sectional 44.3 structure, park trailer or travel trailer as provided in section 44.4 273.125, subdivision 8, paragraph (f); and 44.5 (f) flight property as defined in section 270.071. 44.6 (9) Personal property used primarily for the abatement and 44.7 control of air, water, or land pollution to the extent that it 44.8 is so used, and real property which is used primarily for 44.9 abatement and control of air, water, or land pollution as part 44.10 of an agricultural operation, as a part of a centralized 44.11 treatment and recovery facility operating under a permit issued 44.12 by the Minnesota pollution control agency pursuant to chapters 44.13 115 and 116 and Minnesota Rules, parts 7001.0500 to 7001.0730, 44.14 and 7045.0020 to 7045.1260, as a wastewater treatment facility 44.15 and for the treatment, recovery, and stabilization of metals, 44.16 oils, chemicals, water, sludges, or inorganic materials from 44.17 hazardous industrial wastes, or as part of an electric 44.18 generation system. For purposes of this clause, personal 44.19 property includes ponderous machinery and equipment used in a 44.20 business or production activity that at common law is considered 44.21 real property. 44.22 Any taxpayer requesting exemption of all or a portion of 44.23 any real property or any equipment or device, or part thereof, 44.24 operated primarily for the control or abatement of air or water 44.25 pollution shall file an application with the commissioner of 44.26 revenue. The equipment or device shall meet standards, rules, 44.27 or criteria prescribed by the Minnesota pollution control 44.28 agency, and must be installed or operated in accordance with a 44.29 permit or order issued by that agency. The Minnesota pollution 44.30 control agency shall upon request of the commissioner furnish 44.31 information or advice to the commissioner. On determining that 44.32 property qualifies for exemption, the commissioner shall issue 44.33 an order exempting the property from taxation. The equipment or 44.34 device shall continue to be exempt from taxation as long as the 44.35 permit issued by the Minnesota pollution control agency remains 44.36 in effect. 45.1 (10) Wetlands. For purposes of this subdivision, 45.2 "wetlands" means: (i) land described in section 103G.005, 45.3 subdivision 15a; (ii) land which is mostly under water, produces 45.4 little if any income, and has no use except for wildlife or 45.5 water conservation purposes, provided it is preserved in its 45.6 natural condition and drainage of it would be legal, feasible, 45.7 and economically practical for the production of livestock, 45.8 dairy animals, poultry, fruit, vegetables, forage and grains, 45.9 except wild rice; or (iii) land in a wetland preservation area 45.10 under sections 103F.612 to 103F.616. "Wetlands" under items (i) 45.11 and (ii) include adjacent land which is not suitable for 45.12 agricultural purposes due to the presence of the wetlands, but 45.13 do not include woody swamps containing shrubs or trees, wet 45.14 meadows, meandered water, streams, rivers, and floodplains or 45.15 river bottoms. Exemption of wetlands from taxation pursuant to 45.16 this section shall not grant the public any additional or 45.17 greater right of access to the wetlands or diminish any right of 45.18 ownership to the wetlands. 45.19 (11) Native prairie. The commissioner of the department of 45.20 natural resources shall determine lands in the state which are 45.21 native prairie and shall notify the county assessor of each 45.22 county in which the lands are located. Pasture land used for 45.23 livestock grazing purposes shall not be considered native 45.24 prairie for the purposes of this clause. Upon receipt of an 45.25 application for the exemption provided in this clause for lands 45.26 for which the assessor has no determination from the 45.27 commissioner of natural resources, the assessor shall refer the 45.28 application to the commissioner of natural resources who shall 45.29 determine within 30 days whether the land is native prairie and 45.30 notify the county assessor of the decision. Exemption of native 45.31 prairie pursuant to this clause shall not grant the public any 45.32 additional or greater right of access to the native prairie or 45.33 diminish any right of ownership to it. 45.34 (12) Property used in a continuous program to provide 45.35 emergency shelter for victims of domestic abuse, provided the 45.36 organization that owns and sponsors the shelter is exempt from 46.1 federal income taxation pursuant to section 501(c)(3) of the 46.2 Internal Revenue Code of 1986, as amended through December 31, 46.3 1992, notwithstanding the fact that the sponsoring organization 46.4 receives funding under section 8 of the United States Housing 46.5 Act of 1937, as amended. 46.6 (13) If approved by the governing body of the municipality 46.7 in which the property is located, property not exceeding one 46.8 acre which is owned and operated by any senior citizen group or 46.9 association of groups that in general limits membership to 46.10 persons age 55 or older and is organized and operated 46.11 exclusively for pleasure, recreation, and other nonprofit 46.12 purposes, no part of the net earnings of which inures to the 46.13 benefit of any private shareholders; provided the property is 46.14 used primarily as a clubhouse, meeting facility, or recreational 46.15 facility by the group or association and the property is not 46.16 used for residential purposes on either a temporary or permanent 46.17 basis. 46.18 (14) To the extent provided by section 295.44, real and 46.19 personal property used or to be used primarily for the 46.20 production of hydroelectric or hydromechanical power on a site 46.21 owned by the state or a local governmental unit which is 46.22 developed and operated pursuant to the provisions of section 46.23 103G.535. 46.24 (15) If approved by the governing body of the municipality 46.25 in which the property is located, and if construction is 46.26 commenced after June 30, 1983: 46.27 (a) a "direct satellite broadcasting facility" operated by 46.28 a corporation licensed by the federal communications commission 46.29 to provide direct satellite broadcasting services using direct 46.30 broadcast satellites operating in the 12-ghz. band; and 46.31 (b) a "fixed satellite regional or national program service 46.32 facility" operated by a corporation licensed by the federal 46.33 communications commission to provide fixed satellite-transmitted 46.34 regularly scheduled broadcasting services using satellites 46.35 operating in the 6-ghz. band. 46.36 An exemption provided by clause (15) shall apply for a period 47.1 not to exceed five years. When the facility no longer qualifies 47.2 for exemption, it shall be placed on the assessment rolls as 47.3 provided in subdivision 4. Before approving a tax exemption 47.4 pursuant to this paragraph, the governing body of the 47.5 municipality shall provide an opportunity to the members of the 47.6 county board of commissioners of the county in which the 47.7 facility is proposed to be located and the members of the school 47.8 board of the school district in which the facility is proposed 47.9 to be located to meet with the governing body. The governing 47.10 body shall present to the members of those boards its estimate 47.11 of the fiscal impact of the proposed property tax exemption. 47.12 The tax exemption shall not be approved by the governing body 47.13 until the county board of commissioners has presented its 47.14 written comment on the proposal to the governing body or 30 days 47.15 have passed from the date of the transmittal by the governing 47.16 body to the board of the information on the fiscal impact, 47.17 whichever occurs first. 47.18 (16) Real and personal property owned and operated by a 47.19 private, nonprofit corporation exempt from federal income 47.20 taxation pursuant to United States Code, title 26, section 47.21 501(c)(3), primarily used in the generation and distribution of 47.22 hot water for heating buildings and structures. 47.23 (17) Notwithstanding section 273.19, state lands that are 47.24 leased from the department of natural resources under section 47.25 92.46. 47.26 (18) Electric power distribution lines and their 47.27 attachments and appurtenances, that are used primarily for 47.28 supplying electricity to farmers at retail. 47.29 (19) Transitional housing facilities. "Transitional 47.30 housing facility" means a facility that meets the following 47.31 requirements. (i) It provides temporary housing to individuals, 47.32 couples, or families. (ii) It has the purpose of reuniting 47.33 families and enabling parents or individuals to obtain 47.34 self-sufficiency, advance their education, get job training, or 47.35 become employed in jobs that provide a living wage. (iii) It 47.36 provides support services such as child care, work readiness 48.1 training, and career development counseling; and a 48.2 self-sufficiency program with periodic monitoring of each 48.3 resident's progress in completing the program's goals. (iv) It 48.4 provides services to a resident of the facility for at least 48.5 three months but no longer than three years, except residents 48.6 enrolled in an educational or vocational institution or job 48.7 training program. These residents may receive services during 48.8 the time they are enrolled but in no event longer than four 48.9 years. (v) It is owned and operated or under lease from a unit 48.10 of government or governmental agency under a property 48.11 disposition program and operated by one or more organizations 48.12 exempt from federal income tax under section 501(c)(3) of the 48.13 Internal Revenue Code of 1986, as amended through December 31, 48.14 1992. This exemption applies notwithstanding the fact that the 48.15 sponsoring organization receives financing by a direct federal 48.16 loan or federally insured loan or a loan made by the Minnesota 48.17 housing finance agency under the provisions of either Title II 48.18 of the National Housing Act or the Minnesota housing finance 48.19 agency law of 1971 or rules promulgated by the agency pursuant 48.20 to it, and notwithstanding the fact that the sponsoring 48.21 organization receives funding under Section 8 of the United 48.22 States Housing Act of 1937, as amended. 48.23 (20) Real and personal property, including leasehold or 48.24 other personal property interests, owned and operated by a 48.25 corporation if more than 50 percent of the total voting power of 48.26 the stock of the corporation is owned collectively by: (i) the 48.27 board of regents of the University of Minnesota, (ii) the 48.28 University of Minnesota Foundation, an organization exempt from 48.29 federal income taxation under section 501(c)(3) of the Internal 48.30 Revenue Code of 1986, as amended through December 31, 1992, and 48.31 (iii) a corporation organized under chapter 317A, which by its 48.32 articles of incorporation is prohibited from providing pecuniary 48.33 gain to any person or entity other than the regents of the 48.34 University of Minnesota; which property is used primarily to 48.35 manage or provide goods, services, or facilities utilizing or 48.36 relating to large-scale advanced scientific computing resources 49.1 to the regents of the University of Minnesota and others. 49.2 (21)(a) Small scale wind energy conversion systems, as49.3defined in section 216C.06, subdivision 12,installed after 49.4 January 1, 1991, andbefore January 2, 1995, andused as an 49.5 electric power source,are exempt. 49.6(b)"Small scale wind energy conversion systems" are wind 49.7 energy conversion systems, as defined in section 216C.06, 49.8 subdivision 12,installed after January 1, 1995,including the 49.9 foundation or support pad, which are (i) used as an electric 49.10 power source; (ii) located within one county and owned by the 49.11 same owner; and (iii) produce two megawatts or less of 49.12 electricity as measured by nameplate ratings, are exempt. 49.13(c)(b) Medium scale wind energy conversion systems, as49.14defined in section 216C.06, subdivision 12,installed after 49.15 January 1,19951991,and used as an electric power source but49.16not exempt under item (b),are treated as follows: (i) the 49.17 foundation and support pad are taxable; (ii) the associated 49.18 supporting and protective structures are exempt for the first 49.19 five assessment years after they have been constructed, and 49.20 thereafter, 30 percent of the market value of the associated 49.21 supporting and protective structures are taxable; and (iii) the 49.22 turbines, blades, transformers, and its related equipment, are 49.23 exempt. "Medium scale wind energy conversion systems" are wind 49.24 energy conversion systems as defined in section 216C.06, 49.25 subdivision 12, including the foundation or support pad, which 49.26 are: (i) used as an electric power source; (ii) located within 49.27 one county and owned by the same owner; and (iii) produce more 49.28 than two but equal to or less than 12 megawatts of energy as 49.29 measured by nameplate ratings. 49.30 (c) Large scale wind energy conversion systems installed 49.31 after January 1, 1991, are treated as follows: 25 percent of 49.32 the market value of all property is taxable, including (i) the 49.33 foundation and support pad; (ii) the associated supporting and 49.34 protective structures; and (iii) the turbines, blades, 49.35 transformers, and its related equipment. "Large scale wind 49.36 energy conversion systems" are wind energy conversion systems as 50.1 defined in section 216C.06, subdivision 12, including the 50.2 foundation or support pad, which are: (i) used as an electric 50.3 power source; and (ii) produce more than 12 megawatts of energy 50.4 as measured by nameplate ratings. 50.5 (22) Containment tanks, cache basins, and that portion of 50.6 the structure needed for the containment facility used to 50.7 confine agricultural chemicals as defined in section 18D.01, 50.8 subdivision 3, as required by the commissioner of agriculture 50.9 under chapter 18B or 18C. 50.10 (23) Photovoltaic devices, as defined in section 216C.06, 50.11 subdivision 13, installed after January 1, 1992, and used to 50.12 produce or store electric power. 50.13 (24) Real and personal property owned and operated by a 50.14 private, nonprofit corporation exempt from federal income 50.15 taxation pursuant to United States Code, title 26, section 50.16 501(c)(3), primarily used for an ice arena or ice rink, and used 50.17 primarily for youth and high school programs. 50.18 (25) A structure that is situated on real property that is 50.19 used for: 50.20 (i) housing for the elderly or for low- and moderate-income 50.21 families as defined in Title II of the National Housing Act, as 50.22 amended through December 31, 1990, and funded by a direct 50.23 federal loan or federally insured loan made pursuant to Title II 50.24 of the act; or 50.25 (ii) housing lower income families or elderly or 50.26 handicapped persons, as defined in Section 8 of the United 50.27 States Housing Act of 1937, as amended. 50.28 In order for a structure to be exempt under (i) or (ii), it 50.29 must also meet each of the following criteria: 50.30 (A) is owned by an entity which is operated as a nonprofit 50.31 corporation organized under chapter 317A; 50.32 (B) is owned by an entity which has not entered into a 50.33 housing assistance payments contract under Section 8 of the 50.34 United States Housing Act of 1937, or, if the entity which owns 50.35 the structure has entered into a housing assistance payments 50.36 contract under Section 8 of the United States Housing Act of 51.1 1937, the contract provides assistance for less than 90 percent 51.2 of the dwelling units in the structure, excluding dwelling units 51.3 intended for management or maintenance personnel; 51.4 (C) operates an on-site congregate dining program in which 51.5 participation by residents is mandatory, and provides assisted 51.6 living or similar social and physical support services for 51.7 residents; and 51.8 (D) was not assessed and did not pay tax under chapter 273 51.9 prior to the 1991 levy, while meeting the other conditions of 51.10 this clause. 51.11 An exemption under this clause remains in effect for taxes 51.12 levied in each year or partial year of the term of its permanent 51.13 financing. 51.14 (26) Real and personal property that is located in the 51.15 Superior National Forest, and owned or leased and operated by a 51.16 nonprofit organization that is exempt from federal income 51.17 taxation under section 501(c)(3) of the Internal Revenue Code of 51.18 1986, as amended through December 31, 1992, and primarily used 51.19 to provide recreational opportunities for disabled veterans and 51.20 their families. 51.21 (27) Manure pits and appurtenances, which may include 51.22 slatted floors and pipes, installed or operated in accordance 51.23 with a permit, order, or certificate of compliance issued by the 51.24 Minnesota pollution control agency. The exemption shall 51.25 continue for as long as the permit, order, or certificate issued 51.26 by the Minnesota pollution control agency remains in effect. 51.27 (28) Notwithstanding clause (8), item (a), attached 51.28 machinery and other personal property which is part of a 51.29 facility containing a cogeneration system as described in 51.30 section 216B.166, subdivision 2, paragraph (a), if the 51.31 cogeneration system has met the following criteria: (i) the 51.32 system utilizes natural gas as a primary fuel and the 51.33 cogenerated steam initially replaces steam generated from 51.34 existing thermal boilers utilizing coal; (ii) the facility 51.35 developer is selected as a result of a procurement process 51.36 ordered by the public utilities commission; and (iii) 52.1 construction of the facility is commenced after July 1, 1994, 52.2 and before July 1, 1997. 52.3 (29) Real property acquired by a home rule charter city, 52.4 statutory city, county, town, or school district under a lease 52.5 purchase agreement or an installment purchase contract during 52.6 the term of the lease purchase agreement as long as and to the 52.7 extent that the property is used by the city, county, town, or 52.8 school district and devoted to a public use and to the extent it 52.9 is not subleased to any private individual, entity, association, 52.10 or corporation in connection with a business or enterprise 52.11 operated for profit. 52.12 Sec. 8. Minnesota Statutes 1996, section 272.02, is 52.13 amended by adding a subdivision to read: 52.14 Subd. 9. [PERSONAL PROPERTY; BIOMASS FACILITY.] (a) 52.15 Notwithstanding clause (8), item (a), of subdivision 1, attached 52.16 machinery and other personal property, excluding transmission 52.17 and distribution lines, that is part of a system that generates 52.18 biomass electric energy that satisfies the mandate, in whole or 52.19 in part, established in section 216B.2424, or a system that 52.20 generates electric energy using waste wood, is exempt if it 52.21 meets the requirements of this subdivision. 52.22 (b) The governing bodies of the county, city or town, and 52.23 school district must each approve, by resolution, the exemption 52.24 of the personal property under this subdivision. Each of the 52.25 governing bodies shall file a copy of the resolution with the 52.26 county auditor. The county auditor shall publish the 52.27 resolutions in newspapers of general circulation within the 52.28 county. The voters of the county may request a referendum on 52.29 the proposed exemption by filing a petition within 30 days after 52.30 the resolutions are published. The petition must be signed by 52.31 voters who reside in the county. The number of signatures must 52.32 equal at least ten percent of the number of persons voting in 52.33 the county in the last general election. If such a petition is 52.34 timely filed, the resolutions are not effective until they have 52.35 been submitted to the voters residing in the county at a general 52.36 or special election and a majority of votes cast on the question 53.1 of approving the resolution are in the affirmative. The 53.2 commissioner of revenue shall prepare a suggested form of 53.3 question to be presented at the referendum. 53.4 (c) The exemption under this subdivision is limited to a 53.5 maximum of five years, beginning with the assessment year 53.6 immediately following the year during which the personal 53.7 property is put in operation. 53.8 Sec. 9. Minnesota Statutes 1996, section 272.115, is 53.9 amended to read: 53.10 272.115 [CERTIFICATE OF VALUE; FILING.] 53.11 Subdivision 1. [REQUIREMENT.] Except as otherwise provided 53.12 in subdivision 5, whenever any real estate is sold for a 53.13 consideration in excess of $1,000, whether by warranty deed, 53.14 quitclaim deed, contract for deed or any other method of sale, 53.15 the grantor, grantee or the legal agent of either shall file a 53.16 certificate of value with the county auditor in the county in 53.17 which the property is located when the deed or other document is 53.18 presented for recording. Contract for deeds are subject to 53.19 recording under section 507.235, subdivision 1. Value shall, in 53.20 the case of any deed not a gift, be the amount of the full 53.21 actual consideration thereof, paid or to be paid, including the 53.22 amount of any lien or liens assumed. The items and value of 53.23 personal property transferred with the real property must be 53.24 listed and deducted from the sale price. The certificate of 53.25 value shall include the classification to which the property 53.26 belongs for the purpose of determining the fair market value of 53.27 the property. The certificate shall include financing terms and 53.28 conditions of the sale which are necessary to determine the 53.29 actual, present value of the sale price for purposes of the 53.30 sales ratio study. The commissioner of revenue shall promulgate 53.31 administrative rules specifying the financing terms and 53.32 conditions which must be included on the certificate. Pursuant 53.33 to the authority of the commissioner of revenue in section 53.34 270.066, the certificate of value must include the social 53.35 security number or the federal employer identification number of 53.36 the grantors and grantees. The identification numbers of the 54.1 grantors and grantees are private data on individuals or 54.2 nonpublic data as defined in section 13.02, subdivisions 9 and 54.3 12, but, notwithstanding that section, the private or nonpublic 54.4 data may be disclosed to the commissioner of revenue for 54.5 purposes of tax administration. 54.6 Subd. 2. [FORM; INFORMATION REQUIRED.] The certificate of 54.7 value shall require such facts and information as may be 54.8 determined by the commissioner to be reasonably necessary in the 54.9 administration of the state education aid formulas. The form of 54.10 the certificate of value shall be prescribed by the department 54.11 of revenue which shall provide an adequate supply of forms to 54.12 each county auditor. 54.13 Subd. 3. [COPIES TRANSMITTED; HOMESTEAD STATUS.] The 54.14 county auditor shall transmit two true copies of the certificate 54.15 of value to the assessor who shall insert the most recent market 54.16 value and when available, the year of original construction of 54.17 each parcel of property on both copies and shall transmit one 54.18 copy to the department of revenue. Upon the request of a city 54.19 council located within the county, a copy of each certificate of 54.20 value for property located in that city shall be made available 54.21 to the governing body of the city. The assessor shall remove 54.22 the homestead classification for the following assessment year 54.23 from a property which is sold or transferred, unless the grantee 54.24 or the person to whom the property is transferred completes a 54.25 homestead application under section 273.124, subdivision 13, and 54.26 qualifies for homestead status. 54.27 Subd. 4. [ELIGIBILITY FOR HOMESTEAD STATUS.] No real 54.28 estate sold or transferred on or after January 1, 1993, under 54.29 subdivision 1 shall be classified as a homestead, unless (1) a 54.30 certificate of value has been filed with the county auditor in 54.31 accordance with this section, or (2) the real estate was 54.32 conveyed by the federal government, the state, a political 54.33 subdivision of the state, or combination of them to a person 54.34 otherwise eligible to receive homestead classification of the 54.35 property. 54.36 This subdivision shall apply to any real estate taxes that 55.1 are payable the year or years following the sale or transfer of 55.2 the property. 55.3 Subd. 5. [EXEMPTION FOR GOVERNMENT BODIES.] A certificate 55.4 of real estate value is not required when the real estate is 55.5 being conveyed to or by a public authority or agency of the 55.6 federal government, the state of Minnesota, a political 55.7 subdivision of the state, or any combination of them, provided 55.8 that the authority, agency, or governmental unit has agreed to 55.9 file a list of the real estate conveyed by or to the authority, 55.10 agency, or governmental unit with the commissioner of revenue by 55.11 June 1 of the year following the year of the conveyance. 55.12 Sec. 10. Minnesota Statutes 1996, section 273.11, 55.13 subdivision 1a, is amended to read: 55.14 Subd. 1a. [LIMITED MARKET VALUE.] In the case of all 55.15 property classified as agricultural homestead or nonhomestead, 55.16 residential homestead or nonhomestead, or noncommercial seasonal 55.17 recreational residential, the assessor shall compare the value 55.18 with that determined in the preceding assessment. The amount of 55.19 the increase entered in the current assessment shall not exceed 55.20 the greater of (1) ten percent of the value in the preceding 55.21 assessment, or (2)one-thirdone-fourth of the difference 55.22 between the current assessment and the preceding assessment. 55.23 This limitation shall not apply to increases in value due to 55.24 improvements. For purposes of this subdivision, the term 55.25 "assessment" means the value prior to any exclusion under 55.26 subdivision 16. 55.27 The provisions of this subdivision shall be in effect only 55.28 for assessment years 1993 through19972001. 55.29 For purposes of the assessment/sales ratio study conducted 55.30 under section 124.2131, and the computation of state aids paid 55.31 under chapters 124, 124A, and 477A, market values and net tax 55.32 capacities determined under this subdivision and subdivision 16, 55.33 shall be used. 55.34 Sec. 11. Minnesota Statutes 1996, section 273.11, 55.35 subdivision 16, is amended to read: 55.36 Subd. 16. [VALUATION EXCLUSION FOR CERTAIN IMPROVEMENTS.] 56.1 Improvements to homestead property made before January 2, 2003, 56.2 shall be fully or partially excluded from the value of the 56.3 property for assessment purposes provided that (1) the house is 56.4 at least 35 years old at the time of the improvement and (2) 56.5 either 56.6 (a) the assessor's estimated market value of the house on 56.7 January 2 of the current year is equal to or less than $150,000, 56.8 or 56.9 (b) if the estimated market value of the house is over 56.10 $150,000 market value but is less than $300,000 on January 2 of 56.11 the current year, the property qualifies if 56.12 (i) it is located in a city or town in which 50 percent or 56.13 more of the owner-occupied housing units were constructed before 56.14 1960 based upon the 1990 federal census, and 56.15 (ii) the city or town's median family income based upon the 56.16 1990 federal census is less than the statewide median family 56.17 income based upon the 1990 federal census, or 56.18 (c) if the estimated market value of the house is $300,000 56.19 or more on January 2 of the current year, the property qualifies 56.20 if 56.21 (i) it is located in a city or town in which 45 percent or 56.22 more of the homes were constructed before 1940 based upon the 56.23 1990 federal census, and 56.24 (ii) it is located in a city or town in which 45 percent or 56.25 more of the housing units were rental based upon the 1990 56.26 federal census, and 56.27 (iii) the city or town's median value of owner-occupied 56.28 housing units based upon the 1990 federal census is less than 56.29 the statewide median value of owner-occupied housing units based 56.30 upon the 1990 federal census. 56.31 For purposes of determining this eligibility, "house" means 56.32 land and buildings. 56.33 The age of a residence is the number of yearsthat the56.34residence has existed at its present sitesince the original 56.35 year of its construction. In the case of a residence that is 56.36 relocated, the relocation must be from a location within the 57.1 state and the only improvements eligible for exclusion under 57.2 this subdivision are (1) those for which building permits were 57.3 issued to the homeowner after the residence was relocated to its 57.4 present site, and (2) those undertaken during or after the year 57.5 the residence is initially occupied by the homeowner, excluding 57.6 any market value increase relating to basic improvements that 57.7 are necessary to install the residence on its foundation and 57.8 connect it to utilities at its present site. In the case of an 57.9 owner-occupied duplex or triplex, the improvement is eligible 57.10 regardless of which portion of the property was improved. 57.11 If the property lies in a jurisdiction which is subject to 57.12 a building permit process, a building permit must have been 57.13 issued prior to commencement of the improvement. Any 57.14 improvement must add at least $1,000 to the value of the 57.15 property to be eligible for exclusion under this subdivision. 57.16 Only improvements to the structure which is the residence of the 57.17 qualifying homesteader or construction of or improvements to no 57.18 more than one two-car garage per residence qualify for the 57.19 provisions of this subdivision. If an improvement was begun 57.20 between January 2, 1992, and January 2, 1993, any value added 57.21 from that improvement for the January 1994 and subsequent 57.22 assessments shall qualify for exclusion under this subdivision 57.23 provided that a building permit was obtained for the improvement 57.24 between January 2, 1992, and January 2, 1993. Whenever a 57.25 building permit is issued for property currently classified as 57.26 homestead, the issuing jurisdiction shall notify the property 57.27 owner of the possibility of valuation exclusion under this 57.28 subdivision. The assessor shall require an application, 57.29 including documentation of the age of the house from the owner, 57.30 if unknown by the assessor. The application may be filed 57.31 subsequent to the date of the building permit provided that the 57.32 application must be filed within three years of the date the 57.33 building permit was issued for the improvement. If the property 57.34 lies in a jurisdiction which is not subject to a building permit 57.35 process, the application must be filed within three years of the 57.36 date the improvement was made. The assessor may require proof 58.1 from the taxpayer of the date the improvement was made. 58.2 Applications must be received prior to July 1 of any year in 58.3 order to be effective for taxes payable in the following year. 58.4 No exclusion may be granted for an improvement by a local 58.5 board of review or county board of equalization and no abatement 58.6 of the taxes for qualifying improvements may be granted by the 58.7 county board unless (1) a building permit was issued prior to 58.8 the commencement of the improvement if the jurisdiction requires 58.9 a building permit, and (2) an application was completed. 58.10 The assessor shall note the qualifying value of each 58.11 improvement on the property's record, and the sum of those 58.12 amounts shall be subtracted from the value of the property in 58.13 each year for ten years after the improvement has been made, at 58.14 which time an amount equal to 20 percent of the qualifying value 58.15 shall be added back in each of the five subsequent assessment 58.16 years. If an application is filed after the first assessment 58.17 date at which an improvement could have been subject to the 58.18 valuation exclusion under this subdivision, the ten-year period 58.19 during which the value is subject to exclusion is reduced by the 58.20 number of years that have elapsed since the property would have 58.21 qualified initially. The valuation exclusion shall terminate 58.22 whenever (1) the property is sold, or (2) the property is 58.23 reclassified to a class which does not qualify for treatment 58.24 under this subdivision. Improvements made by an occupant who is 58.25 the purchaser of the property under a conditional purchase 58.26 contract do not qualify under this subdivision unless the seller 58.27 of the property is a governmental entity. The qualifying value 58.28 of the property shall be computed based upon the increase from 58.29 that structure's market value as of January 2 preceding the 58.30 acquisition of the property by the governmental entity. 58.31 The total qualifying value for a homestead may not exceed 58.32 $50,000. The total qualifying value for a homestead with a 58.33 house that is less than 70 years old may not exceed $25,000. 58.34 The term "qualifying value" means the increase in estimated 58.35 market value resulting from the improvement if the improvement 58.36 occurs when the house is at least 70 years old, or one-half of 59.1 the increase in estimated market value resulting from the 59.2 improvement otherwise. The $25,000 and $50,000 maximum 59.3 qualifying value under this subdivision may result from up to 59.4 three separate improvements to the homestead. The application 59.5 shall state, in clear language, that if more than three 59.6 improvements are made to the qualifying property, a taxpayer may 59.7 choose which three improvements are eligible, provided that 59.8 after the taxpayer has made the choice and any valuation 59.9 attributable to those improvements has been excluded from 59.10 taxation, no further changes can be made by the taxpayer. 59.11 If 50 percent or more of the square footage of a structure 59.12 is voluntarily razed or removed, the valuation increase 59.13 attributable to any subsequent improvements to the remaining 59.14 structure does not qualify for the exclusion under this 59.15 subdivision. If a structure is unintentionally or accidentally 59.16 destroyed by a natural disaster, the property is eligible for an 59.17 exclusion under this subdivision provided that the structure was 59.18 not completely destroyed. The qualifying value on property 59.19 destroyed by a natural disaster shall be computed based upon the 59.20 increase from that structure's market value as determined on 59.21 January 2 of the year in which the disaster occurred. A 59.22 property receiving benefits under the homestead disaster 59.23 provisions under section 273.123 is not disqualified from 59.24 receiving an exclusion under this subdivision. If any 59.25 combination of improvements made to a structure after January 1, 59.26 1993, increases the size of the structure by 100 percent or 59.27 more, the valuation increase attributable to the portion of the 59.28 improvement that causes the structure's size to exceed 100 59.29 percent does not qualify for exclusion under this subdivision. 59.30 Sec. 12. Minnesota Statutes 1996, section 273.111, 59.31 subdivision 3, is amended to read: 59.32 Subd. 3. (a) Real estate consisting of ten acres or more 59.33 or a nursery or greenhouse, and qualifying for classification as 59.34 class 1b, 2a, or 2b under section 273.13, subdivision 23, 59.35 paragraph (d), shall be entitled to valuation and tax deferment 59.36 under this section only if it isactively and exclusively60.1 primarily devoted to agricultural useas defined, and meets the 60.2 qualifications in subdivision 6, and either: 60.3 (1) is the homestead of the owner, or of a surviving 60.4 spouse, child, or sibling of the owner or is real estate which 60.5 is farmed with the real estate which contains the homestead 60.6 property; or 60.7 (2) has been in possession of the applicant, the 60.8 applicant's spouse, parent, or sibling, or any combination 60.9 thereof, for a period of at least seven years prior to 60.10 application for benefits under the provisions of this section, 60.11 or is real estate which is farmed with the real estate which 60.12 qualifies under this clause and is within two townships or 60.13 cities or combination thereof from the qualifying real estate; 60.14 or 60.15 (3) is the homestead of a shareholder in a family farm 60.16 corporation as defined in section 500.24, notwithstanding the 60.17 fact that legal title to the real estate may be held in the name 60.18 of the family farm corporation; or 60.19 (4) is in the possession of a nursery or greenhouse or an 60.20 entity owned by a proprietor, partnership, or corporation which 60.21 also owns the nursery or greenhouse operations on the parcel or 60.22 parcels. 60.23 (b) Valuation of real estate under this section is limited 60.24 to parcels the ownership of which is in noncorporate entities 60.25 except for: 60.26 (1) family farm corporations organized pursuant to section 60.27 500.24; and 60.28 (2) corporations that derive 80 percent or more of their 60.29 gross receipts from the wholesale or retail sale of 60.30 horticultural or nursery stock. 60.31 Corporate entities who previously qualified for tax 60.32 deferment pursuant to this section and who continue to otherwise 60.33 qualify under subdivisions 3 and 6 for a period of at least 60.34 three years following the effective date of Laws 1983, chapter 60.35 222, section 8, will not be required to make payment of the 60.36 previously deferred taxes, notwithstanding the provisions of 61.1 subdivision 9. Special assessments are payable at the end of 61.2 the three-year period or at time of sale, whichever comes first. 61.3 (c) Land that previously qualified for tax deferment 61.4pursuant tounder this section and no longer qualifies because 61.5 it is notclassified asprimarily used for agriculturalland61.6 purposes but would otherwise qualify under subdivisions 3 and 6 61.7 for a period of at least three years will not be required to 61.8 make payment of the previously deferred taxes, notwithstanding 61.9 the provisions of subdivision 9. Sale of the land prior to the 61.10 expiration of the three-year period requires payment of deferred 61.11 taxes as follows: sale in the year the land no longer qualifies 61.12 requires payment of the current year's deferred taxes plus 61.13 payment of deferred taxes for the two prior years; sale during 61.14 the second year the land no longer qualifies requires payment of 61.15 the current year's deferred taxes plus payment of the deferred 61.16 taxes for the prior year; and sale during the third year the 61.17 land no longer qualifies requires payment of the current year's 61.18 deferred taxes. Deferred taxes shall be paid even if the land 61.19 qualifies pursuant to subdivision 11a. When such property is 61.20 sold or no longer qualifies under this paragraph, or at the end 61.21 of the three-year period, whichever comes first, all deferred 61.22 special assessments plus interest are payable in equal 61.23 installments spread over the time remaining until the last 61.24 maturity date of the bonds issued to finance the improvement for 61.25 which the assessments were levied. If the bonds have matured, 61.26 the deferred special assessments plus interest are payable 61.27 within 90 days. The provisions of section 429.061, subdivision 61.28 2, apply to the collection of these installments. Penalties are 61.29 not imposed on any such special assessments if timely paid. 61.30 Sec. 13. Minnesota Statutes 1996, section 273.111, 61.31 subdivision 6, is amended to read: 61.32 Subd. 6. Real property qualifying under subdivision 3 61.33 shall be considered to be in agricultural use provided that 61.34 annually: 61.35 (1) at least 33-1/3 percent of the total family income of 61.36 the owner is derived therefrom, or the total production income 62.1 including rental from the property is $300 plus $10 per tillable 62.2 acre; and 62.3 (2) it is devoted to the production for sale of 62.4 agricultural products as defined in section 273.13, subdivision 62.5 23, paragraph (e). 62.6 Slough, wasteland, and woodland contiguous to or surrounded 62.7 by land that is entitled to valuation and tax deferment under 62.8 this section is considered to be in agricultural use if under 62.9 the same ownership and management. 62.10 Sec. 14. Minnesota Statutes 1996, section 273.112, 62.11 subdivision 2, is amended to read: 62.12 Subd. 2. The present general system of ad valorem property 62.13 taxation in the state of Minnesota does not provide an equitable 62.14 basis for the taxation of certain privateoutdoorrecreational, 62.15 social, open space and park land property and has resulted in 62.16 excessive taxes on some of these lands. Therefore, it is hereby 62.17 declared that the public policy of this state would be best 62.18 served by equalizing tax burdens upon privateoutdoor, 62.19 recreational, social, open space and park land within this state 62.20 through appropriate taxing measures to encourage private 62.21 development of these lands which would otherwise not occur or 62.22 have to be provided by governmental authority. 62.23 Sec. 15. Minnesota Statutes 1996, section 273.112, 62.24 subdivision 3, is amended to read: 62.25 Subd. 3. Real estate shall be entitled to valuation and 62.26 tax deferment under this section only if it is: 62.27 (a) actively and exclusively devoted to golf, skiing, lawn 62.28 bowling, croquet, or archery or firearms range recreational use 62.29 oruses andother recreational or social uses carried on at the 62.30 establishment; 62.31 (b) five acres in size or more, except in the case of a 62.32 lawn bowling or croquet green or an archery or firearms range or 62.33 an establishment actively and exclusively devoted to indoor 62.34 fitness, health, social, recreational, and related uses in which 62.35 the establishment is owned and operated by a not-for-profit 62.36 corporation; 63.1 (c)(1) operated by private individuals or, in the case of a 63.2 lawn bowling or croquet green, by private individuals or 63.3 corporations, and open to the public; or 63.4 (2) operated by firms or corporations for the benefit of 63.5 employees or guests; or 63.6 (3) operated by private clubs having a membership of 50 or 63.7 more or open to the public, provided that the club does not 63.8 discriminate in membership requirements or selection on the 63.9 basis of sex or marital status; and 63.10 (d) made available, in the case of real estate devoted to63.11golf,for use without discrimination on the basis of sex during 63.12 the time when the facility is open to use by the public or by 63.13 members, except that use for golf may be restricted on the basis 63.14 of sex no more frequently than one, or part of one, weekend each 63.15 calendar month for each sex and no more than two, or part of 63.16 two, weekdays each week for each sex. 63.17 If a golf club membership allows use of golf course 63.18 facilities by more than one adult per membership, the use must 63.19 be equally available to all adults entitled to use of the golf 63.20 course under the membership, except that use may be restricted 63.21 on the basis of sex as permitted in this section. Memberships 63.22 that permit play during restricted times may be allowed only if 63.23 the restricted times apply to all adults using the membership. 63.24 A golf club may not offer a membership or golfing privileges to 63.25 a spouse of a member that provides greater or less access to the 63.26 golf course than is provided to that person's spouse under the 63.27 same or a separate membership in that club, except that the 63.28 terms of a membership may provide that one spouse may have no 63.29 right to use the golf course at any time while the other spouse 63.30 may have either limited or unlimited access to the golf course. 63.31 A golf club may have or create an individual membership 63.32 category which entitles a member for a reduced rate to play 63.33 during restricted hours as established by the club. The club 63.34 must have on record a written request by the member for such 63.35 membership. 63.36 A golf club that has food or beverage facilities or 64.1 services must allow equal access to those facilities and 64.2 services for both men and women members in all membership 64.3 categories at all times. Nothing in this paragraph shall be 64.4 construed to require service or access to facilities to persons 64.5 under the age of 21 years or require any act that would violate 64.6 law or ordinance regarding sale, consumption, or regulation of 64.7 alcoholic beverages. 64.8 For purposes of this subdivision and subdivision 7a, 64.9 discrimination means a pattern or course of conduct and not 64.10 linked to an isolated incident. 64.11 Sec. 16. Minnesota Statutes 1996, section 273.112, 64.12 subdivision 4, is amended to read: 64.13 Subd. 4. The value of any real estate described in 64.14 subdivision 3 shall upon timely application by the owner, in the 64.15 manner provided in subdivision 6, be determined solely with 64.16 reference to its appropriate privateoutdoor, 64.17 recreational, social, open space and park land classification 64.18 and value notwithstanding sections 272.03, subdivision 8, and 64.19 273.11. In determining such value for ad valorem tax purposes 64.20 the assessor shall not consider the value such real estate would 64.21 have if it were converted to commercial, industrial, residential 64.22 or seasonal residential use. 64.23 Sec. 17. Minnesota Statutes 1996, section 273.121, is 64.24 amended to read: 64.25 273.121 [VALUATION OF REAL PROPERTY, NOTICE.] 64.26 Any county assessor or city assessor having the powers of a 64.27 county assessor, valuing or classifying taxable real property 64.28 shall in each year notify those persons whose property is to be 64.29 assessed or reclassified that year if the person's address is 64.30 known to the assessor, otherwise the occupant of the property. 64.31 The notice shall be in writing and shall be sent by ordinary 64.32 mail at least ten days before the meeting of the local board of 64.33 review or equalization under section 274.01 or the review 64.34 process established under section 274.13, subdivision 1c. It 64.35 shall contain: (1) the market value, (2) the limited market 64.36 value under section 273.11, subdivision 1a, (3) the qualifying 65.1 amount of any improvements under section 273.11, subdivision 16, 65.2 (4) the market value subject to taxation after subtracting the 65.3 amount of any qualifying improvements, (5) the new 65.4 classification, (6) a note that if the property is homestead and 65.5 at least 35 years old, improvements made to the property may be 65.6 eligible for a valuation exclusion under section 273.11, 65.7 subdivision 16, (7) the assessor's office address, and (8) the 65.8 dates, places, and times set for the meetings of the local board 65.9 of review or equalization, the review process established under 65.10 section 274.13, subdivision 1c, and the county board of 65.11 equalization. If the assessment roll is not complete, the 65.12 notice shall be sent by ordinary mail at least ten days prior to 65.13 the date on which the board of review has adjourned. The 65.14 assessor shall attach to the assessment roll a statement that 65.15 the notices required by this section have been mailed. Any 65.16 assessor who is not provided sufficient funds from the 65.17 assessor's governing body to provide such notices, may make 65.18 application to the commissioner of revenue to finance such 65.19 notices. The commissioner of revenue shall conduct an 65.20 investigation and, if satisfied that the assessor does not have 65.21 the necessary funds, issue a certification to the commissioner 65.22 of finance of the amount necessary to provide such notices. The 65.23 commissioner of finance shall issue a warrant for such amount 65.24 and shall deduct such amount from any state payment to such 65.25 county or municipality. The necessary funds to make such 65.26 payments are hereby appropriated. Failure to receive the notice 65.27 shall in no way affect the validity of the assessment, the 65.28 resulting tax, the procedures of any board of review or 65.29 equalization, or the enforcement of delinquent taxes by 65.30 statutory means. 65.31 Sec. 18. Minnesota Statutes 1996, section 273.124, 65.32 subdivision 1, is amended to read: 65.33 Subdivision 1. [GENERAL RULE.] (a) Residential real estate 65.34 that is occupied and used for the purposes of a homestead by its 65.35 owner, who must be a Minnesota resident, is a residential 65.36 homestead. 66.1 Agricultural land, as defined in section 273.13, 66.2 subdivision 23, that is occupied and used as a homestead by its 66.3 owner, who must be a Minnesota resident, is an agricultural 66.4 homestead. 66.5 Dates for establishment of a homestead and homestead 66.6 treatment provided to particular types of property are as 66.7 provided in this section. 66.8 Property of a trustee, beneficiary, or grantor of a trust 66.9 is not disqualified from receiving homestead benefits if the 66.10 homestead requirements under this chapter are satisfied. 66.11 The assessor shall require proof, as provided in 66.12 subdivision 13, of the facts upon which classification as a 66.13 homestead may be determined. Notwithstanding any other law, the 66.14 assessor may at any time require a homestead application to be 66.15 filed in order to verify that any property classified as a 66.16 homestead continues to be eligible for homestead status. 66.17 Notwithstanding any other law to the contrary, the department of 66.18 revenue may, upon request from an assessor, verify whether an 66.19 individual who is requesting or receiving homestead 66.20 classification has filed a Minnesota income tax return as a 66.21 resident for the most recent taxable year for which the 66.22 information is available. 66.23 When there is a name change or a transfer of homestead 66.24 property, the assessor may reclassify the property in the next 66.25 assessment unless a homestead application is filed to verify 66.26 that the property continues to qualify for homestead 66.27 classification. 66.28 (b) For purposes of this section, homestead property shall 66.29 include property which is used for purposes of the homestead but 66.30 is separated from the homestead by a road, street, lot, 66.31 waterway, or other similar intervening property. The term "used 66.32 for purposes of the homestead" shall include but not be limited 66.33 to uses for gardens, garages, or other outbuildings commonly 66.34 associated with a homestead, but shall not include vacant land 66.35 held primarily for future development. In order to receive 66.36 homestead treatment for the noncontiguous property, the owner 67.1 shall apply for it to the assessor by July 1 of the year when 67.2 the treatment is initially sought. After initial qualification 67.3 for the homestead treatment, additional applications for 67.4 subsequent years are not required. 67.5 (c) Residential real estate that is occupied and used for 67.6 purposes of a homestead by a relative of the owner is a 67.7 homestead but only to the extent of the homestead treatment that 67.8 would be provided if the related owner occupied the property. 67.9 For purposes of this paragraph and paragraph(f)(g), "relative" 67.10 means a parent, stepparent, child, stepchild, grandparent, 67.11 grandchild, brother, sister, uncle, or aunt. This relationship 67.12 may be by blood or marriage. Property that has been classified 67.13 as seasonal recreational residential property at any time during 67.14 which it has been owned by the current owner or spouse of the 67.15 current owner will not be reclassified as a homestead unless it 67.16 is occupied as a homestead by the owner; this prohibition also 67.17 applies to property that, in the absence of this paragraph, 67.18 would have been classified as seasonal recreational residential 67.19 property at the time when the residence was constructed. 67.20 Neither the related occupant nor the owner of the property may 67.21 claim a property tax refund under chapter 290A for a homestead 67.22 occupied by a relative. In the case of a residence located on 67.23 agricultural land, only the house, garage, and immediately 67.24 surrounding one acre of land shall be classified as a homestead 67.25 under this paragraph, except as provided in paragraph (d). 67.26 (d) Agricultural property that is occupied and used for 67.27 purposes of a homestead by a relative of the owner, is a 67.28 homestead, only to the extent of the homestead treatment that 67.29 would be provided if the related owner occupied the property, 67.30 and only if all of the following criteria are met: 67.31 (1) the relative who is occupying the agricultural property 67.32 is a son, daughter, father, or mother of the owner of the 67.33 agricultural property or a son or daughter of the spouse of the 67.34 owner of the agricultural property, 67.35 (2) the owner of the agricultural property must be a 67.36 Minnesota resident, 68.1 (3) the owner of the agricultural property must not receive 68.2 homestead treatment on any other agricultural property in 68.3 Minnesota, and 68.4 (4) the owner of the agricultural property is limited to 68.5 only one agricultural homestead per family under this paragraph. 68.6 Neither the related occupant nor the owner of the property 68.7 may claim a property tax refund under chapter 290A for a 68.8 homestead occupied by a relative qualifying under this 68.9 paragraph. For purposes of this paragraph, "agricultural 68.10 property" means the house, garage, other farm buildings and 68.11 structures, and agricultural land. 68.12 Application must be made to the assessor by the owner of 68.13 the agricultural property to receive homestead benefits under 68.14 this paragraph. The assessor may require the necessary proof 68.15 that the requirements under this paragraph have been met. 68.16 (e) In the case of property owned by a property owner who 68.17 is married, the assessor must not deny homestead treatment in 68.18 whole or in part if only one of the spouses occupies the 68.19 property and the other spouse is absent due to: (1) marriage 68.20 dissolution proceedings, (2) legal separation, (3) employment or 68.21 self-employment in another location, or (4)residence in a68.22nursing home or boarding care facility, or (5)other personal 68.23 circumstances causing the spouses to live separately, not 68.24 including an intent to obtain two homestead classifications for 68.25 property tax purposes. To qualify under clause (3), the 68.26 spouse's place of employment or self-employment must be at least 68.27 50 miles distant from the other spouse's place of employment, 68.28 and the homesteads must be at least 50 miles distant from each 68.29 other. Homestead treatment, in whole or in part, shall not be 68.30 denied to the owner's spouse who previously occupied the 68.31 residence with the owner if the absence of the owner is due to 68.32 one of the exceptions provided in this paragraph. 68.33 (f) The assessor must not deny homestead treatment in whole 68.34 or in part if: 68.35 (1) in the case of a property owner who is not married, the 68.36 owner is absent due to residence in a nursing home or boarding 69.1 care facility and the property is not otherwise occupied; or 69.2 (2) in the case of a property owner who is married, the 69.3 owner or the owner's spouse or both are absent due to residence 69.4 in a nursing home or boarding care facility and the property is 69.5 not occupied or is occupied only by the owner's spouse. 69.6 (g) If an individual is purchasing property with the intent 69.7 of claiming it as a homestead and is required by the terms of 69.8 the financing agreement to have a relative shown on the deed as 69.9 a coowner, the assessor shall allow a full homestead 69.10 classification. This provision only applies to first-time 69.11 purchasers, whether married or single, or to a person who had 69.12 previously been married and is purchasing as a single individual 69.13 for the first time. The application for homestead benefits must 69.14 be on a form prescribed by the commissioner and must contain the 69.15 data necessary for the assessor to determine if full homestead 69.16 benefits are warranted. 69.17 Sec. 19. Minnesota Statutes 1996, section 273.124, is 69.18 amended by adding a subdivision to read: 69.19 Subd. 19. [LEASE-PURCHASE PROGRAM.] Qualifying buildings 69.20 and appurtenances, together with the land on which they are 69.21 located, are classified as homesteads, if the following 69.22 qualifications are met: 69.23 (1) the property is leased for up to a five-year period by 69.24 the occupant under a lease-purchase program administered by the 69.25 Minnesota housing finance agency or a housing and redevelopment 69.26 authority under sections 469.001 to 469.047; 69.27 (2) the occupant's income is no greater than 80 percent of 69.28 the county or area median income, adjusted for family size; 69.29 (3) the building consists of one or two dwelling units; 69.30 (4) the lease agreement provides that part of the lease 69.31 payment is escrowed as a nonrefundable down payment on the 69.32 housing; 69.33 (5) the administering agency verifies the occupant's income 69.34 eligibility and certifies to the county assessor that the 69.35 occupant meets the income standards; and 69.36 (6) the property owner applies to the county assessor by 70.1 May 30 of each year. 70.2 For purposes of this subdivision, "qualifying buildings and 70.3 appurtenances" means a one- or two-unit residential building 70.4 which was unoccupied, abandoned, and boarded for at least six 70.5 months. 70.6 Sec. 20. Minnesota Statutes 1996, section 273.13, 70.7 subdivision 23, is amended to read: 70.8 Subd. 23. [CLASS 2.] (a) Class 2a property is agricultural 70.9 land including any improvements that is homesteaded. The market 70.10 value of the house and garage and immediately surrounding one 70.11 acre of land has the same class rates as class 1a property under 70.12 subdivision 22. The value of the remaining land including 70.13 improvements up to $115,000 has a net class rate of.450.4 70.14 percent of market valueand a gross class rate of 1.75 percent70.15of market value. The remaining value of class 2a property over 70.16 $115,000 of market value that does not exceed 320 acres has a 70.17 net class rate ofone0.9 percent of market value, and a gross70.18class rate of 2.25 percent of market value. The remaining 70.19 property over the $115,000 market value in excess of 320 acres 70.20 has a class rate of1.51.4 percent of market value, and a gross70.21class rate of 2.25 percent of market value. 70.22 (b) Class 2b property is (1) real estate, rural in 70.23 character and used exclusively for growing trees for timber, 70.24 lumber, and wood and wood products; (2) real estate that is not 70.25 improved with a structure and is used exclusively for growing 70.26 trees for timber, lumber, and wood and wood products, if the 70.27 owner has participated or is participating in a cost-sharing 70.28 program for afforestation, reforestation, or timber stand 70.29 improvement on that particular property, administered or 70.30 coordinated by the commissioner of natural resources; (3) real 70.31 estate that is nonhomestead agricultural land; or (4) a landing 70.32 area or public access area of a privately owned public use 70.33 airport. Class 2b property has a net class rate of1.51.4 70.34 percent of market value, and a gross class rate of 2.25 percent70.35of market value. 70.36 (c) Agricultural land as used in this section means 71.1 contiguous acreage of ten acres or more,primarilyused during 71.2 the preceding year for agricultural purposes.Agricultural use71.3may include"Agricultural purposes" as used in this section 71.4 means the raising or cultivation of agricultural products or 71.5 enrollment in the Reinvest in Minnesota program under sections 71.6 103F.501 to 103F.535 or the federal Conservation Reserve Program 71.7 as contained in Public Law Number 99-198. Contiguous acreage on 71.8 the same parcel, or contiguous acreage on an immediately 71.9 adjacent parcel under the same ownership, may also qualify as 71.10 agricultural land, but only if it is pasture, timber, waste, 71.11 unusable wild land,andor land included in state or federal 71.12 farmor conservationprograms."Agricultural purposes" as used71.13in this section means the raising or cultivation of agricultural71.14products. Land enrolled in the Reinvest in Minnesota program71.15under sections 103F.505 to 103F.531 or the federal Conservation71.16Reserve Program as contained in Public Law Number 99-198, and71.17consisting of a minimum of ten contiguous acres, shall be71.18classified as agricultural.Agricultural classification for 71.19 property shall be determinedwith respect to the use of the71.20whole parcel,excluding the house, garage, and immediately 71.21 surrounding one acre of land, and shall not be based upon the 71.22 market value of any residential structures on the parcel or 71.23 contiguous parcels under the same ownership. 71.24 (d) Real estate, excluding the house, garage, and 71.25 immediately surrounding one acre of land, of less than ten acres 71.26 which is exclusively and intensively usedprincipallyfor 71.27 raising or cultivating agricultural products, shall be 71.28 considered as agricultural land, if it is not used primarily for71.29residential purposes. 71.30 Land shall be classified as agricultural even if all or a 71.31 portion of the agricultural use of that property is the leasing 71.32 to, or use by another person for agricultural purposes. 71.33 Classification under this subdivision is not determinative 71.34 for qualifying under section 273.111. 71.35 The property classification under this section supersedes, 71.36 for property tax purposes only, any locally administered 72.1 agricultural policies or land use restrictions that define 72.2 minimum or maximum farm acreage. 72.3 (e) The term "agricultural products" as used in this 72.4 subdivision includes production for sale of: 72.5 (1) livestock, dairy animals, dairy products, poultry and 72.6 poultry products, fur-bearing animals, horticultural and nursery 72.7 stock described in sections 18.44 to 18.61, fruit of all kinds, 72.8 vegetables, forage, grains, bees, and apiary products by the 72.9 owner; 72.10 (2) fish bred for sale and consumption if the fish breeding 72.11 occurs on land zoned for agricultural use; 72.12 (3) the commercial boarding of horses if the boarding is 72.13 done in conjunction with raising or cultivating agricultural 72.14 products as defined in clause (1); 72.15 (4) property which is owned and operated by nonprofit 72.16 organizations used for equestrian activities, excluding racing; 72.17 and 72.18 (5) game birds and waterfowl bred and raised for use on a 72.19 shooting preserve licensed under section 97A.115. 72.20 (f) If a parcel used for agricultural purposes is also used 72.21 for commercial or industrial purposes, including but not limited 72.22 to: 72.23 (1) wholesale and retail sales; 72.24 (2) processing of raw agricultural products or other goods; 72.25 (3) warehousing or storage of processed goods; and 72.26 (4) office facilities for the support of the activities 72.27 enumerated in clauses (1), (2), and (3), 72.28 the assessor shall classify the part of the parcel used for 72.29 agricultural purposes as class 1b, 2a, or 2b, whichever is 72.30 appropriate, and the remainder in the class appropriate to its 72.31 use. The grading, sorting, and packaging of raw agricultural 72.32 products for first sale is considered an agricultural purpose. 72.33 A greenhouse or other building where horticultural or nursery 72.34 products are grown that is also used for the conduct of retail 72.35 sales must be classified as agricultural if it is primarily used 72.36 for the growing of horticultural or nursery products from seed, 73.1 cuttings, or roots and occasionally as a showroom for the retail 73.2 sale of those products. Use of a greenhouse or building only 73.3 for the display of already grown horticultural or nursery 73.4 products does not qualify as an agricultural purpose. 73.5 The assessor shall determine and list separately on the 73.6 records the market value of the homestead dwelling and the one 73.7 acre of land on which that dwelling is located. If any farm 73.8 buildings or structures are located on this homesteaded acre of 73.9 land, their market value shall not be included in this separate 73.10 determination. 73.11 (g) To qualify for classification under paragraph (b), 73.12 clause (4), a privately owned public use airport must be 73.13 licensed as a public airport under section 360.018. For 73.14 purposes of paragraph (b), clause (4), "landing area" means that 73.15 part of a privately owned public use airport properly cleared, 73.16 regularly maintained, and made available to the public for use 73.17 by aircraft and includes runways, taxiways, aprons, and sites 73.18 upon which are situated landing or navigational aids. A landing 73.19 area also includes land underlying both the primary surface and 73.20 the approach surfaces that comply with all of the following: 73.21 (i) the land is properly cleared and regularly maintained 73.22 for the primary purposes of the landing, taking off, and taxiing 73.23 of aircraft; but that portion of the land that contains 73.24 facilities for servicing, repair, or maintenance of aircraft is 73.25 not included as a landing area; 73.26 (ii) the land is part of the airport property; and 73.27 (iii) the land is not used for commercial or residential 73.28 purposes. 73.29 The land contained in a landing area under paragraph (b), clause 73.30 (4), must be described and certified by the commissioner of 73.31 transportation. The certification is effective until it is 73.32 modified, or until the airport or landing area no longer meets 73.33 the requirements of paragraph (b), clause (4). For purposes of 73.34 paragraph (b), clause (4), "public access area" means property 73.35 used as an aircraft parking ramp, apron, or storage hangar, or 73.36 an arrival and departure building in connection with the airport. 74.1 Sec. 21. Minnesota Statutes 1996, section 273.13, is 74.2 amended by adding a subdivision to read: 74.3 Subd. 25a. [ELDERLY ASSISTED LIVING FACILITY 74.4 PROPERTY.] "Elderly assisted living facility property" means 74.5 residential real estate containing more than one unit held for 74.6 use by the tenants or lessees as a residence for periods of 30 74.7 days or more, along with community rooms, lounges, activity 74.8 rooms, and related facilities, designed to meet the housing, 74.9 health, and financial security needs of the elderly. The real 74.10 estate may be owned by an individual, partnership, limited 74.11 partnership, for-profit corporation or nonprofit corporation 74.12 exempt from federal income taxation under United States Code, 74.13 title 26, section 501(c)(3) or related sections. 74.14 An admission or initiation fee may be required of tenants. 74.15 Monthly charges may include charges for the residential unit, 74.16 meals, housekeeping, utilities, social programs, a health care 74.17 alert system, or any combination of them. On-site health care 74.18 may be provided by in-house staff or an outside health care 74.19 provider. 74.20 The assessor shall classify elderly assisted living 74.21 facility property, depending upon the property's ownership, 74.22 occupancy, and use. The applicable class rates shall apply 74.23 based on its classification, if taxable. 74.24 Sec. 22. Minnesota Statutes 1996, section 273.18, is 74.25 amended to read: 74.26 273.18 [LISTING, VALUATION, AND ASSESSMENT OF EXEMPT 74.27 PROPERTY BY COUNTY AUDITORS.] 74.28 (a) In every sixth year after the year 1926, the county 74.29 auditor shall enter, in a separate place in the real estate 74.30 assessment books, the description of each tract of real property 74.31 exempt by law from taxation, with the name of the owner, if 74.32 known, and the assessor shall value and assess the same in the 74.33 same manner that other real property is valued and assessed, and 74.34 shall designate in each case the purpose for which the property 74.35 is used. 74.36 (b) For purposes of the apportionment of fire state aid 75.1 under section 69.021, subdivision 7, the county auditor shall 75.2 include on the abstract of assessment of exempt real property 75.3 filed under this section, the total number of acres of all 75.4 natural resources lands for which in lieu payments are made 75.5 under sections 477A.11 to 477A.14. The assessor shall estimate 75.6 its market value, provided that if the assessor is not able to 75.7 estimate the market value of the land on a per parcel basis, the 75.8 assessor shall furnish the commissioner of revenue with an 75.9 estimate of the average value per acre of this land within the 75.10 county. 75.11 Sec. 23. Minnesota Statutes 1996, section 274.01, is 75.12 amended to read: 75.13 274.01 [BOARD OF REVIEW.] 75.14 Subdivision 1. [ORDINARY BOARD; MEETINGS, DEADLINES, 75.15 GRIEVANCES.] (a) The town board of a town, or the council or 75.16 other governing body of a city, is the board of review 75.17 except (1) in cities whose charters provide for a board of 75.18 equalization or (2) in any city or town that has transferred its 75.19 local board of review power and duties to the county board as 75.20 provided in subdivision 3. The county assessor shall fix a day 75.21 and time when the board or the board of equalization shall meet 75.22 in the assessment districts of the county. On or before 75.23 February 15 of each year the assessor shall give written notice 75.24 of the time to the city or town clerk. Notwithstanding the 75.25 provisions of any charter to the contrary, the meetings must be 75.26 held between April 1 and May 31 each year. The clerk shall give 75.27 published and posted notice of the meeting at least ten days 75.28 before the date of the meeting. 75.29 If in any county, at least 25 percent of the total net tax 75.30 capacity of a city or town is noncommercial seasonal residential 75.31 recreational property classified under section 273.13, 75.32 subdivision 25, the county must hold two countywide 75.33 informational meetings on Saturdays. The meetings will allow 75.34 noncommercial seasonal residential recreational taxpayers to 75.35 discuss their property valuation with the appropriate assessment 75.36 staff. These Saturday informational meetings must be scheduled 76.1 to allow the owner of the noncommercial seasonal residential 76.2 recreational property the opportunity to attend one of the 76.3 meetings prior to the scheduled board of review for their city 76.4 or town. The Saturday meeting dates must be contained on the 76.5 notice of valuation of real property under section 273.121. 76.6 The board shall meet at the office of the clerk to review 76.7 the assessment and classification of property in the town or 76.8 city. No changes in valuation or classification which are 76.9 intended to correct errors in judgment by the county assessor 76.10 may be made by the county assessor after the board of reviewor76.11the county board of equalization has adjournedin those cities 76.12 or towns that hold a local board of review; however, corrections 76.13 of errors that are merely clerical in nature or changes that 76.14 extend homestead treatment to property are permitted after 76.15 adjournment until the tax extension date for that assessment 76.16 year. The changes must be fully documented and maintained in 76.17 the assessor's office and must be available for review by any 76.18 person. A copy of the changes made during this period in those 76.19 cities or towns that hold a local board of review must be sent 76.20 to the county board no later than December 31 of the assessment 76.21 year. 76.22 (b) The board shall determine whether the taxable property 76.23 in the town or city has been properly placed on the list and 76.24 properly valued by the assessor. If real or personal property 76.25 has been omitted, the board shall place it on the list with its 76.26 market value, and correct the assessment so that each tract or 76.27 lot of real property, and each article, parcel, or class of 76.28 personal property, is entered on the assessment list at its 76.29 market value. No assessment of the property of any person may 76.30 be raised unless the person has been duly notified of the intent 76.31 of the board to do so. On application of any person feeling 76.32 aggrieved, the board shall review the assessment or 76.33 classification, or both, and correct it as appears just. 76.34 (c) A local board of review may reduce assessments upon 76.35 petition of the taxpayer but the total reductions must not 76.36 reduce the aggregate assessment made by the county assessor by 77.1 more than one percent. If the total reductions would lower the 77.2 aggregate assessments made by the county assessor by more than 77.3 one percent, none of the adjustments may be made. The assessor 77.4 shall correct any clerical errors or double assessments 77.5 discovered by the board of review without regard to the one 77.6 percent limitation. 77.7 (d) A majority of the members may act at the meeting, and 77.8 adjourn from day to day until they finish hearing the cases 77.9 presented. The assessor shall attend, with the assessment books 77.10 and papers, and take part in the proceedings, but must not 77.11 vote. The county assessor, or an assistant delegated by the 77.12 county assessor shall attend the meetings. The board shall list 77.13 separately, on a form appended to the assessment book, all 77.14 omitted property added to the list by the board and all items of 77.15 property increased or decreased, with the market value of each 77.16 item of property, added or changed by the board, placed opposite 77.17 the item. The county assessor shall enter all changes made by 77.18 the board in the assessment book. 77.19 (e) Except as provided in subdivision 3, if a person fails 77.20 to appear in person, by counsel, or by written communication 77.21 before the board after being duly notified of the board's intent 77.22 to raise the assessment of the property, or if a person feeling 77.23 aggrieved by an assessment or classification fails to apply for 77.24 a review of the assessment or classification, the person may not 77.25 appear before the county board of equalization for a review of 77.26 the assessment or classification. This paragraph does not apply 77.27 if an assessment was made after the board meeting, as provided 77.28 in section 273.01, or if the person can establish not having 77.29 received notice of market value at least five days before the 77.30 local board of review meeting. 77.31 (f) The board of review or the board of equalization must 77.32 complete its work and adjourn within 20 days from the time of 77.33 convening stated in the notice of the clerk, unless a longer 77.34 period is approved by the commissioner of revenue. No action 77.35 taken after that date is valid. All complaints about an 77.36 assessment or classification made after the meeting of the board 78.1 must be heard and determined by the county board of 78.2 equalization. A nonresident may, at any time, before the 78.3 meeting of the board of review file written objections to an 78.4 assessment or classification with the county assessor. The 78.5 objections must be presented to the board of review at its 78.6 meeting by the county assessor for its consideration. 78.7 Subd. 2. [SPECIAL BOARD; DUTIES DELEGATED.] The governing 78.8 body of a city, including a city whose charter provides for a 78.9 board of equalization, may appoint a special board of review. 78.10 The city may delegate to the special board of review all of the 78.11 powers and duties in subdivision 1. The special board of review 78.12 shall serve at the direction and discretion of the appointing 78.13 body, subject to the restrictions imposed by law. The 78.14 appointing body shall determine the number of members of the 78.15 board, the compensation and expenses to be paid, and the term of 78.16 office of each member. At least one member of the special board 78.17 of review must be an appraiser, realtor, or other person 78.18 familiar with property valuations in the assessment district. 78.19 Subd. 3. [LOCAL BOARD DUTIES TRANSFERRED TO COUNTY.] The 78.20 town board of any town or the governing body of any home rule 78.21 charter or statutory city may transfer its powers and duties 78.22 under subdivision 1 to the county board, and no longer perform 78.23 the function of a local board. Before the town board or the 78.24 governing body of a city transfers the powers and duties to the 78.25 county board, the town board or city's governing body shall give 78.26 public notice of the meeting at which the proposal for transfer 78.27 is to be considered. The public notice shall follow the 78.28 procedure contained in section 471.705, subdivision 1c, 78.29 paragraph (b). A transfer of duties as permitted under this 78.30 subdivision must be communicated to the county assessor, in 78.31 writing, before December 1 of any year to be effective for the 78.32 following year's assessment. This transfer of duties to the 78.33 county may either be permanent or for a specified number of 78.34 years, provided that the transfer cannot be for less than three 78.35 years. Its length must be stated in writing. A town or city 78.36 may renew its option to transfer. The option to transfer duties 79.1 under this subdivision is only available to a town or city whose 79.2 assessment is done by the county. 79.3 Sec. 24. Minnesota Statutes 1996, section 274.13, is 79.4 amended by adding a subdivision to read: 79.5 Subd. 1b. [ASSESSMENT CHANGES.] No changes in valuation or 79.6 classification that are intended to correct errors in judgment 79.7 by the county assessor may be made by the county assessor after 79.8 the county board of equalization has adjourned; however, 79.9 corrections of errors that are merely clerical in nature or 79.10 changes that extend homestead treatment to property are 79.11 permitted after adjournment until the tax extension date for 79.12 that assessment year. The changes must be fully documented and 79.13 maintained in the assessor's office and must be available for 79.14 review by any person. 79.15 Sec. 25. Minnesota Statutes 1996, section 274.13, is 79.16 amended by adding a subdivision to read: 79.17 Subd. 1c. [ALTERNATIVE REVIEW OPTION.] The county shall 79.18 notify taxpayers whose town or city elected to transfer its 79.19 powers and duties under section 274.01 to the county. Prior to 79.20 the time of the county board of equalization, the county shall 79.21 make available to those taxpayers a procedure for a review of 79.22 its assessments, including, but not limited to, open book 79.23 meetings. This alternative review process shall take place in 79.24 April and May. 79.25 Sec. 26. Minnesota Statutes 1996, section 281.13, is 79.26 amended to read: 79.27 281.13 [NOTICE OF EXPIRATION OF REDEMPTION.] 79.28 Every person holding a tax certificate after expiration of 79.29 three years, or the redemption period specified in section 79.30 281.17 if shorter, after the date of the tax sale under which 79.31 the same was issued, may present such certificate to the county 79.32 auditor; and thereupon the auditor shall prepare, under the 79.33 auditor's hand and official seal, a notice, directed to the 79.34 person or persons in whose name such lands are assessed, 79.35 specifying the description thereof, the amount for which the 79.36 same was sold, the amount required to redeem the same, exclusive 80.1 of the costs to accrue upon such notice, and the time when the 80.2 redemption period will expire. If, at the time when any tax 80.3 certificate is so presented, such lands are assessed in the name 80.4 of the holder of the certificate, such notice shall be directed 80.5 also to the person or persons in whose name title in fee of such 80.6 land appears of record in the office of the county recorder. 80.7 The auditor shall deliver such notice to the party applying 80.8 therefor, who shall deliver it to the sheriff of the proper 80.9 county or any other person not less than 18 years of age for 80.10 service. Within 20 days after receiving it, the sheriff or 80.11 other person serving the notice shall serve such notice upon the 80.12 persons to whom it is directed, if to be found in thesheriff's80.13 county, in the manner prescribed for serving a summons in a 80.14 civil action; if not so found, then upon the person in 80.15 possession of the land, and make return thereof to the auditor. 80.16 In the case of land held in joint tenancy the notice shall be 80.17 served upon each joint tenant. If one or more of the persons to 80.18 whom the notice is directed cannot be found in the county, and 80.19 there is no one in possession of the land, of each of which 80.20 facts the return of the sheriff or other person serving the 80.21 notice so specifying shall be prima facie evidence, service 80.22 shall be made upon those persons that can be found and service 80.23 shall also be made by two weeks' published notice, proof of 80.24 which publication shall be filed with the auditor. 80.25 When the records in the office of the county recorder show 80.26 that any lot or tract of land is encumbered by an unsatisfied 80.27 mortgage or other lien, and show the post office address of the 80.28 mortgagee or lienee, or if the same has been assigned, the post 80.29 office address of the assignee, the person holding such tax 80.30 certificate shall serve a copy of such notice upon such 80.31 mortgagee, lienee, or assignee by certified mail addressed to 80.32 such mortgagee, lienee, or assignee at the post office address 80.33 of the mortgagee, lienee, or assignee as disclosed by the 80.34 records in the office of the county recorder, at least 60 days 80.35 prior to the time when the redemption period will expire. 80.36 The notice herein provided for shall be sufficient if 81.1 substantially in the following form: 81.2 "NOTICE OF EXPIRATION OF REDEMPTION 81.3 Office of the County Auditor 81.4 County of ......................., State of Minnesota. 81.5 To .............................. 81.6 You are hereby notified that the following described piece 81.7 or parcel of land, situated in the county of 81.8 ......................., and State of Minnesota, and known and 81.9 described as follows: ......... 81.10 ............................................................ 81.11 .........., is now assessed in your name; that on the 81.12 ........................ day of May, ....................., at 81.13 the sale of land pursuant to the real estate tax judgment, duly 81.14 given and made in and by the district court in and for said 81.15 county of ......................................, on the 81.16 ................................. day of March, .............., 81.17 in proceedings to enforce the payment of taxes delinquent upon 81.18 real estate for the year .............. for said county of 81.19 ........... ......................., the above described piece 81.20 or parcel of land was sold for the sum of $............., and 81.21 the amount required to redeem such piece or parcel of land from 81.22 such sale, exclusive of the cost to accrue upon this notice, is 81.23 the sum of $............, and interest at the rate of 81.24 ............... percent per annum from said 81.25 ............................. day of ......................, 81.26 ..................., to the day such redemption is made, and 81.27 that the tax certificate has been presented to me by the holder 81.28 thereof, and the time for redemption of such piece or parcel of 81.29 land from such sale will expire 60 days after the service of 81.30 this notice and proof thereof has been filed in my office. 81.31 Witness my hand and official seal this 81.32 ............................ day of ................, 81.33 ................. 81.34 ................. 81.35 (OFFICIAL SEAL) 81.36 County Auditor of 82.1 ...................... County, Minnesota." 82.2 Sec. 27. Minnesota Statutes 1996, section 281.23, is 82.3 amended by adding a subdivision to read: 82.4 Subd. 5a. [DEFINITION.] In this section, "occupied parcel" 82.5 means a parcel containing a structure subject to property 82.6 taxation. 82.7 Sec. 28. Minnesota Statutes 1996, section 281.23, 82.8 subdivision 6, is amended to read: 82.9 Subd. 6. [SERVICEBY SHERIFFOF NOTICE.] (a) Forthwith 82.10 after the commencement of such publication or mailing the county 82.11 auditor shall deliver to the sheriff of the county or any other 82.12 person not less than 18 years of age a sufficient number of 82.13 copies of such notice of expiration of redemption for service 82.14 upon the persons in possession of all parcels of such land as 82.15 are actually occupied and documentation if the certified mail 82.16 notice was returned as undeliverable or the notice was not 82.17 mailed to the address associated with the property. Within 30 82.18 days after receipt thereof, the sheriff or other person serving 82.19 the notice shall make such investigation as may be necessary to 82.20 ascertain whether or not the parcels covered by such notice are 82.21 actually occupiedor notparcels, and shall serve a copy of such 82.22 notice of expiration of redemption upon the person in possession 82.23 of each parcel found to besoan occupied parcel, in the manner 82.24 prescribed for serving summons in a civil action. The 82.25 sheriff or other person serving the notice shall make prompt 82.26 return to the auditor as to all notices so served and as to all 82.27 parcels found vacant and unoccupied. Such return shall be made 82.28 upon a copy of such notice and shall be prima facie evidence of 82.29 the facts therein stated. 82.30Unless compensation for such services is otherwise provided82.31by law,If the notice is served by the sheriff, the sheriff 82.32 shall receive from the county, in addition to other compensation 82.33 prescribed by law, such fees and mileage for service on persons 82.34 in possession as are prescribed by law for such service in other 82.35 cases, and shall also receive such compensation for making 82.36 investigation and return as to vacant and unoccupied lands as 83.1 the county board may fix, subject to appeal to the district 83.2 court as in case of other claims against the county. As to 83.3 either service upon persons in possession or return as to vacant 83.4 lands, the sheriff shall charge mileage only for one trip if the 83.5 occupants of more than two tracts are served simultaneously, and 83.6 in such case mileage shall be prorated and charged equitably 83.7 against all such owners. 83.8 (b) The secretary of state shall receive sheriff's service 83.9 for all out-of-state interests. 83.10 Sec. 29. Minnesota Statutes 1996, section 281.273, is 83.11 amended to read: 83.12 281.273 [EXPIRATION OF TIME OF REDEMPTION ON LANDS OWNED BY 83.13 PERSONS IN MILITARY SERVICE.] 83.14 When a county sheriff or other person serves notice of 83.15 expiration of the time for redemption of any parcel of real 83.16 property from delinquent taxes upon any occupant of the real 83.17 property, the sheriff or other person shall inquire of the 83.18 occupant and otherwise as the sheriff or other person may deem 83.19 proper whether the real property was owned and occupied for 83.20 dwelling, professional, business or agricultural purposes by a 83.21 person in the military service of the United States as defined 83.22 in the Soldiers' and Sailors' Civil Relief Act of 1940, as 83.23 amended, or the person's dependents at the commencement of the 83.24 period of military service. On finding that the real property 83.25 is so owned, the sheriff or other person shall make a 83.26 certificate to the county auditor, setting forth the description 83.27 of the property, the name of the owner, the particulars of the 83.28 owner's military service so far as ascertained or claimed, and 83.29 the names and addresses of the persons of whom the sheriff or 83.30 other person made inquiry. The certificate shall be filed with 83.31 the county auditor and shall be prima facie evidence of the 83.32 facts stated. If the real property described in the certificate 83.33 becomes forfeited to the state, it shall be withheld from sale 83.34 or conveyance as tax-forfeited property in accordance with and 83.35 subject to the provisions of the Soldiers' and Sailors' Civil 83.36 Relief Act of 1940, as amended, except that the requirement in 84.1 United States Code, title 50, section 560, that the property be 84.2 occupied by the dependent or employee of the person in military 84.3 service does not apply. The period of withholding from sale or 84.4 conveyance shall be no longer than is required by that act. If 84.5 upon further investigation the sheriff or other person finds at 84.6 any time that the certificate is erroneous in any particular, 84.7 the sheriff or other person shall file a supplemental 84.8 certificate referring to the matter in error and stating the 84.9 facts as found. The supplemental certificate shall be prima 84.10 facie evidence of the facts stated, and shall supersede any 84.11 prior certificate so far as in conflict therewith. If it 84.12 appears from the supplemental certificate that the owner of the 84.13 real property affected is not entitled to have the same withheld 84.14 from sale under the Soldiers' and Sailors' Civil Relief Act of 84.15 1940, as amended, the property shall not be withheld from sale 84.16 further under this section. 84.17 Sec. 30. Minnesota Statutes 1996, section 281.276, is 84.18 amended to read: 84.19 281.276 [RETURNOF SHERIFFMUST SHOW MILITARY SERVICE.] 84.20 Unless asheriff'scertificate showing military service is 84.21 filed as required by section 281.273, it shall be presumed that 84.22 the owner of the property described in the notice of expiration 84.23 of the time for redemption from delinquent taxes is not in such 84.24 service. The filing of thesheriff'scertificate provided for 84.25 in section 281.273 shall not affect the forfeiture of the real 84.26 property described in such notice of the expiration of the time 84.27 for redemption from delinquent taxes or their proceedings 84.28 relating thereto except as expressly herein provided. 84.29 Sec. 31. Minnesota Statutes 1996, section 373.40, 84.30 subdivision 7, is amended to read: 84.31 Subd. 7. [REPEALER.] This section is repealed effective 84.32 for bonds issued after July 1,19982003, but continues to apply 84.33 to bonds issued before that date. 84.34 Sec. 32. Minnesota Statutes 1996, section 375.192, 84.35 subdivision 2, is amended to read: 84.36 Subd. 2. [PROCEDURE, CONDITIONS.] Upon written application 85.1 by the owner of any property, the county board may grant the 85.2 reduction or abatement of estimated market valuation or taxes 85.3 and of any costs, penalties, or interest on them as the board 85.4 deems just and equitable and order the refund in whole or part 85.5 of any taxes, costs, penalties, or interest which have been 85.6 erroneously or unjustly paid. Except as provided in sections 85.7 469.1812 to 469.1815, no reduction or abatement may be granted 85.8 on the basis of providing an incentive for economic development 85.9 or redevelopment. Except as provided in section 375.194, the 85.10 county board is authorized to consider and grant reductions or 85.11 abatements on applications only as they relate to taxes payable 85.12 in the current year and the two prior years; provided that 85.13 reductions or abatements for the two prior years shall be 85.14 considered or granted only for (i) clerical errors, or (ii) when 85.15 the taxpayer fails to file for a reduction or an adjustment due 85.16 to hardship, as determined by the county board. The application 85.17 must include the social security number of the applicant. The 85.18 social security number is private data on individuals as defined 85.19 by section 13.02, subdivision 12. All applications must be 85.20 approved by the county assessor, or, if the property is located 85.21 in a city of the first or second class having a city assessor, 85.22 by the city assessor, and by the county auditor before 85.23 consideration by the county board, except that the part of the 85.24 application which is for the abatement of penalty or interest 85.25 must be approved by the county treasurer and county auditor. 85.26 Approval by the county or city assessor is not required for 85.27 abatements of penalty or interest. No reduction, abatement, or 85.28 refund of any special assessments made or levied by any 85.29 municipality for local improvements shall be made unless it is 85.30 also approved by the board of review or similar taxing authority 85.31 of the municipality. Before taking action on any reduction or 85.32 abatement where the reduction of taxes, costs, penalties, and 85.33 interest exceed $10,000, the county board shall give 20 days' 85.34 notice to the school board and the municipality in which the 85.35 property is located. The notice must describe the property 85.36 involved, the actual amount of the reduction being sought, and 86.1 the reason for the reduction. If the school board or the 86.2 municipality object to the granting of the reduction or 86.3 abatement, the county board must refer the abatement or 86.4 reduction to the commissioner of revenue with its 86.5 recommendation. The commissioner shall consider the abatement 86.6 or reduction under section 270.07, subdivision 1. 86.7 An appeal may not be taken to the tax court from any order 86.8 of the county board made in the exercise of the discretionary 86.9 authority granted in this section. 86.10 The county auditor shall notify the commissioner of revenue 86.11 of all abatements resulting from the erroneous classification of 86.12 real property, for tax purposes, as nonhomestead property. For 86.13 the abatements relating to the current year's tax processed 86.14 through June 30, the auditor shall notify the commissioner on or 86.15 before July 31 of that same year of all abatement applications 86.16 granted. For the abatements relating to the current year's tax 86.17 processed after June 30 through the balance of the year, the 86.18 auditor shall notify the commissioner on or before the following 86.19 January 31 of all applications granted. The county auditor 86.20 shall submit a form containing the social security number of the 86.21 applicant and such other information the commissioner prescribes. 86.22 Sec. 33. Minnesota Statutes 1996, section 465.71, is 86.23 amended to read: 86.24 465.71 [INSTALLMENT AND LEASE PURCHASES; CITIES; COUNTIES; 86.25 SCHOOL DISTRICTS.] 86.26 A home rule charter city, statutory city, county, town, or 86.27 school district may purchase personal property under an 86.28 installment contract, or lease real or personal property with an 86.29 option to purchase under a lease-purchase agreement, by which 86.30 contract or agreement title is retained by the seller or vendor 86.31 or assigned to a third party as security for the purchase price, 86.32 including interest, if any, but such purchases are subject to 86.33 statutory and charter provisions applicable to the purchase of 86.34 real or personal property. For purposes of the bid requirements 86.35 contained in section 471.345, "the amount of the contract" shall 86.36 include the total of all lease payments for the entire term of 87.1 the lease under a lease-purchase agreement. The obligation 87.2 created by a lease-purchase agreement for personal property or a 87.3 lease-purchase agreement for real property if the amount of the 87.4 contract for purchase of the real property is less than 87.5 $1,000,000 shall not be included in the calculation of net debt 87.6 for purposes of section 475.53, and shall not constitute debt 87.7 under any other statutory provision. No election shall be 87.8 required in connection with the execution of a lease-purchase 87.9 agreement authorized by this section. The city, county, town, 87.10 or school district must have the right to terminate a lease- 87.11 purchase agreement at the end of any fiscal year during its term. 87.12 Sec. 34. Minnesota Statutes 1996, section 465.81, 87.13 subdivision 1, is amended to read: 87.14 Subdivision 1. [SCOPE.] Sections 465.81 to 465.87 87.15 establish procedures to be used by counties, cities, or towns 87.16 that adopt by resolution an agreement providing a plan to 87.17 provide combined services during an initial cooperation period 87.18 that may not exceed two years and then: 87.19 (1) to merge into a single unit of government over the 87.20 succeeding two-year period; or 87.21 (2) to agree to apportion the entire area of at least one 87.22 local government unit between or among two or more local 87.23 government units contiguous to the unit to be apportioned, 87.24 resulting in the elimination of at least one local government 87.25 unit over the succeeding two years. 87.26 Sec. 35. Minnesota Statutes 1996, section 465.81, 87.27 subdivision 3, is amended to read: 87.28 Subd. 3. [COMBINATION REQUIREMENTS.] Counties may combine 87.29 with one or more other counties. Cities may combine with one or 87.30 more other cities or with one or more towns. Towns may combine 87.31 with one or more other towns or with one or more cities. Units 87.32 that combine must be contiguous. A county, through the adoption 87.33 of a resolution by all county boards that are affected by the 87.34 combination, may apportion its territory between or among two or 87.35 more counties contiguous to the county that is to be 87.36 apportioned. A city, through the adoption of a resolution by 88.1 all city councils that are affected by the combination, may 88.2 apportion its territory between or among two or more cities 88.3 contiguous to the city that is to be apportioned. A township, 88.4 through the adoption of a resolution by all town boards or city 88.5 councils that are affected by the combination, may apportion its 88.6 territory between or among two or more townships or cities 88.7 contiguous to the township that is to be apportioned. 88.8 Sec. 36. Minnesota Statutes 1996, section 465.82, 88.9 subdivision 1, is amended to read: 88.10 Subdivision 1. [ADOPTION AND STATE AGENCY REVIEW.] Each 88.11 governing body that proposes tocombinetake part in a 88.12 combination under sections 465.81 to 465.87 mustadoptby 88.13 resolution adopt a plan for cooperation and combination. The 88.14 plan must address each item in this section. The plan must be 88.15 specific for any item that will occur within three years and may 88.16 be general or set forth alternative proposals for an item that 88.17 will occur more than three years in the future. The plan must 88.18 be submitted to the board of government innovation and 88.19 cooperation for review and comment. For a metropolitan area 88.20 local government unit, the plan must also be submitted to the 88.21 metropolitan council for review and comment. The council may 88.22 point out any resources or technical assistance it may be able 88.23 to provide a governing body submitting a plan under this 88.24 subdivision. Significant modifications and specific resolutions 88.25 of items must be submitted to the board and council, if 88.26 appropriate, for review and comment. In the official newspaper 88.27 of each local government unitproposed forproposing to take 88.28 part in the combination, the governing bodymustshall publish 88.29 at least a summary of the adopted plans, each significant 88.30 modification and resolution of items, and, if appropriate, the 88.31 results of each board and council, if appropriate,review and 88.32 comment. If a territory of a unit is to be apportioned between 88.33 or among two or more units contiguous to the unit that is to be 88.34 apportioned, the plan must specify the area that will become a 88.35 part of each remaining unit. 88.36 Sec. 37. Minnesota Statutes 1996, section 465.82, 89.1 subdivision 2, is amended to read: 89.2 Subd. 2. [CONTENTS OF PLAN.] The plan must state: 89.3 (1) the specific cooperative activities the units will 89.4 engage in during the first two years of the venture; 89.5 (2) the steps to be taken to effect the merger of the 89.6 governmental units, with completion no later than four years 89.7 after the process begins; 89.8 (3) the steps by which a single governing body will be 89.9 created or, when the entire territory of a unit will be 89.10 apportioned between or among two or more units contiguous to the 89.11 unit that is to be apportioned, the steps to be taken by the 89.12 governing bodies of the remaining units to provide for 89.13 representation of the residents of the apportioned unit; 89.14 (4) changes in services provided, facilities used, and 89.15 administrative operations and staffing required to effect the 89.16 preliminary cooperative activities and the final merger, and a 89.17 two-, five-, and ten-year projection of expenditures for each 89.18 unit if it combined and if it remained separate; 89.19 (5) treatment of employees of the merging governmental 89.20 units, specifically including provisions for reassigning 89.21 employees, dealing withunionsexclusive representatives, and 89.22 providing financial incentives to encourage early retirements; 89.23 (6) financial arrangements for the merger, specifically 89.24 including responsibility for debt service on outstanding 89.25 obligations of the mergingentitiesunits; 89.26 (7) one- and two-year impactanalysisanalyses, prepared by 89.27 the granting state agency at the request of the local government 89.28 unit, of major state aid revenues received for each unit if it 89.29 combined and if it remained separate. This would also include, 89.30 including an impact analysis, prepared by the department of 89.31 revenue, of any property tax revenue implications, if any,89.32 associated with tax increment financing districts and fiscal 89.33 disparities under chapter 276A or 473F resulting from the 89.34 merger; 89.35 (8) procedures for a referendum to be held before the 89.36 proposed combination to approve combining the local government 90.1 units, specifically stating whether a majority of those voting 90.2 in each district proposed for combination or a majority of those 90.3 voting on the question in the entire area proposed for 90.4 combinationwould beis needed to pass the referendum; and 90.5 (9) a time schedule for implementation. 90.6 Notwithstanding clause (3) or any other law to the 90.7 contrary, all current members of the governing bodies of the 90.8 localgovernmentalgovernment units that propose to combine 90.9 under sections 465.81 to 465.88 may serve on the initial 90.10 governing body of the combined unit until a gradual reduction in 90.11 membership is achieved by foregoing election of new members when 90.12 terms expire until the number permitted by other law is reached. 90.13 Sec. 38. Minnesota Statutes 1996, section 465.82, is 90.14 amended by adding a subdivision to read: 90.15 Subd. 3. [INTERIM GOVERNING BODY.] The plan for 90.16 cooperation and combination adopted in accordance with 90.17 subdivision 1 may establish an interim governing body to act on 90.18 behalf of the new local government unit before the effective 90.19 date of the combination. If established, the interim governing 90.20 body must consist of at least a majority of the elected 90.21 officials from each local government unit taking part in the 90.22 combination. If the plan establishes an interim governing body, 90.23 the governing body of each unit taking part in the combination 90.24 shall appoint its representatives to serve on the interim 90.25 governing body. An interim governing body may not take any 90.26 official action on behalf of the new local government unit 90.27 before approval of the combination through the referendum 90.28 required by section 465.84. After approval of the combination 90.29 through the referendum, and before the effective date of the 90.30 combination, an interim governing body may exercise all 90.31 statutory authority of the governing body of the new local 90.32 government unit, including the authority to enter into contracts 90.33 and adopt policies and local ordinances. 90.34 Sec. 39. Minnesota Statutes 1996, section 465.87, 90.35 subdivision 1a, is amended to read: 90.36 Subd. 1a. [ADDITIONAL ELIGIBILITY.] A local government 91.1 unit is eligible to apply for aid under this section if it has 91.2 combined with another unit of government in accordance with any 91.3 process within chapter 414 that results in the elimination of at 91.4 least one local government unit and a copy of the municipal 91.5 board's order or orders combining thetwounits of government is 91.6 forwarded to the board. If the municipal board issues two or 91.7 more orders within 30 days for the annexation of the area of an 91.8 entire township by two or more cities contiguous to the 91.9 township, the cities subject to the board's order are eligible 91.10 to receive pro rata shares, on the basis of their populations, 91.11 of the total amount of cooperation and combination aid all 91.12 participating units of government would be eligible to receive 91.13 under subdivision 2. If two units of government cooperate in 91.14 the orderly annexation of the entire area of a third unit of 91.15 government which has a population of at least 8,000 people, the 91.16 two units of government are each eligible for the amount of aid 91.17 specified in subdivision 2. 91.18 Sec. 40. Minnesota Statutes 1996, section 465.87, 91.19 subdivision 2, is amended to read: 91.20 Subd. 2. [AMOUNT OF AID.] The annual amount of aid to be 91.21 paid to each eligible local government unit may not exceed the 91.22 following per capita amounts, based on the combined population 91.23 of the units, as estimated by the state demographer, or 91.24 $100,000, whichever is less. 91.25 Combined Population Aid 91.26 after Combination Per Capita 91.27 0 - 2,500 $25 91.28 2,500 - 5,000 20 91.29 5,000 - 20,000 15 91.30 over 20,000 10 91.31 If two or more units are eligible for a single award under this 91.32 subdivision, the award must be divided among the units in pro 91.33 rata shares based on each unit's population. Payments must be 91.34 made on the dates provided for payments of local government aid 91.35 under section 477A.013, beginning in the year during which 91.36 substantial cooperative activities under the plan initially 92.1 occur, unless those activities begin after July 1, in which case 92.2 the initial aid payment must be made in the following calendar 92.3 year. Payments to a local government unit that qualifies for 92.4 aid under subdivision 1a must be made on the dates provided for 92.5 payments of local government aids under section 477A.013, 92.6 beginning in the calendar year during which a combination in any 92.7 form is expected to be ordered by the Minnesota municipal board 92.8 as evidenced in a resolution adopted by July 1 by the affected 92.9 local government units declaring their intent to combine. The 92.10 resolutions must certify that the combination agreement 92.11 addressing all issues relative to the combination is 92.12 substantially complete. The total amount of aid paid may not 92.13 exceed the amount appropriated to the board for purposes of this 92.14 section. 92.15 Sec. 41. Minnesota Statutes 1996, section 465.88, is 92.16 amended to read: 92.17 465.88 [PLANNING AID FOR CONSOLIDATION STUDIES.] 92.18 Two or more local units of government with a combined 92.19 population of2,50030,000 or less based on the most recent 92.20 decennial census may apply to the board for aid to assist in the 92.21 study of a possible consolidation or combination. To be 92.22 eligible for receipt of aid under this section, thetwolocal 92.23 units of government must be subject to a municipal boardmotion92.24 proceeding to form a consolidation commission under section 92.25 414.041, subdivision 2, or the governing bodies of the local 92.26 units of government must have approved a resolution expressing 92.27 their intent to develop and submit a combination plan for 92.28 consideration by the board. The application must be on a form 92.29 prescribed by the board and must provide a proposed budget 92.30 detailing how the requested aidshallis to be used. The 92.31 governing bodies of the local units of governmentmustshall 92.32 also approve resolutions certifying that the requested aid is 92.33 essential for paying a portion of the costs associated with the 92.34 consolidation or combination study. The board may grant up to 92.35 $10,000 in aid for each application received. Two or more local 92.36 government units with a combined population of at least 2,500 93.1 but not greater than 30,000, based on the most recent decennial 93.2 census, must agree to provide at least $1 for the study of a 93.3 possible consolidation or combination for each dollar of aid 93.4 granted by the board under this section. 93.5 Sec. 42. Minnesota Statutes 1996, section 469.012, 93.6 subdivision 1, is amended to read: 93.7 Subdivision 1. [SCHEDULE OF POWERS.] An authority shall be 93.8 a public body corporate and politic and shall have all the 93.9 powers necessary or convenient to carry out the purposes of 93.10 sections 469.001 to 469.047, except that the power to levy and 93.11 collect taxes or special assessments is limited to the power 93.12 provided in sections 469.027 to 469.033. Its powers include the 93.13 following powers in addition to others granted in sections 93.14 469.001 to 469.047: 93.15 (1) to sue and be sued; to have a seal, which shall be 93.16 judicially noticed, and to alter it; to have perpetual 93.17 succession; and to make, amend, and repeal rules consistent with 93.18 sections 469.001 to 469.047; 93.19 (2) to employ an executive director, technical experts, and 93.20 officers, agents, and employees, permanent and temporary, that 93.21 it requires, and determine their qualifications, duties, and 93.22 compensation; for legal services it requires, to call upon the 93.23 chief law officer of the city or to employ its own counsel and 93.24 legal staff; so far as practicable, to use the services of local 93.25 public bodies in its area of operation, provided that those 93.26 local public bodies, if requested, shall make the services 93.27 available; 93.28 (3) to delegate to one or more of its agents or employees 93.29 the powers or duties it deems proper; 93.30 (4) within its area of operation, to undertake, prepare, 93.31 carry out, and operate projects and to provide for the 93.32 construction, reconstruction, improvement, extension, 93.33 alteration, or repair of any project or part thereof; 93.34 (5) subject to the provisions of section 469.026, to give, 93.35 sell, transfer, convey, or otherwise dispose of real or personal 93.36 property or any interest therein and to execute leases, deeds, 94.1 conveyances, negotiable instruments, purchase agreements, and 94.2 other contracts or instruments, and take action that is 94.3 necessary or convenient to carry out the purposes of these 94.4 sections; 94.5 (6) within its area of operation, to acquire real or 94.6 personal property or any interest therein by gifts, grant, 94.7 purchase, exchange, lease, transfer, bequest, devise, or 94.8 otherwise, and by the exercise of the power of eminent domain, 94.9 in the manner provided by chapter 117, to acquire real property 94.10 which it may deem necessary for its purposes, after the adoption 94.11 by it of a resolution declaring that the acquisition of the real 94.12 property is necessary to eliminate one or more of the conditions 94.13 found to exist in the resolution adopted pursuant to section 94.14 469.003 or to provide decent, safe, and sanitary housing for 94.15 persons of low and moderate income, or is necessary to carry out 94.16 a redevelopment project. Real property needed or convenient for 94.17 a project may be acquired by the authority for the project by 94.18 condemnation pursuant to this section. This includes any 94.19 property devoted to a public use, whether or not held in trust, 94.20 notwithstanding that the property may have been previously 94.21 acquired by condemnation or is owned by a public utility 94.22 corporation, because the public use in conformity with the 94.23 provisions of sections 469.001 to 469.047 shall be deemed a 94.24 superior public use. Property devoted to a public use may be so 94.25 acquired only if the governing body of the municipality has 94.26 approved its acquisition by the authority. An award of 94.27 compensation shall not be increased by reason of any increase in 94.28 the value of the real property caused by the assembly, clearance 94.29 or reconstruction, or proposed assembly, clearance or 94.30 reconstruction for the purposes of sections 469.001 to 469.047 94.31 of the real property in an area; 94.32 (7) within its area of operation, and without the adoption 94.33 of an urban renewal plan, to acquire, by all means as set forth 94.34 in clause (6) but without the adoption of a resolution provided 94.35 for in clause (6), real property, and to demolish, remove, 94.36 rehabilitate, or reconstruct the buildings and improvements or 95.1 construct new buildings and improvements thereon, or to so 95.2 provide through other means as set forth in Laws 1974, chapter 95.3 228, or to grade, fill, and construct foundations or otherwise 95.4 prepare the site for improvements. The authority may dispose of 95.5 the property pursuant to section 469.029, provided that the 95.6 provisions of section 469.029 requiring conformance to an urban 95.7 renewal plan shall not apply. The authority may finance these 95.8 activities by means of the redevelopment project fund or by 95.9 means of tax increments or tax increment bonds or by the methods 95.10 of financing provided for in section 469.033 or by means of 95.11 contributions from the municipality provided for in section 95.12 469.041, clause (9), or by any combination of those means. Real 95.13 property with buildings or improvements thereon shall only be 95.14 acquired under this clause when the buildings or improvements 95.15 are substandard. The exercise of the power of eminent domain 95.16 under this clause shall be limited to real property which 95.17 contains, or has contained within the three years immediately 95.18 preceding the exercise of the power of eminent domain and is 95.19 currently vacant, buildings and improvements which are vacated 95.20 and substandard. Notwithstanding the prior sentence, in cities 95.21 of the first class the exercise of the power of eminent domain 95.22 under this clause shall be limited to real property which 95.23 contains, or has contained within the three years immediately 95.24 preceding the exercise of the power of eminent domain, buildings 95.25 and improvements which are substandard. For the purpose of this 95.26 clause, substandard buildings or improvements mean hazardous 95.27 buildings as defined in section 463.15, subdivision 3, or 95.28 buildings or improvements that are dilapidated or obsolescent, 95.29 faultily designed, lack adequate ventilation, light, or sanitary 95.30 facilities, or any combination of these or other factors that 95.31 are detrimental to the safety or health of the community; 95.32 (8) within its area of operation, to determine the level of 95.33 income constituting low or moderate family income. The 95.34 authority may establish various income levels for various family 95.35 sizes. In making its determination, the authority may consider 95.36 income levels that may be established by the Department of 96.1 Housing and Urban Development or a similar or successor federal 96.2 agency for the purpose of federal loan guarantees or subsidies 96.3 for persons of low or moderate income. The authority may use 96.4 that determination as a basis for the maximum amount of income 96.5 for admissions to housing development projects or housing 96.6 projects owned or operated by it; 96.7 (9) to provide in federally assisted projects any 96.8 relocation payments and assistance necessary to comply with the 96.9 requirements of the Federal Uniform Relocation Assistance and 96.10 Real Property Acquisition Policies Act of 1970, and any 96.11 amendments or supplements thereto; 96.12 (10) to make an agreement with the governing body or bodies 96.13 creating the authority which provides exemption from all ad 96.14 valorem real and personal property taxes levied or imposed by 96.15 thestate, city, county, or other political subdivisions, for96.16which the authority shall make payments in lieu of taxes to the96.17state, city, county, or other political subdivisions as provided96.18in section 469.040body or bodies creating the authority. The 96.19 governing body shall agree on behalf of all the applicable 96.20 governing bodies affected that local cooperation as required by 96.21 the federal government shall be provided by the local governing 96.22 body or bodies in whose jurisdiction the project is to be 96.23 located, at no cost or at no greater cost than the same public 96.24 services and facilities furnished to other residents; 96.25 (11) to cooperate with or act as agent for the federal 96.26 government, the state or any state public body, or any agency or 96.27 instrumentality of the foregoing, in carrying out any of the 96.28 provisions of sections 469.001 to 469.047 or of any other 96.29 related federal, state, or local legislation; and upon the 96.30 consent of the governing body of the city to purchase, lease, 96.31 manage, or otherwise take over any housing project already owned 96.32 and operated by the federal government; 96.33 (12) to make plans for carrying out a program of voluntary 96.34 repair and rehabilitation of buildings and improvements, and 96.35 plans for the enforcement of laws, codes, and regulations 96.36 relating to the use of land and the use and occupancy of 97.1 buildings and improvements, and to the compulsory repair, 97.2 rehabilitation, demolition, or removal of buildings and 97.3 improvements. The authority may develop, test, and report 97.4 methods and techniques, and carry out demonstrations and other 97.5 activities for the prevention and elimination of slums and 97.6 blight; 97.7 (13) to borrow money or other property and accept 97.8 contributions, grants, gifts, services, or other assistance from 97.9 the federal government, the state government, state public 97.10 bodies, or from any other public or private sources; 97.11 (14) to include in any contract for financial assistance 97.12 with the federal government any conditions that the federal 97.13 government may attach to its financial aid of a project, not 97.14 inconsistent with purposes of sections 469.001 to 469.047, 97.15 including obligating itself (which obligation shall be 97.16 specifically enforceable and not constitute a mortgage, 97.17 notwithstanding any other laws) to convey to the federal 97.18 government the project to which the contract relates upon the 97.19 occurrence of a substantial default with respect to the 97.20 covenants or conditions to which the authority is subject; to 97.21 provide in the contract that, in case of such conveyance, the 97.22 federal government may complete, operate, manage, lease, convey, 97.23 or otherwise deal with the project until the defaults are cured 97.24 if the federal government agrees in the contract to reconvey to 97.25 the authority the project as then constituted when the defaults 97.26 have been cured; 97.27 (15) to issue bonds for any of its corporate purposes and 97.28 to secure the bonds by mortgages upon property held or to be 97.29 held by it or by pledge of its revenues, including grants or 97.30 contributions; 97.31 (16) to invest any funds held in reserves or sinking funds, 97.32 or any funds not required for immediate disbursement, in 97.33 property or securities in which savings banks may legally invest 97.34 funds subject to their control or in the manner and subject to 97.35 the conditions provided in section 118A.04 for the deposit and 97.36 investment of public funds; 98.1 (17) within its area of operation, to determine where 98.2 blight exists or where there is unsafe, unsanitary, or 98.3 overcrowded housing; 98.4 (18) to carry out studies of the housing and redevelopment 98.5 needs within its area of operation and of the meeting of those 98.6 needs. This includes study of data on population and family 98.7 groups and their distribution according to income groups, the 98.8 amount and quality of available housing and its distribution 98.9 according to rentals and sales prices, employment, wages, 98.10 desirable patterns for land use and community growth, and other 98.11 factors affecting the local housing and redevelopment needs and 98.12 the meeting of those needs; to make the results of those studies 98.13 and analyses available to the public and to building, housing, 98.14 and supply industries; 98.15 (19) if a local public body does not have a planning agency 98.16 or the planning agency has not produced a comprehensive or 98.17 general community development plan, to make or cause to be made 98.18 a plan to be used as a guide in the more detailed planning of 98.19 housing and redevelopment areas; 98.20 (20) to lease or rent any dwellings, accommodations, lands, 98.21 buildings, structures, or facilities included in any project 98.22 and, subject to the limitations contained in sections 469.001 to 98.23 469.047 with respect to the rental of dwellings in housing 98.24 projects, to establish and revise the rents or charges therefor; 98.25 (21) to own, hold, and improve real or personal property 98.26 and to sell, lease, exchange, transfer, assign, pledge, or 98.27 dispose of any real or personal property or any interest 98.28 therein; 98.29 (22) to insure or provide for the insurance of any real or 98.30 personal property or operations of the authority against any 98.31 risks or hazards; 98.32 (23) to procure or agree to the procurement of government 98.33 insurance or guarantees of the payment of any bonds or parts 98.34 thereof issued by an authority and to pay premiums on the 98.35 insurance; 98.36 (24) to make expenditures necessary to carry out the 99.1 purposes of sections 469.001 to 469.047; 99.2 (25) to enter into an agreement or agreements with any 99.3 state public body to provide informational service and 99.4 relocation assistance to families, individuals, business 99.5 concerns, and nonprofit organizations displaced or to be 99.6 displaced by the activities of any state public body; 99.7 (26) to compile and maintain a catalog of all vacant, open 99.8 and undeveloped land, or land which contains substandard 99.9 buildings and improvements as that term is defined in clause 99.10 (7), that is owned or controlled by the authority or by the 99.11 governing body within its area of operation and to compile and 99.12 maintain a catalog of all authority owned real property that is 99.13 in excess of the foreseeable needs of the authority, in order to 99.14 determine and recommend if the real property compiled in either 99.15 catalog is appropriate for disposal pursuant to the provisions 99.16 of section 469.029, subdivisions 9 and 10; 99.17 (27) to recommend to the city concerning the enforcement of 99.18 the applicable health, housing, building, fire prevention, and 99.19 housing maintenance code requirements as they relate to 99.20 residential dwelling structures that are being rehabilitated by 99.21 low- or moderate-income persons pursuant to section 469.029, 99.22 subdivision 9, for the period of time necessary to complete the 99.23 rehabilitation, as determined by the authority; 99.24 (28) to recommend to the city the initiation of municipal 99.25 powers, against certain real properties, relating to repair, 99.26 closing, condemnation, or demolition of unsafe, unsanitary, 99.27 hazardous, and unfit buildings, as provided in section 469.041, 99.28 clause (5); 99.29 (29) to sell, at private or public sale, at the price or 99.30 prices determined by the authority, any note, mortgage, lease, 99.31 sublease, lease purchase, or other instrument or obligation 99.32 evidencing or securing a loan made for the purpose of economic 99.33 development, job creation, redevelopment, or community 99.34 revitalization by a public agency to a business, for-profit or 99.35 nonprofit organization, or an individual; 99.36 (30) within its area of operation, to acquire and sell real 100.1 property that is benefited by federal housing assistance 100.2 payments, other rental subsidies, interest reduction payments, 100.3 or interest reduction contracts for the purpose of preserving 100.4 the affordability of low- and moderate-income multifamily 100.5 housing; 100.6 (31) to apply for, enter into contracts with the federal 100.7 government, administer, and carry out a section 8 program. 100.8 Authorization by the governing body creating the authority to 100.9 administer the program at the authority's initial application is 100.10 sufficient to authorize operation of the program in its area of 100.11 operation for which it was created without additional local 100.12 governing body approval. Approval by the governing body or 100.13 bodies creating the authority constitutes approval of a housing 100.14 program for purposes of any special or general law requiring 100.15 local approval of section 8 programs undertaken by city, county, 100.16 or multicounty authorities; and 100.17 (32) to secure a mortgage or loan for a rental housing 100.18 project by obtaining the appointment of receivers or assignments 100.19 of rents and profits under sections 559.17 and 576.01, except 100.20 that the limitation relating to the minimum amounts of the 100.21 original principal balances of mortgages specified in sections 100.22 559.17, subdivision 2, clause (2); and 576.01, subdivision 2, 100.23 does not apply. 100.24 Sec. 43. Minnesota Statutes 1996, section 469.033, 100.25 subdivision 6, is amended to read: 100.26 Subd. 6. [OPERATION AREA AS TAXING DISTRICT, SPECIAL TAX.] 100.27 All of the territory included within the area of operation of 100.28 any authority shall constitute a taxing district for the purpose 100.29 of levying and collecting special benefit taxes as provided in 100.30 this subdivision. All of the taxable property, both real and 100.31 personal, within that taxing district shall be deemed to be 100.32 benefited by projects to the extent of the special taxes levied 100.33 under this subdivision. Subject to the consent by resolution of 100.34 the governing body of the city in and for which it was created, 100.35 an authority may levy a tax upon all taxable property within 100.36 that taxing district. The tax shall be extended, spread, and 101.1 included with and as a part of the general taxes for state, 101.2 county, and municipal purposes by the county auditor, to be 101.3 collected and enforced therewith, together with the penalty, 101.4 interest, and costs. As the tax, including any penalties, 101.5 interest, and costs, is collected by the county treasurer it 101.6 shall be accumulated and kept in a separate fund to be known as 101.7 the "housing and redevelopment project fund." The money in the 101.8 fund shall be turned over to the authority at the same time and 101.9 in the same manner that the tax collections for the city are 101.10 turned over to the city, and shall be expended only for the 101.11 purposes of sections 469.001 to 469.047. It shall be paid out 101.12 upon vouchers signed by the chair of the authority or an 101.13 authorized representative. The amount of the levy shall be an 101.14 amount approved by the governing body of the city, but shall not 101.15 exceed0.01310.0144 percent of taxable market value.The101.16authority may levy an additional levy, not to exceed 0.0013101.17percent of taxable market value, to be used to defray costs of101.18providing informational service and relocation assistance as set101.19forth in section 469.012, subdivision 1.The authority shall 101.20 each year formulate and file a budget in accordance with the 101.21 budget procedure of the city in the same manner as required of 101.22 executive departments of the city or, if no budgets are required 101.23 to be filed, by August 1. The amount of the tax levy for the 101.24 following year shall be based on that budget. 101.25 Sec. 44. Minnesota Statutes 1996, section 469.040, 101.26 subdivision 3, is amended to read: 101.27 Subd. 3. [STATEMENT FILED WITH ASSESSOR; PERCENTAGE TAX ON 101.28 RENTALS.] Notwithstanding the provisions of subdivision 1, after 101.29 a housing project or a housing development project carried on 101.30 under sections 469.016 to 469.026 has become occupied, in whole 101.31 or in part, an authority shall file with the assessor, on or 101.32 before April 15 of each year, a statement of the aggregate 101.33 shelter rentals of that project collected during the preceding 101.34 calendar year. Unless a greater amount has been agreed upon 101.35 between the authority and the governing body or bodies for which 101.36 the authority was created, in whose jurisdiction the project is 102.1 located, five percent of the aggregate shelter rentals shall be 102.2 charged to the authority as a service charge for the services 102.3 and facilities to be furnished with respect to that project. 102.4 The service charge shall be collected from the authority in the 102.5 manner provided by law for the assessment and collection of 102.6 taxes. The amount so collected shall be distributed to the 102.7 several taxing bodies in the same proportion as the tax rate of 102.8 each bears to the total tax rate of those taxing bodies. The 102.9 governing body or bodies for which the authority has been 102.10 created, in whose jurisdiction the project is located, may agree 102.11 with the authority for the payment of a service charge for a 102.12 housing project or a housing development project in an amount 102.13 greater than five percent of the aggregate annual shelter 102.14 rentals of any project, upon the basis of shelter rentals or 102.15 upon another basis agreed upon. The service charge may not 102.16 exceed the amount which would be payable in taxes were the 102.17 property not exempt. If such an agreement is made, the service 102.18 charge so agreed upon shall be collected and distributed in the 102.19 manner above provided. If the project has become occupied, or 102.20 if the land upon which the project is to be constructed has been 102.21 acquired, the agreement shall specify the location of the 102.22 project for which the agreement is made. "Shelter rental" means 102.23 the total rentals of a housing project exclusive of any charge 102.24 for utilities and special services such as heat, water, 102.25 electricity, gas, sewage disposal, or garbage removal. "Service 102.26 charge" means payment in lieu of taxes. The records of each 102.27housingproject shall be open to inspection by the proper 102.28 assessing officer. 102.29 Sec. 45. [469.1812] [DEFINITIONS.] 102.30 Subdivision 1. [SCOPE.] For purposes of sections 469.1812 102.31 to 469.1815, the following terms have the meanings given. 102.32 Subd. 2. [GOVERNING BODY.] "Governing body" means, for a 102.33 city, the city council; for a school district, the school board; 102.34 for a county, the county board; and for a town, the annual 102.35 meeting of the town. 102.36 Subd. 3. [MUNICIPALITY.] "Municipality" means a statutory 103.1 or home rule charter city or a town. 103.2 Subd. 4. [POLITICAL SUBDIVISION OR SUBDIVISION.] 103.3 "Political subdivision" or "subdivision" means a statutory or 103.4 home rule charter city, town, school district, or county. 103.5 Sec. 46. [469.1813] [ABATEMENT AUTHORITY.] 103.6 Subdivision 1. [AUTHORITY.] The governing body of a 103.7 political subdivision may grant an abatement of the taxes 103.8 imposed by the political subdivision on a parcel of property, if: 103.9 (a) it expects the benefits to the political subdivision of 103.10 the proposed abatement agreement to at least equal the costs to 103.11 the political subdivision of the proposed agreement; and 103.12 (b) it finds that doing so is in the public interest 103.13 because it will: 103.14 (1) increase or preserve tax base; 103.15 (2) provide employment opportunities in the political 103.16 subdivision; 103.17 (3) provide or help acquire or construct public facilities; 103.18 (4) help redevelop or renew blighted areas; or 103.19 (5) help provide access to services for residents of the 103.20 political subdivision. 103.21 Subd. 2. [ABATEMENT RESOLUTION.] The governing body of a 103.22 political subdivision may grant an abatement only by adopting an 103.23 abatement resolution, specifying the terms of the abatement. 103.24 The resolution must also include a specific statement as to the 103.25 nature and extent of the public benefits which the governing 103.26 body expects to result from the agreement. The abatement may 103.27 reduce all or part of the property tax levied by the political 103.28 subdivision on the parcel. The political subdivision may limit 103.29 the abatement: 103.30 (1) to a specific dollar amount per year or in total; 103.31 (2) to the increase in property taxes resulting from 103.32 improvement of the property; 103.33 (3) to the increases in property taxes resulting from 103.34 increases in the market value or tax capacity of the property; 103.35 or 103.36 (4) in any other manner the governing body of the 104.1 subdivision determines is appropriate. 104.2 The political subdivision may not abate tax attributable to the 104.3 value of the land or the areawide tax under chapter 276A or 473F. 104.4 Subd. 3. [SCHOOL DISTRICT ABATEMENT PROCEDURE.] 104.5 Notwithstanding the amounts in subdivision 2, a school district 104.6 that grants an abatement under this section must limit the 104.7 abatement for any property to not more than an amount equal to 104.8 the product of: (1) the property's net tax capacity, and (2) 104.9 the difference between the district's total tax rate for that 104.10 year and one-half of the general education tax rate for that 104.11 year. An abatement granted under this section is not an 104.12 abatement for purposes of state aid or local levy under chapter 104.13 124. 104.14 Subd. 4. [PROPERTY LOCATED IN TAX INCREMENT FINANCING 104.15 DISTRICTS.] The governing body of a governmental subdivision may 104.16 not enter into a property tax abatement agreement under sections 104.17 469.1812 to 469.1815 if the property is located in a tax 104.18 increment financing district. 104.19 Subd. 5. [NOTICE AND PUBLIC HEARING.] (a) The governing 104.20 body of the political subdivision may approve an abatement under 104.21 sections 469.1812 to 469.1815 only after holding a public 104.22 hearing on the abatement. 104.23 (b) Notice of the hearing must be published in a newspaper 104.24 of general circulation in the political subdivision at least 104.25 once more than ten days but less than 30 days before the 104.26 hearing. The newspaper must be one of general interest and 104.27 readership in the community, and not one of limited subject 104.28 matter. The newspaper must be published at least once per 104.29 week. The notice must indicate that the governing body will 104.30 consider granting a property tax abatement, identify the 104.31 property or properties for which an abatement is under 104.32 consideration, and the total estimated amount of the abatement. 104.33 Subd. 6. [DURATION LIMIT.] (a) A political subdivision 104.34 other than a school district may grant an abatement for a period 104.35 no longer than ten years. The subdivision may specify in the 104.36 abatement resolution a shorter duration. If the resolution does 105.1 not specify a period of time, the abatement is for eight years. 105.2 If an abatement has been granted to a parcel of property and the 105.3 period of the abatement has expired, the political subdivision 105.4 that granted the abatement may not grant another abatement for 105.5 eight years after the expiration of the first abatement. This 105.6 prohibition does not apply to improvements added after and not 105.7 subject to the first abatement. 105.8 (b) A school district may grant an abatement for only one 105.9 year at a time. Once a school district has authorized an 105.10 abatement for a property, it may reauthorize the abatement in 105.11 any subsequent year for the next seven years, or nine years if 105.12 provided in the original abatement agreement. This prohibition 105.13 does not apply to improvements added after and not subject to 105.14 the original abatement agreement. 105.15 Subd. 7. [REVIEW AND MODIFICATION OF ABATEMENTS.] The 105.16 political subdivision may provide in the abatement resolution 105.17 that the abatement may not be modified or changed during its 105.18 term. If the abatement resolution does not provide that the 105.19 abatement may not be modified or changed, the governing body of 105.20 the political subdivision may review and modify the abatement 105.21 every second year after it was approved. 105.22 Subd. 8. [LIMITATION ON ABATEMENTS.] In any year, the 105.23 total amount of property taxes abated by a political subdivision 105.24 under this section may not exceed (1) five percent of the 105.25 current levy, or (2) $100,000, whichever is greater. 105.26 Sec. 47. [469.1814] [BONDING AUTHORITY.] 105.27 Subdivision 1. [AUTHORITY.] A political subdivision may 105.28 issue bonds or other obligations to provide an amount equal to 105.29 the sum of the abatements granted for a property under section 105.30 469.1813. The maximum principal amount of these bonds may not 105.31 exceed the estimated sum of the abatements for the property for 105.32 the years authorized. The bonds may be general obligations of 105.33 the political subdivision if the governing body of the political 105.34 subdivision elects to pledge the full faith and credit of the 105.35 subdivision in the resolution issuing the bonds. 105.36 Subd. 2. [BOND CODE APPLIES.] Chapter 475 applies to the 106.1 obligations authorized by this section, except bonds are 106.2 excluded from the calculation of the net debt limit. 106.3 Subd. 3. [MUNICIPAL ISSUE FOR COMBINED ABATEMENTS.] If two 106.4 or more political subdivisions decide to grant abatements for 106.5 the same property, the municipality in which the property is 106.6 located may issue bonds to provide an amount equal to the sum of 106.7 the abatements for each of the jurisdictions that agrees. The 106.8 governing body of each of the other jurisdictions must guarantee 106.9 and pledge to pay annually to the municipality the amount of the 106.10 abatement. This pledge and guarantee is a binding obligation of 106.11 the political subdivision and must be included in the abatement 106.12 resolution. 106.13 Subd. 4. [BONDED ABATEMENTS NOT SUBJECT TO REVIEW.] If 106.14 bonds are issued to provide advance payment of abatements under 106.15 this section, the amount of abatement is not subject to periodic 106.16 review by the political subdivision under section 469.1813, 106.17 subdivision 7. 106.18 Subd. 5. [USE OF PROCEEDS.] The proceeds of bonds issued 106.19 under this section may be used to (1) pay for public 106.20 improvements that benefit the property, (2) to acquire and 106.21 convey land or other property, as provided under this section, 106.22 (3) to reimburse the property owner for the cost of improvements 106.23 made to the property, or (4) to pay the costs of issuance of the 106.24 bonds. 106.25 Sec. 48. [469.1815] [ADMINISTRATIVE.] 106.26 Subdivision 1. [INCLUSION IN PROPOSED AND FINAL 106.27 LEVIES.] The political subdivision must add to its levy amount 106.28 for the current year under sections 275.065 and 275.07 the total 106.29 estimated amount of all current year abatements granted. The 106.30 tax amounts shown on the proposed notice under section 275.065, 106.31 subdivision 3, and on the property tax statement under section 106.32 276.04, subdivision 2, are the total amounts before the 106.33 reduction of any abatements that will be granted on the property. 106.34 Subd. 2. [PROPERTY TAXES; ABATEMENT PAYMENT.] The total 106.35 property taxes shall be levied on the property and shall be due 106.36 and payable to the county at the times provided under section 107.1 279.01. The political subdivision will pay the abatement to the 107.2 property owner, lessee, or a representative of the bondholders, 107.3 as provided by the abatement resolution. 107.4 Sec. 49. Minnesota Statutes 1996, section 477A.011, 107.5 subdivision 36, is amended to read: 107.6 Subd. 36. [CITY AID BASE.] (a) Except as provided in 107.7 paragraphs (b)and, (c), and (d), "city aid base" means, for 107.8 each city, the sum of the local government aid and equalization 107.9 aid it was originally certified to receive in calendar year 1993 107.10 under Minnesota Statutes 1992, section 477A.013, subdivisions 3 107.11 and 5, and the amount of disparity reduction aid it received in 107.12 calendar year 1993 under Minnesota Statutes 1992, section 107.13 273.1398, subdivision 3. 107.14 (b) For aids payable in 1996 and thereafter, a city that in 107.15 1992 or 1993 transferred an amount from governmental funds to 107.16 its sewer and water fund, which amount exceeded its net levy for 107.17 taxes payable in the year in which the transfer occurred, has a 107.18 "city aid base" equal to the sum of (i) its city aid base, as 107.19 calculated under paragraph (a), and (ii) one-half of the 107.20 difference between its city aid distribution under section 107.21 477A.013, subdivision 9, for aids payable in 1995 and its city 107.22 aid base for aids payable in 1995. 107.23 (c) The city aid base for any city with a population less 107.24 than 500 is increased by $40,000 for aids payable in calendar 107.25 year 1995 and thereafter, and the maximum amount of total aid it 107.26 may receive under section 477A.013, subdivision 9, paragraph 107.27 (c), is also increased by $40,000 for aids payable in calendar 107.28 year 1995 only, provided that: 107.29 (i) the average total tax capacity rate for taxes payable 107.30 in 1995 exceeds 200 percent; 107.31 (ii) the city portion of the tax capacity rate exceeds 100 107.32 percent; and 107.33 (iii) its city aid base is less than $60 per capita. 107.34 (d) The city aid base for a city is increased by $20,000 in 107.35 1998 and thereafter and the maximum amount of total aid it may 107.36 receive under section 477A.013, subdivision 9, paragraph (c), is 108.1 also increased by $20,000 in calendar year 1998 only, provided 108.2 that: 108.3 (i) the city has a population in 1994 of 2,500 or more; 108.4 (ii) the city is located in a county, outside of the 108.5 metropolitan area, which contains a city of the first class; 108.6 (iii) the city's net tax capacity used in calculating its 108.7 1996 aid under section 477A.013 is less than $400 per capita; 108.8 and 108.9 (iv) at least four percent of the total net tax capacity, 108.10 for taxes payable in 1996, of property located in the city is 108.11 classified as railroad property. 108.12 Sec. 50. Laws 1992, chapter 511, article 2, section 52, is 108.13 amended to read: 108.14 Sec. 52. [WATERSHED DISTRICT LEVIES.] 108.15 (a) The Nine Mile Creek watershed district, the 108.16 Riley-Purgatory Bluff Creek watershed district, the Minnehaha 108.17 Creek watershed district, the Coon Creek watershed district, and 108.18 the Lower Minnesota River watershed district may levy in 1992 108.19 and thereafter a tax not to exceed $200,000 on property within 108.20 the district for the administrative fund. The levy authorized 108.21 under this section is in lieu of section 103D.905, subdivision 108.22 3. The administrative fund shall be used for the purposes 108.23 contained in Minnesota Statutes, section 103D.905, subdivision 108.24 3. The board of managers shall make the levy for the 108.25 administrative fund in accordance with Minnesota Statutes, 108.26 section 103D.915. 108.27 (b) The Wild Rice watershed district may levy, for taxes 108.28 payable in 1993, 1994, 1995, 1996,and1997, 1998, 1999, 2000, 108.29 2001, and 2002, an ad valorem tax not to exceed $200,000 on 108.30 property within the district for the administrative fund. The 108.31 additional $75,000 above the amount authorized in Minnesota 108.32 Statutes, section 103D.905, subdivision 3, must be used for 108.33 costs incurred in connection with the development and 108.34 maintenance of cost-sharing projects with the United States Army 108.35 Corps of Engineers. The board of managers shall make the levy 108.36 for the administrative fund in accordance with Minnesota 109.1 Statutes, section 103D.915. 109.2 Sec. 51. Laws 1997, chapter 75, section 2, is amended to 109.3 read: 109.4 Sec. 2. [EFFECTIVE DATE; EXPIRATION.] 109.5 Section 1 is effective May 2, 1997, and expires January 1, 109.6 1998. 109.7 Sec. 52. [VALUATION EXCLUSION FOR IMPROVEMENTS TO CERTAIN 109.8 BUSINESS PROPERTY.] 109.9 Property classified under Minnesota Statutes, section 109.10 273.13, subdivision 24, which is eligible for the preferred 109.11 class rate on the market value up to $150,000, shall qualify for 109.12 a valuation exclusion for assessment purposes, provided all of 109.13 the following conditions are met: 109.14 (1) the building must be at least 50 years old at the time 109.15 of the improvement or damaged by the 1997 floods; 109.16 (2) the building must be located in a city or town with a 109.17 population of 10,000 or less that is located outside the 109.18 seven-county metropolitan area, as defined in section 473.121, 109.19 subdivision 2; 109.20 (3) the total estimated market value of the land and 109.21 buildings must be $100,000 or less prior to the improvement and 109.22 prior to the damage caused by the 1997 floods; 109.23 (4) the current year's estimated market value of the 109.24 property must be equal to or less than the property's estimated 109.25 market value in each of the two previous years' assessments; 109.26 (5) a building permit must have been issued prior to the 109.27 commencement of the improvement, or if the building is located 109.28 in a city or town which does not have a building permit process, 109.29 the property owner must notify the assessor prior to the 109.30 commencement of the improvement; 109.31 (6) the property, including its improvements, has received 109.32 no public assistance, grants or financing; 109.33 (7) the property is not receiving a property tax abatement 109.34 under section 469.1813; and 109.35 (8) the improvements are made after the effective date of 109.36 this act and prior to January 1, 1999. 110.1 The assessor shall estimate the market value of the 110.2 building in the assessment year immediately following the year 110.3 that (1) the building permit was taken out, or (2) the taxpayer 110.4 notified the assessor that an improvement was to be made. If 110.5 the estimated market value of the building has increased over 110.6 the prior year's assessment, the assessor shall note the amount 110.7 of the increase on the property's record, and that amount shall 110.8 be subtracted from the value of the property in each year for 110.9 five years after the improvement has been made, at which time an 110.10 amount equal to 20 percent of the excluded value shall be added 110.11 back in each of the five subsequent assessment years. 110.12 For any property, there can be no more than two 110.13 improvements qualifying for exclusion under this subdivision. 110.14 The maximum amount of value that can be excluded from any 110.15 property under this subdivision is $50,000. 110.16 The assessor shall require an application, including 110.17 documentation of the age of the building from the owner, if 110.18 unknown by the assessor. Applications must be received prior to 110.19 July 1 of any year in order to be effective for taxes payable in 110.20 the following year. 110.21 For purposes of this subdivision, "population" has the same 110.22 meaning given in Minnesota Statutes, section 477A.011, 110.23 subdivision 3. 110.24 Sec. 53. [CITY OF DULUTH; REASSESSMENTS OF CANCELED 110.25 SPECIAL ASSESSMENTS.] 110.26 Subdivision 1. [AUTHORIZATION.] Notwithstanding any law, 110.27 city charter provision, or ordinance to the contrary, if a 110.28 parcel of tax-forfeited land located in the city of Duluth is 110.29 returned to private ownership and the parcel is benefited by an 110.30 improvement for which special assessments were canceled because 110.31 of the forfeiture, the city council may, upon notice and hearing 110.32 as provided for in the original assessment, make a reassessment 110.33 or a new assessment as to the parcel in an amount equal to the 110.34 amount remaining unpaid on the original assessment. 110.35 Subd. 2. [LOCAL APPROVAL REQUIRED.] This section is 110.36 effective upon approval by the governing body of the city of 111.1 Duluth and compliance with Minnesota Statutes, section 645.021, 111.2 subdivision 3. 111.3 Sec. 54. [FLOODWOOD JOINT RECREATION BOARD TAX.] 111.4 Subdivision 1. [LEVY AUTHORIZATION.] Each year, the 111.5 Floodwood joint recreation board may levy a tax not to exceed 111.6 $25,000 on the value of property situated in the territory of 111.7 independent school district No. 698 in accordance with this 111.8 section. Property in territory in the school district may be 111.9 made subject to the tax permitted by this section by the 111.10 agreement of the governing body or town board of the city or 111.11 town where it is located. The agreement may be by resolution of 111.12 a governing body or town board or by a joint powers agreement 111.13 pursuant to Minnesota Statutes, section 471.59. If levied, the 111.14 tax is in addition to all other taxes on the property subject to 111.15 it permitted to be levied for park and recreation purposes by 111.16 the cities and towns other than for the support of the joint 111.17 recreation board. It shall be disregarded in the calculation of 111.18 all other mill rate or per capita tax levy limitations imposed 111.19 by law or charter upon them. A city or town may withdraw its 111.20 agreement to future taxes by notice to the recreation board and 111.21 the county auditor unless provided otherwise by a joint powers 111.22 agreement. The tax shall be collected by the applicable county 111.23 auditor and treasurer and paid directly to the Floodwood joint 111.24 recreation board. 111.25 Subd. 2. [LOCAL APPROVAL.] This section is effective in 111.26 the city of Floodwood, the towns of Arrowhead, Fine Lakes, 111.27 Floodwood, Halden, Van Buren, Cedar Valley, Prairie Lake, and 111.28 Unorganized Township 52-21 in St. Louis county, and Unorganized 111.29 Township 52-22 in Aitkin county the day after compliance with 111.30 Minnesota Statutes, section 645.021, subdivision 3, by the 111.31 governing body of each. This section is effective for each 111.32 city, town, and unorganized township regardless of the action of 111.33 the others. 111.34 Approval of this section is not agreement to be subject to 111.35 the tax permitted by it. Agreement to the tax must be by 111.36 separate action in accordance with subdivision 1. 112.1 Sec. 55. [SAUK RIVER WATERSHED DISTRICT.] 112.2 Subdivision 1. [LEVY AUTHORIZATION.] Notwithstanding 112.3 Minnesota Statutes, section 103D.905, subdivision 3, the Sauk 112.4 River watershed district may levy up to $150,000 for its 112.5 administrative fund for taxes levied in 1997, payable in 1998. 112.6 Subd. 2. [EFFECTIVE DATE.] This section is effective the 112.7 day following final enactment. 112.8 Sec. 56. [VIRGINIA AREA AMBULANCE DISTRICT.] 112.9 Subdivision 1. [AGREEMENT; POWERS; GENERAL DESCRIPTION.] 112.10 (a) The cities of Virginia, Mountain Iron, and Gilbert, and the 112.11 towns of Pike, Clinton, McDavitt, Colvin, Sandy, Cherry, 112.12 Ellsburg, Wouri, Lavell, Cotton, and Embarrass, may by 112.13 resolution of their city councils and town boards establish the 112.14 Virginia area ambulance district. 112.15 (b) The St. Louis county board may by resolution provide 112.16 that property located in unorganized townships described in 112.17 clauses (1) to (6) may be included within the district: 112.18 (1) Township 61 North, Range 17 West; 112.19 (2) Township 59 North, Ranges 16 and 18 West; 112.20 (3) Township 56 North, Range 16 West; 112.21 (4) Township 60 North, Range 18 West; 112.22 (5) Township 55 North, Range 15; and 112.23 (6) Township 57, Range 16. 112.24 (c) The district shall make payments of the proceeds of the 112.25 tax authorized in this section to the city of Virginia, which 112.26 shall provide ambulance services throughout the district and may 112.27 exercise all the powers of the cities and towns that relate to 112.28 ambulance service anywhere within its territory. 112.29 (d) Any other contiguous town or home rule charter or 112.30 statutory city may join the district with the agreement of the 112.31 cities and towns that comprise the district at the time of its 112.32 application to join. Action to join the district may be taken 112.33 by the city council or town board of the city or town. 112.34 Subd. 2. [BOARD.] The district shall be governed by a 112.35 board composed of one member appointed by the city council or 112.36 town board of each city and town in the district. A district 113.1 board member may, but is not required to, be a member of a city 113.2 council or town board. Except as provided in this section, 113.3 members shall serve two-year terms ending the first Monday in 113.4 January and until their successors are appointed and qualified. 113.5 Of the members first appointed, as far as possible, the terms of 113.6 one-half shall expire on the first Monday in January in the 113.7 first year following appointment and one-half the first Monday 113.8 in January in the second year. The terms of those initially 113.9 appointed must be determined by lot. If an additional member is 113.10 added because an additional city or town joins the district, the 113.11 member's term must be fixed so that, as far as possible, the 113.12 terms of one-half of all the members expire on the same date. 113.13 Subd. 3. [TAX.] The district may impose a property tax on 113.14 real and personal property in the district in an amount 113.15 sufficient to discharge its operating expenses and debt payable 113.16 in each year, but not to exceed .0528 percent of the district's 113.17 taxable market value. The St. Louis county auditor shall 113.18 collect the tax and distribute it to the Virginia area ambulance 113.19 district. 113.20 Subd. 4. [EXPENDITURES.] The taxes collected under 113.21 subdivision 3 shall be used for licensed ambulance services and 113.22 first responders. Licensed ambulance services shall receive 80 113.23 percent of the available funds and first responders shall 113.24 receive 20 percent of the available funds. The amounts 113.25 allocated to first responders shall be used for education, 113.26 training, and reimbursement for their allowable expenses. Only 113.27 education and training that meets the recognized education and 113.28 training guidelines set by the emergency medical services 113.29 regulatory board under Minnesota Statutes, chapter 144E, shall 113.30 be reimbursable under this subdivision. 113.31 Subd. 5. [PUBLIC INDEBTEDNESS.] The district may incur 113.32 debt in the manner provided for a municipality by Minnesota 113.33 Statutes, chapter 475, when necessary to accomplish a duty 113.34 charged to it. 113.35 Subd. 6. [WITHDRAWAL.] Upon two years' notice, a city or 113.36 town may withdraw from the district. Its territory shall remain 114.1 subject to taxation for debt incurred prior to its withdrawal 114.2 under Minnesota Statutes, chapter 475. 114.3 Subd. 7. [EFFECTIVE DATE.] This section is effective (1) 114.4 in the cities of Virginia, Mountain Iron, and Gilbert, and the 114.5 towns of Pike, Clinton, McDavitt, Colvin, Sandy, Cherry, 114.6 Ellsburg, Wouri, Lavell, Cotton, and Embarrass, the day after 114.7 compliance with Minnesota Statutes, section 645.021, subdivision 114.8 2, by the governing body of each, and (2) for unorganized 114.9 townships described in subdivision 1, paragraph (b), clauses (1) 114.10 to (6), the day after compliance with Minnesota Statutes, 114.11 section 645.021, subdivision 2, by the St. Louis county board, 114.12 provided that the district must be established by September 1, 114.13 2000. Any of the cities, towns, and unorganized townships 114.14 listed in subdivision 1 that do not join the district initially 114.15 may join the district after its establishment. 114.16 Sec. 57. [ST. LOUIS COUNTY; UTILITY PERSONAL PROPERTY 114.17 EXEMPTION.] 114.18 (a) An electric generating facility with a capacity of 114.19 110,000 kilowatts located in St. Louis County whose operation is 114.20 integral to the development and operation of a new, adjacent 114.21 industrial park is exempt from property taxes on attached 114.22 machinery and other personal property for replacement equipment 114.23 and improvements installed after July 1, 1997. If the 114.24 industrial park is not built by July 1, 2001, this exemption 114.25 expires. 114.26 (b) The governing bodies of the county, city or town, and 114.27 school district must each approve by resolution the exemption of 114.28 the personal property under this section. The resolution shall 114.29 contain the number of years for which the exemption is granted. 114.30 Each of the governing bodies shall file a copy of the resolution 114.31 with the county auditor. The county auditor shall publish the 114.32 resolutions in newspapers of general circulation within the 114.33 county. The voters of the county may request a referendum on 114.34 the proposed exemption by filing a petition within 30 days after 114.35 the resolutions are published. The petition must be signed by 114.36 voters who reside in the county. The number of signatures must 115.1 equal at least ten percent of the number of persons voting in 115.2 the county in the last general election. If such a petition is 115.3 timely filed, the resolutions are not effective until they have 115.4 been submitted to the voters residing in the county at a general 115.5 or special election and a majority of votes cast on the question 115.6 of approving the resolution are in the affirmative. The 115.7 commissioner of revenue shall prepare a suggested form of 115.8 question to be presented at the referendum. 115.9 (c) The exemption under this section is limited to a 115.10 maximum of five years, beginning with the assessment year 115.11 immediately following when the personal property is put in 115.12 operation and expires thereafter. 115.13 Sec. 58. [WASHINGTON COUNTY; LEVY TO FUND THE COUNTY 115.14 HOUSING AND REDEVELOPMENT AUTHORITY.] 115.15 Subdivision 1. [AUTHORIZATION.] In addition to all other 115.16 levies authorized by law, Washington county may levy an amount 115.17 not to exceed $2,000,000 over a ten-year period beginning in 115.18 1997 for taxes payable in 1998, and transfer the proceeds of the 115.19 levy to the Washington county housing and redevelopment 115.20 authority to be used to support the activities of the authority, 115.21 which may include refinancing of indebtedness of the authority, 115.22 in the city of Landfall. 115.23 Subd. 2. [LOCAL APPROVAL.] This section is effective upon 115.24 approval by the governing body of Washington county and 115.25 compliance with Minnesota Statutes, section 645.021, subdivision 115.26 3. 115.27 Sec. 59. [BROOKLYN PARK; CERTIFICATION OF CHARGES; 115.28 DEFINITIONS.] 115.29 Subdivision 1. [SCOPE.] For the purpose of sections 60 and 115.30 61, the terms defined in this section have the meanings given 115.31 them. 115.32 Subd. 2. [ASSOCIATION.] "Association" has the meaning 115.33 given it in Minnesota Statutes, section 515B.1-103, paragraph 115.34 (4). 115.35 Subd. 3. [AUTHORITY.] "Authority" means the Brooklyn Park 115.36 economic development authority. 116.1 Subd. 4. [COMMON ELEMENTS.] "Common elements" has the 116.2 meaning given it in Minnesota Statutes, section 515B.1-103, 116.3 paragraph (7). 116.4 Subd. 5. [COMMON ELEMENT IMPROVEMENTS.] "Common element 116.5 improvements" means any physical repair, replacement, or 116.6 modification of, or addition to, the common elements of a common 116.7 interest community. 116.8 Subd. 6. [COMMON INTEREST COMMUNITY.] "Common interest 116.9 community" has the meaning given it in Minnesota Statutes, 116.10 section 515B.1-103, paragraph (10). 116.11 Subd. 7. [UNIT.] "Unit" has the meaning given it in 116.12 Minnesota Statutes, section 515B.1-103, paragraph (33). 116.13 Subd. 8. [UNIT OWNER.] "Unit owner" has the meaning given 116.14 it in Minnesota Statutes, section 515B.1-103, paragraph (35). 116.15 Sec. 60. [BROOKLYN PARK; AUTHORITY GRANTED.] 116.16 If: 116.17 (1) the authority lends or agrees to lend funds to an 116.18 association for the provision or construction of common element 116.19 improvements; 116.20 (2) the association has duly levied common expense 116.21 assessments against the units in order to provide the 116.22 association with funds to: 116.23 (i) pay principal and interest on the loan; 116.24 (ii) provide coverage in excess of principal and interest 116.25 payments on the loan; 116.26 (iii) create or replenish reserve funds pledged as security 116.27 for the loan; or 116.28 (iv) pay expenses related to the loan or the assessments 116.29 that are identified in the loan agreement between the authority 116.30 and the association; 116.31 (3) a unit owner has become delinquent in the payment of 116.32 any assessment installment; and 116.33 (4) the association has declared the entire amount of the 116.34 assessment due and owing pursuant to Minnesota Statutes, section 116.35 515B.3-115, paragraph (k), then 116.36 the authority may certify the delinquent assessment, together 117.1 with interest and penalties, to the county auditor for 117.2 collection to the same extent and in the same manner provided by 117.3 law for the assessment and collection of real estate taxes. 117.4 Sec. 61. [BROOKLYN PARK; DISCLOSURE REQUIRED.] 117.5 For any common interest community located in the city of 117.6 Brooklyn Park, the disclosure statement required under Minnesota 117.7 Statutes, section 515B.4-102, must include a description of the 117.8 potential applicability and consequences of section 60. 117.9 Sec. 62. [MINNEAPOLIS UTILITY CHARGE ASSESSMENTS.] 117.10 Subdivision 1. [BECOMES LIEN WHEN DELINQUENT.] An 117.11 assessment levied by the city of Minneapolis for delinquent 117.12 utility charges, and interest and penalties on the charges under 117.13 Minnesota Statutes, section 272.32; Laws 1969, chapter 499; Laws 117.14 1973, chapter 320; or Laws 1994, chapter 587, article 9, section 117.15 4, with accruing interest, is a lien upon all property included 117.16 in the assessment, concurrent with general taxes, from the date 117.17 the utility charges become delinquent, regardless of the date 117.18 the assessment is levied. The time of effect of a lien attached 117.19 for delinquent utility charge assessments supersedes any 117.20 contrary law in Minnesota Statutes, section 272.32 or 429.061. 117.21 Subd. 2. [WHEN DELINQUENT; STATEMENT REQUIRED.] Utility 117.22 charges become delinquent for the purposes of this section when 117.23 they are set forth in a statement sent by the city of 117.24 Minneapolis to the current billpayer of the property subject to 117.25 the utility charges and are not paid in full on or before the 117.26 due date stated in the statement. The utility billing office of 117.27 the city of Minneapolis shall provide a written summary of 117.28 unpaid utility statements within ten business days of receipt of 117.29 a written request for a specified real property title 117.30 transaction. If a summary is not provided by the utility 117.31 billing office within the requested time or a previous statement 117.32 charge is omitted, those charges and the lien under subdivision 117.33 1 are not enforceable against third parties who rely upon the 117.34 summary for real property transaction purposes. 117.35 Subd. 3. [UTILITY CHARGES DEFINED.] "Utility charges," in 117.36 this section, includes all fees, taxes, special charges, or 118.1 other charges imposed by the city of Minneapolis in connection 118.2 with the provision of services for sewer, water, solid waste 118.3 collection and management, nuisance abatement, or other services 118.4 or improvements specified in Minnesota Statutes, section 118.5 429.101; Laws 1969, chapter 499; and Laws 1973, chapter 320. 118.6 Subd. 4. [NOT CONVEYANCES.] The statement issued by the 118.7 city of Minneapolis for utility charges or any instrument in 118.8 writing created in connection with any assessment for delinquent 118.9 utility charges subject to this section are not conveyances as 118.10 defined in Minnesota Statutes, section 507.01, and are not 118.11 subject to the requirements of Minnesota Statutes, chapter 507, 118.12 regarding conveyances of real estate. 118.13 Sec. 63. [BROOKLYN CENTER, RICHFIELD, AND ST. LOUIS PARK; 118.14 APARTMENT EXCLUSIONS.] 118.15 Subdivision 1. [IMPROVEMENTS MADE TO CERTAIN 118.16 APARTMENTS.] (a) Notwithstanding any other provisions to the 118.17 contrary, the market value increase resulting from improvements 118.18 made after the effective date of this act and prior to January 118.19 1, 1999, to qualifying property located in the city of Brooklyn 118.20 Center, Richfield, or St. Louis Park shall be excluded for 118.21 assessment purposes under the conditions provided in this 118.22 subdivision. 118.23 (b) "Qualifying property" means property that meets all of 118.24 the following criteria: 118.25 (1) the building is at least 30 years old at the time of 118.26 the improvements; 118.27 (2) the building is residential real estate of four or more 118.28 units and is classified under Minnesota Statutes, section 118.29 273.13, subdivision 25, as class 4a, 4c, or 4d property; and 118.30 (3) the total cost of the qualifying improvements exceeds 118.31 $5,000 per unit. 118.32 (c) A building permit must have been issued prior to the 118.33 commencement of the improvements. Only improvements to the 118.34 residential structure and garages qualify under this 118.35 subdivision. The assessor shall require an application, 118.36 including, if unknown by the assessor, documentation of the age 119.1 of the building from the owner. The application may be filed 119.2 subsequent to the date of the building permit provided that the 119.3 application is filed prior to the next assessment date. 119.4 (d) If the property qualifies under this subdivision, the 119.5 assessor shall note the qualifying value of the improvements on 119.6 the property's record and that amount shall be subtracted from 119.7 the qualifying property's market value for the five assessment 119.8 years immediately following the year in which the improvements 119.9 were completed, at which time the assessor shall determine the 119.10 property's estimated market value, and 20 percent of the 119.11 qualifying value shall be added back in each of the next five 119.12 subsequent assessment years. The assessor may require from the 119.13 owner any documentation necessary to verify that the cost of 119.14 improvements exceed the $5,000 per unit minimum. 119.15 Subd. 2. [EFFECTIVE DATE.] This section is effective for 119.16 each of the cities of Brooklyn Center, Richfield, and St. Louis 119.17 Park upon compliance with Minnesota Statutes, section 645.021, 119.18 subdivision 3, by the governing body of that city. 119.19 Sec. 64. [PROPERTY TAX ABATEMENTS; FLOOD PROPERTY.] 119.20 Subdivision 1. [AUTHORIZATION.] Notwithstanding the 119.21 requirements of Minnesota Statutes, section 375.192, the county 119.22 board of a qualified county may grant abatements of the full 119.23 amount of taxes on eligible property for taxes payable in 1997 119.24 as provided in this section. The owner of the property is not 119.25 required to apply for the abatement. 119.26 Subd. 2. [DEFINITIONS.] (a) As used in this section, the 119.27 terms defined in this subdivision have the meanings given them. 119.28 (b) "Qualified county" means any county that has been 119.29 designated between April 1, 1997, and May 1, 1997, by the 119.30 director of the Federal Emergency Management Agency as eligible 119.31 for federal aid due to flooding. 119.32 (c) "Eligible property" means a parcel of taxable property 119.33 located in a qualified county that contains a structure that has 119.34 been determined by the assessor to have lost over 50 percent of 119.35 its estimated market value due to flooding and flood damage. In 119.36 the case of agricultural property, the abatement is limited to 120.1 the taxes on the parcel attributable to the value of the house, 120.2 garage, and surrounding one acre, if the house has lost over 50 120.3 percent of its estimated market value, and the tax attributable 120.4 to the value of any farm buildings and structures that have lost 120.5 over 50 percent of their estimated market value. 120.6 Subd. 3. [ASSESSORS' DUTIES.] As soon as practicable, 120.7 local and county assessors in qualified counties shall notify 120.8 the county board and property owners of parcels of eligible 120.9 property. 120.10 Sec. 65. [DISASTER AREA; DUE DATE EXTENDED FOR BUSINESS 120.11 PROPERTY TAXES.] 120.12 (a) Notwithstanding Minnesota Statutes, section 279.01, 120.13 subdivision 1, a penalty shall not accrue if (1) because of a 120.14 natural disaster, a taxpayer is unable to pay the first half of 120.15 the payable 1997 property taxes on class 3a or 3b property, 120.16 classified under Minnesota Statutes, section 273.13, subdivision 120.17 24, located in an area designated by the Federal Emergency 120.18 Management Agency pursuant to a major disaster declaration 120.19 issued for Minnesota by President Clinton between April 1, 1997, 120.20 and April 14, 1997, and (2) the taxpayer pays the first half of 120.21 the payable 1997 taxes by October 15, 1997. 120.22 (b) If the first one half payment is paid after October 15, 120.23 1997, then all penalties that would have occurred on the due 120.24 date under Minnesota Statutes, section 279.01, subdivision 1, 120.25 shall be charged on the amount of the unpaid tax. 120.26 (c) The property taxpayer shall attach to the payment a 120.27 statement that the property is located in a disaster area and 120.28 qualified for an extension under this section. 120.29 Sec. 66. [DELAY OF FINANCIAL REPORT FILING; DISASTER 120.30 AREAS.] 120.31 For any city or town located in whole or in part within a 120.32 county that has been designated between April 1, 1997, and May 120.33 1, 1997, by the director of the Federal Emergency Management 120.34 Agency as eligible for federal aid due to flooding, the deadline 120.35 by which financial reports are required to be filed under 120.36 Minnesota Statutes, section 471.697 or 471.698, is extended by 121.1 90 days. 121.2 Sec. 67. [LOW-INCOME HOUSING CREDITS; PRIORITY IN DISASTER 121.3 AREAS.] 121.4 For its 1998 allocation of low-income housing tax credits 121.5 through the greater Minnesota pool under Minnesota Statutes, 121.6 section 462A.222, the Minnesota housing finance agency must give 121.7 priority to projects located in areas that have lost low-income 121.8 housing due to the floods that occurred in this state during 121.9 1997. 121.10 Sec. 68. [ELDERLY ASSISTED LIVING FACILITIES.] 121.11 Subdivision 1. [APPLICATION.] To facilitate a review by 121.12 the 1998 legislature of the property taxation of elderly 121.13 assisted living facilities and the development of standards and 121.14 criteria for the taxation of these facilities, this section: 121.15 (1) requires the commissioner of revenue to conduct a 121.16 survey of the tax status of these facilities under subdivision 121.17 2; and 121.18 (2) prohibits changes in assessment practices and policies 121.19 regarding these facilities under subdivision 3. 121.20 Subd. 2. [REPORT BY COMMISSIONER OF REVENUE.] The 121.21 commissioner of revenue shall survey all county assessors on the 121.22 tax status of all elderly assisted living facilities as defined 121.23 in Minnesota Statutes, section 273.13, subdivision 25a, located 121.24 in the state, and report the findings to the chairs of the house 121.25 and senate tax committees by February 1, 1998. The survey must 121.26 include, but is not limited to, estimates of the amount of 121.27 charitable contributions, if any, for each elderly assisted 121.28 living facility and the relative portion of those charitable 121.29 contributions to the total operating costs of the elderly 121.30 assisted living facility. 121.31 Subd. 3. [MORATORIUM ON CHANGES IN ASSESSMENT 121.32 PRACTICES.] (a) An assessor may not change the current practices 121.33 or policies used generally in assessing elderly assisted living 121.34 facilities. 121.35 (b) An assessor may not change the assessment of an 121.36 existing elderly assisted living facility, unless the change is 122.1 made as a result of a change in ownership, occupancy, or use of 122.2 the facility. This paragraph does not apply to: 122.3 (1) a facility that was constructed during calendar year 122.4 1997; 122.5 (2) a facility that was converted to an elderly assisted 122.6 living facility during calendar year 1997; or 122.7 (3) a change in market value. 122.8 (c) This subdivision expires and no longer applies on the 122.9 earlier of: 122.10 (1) the enactment of legislation establishing criteria for 122.11 the property taxation of elderly assisted living facilities; or 122.12 (2) final adjournment of the 1998 legislature. 122.13 Subd. 4. [DEFINITION.] For purposes of this section, 122.14 "elderly assisted living facility" has the meaning given in 122.15 Minnesota Statutes, section 273.13, subdivision 25a. 122.16 Sec. 69. [INSTRUCTION TO THE REVISOR.] 122.17 The revisor of statutes shall change the phrase "implicit 122.18 price deflator for state and local government purchases of goods 122.19 and services" wherever it appears in the next edition of 122.20 Minnesota Statutes and Minnesota Rules to "implicit price 122.21 deflator for government consumption expenditures and gross 122.22 investment for state and local governments" unless the reference 122.23 is to the implicit price deflator as of a specified date before 122.24 January 1, 1996. 122.25 Sec. 70. [REPEALER.] 122.26 (a) Minnesota Statutes 1996, sections 270B.12, subdivision 122.27 11; 276.012; 290A.055; and 290A.26; and Laws 1995, chapter 264, 122.28 article 4, as amended by Laws 1996, chapter 471, article 3, are 122.29 repealed. Notwithstanding Minnesota Statutes, section 645.34, 122.30 the sections of statutes amended by the repealed Laws 1995, 122.31 chapter 264, article 4, as amended, remain in effect as if not 122.32 so amended. 122.33 (b) Minnesota Statutes 1996, section 469.181, is repealed. 122.34 (c) Minnesota Statutes 1996, sections 276.20; and 276.21, 122.35 are repealed. 122.36 Sec. 71. [EFFECTIVE DATE.] 123.1 Section 1 is effective for aids distributed in 1999 and 123.2 thereafter. 123.3 Sections 2 to 4, 6, 17, 23 to 25, 32, 51, 57, 64 to 67, and 123.4 70, paragraph (a), are effective the day following final 123.5 enactment. 123.6 Sections 7, 8, 12 to 16, 18, 20, 21, 45 to 48, and 70, 123.7 paragraph (c), are effective for the 1997 assessment and 123.8 thereafter, for taxes payable in 1998 and thereafter. 123.9 Section 10 is effective beginning with the 1997 assessment. 123.10 Section 11 is effective beginning with the 1997 assessment 123.11 and ending with the 2002 assessment, for qualifying improvements 123.12 made after January 2, 1993, to a residence that has been 123.13 relocated; provided, that any residence that originally 123.14 qualifies in that time period is allowed to receive the benefits 123.15 provided under section 11 for the full ten-year time period. In 123.16 order to qualify for a market value exclusion under Minnesota 123.17 Statutes, section 273.11, subdivision 10, for the 1997 123.18 assessment for improvements made to a relocated residence, a 123.19 homeowner must notify the assessor by July 1, 1997. 123.20 Section 19 is effective payable 1999 and thereafter. 123.21 Section 22 is effective for the abstracts of exempt real 123.22 property filed in 1998, and thereafter. 123.23 Sections 33 and 42 are effective for agreements executed on 123.24 or after the day following final enactment. 123.25 Section 44 is effective the day following final enactment 123.26 for all housing development projects. 123.27 Section 49 is effective for aids payable in 1998 and 123.28 thereafter. 123.29 Sections 59 to 61 are effective the day after the governing 123.30 body of Brooklyn Park complies with Minnesota Statutes, section 123.31 645.021, subdivision 3. 123.32 Section 70, paragraph (b), is effective for property tax 123.33 deferrals granted after June 30, 1997. 123.34 ARTICLE 3 123.35 LEVY LIMITS 123.36 Section 1. Minnesota Statutes 1996, section 275.16, is 124.1 amended to read: 124.2 275.16 [COUNTY AUDITOR TO FIX AMOUNT OF LEVY.] 124.3 If any such municipality shall return to the county auditor 124.4 a levy greater than permitted by chapters 124, 124A, 124B, 136C, 124.5and136D,andsections 275.124 to 275.16, and sections 275.70 to 124.6 275.74, such county auditor shall extend only such amount of 124.7 taxes as the limitations herein prescribed will permit; 124.8 provided, if such levy shall include any levy for the payment of 124.9 bonded indebtedness or judgments, such levies for bonded 124.10 indebtedness or judgments shall be extended in full, and the 124.11 remainder of the levies shall be reduced so that the total 124.12 thereof, including levies for bonds and judgments, shall not 124.13 exceed such amount as the limitations herein prescribed will 124.14 permit. 124.15 Sec. 2. Minnesota Statutes 1996, section 275.62, 124.16 subdivision 1, is amended to read: 124.17 Subdivision 1. [REPORT ON TAXES LEVIED.] The commissioner 124.18 of revenue shall establish procedures for the annual reporting 124.19 of local government levies. Each local governmental unit shall 124.20 submit a report to the commissioner by December 30 of the year 124.21 in which the tax is levied. The report shall include, but is 124.22 not limited to, information on the amount of the tax levied by 124.23 the governmental unit for the following purposes: 124.24 (1) debt, which includes taxes levied for the purposes 124.25 defined in Minnesota Statutes 1991 Supplement, section 275.50, 124.26 subdivision 5, clauses (b), (c), (d), and (e); 124.27 (2) social services and related programs, which include 124.28 taxes levied for the purposes defined in Minnesota Statutes 1991 124.29 Supplement, section 275.50, subdivision 5, clauses (a), (j), and 124.30 (v); 124.31 (3) libraries, which include taxes levied for the purposes 124.32 defined in Minnesota Statutes 1991 Supplement, section 275.50, 124.33 subdivision 5, clause (n);and124.34 (4) for counties only, the amount of levy needed to fund 124.35 increased county costs associated with the welfare reform under 124.36 Minnesota Laws 1997, chapter 85, including increased 125.1 administration and program costs of the income maintenance 125.2 programs and also related support services as they relate 125.3 directly to the welfare reform; and 125.4 (5) other levies, which include the taxes levied for all 125.5 purposes not included in clause (1), (2),or(3), or (4). 125.6 Sec. 3. [275.70] [LEVY LIMITATIONS; DEFINITIONS.] 125.7 Subdivision 1. [APPLICATION.] For the purposes of sections 125.8 275.70 to 275.74, the following terms shall have the meanings 125.9 given them, unless provided otherwise. 125.10 Subd. 2. [IMPLICIT PRICE DEFLATOR.] "Implicit price 125.11 deflator" means the implicit price deflator for government 125.12 consumption expenditures and gross investment for state and 125.13 local governments prepared by the bureau of economic analysis of 125.14 the United States Department of Commerce for the 12-month period 125.15 ending March 31 of the levy year. 125.16 Subd. 3. [LOCAL GOVERNMENTAL UNIT.] "Local governmental 125.17 unit" means a county, or a statutory or home rule charter city 125.18 with a population greater than 2,500. 125.19 Subd. 4. [POPULATION AND HOUSEHOLD ESTIMATES.] "Population" 125.20 or "number of households" means the population or number of 125.21 households for the local governmental unit as established by the 125.22 last federal census, by a census taken under section 275.14, or 125.23 by an estimate made by the metropolitan council or by the state 125.24 demographer under section 4A.02, whichever is most recent as to 125.25 the stated date of the count or estimate up to and including 125.26 July 1 of the current levy year. 125.27 Subd. 5. [SPECIAL LEVIES.] "Special levies" means those 125.28 portions of ad valorem taxes levied by a local governmental unit 125.29 for the following purposes or in the following manner: 125.30 (1) to pay the costs of the principal and interest on 125.31 bonded indebtedness or to reimburse for the amount of liquor 125.32 store revenues used to pay the principal and interest due on 125.33 municipal liquor store bonds in the year preceding the year for 125.34 which the levy limit is calculated; 125.35 (2) to pay the costs of principal and interest on 125.36 certificates of indebtedness issued for any corporate purpose 126.1 except for the following: 126.2 (i) tax anticipation or aid anticipation certificates of 126.3 indebtedness; 126.4 (ii) certificates of indebtedness issued under sections 126.5 298.28 and 298.282; 126.6 (iii) certificates of indebtedness used to fund current 126.7 expenses or to pay the costs of extraordinary expenditures that 126.8 result from a public emergency; or 126.9 (iv) certificates of indebtedness used to fund an 126.10 insufficiency in tax receipts or an insufficiency in other 126.11 revenue sources; 126.12 (3) to provide for the bonded indebtedness portion of 126.13 payments made to another political subdivision of the state of 126.14 Minnesota; 126.15 (4) to fund payments made to the Minnesota state armory 126.16 building commission under section 193.145, subdivision 2, to 126.17 retire the principal and interest on armory construction bonds; 126.18 (5) for unreimbursed expenses related to flooding that 126.19 occurred during the first half of calendar year 1997, as allowed 126.20 by the commissioner of revenue under section 275.74, paragraph 126.21 (b); 126.22 (6) for local units of government located in an area 126.23 designated by the Federal Emergency Management Agency pursuant 126.24 to a major disaster declaration issued for Minnesota by 126.25 President Clinton after April 1, 1997, and before April 21, 126.26 1997, for the amount of tax dollars lost due to abatements 126.27 authorized under section 273.123, subdivision 7, to the extent 126.28 that they are related to the major disaster; 126.29 (7) property taxes approved by voters which are levied 126.30 against the referendum market value as provided under section 126.31 275.61; 126.32 (8) to fund matching requirements needed to qualify for 126.33 federal or state grants or programs to the extent that either 126.34 (i) the matching requirement exceeds the matching requirement in 126.35 calendar year 1997, or (ii) it is a new matching requirement 126.36 that didn't exist prior to 1998; and 127.1 (9) to pay the expenses reasonably and necessarily incurred 127.2 in preparing for or repairing the effects of natural disaster 127.3 including the occurrence or threat of widespread or severe 127.4 damage, injury, or loss of life or property resulting from 127.5 natural causes, in accordance with standards formulated by the 127.6 emergency services division of the state department of public 127.7 safety, as allowed by the commissioner of revenue under section 127.8 275.74, paragraph (b). 127.9 Sec. 4. [275.71] [LEVY LIMITS.] 127.10 Subdivision 1. [LIMIT ON LEVIES.] Notwithstanding any 127.11 other provision of law or municipal charter to the contrary 127.12 which authorize ad valorem taxes in excess of the limits 127.13 established by sections 275.70 to 275.74, the provision of this 127.14 section shall apply to local governmental units for all purposes 127.15 other than those for which special levies and special 127.16 assessments are made. 127.17 Subd. 2. [LEVY LIMIT BASE.] (a) The levy limit base for a 127.18 local governmental unit for taxes levied in 1997 shall be equal 127.19 to the sum of: 127.20 (1) the amount the local governmental unit levied in 1996, 127.21 less any amount levied for debt, as reported to the department 127.22 of revenue under section 275.62, subdivision 1, clause (1), and 127.23 less any tax levied in 1996 against market value as provided for 127.24 in section 275.61; 127.25 (2) the amount of aids the local governmental unit was 127.26 certified to receive in calendar year 1997 under sections 127.27 477A.011 to 477A.03 before any reductions for state tax 127.28 increment financing aid under section 273.1399, subdivision 5; 127.29 (3) the amount of homestead and agricultural credit aid the 127.30 local governmental unit was certified to receive under section 127.31 273.1398 in calendar year 1997 before any reductions for tax 127.32 increment financing aid under section 273.1399, subdivision 5; 127.33 (4) the amount of local performance aid the local 127.34 governmental unit was certified to receive in calendar year 1997 127.35 under section 477A.05; 127.36 (5) the amount of any payments certified to the local 128.1 government unit in 1997 under sections 298.28 and 298.282; and 128.2 (6) the amount of any adjustments authorized under section 128.3 275.72. 128.4 If a governmental unit was not required to report under 128.5 section 275.62 for taxes levied in 1997, the commissioner shall 128.6 request information on levies used for debt from the local 128.7 governmental unit and adjust its levy limit base accordingly. 128.8 (b) The levy limit base for a local governmental unit for 128.9 taxes levied in 1998 is limited to its adjusted levy limit base 128.10 in the previous year, subject to any adjustments under section 128.11 275.72. 128.12 Subd. 3. [ADJUSTED LEVY LIMIT BASE.] For taxes levied in 128.13 1997 and 1998, the adjusted levy limit is equal to the levy 128.14 limit base computed under subdivision 2, multiplied by: 128.15 (1) one plus a percentage equal to the percentage growth in 128.16 the implicit price deflator; and 128.17 (2) for all cities and for counties outside of the 128.18 seven-county metropolitan area, one plus a percentage equal to 128.19 the percentage increase in number of households, if any, for the 128.20 most recent 12-month period for which data is available; and 128.21 (3) for counties located in the seven-county metropolitan 128.22 area, one plus a percentage equal to the greater of the 128.23 percentage increase in the number of households in the county or 128.24 the percentage increase in the number of households in the 128.25 entire seven-county metropolitan area for the most recent 128.26 12-month period for which data is available. 128.27 Subd. 4. [PROPERTY TAX LEVY LIMIT.] For taxes levied in 128.28 1997 and 1998, the property tax levy limit for a local 128.29 governmental unit is equal to its adjusted levy limit base 128.30 determined under subdivision 3 plus any additional levy 128.31 authorized under section 275.73, which is levied against net tax 128.32 capacity, reduced by the sum of (1) the total amount of aids 128.33 that the local governmental unit is certified to receive under 128.34 sections 477A.011 to 477A.014, (2) homestead and agricultural 128.35 aids it is certified to receive under section 273.1398, (3) 128.36 local performance aid it is certified to receive under section 129.1 477A.05, and (4) taconite aids under sections 298.28 and 298.282 129.2 including any aid which was required to be placed in a special 129.3 fund for expenditure in the next succeeding year. 129.4 Subd. 5. [LEVIES IN EXCESS OF LEVY LIMITS.] If the levy 129.5 made by a city or county exceeds the levy limit provided in 129.6 sections 275.70 to 275.74, except when the excess levy is due to 129.7 the rounding of the rate in accordance with section 275.28, the 129.8 county auditor shall only extend the amount of taxes permitted 129.9 under sections 275.70 to 275.74, as provided for in section 129.10 275.16. 129.11 Sec. 5. [275.72] [LEVY LIMIT ADJUSTMENTS FOR CONSOLIDATION 129.12 AND ANNEXATION.] 129.13 Subdivision 1. [ADJUSTMENTS FOR CONSOLIDATION.] If all of 129.14 the area included in two or more local governmental units is 129.15 consolidated, merged, or otherwise combined to constitute a 129.16 single governmental unit, the levy limit base for the resulting 129.17 governmental unit in the first levy year in which the 129.18 consolidation is effective shall be equal to (1) the highest tax 129.19 rate in any of the merging governmental units in the previous 129.20 year multiplied by the net tax capacity of all the merging 129.21 governmental units in the previous year, minus (2) the sum of 129.22 all levies in the merging governmental units in the previous 129.23 year that qualify as special levies under section 275.70, 129.24 subdivision 3. 129.25 Subd. 2. [ADJUSTMENTS FOR ANNEXATION.] If a local 129.26 governmental unit increases its tax base through annexation of 129.27 an area which is not the area of an entire local governmental 129.28 unit, the levy limit base of the local governmental unit in the 129.29 first year in which the annexation is effective shall be equal 129.30 to its adjusted levy limit base from the previous year 129.31 multiplied by the ratio of the net tax capacity in the local 129.32 governmental unit after the annexation compared to its net tax 129.33 capacity before the annexation. 129.34 Subd. 3. [TRANSFER OF GOVERNMENTAL FUNCTIONS.] If a 129.35 function or service of one local governmental unit is 129.36 transferred to another local governmental unit, the levy limits 130.1 established under section 275.71 shall be adjusted by the 130.2 commissioner of revenue in such manner so as to fairly and 130.3 equitably reflect the reduced or increased property tax burden 130.4 resulting from the transfer. The aggregate of the adjusted 130.5 limitations shall not exceed the aggregate of the limitations 130.6 prior to adjustment. 130.7 Subd. 4. [EFFECTIVE DATE FOR LEVY LIMITS PURPOSES.] 130.8 Annexations, mergers, and shifts in services and functional 130.9 responsibilities that are effective by June 30 of the levy year 130.10 are included in the calculation of the levy limit for that levy 130.11 year. Annexations, mergers, and shifts in services and 130.12 functional responsibilities that are effective after June 30 of 130.13 a levy year are not included in the calculation of the levy 130.14 limit until the subsequent levy year. 130.15 Sec. 6. [275.73] [ELECTIONS FOR ADDITIONAL LEVIES.] 130.16 Subdivision 1. [ADDITIONAL LEVY AUTHORIZATION.] 130.17 Notwithstanding the provisions of sections 275.70 to 275.72, but 130.18 subject to other law or charter provisions establishing other 130.19 limitations on the amount of property taxes a local governmental 130.20 unit may levy, a local governmental unit may levy an additional 130.21 levy in any amount which is approved by the majority of voters 130.22 of the governmental unit voting on the question at a general or 130.23 special election. Notwithstanding section 275.61, any levy 130.24 authorized under this section shall be levied against net tax 130.25 capacity unless the levy required voter approval under another 130.26 general or special law or any charter provisions. When the 130.27 governing body of the local governmental unit resolves to 130.28 increase the levy pursuant to this section, it shall provide for 130.29 submission of the proposition of an additional levy at a general 130.30 or special election. Notice of the election shall be given in 130.31 the manner required by law. The notice shall state the purpose 130.32 and the maximum yearly amount of the additional levy. 130.33 Subd. 2. [LEVY EFFECTIVE DATE.] An additional levy 130.34 approved under subdivision 1 at a general or special election 130.35 held prior to September 1 in any levy year may be levied in that 130.36 same levy year and subsequent levy years. An additional levy 131.1 approved under subdivision 1 at a general or special election 131.2 held after August 31 in any levy year shall not be levied in 131.3 that same levy but may be levied in subsequent levy years. 131.4 Sec. 7. [275.74] [STATE REGULATION OF LEVIES.] 131.5 (a) The commissioner of revenue shall make all necessary 131.6 calculations for determining levy limits for local governmental 131.7 units and notify the affected governmental units of their levy 131.8 limits directly by August 1 of each levy year. The local 131.9 governmental unit shall report by September 15, in a manner 131.10 prescribed by the commissioner, the maximum amount of taxes it 131.11 plans to levy for each of the purposes listed under special 131.12 levies and any additional levy authorized under section 275.73, 131.13 along with any necessary documentation. The commissioner shall 131.14 review the proposed special levies and make any adjustments 131.15 needed. The commissioner's decision is final. The final 131.16 allowed special levy amounts and any levy limit adjustments 131.17 shall be certified back to the local governments by December 131.18 10. In addition, the commissioner of revenue shall notify all 131.19 county auditors on or before five working days after December 20 131.20 of the sum of the levy limit plus the total of allowed special 131.21 levies for each local governmental unit located within their 131.22 boundaries so that they may fix the levies as required in 131.23 section 275.16. The local governmental units shall provide the 131.24 commissioner of revenue with all information that the 131.25 commissioner deems necessary to make the calculations provided 131.26 for in sections 275.70 to 275.73. 131.27 (b) A local governmental unit may request authorization to 131.28 levy under section 275.70, subdivision 5, clause (5), if (i) the 131.29 governmental unit is located in an area designated by the 131.30 Federal Emergency Management Agency pursuant to a major disaster 131.31 declaration issued for Minnesota by President Clinton after 131.32 April 1, 1997, and before April 21, 1997, and (ii) the amount of 131.33 direct unreimbursed costs incurred by the governmental unit 131.34 related to the flooding and its clean up, including emergency 131.35 disaster assistance to residents, exceeds five percent of its 131.36 levy in 1997. A local governmental unit may request 132.1 authorization to levy for unreimbursed costs for other natural 132.2 disasters, except the 1997 floods, under section 275.70, 132.3 subdivision 5, clause (9). The local governmental unit must 132.4 submit a request to levy under section 275.70, subdivision 5, 132.5 clause (5) or (9), to the commissioner of revenue by September 132.6 15 of the levy year and the request must include information 132.7 documenting the estimated unreimbursed costs. The commissioner 132.8 of revenue may grant levy authority, up to the amount requested 132.9 based on the documentation submitted. All decisions of the 132.10 commissioner are final. The commissioner shall send a report to 132.11 the chairs of the house and senate tax committees on the levies 132.12 authorized and levied under this provision by February 28 of the 132.13 year following the levy year. 132.14 Sec. 8. [FARIBAULT COUNTY; CITY OF BLUE EARTH; SPECIAL 132.15 LEVY.] 132.16 The amount of taxes levied by Faribault county and by the 132.17 city of Blue Earth is a special levy for the purposes of levy 132.18 limits under Minnesota Statutes, sections 275.70 to 275.73, if 132.19 the levy's purpose is to raise the matching funds required to 132.20 receive restitution funds awarded by plea agreement in the case 132.21 of United States v. Darling International, Inc., for developing 132.22 environmental projects that will improve water quality in the 132.23 Blue Earth and Minnesota rivers. 132.24 Sec. 9. [EFFECTIVE DATE.] 132.25 Sections 1 to 7 are effective for taxes levied in 1997 and 132.26 1998, payable in 1998 and 1999. 132.27 Upon compliance with Minnesota Statutes, section 645.021, 132.28 subdivision 3, by the governing body of Faribault county or the 132.29 city of Blue Earth, section 8 is effective for taxes levied in 132.30 1997 and 1998 in the county or city that approves it. 132.31 ARTICLE 4 132.32 TRUTH IN TAXATION 132.33 Section 1. Minnesota Statutes 1996, section 275.065, 132.34 subdivision 1, is amended to read: 132.35 Subdivision 1. [PROPOSED LEVY.] (a) Notwithstanding any 132.36 law or charter to the contrary, on or before September 15, each 133.1 taxing authority, other than a school district, shall adopt a 133.2 proposed budget and shall certify to the county auditor the 133.3 proposed or, in the case of a town, the final property tax levy 133.4 for taxes payable in the following year. 133.5 (b) On or before September 30, each school district shall 133.6 certify to the county auditor the proposed property tax levy for 133.7 taxes payable in the following year. The school districtmay133.8 shall certify the proposed levy as: 133.9 (1)a specific dollar amount; orthe state determined 133.10 school levy amount as prescribed under section 124A.23, 133.11 subdivision 2; 133.12 (2) voter approved referendum and debt levies; and 133.13(2) an amount equal to(3) the sum of the remaining school 133.14 levies, or the maximum levy limitation certified by the 133.15 commissioner of children, families, and learningto the county133.16auditoraccording to section 124.918, subdivision 1, less the 133.17 amounts levied under clauses (1) and (2). 133.18 (c) If the board of estimate and taxation or any similar 133.19 board that establishes maximum tax levies for taxing 133.20 jurisdictions within a first class city certifies the maximum 133.21 property tax levies for funds under its jurisdiction by charter 133.22 to the county auditor by September 15, the city shall be deemed 133.23 to have certified its levies for those taxing jurisdictions. 133.24 (d) For purposes of this section, "taxing authority" 133.25 includes all home rule and statutory cities, towns, counties, 133.26 school districts, and special taxing districts as defined in 133.27 section 275.066. Intermediate school districts that levy a tax 133.28 under chapter 124 or 136D, joint powers boards established under 133.29 sections 124.491 to 124.495, and common school districts No. 133.30 323, Franconia, and No. 815, Prinsburg, are also special taxing 133.31 districts for purposes of this section. 133.32 Sec. 2. Minnesota Statutes 1996, section 275.065, is 133.33 amended by adding a subdivision to read: 133.34 Subd. 1a. [LEVY; SHARED, MERGED, CONSOLIDATED 133.35 SERVICES.] If two or more taxing authorities are in the process 133.36 of negotiating an agreement for sharing, merging, or 134.1 consolidating services between those taxing authorities at the 134.2 time the proposed levy is to be certified under subdivision 1, 134.3 each taxing authority involved in the negotiation shall certify 134.4 its total proposed levy as provided in that subdivision, 134.5 including a notification to the county auditor of the specific 134.6 service involved in the agreement which is not yet finalized. 134.7 The affected taxing authorities may amend their proposed levies 134.8 under subdivision 1 until October 10 for levy amounts relating 134.9 only to the specific service involved. 134.10 Sec. 3. Minnesota Statutes 1996, section 275.065, 134.11 subdivision 3, is amended to read: 134.12 Subd. 3. [NOTICE OF PROPOSED PROPERTY TAXES.] (a) The 134.13 county auditor shall prepare and the county treasurer shall 134.14 deliver after November 10 and on or before November 24 each 134.15 year, by first class mail to each taxpayer at the address listed 134.16 on the county's current year's assessment roll, a notice of 134.17 proposed property taxesand, in the case of a town, final134.18property taxes. 134.19 (b) The commissioner of revenue shall prescribe the form of 134.20 the notice. 134.21 (c) The notice must inform taxpayers that it contains the 134.22 amount of property taxes each taxing authorityother than a town134.23 proposes to collect for taxes payable the following yearand,134.24for a town, the amount of its final levy.ItIn the case of a 134.25 town, or in the case of the state determined portion of the 134.26 school district levy, the final tax amount will be its proposed 134.27 tax. The notice must clearly state that each taxing authority, 134.28 including regional library districts established under section 134.29 134.201, and including the metropolitan taxing districts as 134.30 defined in paragraph (i), but excluding all other special taxing 134.31 districts and towns, will hold a public meeting to receive 134.32 public testimony on the proposed budget and proposed or final 134.33 property tax levy, or, in case of a school district, on the 134.34 current budget and proposed property tax levy. It must clearly 134.35 state the time and place of each taxing authority's meeting and 134.36 an address where comments will be received by mail. 135.1 (d) The notice must state for each parcel: 135.2 (1) the market value of the property as determined under 135.3 section 273.11, and used for computing property taxes payable in 135.4 the following year and for taxes payable in the current year; 135.5 and, in the case of residential property, whether the property 135.6 is classified as homestead or nonhomestead. The notice must 135.7 clearly inform taxpayers of the years to which the market values 135.8 apply and that the values are final values; 135.9 (2) the items listed below, shown separately by county, 135.10 city or town,school district excess referenda levystate 135.11 determined school tax net of the education homestead credit 135.12 under section 273.1382,remainingvoter approved school levy, 135.13 other local schooldistrictlevy,regional library district, if135.14in existence, the total of the metropolitan special taxing135.15districts as defined in paragraph (i)and the sum of 135.16 theremainingspecial taxing districts, and as a total ofthe135.17 all taxing authorities, including all special taxing districts,135.18the proposed or, for a town, final net tax on the property for135.19taxes payable the following year and the actual tax for taxes135.20payable the current year: 135.21 (i) the actual tax for taxes payable in the current year; 135.22 (ii) the tax change due to spending factors, defined as the 135.23 proposed tax minus the constant spending tax amount; 135.24 (iii) the tax change due to other factors, defined as the 135.25 constant spending tax amount minus the actual current year tax; 135.26 and 135.27 (iv) the proposed tax amount. 135.28 In the case of a town or the state determined school tax, 135.29 the final tax shall also be its proposed tax unless the town 135.30 changes its levy at a special town meeting under section 135.31 365.52. If a school district has certified under section 135.32 124A.03, subdivision 2, that a referendum will be held in the 135.33 school district at the November general election, the county 135.34 auditor must note next to the school district's proposed amount 135.35 that a referendum is pending and that, if approved by the 135.36 voters, the tax amount may be higher than shown on the 136.1 notice.For the purposes of this subdivision, "school district136.2excess referenda levy" means school district taxes for operating136.3purposes approved at referendums, including those taxes based on136.4net tax capacity as well as those based on market value.136.5"School district excess referenda levy" does not include school136.6district taxes for capital expenditures approved at referendums136.7or school district taxes to pay for the debt service on bonds136.8approved at referenda.In the case of the city of Minneapolis, 136.9 the levy for the Minneapolis library board and the levy for 136.10 Minneapolis park and recreation shall be listed separately from 136.11 the remaining amount of the city's levy. In the case of a 136.12 parcel where tax increment or the fiscal disparities areawide 136.13 tax under chapter 276A or 473F applies, the proposed tax levy on 136.14 the captured value or the proposed tax levy on the tax capacity 136.15 subject to the areawide tax must each be stated separately and 136.16 not included in the sum of the special taxing districts; and 136.17 (3) the increase or decreasein the amounts in clause (2)136.18frombetween the total taxes payable in the current yeartoand 136.19 the total proposedor, for a town, final taxes payable the136.20following yeartaxes, expressedas a dollar amount andas a 136.21 percentage. 136.22 (e) The notice must clearly state that the proposed or 136.23 final taxes do not include the following: 136.24 (1) special assessments; 136.25 (2) levies approved by the voters after the date the 136.26 proposed taxes are certified, including bond referenda, school 136.27 district levy referenda, and levy limit increase referenda; 136.28 (3) amounts necessary to pay cleanup or other costs due to 136.29 a natural disaster occurring after the date the proposed taxes 136.30 are certified; 136.31 (4) amounts necessary to pay tort judgments against the 136.32 taxing authority that become final after the date the proposed 136.33 taxes are certified; and 136.34 (5) the contamination tax imposed on properties which 136.35 received market value reductions for contamination. 136.36 (f) Except as provided in subdivision 7, failure of the 137.1 county auditor to prepare or the county treasurer to deliver the 137.2 notice as required in this section does not invalidate the 137.3 proposed or final tax levy or the taxes payable pursuant to the 137.4 tax levy. 137.5 (g) If the notice the taxpayer receives under this section 137.6 lists the property as nonhomestead and the homeowner provides 137.7 satisfactory documentation to the county assessor that the 137.8 property is owned and used as the owner's homestead, the 137.9 assessor shall reclassify the property to homestead for taxes 137.10 payable in the following year. 137.11 (h) In the case of class 4 residential property used as a 137.12 residence for lease or rental periods of 30 days or more, the 137.13 taxpayer must either: 137.14 (1) mail or deliver a copy of the notice of proposed 137.15 property taxes to each tenant, renter, or lessee; or 137.16 (2) post a copy of the notice in a conspicuous place on the 137.17 premises of the property. 137.18 The notice must be mailed or posted by the taxpayer by 137.19 November 27 or within three days of receipt of the notice, 137.20 whichever is later. A taxpayer may notify the county treasurer 137.21 of the address of the taxpayer, agent, caretaker, or manager of 137.22 the premises to which the notice must be mailed in order to 137.23 fulfill the requirements of this paragraph. 137.24 (i) For purposes of this subdivision, subdivisions 5a and 137.25 6, "metropolitan special taxing districts" means the following 137.26 taxing districts in the seven-county metropolitan area that levy 137.27 a property tax for any of the specified purposes listed below: 137.28 (1) metropolitan council under section 473.132, 473.167, 137.29 473.249, 473.325, 473.446, 473.521, 473.547, or 473.834; 137.30 (2) metropolitan airports commission under section 473.667, 137.31 473.671, or 473.672; and 137.32 (3) metropolitan mosquito control commission under section 137.33 473.711. 137.34 For purposes of this section, any levies made by the 137.35 regional rail authorities in the county of Anoka, Carver, 137.36 Dakota, Hennepin, Ramsey, Scott, or Washington under chapter 138.1 398A shall be included with the appropriate county's levy and 138.2 shall be discussed at that county's public hearing. 138.3(j) For taxes levied in 1996, payable in 1997 only, in the138.4case of a statutory or home rule charter city or town that138.5exercises the local levy option provided in section 473.388,138.6subdivision 7, the notice of its proposed taxes may include a138.7statement of the amount by which its proposed tax increase for138.8taxes payable in 1997 is attributable to its exercise of that138.9option, together with a statement that the levy of the138.10metropolitan council was decreased by a similar amount because138.11of the exercise of that option.138.12 Sec. 4. Minnesota Statutes 1996, section 275.065, is 138.13 amended by adding a subdivision to read: 138.14 Subd. 3a. [CONSTANT SPENDING LEVY AMOUNT.] (a) For 138.15 purposes of this section, "constant spending levy amount" for a 138.16 county, city, town, or special taxing district means the 138.17 property tax levy that the taxing authority would need to levy 138.18 so that the sum of (i) its levy, including its fiscal 138.19 disparities distribution levy under section 276A.06, subdivision 138.20 3, clause (a), or 473F.08, subdivision 3, clause (a), plus (ii) 138.21 its property tax aid amounts, would remain constant from the 138.22 current year to the proposed year, taking into account the 138.23 fiscal disparities distribution levy amounts and the property 138.24 tax aid amounts that have been certified for the proposed year. 138.25 For the purposes of this paragraph, property tax aids include 138.26 homestead and agricultural credit aid under section 273.1398, 138.27 subdivision 2, local government aid under section 477A.013, 138.28 local performance aid under section 477A.05, county criminal 138.29 justice aid under section 477A.0121, and family preservation aid 138.30 under section 477A.0122. 138.31 (b) For the state determined school tax, "constant spending 138.32 levy amount" is the same as the proposed tax. 138.33 (c) For the voter approved school levy, "constant spending 138.34 levy amount" is the result of the following computation: (i) 138.35 compute the current year's revenue per pupil in average daily 138.36 membership as the ratio of the voter approved referendum and 139.1 debt service levy plus aid revenue to the number of pupils in 139.2 average daily membership, as estimated at the time of levy 139.3 certification the previous December; (ii) compute the proposed 139.4 year's levy ratio as ratio of the proposed year's levy 139.5 limitation for voter approved referendum and debt service 139.6 revenue to the maximum referendum and debt service levy plus aid 139.7 revenue for the proposed year, at the time of proposed levy 139.8 certification in September; and (iii) compute the "constant 139.9 spending levy amount" as the product of the current year's 139.10 revenue per pupil from clause (i) times the proposed year's levy 139.11 ratio from clause (ii) times the proposed year's pupils in 139.12 average daily membership. 139.13 (d) For the sum of all other school levies not included in 139.14 paragraph (b) or (c), "constant spending levy amount" is the 139.15 result of the following computation: (i) compute the current 139.16 year's revenue per pupil in average daily membership as the 139.17 ratio of the levy plus associated aid revenue to the number of 139.18 pupils in average daily membership, as estimated at the time of 139.19 levy certification the previous December; (ii) compute the 139.20 proposed year's levy ratio as ratio of the proposed year's levy 139.21 limitation to the maximum levy plus associated aid revenue for 139.22 the proposed year, estimated at the time of proposed levy 139.23 certification in September; and (iii) compute the "constant 139.24 spending levy amount" as the product of the current year's 139.25 revenue per pupil from clause (i) times the proposed year's levy 139.26 ratio from clause (ii) times the proposed year's pupils in 139.27 average daily membership. 139.28 (e) Each year, the commissioner of children, families, and 139.29 learning must compute and report to the county auditor each 139.30 school district's constant spending levy amounts by September 139.31 30. In no case shall a constant spending levy amount be less 139.32 than $0. For the purposes of this subdivision, school homestead 139.33 and agricultural credit aid under section 273.1398, subdivision 139.34 2, shall be included in the other school levy category. For 139.35 purposes of this subdivision, the school fiscal disparities 139.36 distribution levy shall be apportioned proportionately among 140.1 levy categories. 140.2 (f) For the tax increment financing tax, and the fiscal 140.3 disparities tax, the "constant spending levy amount" is the same 140.4 as the proposed tax. 140.5 Sec. 5. Minnesota Statutes 1996, section 275.065, 140.6 subdivision 5a, is amended to read: 140.7 Subd. 5a. [PUBLIC ADVERTISEMENT.] (a) A city that has a 140.8 population of more than 2,500, county, a metropolitan special 140.9 taxing district as defined in subdivision 3, paragraph (i), a 140.10 regional library district established under section 134.201, or 140.11 school district shall advertise in a newspaper a notice of its 140.12 intent to adopt a budget and property tax levy or, in the case 140.13 of a school district, to review its current budget and proposed 140.14 property taxes payable in the following year, at a public 140.15 hearing. The notice must be published not less than two 140.16 business days nor more than six business days before the hearing. 140.17 The advertisement must be at least one-eighth page in size 140.18 of a standard-size or a tabloid-size newspaper. The 140.19 advertisement must not be placed in the part of the newspaper 140.20 where legal notices and classified advertisements appear. The 140.21 advertisement must be published in an official newspaper of 140.22 general circulation in the taxing authority. The newspaper 140.23 selected must be one of general interest and readership in the 140.24 community, and not one of limited subject matter. The 140.25 advertisement must appear in a newspaper that is published at 140.26 least once per week. 140.27 For purposes of this section, the metropolitan special 140.28 taxing district's advertisement must only be published in the 140.29 Minneapolis Star and Tribune and the Saint Paul Pioneer Press. 140.30 (b) The advertisement for school districts, metropolitan 140.31 special taxing districts, and regional library districts must be 140.32 in the following form, except that the notice for a school 140.33 district may include references to the current budget in regard 140.34 to proposed property taxes. 140.35 "NOTICE OF 140.36 PROPOSED PROPERTY TAXES 141.1 (City/County/School District/Metropolitan 141.2 Special Taxing District/Regional 141.3 Library District) of ......... 141.4 The governing body of ........ will soon hold budget hearings 141.5 and vote on the property taxes for (city/county/metropolitan 141.6 special taxing district/regional library district services that 141.7 will be provided in199_(year)/school district services that 141.8 will be provided in199_(year) and199_(year)). 141.9 NOTICE OF PUBLIC HEARING: 141.10 All concerned citizens are invited to attend a public hearing 141.11 and express their opinions on the proposed (city/county/school 141.12 district/metropolitan special taxing district/regional library 141.13 district) budget and property taxes, or in the case of a school 141.14 district, its current budget and proposed property taxes, 141.15 payable in the following year. The hearing will be held on 141.16 (Month/Day/Year) at (Time) at (Location, Address)." 141.17 (c) The advertisement for cities and counties must be in 141.18 the following form. 141.19 "NOTICE OF PROPOSED 141.20 TOTAL BUDGET AND PROPERTY TAXES 141.21 The (city/county) governing body or board of commissioners will 141.22 hold a public hearing to discuss the budget and to vote on the 141.23 amount of property taxes to collect for services the 141.24 (city/county) will provide in (year). 141.25 141.26 SPENDING: The total budget amounts below compare 141.27 (city's/county's) (year) total actual budget with the amount the 141.28 (city/county) proposes to spend in (year). 141.29 141.30 (Year) Total Proposed (Year) Change from 141.31 Actual Budget Budget (Year)-(Year) 141.32 141.33 $....... $....... ...% 141.34 141.35 TAXES: The property tax amounts below compare that portion of 141.36 the current budget levied in property taxes in (city/county) for 142.1 (year) with the property taxes the (city/county) proposes to 142.2 collect in (year). 142.3 142.4 (Year) Property Proposed (Year) Change from 142.5 Taxes Property Taxes (Year)-(Year) 142.6 142.7 $....... $....... ...% 142.8 142.9 ATTEND THE PUBLIC HEARING 142.10 All (city/county) residents are invited to attend the public 142.11 hearing of the (city/county) to express your opinions on the 142.12 budget and the proposed amount of (year) property taxes. The 142.13 hearing will be held on: 142.14 (Month/Day/Year/Time) 142.15 (Location/Address) 142.16 If the discussion of the budget cannot be completed, a time and 142.17 place for continuing the discussion will be announced at the 142.18 hearing. You are also invited to send your written comments to: 142.19 (City/County) 142.20 (Location/Address)" 142.21 (d) For purposes of this subdivision, the budget amounts 142.22 listed on the advertisement mean: 142.23 (1) for cities, the total government fund expenditures, as 142.24 defined by the state auditor under section 471.6965, less any 142.25 expenditures for improvements or services that are specially 142.26 assessed or charged under chapter 429, 430, 435, or the 142.27 provisions of any other law or charter; and 142.28 (2) for counties, the total government fund expenditures, 142.29 as defined by the state auditor under section 375.169, less any 142.30 expenditures for direct payments to recipients or providers for 142.31 the human service aids listed below: 142.32 (1) aid to families with dependent children under sections 142.33 256.82, subdivision 1, and 256.935, subdivision 1; 142.34 (2) medical assistance under sections 256B.041, subdivision 142.35 5, and 256B.19, subdivision 1; 142.36 (3) general assistance medical care under section 256D.03, 143.1 subdivision 6; 143.2 (4) general assistance under section 256D.03, subdivision 143.3 2; 143.4 (5) emergency assistance under section 256.871, subdivision 143.5 6; 143.6 (6) Minnesota supplemental aid under section 256D.36, 143.7 subdivision 1; 143.8 (7) preadmission screening under section 256B.0911, and 143.9 alternative care grants under section 256B.0913; 143.10 (8) general assistance medical care claims processing, 143.11 medical transportation and related costs under section 256D.03, 143.12 subdivision 4; 143.13 (9) medical transportation and related costs under section 143.14 256B.0625, subdivisions 17 to 18a; 143.15 (10) group residential housing under 256I.05, subdivision 143.16 8, transferred from programs in clauses (4) and (6); or 143.17 (11) any successor programs to those listed in clauses (1) 143.18 to (10). 143.19(c)(e) A city with a population of over 500 but not more 143.20 than 2,500 must advertise by posted notice as defined in section 143.21 645.12, subdivision 1. The advertisement must be posted at the 143.22 time provided in paragraph (a). It must be in the form required 143.23 in paragraph (b). 143.24(d)(f) For purposes of this subdivision, the population of 143.25 a city is the most recent population as determined by the state 143.26 demographer under section 4A.02. 143.27(e)(g) The commissioner of revenue, subject to the 143.28 approval of the chairs of the house and senate tax committees, 143.29 shall prescribe the form and format of the advertisement. 143.30(f) For calendar year 1993, each taxing authority required143.31to publish an advertisement must include on the advertisement a143.32statement that information on the increases or decreases of the143.33total budget, including employee and independent contractor143.34compensation in the prior year, current year, and proposed143.35budget year will be discussed at the hearing.143.36(g) Notwithstanding paragraph (f), for 1993, the144.1commissioner of revenue shall prescribe the form, format, and144.2content of an advertisement comparing current and proposed144.3expense budgets for the metropolitan council, the metropolitan144.4airports commission, and the metropolitan mosquito control144.5commission. The expense budget must include occupancy,144.6personnel, contractual and capital improvement expenses. The144.7form, format, and content of the advertisement must be approved144.8by the chairs of the house and senate tax committees prior to144.9publication.144.10 Sec. 6. Minnesota Statutes 1996, section 275.065, 144.11 subdivision 6, is amended to read: 144.12 Subd. 6. [PUBLIC HEARING; ADOPTION OF BUDGET AND LEVY.] 144.13 (a) For purposes of this section, the following terms shall 144.14 have the meanings given: 144.15 (1) "Initial hearing" means the first and primary hearing 144.16 held to discuss the taxing authority's proposed budget and 144.17 proposed property tax levy for taxes payable in the following 144.18 year, or, for school districts, the current budget and the 144.19 proposed property tax levy for taxes payable in the following 144.20 year. 144.21 (2) "Continuation hearing" means a hearing held to complete 144.22 the initial hearing, if the initial hearing is not completed on 144.23 its scheduled date. 144.24 (3) "Subsequent hearing" means the hearing held to adopt 144.25 the taxing authority's final property tax levy, and, in the case 144.26 of taxing authorities other than school districts, the final 144.27 budget, for taxes payable in the following year. 144.28 (b) Between November 29 and December 20, the governing 144.29 bodies of a city that has a population over 500, county, 144.30 metropolitan special taxing districts as defined in subdivision 144.31 3, paragraph (i), and regional library districts shall each hold 144.32aan initial public hearing to discuss and seek public comment 144.33 on its final budget and property tax levy for taxes payable in 144.34 the following year, and the governing body of the school 144.35 district shall holdaan initial public hearing to review its 144.36 current budget and proposed property tax levy for taxes payable 145.1 in the following year. The metropolitan special taxing 145.2 districts shall be required to hold only a single joint initial 145.3 public hearing, the location of which will be determined by the 145.4 affected metropolitan agencies. 145.5 (c) The initial hearing must be held after 5:00 p.m. if 145.6 scheduled on a day other than Saturday. No initial hearing may 145.7 be held on a Sunday. 145.8 (d) At the initial hearing under this subdivision, the 145.9 percentage increase in property taxes proposed by the taxing 145.10 authority, if any, and the specific purposes for which property 145.11 tax revenues are being increased must be discussed. During the 145.12 discussion, the governing body shall hear comments regarding a 145.13 proposed increase and explain the reasons for the proposed 145.14 increase. The public shall be allowed to speak and to ask 145.15 questions. At the public hearing, the school district must also 145.16 provide and discuss information on the distribution of its 145.17 revenues by revenue source, and the distribution of its spending 145.18 by program area. 145.19 (e) If the initial hearing is not completed on its 145.20 scheduled date, the taxing authority must announce, prior to 145.21 adjournment of the hearing, the date, time, and place for the 145.22 continuation of the hearing. The continuation hearing must be 145.23 held at least five business days but no more than 14 business 145.24 days after the initial hearing. A continuation hearing may not 145.25 be held later than December 20 except as provided in paragraphs 145.26 (f) and (g). A continuation hearing must be held after 5:00 145.27 p.m. if scheduled on a day other than Saturday. No continuation 145.28 hearing may be held on a Sunday. 145.29 (f) The governing body of a county shall hold its initial 145.30 hearing on the second Tuesday in December each year, and may 145.31 hold additional initial hearings on other dates before December 145.32 20 if necessary for the convenience of county residents. If the 145.33 county needs a continuation of its hearing, the continuation 145.34 hearing shall be held on the third Tuesday in December. If the 145.35 third Tuesday in December falls on December 21, the county's 145.36 continuation hearing shall be held on Monday, December 20. 146.1 (g) The metropolitan special taxing districts shall hold a 146.2 joint initial public hearing on the first Monday of December. A 146.3 continuation hearing, if necessary, shall be held on the second 146.4 Monday of December even if that second Monday is after December 146.5 10. 146.6 (h) The county auditor shall provide for the coordination 146.7 of initial and continuation hearing dates for all school 146.8 districts and cities within the county to prevent conflicts 146.9 under clauses (i) and (j). 146.10 (i) By August 10, each school board and the board of the 146.11 regional library district shall certify to the county auditors 146.12 of the counties in which the school district or regional library 146.13 district is located the dates on which it elects to hold its 146.14 initial hearing and any continuation hearing. If a school board 146.15 or regional library district does not certify these dates by 146.16 August 10, the auditor will assign the initial and continuation 146.17 hearing dates. The dates elected or assigned must not conflict 146.18 with the initial and continuation hearing dates of the county or 146.19 the metropolitan special taxing districts. 146.20 (j) By August 20, the county auditor shall notify the 146.21 clerks of the cities within the county of the dates on which 146.22 school districts and regional library districts have elected to 146.23 hold their initial and continuation hearings. At the time a 146.24 city certifies its proposed levy under subdivision 1 it shall 146.25 certify the dates on which it elects to hold its initial hearing 146.26 and any continuation hearing. If a city does not certify these 146.27 dates by September 15, the auditor shall assign the initial and 146.28 continuation hearing dates. The dates elected or assigned for 146.29 the initial hearing must not conflict with the initial hearing 146.30 dates of the county, metropolitan special taxing districts, 146.31 regional library districts, or school districts within which the 146.32 city is located. To the extent possible, the dates of the 146.33 city's continuation hearing should not conflict with the 146.34 continuation hearing dates of the county, metropolitan special 146.35 taxing districts, regional library districts, or school 146.36 districts within which the city is located. This paragraph does 147.1 not apply to cities of 500 population or less. 147.2 (k) The county initial hearing date and the city, 147.3 metropolitan special taxing district, regional library district, 147.4 and school district initial hearing dates must be designated on 147.5 the notices required under subdivision 3. The continuation 147.6 hearing dates need not be stated on the notices. 147.7 (l) At a subsequent hearing, each county, school district, 147.8 city over 500 population, and metropolitan special taxing 147.9 district may amend its proposed property tax levy and must adopt 147.10 a final property tax levy. Each county, city over 500 147.11 population, and metropolitan special taxing district may also 147.12 amend its proposed budget and must adopt a final budget at the 147.13 subsequent hearing. The final property tax levy must be adopted 147.14 prior to adopting the final budget. A school district is not 147.15 required to adopt its final budget at the subsequent hearing. 147.16 The subsequent hearing of a taxing authority must be held on a 147.17 date subsequent to the date of the taxing authority's initial 147.18 public hearing, or subsequent to the date of its continuation147.19hearing. If a continuation hearing is held, the subsequent 147.20 hearing must be held either immediately following the 147.21 continuation hearing or on a date subsequent to the continuation 147.22 hearing. The subsequent hearing may be held at a regularly 147.23 scheduled board or council meeting or at a special meeting 147.24 scheduled for the purposes of the subsequent hearing. The 147.25 subsequent hearing of a taxing authority does not have to be 147.26 coordinated by the county auditor to prevent a conflict with an 147.27 initial hearing, a continuation hearing, or a subsequent hearing 147.28 of any other taxing authority. All subsequent hearings must be 147.29 held prior to five working days after December 20 of the levy 147.30 year. The date, time, and place of the subsequent hearing must 147.31 be announced at the initial public hearing or at the 147.32 continuation hearing. 147.33 (m) The property tax levy certified under section 275.07 by 147.34 a city of any population, county, metropolitan special taxing 147.35 district, regional library district, or school district must not 147.36 exceed the proposed levy determined under subdivision 1, except 148.1 by an amount up to the sum of the following amounts: 148.2 (1) the amount of a school district levy whose voters 148.3 approved a referendum to increase taxes under section 124.82, 148.4 subdivision 3, 124A.03, subdivision 2, or 124B.03, subdivision 148.5 2, after the proposed levy was certified; 148.6 (2) the amount of a city or county levy approved by the 148.7 voters after the proposed levy was certified; 148.8 (3) the amount of a levy to pay principal and interest on 148.9 bonds approved by the voters under section 475.58 after the 148.10 proposed levy was certified; 148.11 (4) the amount of a levy to pay costs due to a natural 148.12 disaster occurring after the proposed levy was certified, if 148.13 that amount is approved by the commissioner of revenue under 148.14 subdivision 6a; 148.15 (5) the amount of a levy to pay tort judgments against a 148.16 taxing authority that become final after the proposed levy was 148.17 certified, if the amount is approved by the commissioner of 148.18 revenue under subdivision 6a; 148.19 (6) the amount of an increase in levy limits certified to 148.20 the taxing authority by the commissioner of children, families, 148.21 and learning or the commissioner of revenue after the proposed 148.22 levy was certified; and 148.23 (7) the amount required under section 124.755. 148.24At the hearing under this subdivision, the percentage148.25increase in property taxes proposed by the taxing authority, if148.26any, and the specific purposes for which property tax revenues148.27are being increased must be discussed.148.28During the discussion, the governing body shall hear148.29comments regarding a proposed increase and explain the reasons148.30for the proposed increase. The public shall be allowed to speak148.31and to ask questions. At the subsequent hearing held as148.32provided in this subdivision, the governing body, other than the148.33governing body of a school district, shall adopt its final148.34property tax levy prior to adopting its final budget.148.35If the hearing is not completed on its scheduled date, the148.36taxing authority must announce, prior to adjournment of the149.1hearing, the date, time, and place for the continuation of the149.2hearing. The continued hearing must be held at least five149.3business days but no more than 14 business days after the149.4original hearing.149.5The hearing must be held after 5:00 p.m. if scheduled on a149.6day other than Saturday. No hearing may be held on a Sunday.149.7The governing body of a county shall hold a hearing on the149.8second Tuesday in December each year, and may hold additional149.9hearings on other dates before December 20 if necessary for the149.10convenience of county residents. If the county needs a149.11continuation of its hearing, the continued hearing shall be held149.12on the third Tuesday in December. If the third Tuesday in149.13December falls on December 21, the county's continuation hearing149.14shall be held on Monday, December 20. The county auditor shall149.15provide for the coordination of hearing dates for all cities and149.16school districts within the county.149.17The metropolitan special taxing districts shall hold a149.18joint public hearing on the first Monday of December. A149.19continuation hearing, if necessary, shall be held on the second149.20Monday of December.149.21By August 10, each school board and the board of the149.22regional library district shall certify to the county auditors149.23of the counties in which the school district or regional library149.24district is located the dates on which it elects to hold its149.25hearings and any continuations. If a school board or regional149.26library district does not certify the dates by August 10, the149.27auditor will assign the hearing date. The dates elected or149.28assigned must not conflict with the hearing dates of the county149.29or the metropolitan special taxing districts. By August 20, the149.30county auditor shall notify the clerks of the cities within the149.31county of the dates on which school districts and regional149.32library districts have elected to hold their hearings. At the149.33time a city certifies its proposed levy under subdivision 1 it149.34shall certify the dates on which it elects to hold its hearings149.35and any continuations. For its initial hearing and for the149.36subsequent hearing at which the final property tax levy will be150.1adopted, the city must not select dates that conflict with the150.2county hearing dates, metropolitan special taxing district150.3dates, or with those elected by or assigned to the school150.4districts or regional library district in which the city is150.5located. For continuation hearings, the city may select dates150.6that conflict with other taxing authorities' dates if the city150.7deems it necessary.150.8The county hearing dates and the city, metropolitan special150.9taxing district, regional library district, and school district150.10hearing dates must be designated on the notices required under150.11subdivision 3. The continuation dates need not be stated on the150.12notices.150.13 (n) This subdivision does not apply to towns and special 150.14 taxing districts other than regional library districts and 150.15 metropolitan special taxing districts. 150.16 (o) Notwithstanding the requirements of this section, the 150.17 employer is required to meet and negotiate over employee 150.18 compensation as provided for in chapter 179A. 150.19 Sec. 7. Minnesota Statutes 1996, section 275.065, is 150.20 amended by adding a subdivision to read: 150.21 Subd. 6b. [JOINT PUBLIC HEARINGS.] Notwithstanding any 150.22 other provision of law, any city with a population of 10,000 and 150.23 over, may conduct a more comprehensive public hearing than is 150.24 contained in subdivision 6 by including a board member from the 150.25 county, a board member from the school district located within 150.26 the city's boundary, and a representative of the metropolitan 150.27 council, if the city is in the metropolitan area, as defined in 150.28 section 473.121, subdivision 2, at the city's public hearing. 150.29 All provisions regarding the public hearings under subdivision 6 150.30 are applicable to the joint public hearings under this 150.31 subdivision. 150.32 Upon the adoption of a resolution by the governing body of 150.33 the city to hold a joint hearing, the city shall notify the 150.34 county, the school district, and the metropolitan council if the 150.35 city is in the metropolitan area, of the decision to hold a 150.36 joint public hearing and request a board member from each of 151.1 those taxing authorities, and the member or the designee of the 151.2 metropolitan council if applicable, to be at the joint hearing. 151.3 If the city is located in more than one county, the city may 151.4 choose to request a county board member from each county or only 151.5 from the county containing the majority of the city's market 151.6 value. If more than one school district is partially or totally 151.7 located within the city, the city may choose to request a school 151.8 district board member from each school district, or a board 151.9 member only from the school district containing the majority of 151.10 the city's market value. If, as a result of requests under this 151.11 subdivision, there are not sufficient board members in the 151.12 county or the school district to attend the joint hearing, the 151.13 county or school district may send a nonelected person working 151.14 for its taxing authority to speak on the authority's behalf. 151.15 The city may also invite each state senator and representative 151.16 who represents the city, or a portion of the city, to come to 151.17 the joint hearing. 151.18 The primary purpose of the joint hearing is to discuss the 151.19 city's budget and property tax levy. The county and school 151.20 district officials, and metropolitan council representative, if 151.21 the city is in the metropolitan area, should be prepared to 151.22 answer questions relevant to its budget and levy and the effect 151.23 that its levy has on the property owners in the city. 151.24 If a city conducts a hearing under this subdivision, this 151.25 hearing is in lieu of the initial hearing required under 151.26 subdivision 6. However, the city is still required to adopt its 151.27 proposed property tax levy at a subsequent hearing as provided 151.28 under subdivision 6. The hearings under this subdivision do not 151.29 relieve a county, school district, or the metropolitan council 151.30 of the requirement to hold its individual hearing under 151.31 subdivision 6. 151.32 Sec. 8. Minnesota Statutes 1996, section 275.065, 151.33 subdivision 8, is amended to read: 151.34 Subd. 8. [HEARING.] Notwithstanding any other provision of 151.35 law, Ramsey county, the city of St. Paul, and independent school 151.36 district No. 625 are authorized to and shall hold their initial 152.1 public hearing jointly. The hearing must be held on the second 152.2 Tuesday of December each year. The advertisement required in 152.3 subdivision 5a may be a joint advertisement. The hearing is 152.4 otherwise subject to the requirements of this section. 152.5 Ramsey county is authorized to hold an additional initial 152.6 hearing or hearings as provided under this section, provided 152.7 that any additional hearings must not conflict with the initial 152.8 or continuation hearing dates of the other taxing districts. 152.9 However, if Ramsey county elects not to hold such 152.10 additional initial hearing or hearings, the joint initial 152.11 hearing required by this subdivision must be held in a St. Paul 152.12 location convenient to residents of Ramsey county. 152.13 Sec. 9. Minnesota Statutes 1996, section 275.07, 152.14 subdivision 4, is amended to read: 152.15 Subd. 4. [REPORT TO COMMISSIONER.] (a) On or before 152.16 October 8 of each year, the county auditor shall report to the 152.17 commissioner of revenue the proposed levy certified by local 152.18 units of government under section 275.065, subdivision 1. If 152.19 any taxing authorities have notified the county auditor that 152.20 they are in the process of negotiating an agreement for sharing, 152.21 merging, or consolidating services but that when the proposed 152.22 levy was certified under section 275.065, subdivision 1a, the 152.23 agreement was not yet finalized, the county auditor shall supply 152.24 that information to the commissioner when filing the report 152.25 under this section and shall recertify the affected levies as 152.26 soon as practical after October 10. 152.27 (b) On or before January 15 of each year, the county 152.28 auditor shall report to the commissioner of revenue the final 152.29 levy certified by local units of government under subdivision 1. 152.30 (c) The levies must be reported in the manner prescribed by 152.31 the commissioner. The reports must show a total levy and the 152.32 amount of each special levy. 152.33 Sec. 10. Minnesota Statutes 1996, section 276.04, 152.34 subdivision 2, is amended to read: 152.35 Subd. 2. [CONTENTS OF TAX STATEMENTS.] (a) The treasurer 152.36 shall provide for the printing of the tax statements. The 153.1 commissioner of revenue shall prescribe the form of the property 153.2 tax statement and its contents. The statement must contain a 153.3 tabulated statement of the dollar amount due to each taxing 153.4 authority and the amount of the state determined school tax from 153.5 the parcel of real property for which a particular tax statement 153.6 is prepared. The dollar amountsdueattributable to the county, 153.7 the state determined school tax, the voter approved school tax, 153.8 the other local school tax, the township or municipality, and 153.9 the total of the metropolitan special taxing districts as 153.10 defined in section 275.065, subdivision 3, paragraph (i),school153.11district excess referenda levy, remaining school district levy,153.12and the total of other voter approved referenda levies based on153.13market value under section 275.61must be separately stated. 153.14 The amounts due all other special taxing districts, if any, may 153.15 be aggregated.For the purposes of this subdivision, "school153.16district excess referenda levy" means school district taxes for153.17operating purposes approved at referenda, including those taxes153.18based on net tax capacity as well as those based on market153.19value. "School district excess referenda levy" does not include153.20school district taxes for capital expenditures approved at153.21referendums or school district taxes to pay for the debt service153.22on bonds approved at referenda.The amount of the tax on 153.23 contamination value imposed under sections 270.91 to 270.98, if 153.24 any, must also be separately stated. The dollar amounts, 153.25 including the dollar amount of any special assessments, may be 153.26 rounded to the nearest even whole dollar. For purposes of this 153.27 section whole odd-numbered dollars may be adjusted to the next 153.28 higher even-numbered dollar. The amount of market value 153.29 excluded under section 273.11, subdivision 16, if any, must also 153.30 be listed on the tax statement. The statement shall include the 153.31 followingsentencesentences, printed in upper case letters in 153.32 boldface print: "EVEN THOUGH THE STATE OF MINNESOTA DOES NOT 153.33 RECEIVE ANY PROPERTY TAX REVENUES, IT SETS THE AMOUNT OF THE 153.34 STATE-DETERMINED SCHOOL TAX LEVY. THE STATE OF MINNESOTA 153.35 REDUCES YOUR PROPERTY TAX BY PAYING CREDITS AND REIMBURSEMENTS 153.36 TO LOCAL UNITS OF GOVERNMENT." 154.1 (b) The property tax statements for manufactured homes and 154.2 sectional structures taxed as personal property shall contain 154.3 the same information that is required on the tax statements for 154.4 real property. 154.5 (c) Real and personal property tax statements must contain 154.6 the following information in the order given in this paragraph. 154.7 The information must contain the current year tax information in 154.8 the right column with the corresponding information for the 154.9 previous year in a column on the left: 154.10 (1) the property's estimated market value under section 154.11 273.11, subdivision 1; 154.12 (2) the property's taxable market value after reductions 154.13 under section 273.11, subdivisions 1a and 16; 154.14 (3) the property's gross tax, calculated bymultiplying the154.15property's gross tax capacity times the total local tax rate and154.16 adding the property's total property tax tothe resultthe sum 154.17 of the aids enumerated in clause (4); 154.18 (4) a total of the following aids: 154.19 (i) education aids payable under chapters 124 and 124A; 154.20 (ii) local government aids for cities, towns, and counties 154.21 under chapter 477A;and154.22 (iii) disparity reduction aid under section 273.1398; and 154.23 (iv) homestead and agricultural credit aid under section 154.24 273.1398; 154.25 (5) for homestead residential and agricultural properties, 154.26 the education homesteadand agriculturalcreditaid apportioned154.27to the property. This amount is obtained by multiplying the154.28total local tax rate by the difference between the property's154.29gross and net tax capacities under section 273.13. This amount154.30must be separately stated and identified as "homestead and154.31agricultural credit." For purposes of comparison with the154.32previous year's amount for the statement for taxes payable in154.331990, the statement must show the homestead credit for taxes154.34payable in 1989 under section 273.13, and the agricultural154.35credit under section 273.132 for taxes payable in 1989under 154.36 section 273.1382; 155.1 (6) any credits received under sections 273.119; 273.123; 155.2 273.135; 273.1391; 273.1398, subdivision 4; 469.171; and 155.3 473H.10, except that the amount of credit received under section 155.4 273.135 must be separately stated and identified as "taconite 155.5 tax relief"; and 155.6 (7) the net tax payable in the manner required in paragraph 155.7 (a). 155.8 (d) If the county uses envelopes for mailing property tax 155.9 statements and if the county agrees, a taxing district may 155.10 include a notice with the property tax statement notifying 155.11 taxpayers when the taxing district will begin its budget 155.12 deliberations for the current year, and encouraging taxpayers to 155.13 attend the hearings. If the county allows notices to be 155.14 included in the envelope containing the property tax statement, 155.15 and if more than one taxing district relative to a given 155.16 property decides to include a notice with the tax statement, the 155.17 county treasurer or auditor must coordinate the process and may 155.18 combine the information on a single announcement. 155.19 The commissioner of revenue shall certify to the county 155.20 auditor the actual or estimated aids enumerated inclauses (3)155.21andclause (4) that local governments will receive in the 155.22 following year.In the case of a county containing a city of155.23the first class, for taxes levied in 1991, and for all counties155.24for taxes levied in 1992 and thereafter,The commissioner must 155.25 certify this amount bySeptemberJanuary 1 of each year. 155.26 Sec. 11. Minnesota Statutes 1996, section 383A.75, 155.27 subdivision 3, is amended to read: 155.28 Subd. 3. [DUTIES.] The committee is authorized to and 155.29 shall meet from time to time to make appropriate recommendations 155.30 for the efficient and effective use of property tax dollars 155.31 raised by the jurisdictions for programs, buildings, and 155.32 operations. In addition, the committee shall: 155.33 (1) identify trends and factors likely to be driving budget 155.34 outcomes over the next five years with recommendations for how 155.35 the jurisdictions should manage those trends and factors to 155.36 increase efficiency and effectiveness; 156.1 (2) agree, bySeptemberOctober 1 of each year, on the 156.2 appropriate level of overall property tax levy for the three 156.3 jurisdictions and publicly report such to the governing bodies 156.4 of each jurisdiction for ratification or modification by 156.5 resolution; 156.6 (3) plan for the joint truth-in-taxation hearings under 156.7 section 275.065, subdivision 8; and 156.8 (4) identify, by December 31 of each year, areas of the 156.9 budget to be targeted in the coming year for joint review to 156.10 improve services or achieve efficiencies. 156.11 In carrying out its duties, the committee shall consult 156.12 with public employees of each jurisdiction and with other 156.13 stakeholders of the city, county, and school district, as 156.14 appropriate. 156.15 Sec. 12. Laws 1993, chapter 375, article 7, section 29, is 156.16 amended to read: 156.17 Sec. 29. [EFFECTIVE DATE.] 156.18 Sections 1, 6 to 8, 13, 15 to 25, 27, and 28 are effective 156.19 for taxes levied in 1993, payable in 1994 and thereafter. 156.20 Section 3, subdivision 5, and the provisions of sections 9 156.21 to 11 relating to regional library districts are effective for 156.22 property taxes levied in 1994, payable in 1995, and thereafter. 156.23 The other provisions of sections 9 to 11 are effective for 156.24 property taxes levied in 1993, payable in 1994 and thereafter. 156.25 Sections 12 and 14 are effective the day following final 156.26 enactment and without local approval, as provided in Minnesota 156.27 Statutes, section 645.023, subdivision 1, clause (a), and shall156.28expire after December 31, 1997. 156.29 Section 26 is effective beginning with aids payable in 156.30 calendar year 1993. 156.31 Sec. 13. [EXCEPTION FOR TAXES PAYABLE IN 1998.] 156.32 (a) Notwithstanding Minnesota Statutes, section 275.065, 156.33 subdivision 3, for taxes payable in 1998 only, the commissioner 156.34 of revenue may allow a county auditor, upon request, to prepare 156.35 notices of proposed property taxes that do not itemize school 156.36 district levies as required by that section, if the county 157.1 determines that it is not able to compute the separate levies 157.2 for the actual tax payable in 1997. 157.3 (b) Notwithstanding Minnesota Statutes, section 276.04, 157.4 subdivision 2, for taxes payable in 1998 only, the commissioner 157.5 of revenue may allow a county treasurer, upon request, to 157.6 prepare property tax statements that (i) do not itemize school 157.7 levies as required by that section, and (ii) do not include 157.8 homestead and agricultural credit aid as required by paragraph 157.9 (c), clause (4), if the county determines that it is not able to 157.10 compute the separate items for the tax payable in 1997. 157.11 Sec. 14. [APPROPRIATION.] 157.12 $1,000,000 is appropriated for fiscal year 1998 to the 157.13 commissioner of revenue for distribution to the 87 counties for 157.14 implementing the various provisions of this act, including the 157.15 added expenses of the truth in taxation provisions. The 157.16 commissioner shall distribute the dollars using the following 157.17 formula: 25 percent shall be distributed equally, 25 percent 157.18 shall be distributed based on population within each county, and 157.19 the remaining 50 percent shall be distributed based on the 157.20 number of property tax statements within each county. 157.21 Sec. 15. [EFFECTIVE DATE.] 157.22 Sections 1 to 4 and 9 are effective for levies and notices 157.23 for taxes payable in 1998, and thereafter. 157.24 Section 5 is effective for newspaper advertisements 157.25 prepared in 1997 for taxes payable in 1998, and thereafter. 157.26 Sections 6 to 8 are effective for public hearings held in 157.27 1997, and thereafter. 157.28 Section 10 is effective for property tax statements 157.29 prepared in 1998, and thereafter. 157.30 ARTICLE 5 157.31 INCOME TAXES AND PROPERTY TAX REFUNDS 157.32 Section 1. Minnesota Statutes 1996, section 270B.02, is 157.33 amended by adding a subdivision to read: 157.34 Subd. 6. [CLIENT LISTS; THIRD-PARTY BULK FILERS.] Client 157.35 lists required under section 290.92, subdivision 30, are 157.36 classified as private data on individuals or nonpublic data, as 158.1 defined in section 13.02, subdivisions 9 and 12. 158.2 Sec. 2. Minnesota Statutes 1996, section 290.01, 158.3 subdivision 19b, is amended to read: 158.4 Subd. 19b. [SUBTRACTIONS FROM FEDERAL TAXABLE INCOME.] For 158.5 individuals, estates, and trusts, there shall be subtracted from 158.6 federal taxable income: 158.7 (1) interest income on obligations of any authority, 158.8 commission, or instrumentality of the United States to the 158.9 extent includable in taxable income for federal income tax 158.10 purposes but exempt from state income tax under the laws of the 158.11 United States; 158.12 (2) if included in federal taxable income, the amount of 158.13 any overpayment of income tax to Minnesota or to any other 158.14 state, for any previous taxable year, whether the amount is 158.15 received as a refund or as a credit to another taxable year's 158.16 income tax liability; 158.17 (3) the amount paid to others not to exceed $650 for each 158.18 dependent in grades kindergarten to 6 and $1,000 for each 158.19 dependent in grades 7 to 12, for tuition, textbooks, and 158.20 transportation of each dependent in attending an elementary or 158.21 secondary school situated in Minnesota, North Dakota, South 158.22 Dakota, Iowa, or Wisconsin, wherein a resident of this state may 158.23 legally fulfill the state's compulsory attendance laws, which is 158.24 not operated for profit, and which adheres to the provisions of 158.25 the Civil Rights Act of 1964 and chapter 363. As used in this 158.26 clause, "textbooks" includes books and other instructional 158.27 materials and equipment used in elementary and secondary schools 158.28 in teaching only those subjects legally and commonly taught in 158.29 public elementary and secondary schools in this state. 158.30 "Textbooks" does not include instructional books and materials 158.31 used in the teaching of religious tenets, doctrines, or worship, 158.32 the purpose of which is to instill such tenets, doctrines, or 158.33 worship, nor does it include books or materials for, or 158.34 transportation to, extracurricular activities including sporting 158.35 events, musical or dramatic events, speech activities, driver's 158.36 education, or similar programs. In order to qualify for the 159.1 subtraction under this clause the taxpayer must elect to itemize 159.2 deductions under section 63(e) of the Internal Revenue Code; 159.3 (4) to the extent included in federal taxable income, 159.4 distributions from a qualified governmental pension plan, an 159.5 individual retirement account, simplified employee pension, or 159.6 qualified plan covering a self-employed person that represent a 159.7 return of contributions that were included in Minnesota gross 159.8 income in the taxable year for which the contributions were made 159.9 but were deducted or were not included in the computation of 159.10 federal adjusted gross income. The distribution shall be 159.11 allocated first to return of contributions until the 159.12 contributions included in Minnesota gross income have been 159.13 exhausted. This subtraction applies only to contributions made 159.14 in a taxable year prior to 1985; 159.15 (5) income as provided under section 290.0802; 159.16 (6) the amount of unrecovered accelerated cost recovery 159.17 system deductions allowed under subdivision 19g; 159.18 (7) to the extent included in federal adjusted gross 159.19 income, income realized on disposition of property exempt from 159.20 tax under section 290.491; 159.21 (8) to the extent not deducted in determining federal 159.22 taxable income, the amount paid for health insurance of 159.23 self-employed individuals as determined under section 162(l) of 159.24 the Internal Revenue Code, except that the 25 percent limit does 159.25 not apply. If the taxpayer deducted insurance payments under 159.26 section 213 of the Internal Revenue Code of 1986, the 159.27 subtraction under this clause must be reduced by the lesser of: 159.28 (i) the total itemized deductions allowed under section 159.29 63(d) of the Internal Revenue Code, less state, local, and 159.30 foreign income taxes deductible under section 164 of the 159.31 Internal Revenue Code and the standard deduction under section 159.32 63(c) of the Internal Revenue Code; or 159.33 (ii) the lesser of (A) the amount of insurance qualifying 159.34 as "medical care" under section 213(d) of the Internal Revenue 159.35 Code to the extent not deducted under section 162(1) of the 159.36 Internal Revenue Code or excluded from income or (B) the total 160.1 amount deductible for medical care under section 213(a);and160.2 (9) the exemption amount allowed under Laws 1995, chapter 160.3 255, article 3, section 2, subdivision 3; and 160.4 (10) to the extent included in federal taxable income, 160.5 postservice benefits for youth community service under section 160.6 121.707 for volunteer service under United States Code, title 160.7 42, section 5011(d), as amended. 160.8 Sec. 3. Minnesota Statutes 1996, section 290.01, 160.9 subdivision 19c, is amended to read: 160.10 Subd. 19c. [CORPORATIONS; ADDITIONS TO FEDERAL TAXABLE 160.11 INCOME.] For corporations, there shall be added to federal 160.12 taxable income: 160.13 (1) the amount of any deduction taken for federal income 160.14 tax purposes for income, excise, or franchise taxes based on net 160.15 income or related minimum taxes paid by the corporation to 160.16 Minnesota, another state, a political subdivision of another 160.17 state, the District of Columbia, or any foreign country or 160.18 possession of the United States; 160.19 (2) interest not subject to federal tax upon obligations 160.20 of: the United States, its possessions, its agencies, or its 160.21 instrumentalities; the state of Minnesota or any other state, 160.22 any of its political or governmental subdivisions, any of its 160.23 municipalities, or any of its governmental agencies or 160.24 instrumentalities; the District of Columbia; or Indian tribal 160.25 governments; 160.26 (3) exempt-interest dividends received as defined in 160.27 section 852(b)(5) of the Internal Revenue Code; 160.28 (4)the amount of any windfall profits tax deducted under160.29section 164 or 471 of the Internal Revenue Code;160.30(5)the amount of any net operating loss deduction taken 160.31 for federal income tax purposes under section 172 or 832(c)(10) 160.32 of the Internal Revenue Code or operations loss deduction under 160.33 section 810 of the Internal Revenue Code; 160.34(6)(5) the amount of any special deductions taken for 160.35 federal income tax purposes under sections 241 to 247 of the 160.36 Internal Revenue Code; 161.1(7)(6) losses from the business of mining, as defined in 161.2 section 290.05, subdivision 1, clause (a), that are not subject 161.3 to Minnesota income tax; 161.4(8)(7) the amount of any capital losses deducted for 161.5 federal income tax purposes under sections 1211 and 1212 of the 161.6 Internal Revenue Code; 161.7(9)(8) the amount of any charitable contributions deducted 161.8 for federal income tax purposes under section 170 of the 161.9 Internal Revenue Code; 161.10(10)(9) the exempt foreign trade income of a foreign sales 161.11 corporation under sections 921(a) and 291 of the Internal 161.12 Revenue Code; 161.13(11)(10) the amount of percentage depletion deducted under 161.14 sections 611 through 614 and 291 of the Internal Revenue Code; 161.15(12)(11) for certified pollution control facilities placed 161.16 in service in a taxable year beginning before December 31, 1986, 161.17 and for which amortization deductions were elected under section 161.18 169 of the Internal Revenue Code of 1954, as amended through 161.19 December 31, 1985, the amount of the amortization deduction 161.20 allowed in computing federal taxable income for those 161.21 facilities;and161.22(13)(12) the amount of any deemed dividend from a foreign 161.23 operating corporation determined pursuant to section 290.17, 161.24 subdivision 4, paragraph (g); and 161.25 (13) the amount of any environmental tax paid under section 161.26 59(a) of the Internal Revenue Code. 161.27 Sec. 4. Minnesota Statutes 1996, section 290.01, 161.28 subdivision 19d, is amended to read: 161.29 Subd. 19d. [CORPORATIONS; MODIFICATIONS DECREASING FEDERAL 161.30 TAXABLE INCOME.] For corporations, there shall be subtracted 161.31 from federal taxable income after the increases provided in 161.32 subdivision 19c: 161.33 (1) the amount of foreign dividend gross-up added to gross 161.34 income for federal income tax purposes under section 78 of the 161.35 Internal Revenue Code; 161.36 (2) the amount of salary expense not allowed for federal 162.1 income tax purposes due to claiming the federal jobs credit 162.2 under section 51 of the Internal Revenue Code; 162.3 (3) any dividend (not including any distribution in 162.4 liquidation) paid within the taxable year by a national or state 162.5 bank to the United States, or to any instrumentality of the 162.6 United States exempt from federal income taxes, on the preferred 162.7 stock of the bank owned by the United States or the 162.8 instrumentality; 162.9 (4) amounts disallowed for intangible drilling costs due to 162.10 differences between this chapter and the Internal Revenue Code 162.11 in taxable years beginning before January 1, 1987, as follows: 162.12 (i) to the extent the disallowed costs are represented by 162.13 physical property, an amount equal to the allowance for 162.14 depreciation under Minnesota Statutes 1986, section 290.09, 162.15 subdivision 7, subject to the modifications contained in 162.16 subdivision 19e; and 162.17 (ii) to the extent the disallowed costs are not represented 162.18 by physical property, an amount equal to the allowance for cost 162.19 depletion under Minnesota Statutes 1986, section 290.09, 162.20 subdivision 8; 162.21 (5) the deduction for capital losses pursuant to sections 162.22 1211 and 1212 of the Internal Revenue Code, except that: 162.23 (i) for capital losses incurred in taxable years beginning 162.24 after December 31, 1986, capital loss carrybacks shall not be 162.25 allowed; 162.26 (ii) for capital losses incurred in taxable years beginning 162.27 after December 31, 1986, a capital loss carryover to each of the 162.28 15 taxable years succeeding the loss year shall be allowed; 162.29 (iii) for capital losses incurred in taxable years 162.30 beginning before January 1, 1987, a capital loss carryback to 162.31 each of the three taxable years preceding the loss year, subject 162.32 to the provisions of Minnesota Statutes 1986, section 290.16, 162.33 shall be allowed; and 162.34 (iv) for capital losses incurred in taxable years beginning 162.35 before January 1, 1987, a capital loss carryover to each of the 162.36 five taxable years succeeding the loss year to the extent such 163.1 loss was not used in a prior taxable year and subject to the 163.2 provisions of Minnesota Statutes 1986, section 290.16, shall be 163.3 allowed; 163.4 (6) an amount for interest and expenses relating to income 163.5 not taxable for federal income tax purposes, if (i) the income 163.6 is taxable under this chapter and (ii) the interest and expenses 163.7 were disallowed as deductions under the provisions of section 163.8 171(a)(2), 265 or 291 of the Internal Revenue Code in computing 163.9 federal taxable income; 163.10 (7) in the case of mines, oil and gas wells, other natural 163.11 deposits, and timber for which percentage depletion was 163.12 disallowed pursuant to subdivision 19c, clause (11), a 163.13 reasonable allowance for depletion based on actual cost. In the 163.14 case of leases the deduction must be apportioned between the 163.15 lessor and lessee in accordance with rules prescribed by the 163.16 commissioner. In the case of property held in trust, the 163.17 allowable deduction must be apportioned between the income 163.18 beneficiaries and the trustee in accordance with the pertinent 163.19 provisions of the trust, or if there is no provision in the 163.20 instrument, on the basis of the trust's income allocable to 163.21 each; 163.22 (8) for certified pollution control facilities placed in 163.23 service in a taxable year beginning before December 31, 1986, 163.24 and for which amortization deductions were elected under section 163.25 169 of the Internal Revenue Code of 1954, as amended through 163.26 December 31, 1985, an amount equal to the allowance for 163.27 depreciation under Minnesota Statutes 1986, section 290.09, 163.28 subdivision 7; 163.29 (9) the amount included in federal taxable income 163.30 attributable to the credits provided in Minnesota Statutes 1986, 163.31 section 273.1314, subdivision 9, or Minnesota Statutes, section 163.32 469.171, subdivision 6; 163.33 (10) amounts included in federal taxable income that are 163.34 due to refunds of income, excise, or franchise taxes based on 163.35 net income or related minimum taxes paid by the corporation to 163.36 Minnesota, another state, a political subdivision of another 164.1 state, the District of Columbia, or a foreign country or 164.2 possession of the United States to the extent that the taxes 164.3 were added to federal taxable income under section 290.01, 164.4 subdivision 19c, clause (1), in a prior taxable year; 164.5 (11)the following percentage80 percent of royalties, 164.6 fees, or other like income accrued or received from a foreign 164.7 operating corporation or a foreign corporation which is part of 164.8 the same unitary business as the receiving corporation:164.9Taxable Year164.10Beginning After .......... Percentage164.11December 31, 1988 ........ 50 percent164.12December 31, 1990 ........ 80 percent; 164.13 (12) income or gains from the business of mining as defined 164.14 in section 290.05, subdivision 1, clause (a), that are not 164.15 subject to Minnesota franchise tax; 164.16 (13) the amount of handicap access expenditures in the 164.17 taxable year which are not allowed to be deducted or capitalized 164.18 under section 44(d)(7) of the Internal Revenue Code; 164.19 (14) the amount of qualified research expenses not allowed 164.20 for federal income tax purposes under section 280C(c) of the 164.21 Internal Revenue Code, but only to the extent that the amount 164.22 exceeds the amount of the credit allowed under section 290.068; 164.23and164.24 (15) the amount of salary expenses not allowed for federal 164.25 income tax purposes due to claiming the Indian employment credit 164.26 under section 45A(a) of the Internal Revenue Code; and 164.27 (16) the amount of any refund of environmental taxes paid 164.28 under section 59A of the Internal Revenue Code. 164.29 Sec. 5. Minnesota Statutes 1996, section 290.06, is 164.30 amended by adding a subdivision to read: 164.31 Subd. 26. [CREDIT FOR PROPERTY TAXES PAID ON SEASONAL 164.32 RESIDENTIAL RECREATIONAL PROPERTY.] A taxpayer may take as a 164.33 credit against the tax due from the taxpayer and a spouse, if 164.34 any, under this chapter the credit allowed under section 164.35 290A.04, subdivision 2j. The credit allowed may not exceed the 164.36 tax due under this chapter. In the case of a nonresident, or a 165.1 part-year resident, the credit must be allocated based on the 165.2 ratio in subdivision 2c. 165.3 Sec. 6. Minnesota Statutes 1996, section 290.067, 165.4 subdivision 1, is amended to read: 165.5 Subdivision 1. [AMOUNT OF CREDIT.] (a) A taxpayer may take 165.6 as a credit against the tax due from the taxpayer and a spouse, 165.7 if any, under this chapter an amount equal to the dependent care 165.8 credit for which the taxpayer is eligible pursuant to the 165.9 provisions of section 21 of the Internal Revenue Code subject to 165.10 the limitations provided in subdivision 2 except that in 165.11 determining whether the child qualified as a dependent, income 165.12 received as an aid to families with dependent children grant or 165.13 allowance to or on behalf of the child, or as a grant or 165.14 allowance to or on behalf of the child under the successor 165.15 program pursuant to Public Law 104-193, must not be taken into 165.16 account in determining whether the child received more than half 165.17 of the child's support from the taxpayer, and the provisions of 165.18 section 32(b)(1)(D) of the Internal Revenue Code do not apply. 165.19 (b) If a child who has not attained the age of six years at 165.20 the close of the taxable year is cared for at a licensed family 165.21 day care home operated by the child's parent, the taxpayer is 165.22 deemed to have paid employment-related expenses. If the child 165.23 is 16 months old or younger at the close of the taxable year, 165.24 the amount of expenses deemed to have been paid equals the 165.25 maximum limit for one qualified individual under section 21(c) 165.26 and (d) of the Internal Revenue Code. If the child is older 165.27 than 16 months of age but has not attained the age of six years 165.28 at the close of the taxable year, the amount of expenses deemed 165.29 to have been paid equals the amount the licensee would charge 165.30 for the care of a child of the same age for the same number of 165.31 hours of care. 165.32 (c) If a married couple: 165.33 (1) has a child who has not attained the age of one year at 165.34 the close of the taxable year; 165.35 (2) files a joint tax return for the taxable year; and 165.36 (3) does not participate in a dependent care assistance 166.1 program as defined in section 129 of the Internal Revenue Code, 166.2 in lieu of the actual employment related expenses paid for that 166.3 child under paragraph (a) or the deemed amount under paragraph 166.4 (b), the lesser of (i) the combined earned income of the couple 166.5 or (ii) $2,400 will be deemed to be the employment related 166.6 expense paid for that child. The earned income limitation of 166.7 section 21(d) of the Internal Revenue Code shall not apply to 166.8 this deemed amount. These deemed amounts apply regardless of 166.9 whether any employment-related expenses have been paid. 166.10 (d) If the taxpayer is not required and does not file a 166.11 federal individual income tax return for the tax year, no credit 166.12 is allowed for any amount paid to any person unless: 166.13 (1) the name, address, and taxpayer identification number 166.14 of the person are included on the return claiming the credit; or 166.15 (2) if the person is an organization described in section 166.16 501(c)(3) of the Internal Revenue Code and exempt from tax under 166.17 section 501(a) of the Internal Revenue Code, the name and 166.18 address of the person are included on the return claiming the 166.19 credit. 166.20 In the case of a failure to provide the information required 166.21 under the preceding sentence, the preceding sentence does not 166.22 apply if it is shown that the taxpayer exercised due diligence 166.23 in attempting to provide the information required. 166.24 In the case of a nonresident, part-year resident, or a 166.25 person who has earned income not subject to tax under this 166.26 chapter, the credit determined under section 21 of the Internal 166.27 Revenue Code must be allocated based on the ratio by which the 166.28 earned income of the claimant and the claimant's spouse from 166.29 Minnesota sources bears to the total earned income of the 166.30 claimant and the claimant's spouse. 166.31 Sec. 7. [290.0672] [LONG-TERM CARE INSURANCE CREDIT.] 166.32 Subdivision 1. [DEFINITIONS.] (a) For purposes of this 166.33 section, the following terms have the meanings given. 166.34 (b) "Long-term care insurance" means a policy that: 166.35 (1) qualifies for a deduction under section 213 of the 166.36 Internal Revenue Code, disregarding the 7.5 percent income test; 167.1 or meets the requirements given in section 62A.46; or provides 167.2 similar coverage issued under the laws of another jurisdiction; 167.3 and 167.4 (2) does not have a lifetime long-term care benefit limit 167.5 of less than $100,000; and 167.6 (3) includes inflation protection that meets or exceeds the 167.7 inflation protection requirements of the long-term care 167.8 insurance model regulation cited under section 167.9 7702B(g)(2)(A)(i)(x) of the Internal Revenue Code. 167.10 (c) "Qualified beneficiary" means the taxpayer or the 167.11 taxpayer's spouse. 167.12 (d) "Premiums deducted in determining federal taxable 167.13 income" means the lesser of (1) long-term care insurance 167.14 premiums that qualify as deductions under section 213 of the 167.15 Internal Revenue Code; and (2) the total amount deductible for 167.16 medical care under section 213 of the Internal Revenue Code. 167.17 Subd. 2. [CREDIT.] A taxpayer is allowed a credit against 167.18 the tax imposed by this chapter for long-term care insurance 167.19 policy premiums paid during the tax year. The credit for each 167.20 policy equals the lesser of (1) 25 percent of premiums paid to 167.21 the extent not deducted in determining federal taxable income; 167.22 or (2) $100. A taxpayer may claim a credit for only one policy 167.23 for each qualified beneficiary. Only one credit may be claimed 167.24 by any taxpayer for each policy. The maximum total credit 167.25 allowed per year is $200 for married couples filing joint 167.26 returns and $100 for all other filers. For a nonresident or 167.27 part-year resident, the credit determined under this section 167.28 must be allocated based on the percentage calculated under 167.29 section 290.06, subdivision 2c, paragraph (e). 167.30 Sec. 8. [290.0673] [JOB TRAINING PROGRAM CREDIT.] 167.31 Subdivision 1. [CREDIT ALLOWED.] (a) A credit is allowed 167.32 against the tax imposed by section 290.06, subdivision 1, equal 167.33 to the sum of: 167.34 (1) placement fees paid to a job training program upon 167.35 hiring a qualified graduate of the program; and 167.36 (2) retention fees paid to a job training program for 168.1 retention of a qualified graduate of the program. 168.2 (b) The maximum placement fee qualifying for a credit under 168.3 this section is $8,000 per qualified graduate in the year 168.4 hired. The maximum retention fee qualifying for a credit under 168.5 this section is $6,000 per qualified graduate retained as an 168.6 employee per year. Only retention fees paid in the second and 168.7 third years after the qualified graduate is hired qualify for 168.8 the credit. 168.9 (c) A credit is allowed only up to the dollar amount of 168.10 certificates, issued under subdivision 4, and provided by the 168.11 job training program to the taxpayer. 168.12 Subd. 2. [QUALIFIED JOB TRAINING PROGRAM.] (a) To qualify 168.13 for credits under this section, a job training program must 168.14 satisfy the following requirements: 168.15 (1) It must be operated by a nonprofit corporation that 168.16 qualifies under section 501(c)(3) of the Internal Revenue Code. 168.17 (2) The organization must spend at least $5,000 per 168.18 graduate of the program. 168.19 (3) The program must provide education and training in: 168.20 (i) basic skills, such as reading, writing, mathematics, 168.21 and communications; 168.22 (ii) thinking skills, such as reasoning, creative thinking, 168.23 decision making, and problem solving; and 168.24 (iii) personal qualities, such as responsibility, 168.25 self-esteem, self-management, honesty, and integrity. 168.26 (4) The program must provide income supplements, when 168.27 needed, to participants for housing, counseling, tuition, and 168.28 other basic needs. 168.29 (5) The education and training course must last for at 168.30 least six months. 168.31 (6) Individuals served by the program must: 168.32 (i) be 18 years old or older; 168.33 (ii) have had federal adjusted gross income of no more than 168.34 $10,000 per year in the last two years; 168.35 (iii) have assets of no more than $5,000, excluding the 168.36 value of a homestead; and 169.1 (iv) not have been claimed as a dependent on the federal 169.2 tax return of another person in the previous taxable year. 169.3 (7) The program must charge placement and retention fees 169.4 that exceed the amount of credit certificates provided to the 169.5 employer by at least 20 percent. 169.6 (b) The program must be certified by the commissioner of 169.7 children, families, and learning as meeting the requirements of 169.8 this subdivision. 169.9 Subd. 3. [QUALIFIED GRADUATE.] A qualified graduate is a 169.10 graduate of a job training program qualifying under subdivision 169.11 1, who is placed in a job in Minnesota that pays at least $9 per 169.12 hour or its equivalent. To qualify for a credit under this 169.13 section for a retention fee, a job in which the graduate is 169.14 retained must pay at least $10 per hour at the end for the first 169.15 and second years of employment. A business, other than the 169.16 business that originally hired the graduate, may pay a retention 169.17 fee for the graduate and qualify for the credit. 169.18 Subd. 4. [DUTIES OF PROGRAM.] (a) Each program certified 169.19 by the commissioner under subdivision 2 must comply with the 169.20 requirements of this subdivision. 169.21 (b) Each program must maintain records for each graduate 169.22 for which the program provides a credit certificate to an 169.23 employer. These records must include information sufficient to 169.24 verify the graduate's eligibility under this section, identify 169.25 the employer, describe the job including its compensation rate 169.26 and benefits, and determine the amount of placement and 169.27 retention fees received. 169.28 (c) Each program must report to the commissioner of revenue 169.29 by January 1, 1999, and by January 1, 2001, on its use of the 169.30 credit. Each report must include, at least, information on: 169.31 (1) the number of graduates placed; 169.32 (2) demographic information on the graduates; 169.33 (3) the types of position in which each graduate is placed, 169.34 including compensation information; 169.35 (4) the tenure of each graduate at the placed position or 169.36 in other jobs; 170.1 (5) the amount of employer fees paid to the program; 170.2 (6) the amount of money raised by the program from other 170.3 sources; and 170.4 (7) the types and sizes of employers with which graduates 170.5 have been placed and retained. 170.6 (d) The commissioner shall compile and summarize this 170.7 information and report to the legislature by February 15, 1999, 170.8 and February 15, 2001. 170.9 Subd. 5. [ISSUANCE OF CREDIT CERTIFICATES.] (a) The total 170.10 amount of credits under this section is limited to $1,200,000 170.11 for taxable years beginning after December 31, 1996, and before 170.12 January 1, 2002. The commissioner may issue under paragraph (b) 170.13 no more than the specified amount of certificates for taxable 170.14 years beginning during each calendar year: 170.15 1997 $100,000 170.16 1998 $200,000 170.17 1999 $300,000 170.18 2000 $300,000 170.19 2001 $300,000 170.20 Unused certificates for a taxable year carry over and may 170.21 be used for a later taxable year, regardless of when issued by 170.22 the commissioner. 170.23 (b) Upon application, the commissioner of children, 170.24 families, and learning shall issue certificates to job training 170.25 programs, certified under subdivision 2, up to the dollar amount 170.26 available for the taxable year. The certificates must be in a 170.27 dollar amount that is no greater than the dollar amount applied 170.28 for, and reflects the commissioner's estimate of the job 170.29 training program's projected fees for placements and retentions 170.30 of qualifying graduates. The commissioner shall issue the 170.31 certificates in the order in which applications are received 170.32 until the available authority has been issued. 170.33 (c) To the extent available, the job training program must 170.34 provide to employers of its qualified graduates certificates 170.35 issued by the commissioner of children, families, and learning 170.36 under this subdivision. 171.1 Subd. 6. [NONREFUNDABLE.] The taxpayer must use the tax 171.2 credit for the taxable year in which the certificate is issued 171.3 to the employer. The credit for the taxable year may not exceed 171.4 the liability for tax under section 290.06, subdivision 1, for 171.5 the taxable year, before reduction by the nonrefundable credits 171.6 allowed under this chapter. 171.7 Subd. 7. [MANNER OF CLAIMING.] The commissioner shall 171.8 prescribe the manner in which the credit may be claimed. This 171.9 may include allowing the credit only as a separately processed 171.10 claim for a refund. 171.11 Subd. 8. [EXPIRATION.] This section expires effective for 171.12 taxable years beginning after December 31, 2001. 171.13 Sec. 9. Minnesota Statutes 1996, section 290.191, 171.14 subdivision 4, is amended to read: 171.15 Subd. 4. [APPORTIONMENT FORMULA FOR CERTAIN MAIL ORDER 171.16 BUSINESSES.] If the business of a corporation, partnership, or 171.17 proprietorship consists exclusively of the selling of tangible 171.18 personal property and services in response to orders received by 171.19 United States mailor, telephone, facsimile, or other electronic 171.20 media, and 99 percent of the taxpayer's property and payroll is 171.21 within Minnesota, then the taxpayer may apportion net income to 171.22 Minnesota based solely upon the percentage that the sales made 171.23 within this state in connection with its trade or business 171.24 during the tax period are of the total sales wherever made in 171.25 connection with the trade or business during the tax period. 171.26 Property and payroll factors are disregarded. In determining 171.27 eligibility for this subdivision: 171.28 (1) the sale not in the ordinary course of business of 171.29 tangible or intangible assets used in conducting business 171.30 activities must be disregarded; and 171.31 (2) property and payroll at a distribution center outside 171.32 of Minnesota are disregarded if the sole activity at the 171.33 distribution center is the filling of orders, and no 171.34 solicitation of orders occurs at the distribution center. 171.35 Sec. 10. Minnesota Statutes 1996, section 290.92, is 171.36 amended by adding a subdivision to read: 172.1 Subd. 30. [REGISTRATION; THIRD-PARTY BULK FILER.] (a) For 172.2 purposes of this subdivision, the following terms have the 172.3 meanings given: 172.4 (1) Notwithstanding section 290.01, "person" means an 172.5 individual, fiduciary, partnership, corporation, limited 172.6 liability company, association, or other entity organized under 172.7 the laws of this state or any other jurisdiction. 172.8 (2) "Third-party bulk filer" means a person that collects 172.9 withholding taxes from more than one employer for the purpose of 172.10 filing returns and depositing the withheld taxes with the 172.11 commissioner. 172.12 (b) A person shall not act as a third-party bulk filer 172.13 unless the person is registered with the commissioner under this 172.14 subdivision. 172.15 (c) A person may apply to the commissioner, on a form 172.16 prescribed by the commissioner, for registration as a 172.17 third-party bulk filer under this subdivision, and the 172.18 commissioner shall grant the application if the application 172.19 indicates that the person will comply with this subdivision. 172.20 (d) A third-party bulk filer must: 172.21 (1) keep client funds held for payment of federal or state 172.22 withholding taxes or other client obligations in an account 172.23 separate from the third-party bulk filer's own funds; 172.24 (2) permit the commissioner to conduct scheduled or 172.25 unscheduled audits of the third-party bulk filer's books and 172.26 records relating to compliance with this subdivision and fully 172.27 cooperate with the audits or, at the discretion of the 172.28 commissioner, submit an audit conducted by a certified public 172.29 accountant; 172.30 (3) file returns electronically and make deposits 172.31 electronically with the commissioner in compliance with the 172.32 commissioner's requirements for electronic filing and 172.33 depositing; 172.34 (4) provide to the commissioner at least monthly, in the 172.35 form requested by the commissioner, an updated client list that 172.36 includes at least the name, address, tax identification number, 173.1 and federal deposit frequency of each client. The address 173.2 listed for the client must be the client's actual street or post 173.3 office box address and not the third-party bulk filer's address; 173.4 (5) disclose in writing to prospective clients that: 173.5 (i) the third-party bulk filer may invest client funds 173.6 prior to depositing them with the commissioner and with the 173.7 Internal Revenue Service and that earnings from those 173.8 investments will be the property of the third-party bulk filer; 173.9 (ii) if the third-party bulk filer incurs losses on those 173.10 investments or uses the client's funds for other purposes, the 173.11 third-party bulk filer will still be liable to the client for 173.12 the amounts withheld but will be able to make required tax 173.13 deposits on behalf of the client only by using the third-party 173.14 bulk filer's own funds or other assets to replace the funds lost 173.15 through the investments or used for other purposes; and 173.16 (iii) no state or federal agency monitors or assumes any 173.17 responsibility for the financial solvency of third-party bulk 173.18 filers; 173.19 (6) timely file all returns and timely make all tax 173.20 deposits required under its contracts with its clients; 173.21 (7) upon request, provide to the commissioner, within the 173.22 time specified in the request, a copy of any contract with a 173.23 client; and 173.24 (8) comply with all other requirements of this section or 173.25 of rules adopted under this section. 173.26 (e) When the commissioner sends an order of assessment 173.27 issued under section 289A.37, in either paper or electronic 173.28 form, to a third-party bulk filer regarding a client, the 173.29 commissioner shall also send a paper copy of the order of 173.30 assessment to the client. 173.31 (f) If the commissioner determines that a required deposit 173.32 appears not to have been made, the commissioner shall send a 173.33 written notice of the delinquency, in electronic or paper form, 173.34 to the third-party bulk filer, and a copy to the client as 173.35 required under paragraph (e). 173.36 (g) If the commissioner determines that a required deposit 174.1 has not been made, and that continued operation of the 174.2 third-party bulk filer would present a risk of loss to its 174.3 clients, the commissioner may, upon ten business days' written 174.4 notice by certified mail to the third-party bulk filer, suspend 174.5 the registration of the third-party bulk filer for an indefinite 174.6 period, and notify the third-party bulk filer's clients that the 174.7 registration has been suspended. A registration may not be 174.8 suspended if the failure to make a deposit was caused by the 174.9 client's failure to deposit funds or provide the information 174.10 necessary to calculate appropriate tax withholding payments. 174.11 The commissioner shall, upon request, provide the third-party 174.12 bulk filer with the opportunity for an administrative appeal 174.13 under section 289A.65, subdivisions 1, 4, and 10, prior to 174.14 suspension; the hearing, if any, on the administrative appeal 174.15 must occur within the ten-day period unless the commissioner, in 174.16 the commissioner's sole discretion, agrees to delay the 174.17 suspension to permit a later hearing. The 60-day period 174.18 specified in section 289A.65, subdivision 4, does not apply to a 174.19 proceeding under this paragraph. Within 30 days after the 174.20 beginning of a suspension under this paragraph, the commissioner 174.21 may commence a proceeding to suspend or revoke under paragraph 174.22 (h); if the commissioner fails to do so, the suspension under 174.23 this paragraph terminates. 174.24 (h) If the commissioner determines, in compliance with 174.25 paragraph (i), that a third-party bulk filer has violated this 174.26 section without reasonable cause or is no longer eligible for 174.27 registration under this subdivision, the commissioner may 174.28 suspend or revoke the third-party bulk filer's registration or 174.29 may assess a civil penalty upon the third-party bulk filer, not 174.30 to exceed $5,000 per violation. A suspension of registration 174.31 may be for any period of less than six months and may include 174.32 conditions for reinstatement. If the commissioner revokes the 174.33 registration, the third-party bulk filer may not apply for 174.34 reregistration for six months after the revocation. If the 174.35 commissioner suspends or revokes a registration, the 174.36 commissioner shall notify the former registrant's clients that 175.1 the registration has been suspended or revoked. If the 175.2 commissioner assesses a civil penalty, the commissioner shall 175.3 not notify the third-party bulk filer's clients of the 175.4 assessment. 175.5 (i) Prior to a suspension, revocation, or assessment of a 175.6 civil penalty under paragraph (h), the commissioner shall first 175.7 provide 30 days' written notice to the third-party bulk filer, 175.8 specifying the violations and informing the third-party bulk 175.9 filer that the commissioner intends, based upon those 175.10 violations, to take action against the third-party bulk filer as 175.11 permitted under this paragraph and paragraph (h). The notice 175.12 shall advise the third-party bulk filer of the right to contest 175.13 the suspension, revocation, or assessment of a civil penalty and 175.14 of the general procedures for a contested case hearing under 175.15 chapter 14. The notice may be served personally or by mail in 175.16 the manner prescribed for service of an order of assessment 175.17 issued under section 289A.37. A suspension or revocation of 175.18 registration under this paragraph is effective when the 175.19 commissioner serves a notice of suspension or revocation upon 175.20 the third-party bulk filer after 30 days have passed following 175.21 the date of the notice of intent to suspend or revoke without 175.22 the third-party bulk filer requesting a hearing. If a hearing 175.23 is timely requested and held, the suspension or revocation is 175.24 effective upon service by the commissioner of an order of 175.25 suspension or revocation under section 14.62, subdivision 1. 175.26 (j) A third-party bulk filer may terminate its registration 175.27 by written notice to the commissioner, but the termination does 175.28 not affect the commissioner's authority to begin or continue a 175.29 proceeding to take action permitted under paragraph (h). The 175.30 commissioner shall notify the third-party bulk filer's clients 175.31 of a termination of registration under this paragraph. 175.32 (k) The commissioner shall remind employers at least 175.33 annually, through the department's regular informational 175.34 publications that it sends to employers, that employers may 175.35 telephone the department to determine whether a required filing 175.36 or deposit has been made by a third-party bulk filer. 176.1 Sec. 11. Minnesota Statutes 1996, section 290A.03, 176.2 subdivision 7, is amended to read: 176.3 Subd. 7. [DEPENDENT.] "Dependent" means any person who is 176.4 considered a dependent under sections 151 and 152 of the 176.5 Internal Revenue Code. In the case of a son, stepson, daughter, 176.6 or stepdaughter of the claimant, amounts received as an aid to 176.7 families with dependent children grant, allowance to or on 176.8 behalf of the child, or as a grant or allowance to or on behalf 176.9 of the child under the successor program pursuant to Public Law 176.10 Number 104-193, surplus food, or other relief in kind supplied 176.11 by a governmental agency must not be taken into account in 176.12 determining whether the child received more than half of the 176.13 child's support from the claimant. 176.14 Sec. 12. Minnesota Statutes 1996, section 290A.03, 176.15 subdivision 11, is amended to read: 176.16 Subd. 11. [RENT CONSTITUTING PROPERTY TAXES.] "Rent 176.17 constituting property taxes" meansthe amount of gross rent176.18actually paid in cash, or its equivalent, which is attributable176.19(a) to the property tax paid on the unit or (b) to the amount18 176.20 percent of the gross rent actually paid in cash, or its 176.21 equivalent, or the portion of rent paid in lieu of property 176.22 taxes, in any calendar year by a claimant for the right of 176.23 occupancy of the claimant's Minnesota homestead in the calendar 176.24 year, and which rent constitutes the basis, in the succeeding 176.25 calendar year of a claim for relief under this chapter by the 176.26 claimant.The amount of rent attributable to property taxes176.27paid or payments in lieu made on the unit shall be determined by176.28multiplying the gross rent paid by the claimant for the calendar176.29year for the unit by a fraction, the numerator of which is the176.30net tax on the property where the unit is located and the176.31denominator of which is the total scheduled rent. In no case176.32may the rent constituting property taxes exceed 50 percent of176.33the gross rent paid by the claimant during that calendar year.176.34In the case of a claimant who resides in a unit for which (1) a176.35rent subsidy is paid to, or for, the claimant based on the176.36income of the claimant or the claimant's family, or (2) a177.1subsidy is paid to a public housing authority that owns or177.2operates the claimant's rental unit, pursuant to United States177.3Code, title 42, section 1437c, 20 percent of gross rent actually177.4paid in cash or its equivalent shall be the claimant's "rent177.5constituting property taxes paid." For purposes of this177.6subdivision, "rent subsidy" does not include any housing177.7assistance received under aid to families with dependent177.8children, general assistance, Minnesota supplemental assistance,177.9supplemental security income, or similar income maintenance177.10programs.177.11 Sec. 13. Minnesota Statutes 1996, section 290A.03, 177.12 subdivision 13, is amended to read: 177.13 Subd. 13. [PROPERTY TAXES PAYABLE.] "Property taxes 177.14 payable" means the property tax exclusive of special 177.15 assessments, penalties, and interest payable on a claimant's 177.16 homestead before reductions made under section 273.13 but after 177.17 deductions made under sections 273.135, 273.1391, 273.42, 177.18 subdivision 2, and any other state paid property tax credits in 177.19 any calendar year. In the case of a claimant who makes ground 177.20 lease payments, "property taxes payable" includes the amount of 177.21 the payments directly attributable to the property taxes 177.22 assessed against the parcel on which the house is located. No 177.23 apportionment or reduction of the "property taxes payable" shall 177.24 be required for the use of a portion of the claimant's homestead 177.25 for a business purpose if the claimant does not deduct any 177.26 business depreciation expenses for the use of a portion of the 177.27 homestead in the determination of federal adjusted gross 177.28 income. For homesteads which are manufactured homes as defined 177.29 in section 273.125, subdivision 8, and for homesteads which are 177.30 park trailers taxed as manufactured homes under section 168.012, 177.31 subdivision 9, "property taxes payable" shall also includethe177.32amount18 percent of the gross rent paid in the preceding year 177.33 for the site on which the homestead is located, which is177.34attributable to the net tax paid on the site. The amount177.35attributable to property taxes shall be determined by177.36multiplying the net tax on the parcel by a fraction, the178.1numerator of which is the gross rent paid for the calendar year178.2for the site and the denominator of which is the gross rent paid178.3for the calendar year for the parcel. When a homestead is owned 178.4 by two or more persons as joint tenants or tenants in common, 178.5 such tenants shall determine between them which tenant may claim 178.6 the property taxes payable on the homestead. If they are unable 178.7 to agree, the matter shall be referred to the commissioner of 178.8 revenue whose decision shall be final. Property taxes are 178.9 considered payable in the year prescribed by law for payment of 178.10 the taxes. 178.11 In the case of a claim relating to "property taxes 178.12 payable," the claimant must have owned and occupied the 178.13 homestead on January 2 of the year in which the tax is payable 178.14 and (i) the property must have been classified as homestead 178.15 property pursuant to section273.13, subdivision 22 or 23178.16 273.124, on or before December 15 of the assessment year to 178.17 which the "property taxes payable" relate; or (ii) the claimant 178.18 must provide documentation from the local assessor that 178.19 application for homestead classification has been made on or 178.20 before December 15 of the year in which the "property taxes 178.21 payable" were payable and that the assessor has approved the 178.22 application. 178.23 Sec. 14. Minnesota Statutes 1996, section 290A.04, is 178.24 amended by adding a subdivision to read: 178.25 Subd. 2j. [SEASONAL RESIDENTIAL RECREATIONAL CREDIT.] If 178.26 the net property taxes payable on a seasonal residential 178.27 recreational property not used for commercial purposes, 178.28 classified under section 273.13, subdivision 25, increase more 178.29 than ten percent over its net property taxes payable in the 178.30 previous year, and if the amount of the increase is $100 or 178.31 more, a claimant who is an owner of the property in both years 178.32 is allowed a credit under section 290.06, subdivision 26, equal 178.33 to 75 percent of the first $300 of the excess of the increase 178.34 over ten percent. This subdivision does not apply to the 178.35 portion of an increase in taxes payable that are attributable to 178.36 improvements to the property. 179.1 In addition to the other proofs required by this chapter, 179.2 each claimant under this subdivision shall file with the 179.3 application a copy of the property tax statement for property 179.4 taxes payable in the current year and the previous year and any 179.5 other documents required by the commissioner. 179.6 For purposes of this subdivision, "net property taxes 179.7 payable" means property taxes payable minus credit amounts for 179.8 which a claimant qualify's under this subdivision for the 179.9 previous year. 179.10 The credit under this subdivision is effective for property 179.11 taxes payable in 1998, for credits under section 290.06, 179.12 subdivision 26, for tax year 1998, income tax returns filed in 179.13 1999; and for property taxes payable in 1999, for credits under 179.14 section 290.06, subdivision 26, for tax year 1999, income tax 179.15 returns filed in 2000. 179.16 Sec. 15. Minnesota Statutes 1996, section 290A.19, is 179.17 amended to read: 179.18 290A.19 [OWNER OR MANAGING AGENT TO FURNISH RENT 179.19 CERTIFICATE.] 179.20(a)The owner or managing agent of any property for which 179.21 rent is paid for occupancy as a homestead must furnish a 179.22 certificate of rentconstituting property taxpaid to a person 179.23 who is a renter on December 31, in the form prescribed by the 179.24 commissioner. If the renter moves before December 31, the owner 179.25 or managing agent may give the certificate to the renter at the 179.26 time of moving, or mail the certificate to the forwarding 179.27 address if an address has been provided by the renter. The 179.28 certificate must be made available to the renter before February 179.29 1 of the year following the year in which the rent was paid. 179.30 The owner or managing agent must retain a duplicate of each 179.31 certificate or an equivalent record showing the same information 179.32 for a period of three years. The duplicate or other record must 179.33 be made available to the commissioner upon request. For the 179.34 purposes of this section, "owner" includes a park owner as 179.35 defined under section 327C.01, subdivision 6, and "property" 179.36 includes a lot as defined under section 327C.01, subdivision 3. 180.1(b) The certificate of rent constituting property taxes180.2must include the address of the property, including the county,180.3and the property tax parcel identification number and any180.4additional information that the commissioner determines is180.5appropriate.180.6(c) If the owner or managing agent fails to provide the180.7renter with a certificate of rent constituting property taxes,180.8the commissioner shall allocate the net tax on the building to180.9the unit on a square footage basis or other appropriate basis as180.10the commissioner determines. The renter shall supply the180.11commissioner with a statement from the county treasurer that180.12gives the amount of property tax on the parcel, the address and180.13property tax parcel identification number of the property, and180.14the number of units in the building.180.15(d) By January 31 of the year following the year in which180.16the rent was collected, each owner or managing agent shall180.17report to the commissioner on a form prescribed by the180.18commissioner the net tax pertaining to the rental residential180.19part of the property, the total scheduled rent, and the fraction180.20computed under section 290A.03, subdivision 11. A copy of the180.21property tax statement for taxes payable in that year must be180.22attached.180.23 Sec. 16. Laws 1995, chapter 255, article 3, section 2, 180.24 subdivision 1, as amended by Laws 1996, chapter 464, article 4, 180.25 section 1, is amended to read: 180.26 Subdivision 1. [URBAN REVITALIZATION AND STABILIZATION 180.27 ZONES.] (a) By September 1, 1995, the metropolitan council shall 180.28 designate one or more urban revitalization and stabilization 180.29 zones in the metropolitan area, as defined in section 473.121, 180.30 subdivision 2. The designated zones must contain no more than 180.31 1,000 single family homes in total. In designating urban 180.32 revitalization and stabilization zones, the council shall choose 180.33 areas that are in transition toward blight and poverty. The 180.34 council shall use indicators that evidence increasing 180.35 neighborhood distress such as declining residential property 180.36 values, declining resident incomes, declining rates of 181.1 owner-occupancy, and other indicators of blight and poverty in 181.2 determining which areas are to be urban revitalization and 181.3 stabilization zones. 181.4 (b) An urban revitalization and stabilization zone is 181.5 created in the geographic area composed entirely of parcels that 181.6 are in whole or in part located within the 1996 65Ldn contour 181.7 surrounding the Minneapolis-St. Paul International Airport, or 181.8 within one mile of the boundaries of the 1996 65Ldn contour. 181.9 For residents of the zone created under this paragraph, 181.10 eligibility for the program as provided in subdivision 2 is 181.11 limited to persons buying and occupying a residence in the zone 181.12 after June 1, 1996, who have entered into purchase agreements 181.13 related to those homes before July 1, 1997. 181.14 Sec. 17. Laws 1997, chapter 34, section 2, is amended to 181.15 read: 181.16 Sec. 2. [EFFECTIVE DATE.] 181.17 Section 1 is effective the day following final enactment 181.18 for time limitations which expire or due dates specified in 181.19 Minnesota Statutes, section 289A.20, which fall in the period 181.20 between March 31, 1997, and May 30, 1997. 181.21 Sec. 18. [LEGISLATIVE TAX STUDIES.] 181.22 Subdivision 1. [COMMISSION RESPONSIBILITIES.] (a) The 181.23 legislative coordinating commission shall prepare studies of 181.24 business taxation and the taxation of telecommunications 181.25 services during the 1997-98 legislative session, as provided by 181.26 this section. The commission is responsible for managing any 181.27 contracts under this section and for preparing the studies. It 181.28 may delegate any or all of its responsibilities under this 181.29 section to the legislative commission on planning and fiscal 181.30 policy. 181.31 (b) For the business tax study under subdivision 2, the 181.32 commission may appoint a formal or informal bipartisan working 181.33 group of house and senate members to oversee and coordinate the 181.34 study. 181.35 (c) For the study of the taxation of telecommunications 181.36 services under subdivision 4, the commission shall appoint a 182.1 bipartisan working group that includes house and senate members 182.2 and members of the public, at least two of whom are 182.3 representatives of Internet service businesses who are 182.4 knowledgeable about the technologies and practices of the 182.5 Internet and at least two of whom are the representatives of 182.6 businesses that conduct commerce on the Internet. 182.7 Subd. 2. [BUSINESS TAX STUDY.] The study of business taxes 182.8 must analyze the following taxes paid by businesses: 182.9 (1) the corporate franchise tax; 182.10 (2) the sales tax on capital or other business inputs; 182.11 (3) the personal property tax on utility property; 182.12 (4) the real property tax on commercial and industrial 182.13 property. 182.14 The study must consider the impact of alternative methods 182.15 of taxing business and the impact of doing so on the fairness, 182.16 efficiency, simplicity, elasticity, and stability of revenues, 182.17 and competitiveness of Minnesota's taxation of business. 182.18 Subd. 3. [APPROPRIATION.] $50,000 is appropriated from the 182.19 general fund for fiscal years 1998 and 1999 to the legislative 182.20 coordinating commission to study alternative methods of taxing 182.21 businesses. This appropriation may be used to hire a consultant 182.22 or consultants to prepare all or part of the study and is fully 182.23 available in either fiscal year. 182.24 Subd. 4. [TELECOMMUNICATIONS STUDY.] The commission and 182.25 the working group shall: 182.26 (1) study existing and emerging tax policies, both 182.27 federally and nationally, that apply to telecommunications and 182.28 computer industries and identify any inequities which may exist 182.29 in the current system of taxation as it applies to those 182.30 industries; 182.31 (2) identify potential for erosion of the sales tax base as 182.32 a result of evolving technologies in the telecommunications and 182.33 computer industries; 182.34 (3) consider methods of addressing potential impediments to 182.35 extension of state taxes to emerging technologies; 182.36 (4) suggest options for changing the tax system to maintain 183.1 or broaden the sales tax base and to provide equitable tax 183.2 treatment for users of existing and emerging technologies. 183.3 Subd. 5. [STAFFING.] The department of revenue shall 183.4 provide administrative and staff assistance when requested by 183.5 the commissions or working groups. 183.6 Sec. 19. [REPEALER.] 183.7 Minnesota Statutes 1996, section 290A.03, subdivisions 12a 183.8 and 14, are repealed. 183.9 Sec. 20. [EFFECTIVE DATE.] 183.10 Sections 1, 5, 6, 11, 16, and 18 are effective the day 183.11 following final enactment. 183.12 Sections 2 to 4, and 9 are effective for taxable years 183.13 beginning after December 31, 1996. 183.14 Section 7 is effective for taxable years beginning after 183.15 December 31, 1998. 183.16 Section 8 is effective for tax credit certificates issued 183.17 after December 31, 1996, and used in taxable years beginning 183.18 after December 31, 1996. 183.19 Section 10 is effective January 1, 1998. 183.20 Sections 12, 13, 15, and 19 are effective beginning for 183.21 property tax refunds based on rent paid after December 31, 1996. 183.22 Section 17 is effective April 16, 1997. 183.23 ARTICLE 6 183.24 FEDERAL UPDATE 183.25 Section 1. Minnesota Statutes 1996, section 289A.02, 183.26 subdivision 7, is amended to read: 183.27 Subd. 7. [INTERNAL REVENUE CODE.] Unless specifically 183.28 defined otherwise, "Internal Revenue Code" means the Internal 183.29 Revenue Code of 1986, as amended throughMarch 22December 31, 183.30 1996, and includes the provisions of section 1(a) and (b) of 183.31 Public Law Number 104-117. 183.32 Sec. 2. Minnesota Statutes 1996, section 290.01, 183.33 subdivision 19, is amended to read: 183.34 Subd. 19. [NET INCOME.] The term "net income" means the 183.35 federal taxable income, as defined in section 63 of the Internal 183.36 Revenue Code of 1986, as amended through the date named in this 184.1 subdivision, incorporating any elections made by the taxpayer in 184.2 accordance with the Internal Revenue Code in determining federal 184.3 taxable income for federal income tax purposes, and with the 184.4 modifications provided in subdivisions 19a to 19f. 184.5 In the case of a regulated investment company or a fund 184.6 thereof, as defined in section 851(a) or 851(h) of the Internal 184.7 Revenue Code, federal taxable income means investment company 184.8 taxable income as defined in section 852(b)(2) of the Internal 184.9 Revenue Code, except that: 184.10 (1) the exclusion of net capital gain provided in section 184.11 852(b)(2)(A) of the Internal Revenue Code does not apply;and184.12 (2) the deduction for dividends paid under section 184.13 852(b)(2)(D) of the Internal Revenue Code must be applied by 184.14 allowing a deduction for capital gain dividends and 184.15 exempt-interest dividends as defined in sections 852(b)(3)(C) 184.16 and 852(b)(5) of the Internal Revenue Code; and 184.17 (3) the deduction for dividends paid must also be applied 184.18 in the amount of any undistributed capital gains which the 184.19 regulated investment company elects to have treated as provided 184.20 in section 852(b)(3)(D) of the Internal Revenue Code. 184.21 The net income of a real estate investment trust as defined 184.22 and limited by section 856(a), (b), and (c) of the Internal 184.23 Revenue Code means the real estate investment trust taxable 184.24 income as defined in section 857(b)(2) of the Internal Revenue 184.25 Code. 184.26 The net income of a designated settlement fund as defined 184.27 in section 468B(d) of the Internal Revenue Code means the gross 184.28 income as defined in section 468B(b) of the Internal Revenue 184.29 Code. 184.30 The Internal Revenue Code of 1986, as amended through 184.31 December 31, 1986, shall be in effect for taxable years 184.32 beginning after December 31, 1986. The provisions of sections 184.33 10104, 10202, 10203, 10204, 10206, 10212, 10221, 10222, 10223, 184.34 10226, 10227, 10228, 10611, 10631, 10632, and 10711 of the 184.35 Omnibus Budget Reconciliation Act of 1987, Public Law Number 184.36 100-203, the provisions of sections 1001, 1002, 1003, 1004, 185.1 1005, 1006, 1008, 1009, 1010, 1011, 1011A, 1011B, 1012, 1013, 185.2 1014, 1015, 1018, 2004, 3041, 4009, 6007, 6026, 6032, 6137, 185.3 6277, and 6282 of the Technical and Miscellaneous Revenue Act of 185.4 1988, Public Law Number 100-647,andthe provisions of sections 185.5 7811, 7816, and 7831 of the Omnibus Budget Reconciliation Act of 185.6 1989, Public Law Number 101-239, and the provisions of sections 185.7 1305, 1704(r), and 1704(e)(1) of the Small Business Job 185.8 Protection Act, Public Law Number 104-188, shall be effective at 185.9 the time they become effective for federal income tax purposes. 185.10 The Internal Revenue Code of 1986, as amended through 185.11 December 31, 1987, shall be in effect for taxable years 185.12 beginning after December 31, 1987. The provisions of sections 185.13 4001, 4002, 4011, 5021, 5041, 5053, 5075, 6003, 6008, 6011, 185.14 6030, 6031, 6033, 6057, 6064, 6066, 6079, 6130, 6176, 6180, 185.15 6182, 6280, and 6281 of the Technical and Miscellaneous Revenue 185.16 Act of 1988, Public Law Number 100-647, the provisions of 185.17 sections 7815 and 7821 of the Omnibus Budget Reconciliation Act 185.18 of 1989, Public Law Number 101-239, and the provisions of 185.19 section 11702 of the Revenue Reconciliation Act of 1990, Public 185.20 Law Number 101-508, shall become effective at the time they 185.21 become effective for federal tax purposes. 185.22 The Internal Revenue Code of 1986, as amended through 185.23 December 31, 1988, shall be in effect for taxable years 185.24 beginning after December 31, 1988. The provisions of sections 185.25 7101, 7102, 7104, 7105, 7201, 7202, 7203, 7204, 7205, 7206, 185.26 7207, 7210, 7211, 7301, 7302, 7303, 7304, 7601, 7621, 7622, 185.27 7641, 7642, 7645, 7647, 7651, and 7652 of the Omnibus Budget 185.28 Reconciliation Act of 1989, Public Law Number 101-239, the 185.29 provision of section 1401 of the Financial Institutions Reform, 185.30 Recovery, and Enforcement Act of 1989, Public Law Number 101-73, 185.31andthe provisions of sections 11701 and 11703 of the Revenue 185.32 Reconciliation Act of 1990, Public Law Number 101-508, and the 185.33 provisions of sections 1702(g) and 1704(f)(2)(A) and (B) of the 185.34 Small Business Job Protection Act, Public Law Number 104-188, 185.35 shall become effective at the time they become effective for 185.36 federal tax purposes. 186.1 The Internal Revenue Code of 1986, as amended through 186.2 December 31, 1989, shall be in effect for taxable years 186.3 beginning after December 31, 1989. The provisions of sections 186.4 11321, 11322, 11324, 11325, 11403, 11404, 11410, and 11521 of 186.5 the Revenue Reconciliation Act of 1990, Public Law Number 186.6 101-508, and the provisions of sections 13224 and 13261 of the 186.7 Omnibus Budget Reconciliation Act of 1993, Public Law Number 186.8 103-66, shall become effective at the time they become effective 186.9 for federal purposes. 186.10 The Internal Revenue Code of 1986, as amended through 186.11 December 31, 1990, shall be in effect for taxable years 186.12 beginning after December 31, 1990. 186.13 The provisions of section 13431 of the Omnibus Budget 186.14 Reconciliation Act of 1993, Public Law Number 103-66, shall 186.15 become effective at the time they became effective for federal 186.16 purposes. 186.17 The Internal Revenue Code of 1986, as amended through 186.18 December 31, 1991, shall be in effect for taxable years 186.19 beginning after December 31, 1991. 186.20 The provisions of sections 1936 and 1937 of the 186.21 Comprehensive National Energy Policy Act of 1992, Public Law 186.22 Number 102-486, and the provisions of sections 13101, 13114, 186.23 13122, 13141, 13150, 13151, 13174, 13239, 13301, and 13442 of 186.24 the Omnibus Budget Reconciliation Act of 1993, Public Law Number 186.25 103-66, shall become effective at the time they become effective 186.26 for federal purposes. 186.27 The Internal Revenue Code of 1986, as amended through 186.28 December 31, 1992, shall be in effect for taxable years 186.29 beginning after December 31, 1992. 186.30 The provisions of sections 13116, 13121, 13206, 13210, 186.31 13222, 13223, 13231, 13232, 13233, 13239, 13262, and 13321 of 186.32 the Omnibus Budget Reconciliation Act of 1993, Public Law Number 186.33 103-66, and the provisions of sections 1703(a), 1703(d), 186.34 1703(i), 1703(l), and 1703(m) of the Small Business Job 186.35 Protection Act, Public Law Number 104-188, shall become 186.36 effective at the time they become effective for federal purposes. 187.1 The Internal Revenue Code of 1986, as amended through 187.2 December 31, 1993, shall be in effect for taxable years 187.3 beginning after December 31, 1993. 187.4 The provision of section 741 of Legislation to Implement 187.5 Uruguay Round of General Agreement on Tariffs and Trade, Public 187.6 Law Number 103-465,andthe provisions of sections 1, 2, and 3, 187.7 of the Self-Employed Health Insurance Act of 1995, Public Law 187.8 Number 104-7, the provision of section 501(b)(2) of the Health 187.9 Insurance Portability and Accountability Act, Public Law Number 187.10 104-191, and the provisions of sections 1604 and 1704(p)(1) and 187.11 (2) of the Small Business Job Protection Act, Public Law Number 187.12 104-188, shall become effective at the time they become 187.13 effective for federal purposes. 187.14 The Internal Revenue Code of 1986, as amended through 187.15 December 31, 1994, shall be in effect for taxable years 187.16 beginning after December 31, 1994. 187.17 The provisions of sections 1119(a), 1120, 1121, 1202(a), 187.18 1444, 1449(b), 1602(a), 1610(a), 1613, and 1805 of the Small 187.19 Business Job Protection Act, Public Law Number 104-188, and the 187.20 provision of section 511 of the Health Insurance Portability and 187.21 Accountability Act, Public Law Number 104-191, shall become 187.22 effective at the time they become effective for federal purposes. 187.23 The Internal Revenue Code of 1986, as amended through March 187.24 22, 1996, is in effect for taxable years beginning after 187.25 December 31, 1995. 187.26 The provisions of sections 1113(a), 1117, 1206(a), 1313(a), 187.27 1402(a), 1403(a), 1443, 1450, 1501(a), 1605, 1611(a), 1612, 187.28 1616, 1617, 1704(l), and 1704(m) of the Small Business Job 187.29 Protection Act, Public Law Number 104-188, and the provisions of 187.30 Public Law Number 104-117 become effective at the time they 187.31 become effective for federal purposes. 187.32 The Internal Revenue Code of 1986, as amended through 187.33 December 31, 1996, shall be in effect for taxable years 187.34 beginning after December 31, 1996. 187.35 Except as otherwise provided, references to the Internal 187.36 Revenue Code in subdivisions 19a to 19g mean the code in effect 188.1 for purposes of determining net income for the applicable year. 188.2 Sec. 3. Minnesota Statutes 1996, section 290.01, 188.3 subdivision 19a, is amended to read: 188.4 Subd. 19a. [ADDITIONS TO FEDERAL TAXABLE INCOME.] For 188.5 individuals, estates, and trusts, there shall be added to 188.6 federal taxable income: 188.7 (1)(i) interest income on obligations of any state other 188.8 than Minnesota or a political or governmental subdivision, 188.9 municipality, or governmental agency or instrumentality of any 188.10 state other than Minnesota exempt from federal income taxes 188.11 under the Internal Revenue Code or any other federal statute, 188.12 and 188.13 (ii) exempt-interest dividends as defined in section 188.14 852(b)(5) of the Internal Revenue Code, except the portion of 188.15 the exempt-interest dividends derived from interest income on 188.16 obligations of the state of Minnesota or its political or 188.17 governmental subdivisions, municipalities, governmental agencies 188.18 or instrumentalities, but only if the portion of the 188.19 exempt-interest dividends from such Minnesota sources paid to 188.20 all shareholders represents 95 percent or more of the 188.21 exempt-interest dividends that are paid by the regulated 188.22 investment company as defined in section 851(a) of the Internal 188.23 Revenue Code, or the fund of the regulated investment company as 188.24 defined in section 851(h) of the Internal Revenue Code, making 188.25 the payment; and 188.26 (iii) for the purposes of items (i) and (ii), interest on 188.27 obligations of an Indian tribal government described in section 188.28 7871(c) of the Internal Revenue Code shall be treated as 188.29 interest income on obligations of the state in which the tribe 188.30 is located; 188.31 (2) the amount of income taxes paid or accrued within the 188.32 taxable year under this chapter and income taxes paid to any 188.33 other state or to any province or territory of Canada, to the 188.34 extent allowed as a deduction under section 63(d) of the 188.35 Internal Revenue Code, but the addition may not be more than the 188.36 amount by which the itemized deductions as allowed under section 189.1 63(d) of the Internal Revenue Code exceeds the amount of the 189.2 standard deduction as defined in section 63(c) of the Internal 189.3 Revenue Code. For the purpose of this paragraph, the 189.4 disallowance of itemized deductions under section 68 of the 189.5 Internal Revenue Code of 1986, income tax is the last itemized 189.6 deduction disallowed; 189.7 (3) the capital gain amount of a lump sum distribution to 189.8 which the special tax under section 1122(h)(3)(B)(ii) of the Tax 189.9 Reform Act of 1986, Public Law Number 99-514, applies;and189.10 (4) the amount of income taxes paid or accrued within the 189.11 taxable year under this chapter and income taxes paid to any 189.12 other state or any province or territory of Canada, to the 189.13 extent allowed as a deduction in determining federal adjusted 189.14 gross income. For the purpose of this paragraph, income taxes 189.15 do not include the taxes imposed by sections 290.0922, 189.16 subdivision 1, paragraph (b), 290.9727, 290.9728, and 290.9729.; 189.17 (5) the amount of loss or expense included in federal 189.18 taxable income under section 1366 of the Internal Revenue Code 189.19 flowing from a corporation that has a valid election in effect 189.20 for the taxable year under section 1362 of the Internal Revenue 189.21 Code, but which is not allowed to be an "S" corporation under 189.22 section 290.9725; and 189.23 (6) the amount of any distributions in cash or property 189.24 made to a shareholder during the taxable year by a corporation 189.25 that has a valid election in effect for the taxable year under 189.26 section 1362 of the Internal Revenue code, but which is not 189.27 allowed to be an "S" corporation under section 290.9725 to the 189.28 extent not already included in federal taxable income under 189.29 section 1368 of the Internal Revenue Code. 189.30 Sec. 4. Minnesota Statutes 1996, section 290.01, 189.31 subdivision 19b, is amended to read: 189.32 Subd. 19b. [SUBTRACTIONS FROM FEDERAL TAXABLE INCOME.] For 189.33 individuals, estates, and trusts, there shall be subtracted from 189.34 federal taxable income: 189.35 (1) interest income on obligations of any authority, 189.36 commission, or instrumentality of the United States to the 190.1 extent includable in taxable income for federal income tax 190.2 purposes but exempt from state income tax under the laws of the 190.3 United States; 190.4 (2) if included in federal taxable income, the amount of 190.5 any overpayment of income tax to Minnesota or to any other 190.6 state, for any previous taxable year, whether the amount is 190.7 received as a refund or as a credit to another taxable year's 190.8 income tax liability; 190.9 (3) the amount paid to others not to exceed $650 for each 190.10 dependent in grades kindergarten to 6 and $1,000 for each 190.11 dependent in grades 7 to 12, for tuition, textbooks, and 190.12 transportation of each dependent in attending an elementary or 190.13 secondary school situated in Minnesota, North Dakota, South 190.14 Dakota, Iowa, or Wisconsin, wherein a resident of this state may 190.15 legally fulfill the state's compulsory attendance laws, which is 190.16 not operated for profit, and which adheres to the provisions of 190.17 the Civil Rights Act of 1964 and chapter 363. As used in this 190.18 clause, "textbooks" includes books and other instructional 190.19 materials and equipment used in elementary and secondary schools 190.20 in teaching only those subjects legally and commonly taught in 190.21 public elementary and secondary schools in this state. 190.22 "Textbooks" does not include instructional books and materials 190.23 used in the teaching of religious tenets, doctrines, or worship, 190.24 the purpose of which is to instill such tenets, doctrines, or 190.25 worship, nor does it include books or materials for, or 190.26 transportation to, extracurricular activities including sporting 190.27 events, musical or dramatic events, speech activities, driver's 190.28 education, or similar programs. In order to qualify for the 190.29 subtraction under this clause the taxpayer must elect to itemize 190.30 deductions under section 63(e) of the Internal Revenue Code; 190.31 (4) to the extent included in federal taxable income, 190.32 distributions from a qualified governmental pension plan, an 190.33 individual retirement account, simplified employee pension, or 190.34 qualified plan covering a self-employed person that represent a 190.35 return of contributions that were included in Minnesota gross 190.36 income in the taxable year for which the contributions were made 191.1 but were deducted or were not included in the computation of 191.2 federal adjusted gross income. The distribution shall be 191.3 allocated first to return of contributions until the 191.4 contributions included in Minnesota gross income have been 191.5 exhausted. This subtraction applies only to contributions made 191.6 in a taxable year prior to 1985; 191.7 (5) income as provided under section 290.0802; 191.8 (6) the amount of unrecovered accelerated cost recovery 191.9 system deductions allowed under subdivision 19g; 191.10 (7) to the extent included in federal adjusted gross 191.11 income, income realized on disposition of property exempt from 191.12 tax under section 290.491; 191.13 (8) to the extent not deducted in determining federal 191.14 taxable income, the amount paid for health insurance of 191.15 self-employed individuals as determined under section 162(l) of 191.16 the Internal Revenue Code, except that the 25 percent limit does 191.17 not apply. If the taxpayer deducted insurance payments under 191.18 section 213 of the Internal Revenue Code of 1986, the 191.19 subtraction under this clause must be reduced by the lesser of: 191.20 (i) the total itemized deductions allowed under section 191.21 63(d) of the Internal Revenue Code, less state, local, and 191.22 foreign income taxes deductible under section 164 of the 191.23 Internal Revenue Code and the standard deduction under section 191.24 63(c) of the Internal Revenue Code; or 191.25 (ii) the lesser of (A) the amount of insurance qualifying 191.26 as "medical care" under section 213(d) of the Internal Revenue 191.27 Code to the extent not deducted under section 162(1) of the 191.28 Internal Revenue Code or excluded from income or (B) the total 191.29 amount deductible for medical care under section 213(a);and191.30 (9) the exemption amount allowed under Laws 1995, chapter 191.31 255, article 3, section 2, subdivision 3.; and 191.32 (10) the amount of income or gain included in federal 191.33 taxable income under section 1366 of the Internal Revenue Code 191.34 flowing from a corporation that has a valid election in effect 191.35 for the taxable year under section 1362 of the Internal Revenue 191.36 Code which is not allowed to be an "S" corporation under section 192.1 290.9725. 192.2 Sec. 5. Minnesota Statutes 1996, section 290.01, 192.3 subdivision 19f, is amended to read: 192.4 Subd. 19f. [BASIS MODIFICATIONS AFFECTING GAIN OR LOSS ON 192.5 DISPOSITION OF PROPERTY.] (a) For individuals, estates, and 192.6 trusts, the basis of property is its adjusted basis for federal 192.7 income tax purposes except as set forth in paragraphs (f)and, 192.8 (g) and (m). For corporations, the basis of property is its 192.9 adjusted basis for federal income tax purposes, without regard 192.10 to the time when the property became subject to tax under this 192.11 chapter or to whether out-of-state losses or items of tax 192.12 preference with respect to the property were not deductible 192.13 under this chapter, except that the modifications to the basis 192.14 for federal income tax purposes set forth in paragraphs (b) to 192.15 (j) are allowed to corporations, and the resulting modifications 192.16 to federal taxable income must be made in the year in which gain 192.17 or loss on the sale or other disposition of property is 192.18 recognized. 192.19 (b) The basis of property shall not be reduced to reflect 192.20 federal investment tax credit. 192.21 (c) The basis of property subject to the accelerated cost 192.22 recovery system under section 168 of the Internal Revenue Code 192.23 shall be modified to reflect the modifications in depreciation 192.24 with respect to the property provided for in subdivision 19e. 192.25 For certified pollution control facilities for which 192.26 amortization deductions were elected under section 169 of the 192.27 Internal Revenue Code of 1954, the basis of the property must be 192.28 increased by the amount of the amortization deduction not 192.29 previously allowed under this chapter. 192.30 (d) For property acquired before January 1, 1933, the basis 192.31 for computing a gain is the fair market value of the property as 192.32 of that date. The basis for determining a loss is the cost of 192.33 the property to the taxpayer less any depreciation, 192.34 amortization, or depletion, actually sustained before that 192.35 date. If the adjusted cost exceeds the fair market value of the 192.36 property, then the basis is the adjusted cost regardless of 193.1 whether there is a gain or loss. 193.2 (e) The basis is reduced by the allowance for amortization 193.3 of bond premium if an election to amortize was made pursuant to 193.4 Minnesota Statutes 1986, section 290.09, subdivision 13, and the 193.5 allowance could have been deducted by the taxpayer under this 193.6 chapter during the period of the taxpayer's ownership of the 193.7 property. 193.8 (f) For assets placed in service before January 1, 1987, 193.9 corporations, partnerships, or individuals engaged in the 193.10 business of mining ores other than iron ore or taconite 193.11 concentrates subject to the occupation tax under chapter 298 193.12 must use the occupation tax basis of property used in that 193.13 business. 193.14 (g) For assets placed in service before January 1, 1990, 193.15 corporations, partnerships, or individuals engaged in the 193.16 business of mining iron ore or taconite concentrates subject to 193.17 the occupation tax under chapter 298 must use the occupation tax 193.18 basis of property used in that business. 193.19 (h) In applying the provisions of sections 301(c)(3)(B), 193.20 312(f) and (g), and 316(a)(1) of the Internal Revenue Code, the 193.21 dates December 31, 1932, and January 1, 1933, shall be 193.22 substituted for February 28, 1913, and March 1, 1913, 193.23 respectively. 193.24 (i) In applying the provisions of section 362(a) and (c) of 193.25 the Internal Revenue Code, the date December 31, 1956, shall be 193.26 substituted for June 22, 1954. 193.27 (j) The basis of property shall be increased by the amount 193.28 of intangible drilling costs not previously allowed due to 193.29 differences between this chapter and the Internal Revenue Code. 193.30 (k) The adjusted basis of any corporate partner's interest 193.31 in a partnership is the same as the adjusted basis for federal 193.32 income tax purposes modified as required to reflect the basis 193.33 modifications set forth in paragraphs (b) to (j). The adjusted 193.34 basis of a partnership in which the partner is an individual, 193.35 estate, or trust is the same as the adjusted basis for federal 193.36 income tax purposes modified as required to reflect the basis 194.1 modifications set forth in paragraphs (f) and (g). 194.2 (l) The modifications contained in paragraphs (b) to (j) 194.3 also apply to the basis of property that is determined by 194.4 reference to the basis of the same property in the hands of a 194.5 different taxpayer or by reference to the basis of different 194.6 property. 194.7 (m) If a corporation has a valid election in effect for the 194.8 taxable year under section 1362 of the Internal Revenue Code, 194.9 but is not allowed to be an "S" corporation under section 194.10 290.9725, and the corporation is liquidated or the individual 194.11 shareholder disposes of the stock and there is no capital loss 194.12 reflected in federal adjusted gross income because of the fact 194.13 that corporate losses have exhausted the shareholders' basis for 194.14 federal purposes, the shareholders shall be entitled to a 194.15 capital loss commensurate to their Minnesota basis for the stock. 194.16 Sec. 6. Minnesota Statutes 1996, section 290.01, 194.17 subdivision 19g, is amended to read: 194.18 Subd. 19g. [ACRS MODIFICATION FOR INDIVIDUALS.] (a) An 194.19 individual is allowed a subtraction from federal taxable income 194.20 for the amount of accelerated cost recovery system deductions 194.21 that were added to federal adjusted gross income in computing 194.22 Minnesota gross income for taxable year 1981, 1982, 1983, or 194.23 1984 and that were not deducted in a later taxable year. The 194.24 deduction is allowed beginning in the first taxable year after 194.25 the entire allowable deduction for the property has been allowed 194.26 under federal law or the first taxable year beginning after 194.27 December 31, 1987, whichever is later. The amount of the 194.28 deduction is computed by deducting the amount added to federal 194.29 adjusted gross income in computing Minnesota gross income (less 194.30 any deduction allowed under Minnesota Statutes 1986, section 194.31 290.01, subdivision 20f) in equal annual amounts over five years. 194.32 (b) In the event of a sale or exchange of the property, a 194.33 deduction is allowed equal to the lesser of (1) the remaining 194.34 amount that would be allowed as a deduction under paragraph (a) 194.35 or (2) the amount of capital gain recognized and the amount of 194.36 cost recovery deductions that were subject to recapture under 195.1 sections 1245 and 1250 of the Internal Revenue Code of 1986 for 195.2 the taxable year. 195.3 (c) In the case of a corporationelecting S corporation195.4status under section 1362 of the Internal Revenue Codetreated 195.5 as an "S" corporation under section 290.9725, the amount of the 195.6 corporation's cost recovery allowances that have been deducted 195.7 in computing federal tax, but have been added to federal taxable 195.8 income or not deducted in computing tax under this chapter as a 195.9 result of the application of subdivision 19e, paragraphs (a) and 195.10 (c) or Minnesota Statutes 1986, section 290.09, subdivision 7, 195.11 is allowed as a deduction to the shareholders under the 195.12 provisions of paragraph (a). 195.13 Sec. 7. Minnesota Statutes 1996, section 290.01, 195.14 subdivision 31, is amended to read: 195.15 Subd. 31. [INTERNAL REVENUE CODE.] Unless specifically 195.16 defined otherwise, "Internal Revenue Code" means the Internal 195.17 Revenue Code of 1986, as amended throughMarch 22December 31, 195.18 1996, and includes the provisions of section 1(a) and (b) of 195.19 Public Law Number 104-117. 195.20 Sec. 8. Minnesota Statutes 1996, section 290.014, 195.21 subdivision 2, is amended to read: 195.22 Subd. 2. [NONRESIDENT INDIVIDUALS.] Except as provided in 195.23 section 290.015, a nonresident individual is subject to the 195.24 return filing requirements and to tax as provided in this 195.25 chapter to the extent that the income of the nonresident 195.26 individual is: 195.27 (1) allocable to this state under section 290.17, 290.191, 195.28 or 290.20; 195.29 (2) taxed to the individual under the Internal Revenue Code 195.30 (or not taxed under the Internal Revenue Code by reason of its 195.31 character but of a character which is taxable under this 195.32 chapter) in the individual's capacity as a beneficiary of an 195.33 estate with income allocable to this state under section 290.17, 195.34 290.191, or 290.20 and the income, taking into account the 195.35 income character provisions of section 662(b) of the Internal 195.36 Revenue Code, would be allocable to this state under section 196.1 290.17, 290.191, or 290.20 if realized by the individual 196.2 directly from the source from which realized by the estate; 196.3 (3) taxed to the individual under the Internal Revenue Code 196.4 (or not taxed under the Internal Revenue Code by reason of its 196.5 character but of a character that is taxable under this chapter) 196.6 in the individual's capacity as a beneficiary or grantor or 196.7 other person treated as a substantial owner of a trust with 196.8 income allocable to this state under section 290.17, 290.191, or 196.9 290.20 and the income, taking into account the income character 196.10 provisions of section 652(b), 662(b), or 664(b) of the Internal 196.11 Revenue Code, would be allocable to this state under section 196.12 290.17, 290.191, or 290.20 if realized by the individual 196.13 directly from the source from which realized by the trust; 196.14 (4) taxed to the individual under the Internal Revenue Code 196.15 (or not taxed under the Internal Revenue Code by reason of its 196.16 character but of a character which is taxable under this 196.17 chapter) in the individual's capacity as a limited or general 196.18 partner in a partnership with income allocable to this state 196.19 under section 290.17, 290.191, or 290.20 and the income, taking 196.20 into account the income character provisions of section 702(b) 196.21 of the Internal Revenue Code, would be allocable to this state 196.22 under section 290.17, 290.191, or 290.20 if realized by the 196.23 individual directly from the source from which realized by the 196.24 partnership; or 196.25 (5) taxed to the individual under the Internal Revenue Code 196.26 (or not taxed under the Internal Revenue Code by reason of its 196.27 character but of a character which is taxable under this 196.28 chapter) in the individual's capacity as a shareholder of a 196.29 corporationhaving a valid election in effect under section 1362196.30of the Internal Revenue Codetreated as an "S" corporation under 196.31 section 290.9725, and income allocable to this state under 196.32 section 290.17, 290.191, or 290.20 and the income, taking into 196.33 account the income character provisions of section 1366(b) of 196.34 the Internal Revenue Code, would be allocable to this state 196.35 under section 290.17, 290.191, or 290.20 if realized by the 196.36 individual directly from the source from which realized by the 197.1 corporation. 197.2 Sec. 9. Minnesota Statutes 1996, section 290.014, 197.3 subdivision 3, is amended to read: 197.4 Subd. 3. [TRUSTS AND ESTATES.] Except as provided in 197.5 section 290.015, a trust or estate, whether resident or 197.6 nonresident, is subject to the return filing requirements and to 197.7 tax as provided in this chapter to the extent that the income of 197.8 the trust or estate is: 197.9 (1) allocable to this state under section 290.17, 290.191, 197.10 or 290.20; 197.11 (2) taxed to the trust or estate under the Internal Revenue 197.12 Code (or not taxed under the Internal Revenue Code by reason of 197.13 its character but of a character which is taxable under this 197.14 chapter) in its capacity as a beneficiary of a trust or estate 197.15 with income allocable to this state under section 290.17, 197.16 290.191, or 290.20 and the income, taking into account the 197.17 income character provisions of section 662(b) of the Internal 197.18 Revenue Code, would be allocable to this state under section 197.19 290.17, 290.191, or 290.20 if realized by the trust or 197.20 beneficiary estate directly from the source from which realized 197.21 by the distributing estate; 197.22 (3) taxed to the trust or estate under the Internal Revenue 197.23 Code (or not taxed under the Internal Revenue Code by reason of 197.24 its character but of a character which is taxable under this 197.25 chapter) in its capacity as a beneficiary or grantor or other 197.26 person treated as a substantial owner of a trust with income 197.27 allocable to this state under section 290.17, 290.191, or 290.20 197.28 and the income, taking into account the income character 197.29 provisions of section 652(b), 662(b), or 664(b) of the Internal 197.30 Revenue Code, would be allocable to this state under section 197.31 290.17, 290.191, or 290.20 if realized by the beneficiary trust 197.32 or estate directly from the source from which realized by the 197.33 distributing trust; 197.34 (4) taxed to the trust or estate under the Internal Revenue 197.35 Code (or not taxed under the Internal Revenue Code by reason of 197.36 its character but of a character which is taxable under this 198.1 chapter) in its capacity as a limited or general partner in a 198.2 partnership with income allocable to this state under section 198.3 290.17, 290.191, or 290.20 and the income, taking into account 198.4 the income character provisions of section 702(b) of the 198.5 Internal Revenue Code, would be allocable to this state under 198.6 section 290.17, 290.191, or 290.20 if realized by the trust or 198.7 estate directly from the source from which realized by the 198.8 partnership; or 198.9 (5) taxed to the trust or estate under the Internal Revenue 198.10 Code (or not taxed under the Internal Revenue Code by reason of 198.11 its character but of a character which is taxable under this 198.12 chapter) in its capacity as a shareholder of a 198.13 corporationhaving a valid election in effect under section 1362198.14of the Internal Revenue Codetreated as an "S" corporation under 198.15 section 290.9725, and income allocable to this state under 198.16 section 290.17, 290.191, or 290.20 and the income, taking into 198.17 account the income character provisions of section 1366(b) of 198.18 the Internal Revenue Code, would be allocable to this state 198.19 under section 290.17, 290.191, or 290.20 if realized by the 198.20 trust or estate directly from the source from which realized by 198.21 the corporation. 198.22 Sec. 10. Minnesota Statutes 1996, section 290.015, 198.23 subdivision 3, is amended to read: 198.24 Subd. 3. [EXCEPTIONS.] (a) A person is not subject to tax 198.25 under this chapter if the person is engaged in the business of 198.26 selling tangible personal property and taxation of that person 198.27 under this chapter is precluded by Public Law Number 86-272, 198.28 United States Code, title 15, sections 381 to 384, or would be 198.29 so precluded except for the fact that the person stored tangible 198.30 personal property in a state licensed facility under chapter 231. 198.31 (b) Ownership of an interest in the following types of 198.32 property (including those contacts with this state reasonably 198.33 required to evaluate and complete the acquisition or disposition 198.34 of the property, the servicing of the property or the income 198.35 from it, the collection of income from the property, or the 198.36 acquisition or liquidation of collateral relating to the 199.1 property) shall not be a factor in determining whether the owner 199.2 is subject to tax under this chapter: 199.3 (1) an interest in a real estate mortgage investment 199.4 conduit, a real estate investment trust, a financial asset 199.5 securitization investment trust, or a regulated investment 199.6 company or a fund of a regulated investment company, as those 199.7 terms are defined in the Internal Revenue Code; 199.8 (2) an interest in money market instruments or securities 199.9 as defined in section 290.191, subdivision 6, paragraphs (c) and 199.10 (d); 199.11 (3) an interest in a loan-backed, mortgage-backed, or 199.12 receivable-backed security representing either: (i) ownership 199.13 in a pool of promissory notes, mortgages, or receivables or 199.14 certificates of interest or participation in such notes, 199.15 mortgages, or receivables, or (ii) debt obligations or equity 199.16 interests which provide for payments in relation to payments or 199.17 reasonable projections of payments on the notes, mortgages, or 199.18 receivables; 199.19 (4) an interest acquired from a person in assets described 199.20 in section 290.191, subdivision 11, paragraphs (e) to (l), 199.21 subject to the provisions of paragraph (c), clause (2)(A); 199.22 (5) an interest acquired from a person in the right to 199.23 service, or collect income from any assets described in section 199.24 290.191, subdivision 11, paragraphs (e) to (l), subject to the 199.25 provisions of paragraph (c), clause (2)(A); 199.26 (6) an interest acquired from a person in a funded or 199.27 unfunded agreement to extend or guarantee credit whether 199.28 conditional, mandatory, temporary, standby, secured, or 199.29 otherwise, subject to the provisions of paragraph (c), clause 199.30 (2)(A); 199.31 (7) an interest of a person other than an individual, 199.32 estate, or trust, in any intangible, tangible, real, or personal 199.33 property acquired in satisfaction, whether in whole or in part, 199.34 of any asset embodying a payment obligation which is in default, 199.35 whether secured or unsecured, the ownership of an interest in 199.36 which would be exempt under the preceding provisions of this 200.1 subdivision, provided the property is disposed of within a 200.2 reasonable period of time; or 200.3 (8) amounts held in escrow or trust accounts, pursuant to 200.4 and in accordance with the terms of property described in this 200.5 subdivision. 200.6 (c)(1) For purposes of paragraph (b), clauses (4) to (6), 200.7 an interest in the type of assets or credit agreements described 200.8 is deemed to exist at the time the owner becomes legally 200.9 obligated, conditionally or unconditionally, to fund, acquire, 200.10 renew, extend, amend, or otherwise enter into the credit 200.11 arrangement. 200.12 (2)(A) An owner has acquired an interest from a person in 200.13 paragraph (b), clauses (4) to (6), assets if: 200.14 (i) the owner at the time of the acquisition of the asset 200.15 does not own, directly or indirectly, 15 percent or more of the 200.16 outstanding stock or in the case of a partnership 15 percent or 200.17 more of the capital or profit interests of the person from whom 200.18 it acquired the asset; 200.19 (ii) the person from whom the owner acquired the asset 200.20 regularly sells, assigns, or transfers interests in paragraph 200.21 (b), clauses (4) to (6), assets during the 12 calendar months 200.22 immediately preceding the month of acquisition to three or more 200.23 persons; and 200.24 (iii) the person from whom the owner acquired the asset 200.25 does not sell, assign, or transfer 75 percent or more of its 200.26 paragraph (b), clauses (4) to (6), assets during the 12 calendar 200.27 months immediately preceding the month of acquisition to the 200.28 owner. 200.29 For purposes of determining indirect ownership under item (i), 200.30 the owner is deemed to own all stock, capital, or profit 200.31 interests owned by another person if the owner directly owns 15 200.32 percent or more of the stock, capital, or profit interests in 200.33 the other person. The owner is also deemed to own through any 200.34 intermediary parties all stock, capital, and profit interests 200.35 directly owned by a person to the extent there exists a 15 200.36 percent or more chain of ownership of stock, capital, or profit 201.1 interests between the owner, intermediary parties and the person. 201.2 (B) If the owner of the asset is a member of the unitary 201.3 group, paragraph (b), clauses (4) to (8), do not apply to an 201.4 interest acquired from another member of the unitary group. If 201.5 the interest in the asset was originally acquired from a 201.6 nonunitary member and at that time qualified as a section 201.7 290.015, subdivision 3, paragraph (b), asset, the foregoing 201.8 limitation does not apply. 201.9 Sec. 11. Minnesota Statutes 1996, section 290.015, 201.10 subdivision 5, is amended to read: 201.11 Subd. 5. [DETERMINATION AT ENTITY LEVEL.] Determinations 201.12 under this section with respect to trades or businesses 201.13 conducted by a partnership, trust, estate, or corporationwith201.14an election in effect under section 1362 of the Internal Revenue201.15Codetreated as an "S" corporation under section 290.9725, or 201.16 any other entity, the income of which is or may be taxed to its 201.17 owners or beneficiaries must be made with respect to the entity 201.18 carrying on the trade or business and not with respect to owners 201.19 or beneficiaries of the trade or business, the taxability of 201.20 which under this chapter must be determined under section 201.21 290.014. 201.22 Sec. 12. Minnesota Statutes 1996, section 290.06, 201.23 subdivision 22, is amended to read: 201.24 Subd. 22. [CREDIT FOR TAXES PAID TO ANOTHER STATE.] (a) A 201.25 taxpayer who is liable for taxes on or measured by net income to 201.26 another state or province or territory of Canada, as provided in 201.27 paragraphs (b) through (f), upon income allocated or apportioned 201.28 to Minnesota, is entitled to a credit for the tax paid to 201.29 another state or province or territory of Canada if the tax is 201.30 actually paid in the taxable year or a subsequent taxable year. 201.31 A taxpayer who is a resident of this state pursuant to section 201.32 290.01, subdivision 7, clause (2), and who is subject to income 201.33 tax as a resident in the state of the individual's domicile is 201.34 not allowed this credit unless the state of domicile does not 201.35 allow a similar credit. 201.36 (b) For an individual, estate, or trust, the credit is 202.1 determined by multiplying the tax payable under this chapter by 202.2 the ratio derived by dividing the income subject to tax in the 202.3 other state or province or territory of Canada that is also 202.4 subject to tax in Minnesota while a resident of Minnesota by the 202.5 taxpayer's federal adjusted gross income, as defined in section 202.6 62 of the Internal Revenue Code, modified by the addition 202.7 required by section 290.01, subdivision 19a, clause (1), and the 202.8 subtraction allowed by section 290.01, subdivision 19b, clause 202.9 (1), to the extent the income is allocated or assigned to 202.10 Minnesota under sections 290.081 and 290.17. 202.11 (c) If the taxpayer is an athletic team that apportions all 202.12 of its income under section 290.17, subdivision 5, paragraph 202.13 (c), the credit is determined by multiplying the tax payable 202.14 under this chapter by the ratio derived from dividing the total 202.15 net income subject to tax in the other state or province or 202.16 territory of Canada by the taxpayer's Minnesota taxable income. 202.17 (d) The credit determined under paragraph (b) or (c) shall 202.18 not exceed the amount of tax so paid to the other state or 202.19 province or territory of Canada on the gross income earned 202.20 within the other state or province or territory of Canada 202.21 subject to tax under this chapter, nor shall the allowance of 202.22 the credit reduce the taxes paid under this chapter to an amount 202.23 less than what would be assessed if such income amount was 202.24 excluded from taxable net income. 202.25 (e) In the case of the tax assessed on a lump sum 202.26 distribution under section 290.032, the credit allowed under 202.27 paragraph (a) is the tax assessed by the other state or province 202.28 or territory of Canada on the lump sum distribution that is also 202.29 subject to tax under section 290.032, and shall not exceed the 202.30 tax assessed under section 290.032. To the extent the total 202.31 lump sum distribution defined in section 290.032, subdivision 1, 202.32 includes lump sum distributions received in prior years or is 202.33 all or in part an annuity contract, the reduction to the tax on 202.34 the lump sum distribution allowed under section 290.032, 202.35 subdivision 2, includes tax paid to another state that is 202.36 properly apportioned to that distribution. 203.1 (f) If a Minnesota resident reported an item of income to 203.2 Minnesota and is assessed tax in such other state or province or 203.3 territory of Canada on that same income after the Minnesota 203.4 statute of limitations has expired, the taxpayer shall receive a 203.5 credit for that year under paragraph (a), notwithstanding any 203.6 statute of limitations to the contrary. The claim for the 203.7 credit must be submitted within one year from the date the taxes 203.8 were paid to the other state or province or territory of 203.9 Canada. The taxpayer must submit sufficient proof to show 203.10 entitlement to a credit. 203.11 (g) For the purposes of this subdivision, a resident 203.12 shareholder of a corporationhaving a valid election in effect203.13under section 1362 of the Internal Revenue Codetreated as an "S" 203.14 corporation under section 290.9725, must be considered to have 203.15 paid a tax imposed on the shareholder in an amount equal to the 203.16 shareholder's pro rata share of any net income tax paid by the S 203.17 corporation to another state. For the purposes of the preceding 203.18 sentence, the term "net income tax" means any tax imposed on or 203.19 measured by a corporation's net income. 203.20 (h) For the purposes of this subdivision, a resident member 203.21 of a limited liability company taxed as a partnership under the 203.22 Internal Revenue Code must be considered to have paid a tax 203.23 imposed on the member in an amount equal to the member's pro 203.24 rata share of any net income tax paid by the limited liability 203.25 company to a state that does not measure the income of the 203.26 member of the limited liability company by reference to the 203.27 income of the limited liability company. For purposes of the 203.28 preceding sentence, the term "net income" tax means any tax 203.29 imposed on or measured by a limited liability company's net 203.30 income. 203.31 Sec. 13. Minnesota Statutes 1996, section 290.068, 203.32 subdivision 1, is amended to read: 203.33 Subdivision 1. [CREDIT ALLOWED.] A corporation, other than 203.34 a corporationwith a valid election in effect under section 1362203.35of the Internal Revenue Codetreated as an "S" corporation under 203.36 section 290.9725, is allowed a credit against the portion of the 204.1 franchise tax computed under section 290.06, subdivision 1, for 204.2 the taxable year equal to: 204.3 (a) 5 percent of the first $2 million of the excess (if 204.4 any) of 204.5 (1) the qualified research expenses for the taxable year, 204.6 over 204.7 (2) the base amount; and 204.8 (b) 2.5 percent on all of such excess expenses over $2 204.9 million. 204.10 Sec. 14. Minnesota Statutes 1996, section 290.0922, 204.11 subdivision 1, is amended to read: 204.12 Subdivision 1. [IMPOSITION.] (a) In addition to the tax 204.13 imposed by this chapter without regard to this section, the 204.14 franchise tax imposed on a corporation required to file under 204.15 section 289A.08, subdivision 3, other than a corporationhaving204.16a valid election in effect under section 1362 of the Internal204.17Revenue Codetreated as an "S" corporation under section 204.18 290.9725 for the taxable year includes a tax equal to the 204.19 following amounts: 204.20 If the sum of the corporation's 204.21 Minnesota property, payrolls, and sales 204.22 or receipts is: the tax equals: 204.23 less than $500,000 $0 204.24 $ 500,000 to $ 999,999 $100 204.25 $ 1,000,000 to $ 4,999,999 $300 204.26 $ 5,000,000 to $ 9,999,999 $1,000 204.27 $10,000,000 to $19,999,999 $2,000 204.28 $20,000,000 or more $5,000 204.29 (b) A tax is imposed for each taxable year on a corporation 204.30 required to file a return under section 289A.12, subdivision 3, 204.31 thathas a valid election in effect for the taxable year under204.32section 1362 of the Internal Revenue Codeis treated as an "S" 204.33 corporation under section 290.9725 and on a partnership required 204.34 to file a return under section 289A.12, subdivision 3, other 204.35 than a partnership that derives over 80 percent of its income 204.36 from farming. The tax imposed under this paragraph is due on or 205.1 before the due date of the return for the taxpayer due under 205.2 section 289A.18, subdivision 1. The commissioner shall 205.3 prescribe the return to be used for payment of this tax. The 205.4 tax under this paragraph is equal to the following amounts: 205.5 If the sum of the S corporation's or partnership's 205.6 Minnesota property, payrolls, and sales 205.7 or receipts is: the tax equals: 205.8 less than $500,000 $0 205.9 $ 500,000 to $ 999,999 $100 205.10 $ 1,000,000 to $ 4,999,999 $300 205.11 $ 5,000,000 to $ 9,999,999 $1,000 205.12 $10,000,000 to $19,999,999 $2,000 205.13 $20,000,000 or more $5,000 205.14 Sec. 15. Minnesota Statutes 1996, section 290.17, 205.15 subdivision 1, is amended to read: 205.16 Subdivision 1. [SCOPE OF ALLOCATION RULES.] (a) The income 205.17 of resident individuals is not subject to allocation outside 205.18 this state. The allocation rules apply to nonresident 205.19 individuals, estates, trusts, nonresident partners of 205.20 partnerships, nonresident shareholders of corporationshaving a205.21valid election in effect under section 1362 of the Internal205.22Revenue Codetreated as "S" corporations under section 290.9725, 205.23 and all corporations not having such an election in effect. If 205.24 a partnership or corporation would not otherwise be subject to 205.25 the allocation rules, but conducts a trade or business that is 205.26 part of a unitary business involving another legal entity that 205.27 is subject to the allocation rules, the partnership or 205.28 corporation is subject to the allocation rules. 205.29 (b) Expenses, losses, and other deductions (referred to 205.30 collectively in this paragraph as "deductions") must be 205.31 allocated along with the item or class of gross income to which 205.32 they are definitely related for purposes of assignment under 205.33 this section or apportionment under section 290.191, 290.20, 205.34 290.35, or 290.36. Deductions not definitely related to any 205.35 item or class of gross income are assigned to the taxpayer's 205.36 domicile. 206.1 (c) In the case of an individual who is a resident for only 206.2 part of a taxable year, the individual's income, gains, losses, 206.3 and deductions from the distributive share of a partnership, S 206.4 corporation, trust, or estate are not subject to allocation 206.5 outside this state to the extent of the distributive share 206.6 multiplied by a ratio, the numerator of which is the number of 206.7 days the individual was a resident of this state during the tax 206.8 year of the partnership, S corporation, trust, or estate, and 206.9 the denominator of which is the number of days in the taxable 206.10 year of the partnership, S corporation, trust, or estate. 206.11 Sec. 16. Minnesota Statutes 1996, section 290.371, 206.12 subdivision 2, is amended to read: 206.13 Subd. 2. [EXEMPTIONS.] A corporation is not required to 206.14 file a notice of business activities report if: 206.15 (1) by the end of an accounting period for which it was 206.16 otherwise required to file a notice of business activities 206.17 report under this section, it had received a certificate of 206.18 authority to do business in this state; 206.19 (2) a timely return has been filed under section 289A.08; 206.20 (3) the corporation is exempt from taxation under this 206.21 chapter pursuant to section 290.05; 206.22 (4) the corporation's activities in Minnesota, or the 206.23 interests in property which it owns, consist solely of 206.24 activities or property exempted from jurisdiction to tax under 206.25 section 290.015, subdivision 3, paragraph (b); or 206.26 (5) the corporationhas a valid election in effect under206.27section 1362 of the Internal Revenue Codeis an "S" corporation 206.28 under section 290.9725. 206.29 Sec. 17. Minnesota Statutes 1996, section 290.9725, is 206.30 amended to read: 206.31 290.9725 [S CORPORATION.] 206.32 For purposes of this chapter, the term "S corporation" 206.33 means any corporation having a valid election in effect for the 206.34 taxable year under section 1362 of the Internal Revenue Code, 206.35 except that a corporation which either: 206.36 (1) is a financial institution to which either section 585 207.1 or section 593 of the Internal Revenue Code applies; or 207.2 (2) has a wholly owned subsidiary which is a financial 207.3 institution as described above 207.4 is not an "S" corporation for the purposes of this chapter. An 207.5 S corporation shall not be subject to the taxes imposed by this 207.6 chapter, except the taxes imposed under sections 290.0922, 207.7 290.92, 290.9727, 290.9728, and 290.9729. 207.8 Sec. 18. Minnesota Statutes 1996, section 290.9727, 207.9 subdivision 1, is amended to read: 207.10 Subdivision 1. [TAX IMPOSED.] Foraan "S" corporation 207.11 electing S corporation status pursuant to section 1362 of the 207.12 Internal Revenue Code after December 31, 1986, and having a 207.13 recognized built-in gain as defined in section 1374 of the 207.14 Internal Revenue Code, there is imposed a tax on the taxable 207.15 income of such S corporation, as defined in this section, at the 207.16 rate prescribed by section 290.06, subdivision 1. This 207.17 subdivision does not apply to any corporation having an S 207.18 election in effect for each of its taxable years. An S 207.19 corporation and any predecessor corporation must be treated as 207.20 one corporation for purposes of the preceding sentence. 207.21 Sec. 19. Minnesota Statutes 1996, section 290.9728, 207.22 subdivision 1, is amended to read: 207.23 Subdivision 1. [TAX IMPOSED.] There is imposed a tax on 207.24 the taxable income ofaan "S" corporation that has: 207.25 (1) elected S corporation status pursuant to section 1362 207.26 of the Internal Revenue Code of 1986, as amended through 207.27 December 31, 1986, before January 1, 1987; 207.28 (2) a net capital gain for the taxable year (i) in excess 207.29 of $25,000 and (ii) exceeding 50 percent of the corporation's 207.30 federal taxable income for the taxable year; and 207.31 (3) federal taxable income for the taxable year exceeding 207.32 $25,000. 207.33 The tax is imposed at the rate prescribed by section 207.34 290.06, subdivision 1. For purposes of this section, "federal 207.35 taxable income" means federal taxable income determined under 207.36 section 1374(4)(d) of the Internal Revenue Code. This section 208.1 does not apply to an S corporation which has had an election 208.2 under section 1362 of the Internal Revenue Code of 1954, in 208.3 effect for the three immediately preceding taxable years. This 208.4 section does not apply to an S corporation that has been in 208.5 existence for less than four taxable years and has had an 208.6 election in effect under section 1362 of the Internal Revenue 208.7 Code of 1954 for each of the corporation's taxable years. For 208.8 purposes of this section, an S corporation and any predecessor 208.9 corporation are treated as one corporation. 208.10 Sec. 20. [290.9743] [ELECTION BY FASIT.] 208.11 An entity having a valid election as a financial asset 208.12 securitization investment trust in effect for a taxable year 208.13 under section 860L(a) of the Internal Revenue Code shall not be 208.14 subject to the taxes imposed by this chapter, except the tax 208.15 imposed under section 290.92. 208.16 Sec. 21. [290.9744] [FASIT INCOME TAXABLE TO HOLDERS OF 208.17 INTERESTS.] 208.18 The income of a financial asset securitization investment 208.19 trust is taxable to the holders of interests in the financial 208.20 asset securitization investment trust as provided in sections 208.21 860H to 860L of the Internal Revenue Code. The income of the 208.22 holders must be computed under the provisions of this chapter. 208.23 Sec. 22. Minnesota Statutes 1996, section 291.005, 208.24 subdivision 1, is amended to read: 208.25 Subdivision 1. Unless the context otherwise clearly 208.26 requires, the following terms used in this chapter shall have 208.27 the following meanings: 208.28 (1) "Federal gross estate" means the gross estate of a 208.29 decedent as valued and otherwise determined for federal estate 208.30 tax purposes by federal taxing authorities pursuant to the 208.31 provisions of the Internal Revenue Code. 208.32 (2) "Minnesota gross estate" means the federal gross estate 208.33 of a decedent after (a) excluding therefrom any property 208.34 included therein which has its situs outside Minnesota and (b) 208.35 including therein any property omitted from the federal gross 208.36 estate which is includable therein, has its situs in Minnesota, 209.1 and was not disclosed to federal taxing authorities. 209.2 (3) "Personal representative" means the executor, 209.3 administrator or other person appointed by the court to 209.4 administer and dispose of the property of the decedent. If 209.5 there is no executor, administrator or other person appointed, 209.6 qualified, and acting within this state, then any person in 209.7 actual or constructive possession of any property having a situs 209.8 in this state which is included in the federal gross estate of 209.9 the decedent shall be deemed to be a personal representative to 209.10 the extent of the property and the Minnesota estate tax due with 209.11 respect to the property. 209.12 (4) "Resident decedent" means an individual whose domicile 209.13 at the time of death was in Minnesota. 209.14 (5) "Nonresident decedent" means an individual whose 209.15 domicile at the time of death was not in Minnesota. 209.16 (6) "Situs of property" means, with respect to real 209.17 property, the state or country in which it is located; with 209.18 respect to tangible personal property, the state or country in 209.19 which it was normally kept or located at the time of the 209.20 decedent's death; and with respect to intangible personal 209.21 property, the state or country in which the decedent was 209.22 domiciled at death. 209.23 (7) "Commissioner" means the commissioner of revenue or any 209.24 person to whom the commissioner has delegated functions under 209.25 this chapter. 209.26 (8) "Internal Revenue Code" means the United States 209.27 Internal Revenue Code of 1986, as amended throughMarch 22209.28 December 31, 1996, and includes the provisions of section 209.29 1(a)(4) of Public Law Number 104-117. 209.30 Sec. 23. [FEDERAL CHANGES.] 209.31 The changes made by sections 1118(a), 1305, 1603, 1702(e), 209.32 and 1702(f) of the Small Business Job Protection Act, Public Law 209.33 Number 104-188, sections 451(a), 451(b), 909, and 910 of the 209.34 Personal Responsibility and Work Opportunity Reconciliation Act, 209.35 Public Law Number 104-193, and the federal changes to taxable 209.36 income of section 2 of this article which affect the Minnesota 210.1 definition of wages under Minnesota Statutes, section 290.92, 210.2 subdivision 1, S corporation status under Minnesota Statutes, 210.3 section 290.9725, unrelated business income tax under Minnesota 210.4 Statutes, section 290.05, subdivision 3, corporate alternative 210.5 minimum tax under Minnesota Statutes, section 290.0921, 210.6 subdivision 3, estate tax under Minnesota Statutes, sections 210.7 291.005 and 291.03, the Minnesota working family credit under 210.8 Minnesota Statutes, section 290.0671, subdivision 1, and the 210.9 definition of income under Minnesota Statutes, section 290A.03, 210.10 subdivision 3, shall become effective at the same time the 210.11 changes become effective for federal purposes. 210.12 Sec. 24. [INSTRUCTION TO REVISOR.] 210.13 In the next edition of Minnesota Statutes, the revisor of 210.14 statutes shall substitute the phrase "Internal Revenue Code of 210.15 1986, as amended through December 31, 1996," for the words 210.16 "Internal Revenue Code of 1986, as amended through April 15, 210.17 1995," wherever the phrase occurs in chapters 290A, 297, 298, 210.18 and 469. 210.19 Sec. 25. [EFFECTIVE DATE.] 210.20 Sections 3 to 5, 7 to 20 and the provision of section 2 210.21 dealing with regulated investment companies are effective for 210.22 tax years beginning after December 31, 1996. The remainder of 210.23 this article is effective at the same time and for the same 210.24 years as the federal changes made in 1996 were effective for 210.25 federal purposes. 210.26 ARTICLE 7 210.27 SALES AND SPECIAL TAXES 210.28 Section 1. Minnesota Statutes 1996, section 289A.56, 210.29 subdivision 4, is amended to read: 210.30 Subd. 4. [CAPITAL EQUIPMENT REFUNDS; REFUNDS TO 210.31 PURCHASERS.] Notwithstanding subdivision 3, for refunds payable 210.32 undersectionssection 297A.15, subdivision 5,and 289A.50,210.33subdivision 2a,interest is computed from the date the refund 210.34 claim is filed with the commissioner. For refunds payable under 210.35 section 289A.50, subdivision 2a, interest is computed from the 210.36 20th day of the month following the month of the invoice date 211.1 for the purchase which is the subject of the refund. 211.2 Sec. 2. Minnesota Statutes 1996, section 296.141, 211.3 subdivision 4, is amended to read: 211.4 Subd. 4. [CREDIT OR REFUND OF TAX PAID.] The commissioner 211.5 shall allow the distributor credit or refund of the tax paid on 211.6 gasoline and special fuel: 211.7 (1) exported or sold for export from the state, other than 211.8 in the supply tank of a motor vehicle or of an aircraft; 211.9 (2) sold to the United States government to be used 211.10 exclusively in performing its governmental functions and 211.11 activities or to any "cost plus a fixed fee" contractor employed 211.12 by the United States government on any national defense project; 211.13 (3) if the fuel is placed in a tank used exclusively for 211.14 residential heating; 211.15 (4) destroyed by accident while in the possession of the 211.16 distributor; 211.17 (5) in error; 211.18 (6) in the case of gasoline only, sold for storage in an 211.19 on-farm bulk storage tank, if the tax was not collected on the 211.20 sale; and 211.21(6)(7) in such other cases as the commissioner may permit, 211.22 not inconsistent with the provisions of this chapter and other 211.23 laws relating to the gasoline and special fuel excise taxes. 211.24 Sec. 3. Minnesota Statutes 1996, section 296.18, 211.25 subdivision 1, is amended to read: 211.26 Subdivision 1. [CLAIM; FUEL USED IN OTHER VEHICLES.] Any 211.27 person who shall buy and use gasoline for a qualifying purpose 211.28 other than use in motor vehicles, snowmobiles except as provided 211.29 in clause (2), or motorboats, or special fuel for a qualifying 211.30 purpose other than use in licensed motor vehicles, and who shall 211.31 have paid the Minnesota excise tax directly or indirectly 211.32 through the amount of the tax being included in the price of the 211.33 gasoline or special fuel, or otherwise, shall be reimbursed and 211.34 repaid the amount of the tax paid upon filing with the 211.35 commissioner a claim in the form and manner prescribed by the 211.36 commissioner, and containing the information the commissioner 212.1 shall require. By signing any such claim which is false or 212.2 fraudulent, the applicant shall be subject to the penalties 212.3 provided in this section for knowingly making a false claim. 212.4 The claim shall set forth the total amount of the gasoline so 212.5 purchased and used by the applicant other than in motor 212.6 vehicles, or special fuel so purchased and used by the applicant 212.7 other than in licensed motor vehicles, and shall state when and 212.8 for what purpose it was used. When a claim contains an error in 212.9 computation or preparation, the commissioner is authorized to 212.10 adjust the claim in accordance with the evidence shown on the 212.11 claim or other information available to the commissioner. The 212.12 commissioner, on being satisfied that the claimant is entitled 212.13 to the payments, shall approve the claim and transmit it to the 212.14 commissioner of finance. No repayment shall be made unless the 212.15 claim and invoice shall be filed with the commissioner within 212.16 one year from the date of the purchase. The postmark on the 212.17 envelope in which a written claim is mailed shall determine its 212.18 date of filing. The words "gasoline" or "special fuel" as used 212.19 in this subdivision do not include aviation gasoline or special 212.20 fuel for aircraft. Gasoline or special fuel bought and used for 212.21 a "qualifying purpose" means: 212.22 (1) Gasoline or special fuel used in carrying on a trade or 212.23 business, used on a farm situated in Minnesota, and used for a 212.24 farming purpose. "Farm" and "farming purpose" have the meanings 212.25 given them in section 6420(c)(2), (3), and (4) of the Internal 212.26 Revenue Code of 1986, as amended through December 31, 1988. 212.27 (2) Gasoline or special fuel used for off-highway business 212.28 use. "Off-highway business use" means any use off the public 212.29 highway by a person in that person's trade, business, or 212.30 activity for the production of income. "Off-highway business 212.31 use" includes: 212.32 (a) use of a passenger snowmobile off the public highways 212.33 as part of the operations of a resort as defined in section 212.34 157.15.; and 212.35 (b) use of gasoline or special fuel to operate a power 212.36 takeoff unit on a vehicle, but not including fuel consumed 213.1 during idling time. 213.2 "Off-highway business use" does not include use as a fuel 213.3 in a motor vehicle which, at the time of use, is registered or 213.4 is required to be registered for highway use under the laws of 213.5 any state or foreign country. 213.6 (3) Gasoline or special fuel placed in the fuel tanks of 213.7 new motor vehicles, manufactured in Minnesota, and shipped by 213.8 interstate carrier to destinations in other states or foreign 213.9 countries. 213.10 By July 1, 1998, the commissioner shall adopt rules that 213.11 determine the rates and percentages necessary to develop 213.12 formulas for calculating and administering the refund under 213.13 clause (2)(b). 213.14 Sec. 4. Minnesota Statutes 1996, section 297A.01, 213.15 subdivision 3, is amended to read: 213.16 Subd. 3. A "sale" and a "purchase" includes, but is not 213.17 limited to, each of the following transactions: 213.18 (a) Any transfer of title or possession, or both, of 213.19 tangible personal property, whether absolutely or conditionally, 213.20 and the leasing of or the granting of a license to use or 213.21 consume tangible personal property other than manufactured homes 213.22 used for residential purposes for a continuous period of 30 days 213.23 or more, for a consideration in money or by exchange or barter; 213.24 (b) The production, fabrication, printing, or processing of 213.25 tangible personal property for a consideration for consumers who 213.26 furnish either directly or indirectly the materials used in the 213.27 production, fabrication, printing, or processing; 213.28 (c) The furnishing, preparing, or serving for a 213.29 consideration of food, meals, or drinks. "Sale" or "purchase" 213.30 does not include: 213.31 (1) meals or drinks served to patients, inmates, or persons 213.32 residing at hospitals, sanitariums, nursing homes, senior 213.33 citizens homes, and correctional, detention, and detoxification 213.34 facilities; 213.35 (2) meals or drinks purchased for and served exclusively to 213.36 individuals who are 60 years of age or over and their spouses or 214.1 to the handicapped and their spouses by governmental agencies, 214.2 nonprofit organizations, agencies, or churches or pursuant to 214.3 any program funded in whole or part through 42 USCA sections 214.4 3001 through 3045, wherever delivered, prepared or served; or 214.5 (3) meals and lunches served at public and private schools, 214.6 universities, or colleges. 214.7 Notwithstanding section 297A.25, subdivision 2, taxable food or 214.8 meals include, but are not limited to, the following: 214.9 (i)heatedfood or drinks;prepared by the retailer for 214.10 immediate consumption either on or off the retailer's premises. 214.11 For purposes of this subdivision, "food or drinks prepared for 214.12 immediate consumption" includes any food product upon which an 214.13 act of preparation including, but not limited to, cooking, 214.14 mixing, sandwich making, blending, heating, or pouring has been 214.15 performed by the retailer so the food product may be immediately 214.16 consumed by the purchaser. For purposes of this subdivision, 214.17 "premises" means the total space and facilities, including 214.18 buildings, grounds, and parking lots that are made available or 214.19 that are available for use by the retailer or customer for the 214.20 purpose of sale or consumption of prepared food and drinks. 214.21 Food and drinks sold within a building or grounds which require 214.22 an admission charge for entrance are presumed to be sold for 214.23 consumption on the premises. The premises of a caterer is the 214.24 place where the catered food or drinks are served; 214.25 (ii)sandwiches prepared by the retailer;214.26(iii) single sales of prepackaged ice cream or ice milk214.27novelties prepared by the retailer;214.28(iv) hand-prepared or dispensed ice cream or ice milkice 214.29 cream, ice milk, or frozen yogurt products including novelties, 214.30 cones, sundaes, and snow cones, sold in single or individual 214.31 servings. For purposes of this subdivision, "single or 214.32 individual servings" does not include products prepackaged and 214.33 sold in bulk containers or packaging; 214.34(v)(iii) soft drinks and other beveragesprepared or214.35served by the retailer;including all carbonated and 214.36 noncarbonated beverages or drinks sold in liquid form except 215.1 beverages or drinks which contain milk or milk products, 215.2 beverages or drinks containing 15 or more percent fruit juice, 215.3 or noncarbonated and noneffervescent bottled water sold in 215.4 individual containers of one-half gallon or more in size; 215.5(vi)(iv) gum;, candy, and candy products, except when sold 215.6 for fundraising purposes by a nonprofit organization that 215.7 provides educational and social activities primarily for young 215.8 people 18 years of age and under; 215.9(vii)(v) ice; 215.10(viii)(vi) all food soldinfrom vending machines, 215.11 pushcarts, lunch carts, motor vehicles, or any other form of 215.12 vehicle except home delivery vehicles; 215.13(ix)(vii) party traysprepared by the retailers;and215.14(x)(viii) all meals and single servings of packaged snack 215.15 food, single cans or bottles of pop,sold in restaurants and 215.16 bars; and 215.17 (ix) bakery products prepared by the retailer for 215.18 consumption on the retailer's premises; 215.19 (d) The granting of the privilege of admission to places of 215.20 amusement, recreational areas, or athletic events, except a 215.21 world championship football game sponsored by the national 215.22 football league, and the privilege of having access to and the 215.23 use of amusement devices, tanning facilities, reducing salons, 215.24 steam baths, turkish baths, health clubs, and spas or athletic 215.25 facilities; 215.26 (e) The furnishing for a consideration of lodging and 215.27 related services by a hotel, rooming house, tourist court, motel 215.28 or trailer camp and of the granting of any similar license to 215.29 use real property other than the renting or leasing thereof for 215.30 a continuous period of 30 days or more; 215.31 (f) The furnishing for a consideration of electricity, gas, 215.32 water, or steam for use or consumption within this state, or 215.33 local exchange telephone service, intrastate toll service, and 215.34 interstate toll service, if that service originates from and is 215.35 charged to a telephone located in this state. Telephone service 215.36 does not include services purchased with prepaid telephone 216.1 calling cards. Telephone service includes paging services and 216.2 private communication service, as defined in United States Code, 216.3 title 26, section 4252(d), as amended through December 31, 1991, 216.4 except for private communication service purchased by an agent 216.5 acting on behalf of the state lottery. The furnishing for a 216.6 consideration of access to telephone services by a hotel to its 216.7 guests is a sale under this clause. Sales by municipal 216.8 corporations in a proprietary capacity are included in the 216.9 provisions of this clause. The furnishing of water and sewer 216.10 services for residential use shall not be considered a sale. 216.11 The sale of natural gas to be used as a fuel in vehicles 216.12 propelled by natural gas shall not be considered a sale for the 216.13 purposes of this section; 216.14 (g) The furnishing for a consideration of cable television 216.15 services, including charges for basic service, charges for 216.16 premium service, and any other charges for any other 216.17 pay-per-view, monthly, or similar television services; 216.18 (h) The furnishing for a consideration of parking services, 216.19 whether on a contractual, hourly, or other periodic basis, 216.20 except for parking at a meter; 216.21 (i) The furnishing for a consideration of services listed 216.22 in this paragraph: 216.23 (i) laundry and dry cleaning services including cleaning, 216.24 pressing, repairing, altering, and storing clothes, linen 216.25 services and supply, cleaning and blocking hats, and carpet, 216.26 drapery, upholstery, and industrial cleaning. Laundry and dry 216.27 cleaning services do not include services provided by coin 216.28 operated facilities operated by the customer; 216.29 (ii) motor vehicle washing, waxing, and cleaning services, 216.30 including services provided by coin-operated facilities operated 216.31 by the customer, and rustproofing, undercoating, and towing of 216.32 motor vehicles; 216.33 (iii) building and residential cleaning, maintenance, and 216.34 disinfecting and exterminating services; 216.35 (iv) detective services, security services, burglar, fire 216.36 alarm, and armored car services; but not including services 217.1 performed within the jurisdiction they serve by off-duty 217.2 licensed peace officers as defined in section 626.84, 217.3 subdivision 1, or services provided by a nonprofit organization 217.4 for monitoring and electronic surveillance of persons placed on 217.5 in-home detention pursuant to court order or under the direction 217.6 of the Minnesota department of corrections; 217.7 (v) pet grooming services; 217.8 (vi) lawn care, fertilizing, mowing, spraying and sprigging 217.9 services; garden planting and maintenance; tree, bush, and shrub 217.10 pruning, bracing, spraying, and surgery; indoor plant care; 217.11 tree, bush, shrub and stump removal; and tree trimming for 217.12 public utility lines. Services performed under a construction 217.13 contract for the installation of shrubbery, plants, sod, trees, 217.14 bushes, and similar items are not taxable; 217.15 (vii) mixed municipal solid waste management services as 217.16 described in section 297A.45; 217.17 (viii) massages, except when provided by a licensed health 217.18 care facility or professional or upon written referral from a 217.19 licensed health care facility or professional for treatment of 217.20 illness, injury, or disease; and 217.21 (ix) the furnishing for consideration of lodging, board and 217.22 care services for animals in kennels and other similar 217.23 arrangements, but excluding veterinary and horse boarding 217.24 services. 217.25 The services listed in this paragraph are taxable under section 217.26 297A.02 if the service is performed wholly within Minnesota or 217.27 if the service is performed partly within and partly without 217.28 Minnesota and the greater proportion of the service is performed 217.29 in Minnesota, based on the cost of performance. In applying the 217.30 provisions of this chapter, the terms "tangible personal 217.31 property" and "sales at retail" include taxable services and the 217.32 provision of taxable services, unless specifically provided 217.33 otherwise. Services performed by an employee for an employer 217.34 are not taxable under this paragraph. Services performed by a 217.35 partnership or association for another partnership or 217.36 association are not taxable under this paragraph if one of the 218.1 entities owns or controls more than 80 percent of the voting 218.2 power of the equity interest in the other entity. Services 218.3 performed between members of an affiliated group of corporations 218.4 are not taxable. For purposes of this section, "affiliated 218.5 group of corporations" includes those entities that would be 218.6 classified as a member of an affiliated group under United 218.7 States Code, title 26, section 1504, as amended through December 218.8 31, 1987, and who are eligible to file a consolidated tax return 218.9 for federal income tax purposes; 218.10 (j) A "sale" and a "purchase" includes the transfer of 218.11 computer software, meaning information and directions that 218.12 dictate the function performed by data processing equipment. A 218.13 "sale" and a "purchase" does not include the design, 218.14 development, writing, translation, fabrication, lease, or 218.15 transfer for a consideration of title or possession of a custom 218.16 computer program; and 218.17 (k) The granting of membership in a club, association, or 218.18 other organization if: 218.19 (1) the club, association, or other organization makes 218.20 available for the use of its members sports and athletic 218.21 facilities (without regard to whether a separate charge is 218.22 assessed for use of the facilities); and 218.23 (2) use of the sports and athletic facilities is not made 218.24 available to the general public on the same basis as it is made 218.25 available to members. 218.26 Granting of membership includes both one-time initiation fees 218.27 and periodic membership dues. Sports and athletic facilities 218.28 include golf courses, tennis, racquetball, handball and squash 218.29 courts, basketball and volleyball facilities, running tracks, 218.30 exercise equipment, swimming pools, and other similar athletic 218.31 or sports facilities. The provisions of this paragraph do not 218.32 apply to camps or other recreation facilities owned and operated 218.33 by an exempt organization under section 501(c)(3) of the 218.34 Internal Revenue Code of 1986, as amended through December 31, 218.35 1992, for educational and social activities for young people 218.36 primarily age 18 and under. 219.1 Sec. 5. Minnesota Statutes 1996, section 297A.01, 219.2 subdivision 4, is amended to read: 219.3 Subd. 4. (a) A "retail sale" or "sale at retail" means a 219.4 sale for any purpose other than resale in the regular course of 219.5 business. 219.6 (b) Property utilized by the owner only by leasing such 219.7 property to others or by holding it in an effort to so lease it, 219.8 and which is put to no use by the owner other than resale after 219.9 such lease or effort to lease, shall be considered property 219.10 purchased for resale. 219.11 (c) Master computer software programs that are purchased 219.12 and used to make copies for sale or lease are considered 219.13 property purchased for resale. 219.14 (d) Sales of building materials, supplies and equipment to 219.15 owners, contractors, subcontractors or builders for the erection 219.16 of buildings or the alteration, repair or improvement of real 219.17 property are "retail sales" or "sales at retail" in whatever 219.18 quantity sold and whether or not for purpose of resale in the 219.19 form of real property or otherwise. 219.20 (e) A sale of carpeting, linoleum, or other similar floor 219.21 covering which includes installation of the carpeting, linoleum, 219.22 or other similar floor covering is a contract for the 219.23 improvement of real property. 219.24 (f) A sale of shrubbery, plants, sod, trees, and similar 219.25 items that includes installation of the shrubbery, plants, sod, 219.26 trees, and similar items is a contract for the improvement of 219.27 real property. 219.28 (g) Aircraft and parts for the repair thereof purchased by 219.29 a nonprofit, incorporated flying club or association utilized 219.30 solely by the corporation by leasing such aircraft to 219.31 shareholders of the corporation shall be considered property 219.32 purchased for resale. The leasing of the aircraft to the 219.33 shareholders by the flying club or association shall be 219.34 considered a sale. Leasing of aircraft utilized by a lessee for 219.35 the purpose of leasing to others, whether or not the lessee also 219.36 utilizes the aircraft for flight instruction where no separate 220.1 charge is made for aircraft rental or for charter service, shall 220.2 be considered a purchase for resale; provided, however, that a 220.3 proportionate share of the lease payment reflecting use for 220.4 flight instruction or charter service is subject to tax pursuant 220.5 to section 297A.14. 220.6 (h) Tangible personal property that is awarded as prizes 220.7 shall not be considered property purchased for resale. 220.8 (i) Tangible personal property that is utilized or employed 220.9 in the furnishing or providing of services under section 220.10 297A.01, subdivision 3, paragraph (d), or in conducting lawful 220.11 gambling under chapter 349 or the state lottery under chapter 220.12 349A, including property given as promotional items, shall not 220.13 be considered property purchased for resale. Machines, 220.14 equipment, or devices that are used to furnish, provide, or 220.15 dispense goods or services, including coin-operated devices, 220.16 shall not be considered property purchased for resale. 220.17 Sec. 6. Minnesota Statutes 1996, section 297A.01, 220.18 subdivision 7, is amended to read: 220.19 Subd. 7. "Storage" and "use" do not include the keeping,220.20 or retainingor exercising of any right or power overin a 220.21 public warehouse of tangible personal property or tickets or 220.22 admissions to places of amusement or athletic events when 220.23 shipped or brought into Minnesota by common carrier, for the 220.24 purpose of subsequently being transported outside Minnesota and 220.25 thereafter used solely outside Minnesota, except in the course 220.26 of interstate commerce, or for the purpose of being processed,220.27fabricated or manufactured into, attached to or incorporated220.28into other tangible personal property to be transported outside220.29Minnesota and not thereafter returned to a point within220.30Minnesota, except in the course of interstate commerce. 220.31 Sec. 7. Minnesota Statutes 1996, section 297A.01, 220.32 subdivision 11, is amended to read: 220.33 Subd. 11. "Tangible personal property" means corporeal 220.34 personal property of any kind whatsoever, including property 220.35 which is to become real property as a result of incorporation, 220.36 attachment, or installation following its acquisition. 221.1 Personal property does not include: 221.2 (a) large ponderous machinery and equipment used in a 221.3 business or production activity which at common law would be 221.4 considered to be real property; 221.5 (b) property which is subject to an ad valorem property 221.6 tax; 221.7 (c) property described in section 272.02, subdivision 1, 221.8 clause (8), paragraphs (a) to (d); 221.9 (d) property described in section 272.03, subdivision 2, 221.10 clauses (3) and (5). 221.11 Tangible personal property includes computer software, 221.12 whether contained on tape, discs, cards, or other 221.13 devices. Tangible personal property also includes prepaid 221.14 telephone calling cards. 221.15 Sec. 8. Minnesota Statutes 1996, section 297A.01, 221.16 subdivision 16, is amended to read: 221.17 Subd. 16. [CAPITAL EQUIPMENT.] (a) Capital equipment means 221.18 machinery and equipment purchased or leased for use in this 221.19 state and used by the purchaser or lessee primarily for 221.20 manufacturing, fabricating, mining, or refining tangible 221.21 personal property to be sold ultimately at retail and for 221.22 electronically transmitting results retrieved by a customer of 221.23 an on-line computerized data retrieval system. 221.24 (b) Capital equipment includes all machinery and equipment 221.25 that is essential to the integrated production process. Capital 221.26 equipment includes, but is not limited to: 221.27 (1) machinery and equipment used or required to operate, 221.28 control, or regulate the production equipment; 221.29 (2) machinery and equipment used for research and 221.30 development, design, quality control, and testing activities; 221.31 (3) environmental control devices that are used to maintain 221.32 conditions such as temperature, humidity, light, or air pressure 221.33 when those conditions are essential to and are part of the 221.34 production process;or221.35 (4) materials and supplies necessary to construct and 221.36 install machinery or equipment.; 222.1 (5) repair and replacement parts, including accessories, 222.2 whether purchased as spare parts, repair parts, or as upgrades 222.3 or modifications to machinery or equipment; 222.4 (6) materials used for foundations that support machinery 222.5 or equipment; or 222.6 (7) materials used to construct and install special purpose 222.7 buildings used in the production process. 222.8 (c) Capital equipment does not include the following: 222.9 (1)repair or replacement parts, including accessories,222.10whether purchased as spare parts, repair parts, or as upgrades222.11or modifications, and whether purchased before or after the222.12machinery or equipment is placed into service. Parts or222.13accessories are treated as capital equipment only to the extent222.14that they are a part of and are essential to the operation of222.15the machinery or equipment as initially purchased;222.16(2)motor vehicles taxed under chapter 297B; 222.17(3)(2) machinery or equipment used to receive or store raw 222.18 materials; 222.19(4)(3) building materials; 222.20(5)(4) machinery or equipment used for nonproduction 222.21 purposes, including, but not limited to, the following: 222.22 machinery and equipment used for plant security, fire 222.23 prevention, first aid, and hospital stations; machinery and 222.24 equipment used in support operations or for administrative 222.25 purposes; machinery and equipment used solely for pollution 222.26 control, prevention, or abatement; and machinery and equipment 222.27 used in plant cleaning, disposal of scrap and waste, plant 222.28 communications, space heating, lighting, or safety; 222.29(6)(5) "farm machinery" as defined by subdivision 15, and 222.30 "aquaculture production equipment" as defined by subdivision 19,222.31and "replacement capital equipment" as defined by subdivision222.3220; or 222.33(7)(6) any other item that is not essential to the 222.34 integrated process of manufacturing, fabricating, mining, or 222.35 refining. 222.36 (d) For purposes of this subdivision: 223.1 (1) "Equipment" means independent devices or tools separate 223.2 from machinery but essential to an integrated production 223.3 process, including computers and software, used in operating, 223.4 controlling, or regulating machinery and equipment; and any 223.5 subunit or assembly comprising a component of any machinery or 223.6 accessory or attachment parts of machinery, such as tools, dies, 223.7 jigs, patterns, and molds. 223.8 (2) "Fabricating" means to make, build, create, produce, or 223.9 assemble components or property to work in a new or different 223.10 manner. 223.11 (3) "Machinery" means mechanical, electronic, or electrical 223.12 devices, including computers and software, that are purchased or 223.13 constructed to be used for the activities set forth in paragraph 223.14 (a), beginning with the removal of raw materials from inventory 223.15 through the completion of the product, including packaging of 223.16 the product. 223.17 (4) "Manufacturing" means an operation or series of 223.18 operations where raw materials are changed in form, composition, 223.19 or condition by machinery and equipment and which results in the 223.20 production of a new article of tangible personal property. For 223.21 purposes of this subdivision, "manufacturing" includes the 223.22 generation of electricity or steam to be sold at retail. 223.23 (5) "Mining" means the extraction of minerals, ores, stone, 223.24 and peat. 223.25 (6) "On-line data retrieval system" means a system whose 223.26 cumulation of information is equally available and accessible to 223.27 all its customers. 223.28 (7) "Pollution control equipment" means machinery and 223.29 equipment used to eliminate, prevent, or reduce pollution 223.30 resulting from an activity described in paragraph (a). 223.31 (8) "Primarily" means machinery and equipment used 50 223.32 percent or more of the time in an activity described in 223.33 paragraph (a). 223.34 (9) "Refining" means the process of converting a natural 223.35 resource to a product, including the treatment of water to be 223.36 sold at retail. 224.1 (e) For purposes of this subdivision the requirement that 224.2 the machinery or equipment "must be used by the purchaser or 224.3 lessee" means that the person who purchases or leases the 224.4 machinery or equipment must be the one who uses it for the 224.5 qualifying purpose. When a contractor buys and installs 224.6 machinery or equipment as part of an improvement to real 224.7 property, only the contractor is considered the purchaser. 224.8(f) Notwithstanding prior provisions of this subdivision,224.9machinery and equipment purchased or leased to replace machinery224.10and equipment used in the mining or production of taconite shall224.11qualify as capital equipment.224.12 Sec. 9. Minnesota Statutes 1996, section 297A.09, is 224.13 amended to read: 224.14 297A.09 [PRESUMPTION OF TAX; BURDEN OF PROOF.] 224.15 For the purpose of the proper administration of sections 224.16 297A.01 to 297A.44 and to prevent evasion of the tax, it shall 224.17 be presumed that all gross receipts are subject to the tax until 224.18 the contrary is established. The burden of proving that a sale 224.19 is not a sale at retail is upon the person who makes the sale, 224.20 but that person may take from the purchaser, at the time the 224.21 exempt purchase occurs, an exemption certificate to the effect 224.22 that the property purchased is for resale or that the sale is 224.23 otherwise exempt from the application of the tax imposed by 224.24 sections 297A.01 to 297A.44. A person asserting a claim that 224.25 certain sales are exempt, who does not have the required 224.26 exemption certificates in their possession, shall acquire the 224.27 certificates within 60 days after receiving written notice from 224.28 the commissioner that the certificates are required. If the 224.29 certificates are not obtained within the 60-day period, the 224.30 sales are deemed taxable sales under this chapter. 224.31 Sec. 10. Minnesota Statutes 1996, section 297A.15, 224.32 subdivision 7, is amended to read: 224.33 Subd. 7. [REFUND; APPROPRIATION; ADULT AND JUVENILE 224.34 CORRECTIONAL FACILITIES.](a)If construction materials and 224.35 supplies described inparagraph (b)section 297A.25, subdivision 224.36 63, are purchased by a contractor, subcontractor, or builder as 225.1 part of a lump-sum contract or similar type of contract with a 225.2 price covering both labor and materials for use in the project, 225.3 a refund equal to20 percent ofthe taxes paid by the 225.4 contractor, subcontractor, or builder must be paid to the 225.5 governmental subdivision. The tax must be imposed and collected 225.6 as if the sales were taxable and the rate under section 297A.02, 225.7 subdivision 1, applied. An application for refund must be 225.8 submitted by the governmental subdivision and must include 225.9 sufficient information to permit the commissioner to verify the 225.10 sales taxes paid for the project. The contractor, 225.11 subcontractor, or builder must furnish to the governmental 225.12 subdivision a statement of the cost of the construction 225.13 materials and supplies and the sales taxes paid on them. The 225.14 amount required to make the refunds is annually appropriated to 225.15 the commissioner. Interest must be paid on the refund at the 225.16 rate in section 270.76 from 60 days after the date the refund 225.17 claim is filed with the commissioner. 225.18(b) Construction materials and supplies qualify for the225.19refund under this section if: (1) the materials and supplies225.20are for use in a project to construct or improve an adult or225.21juvenile correctional facility in a county, home rule charter225.22city, or statutory city, and (2) the project is mandated by225.23state or federal law, rule, or regulation. The refund applies225.24regardless of whether the materials and supplies are purchased225.25by the city or county, or by a contractor, subcontractor, or225.26builder under a contract with the city or county.225.27 Sec. 11. Minnesota Statutes 1996, section 297A.211, 225.28 subdivision 1, is amended to read: 225.29 Subdivision 1. Every person, as defined in this chapter, 225.30 who is engaged in interstate for-hire transportation of tangible 225.31 personal property or passengers by motor vehicle may at their 225.32 option, under rules prescribed by the commissioner, register as 225.33 retailers and pay the taxes imposed by this chapter in 225.34 accordance with this section. Any taxes paid under this section 225.35 are deemed use taxes, except local sales taxes when no 225.36 corresponding local use tax is imposed. Persons referred to 226.1 herein are: (1) persons possessing a certificate or permit or 226.2 having completed a registration process that authorizes for-hire 226.3 transportation of property or passengers from the United States 226.4 Department of Transportation, the transportation regulation 226.5 board, or the department of transportation; or (2) persons 226.6 transporting commodities defined as "exempt" in for-hire 226.7 transportation in interstate commerce; or (3) persons who, 226.8 pursuant to contracts with persons described in clause (1) or 226.9 (2) above, transport tangible personal property in interstate 226.10 commerce. Persons qualifying under clauses (2) and (3) must 226.11 maintain on a current basis the same type of mileage records 226.12 that are required by persons specified in clause (1) by the 226.13 United States Department of Transportation. Persons who in the 226.14 course of their business are transporting solely their own goods 226.15 in interstate commerce may also register as retailers pursuant 226.16 to rules prescribed by the commissioner and pay the taxes 226.17 imposed by this chapter in accordance with this section. 226.18 Sec. 12. [297A.213] [DIRECT PAYMENT BY PURCHASERS 226.19 PERMITTED.] 226.20 The commissioner may permit purchasers to pay taxes imposed 226.21 by this chapter directly to the commissioner. Any taxes paid by 226.22 purchasers under this section are deemed use taxes, except local 226.23 sales taxes when no corresponding local use tax is imposed. 226.24 Sec. 13. Minnesota Statutes 1996, section 297A.25, 226.25 subdivision 2, is amended to read: 226.26 Subd. 2. [FOOD PRODUCTS.] The gross receipts from the sale 226.27 of food products including but not limited to cereal and cereal 226.28 products, butter, cheese, milk and milk products, oleomargarine, 226.29 meat and meat products, fish and fish products, eggs and egg 226.30 products, vegetables and vegetable products, fruit and fruit 226.31 products, spices and salt, sugar and sugar products, coffee and 226.32 coffee substitutes, tea, cocoa and cocoa products, and food 226.33 products which are not taxable pursuant to section 297A.01, 226.34 subdivision 3, clause (c) are exempt.This exemption does not226.35include the following:226.36(1) candy and candy products, except when sold for227.1fundraising purposes by a nonprofit organization that provides227.2educational and social activities for young people primarily227.3aged 18 and under;227.4(2) carbonated beverages, beverages commonly referred to as227.5soft drinks containing less than 15 percent fruit juice, or227.6bottled water other than noncarbonated and noneffervescent227.7bottled water sold in individual containers of one-half gallon227.8or more in size.227.9 Sec. 14. Minnesota Statutes 1996, section 297A.25, 227.10 subdivision 3, is amended to read: 227.11 Subd. 3. [MEDICINES; MEDICAL DEVICES.] The gross receipts 227.12 from the sale of prescribed drugs, prescribed medicine and 227.13 insulin, intended for use, internal or external, in the cure, 227.14 mitigation, treatment or prevention of illness or disease in 227.15 human beings are exempt, together with prescription glasses, 227.16 fever thermometers, therapeutic, and prosthetic devices. 227.17 "Prescribed drugs" or "prescribed medicine" includes 227.18 over-the-counter drugs or medicine prescribed by a licensed 227.19 physician. "Therapeutic devices" includes reusable finger 227.20 pricking devices for the extraction of blood, blood glucose 227.21 monitoring machines, and other diagnostic agents used in 227.22 diagnosing, monitoring, or treating diabetes. Nonprescription 227.23 analgesics consisting principally (determined by the weight of 227.24 all ingredients) of acetaminophen, acetylsalicylic acid, 227.25 ibuprofen, ketoprofen, naproxen, and other nonprescription 227.26 analgesics that are approved by the United States Food and Drug 227.27 Administration for internal use by human beings, or a 227.28 combination thereof, are exempt. 227.29 Sec. 15. Minnesota Statutes 1996, section 297A.25, 227.30 subdivision 5, is amended to read: 227.31 Subd. 5. [OUTSTATE TRANSPORT OR DELIVERY.] The gross 227.32 receipts from the following sales of, and storage, use, or 227.33 consumption of, tangible personal property are exempt: 227.34 (1) property which, without intermediate use, is shipped or 227.35 transported outside Minnesota by the purchaser and thereafter 227.36 used in a trade or business or is stored, processed, fabricated 228.1 or manufactured into, attached to or incorporated into other 228.2 tangible personal property transported or shipped outside 228.3 Minnesota and thereafter used in a trade or business outside 228.4 Minnesota, and which is not thereafter returned to a point 228.5 within Minnesota, except in the course of interstate commerce 228.6 (storage shall not constitute intermediate use); provided that 228.7 the property is not subject to tax in that state or country to 228.8 which it is transported for storage or use and provided further 228.9 that sales of tangible personal property to be used in other 228.10 states or countries as part of a maintenance contract shall be 228.11 specifically exempt; or 228.12 (2) property which the seller delivers to a common carrier 228.13 for delivery outside Minnesota, places in the United States mail 228.14 or parcel post directed to the purchaser outside Minnesota, or 228.15 delivers to the purchaser outside Minnesota by means of the 228.16 seller's own delivery vehicles, and which is not thereafter 228.17 returned to a point within Minnesota, except in the course of 228.18 interstate commerce. 228.19 Sec. 16. Minnesota Statutes 1996, section 297A.25, 228.20 subdivision 7, is amended to read: 228.21 Subd. 7. [PETROLEUM PRODUCTS.] The gross receipts from the 228.22 sale of and storage, use or consumption of the following 228.23 petroleum products are exempt: 228.24 (1) products upon which a tax has been imposed and paid 228.25 under the provisions of chapter 296, and no refund has been or 228.26 will be allowed because the buyer used the fuel for nonhighway 228.27 use; 228.28 (2) products which are used in the improvement of 228.29 agricultural land by constructing, maintaining, and repairing 228.30 drainage ditches, tile drainage systems, grass waterways, water 228.31 impoundment, and other erosion control structures; 228.32 (3) products purchased by a transit system receiving 228.33 financial assistance under section 174.24 or 473.384;or228.34 (4) products used in a passenger snowmobile, as defined in 228.35 section 296.01, subdivision 27a, for off-highway business use as 228.36 part of the operations of a resort as provided under section 229.1 296.18, subdivision 1, clause (2); or 229.2 (5) products purchased by a state or a political 229.3 subdivision of a state for use in motor vehicles exempt from 229.4 registration under section 168.012, subdivision 1, paragraph (b). 229.5 Sec. 17. Minnesota Statutes 1996, section 297A.25, 229.6 subdivision 56, is amended to read: 229.7 Subd. 56. [FIREFIGHTERS PERSONAL PROTECTIVE EQUIPMENT.] 229.8 The gross receipts from the sale of and storage, use, or 229.9 consumption of firefighters personal protective equipment are 229.10 exempt if purchased by, or when authorized by and for the use 229.11 of, an organized fire department, fire protection district, or 229.12 fire company, regularly charged with the responsibility of 229.13 providing fire protection to the state or a political 229.14 subdivision. For purposes of this subdivision, "personal 229.15 protective equipment" includes: helmets (including face 229.16 shields, chin straps, and neck liners), bunker coats and pants 229.17 (including pant suspenders), boots, gloves, head covers or 229.18 hoods, wildfire jackets, protective coveralls, goggles, 229.19 self-contained breathing apparatuses, canister filter masks, 229.20 personal alert safety systems, spanner belts, optical or thermal 229.21 imaging search devices, and all safety equipment required by the 229.22 Occupational Safety and Health Administration. 229.23 Sec. 18. Minnesota Statutes 1996, section 297A.25, 229.24 subdivision 59, is amended to read: 229.25 Subd. 59. [FARM MACHINERY.]From July 1, 1994, until June229.2630, 1997,The gross receipts from the sale of used farm 229.27 machinery are exempt. 229.28 Sec. 19. Minnesota Statutes 1996, section 297A.25, is 229.29 amended by adding a subdivision to read: 229.30 Subd. 62. [MATERIALS USED IN PROVIDING TAXABLE 229.31 SERVICES.] (a) The gross receipts from the sale of and the 229.32 storage, use, or consumption of all materials used or consumed 229.33 in providing a taxable service intended to be sold ultimately at 229.34 retail are exempt. 229.35 (b) This exemption includes, but is not limited to: 229.36 (1) chemicals, lubricants, packaging materials, seeds, 230.1 trees, fertilizers, and herbicides, used or consumed in 230.2 providing the taxable service; 230.3 (2) chemicals used to treat waste generated as a result of 230.4 providing the taxable service; and 230.5 (3) accessory tools, equipment, and other items that are 230.6 separate detachable units used in providing the service and that 230.7 have an ordinary useful life of less than 12 months. 230.8 (c) This exemption does not include: 230.9 (1) machinery, equipment, implements, tools, accessories, 230.10 appliances, contrivances, furniture, and fixtures used in 230.11 providing the taxable service; and 230.12 (2) fuel, electricity, gas, and steam used for space 230.13 heating or lighting. 230.14 (d) For purposes of this subdivision, "taxable services" 230.15 means the services listed in section 297A.01, subdivision 3, 230.16 paragraph (i). 230.17 Sec. 20. Minnesota Statutes 1996, section 297A.25, is 230.18 amended by adding a subdivision to read: 230.19 Subd. 63. [HOSPITALS.] The gross receipts from the sale of 230.20 tangible personal property to, and the storage, use, or 230.21 consumption of such property by, a hospital are exempt, if the 230.22 property purchased is to be used in providing hospital services 230.23 to human beings. For purposes of this subdivision, "hospital" 230.24 means a hospital organized and operated for charitable purposes 230.25 within the meaning of section 501(c)(3) of the Internal Revenue 230.26 Code of 1986, as amended, and licensed under chapter 144 or by 230.27 any other jurisdiction. For purposes of this subdivision, 230.28 "hospital services" are services authorized or required to be 230.29 performed by a "hospital" under chapter 144 and regulations 230.30 thereunder or under the applicable licensure law of any other 230.31 jurisdiction. This exemption does not apply to purchases made 230.32 by a clinic, physician's office, or any other medical facility 230.33 not operating as a hospital, even though the clinic, office, or 230.34 facility may be owned and operated by a hospital. Sales 230.35 exempted by this subdivision do not include sales under section 230.36 297A.01, subdivision 3, paragraphs (c) and (e). This exemption 231.1 does not apply to building, construction, or reconstruction 231.2 materials purchased by a contractor or a subcontractor as a part 231.3 of a lump-sum contract or similar type of contract with a 231.4 guaranteed maximum price covering both labor and materials for 231.5 use in the construction, alteration, or repair of a hospital. 231.6 This exemption does not apply to construction materials to be 231.7 used in constructing buildings or facilities which will not be 231.8 used principally by a hospital. This exemption does not apply 231.9 to the leasing of a motor vehicle as defined in section 297B.01, 231.10 subdivision 5. 231.11 Sec. 21. Minnesota Statutes 1996, section 297A.25, is 231.12 amended by adding a subdivision to read: 231.13 Subd. 64. [COPIES OF COURT REPORTER DOCUMENTS.] The gross 231.14 receipts from sales of, and use, storage, or consumption of, 231.15 transcripts or copies of transcripts of verbatim testimony 231.16 produced and sold by court reporters or other transcribers of 231.17 legal proceedings to individuals or entities that are parties to 231.18 or representatives of parties to the proceeding to which the 231.19 transcript relates, are exempt. 231.20 Sec. 22. Minnesota Statutes 1996, section 297A.25, is 231.21 amended by adding a subdivision to read: 231.22 Subd. 65. [CONSTRUCTION MATERIALS FOR CORRECTIONAL 231.23 FACILITIES.] The gross receipts from the sale of and storage, 231.24 use, or consumption of construction materials and supplies are 231.25 exempt from the tax imposed under this chapter if purchased for 231.26 use in a project to construct or improve an adult or juvenile 231.27 correctional facility in a county, home rule charter city, or 231.28 statutory city, and if the project is mandated by state or 231.29 federal law, rule, or regulation. The exemption applies 231.30 regardless of whether the materials and supplies are purchased 231.31 by the city or county, or by a contractor, subcontractor, or 231.32 builder under a contract with the city or county. 231.33 Sec. 23. Minnesota Statutes 1996, section 297A.25, is 231.34 amended by adding a subdivision to read: 231.35 Subd. 66. [CONSTRUCTION MATERIALS; LAKE SUPERIOR 231.36 CENTER.] Construction materials and supplies are exempt from the 232.1 tax imposed under this chapter, regardless of whether purchased 232.2 by the owner, a contractor, subcontractor, or builder, provided 232.3 the materials and supplies are used or consumed in constructing 232.4 the Lake Superior Center. 232.5 Sec. 24. Minnesota Statutes 1996, section 297A.25, is 232.6 amended by adding a subdivision to read: 232.7 Subd. 67. [CONSTRUCTION MATERIALS; SCIENCE 232.8 MUSEUM.] Construction materials and supplies are exempt from the 232.9 tax imposed under this chapter, regardless of whether purchased 232.10 by the owner, a contractor, subcontractor, or builder, provided 232.11 the materials and supplies are used or consumed in constructing 232.12 the Science Museum of Minnesota. 232.13 Sec. 25. Minnesota Statutes 1996, section 297A.25, is 232.14 amended by adding a subdivision to read: 232.15 Subd. 68. [CONSTRUCTION MATERIALS; BUSINESS INCUBATOR AND 232.16 INDUSTRIAL PARK FACILITY.] Materials and supplies used or 232.17 consumed in constructing, or incorporated into the construction 232.18 of, an exempted facility as defined in this subdivision are 232.19 exempt from the taxes imposed under this chapter and from any 232.20 sales and use tax imposed by a local unit of government, 232.21 notwithstanding any ordinance or city charter provision. 232.22 As used in this subdivision, an "exempted facility" is a 232.23 facility that includes a business incubator and industrial park 232.24 that: 232.25 (1) is owned and operated by a nonprofit charitable 232.26 organization that qualifies for tax exemption under section 232.27 501(c)(3) of the Internal Revenue Code; 232.28 (2) is used for the development of nonretail businesses, 232.29 offering access to equipment, space, services, and advice to the 232.30 tenant businesses, for the purpose of encouraging economic 232.31 development and job creation in the area served by the 232.32 organization, and emphasizes development of businesses that 232.33 manufacture products from materials found in the waste stream, 232.34 or manufacture alternative energy and conservation systems, or 232.35 make use of emerging environmental technologies; 232.36 (3) includes in its structure systems of material and 233.1 energy exchanges that use waste products from one industrial 233.2 process as sources of energy and material for other processes; 233.3 and 233.4 (4) makes use of solar and wind energy technology and 233.5 incorporates salvaged materials in its construction. 233.6 Sec. 26. Minnesota Statutes 1996, section 297A.25, is 233.7 amended by adding a subdivision to read: 233.8 Subd. 69. [REGIONWIDE PUBLIC SAFETY RADIO COMMUNICATION 233.9 SYSTEM; PRODUCTS AND SERVICES.] The gross receipts from the sale 233.10 of, and the storage, use, or consumption of, products and 233.11 services including end user equipment used for construction, 233.12 ownership, operation, maintenance, and enhancement of the 233.13 backbone system of the regionwide public safety radio 233.14 communication system established under sections 473.891 to 233.15 473.905, are exempt. For purposes of this subdivision, backbone 233.16 system is defined in section 473.891, subdivision 9. 233.17 Sec. 27. Minnesota Statutes 1996, section 297A.25, is 233.18 amended by adding a subdivision to read: 233.19 Subd. 70. [ALFALFA PROCESSING FACILITIES CONSTRUCTION 233.20 MATERIALS.] Purchases of construction materials and supplies are 233.21 exempt from the sales and use taxes imposed under this chapter, 233.22 regardless of whether purchased by the owner or a contractor, 233.23 subcontractor, or builder, if: 233.24 (1) the materials and supplies are used or consumed in 233.25 constructing a facility which either (i) develops market-value 233.26 agricultural products made from alfalfa leaf material, or (ii) 233.27 produces biomass energy fuel or electricity from alfalfa stems 233.28 in accordance with the biomass mandate imposed under section 233.29 216B.2424; and 233.30 (2) the total capital investment made in the value-added 233.31 agricultural products and biomass electric generation facilities 233.32 is at least $50,000,000; or 233.33 (3) the materials and supplies are used or consumed in 233.34 constructing, equipping or modifying a district heating and 233.35 cooling system cogeneration facility that: 233.36 (i) utilizes wood waste as a primary fuel source; and 234.1 (ii) satisfies the requirements of the biomass mandate in 234.2 section 216B.2424, subdivision 5. 234.3 Sec. 28. Minnesota Statutes 1996, section 297A.25, is 234.4 amended by adding a subdivision to read: 234.5 Subd. 71. [FIREWOOD.] The gross receipts from the sale of 234.6 and the storage, use, or consumption of wood used for fires for 234.7 heating, cooking, or any other purpose, except for the 234.8 generation of electricity, steam, or heat to be sold at retail, 234.9 are exempt. 234.10 Sec. 29. Minnesota Statutes 1996, section 297A.25, is 234.11 amended by adding a subdivision to read: 234.12 Subd. 72. [WIND ENERGY CONVERSION SYSTEMS.] The gross 234.13 receipts from the sale of and the storage, use, or consumption 234.14 of wind energy conversion systems, as defined in section 234.15 216C.06, subdivision 12, and the materials used to manufacture, 234.16 install, construct, repair, or replace them are exempt if the 234.17 systems are used as an electric power source. 234.18 Sec. 30. [297A.48] [LOCAL SALES TAX RULES.] 234.19 Subdivision 1. [AUTHORIZATION; SCOPE.] (a) A political 234.20 subdivision of this state may impose a general sales tax if 234.21 permitted by special law or if the subdivision enacted and 234.22 imposed the tax before the effective date of section 477A.016 234.23 and its predecessor provision. 234.24 (b) This section governs the imposition of a general sales 234.25 tax by the political subdivision. The provisions of this 234.26 section preempt the provisions of any special law: 234.27 (1) enacted before its effective date, or 234.28 (2) enacted after its effective date that does not 234.29 explicitly exempt the special law provision from this section's 234.30 rules by reference. 234.31 (c) This section does not apply to or preempt a sales tax 234.32 on motor vehicles or a special excise tax on motor vehicles. 234.33 Subd. 2. [TAX BASE.] (a) The tax applies to sales taxable 234.34 under this chapter that occur within the political subdivision. 234.35 (b) Taxable services are subject to a political 234.36 subdivision's sales tax, if they are performed either: 235.1 (1) within the political subdivision, or 235.2 (2) partly within and partly without the political 235.3 subdivision and more of the service is performed within the 235.4 political subdivision, based on the cost of performance. 235.5 Subd. 3. [TAX RATE.] (a) The tax rate is as specified in 235.6 the special law authorization and as imposed by the political 235.7 subdivision. 235.8 (b) The full political subdivision rate applies to any 235.9 sales that are taxed at a state rate less than or more than the 235.10 state general sales and use tax rate. 235.11 Subd. 4. [USE TAX.] A compensating use tax applies, at the 235.12 same rate as the sales tax, on the use, storage, distribution, 235.13 or consumption of tangible personal property or taxable services. 235.14 Subd. 5. [EXEMPTIONS.] (a) All goods or services that are 235.15 otherwise exempt from taxation under this chapter are exempt 235.16 from a political subdivision's tax. 235.17 (b) The gross receipts from the sale of tangible personal 235.18 property that meets the requirement of section 297A.25, 235.19 subdivision 5, are exempt, except the qualification test applies 235.20 based on the boundaries of the political subdivision instead of 235.21 the state of Minnesota. 235.22 (c) All mobile transportation equipment, and parts and 235.23 accessories attached to or to be attached to the equipment are 235.24 exempt, if purchased by a holder of a motor carrier direct pay 235.25 permit under section 297A.211. 235.26 Subd. 6. [CREDIT FOR OTHER LOCAL TAXES.] If a person paid 235.27 sales or use tax to another political subdivision on tangible 235.28 personal property or another item subject to tax under this 235.29 section, a credit applies against the tax imposed under this 235.30 section. The credit equals the tax the person paid to the other 235.31 political subdivision for the item. 235.32 Subd. 7. [ENFORCEMENT; COLLECTION; AND ADMINISTRATION.] (a) 235.33 The commissioner of revenue shall collect the taxes subject to 235.34 this section. The commissioner may collect the tax with the 235.35 state sales and use tax. All taxes under this section are 235.36 subject to the same penalties, interest, and enforcement 236.1 provisions as apply to the state sales and use tax. 236.2 (b) A request for a refund of state sales tax paid in 236.3 excess of the amount of tax legally due includes a request for a 236.4 refund of the political subdivision taxes paid on the goods or 236.5 services. The commissioner must refund to the taxpayer the full 236.6 amount of the political subdivision taxes paid on exempt sales 236.7 or use. 236.8 (c) A political subdivision that is collecting and 236.9 administering its own sales and use tax before January 1, 1998, 236.10 may elect to be exempt from this subdivision and subdivision 8. 236.11 Subd. 8. [REVENUES; COST OF COLLECTION.] The commissioner 236.12 shall remit the proceeds of the tax, less refunds and a 236.13 proportionate share of the cost of collection, at least 236.14 quarterly, to the political subdivision. The commissioner shall 236.15 deduct from the proceeds remitted an amount that equals 236.16 (1) the direct and indirect costs of the department to 236.17 administer, audit, and collect the political subdivision's tax, 236.18 plus 236.19 (2) the political subdivision's proportionate share of the 236.20 indirect cost of administering all taxes under this section. 236.21 Subd. 9. [EFFECTIVE DATES; NOTIFICATION.] (a) A political 236.22 subdivision may impose a tax under this section starting only on 236.23 the first day of a calendar quarter. A political subdivision 236.24 may repeal a tax under this section stopping only on the last 236.25 day of a calendar quarter. 236.26 (b) The political subdivision must notify the commissioner 236.27 of revenue at least 90 days before imposing or repealing a tax 236.28 under this section. 236.29 Subd. 10. [APPLICATION.] This section applies to all local 236.30 sales taxes authorized on or after the day of enactment of this 236.31 act. Starting January 1, 2000, this section applies to all 236.32 local sales tax that were authorized before the day of enactment 236.33 of this act. 236.34 Sec. 31. Minnesota Statutes 1996, section 297B.01, 236.35 subdivision 7, is amended to read: 236.36 Subd. 7. [SALE, SELLS, SELLING, PURCHASE, PURCHASED, OR 237.1 ACQUIRED.] "Sale," "sells," "selling," "purchase," "purchased," 237.2 or "acquired" means any transfer of title of any motor vehicle, 237.3 whether absolutely or conditionally, for a consideration in 237.4 money or by exchange or barter for any purpose other than resale 237.5 in the regular course of business. Any motor vehicle utilized 237.6 by the owner only by leasing such vehicle to others or by 237.7 holding it in an effort to so lease it, and which is put to no 237.8 other use by the owner other than resale after such lease or 237.9 effort to lease, shall be considered property purchased for 237.10 resale. The terms also shall include any transfer of title or 237.11 ownership of a motor vehicle by way of gift or by any other 237.12 manner or by any other means whatsoever, for or without 237.13 consideration, except that these terms shall not include: 237.14 (a) the acquisition of a motor vehicle by inheritance from 237.15 or by bequest of, a decedent who owned it; 237.16 (b) the transfer of a motor vehicle which was previously 237.17 licensed in the names of two or more joint tenants and 237.18 subsequently transferred without monetary consideration to one 237.19 or more of the joint tenants; 237.20 (c) the transfer of a motor vehicle by way of gift between 237.21 a husband and wife or parent and child;or237.22 (d) the voluntary or involuntary transfer of a motor 237.23 vehicle between a husband and wife in a divorce proceeding.; or 237.24 (e) the transfer of a motor vehicle by way of a gift to an 237.25 organization that is exempt from federal income taxation under 237.26 section 501(c)(3) of the Internal Revenue Code, as amended 237.27 through December 31, 1996, when the motor vehicle will be used 237.28 exclusively for religious, charitable, or educational purposes. 237.29 Sec. 32. Minnesota Statutes 1996, section 297B.01, 237.30 subdivision 8, is amended to read: 237.31 Subd. 8. [PURCHASE PRICE.] "Purchase price" means the 237.32 total consideration valued in money for a sale, whether paid in 237.33 money or otherwise. The purchase price excludes the amount of a 237.34 manufacturer's rebate paid or payable to the purchaser. If a 237.35 motor vehicle is taken in trade as a credit or as part payment 237.36 on a motor vehicle taxable under this chapter, the credit or 238.1 trade-in value allowed by the person selling the motor vehicle 238.2 shall be deducted from the total selling price to establish the 238.3 purchase price of the vehicle being sold and the trade-in 238.4 allowance allowed by the seller shall constitute the purchase 238.5 price of the motor vehicle accepted as a trade-in. The purchase 238.6 price in those instances where the motor vehicle is acquired by 238.7 gift or by any other transfer for a nominal or no monetary 238.8 consideration shall also include the average value of similar 238.9 motor vehicles, established by standards and guides as 238.10 determined by the motor vehicle registrar. The purchase price 238.11 in those instances where a motor vehicle is manufactured by a 238.12 person who registers it under the laws of this state shall mean 238.13 the manufactured cost of such motor vehicle and manufactured 238.14 cost shall mean the amount expended for materials, labor and 238.15 other properly allocable costs of manufacture, except that in 238.16 the absence of actual expenditures for the manufacture of a part 238.17 or all of the motor vehicle, manufactured costs shall mean the 238.18 reasonable value of the completed motor vehicle. 238.19 The term "purchase price" shall not include the portion of 238.20 the value of a motor vehicle due solely to modifications 238.21 necessary to make the motor vehicle handicapped accessible. The 238.22 term "purchase price" shall not include the transfer of a motor 238.23 vehicle by way of gift between a husband and wife or parent and 238.24 child, or to a nonprofit organization as provided under section 238.25 297B.01, paragraph (e), nor shall it include the transfer of a 238.26 motor vehicle by a guardian to a ward when there is no monetary 238.27 consideration and the title to such vehicle was registered in 238.28 the name of the guardian, as guardian, only because the ward was 238.29 a minor. There shall not be included in "purchase price" the 238.30 amount of any tax imposed by the United States upon or with 238.31 respect to retail sales whether imposed upon the retailer or the 238.32 consumer. 238.33 The term "purchase price" shall not include the transfer of 238.34 a motor vehicle as a gift between a foster parent and foster 238.35 child. For purposes of this subdivision, a foster relationship 238.36 exists, regardless of the age of the child, if (1) a foster 239.1 parent's home is or was licensed as a foster family home under 239.2 Minnesota Rules, parts 9545.0010 to 9545.0260, and (2) the 239.3 county verifies that the child was a state ward or in permanent 239.4 foster care. 239.5 Sec. 33. Minnesota Statutes 1996, section 349.154, 239.6 subdivision 2, is amended to read: 239.7 Subd. 2. [NET PROFIT REPORTS.] (a) Each licensed 239.8 organization must report monthly to the board on a form 239.9 prescribed by the board each expenditure and contribution of net 239.10 profits from lawful gambling. The reports must provide for each 239.11 expenditure or contribution: 239.12 (1) the name, address, and telephone number of the 239.13 recipient of the expenditure or contribution; 239.14 (2) the date the contribution was approved by the 239.15 organization; 239.16 (3) the date, amount, and check number of the expenditure 239.17 or contribution; 239.18 (4) a brief description of how the expenditure or 239.19 contribution meets one or more of the purposes in section 239.20 349.12, subdivision 25; and 239.21 (5) in the case of expenditures authorized under section 239.22 349.12, subdivision 25, paragraph (a), clause (7), whether the 239.23 expenditure is for a facility or activity that primarily 239.24 benefits male or female participants. 239.25 (b) The board shall make available to the commissioners of 239.26 revenue and public safety copies of reports received under this 239.27 subdivision and requested by them. 239.28 (c) The report required under this subdivision must provide 239.29 for a separate accounting for all expenditures made from the 239.30 reporting organization's tax refundandor creditaccount239.31 authorized under section 297E.02, subdivision 4, paragraph (d). 239.32 Sec. 34. Minnesota Statutes 1996, section 349.19, 239.33 subdivision 2a, is amended to read: 239.34 Subd. 2a. [TAX REFUNDANDOR CREDITACCOUNT.] (a) Each 239.35 organization that receives a refund or credit under section 239.36 297E.02, subdivision 4, paragraph (d), mustestablish a separate240.1account designated as the tax and credit refund account. The240.2organization must (1)within four business days of receiving a 240.3 refund under that paragraph deposit the refund in 240.4 the organization's gambling account, and (2) within four240.5business days of filing a tax return that claims a credit under240.6that paragraph, transfer from the separate account established240.7under subdivision 2 to the tax refund and credit account an240.8amount equal to the tax credit. 240.9(b) The name and address of the bank, the account number240.10for the tax refund and credit account, and the names of240.11organization members authorized as signatories on the account240.12must be provided to the board within 30 days of the date when240.13the organization establishes the account. Changes in the240.14information must be submitted to the board at least ten days240.15before the change is made.240.16(c)(b) The organization may expendmoney in the account240.17 the tax refund or credit issued under section 297E.02, 240.18 subdivision 4, paragraph (d), only for lawful purposes, other 240.19 than lawful purposes described in section 349.012, subdivision 240.20 25, paragraph (a), clauses (8), (9), and (12). Amountsin the240.21accountreceived as refunds or allowed as credits must be spent 240.22 for qualifying lawful purposes no later than one year after the 240.23 refund or credit isdepositedreceived. 240.24 Sec. 35. Minnesota Statutes 1996, section 349.191, 240.25 subdivision 1b, is amended to read: 240.26 Subd. 1b. [CREDIT AND SALES TO DELINQUENT DISTRIBUTORS.] 240.27 (a) If a manufacturer does not receive payment in full from a 240.28 distributor within3035 days of the delivery of gambling 240.29 equipment, the manufacturer must notify the board in writing of 240.30 the delinquency. 240.31 (b) If a manufacturer who has notified the board under 240.32 paragraph (a) has not received payment in full from the 240.33 distributor within 60 days of the notification under paragraph 240.34 (a), the manufacturer must notify the board of the continuing 240.35 delinquency. 240.36 (c) On receipt of a notice under paragraph (a), the board 241.1 shall order all manufacturers that until further notice from the 241.2 board, they may sell gambling equipment to the delinquent 241.3 distributor only on a cash basis with no credit extended. On 241.4 receipt of a notice under paragraph (b), the board shall order 241.5 all manufacturers not to sell any gambling equipment to the 241.6 delinquent distributor. 241.7 (d) No manufacturer may extend credit or sell gambling 241.8 equipment to a distributor in violation of an order under 241.9 paragraph (c) until the board has authorized such credit or sale. 241.10 Sec. 36. Laws 1993, chapter 375, article 9, section 45, 241.11 subdivision 2, is amended to read: 241.12 Subd. 2. [USE OF REVENUES.] (a) Revenues received from 241.13 taxes authorized by subdivision 1 shall be used by Cook county 241.14 to pay the cost of collecting the tax and to pay all or a 241.15 portion of the costs of expanding and improving the health care 241.16 facility located in the county and known as North Shore hospital. 241.17 Authorized costs include, but are not limited to, securing or 241.18 paying debt service on bonds or other obligations issued to 241.19 finance the expansion and improvement of North Shore hospital. 241.20 The total capital expenditures payable from bond proceeds, 241.21 excluding investment earnings on bond proceeds and tax revenues, 241.22 shall not exceed $4,000,000. 241.23 (b) Additional revenues received from taxes authorized by 241.24 subdivision 1 may be used by Cook county to pay all or a portion 241.25 of the costs of betterment of North Shore care center and 241.26 providing additional improvements to North Shore hospital. 241.27 Authorized costs include, but are not limited to, securing or 241.28 paying debt service on bonds or other obligations issued to 241.29 finance the remodeling of North Shore care center and additional 241.30 improvements to North Shore hospital. The total capital 241.31 expenditures payable from bond proceeds, excluding investment 241.32 earnings on bond proceeds and tax revenues, shall not exceed 241.33 $2,200,000. 241.34 Sec. 37. Laws 1993, chapter 375, article 9, section 45, 241.35 subdivision 3, is amended to read: 241.36 Subd. 3. [EXPIRATION OF TAXING AUTHORITY AND EXPENDITURE 242.1 LIMITATION.] The authority granted by subdivision 1 to Cook 242.2 county to impose a sales tax shall expire when the principal and 242.3 interest on any bonds or obligations issued under subdivision 4, 242.4 paragraph (a), to finance the expansion and improvement of North 242.5 Shore hospital described in subdivision 2, paragraph (a), have 242.6 been paid, or at an earlier time as the county shall, by 242.7 resolution, determine. Any funds remaining after completion of 242.8 the improvements and retirement or redemption of the bonds may 242.9 be placed in the general fund of the county. 242.10 Sec. 38. Laws 1993, chapter 375, article 9, section 45, 242.11 subdivision 4, is amended to read: 242.12 Subd. 4. [BONDS.] (a) Cook county may issue general 242.13 obligation bonds in an amount not to exceed $4,000,000 for the 242.14 expansion and improvement of North Shore hospital,. 242.15 (b) Additionally, Cook county may issue general obligation 242.16 bonds in an amount not to exceed $2,200,000 for the betterment 242.17 of North Shore care center and additional improvements to North 242.18 Shore hospital. 242.19 (c) The bonds may be issued without election under 242.20 Minnesota Statutes, chapter 475, on the question of issuance of 242.21 the bonds or a property tax to pay them. The debt represented 242.22 by the bondsissued for the expansion and improvement of North242.23Shore hospitalshall not be included in computing any debt 242.24 limitations applicable to Cook county, and the levy of taxes 242.25 required by Minnesota Statutes, section 475.61, to pay principal 242.26 of and interest on the bonds shall not be subject to any levy 242.27 limitation or be included in computing or applying any levy 242.28 limitation applicable to the county. 242.29 Sec. 39. Laws 1993, chapter 375, article 9, section 45, is 242.30 amended by adding a subdivision to read: 242.31 Subd. 5a. [REFERENDUM.] If the governing body of Cook 242.32 county intends to use the sales tax proceeds as authorized by 242.33 subdivision 2, paragraph (b), it shall conduct a referendum on 242.34 the issue. The question of so using the tax proceeds must be 242.35 submitted to the voters at a special or general election. The 242.36 tax proceeds may not be used as provided in subdivision 2, 243.1 paragraph (b), unless a majority of votes cast on the question 243.2 are in the affirmative. The commissioner of revenue shall 243.3 prepare a suggested form of question to be presented at the 243.4 election. The referendum must be held at a special or general 243.5 election before December 1, 1997. 243.6 Sec. 40. Laws 1993, chapter 375, article 9, section 46, 243.7 subdivision 2, is amended to read: 243.8 Subd. 2. [USE OF REVENUES.] Revenues received from the tax 243.9 authorized by subdivision 1 may only be used by the city to pay 243.10 the cost of collecting the tax, and to pay for the following 243.11 projects or to secure or pay any principal, premium, or interest 243.12 on bonds issued in accordance with subdivision 3 for the 243.13 following projects. 243.14 (a) To pay all or a portion of the capital expenses of 243.15 construction, equipment and acquisition costs for the expansion 243.16 and remodeling of the St. Paul Civic Center complex. 243.17 (b) The remainder of the funds must be spent for: 243.18 (1) capital projects to further residential, cultural, 243.19 commercial, and economic development in both downtown St. Paul 243.20 and St. Paul neighborhoods; and 243.21 (2) the operating expenses of cultural organizations in the 243.22 city, provided that the amount spent under this clause may not 243.23 exceed ten percent of the total amount spent under this 243.24 paragraph. 243.25 By January 15 of each odd-numbered year, the mayor and the 243.26 city council must report to the legislature on the use of sales 243.27 tax revenues during the preceding two-year period. 243.28 Sec. 41. [CITY OF WILLMAR; TAXES.] 243.29 Subdivision 1. [SALES AND USE TAX AUTHORIZED.] Pursuant to 243.30 the approval of the city voters at the general election held on 243.31 November 5, 1996, the city of Willmar may, by ordinance, impose, 243.32 for the purposes specified in subdivision 3, a sales and use tax 243.33 of up to one-half of one percent. The provisions of Minnesota 243.34 Statutes, section 297A.48, govern the imposition, 243.35 administration, collection, and enforcement of the tax 243.36 authorized under this subdivision. 244.1 Subd. 2. [EXCISE TAX AUTHORIZED.] Notwithstanding 244.2 Minnesota Statutes, section 477A.016, or any other contrary 244.3 provision of law, ordinance, or city charter, the city of 244.4 Willmar may, by ordinance, impose, for the purposes specified in 244.5 subdivision 3, an excise tax of up to $20 per motor vehicle, as 244.6 defined by ordinance, purchased or acquired from any person 244.7 engaged within the city in the business of selling motor 244.8 vehicles at retail. 244.9 Subd. 3. [USE OF REVENUES.] Revenues received from taxes 244.10 authorized by subdivisions 1 and 2 must be used to pay the costs 244.11 of collecting the taxes, and to pay all or a part of the capital 244.12 and administrative costs of the acquisition, construction, and 244.13 improvement of public library facilities, including securing or 244.14 paying debt service on bonds issued for the project under 244.15 subdivision 4. The total capital and administrative 244.16 expenditures payable from bond proceeds and revenues received 244.17 from the taxes authorized by subdivisions 1 and 2, excluding 244.18 investment earnings thereon, must not exceed $4,500,000. 244.19 Subd. 4. [BONDS.] The city of Willmar, pursuant to the 244.20 approval of the city voters at the general election held on 244.21 November 5, 1996, may issue without additional election general 244.22 obligation bonds of the city in an amount not to exceed 244.23 $4,500,000 to pay capital and administrative expenses for the 244.24 acquisition, construction, and improvement of public library 244.25 facilities. The debt represented by the bonds must not be 244.26 included in computing any debt limitations applicable to the 244.27 city, and the levy of taxes required by Minnesota Statutes, 244.28 section 475.61, to pay the principal of and interest on the 244.29 bonds must not be subject to any levy limitation or be included 244.30 in computing or applying any levy limitation applicable to the 244.31 city. 244.32 Subd. 5. [TERMINATION OF TAXES.] The taxes imposed under 244.33 subdivisions 1 and 2 expire when the city council determines 244.34 that sufficient funds have been received from the taxes to 244.35 finance the capital and administrative costs for the 244.36 acquisition, construction, and improvement of public library 245.1 facilities and to prepay or retire at maturity the principal, 245.2 interest, and premium due on any bonds issued for the project 245.3 under subdivision 4. Any funds remaining after completion of 245.4 the project and retirement or redemption of the bonds may be 245.5 placed in the general fund of the city. The taxes imposed under 245.6 subdivisions 1 and 2 may expire at an earlier time if the city 245.7 so determines by ordinance. 245.8 Subd. 6. [EFFECTIVE DATE.] This section is effective 245.9 August 1, 1997, upon compliance by the governing body of the 245.10 city of Willmar with Minnesota Statutes, section 645.021, 245.11 subdivision 3. 245.12 Sec. 42. [STATEMENT OF PURPOSE.] 245.13 The purpose of section 5, paragraph (i), is to confirm and 245.14 clarify the original intent of the legislature in enacting an 245.15 exemption from the sales tax for property to be resold in the 245.16 normal course of business. Section 5, paragraph (i), ratifies 245.17 the existing state interpretation that a resale requires the 245.18 transfer of title to the property or the complete transfer of 245.19 possession and control over the property. This section does not 245.20 apply to litigation currently pending before the Minnesota 245.21 Supreme Court. 245.22 Sec. 43. [RECODIFICATION.] 245.23 In coordination with legislative staff, the revisor of 245.24 statutes shall prepare a bill for introduction in the 1998 245.25 session of the legislature that clarifies and recodifies chapter 245.26 297A. The department of revenue shall assist in the preparation 245.27 of the legislation as requested by the revisor. The revisor may 245.28 consult professional groups and other interested persons in 245.29 preparing the legislation. 245.30 Sec. 44. [EXPIRATION.] 245.31 Minnesota Statutes, section 297A.24, subdivision 3, as 245.32 added by Laws 1997, chapter 84, article 3, section 5, expires 245.33 January 1, 2000. 245.34 Sec. 45. [APPLICATION.] 245.35 Section 26 applies in the counties of Anoka, Carver, 245.36 Dakota, Hennepin, Ramsey, Scott, and Washington. 246.1 Sec. 46. [REPEALER.] 246.2 Minnesota Statutes 1996, sections 297A.01, subdivision 20; 246.3 and 297A.02, subdivision 5, are repealed. 246.4 Sec. 47. [EFFECTIVE DATES.] 246.5 Section 1 is effective for refund claims filed after June 246.6 30, 1997. 246.7 Sections 2, 6, 7, 9, 13, 15, 16, 17, 18, 20, 21, 25, 31, 246.8 and 32 are effective for purchases, sales, storage, use, or 246.9 consumption occurring after June 30, 1997. 246.10 Section 3 is effective on July 1, 1997, or upon adoption of 246.11 the corresponding rules, whichever occurs earlier. 246.12 Section 4, paragraph (i), clause (iv), is effective for 246.13 purchases and sales occurring after September 30, 1987; the 246.14 remainder of section 4 is effective for purchases and sales 246.15 occurring after June 30, 1997. 246.16 Section 5, paragraph (h), is effective for purchases and 246.17 sales occurring after June 30, 1997, and paragraph (i) is 246.18 effective for purchases and sales occurring after December 31, 246.19 1992. 246.20 Sections 8 and 46 are effective July 1, 1998. 246.21 Sections 10 and 22 are effective for purchases, sales, 246.22 storage, use, or consumption occurring after August 31, 1996. 246.23 Sections 11, 12, 33, 34, and 35 are effective July 1, 1997. 246.24 Sections 14 and 19 are effective for purchases and sales 246.25 after June 30, 1999. 246.26 Section 23 is effective January 1, 1997. 246.27 Section 24 is effective for purchases, sales, storage, use, 246.28 or consumption occurring after April 30, 1997. 246.29 Sections 26 and 45 are effective for purchases, sales, 246.30 storage, use, or consumption occurring after July 31, 1997, and 246.31 before August 1, 2003. 246.32 Section 27 is effective for purchases, sales, storage, use, 246.33 or consumption occurring after May 31, 1997. 246.34 Section 28 is effective for sales made after December 31, 246.35 1989, and before January 1, 1997. The provisions of Minnesota 246.36 Statutes, section 289A.50, apply to refunds claimed under 247.1 section 28. Refunds claimed under section 28 must be filed by 247.2 the later of December 31, 1997, or the time limit under 247.3 Minnesota Statutes, section 289A.40, subdivision 1. 247.4 Section 29 is effective for sales or first use after May 247.5 31, 1997, and before June 1, 1998. 247.6 Sections 30, 42, and 43 are effective the day following 247.7 final enactment. 247.8 Sections 36 to 39 are effective the day after compliance by 247.9 the governing body of Cook county with Minnesota Statutes, 247.10 section 645.021, subdivision 3. 247.11 Section 40 is effective for STAR funds collected after June 247.12 30, 1997. 247.13 ARTICLE 8 247.14 MINERALS TAXES 247.15 Section 1. Minnesota Statutes 1996, section 93.41, is 247.16 amended to read: 247.17 93.41 [STATE-OWNED IRON-BEARING MATERIALS.] 247.18 Subdivision 1. [USE FOR ROAD CONSTRUCTION AND OTHER 247.19 PURPOSES.] In case the commissioner of natural resources shall 247.20 determine that any paint rock, taconite, or other iron-bearing 247.21 material belonging to the stateand containing not more than 45247.22percent dried iron by analysisis needed and suitable for use in 247.23 the construction or maintenance of any road, tailings basin, 247.24 settling basin, dike, dam, bank fill, or other works on public 247.25 or private property, and that such use would be in the best 247.26 interests of the public, the commissioner may authorize the 247.27 disposal of such material therefor as hereinafter provided. 247.28 Subd. 2. [MATERIALS SUBJECT TO STATE IRON ORE MINING 247.29 LEASE.] If such material is subject to an existing state iron 247.30 ore mining lease or located on property subject to an existing 247.31 state iron ore mining lease, the commissioner, by written 247.32 agreement with the holder of the lease, may authorize the use of 247.33 the material for any purpose specified in subdivision 1 that 247.34 will facilitate the mining and disposal of the iron ore therein 247.35 on such terms as the commissioner may prescribe consistent with 247.36 the interests of the state, or may authorize the holder of the 248.1 lease to dispose of the material otherwise for any purpose 248.2 specified in subdivision 1 upon payment of an amount therefor 248.3 equivalent to the royalty that would be payable under the terms 248.4 of the lease if the material were shipped or otherwise disposed 248.5 of as iron ore, but not less than the applicable minimum rate 248.6 prescribed by section 93.20. 248.7 Subd. 3. [ISSUANCE OF LEASES, ROYALTIES.] If such 248.8 material, whether in the ground or in stockpile, is not subject 248.9 to an existing lease, the commissioner may issue leases for the 248.10 taking and removal thereof for the purposes specified in 248.11 subdivision 1 in like manner as provided by section 92.50 for 248.12 leases for the taking and removal of sand, gravel, and other 248.13 materials specified in said section, and subject to all the 248.14 provisions thereof, so far as applicable; provided, that the248.15amount payable for such material shall be at least equivalent to248.16the minimum royalty that would be payable therefor under the248.17provisions of section 93.20. 248.18 Subd. 4. [SALE OF STOCKPILED IRON-BEARING MATERIAL IN 248.19 PLACE.] If such material is in stockpile and is not subject to 248.20 an existing lease, the commissioner may sell stockpiled 248.21 iron-bearing material in place. The sale must be to a person 248.22 holding an interest in the surface of the property upon which 248.23 the stockpile is located or to a person holding an interest in 248.24 publicly or privately owned stockpiled iron-bearing material 248.25 located in the same stockpile. 248.26 Sec. 2. Minnesota Statutes 1996, section 273.11, 248.27 subdivision 1, is amended to read: 248.28 Subdivision 1. [GENERALLY.] Except as provided in this 248.29 section or section 273.17, subdivision 1, all property shall be 248.30 valued at its market value. The market value as determined 248.31 pursuant to this section shall be stated such that any amount 248.32 under $100 is rounded up to $100 and any amount exceeding $100 248.33 shall be rounded to the nearest $100. In estimating and 248.34 determining such value, the assessor shall not adopt a lower or 248.35 different standard of value because the same is to serve as a 248.36 basis of taxation, nor shall the assessor adopt as a criterion 249.1 of value the price for which such property would sell at a 249.2 forced sale, or in the aggregate with all the property in the 249.3 town or district; but the assessor shall value each article or 249.4 description of property by itself, and at such sum or price as 249.5 the assessor believes the same to be fairly worth in money. The 249.6 assessor shall take into account the effect on the market value 249.7 of property of environmental factors in the vicinity of the 249.8 property. In assessing any tract or lot of real property, the 249.9 value of the land, exclusive of structures and improvements, 249.10 shall be determined, and also the value of all structures and 249.11 improvements thereon, and the aggregate value of the property, 249.12 including all structures and improvements, excluding the value 249.13 of crops growing upon cultivated land. In valuing real property 249.14 upon which there is a mine or quarry, it shall be valued at such 249.15 price as such property, including the mine or quarry, would sell 249.16 for at a fair, voluntary sale, for cash, if the material being 249.17 mined or quarried is not subject to taxation under section 249.18 298.015 and the mine or quarry is not exempt from the general 249.19 property tax under section 298.25. In valuing real property 249.20 which is vacant, platted property shall be assessed as provided 249.21 in subdivision 14. All property, or the use thereof, which is 249.22 taxable under section 272.01, subdivision 2, or 273.19, shall be 249.23 valued at the market value of such property and not at the value 249.24 of a leasehold estate in such property, or at some lesser value 249.25 than its market value. 249.26 Sec. 3. Minnesota Statutes 1996, section 273.12, is 249.27 amended to read: 249.28 273.12 [ASSESSMENT OF REAL PROPERTY.] 249.29 It shall be the duty of every assessor and board, in 249.30 estimating and determining the value of lands for the purpose of 249.31 taxation, to consider and give due weight to every element and 249.32 factor affecting the market value thereof, including its 249.33 location with reference to roads and streets and the location of 249.34 roads and streets thereon or over the same, and to take into 249.35 consideration a reduction in the acreage of each tract or lot 249.36 sufficient to cover the amount of land actually used for any 250.1 improved public highway and the reduction in area of land caused 250.2 thereby. It shall be the duty of every assessor and board, in 250.3 estimating and determining the value of lands for the purpose of 250.4 taxation, to consider and give due weight to lands which are 250.5 comparable in character, quality, and location, to the end that 250.6 all lands similarly located and improved will be assessed upon a 250.7 uniform basis and without discrimination and, for agricultural 250.8 lands, to consider and give recognition to its earning potential 250.9 as measured by its free market rental rate. 250.10 When mineral, clay, or gravel deposits exist on a property, 250.11 and their extent, quality, and costs of extraction are 250.12 sufficiently well known so as to influence market value, such 250.13 deposits shall be recognized in valuing the property; except for 250.14 mineral and energy-resource deposits which are subject to 250.15 taxation under section 298.015, and except for taconite and 250.16 iron-sulphide deposits which are exempt from the general 250.17 property tax under section 298.25. 250.18 Sec. 4. [273.1651] [TAXATION AND FORFEITURE OF STOCKPILED 250.19 METALLIC MINERALS MATERIAL.] 250.20 Subdivision 1. [DEFINITION.] "Stockpiled metallic minerals 250.21 material" for purposes of this section, means surface 250.22 overburden, rock, lean ore, tailings, or other material that has 250.23 been removed from the ground and deposited elsewhere on the 250.24 surface in the process of iron ore, taconite, or other metallic 250.25 minerals mining, or in the process of beneficiation. Stockpiled 250.26 metallic minerals material does not include processed metallic 250.27 minerals concentrates in the form of pellets, chips, briquettes, 250.28 fines, or other form which have been prepared for or are in the 250.29 process of shipment. 250.30 Subd. 2. [PURPOSE.] The purpose of this section is to 250.31 clarify the ownership of stockpiled metallic minerals material 250.32 in this state. Depending on the intent of the person who 250.33 extracted the material from the ground, stockpiled metallic 250.34 minerals material may or may not be owned separately and apart 250.35 from the fee title to the surface of the real property. The 250.36 legislature finds that the uncertainty of ownership of 251.1 stockpiled metallic minerals material located on real property 251.2 that becomes tax forfeited has created a burden on the public 251.3 owner of the surface of the real property and an impediment to 251.4 productive management or use of a public resource. 251.5 Subd. 3. [TAXATION AND FORFEITURE.] From and after the 251.6 effective date of this section, for purposes of taxation, the 251.7 definition of "real property," as contained in section 272.03, 251.8 subdivision 1, includes stockpiled metallic minerals material. 251.9 Nothing in this subdivision shall be construed to subject 251.10 stockpiled metallic minerals material to the general property 251.11 tax when the stockpiled metallic minerals material is exempt 251.12 from the general property tax pursuant to section 298.015 or 251.13 298.25. If the surface of the real property forfeits for 251.14 delinquent taxes, stockpiled metallic minerals material located 251.15 on the real property forfeits with the surface of the property. 251.16 Subd. 4. [PRIOR FORFEITURE.] Stockpiled metallic minerals 251.17 material located on real property that forfeited prior to the 251.18 effective date of this section or forfeits due to a judgment for 251.19 delinquent taxes issued prior to the effective date of this 251.20 section shall be assessed and taxed as real property. The tax 251.21 applies only to stockpiled metallic minerals material located on 251.22 real property that remains in the ownership of the state or a 251.23 political subdivision of the state. The tax shall be based on 251.24 the market value of the rental of the property for storage of 251.25 stockpiled metallic minerals material. 251.26 Subd. 5. [EXCEPTIONS; TAX LAWS.] (a) The tax imposed 251.27 pursuant to this section shall not be imposed on the following: 251.28 (1) stockpiled metallic minerals material valued and taxed 251.29 under other laws relating to the taxation of minerals, gas, 251.30 coal, oil, or other similar interests; 251.31 (2) stockpiled metallic minerals material that is exempt 251.32 from taxation pursuant to constitutional or related statutory 251.33 provisions; or 251.34 (3) stockpiled metallic minerals material that is owned by 251.35 the state. 251.36 (b) All laws for the enforcement of taxes on real property 252.1 shall apply to the tax imposed pursuant to this section on 252.2 stockpiled metallic minerals material. 252.3 Subd. 6. [FEE OWNER.] For purposes of section 276.041, the 252.4 owner of stockpiled metallic minerals material is a fee owner. 252.5 Sec. 5. Minnesota Statutes 1996, section 282.01, 252.6 subdivision 8, is amended to read: 252.7 Subd. 8. [MINERALS IN TAX-FORFEITED LAND AND TAX-FORFEITED 252.8 STOCKPILED METALLIC MINERALS MATERIAL SUBJECT TO MINING; 252.9 PROCEDURES.] In case the commissioner of natural resources shall 252.10 notify the county auditor of any county in writing that the 252.11 minerals in any tax-forfeited land or tax-forfeited stockpiled 252.12 metallic minerals material located on tax-forfeited land in such 252.13 county have been designated as a mining unit as provided by law, 252.14 or that such minerals or tax-forfeited stockpiled metallic 252.15 minerals material are subject to a mining permit or lease issued 252.16 therefor as provided by law, the surface of such tax-forfeited 252.17 land shall be subject to disposal and use for mining purposes 252.18 pursuant to such designation, permit, or lease, and shall be 252.19 withheld from sale or lease by the county auditor until the 252.20 commissioner shall notify the county auditor that such land has 252.21 been removed from the list of mining units or that any mining 252.22 permit or lease theretofore issued thereon is no longer in 252.23 force; provided, that the surface of such tax-forfeited land may 252.24 be leased by the county auditor as provided by law, with the 252.25 written approval of the commissioner, subject to disposal and 252.26 use for mining purposes as herein provided and to any special 252.27 conditions relating thereto that the commissioner may prescribe, 252.28 also subject to cancellation for mining purposes on three months 252.29 written notice from the commissioner to the county auditor. 252.30 Sec. 6. Minnesota Statutes 1996, section 282.04, 252.31 subdivision 1, is amended to read: 252.32 Subdivision 1. [TIMBER SALES; LAND LEASES AND USES.] (a) 252.33 The county auditor may sell timber upon any tract that may be 252.34 approved by the natural resources commissioner. Such sale of 252.35 timber shall be made for cash at not less than the appraised 252.36 value determined by the county board to the highest bidder after 253.1 not less than one week's published notice in an official paper 253.2 within the county. Any timber offered at such public sale and 253.3 not sold may thereafter be sold at private sale by the county 253.4 auditor at not less than the appraised value thereof, until such 253.5 time as the county board may withdraw such timber from sale. 253.6 The appraised value of the timber and the forestry practices to 253.7 be followed in the cutting of said timber shall be approved by 253.8 the commissioner of natural resources. 253.9 (b) Payment of the full sale price of all timber sold on 253.10 tax-forfeited lands shall be made in cash at the time of the 253.11 timber sale, except in the case of oral or sealed bid auction 253.12 sales, the down payment shall be no less than 15 percent of the 253.13 appraised value, and the balance shall be paid prior to entry. 253.14 In the case of auction sales that are partitioned and sold as a 253.15 single sale with predetermined cutting blocks, the down payment 253.16 shall be no less than 15 percent of the appraised price of the 253.17 entire timber sale which may be held until the satisfactory 253.18 completion of the sale or applied in whole or in part to the 253.19 final cutting block. The value of each separate block must be 253.20 paid in full before any cutting may begin in that block. With 253.21 the permission of the county administrator the purchaser may 253.22 enter unpaid blocks and cut necessary timber incidental to 253.23 developing logging roads as may be needed to log other blocks 253.24 provided that no timber may be removed from an unpaid block 253.25 until separately scaled and paid for. 253.26 (c) The county board may require final settlement on the 253.27 basis of a scale of cut products. Any parcels of land from 253.28 which timber is to be sold by scale of cut products shall be so 253.29 designated in the published notice of sale above mentioned, in 253.30 which case the notice shall contain a description of such 253.31 parcels, a statement of the estimated quantity of each species 253.32 of timber thereon and the appraised price of each specie of 253.33 timber for 1,000 feet, per cord or per piece, as the case may 253.34 be. In such cases any bids offered over and above the appraised 253.35 prices shall be by percentage, the percent bid to be added to 253.36 the appraised price of each of the different species of timber 254.1 advertised on the land. The purchaser of timber from such 254.2 parcels shall pay in cash at the time of sale at the rate bid 254.3 for all of the timber shown in the notice of sale as estimated 254.4 to be standing on the land, and in addition shall pay at the 254.5 same rate for any additional amounts which the final scale shows 254.6 to have been cut or was available for cutting on the land at the 254.7 time of sale under the terms of such sale. Where the final 254.8 scale of cut products shows that less timber was cut or was 254.9 available for cutting under terms of such sale than was 254.10 originally paid for, the excess payment shall be refunded from 254.11 the forfeited tax sale fund upon the claim of the purchaser, to 254.12 be audited and allowed by the county board as in case of other 254.13 claims against the county. No timber, except hardwood pulpwood, 254.14 may be removed from such parcels of land or other designated 254.15 landings until scaled by a person or persons designated by the 254.16 county board and approved by the commissioner of natural 254.17 resources. Landings other than the parcel of land from which 254.18 timber is cut may be designated for scaling by the county board 254.19 by written agreement with the purchaser of the timber. The 254.20 county board may, by written agreement with the purchaser and 254.21 with a consumer designated by the purchaser when the timber is 254.22 sold by the county auditor, and with the approval of the 254.23 commissioner of natural resources, accept the consumer's scale 254.24 of cut products delivered at the consumer's landing. No timber 254.25 shall be removed until fully paid for in cash. Small amounts of 254.26 timber not exceeding $3,000 in appraised valuation may be sold 254.27 for not less than the full appraised value at private sale to 254.28 individual persons without first publishing notice of sale or 254.29 calling for bids, provided that in case of such sale involving a 254.30 total appraised value of more than $200 the sale shall be made 254.31 subject to final settlement on the basis of a scale of cut 254.32 products in the manner above provided and not more than two such 254.33 sales, directly or indirectly to any individual shall be in 254.34 effect at one time. 254.35 (d) As directed by the county board, the county auditor may 254.36 lease tax-forfeited land to individuals, corporations or 255.1 organized subdivisions of the state at public or private vendue, 255.2 and at such prices and under such terms as the county board may 255.3 prescribe, for use as cottage and camp sites and for 255.4 agricultural purposes and for the purpose of taking and removing 255.5 of hay, stumpage, sand, gravel, clay, rock, marl, and black dirt 255.6 therefrom, and for garden sites and other temporary uses 255.7 provided that no leases shall be for a period to exceed ten 255.8 years; provided, further that any leases involving a 255.9 consideration of more than $1,500 per year, except to an 255.10 organized subdivision of the state shall first be offered at 255.11 public sale in the manner provided herein for sale of timber. 255.12 Upon the sale of any such leased land, it shall remain subject 255.13 to the lease for not to exceed one year from the beginning of 255.14 the term of the lease. Any rent paid by the lessee for the 255.15 portion of the term cut off by such cancellation shall be 255.16 refunded from the forfeited tax sale fund upon the claim of the 255.17 lessee, to be audited and allowed by the county board as in case 255.18 of other claims against the county. 255.19 (e) As directed by the county board, the county auditor may 255.20 lease tax-forfeited land to individuals, corporations, or 255.21 organized subdivisions of the state at public or private vendue, 255.22 at such prices and under such terms as the county board may 255.23 prescribe, for the purpose of taking and removing for use for 255.24 road construction and other purposes tax-forfeited stockpiled 255.25 iron-bearing material. The county auditor must determine that 255.26 the material is needed and suitable for use in the construction 255.27 or maintenance of a road, tailings basin, settling basin, dike, 255.28 dam, bank fill, or other works on public or private property, 255.29 and that the use would be in the best interests of the public. 255.30 No lease shall exceed ten years. The use of a stockpile for 255.31 these purposes must first be approved by the commissioner of 255.32 natural resources. The request shall be deemed approved unless 255.33 the requesting county is notified to the contrary by the 255.34 commissioner of natural resources within six months after 255.35 receipt of a request for approval for use of a stockpile. Once 255.36 use of a stockpile has been approved, the county may continue to 256.1 lease it for these purposes until approval is withdrawn by the 256.2 commissioner of natural resources. 256.3 (f) The county auditor, with the approval of the county 256.4 board is authorized to grant permits, licenses, and leases to 256.5 tax-forfeited lands for the depositing of stripping, lean ores, 256.6 tailings, or waste products from mines or ore milling plants, 256.7 upon such conditions and for such consideration and for such 256.8 period of time, not exceeding 15 years, as the county board may 256.9 determine; said permits, licenses, or leases to be subject to 256.10 approval by the commissioner of natural resources. 256.11 (g) Any person who removes any timber from tax-forfeited 256.12 land before said timber has been scaled and fully paid for as 256.13 provided in this subdivision is guilty of a misdemeanor. 256.14 (h) The county auditor may, with the approval of the county 256.15 board, and without first offering at public sale, grant leases, 256.16 for a term not exceeding 25 years, for the removal of peat from 256.17 tax-forfeited lands upon such terms and conditions as the county 256.18 board may prescribe. Any lease for the removal of peat from 256.19 tax-forfeited lands must first be reviewed and approved by the 256.20 commissioner of natural resources if the lease covers 320 or 256.21 more acres. No lease for the removal of peat shall be made by 256.22 the county auditor pursuant to this section without first 256.23 holding a public hearing on the auditor's intention to lease. 256.24 One printed notice in a legal newspaper in the county at least 256.25 ten days before the hearing, and posted notice in the courthouse 256.26 at least 20 days before the hearing shall be given of the 256.27 hearing. 256.28 Sec. 7. Minnesota Statutes 1996, section 298.24, 256.29 subdivision 1, is amended to read: 256.30 Subdivision 1. (a) For concentrate produced in 1992, 1993, 256.31 1994, and 1995 there is imposed upon taconite and iron 256.32 sulphides, and upon the mining and quarrying thereof, and upon 256.33 the production of iron ore concentrate therefrom, and upon the 256.34 concentrate so produced, a tax of $2.054 per gross ton of 256.35 merchantable iron ore concentrate produced therefrom. 256.36 (b) On concentrates produced in 1997 and thereafter, an 257.1 additional tax is imposed equal to three cents per gross ton of 257.2 merchantable iron ore concentrate for each one percent that the 257.3 iron content of the product exceeds 72 percent, when dried at 257.4 212 degrees Fahrenheit. 257.5 (c) For concentrates produced in 1996 and subsequent years, 257.6 the tax rate shall be equal to the preceding year's tax rate 257.7 plus an amount equal to the preceding year's tax rate multiplied 257.8 by the percentage increase in the implicit price deflator from 257.9 the fourth quarter of the second preceding year to the fourth 257.10 quarter of the preceding year, provided that, for concentrates 257.11 produced in 1996 only, the increase in the rate of tax imposed 257.12 under this section over the rate imposed for the previous year 257.13 may not exceed four cents per ton. "Implicit price deflator" 257.14 for the gross national product means the implicit price deflator 257.15 prepared by the bureau of economic analysis of the United States 257.16 Department of Commerce. 257.17(c)(d) The tax shall be imposed on the average of the 257.18 production for the current year and the previous two years. The 257.19 rate of the tax imposed will be the current year's tax rate. 257.20 This clause shall not apply in the case of the closing of a 257.21 taconite facility if the property taxes on the facility would be 257.22 higher if this clause and section 298.25 were not applicable. 257.23(d)(e) If the tax or any part of the tax imposed by this 257.24 subdivision is held to be unconstitutional, a tax of $2.054 per 257.25 gross ton of merchantable iron ore concentrate produced shall be 257.26 imposed. 257.27(e)(f) Consistent with the intent of this subdivision to 257.28 impose a tax based upon the weight of merchantable iron ore 257.29 concentrate, the commissioner of revenue may indirectly 257.30 determine the weight of merchantable iron ore concentrate 257.31 included in fluxed pellets by subtracting the weight of the 257.32 limestone, dolomite, or olivine derivatives or other basic flux 257.33 additives included in the pellets from the weight of the 257.34 pellets. For purposes of this paragraph, "fluxed pellets" are 257.35 pellets produced in a process in which limestone, dolomite, 257.36 olivine, or other basic flux additives are combined with 258.1 merchantable iron ore concentrate. No subtraction from the 258.2 weight of the pellets shall be allowed for binders, mineral and 258.3 chemical additives other than basic flux additives, or moisture. 258.4(f)(g) (1) Notwithstanding any other provision of this 258.5 subdivision, for the firstfive years of a plant's production of258.6direct reduced ore, the rate of the tax on direct reduced ore is258.7determined under this paragraphtwo years of a plant's 258.8 production of direct reduced ore, no tax is imposed under this 258.9 section. As used in this paragraph, "direct reduced ore" is ore 258.10 that results in a product that has an iron content of at least 258.11 75 percent. For the third year of a plant's production of 258.12 direct reduced ore, the rate to be applied to direct reduced ore 258.13 is 25 percent of the rate otherwise determined under this 258.14 subdivisionfor the first 500,000 of taxable tons for the258.15production year, and 50 percent of the rate otherwise determined258.16for any remainder. If the taxpayer had no production in the two258.17years prior to the current production year, the tonnage eligible258.18to be taxed at 25 percent of the rate otherwise determined under258.19this subdivision is the first 166,667 tons. If the taxpayer had258.20some production in the year prior to the current production year258.21but no production in the second prior year, the tonnage eligible258.22to be taxed at 25 percent of the rate otherwise determined under258.23this subdivision is the first 333,333 tons. For the fourth such 258.24 production year, the rate is 50 percent of the rate otherwise 258.25 determined under this subdivision; for the fifth such production 258.26 year, the rate is 75 percent of the rate otherwise determined 258.27 under this subdivision; and for all subsequent production years, 258.28 the full rate is imposed. 258.29 (2) Subject to clause (1), production of direct reduced ore 258.30 in this state is subject to the tax imposed by this section, but 258.31 if that production is not produced by a producer of taconite or 258.32 iron sulfides, the production of taconite or iron sulfides 258.33 consumed in the production of direct reduced iron in this state 258.34 is not subject to the tax imposed by this section on taconite or 258.35 iron sulfides. 258.36 Sec. 8. Minnesota Statutes 1996, section 298.28, 259.1 subdivision 9a, is amended to read: 259.2 Subd. 9a. [TACONITE ECONOMIC DEVELOPMENT FUND.] (a) 15.4 259.3 cents per ton for distributions in 1996, 1998, and 1999 and 20.4 259.4 cents per ton for distributions in 1997, 1998, and 1999shall be 259.5 paid to the taconite economic development fund. No distribution 259.6 shall be made under this paragraph in any year in which total 259.7 industry production falls below 30 million tons. 259.8 (b) An amount equal to 50 percent of the tax under section 259.9 298.24 for concentrate sold in the form of pellet chips and 259.10 fines not exceeding 5/16 inch in size and not including crushed 259.11 pellets shall be paid to the taconite economic development 259.12 fund. The amount paid shall not exceed $700,000 annually for 259.13 all companies. If the initial amount to be paid to the fund 259.14 exceeds this amount, each company's payment shall be prorated so 259.15 the total does not exceed $700,000. 259.16 Sec. 9. Minnesota Statutes 1996, section 298.28, is 259.17 amended by adding a subdivision to read: 259.18 Subd. 9b. [TACONITE ENVIRONMENTAL FUND.] Five cents per 259.19 ton for distributions in 1998 and 1999 shall be paid to the 259.20 taconite environmental fund for use under section 298.2961. No 259.21 distribution may be made under this paragraph in any year in 259.22 which total industry production falls below 30,000,000 tons. 259.23 Sec. 10. Minnesota Statutes 1996, section 298.296, 259.24 subdivision 4, is amended to read: 259.25 Subd. 4. [TEMPORARY LOAN AUTHORITY.] (a) The board may 259.26 recommend that up to$10,000,000$7,500,000 from the corpus of 259.27 the trust may be used for loans as provided in this 259.28 subdivision. The money would be available for loans for 259.29 construction and equipping of facilities constituting (1) a 259.30 value added iron products plant, which may be either a new plant 259.31 or a facility incorporated into an existing plant that produces 259.32 iron upgraded to a minimum of 75 percent iron content or any 259.33 iron alloy with a total minimum metallic content of 90 percent; 259.34 or (2) a new mine or minerals processing plant for any mineral 259.35 subject to the net proceeds tax imposed under section 298.015. 259.36 A loan under this paragraph may not exceed $5,000,000 for any 260.1 facility. 260.2 (b) Additionally, the board must reserve the first 260.3 $2,000,000 of the net interest, dividends, and earnings arising 260.4 from the investment of the trust after June 30, 1996, to be used 260.5 for additional grants for the purposes set forth in paragraph 260.6 (a). This amount must be reserved until it is used for the 260.7 grants or until June 30, 1998, whichever is earlier. 260.8 (c) Additionally, the board may recommend that up to 260.9$3,000,000$5,500,000 from the corpus of the trust may be used 260.10 for additional grants for the purposes set forth in paragraph 260.11 (a). 260.12 (d) The board may require that it receive an equity 260.13 percentage in any project to which it contributes under this 260.14 section. 260.15 (e) The authority to make loans and grants under this 260.16 subdivision terminates June 30, 1998. 260.17 Sec. 11. Minnesota Statutes 1996, section 298.2961, 260.18 subdivision 1, is amended to read: 260.19 Subdivision 1. [APPROPRIATION.] (a) $10,000,000 is 260.20 appropriated from the northeast Minnesota economic protection 260.21 trust fund to a special account in the taconite area 260.22 environmental protection fund for grants or loans to producers 260.23 on a project-by-project basis as provided in this section. 260.24 (b) The proceeds of the tax designated under section 260.25 298.28, subdivision 9b, are appropriated for grants and loans to 260.26 producers on a project-by-project basis as provided in this 260.27 section. 260.28 Sec. 12. Minnesota Statutes 1996, section 298.75, 260.29 subdivision 1, is amended to read: 260.30 Subdivision 1. [DEFINITIONS.] Except as may otherwise be 260.31 provided, the following words, when used in this section, shall 260.32 have the meanings herein ascribed to them. 260.33 (1) "Aggregate material" shall mean nonmetallic natural 260.34 mineral aggregate including, but not limited to sand, silica 260.35 sand, gravel, building stone, crushed rock, limestone, and 260.36 granite. Aggregate material shall not include dimension stone 261.1 and dimension granite. Aggregate material must be measured or 261.2 weighed after it has been extracted from the pit, quarry, or 261.3 deposit. 261.4 (2) "Person" shall mean any individual, firm, partnership, 261.5 corporation, organization, trustee, association, or other entity. 261.6 (3) "Operator" shall mean any person engaged in the 261.7 business of removing aggregate material from the surface or 261.8 subsurface of the soil, for the purpose of sale, either directly 261.9 or indirectly, through the use of the aggregate material in a 261.10 marketable product or service. 261.11 (4) "Extraction site" shall mean a pit, quarry, or deposit 261.12 containing aggregate material and any contiguous property to the 261.13 pit, quarry, or deposit which is used by the operator for 261.14 stockpiling the aggregate material. 261.15 (5) "Importer" shall mean any person who buys aggregate 261.16 material produced from a county not listed in paragraph (6) or 261.17 another state and causes the aggregate material to be imported 261.18 into a county in this state which imposes a tax on aggregate 261.19 material. 261.20 (6) "County" shall mean the counties of Pope, Stearns, 261.21 Benton, Sherburne, Carver, Scott, Dakota, Le Sueur, Kittson, 261.22 Marshall, Pennington, Red Lake, Polk, Norman, Mahnomen, Clay, 261.23 Becker, Carlton, St. Louis, Rock, Murray, Wilkin, Big Stone, 261.24 Sibley, Hennepin, Washington, Chisago, and Ramsey. 261.25 Sec. 13. Minnesota Statutes 1996, section 298.75, 261.26 subdivision 4, is amended to read: 261.27 Subd. 4. If the county auditor has not received the report 261.28 by the 15th day after the last day of each calendar quarter from 261.29 the operator or importer as required by subdivision 3 or has 261.30 received an erroneous report, the county auditor shall estimate 261.31 the amount of tax due and notify the operator or importer by 261.32 registered mail of the amount of tax so estimated within the 261.33 next 14 days. An operator or importer may, within 30 days from 261.34 the date of mailing the notice, and upon payment of the amount 261.35 of tax determined to be due, file in the office of the county 261.36 auditor a written statement of objections to the amount of taxes 262.1 determined to be due. The statement of objections shall be 262.2 deemed to be a petition within the meaning of chapter 278, and 262.3 shall be governed by sections 278.02 to 278.13. 262.4 Sec. 14. Minnesota Statutes 1996, section 298.75, is 262.5 amended by adding a subdivision to read: 262.6 Subd. 8. The county auditor or its duly authorized agent 262.7 may examine records, including computer records, maintained by 262.8 an importer or operator. The term "record" includes, but is not 262.9 limited to, all accounts of an importer or operator. The county 262.10 auditor must have access at all reasonable times to inspect and 262.11 copy all business records related to an importer's or operator's 262.12 collection, transportation, and disposal of aggregate to the 262.13 extent necessary to ensure that all aggregate material 262.14 production taxes required to be paid have been remitted to the 262.15 county. The records must be maintained by the importer or 262.16 operator for no less than six years. 262.17 Sec. 15. [ST. LOUIS COUNTY TOWNS.] 262.18 Subdivision 1. [TAX MAY BE IMPOSED; CONDITIONS.] If the St. 262.19 Louis county board does not approve section 12, as provided in 262.20 section 18, each of the following towns in St. Louis county may 262.21 impose the aggregate materials tax under Minnesota Statutes, 262.22 section 298.75: the towns of Alden, Brevator, Canosia, Duluth, 262.23 Fredenberg, Gnesen, Grand Lake, Industrial, Lakewood, Midway, 262.24 Normanna, North Star, Rice Lake, and Solway. 262.25 Subd. 2. [PROVISIONS THAT APPLY.] For purposes of 262.26 exercising the powers contained in Minnesota Statutes, section 262.27 298.75, the "town" is deemed to be the "county." 262.28 In those towns located in St. Louis County that impose the 262.29 tax under Minnesota Statutes, section 298.75, all provisions in 262.30 that section shall apply to those towns, except that in lieu of 262.31 the distribution of the tax proceeds under subdivision 7, all 262.32 proceeds from this tax shall be retained by each of the towns 262.33 that impose the tax. 262.34 Subd. 3. [APPROVAL.] A tax imposed under this section is 262.35 effective in the town that approves it the day after compliance 262.36 by the town with the requirements of Minnesota Statutes, section 263.1 645.021, subdivision 3. 263.2 Sec. 16. [USE OF PRODUCTION TAX PROCEEDS.] 263.3 The amount distributed to the iron range resources and 263.4 rehabilitation board under Minnesota Statutes, section 298.28, 263.5 subdivision 7, that is attributable to the tax increase due to 263.6 the implicit price deflator increase as provided in Minnesota 263.7 Statutes, section 298.24, subdivision 1, paragraph (c), for 263.8 concentrates produced in 1997 shall be used by the board to make 263.9 a grant to the city of Hoyt Lakes to be used for the 263.10 establishment of an industrial park in the city. 263.11 Sec. 17. [SALES OF LANDS BY SCOTT COUNTY; AGGREGATE 263.12 MATERIALS.] 263.13 Minerals subject to reservation by Scott county under 263.14 Minnesota Statutes, section 373.01, subdivision 1, clause (1), 263.15 do not include minerals defined as aggregate material by 263.16 Minnesota Statutes, section 298.75, subdivision 1, that are 263.17 present in and upon the following described property: 263.18 All that part of the East Half of the Southwest Quarter in 263.19 Section 33, Township 115, Range 23, Scott County MN; which lies 263.20 westerly of the westerly right of way line of the Chicago, St. 263.21 Paul, Minneapolis, and Omaha Railway Company (Chicago and 263.22 NorthWestern Railway), 263.23 Together with all that part of the East Half of the 263.24 Southwest Quarter of Section 33, Township 115, Range 23, Scott 263.25 County, MN; lying easterly of the easterly right of way line of 263.26 the Chicago, St. Paul, Minneapolis and Omaha Railway Company 263.27 (Chicago and NorthWestern Railway); and all that part of the 263.28 West Half of the Southeast Quarter of said Section 33 lying 263.29 westerly of the westerly right of way line of the Minneapolis 263.30 and St. Louis Railroad; excepting therefrom the following 263.31 described parcel: 263.32 EXCEPTION: 263.33 Commencing at the Southwest corner of the Southeast Quarter 263.34 of said Section 33; thence on an assumed bearing of North 263.35 87 degrees 25 minutes 08 seconds East along the South line 263.36 of said Southeast Quarter a distance of 501.49 feet; thence 264.1 North 02 degrees 24 minutes 52 seconds West a distance of 264.2 750.00 feet; thence South 87 degrees 12 minutes 56 seconds 264.3 East a distance of 750.00 feet; thence South 02 degrees 34 264.4 minutes 52 seconds East a distance of 750.00 feet to the 264.5 South line of said East Half of the Southwest Quarter; 264.6 thence North 86 degrees 48 minutes 19 seconds East along 264.7 said South line of the East Half of the Southwest Quarter a 264.8 distance of 248.52 feet to the point of beginning. 264.9 Together with Tract A, Registered Land Survey Number 86; 264.10 and Tract C, Registered Land Survey Number 136; as filed in the 264.11 office of the Registrar of Titles, Scott County, Minnesota. 264.12 The county may sell, lease, or convey the property and 264.13 except the aggregate material from the mineral reservation 264.14 required by Minnesota Statutes, section 373.01, subdivision 1, 264.15 and it may lease the aggregate material upon conditions 264.16 different from those prescribed by that subdivision. 264.17 Sec. 18. [EFFECTIVE DATE.] 264.18 Section 7 is effective for production years beginning after 264.19 December 31, 1996. 264.20 Section 12 is effective for Pope county the day after 264.21 compliance by Pope county with the requirements of Minnesota 264.22 Statutes, section 645.021, subdivision 3. 264.23 Section 12 is effective for Carlton county the day after 264.24 compliance by Carlton county with the requirements of Minnesota 264.25 Statutes, section 645.021, subdivision 3. 264.26 Section 12 is effective for St. Louis county the day after 264.27 compliance by St. Louis county with the requirements of 264.28 Minnesota Statutes, section 645.021, subdivision 3. 264.29 Sections 16 and 17 are effective the day following final 264.30 enactment. 264.31 ARTICLE 9 264.32 BUDGET RESERVE 264.33 Section 1. Minnesota Statutes 1996, section 16A.152, 264.34 subdivision 2, is amended to read: 264.35 Subd. 2. [ADDITIONAL REVENUES; PRIORITY.] If on the basis 264.36 of a forecast of general fund revenues and expenditures after 265.1 November 1 in an odd-numbered year, the commissioner of finance 265.2 determines that there will be a positive unrestricted budgetary 265.3 general fund balance at the close of the biennium, the 265.4 commissioner of finance must allocate moneyto the budget265.5reserve until the total amount in the account is $270,000,000.265.6An amount equal to any additional biennial unrestricted265.7budgetary general fund balance made available as the result of a265.8forecast in an odd-numbered calendar year after November 1 is265.9appropriated in January of the following year to reduce the265.10property tax levy recognition percent under section 121.904,265.11subdivision 4a, to zero before additional money beyond265.12$270,000,000 is allocated to the budget reserve account. The265.13amount appropriated is the full amount forecast to be available265.14at the end of the biennium and is not limited to the amount265.15forecast to be available at the end of the current fiscal year265.16 as follows: 265.17 (a) first, to the budget reserve until the total amount in 265.18 the account equals $522,000,000; then 265.19 (b) 60 percent to the property tax reform account 265.20 established in section 16A.1521; and 265.21 (c) 40 percent is an unrestricted balance in the general 265.22 fund. 265.23 The amounts necessary to meet the requirements of this 265.24 section are appropriated from the general fund within two weeks 265.25 after the forecast is released. 265.26 Sec. 2. [16A.1521] [PROPERTY TAX REFORM ACCOUNT.] 265.27 (a) A property tax reform account is established in the 265.28 general fund. 265.29 (b) Amounts in the account are available for and may only 265.30 be spent to reform the property tax system by: 265.31 (1) reducing the class rates to the target rates specified 265.32 in section 273.13, subdivision 32, or to further reduce the 265.33 ratio of the highest class rate to lowest class rate; 265.34 (2) increasing state education aids to reduce property 265.35 taxes; 265.36 (3) increasing the state share of education funding to 70 266.1 percent; 266.2 (4) increasing the education homestead credit; or 266.3 (5) increasing the property tax refund. 266.4 As provided by section 273.13, subdivision 32, the governor 266.5 shall recommend to the legislature uses of money in the account 266.6 to compress class rate ratios, while mitigating the shifting of 266.7 relative property tax burdens from one class to another through 266.8 the mechanisms listed in clauses (2) through (5). 266.9 (c) The balance in the account does not cancel and remains 266.10 in the account until appropriated for property tax reform. 266.11 Investment earnings on the account are credited to the account. 266.12 Sec. 3. Minnesota Statutes 1996, section 124.195, 266.13 subdivision 7, is amended to read: 266.14 Subd. 7. [PAYMENTS TO SCHOOL NONOPERATING FUNDS.] Each 266.15 fiscal year state general fund payments for a district 266.16 nonoperating fund shall be made at 85 percent of the estimated 266.17 entitlement during the fiscal year of the entitlement, unless a266.18higher rate has been established according to section 121.904,266.19subdivision 4d. This amount shall be paid in 12 equal monthly 266.20 installments. The amount of the actual entitlement, after 266.21 adjustment for actual data, minus the payments made during the 266.22 fiscal year of the entitlement shall be paid prior to October 31 266.23 of the following school year. The commissioner may make advance 266.24 payments of homestead and agricultural credit aid for a 266.25 district's debt service fund earlier than would occur under the 266.26 preceding schedule if the district submits evidence showing a 266.27 serious cash flow problem in the fund. The commissioner may 266.28 make earlier payments during the year and, if necessary, 266.29 increase the percent of the entitlement paid to reduce the cash 266.30 flow problem. 266.31 Sec. 4. Minnesota Statutes 1996, section 124.195, 266.32 subdivision 10, is amended to read: 266.33 Subd. 10. [AID PAYMENT PERCENTAGE.] Except as provided in 266.34 subdivisions 8, 9, and 11, each fiscal year, all education aids 266.35 and credits in this chapter and chapters 121, 123, 124A, 124B, 266.36 125, 126, 134, and section 273.1392, shall be paid at 90 percent 267.1 for districts operating a program under section 121.585 for 267.2 grades 1 to 12 for all students in the district and 85 percent 267.3 for other districts of the estimated entitlement during the 267.4 fiscal year of the entitlement, unless a higher rate has been267.5established according to section 121.904, subdivision 4d. 267.6 Districts operating a program under section 121.585 for grades 1 267.7 to 12 for all students in the district shall receive 85 percent 267.8 of the estimated entitlement plus an additional amount of 267.9 general education aid equal to five percent of the estimated 267.10 entitlement. For all districts, the final adjustment payment, 267.11 according to subdivision 6, shall be the amount of the actual 267.12 entitlement, after adjustment for actual data, minus the 267.13 payments made during the fiscal year of the entitlement. 267.14 Sec. 5. [APPROPRIATIONS.] 267.15 Subdivision 1. [BUDGET RESERVE.] An amount sufficient to 267.16 increase the budget reserve to $522,000,000 on July 1, 1997, is 267.17 appropriated from the general fund. 267.18 Subd. 2. [PROPERTY REFORM ACCOUNT.] $46,000,000 is 267.19 appropriated to the property tax reform account from the general 267.20 fund for fiscal year 2000. 267.21 Sec. 6. [REPEALER.] 267.22 Minnesota Statutes 1996, section 121.904, subdivision 4d, 267.23 is repealed. 267.24 Sec. 7. [EFFECTIVE DATE.] 267.25 Sections 1 to 6 are effective July 1, 1997. 267.26 ARTICLE 10 267.27 TAX INCREMENT FINANCING 267.28 Section 1. Minnesota Statutes 1996, section 469.174, 267.29 subdivision 10, is amended to read: 267.30 Subd. 10. [REDEVELOPMENT DISTRICT.] (a) "Redevelopment 267.31 district" means a type of tax increment financing district 267.32 consisting of a project, or portions of a project, within which 267.33 the authority finds by resolution that one of the following 267.34 conditions, reasonably distributed throughout the district, 267.35 exists: 267.36 (1) parcels consisting of 70 percent of the area of the 268.1 district are occupied by buildings, streets, utilities, or other 268.2 improvements and more than 50 percent of the buildings, not 268.3 including outbuildings, are structurally substandard to a degree 268.4 requiring substantial renovation or clearance; or 268.5 (2) the property consists of vacant, unused, underused, 268.6 inappropriately used, or infrequently used railyards, rail 268.7 storage facilities, or excessive or vacated railroad 268.8 rights-of-way. 268.9 (b) For purposes of this subdivision, "structurally 268.10 substandard" shall mean containing defects in structural 268.11 elements or a combination of deficiencies in essential utilities 268.12 and facilities, light and ventilation, fire protection including 268.13 adequate egress, layout and condition of interior partitions, or 268.14 similar factors, which defects or deficiencies are of sufficient 268.15 total significance to justify substantial renovation or 268.16 clearance. 268.17 (c) A building is not structurally substandard if it is in 268.18 compliance with the building code applicable to new buildings or 268.19 could be modified to satisfy the building code at a cost of less 268.20 than 15 percent of the cost of constructing a new structure of 268.21 the same square footage and type on the site. The municipality 268.22 may find that a building is not disqualified as structurally 268.23 substandard under the preceding sentence on the basis of 268.24 reasonably available evidence, such as the size, type, and age 268.25 of the building, the average cost of plumbing, electrical, or 268.26 structural repairs, or other similar reliable evidence.If the268.27evidence supports a reasonable conclusion that the building is268.28not disqualified as structurally substandard,The municipality 268.29 may not make such a determination without an interior inspection 268.30orof the property, but need not have an independent, expert 268.31 appraisal prepared of the cost of repair and rehabilitation of 268.32 the building. An interior inspection of the property is not 268.33 required, if the municipality finds that (1) the municipality or 268.34 authority is unable to gain access to the property after using 268.35 its best efforts to obtain permission from the party that owns 268.36 or controls the property; and (2) the evidence otherwise 269.1 supports a reasonable conclusion that the building is 269.2 structurally substandard. Items of evidence that support such a 269.3 conclusion include recent fire or police inspections, on-site 269.4 property tax appraisals or housing inspections, exterior 269.5 evidence of deterioration, or other similar reliable evidence. 269.6 Written documentation of the findings and reasons why an 269.7 interior inspection was not conducted must be made and retained 269.8 under section 469.175, subdivision 3, clause (1). 269.9 (d) A parcel is deemed to be occupied by a structurally 269.10 substandard building for purposes of the finding under paragraph 269.11 (a) if all of the following conditions are met: 269.12 (1) the parcel was occupied by a substandard building 269.13 within three years of the filing of the request for 269.14 certification of the parcel as part of the district with the 269.15 county auditor; 269.16 (2) the substandard building was demolished or removed by 269.17 the authority or the demolition or removal was financed by the 269.18 authority or was done by a developer under a development 269.19 agreement with the authority; 269.20 (3) the authority found by resolution before the demolition 269.21 or removal that the parcel was occupied by a structurally 269.22 substandard building and that after demolition and clearance the 269.23 authority intended to include the parcel within a district; and 269.24 (4) upon filing the request for certification of the tax 269.25 capacity of the parcel as part of a district, the authority 269.26 notifies the county auditor that the original tax capacity of 269.27 the parcel must be adjusted as provided by section 469.177, 269.28 subdivision 1, paragraph (h). 269.29(c)(e) For purposes of this subdivision, a parcel is not 269.30 occupied by buildings, streets, utilities, or other improvements 269.31 unless 15 percent of the area of the parcel contains 269.32 improvements. 269.33(d)(f) For districts consisting of two or more 269.34 noncontiguous areas, each area must qualify as a redevelopment 269.35 district under paragraph (a) to be included in the district, and 269.36 the entire area of the district must satisfy paragraph (a). 270.1 Sec. 2. Minnesota Statutes 1996, section 469.174, is 270.2 amended by adding a subdivision to read: 270.3 Subd. 25. [INCREMENT.] "Increment," "tax increment," "tax 270.4 increment revenues," "revenues derived from tax increment," and 270.5 other similar terms for a district include: 270.6 (1) taxes paid by the captured net tax capacity, but 270.7 excluding any excess taxes, as computed under section 469.177; 270.8 (2) the proceeds from the sale or lease of property, 270.9 tangible or intangible, purchased by the authority with tax 270.10 increments; 270.11 (3) repayments of loans or other advances made by the 270.12 authority with tax increments; and 270.13 (4) interest or other investment earnings on or from tax 270.14 increments. 270.15 Sec. 3. Minnesota Statutes 1996, section 469.174, is 270.16 amended by adding a subdivision to read: 270.17 Subd. 26. [POPULATION.] "Population" means the population 270.18 established as of December 31 by the most recent of the 270.19 following: 270.20 (1) the federal census; 270.21 (2) a special census conducted under contract with the 270.22 United States Bureau of the Census; 270.23 (3) a population estimate made by the metropolitan council; 270.24 and 270.25 (4) a population estimate made by the state demographer 270.26 under section 4A.02. 270.27 The population so established applies to the following 270.28 calendar year. 270.29 Sec. 4. Minnesota Statutes 1996, section 469.174, is 270.30 amended by adding a subdivision to read: 270.31 Subd. 27. [SMALL CITY.] "Small city" means any home rule 270.32 charter or statutory city that has a population of 5,000 or less 270.33 and that is located ten miles or more from a home rule charter 270.34 or statutory city, located in this state, with a population of 270.35 10,000 or more. For purposes of this definition, the distance 270.36 between cities is measured by drawing a straight line from the 271.1 nearest boundaries of the two cities. 271.2 Sec. 5. Minnesota Statutes 1996, section 469.175, 271.3 subdivision 3, is amended to read: 271.4 Subd. 3. [MUNICIPALITY APPROVAL.] A county auditor shall 271.5 not certify the original net tax capacity of a tax increment 271.6 financing district until the tax increment financing plan 271.7 proposed for that district has been approved by the municipality 271.8 in which the district is located. If an authority that proposes 271.9 to establish a tax increment financing district and the 271.10 municipality are not the same, the authority shall apply to the 271.11 municipality in which the district is proposed to be located and 271.12 shall obtain the approval of its tax increment financing plan by 271.13 the municipality before the authority may use tax increment 271.14 financing. The municipality shall approve the tax increment 271.15 financing plan only after a public hearing thereon after 271.16 published notice in a newspaper of general circulation in the 271.17 municipality at least once not less than ten days nor more than 271.18 30 days prior to the date of the hearing. The published notice 271.19 must include a map of the area of the district from which 271.20 increments may be collected and, if the project area includes 271.21 additional area, a map of the project area in which the 271.22 increments may be expended. The hearing may be held before or 271.23 after the approval or creation of the project or it may be held 271.24 in conjunction with a hearing to approve the project. Before or 271.25 at the time of approval of the tax increment financing plan, the 271.26 municipality shall make the following findings, and shall set 271.27 forth in writing the reasons and supporting facts for each 271.28 determination: 271.29 (1) that the proposed tax increment financing district is a 271.30 redevelopment district, a renewal or renovation district, a 271.31 mined underground space development district, a housing 271.32 district, a soils condition district, or an economic development 271.33 district; if the proposed district is a redevelopment district 271.34 or a renewal or renovation district, the reasons and supporting 271.35 facts for the determination that the district meets the criteria 271.36 of section 469.174, subdivision 10, paragraph (a), clauses (1) 272.1 and (2), or subdivision 10a, must be documented in writing and 272.2 retained and made available to the public by the authority until 272.3 the district has been terminated. 272.4 (2) that the proposed development or redevelopment, in the 272.5 opinion of the municipality, would not reasonably be expected to 272.6 occur solely through private investment within the reasonably 272.7 foreseeable future and that the increased market value of the 272.8 site that could reasonably be expected to occur without the use 272.9 of tax increment financing would be less than the increase in 272.10 the market value estimated to result from the proposed 272.11 development after subtracting the present value of the projected 272.12 tax increments for the maximum duration of the district 272.13 permitted by the plan. The requirements of this clause do not 272.14 apply if the district is a qualified housing district, as 272.15 defined in section 273.1399, subdivision 1. 272.16 (3) that the tax increment financing plan conforms to the 272.17 general plan for the development or redevelopment of the 272.18 municipality as a whole. 272.19 (4) that the tax increment financing plan will afford 272.20 maximum opportunity, consistent with the sound needs of the 272.21 municipality as a whole, for the development or redevelopment of 272.22 the project by private enterprise. 272.23 (5) that the municipality elects the method of tax 272.24 increment computation set forth in section 469.177, subdivision 272.25 3, clause (b), if applicable. 272.26 When the municipality and the authority are not the same, 272.27 the municipality shall approve or disapprove the tax increment 272.28 financing plan within 60 days of submission by the authority, or 272.29 the plan shall be deemed approved. When the municipality and 272.30 the authority are not the same, the municipality may not amend 272.31 or modify a tax increment financing plan except as proposed by 272.32 the authority pursuant to subdivision 4. Once approved, the 272.33 determination of the authority to undertake the project through 272.34 the use of tax increment financing and the resolution of the 272.35 governing body shall be conclusive of the findings therein and 272.36 of the public need for the financing. 273.1 Sec. 6. Minnesota Statutes 1996, section 469.176, 273.2 subdivision 1b, is amended to read: 273.3 Subd. 1b. [DURATION LIMITS; TERMS.] (a) No tax increment 273.4 shall in any event be paid to the authority 273.5 (1) after 25 years from date of receipt by the authority of 273.6 the first tax increment for a mined underground space 273.7 development district, 273.8 (2) after 15 years after receipt by the authority of the 273.9 first increment for a renewal and renovation district, 273.10 (3) after1220 yearsfrom approval of the tax increment273.11financing planafter receipt by the authority of the first 273.12 increment for a soils condition district, 273.13 (4) after nine years from the date of the receipt, or 11 273.14 years from approval of the tax increment financing plan, 273.15 whichever is less, for an economic development district, 273.16 (5) for a housing district or a redevelopment district, 273.17 after 20 years from the date of receipt by the authority of the 273.18 first tax increment by the authority pursuant to section 273.19 469.175, subdivision 1, paragraph (b); or, if no provision is 273.20 made under section 469.175, subdivision 1, paragraph (b), after 273.21 25 years from the date of receipt by the authority of the first 273.22 increment. 273.23 (b) For purposes of determining a duration limit under this 273.24 subdivision or subdivision 1e that is based on the receipt of an 273.25 increment, any increments from taxes payable in the year in 273.26 which the district terminates shall be paid to the authority. 273.27 This paragraph does not affect a duration limit calculated from 273.28 the date of approval of the tax increment financing plan or 273.29 based on the recovery of costs or to a duration limit under 273.30 subdivision 1c. This paragraph does not supersede the 273.31 restrictions on payment of delinquent taxes in subdivision 1f. 273.32 Sec. 7. Minnesota Statutes 1996, section 469.176, 273.33 subdivision 4c, is amended to read: 273.34 Subd. 4c. [ECONOMIC DEVELOPMENT DISTRICTS.] (a) Revenue 273.35 derived from tax increment from an economic development district 273.36 may not be used to provide improvements, loans, subsidies, 274.1 grants, interest rate subsidies, or assistance in any form to 274.2 developments consisting of buildings and ancillary facilities, 274.3 if more than 15 percent of the buildings and facilities 274.4 (determined on the basis of square footage) are used for a 274.5 purpose other than: 274.6 (1) the manufacturing or production of tangible personal 274.7 property, including processing resulting in the change in 274.8 condition of the property; 274.9 (2) warehousing, storage, and distribution of tangible 274.10 personal property, excluding retail sales; 274.11 (3) research and development related to the activities 274.12 listed in clause (1) or (2); 274.13 (4) telemarketing if that activity is the exclusive use of 274.14 the property; 274.15 (5) tourism facilities; or 274.16 (6) qualified border retail facilities; 274.17 (7) space necessary for and related to the activities 274.18 listed in clauses (1) to(5)(6). 274.19 (b) Notwithstanding the provisions of this subdivision, 274.20 revenue derived from tax increment from an economic development 274.21 district may be used to pay for site preparation and public 274.22 improvements, if the following conditions are met: 274.23 (1) bedrock soils conditions are present in 80 percent or 274.24 more of the acreage of the district; 274.25 (2) the estimated cost of physical preparation of the site 274.26 exceeds the fair market value of the land before completion of 274.27 the preparation; and 274.28 (3) revenues from tax increments are expended only for the 274.29 additional costs of preparing the site because of unstable soils 274.30 and the bedrock soils condition, the additional cost of 274.31 installing public improvements because of unstable soils or the 274.32 bedrock soils condition, and reasonable administrative costs. 274.33 (c) Notwithstanding the provisions of this subdivision, 274.34 revenues derived from tax increment from an economic development 274.35 district may be used to provide improvements, loans, subsidies, 274.36 grants, interest rate subsidies, or assistance in any form for 275.1 up to 15,000 square feet of any separately owned commercial 275.2 facility located within the municipal jurisdiction of a small 275.3 city, if the revenues derived from increments are spent only to 275.4 assist the facility directly or for administrative expenses, the 275.5 assistance is necessary to develop the facility, and all of the 275.6 increments, except those for administrative expenses, are spent 275.7 only for activities within the district. 275.8 (d) For purposes of this subdivision, a qualified border 275.9 retail facility is a development consisting of a shopping center 275.10 or one or more retail stores, if the authority finds that all of 275.11 the following conditions are satisfied: 275.12 (1) the district is in a small city located within one mile 275.13 or less of the border of the state; 275.14 (2) the development is not located in the seven county 275.15 metropolitan area, as defined in section 473.121, subdivision 2; 275.16 (3) the development will contain new buildings or will 275.17 substantially rehabilitate existing buildings that together 275.18 contain at least 25,000 square feet of retail space; and 275.19 (4) without the use of tax increment financing for the 275.20 development, the development or a similar competing development 275.21 will instead occur in the bordering state or province. 275.22 (e) A city is a small city for purposes of this subdivision 275.23 if the city was a small city in the year in which the request 275.24 for certification was made and applies for the rest of the 275.25 duration of the district, regardless of whether the city 275.26 qualifies or ceases to qualify as a small city. 275.27 Sec. 8. Minnesota Statutes 1996, section 469.176, 275.28 subdivision 4j, is amended to read: 275.29 Subd. 4j. [REDEVELOPMENT DISTRICTS.] At least 90 percent 275.30 of the revenues derived from tax increments from a redevelopment 275.31 district or renewal and renovation district must be used to 275.32 finance the cost of correcting conditions that allow designation 275.33 of redevelopment and renewal and renovation districts under 275.34 section 469.174. These costs include, but are not limited to, 275.35 acquiring properties containing structurally substandard 275.36 buildings or improvements or hazardous substances, pollution, or 276.1 contaminants, acquiring adjacent parcels necessary to provide a 276.2 site of sufficient size to permit development, demolition and 276.3 rehabilitation of structures, clearing of the land, the removal 276.4 of hazardous substances or remediation necessary to development 276.5 of the land, and installation of utilities, roads, sidewalks, 276.6 and parking facilities for the site. The allocated 276.7 administrative expenses of the authority, including the cost of 276.8 preparation of the development action response plan, may be 276.9 included in the qualifying costs. 276.10 Sec. 9. Minnesota Statutes 1996, section 469.176, 276.11 subdivision 5, is amended to read: 276.12 Subd. 5. [REQUIREMENT FOR AGREEMENTS.] No more than 25 276.13 percent, by acreage, of the property to be acquired within a 276.14 project which contains a redevelopment district, or ten percent, 276.15 by acreage, of the property to be acquired within a project 276.16 which contains a housing or economic development district, as 276.17 set forth in the tax increment financing plan, shall at any time 276.18 be owned by an authority as a result of acquisition with the 276.19 proceeds of bonds issued pursuant to section 469.178 to which 276.20 tax increment from the property acquired is pledged unless prior 276.21 to acquisition in excess of the percentages, the authority has 276.22 concluded an agreement for the development or redevelopment of 276.23 the property acquired and which provides recourse for the 276.24 authority should the development or redevelopment not be 276.25 completed. This subdivision does not apply to a parcel of a 276.26 district that is a designated hazardous substance site 276.27 established under section 469.174, subdivision 16, or part of a 276.28 hazardous substance subdistrict established under section 276.29 469.175, subdivision 7. 276.30 Sec. 10. Minnesota Statutes 1996, section 469.177, 276.31 subdivision 1, is amended to read: 276.32 Subdivision 1. [ORIGINAL NET TAX CAPACITY.] (a) Upon or 276.33 after adoption of a tax increment financing plan, the auditor of 276.34 any county in which the district is situated shall, upon request 276.35 of the authority, certify the original net tax capacity of the 276.36 tax increment financing district and that portion of the 277.1 district overlying any subdistrict as described in the tax 277.2 increment financing plan and shall certify in each year 277.3 thereafter the amount by which the original net tax capacity has 277.4 increased or decreased as a result of a change in tax exempt 277.5 status of property within the district and any subdistrict, 277.6 reduction or enlargement of the district or changes pursuant to 277.7 subdivision 4. 277.8 (b) In the case of a mined underground space development 277.9 district the county auditor shall certify the original net tax 277.10 capacity as zero, plus the net tax capacity, if any, previously 277.11 assigned to any subsurface area included in the mined 277.12 underground space development district pursuant to section 277.13 272.04. 277.14 (c) For districts approved under section 469.175, 277.15 subdivision 3, or parcels added to existing districts after May 277.16 1, 1988, if the classification under section 273.13 of property 277.17 located in a district changes to a classification that has a 277.18 different assessment ratio, the original net tax capacity of 277.19 that property must be redetermined at the time when its use is 277.20 changed as if the property had originally been classified in the 277.21 same class in which it is classified after its use is changed. 277.22 (d) The amount to be added to the original net tax capacity 277.23 of the district as a result of previously tax exempt real 277.24 property within the district becoming taxable equals the net tax 277.25 capacity of the real property as most recently assessed pursuant 277.26 to section 273.18 or, if that assessment was made more than one 277.27 year prior to the date of title transfer rendering the property 277.28 taxable, the net tax capacity assessed by the assessor at the 277.29 time of the transfer. If substantial taxable improvements were 277.30 made to a parcel after certification of the district and if the 277.31 property later becomes tax exempt, in whole or part, as a result 277.32 of the authority acquiring the property through foreclosure or 277.33 exercise of remedies under a lease or other revenue agreement or 277.34 as a result of tax forfeiture, the amount to be added to the 277.35 original net tax capacity of the district as a result of the 277.36 property again becoming taxable is the amount of the parcel's 278.1 value that was included in original net tax capacity when the 278.2 parcel was first certified. The amount to be added to the 278.3 original net tax capacity of the district as a result of 278.4 enlargements equals the net tax capacity of the added real 278.5 property as most recently certified by the commissioner of 278.6 revenue as of the date of modification of the tax increment 278.7 financing plan pursuant to section 469.175, subdivision 4. 278.8 (e) For districts approved under section 469.175, 278.9 subdivision 3, or parcels added to existing districts after May 278.10 1, 1988, if the net tax capacity of a property increases because 278.11 the property no longer qualifies under the Minnesota 278.12 agricultural property tax law, section 273.111; the Minnesota 278.13 open space property tax law, section 273.112; or the 278.14 metropolitan agricultural preserves act, chapter 473H, or 278.15 because platted, unimproved property is improved or three years 278.16 pass after approval of the plat under section 273.11, 278.17 subdivision 1, the increase in net tax capacity must be added to 278.18 the original net tax capacity. 278.19 (f) Each year the auditor shall also add to the original 278.20 net tax capacity of each economic development district an amount 278.21 equal to the original net tax capacity for the preceding year 278.22 multiplied by the average percentage increase in the market 278.23 value of all property included in the economic development 278.24 district during the five years prior to certification of the 278.25 district. In computing the average percentage increase in 278.26 market value, the auditor shall exclude the market value, as 278.27 estimated by the assessor, that is attributable to new 278.28 construction; extension of sewer, water, roads, or other public 278.29 utilities; or platting of the land. 278.30 (g) The amount to be subtracted from the original net tax 278.31 capacity of the district as a result of previously taxable real 278.32 property within the district becoming tax exempt, or a reduction 278.33 in the geographic area of the district, shall be the amount of 278.34 original net tax capacity initially attributed to the property 278.35 becoming tax exempt or being removed from the district. If the 278.36 net tax capacity of property located within the tax increment 279.1 financing district is reduced by reason of a court-ordered 279.2 abatement, stipulation agreement, voluntary abatement made by 279.3 the assessor or auditor or by order of the commissioner of 279.4 revenue, the reduction shall be applied to the original net tax 279.5 capacity of the district when the property upon which the 279.6 abatement is made has not been improved since the date of 279.7 certification of the district and to the captured net tax 279.8 capacity of the district in each year thereafter when the 279.9 abatement relates to improvements made after the date of 279.10 certification. The county auditor may specify reasonable form 279.11 and content of the request for certification of the authority 279.12 and any modification thereof pursuant to section 469.175, 279.13 subdivision 4. 279.14 (h) If a parcel of property contained a substandard 279.15 building that was demolished or removed and if the authority 279.16 elects to treat the parcel as occupied by a substandard building 279.17 under section 469.174, subdivision 10, paragraph (b), the 279.18 auditor shall certify the original net tax capacity of the 279.19 parcel using the greater of (1) the current net tax capacity of 279.20 the parcel, or (2) the estimated market value of the parcel for 279.21 the year in which the building was demolished or removed, but 279.22 applying the class rates for the current year. 279.23 Sec. 11. Minnesota Statutes 1996, section 469.177, 279.24 subdivision 3, is amended to read: 279.25 Subd. 3. [TAX INCREMENT, RELATIONSHIP TO CHAPTERS 276A AND 279.26 473F.] (a) Unless the governing body elects pursuant to clause 279.27 (b) the following method of computation shall apply to a 279.28 district other than an economic development district for which 279.29 the request for certification was made after June 30, 1997: 279.30 (1) The original net tax capacity and the current net tax 279.31 capacity shall be determined before the application of the 279.32 fiscal disparity provisions of chapter 276A or 473F. Where the 279.33 original net tax capacity is equal to or greater than the 279.34 current net tax capacity, there is no captured net tax capacity 279.35 and no tax increment determination. Where the original net tax 279.36 capacity is less than the current net tax capacity, the 280.1 difference between the original net tax capacity and the current 280.2 net tax capacity is the captured net tax capacity. This amount 280.3 less any portion thereof which the authority has designated, in 280.4 its tax increment financing plan, to share with the local taxing 280.5 districts is the retained captured net tax capacity of the 280.6 authority. 280.7 (2) The county auditor shall exclude the retained captured 280.8 net tax capacity of the authority from the net tax capacity of 280.9 the local taxing districts in determining local taxing district 280.10 tax rates. The local tax rates so determined are to be extended 280.11 against the retained captured net tax capacity of the authority 280.12 as well as the net tax capacity of the local taxing districts. 280.13 The tax generated by the extension of the lesser of (A) the 280.14 local taxing district tax rates or (B) the original local tax 280.15 rate to the retained captured net tax capacity of the authority 280.16 is the tax increment of the authority. 280.17 (b) The following method of computation applies to any 280.18 economic development district for which the request for 280.19 certification was made after June 30, 1997, and to any other 280.20 district for which the governing bodymay, by resolution 280.21 approving the tax increment financing plan pursuant to section 280.22 469.175, subdivision 3,elect the following method of280.23computationelects: 280.24 (1) The original net tax capacity shall be determined 280.25 before the application of the fiscal disparity provisions of 280.26 chapter 276A or 473F. The current net tax capacity shall 280.27 exclude any fiscal disparity commercial-industrial net tax 280.28 capacity increase between the original year and the current year 280.29 multiplied by the fiscal disparity ratio determined pursuant to 280.30 section 276A.06, subdivision 7, or 473F.08, subdivision 6. 280.31 Where the original net tax capacity is equal to or greater than 280.32 the current net tax capacity, there is no captured net tax 280.33 capacity and no tax increment determination. Where the original 280.34 net tax capacity is less than the current net tax capacity, the 280.35 difference between the original net tax capacity and the current 280.36 net tax capacity is the captured net tax capacity. This amount 281.1 less any portion thereof which the authority has designated, in 281.2 its tax increment financing plan, to share with the local taxing 281.3 districts is the retained captured net tax capacity of the 281.4 authority. 281.5 (2) The county auditor shall exclude the retained captured 281.6 net tax capacity of the authority from the net tax capacity of 281.7 the local taxing districts in determining local taxing district 281.8 tax rates. The local tax rates so determined are to be extended 281.9 against the retained captured net tax capacity of the authority 281.10 as well as the net tax capacity of the local taxing districts. 281.11 The tax generated by the extension of the lesser of (A) the 281.12 local taxing district tax rates or (B) the original local tax 281.13 rate to the retained captured net tax capacity of the authority 281.14 is the tax increment of the authority. 281.15 (3) An election by the governing body pursuant to paragraph 281.16 (b) shall be submitted to the county auditor by the authority at 281.17 the time of the request for certification pursuant to 281.18 subdivision 1. 281.19 (c) The method of computation of tax increment applied to a 281.20 district pursuant to paragraph (a) or (b) shall remain the same 281.21 for the duration of the district, except that the governing body 281.22 may elect to change its election from the method of computation 281.23 in paragraph (a) to the method in paragraph (b). 281.24 Sec. 12. Laws 1995, chapter 264, article 5, section 44, 281.25 subdivision 4, as amended by Laws 1996, chapter 471, article 7, 281.26 section 21, is amended to read: 281.27 Subd. 4. [AUTHORITY.] For housing replacement projects in 281.28 the city of Crystal, "authority" means the Crystal economic 281.29 development authority. For housing replacement projects in the 281.30 city of Fridley, "authority" means the housing and redevelopment 281.31 authority in and for the city of Fridley or a successor in 281.32 interest. For housing replacement projects in the city of 281.33 Minneapolis, "authority" means the Minneapolis community 281.34 development agency. For housing replacement projects in the 281.35 city of St. Paul, "authority" means the St. Paul housing and 281.36 redevelopment authority. For housing replacement projects in 282.1 the city of Duluth, "authority" means the Duluth economic 282.2 development authority. For housing replacement projects in the 282.3 city of Richfield, "authority" is the authority as defined in 282.4 Minnesota Statutes, section 469.174, subdivision 2, that is 282.5 designated by the governing body of the city of Richfield. For 282.6 housing replacement projects in the city of Columbia Heights, 282.7 "authority" is the authority as defined in Minnesota Statutes, 282.8 section 469.174, subdivision 2, that is designated by the 282.9 governing body of the city of Columbia Heights. 282.10 Sec. 13. Laws 1995, chapter 264, article 5, section 45, 282.11 subdivision 1, as amended by Laws 1996, chapter 471, article 7, 282.12 section 22, is amended to read: 282.13 Subdivision 1. [CREATION OF PROJECTS.] (a) An authority 282.14 may create a housing replacement project under sections 44 to 282.15 47, as provided in this section. 282.16 (b) For the cities of Crystal, Fridley,andRichfield, and 282.17 Columbia Heights, the authority may designate up to 50 parcels 282.18 in the city to be included in a housing replacement district. 282.19 No more than ten parcels may be included in year one of the 282.20 district, with up to ten additional parcels added to the 282.21 district in each of the following nine years. For the cities of 282.22 Minneapolis, St. Paul, and Duluth, each authority may designate 282.23 up to 100 parcels in the city to be included in a housing 282.24 replacement district over the life of the district. The only 282.25 parcels that may be included in a district are (1) vacant sites, 282.26 (2) parcels containing vacant houses, or (3) parcels containing 282.27 houses that are structurally substandard, as defined in 282.28 Minnesota Statutes, section 469.174, subdivision 10. 282.29 (c) The city in which the authority is located must pay at 282.30 least 25 percent of the housing replacement project costs from 282.31 its general fund, a property tax levy, or other unrestricted 282.32 money, not including tax increments. 282.33 (d) The housing replacement district plan must have as its 282.34 sole object the acquisition of parcels for the purpose of 282.35 preparing the site to be sold for market rate housing. As used 282.36 in this section, "market rate housing" means housing that has a 283.1 market value that does not exceed 150 percent of the average 283.2 market value of single-family housing in that municipality. 283.3 Sec. 14. [CITY OF BROOKLYN CENTER; USE OF TAX INCREMENT 283.4 FINANCING.] 283.5 Subdivision 1. [APPLICATION OF TIME LIMIT.] For tax 283.6 increment financing district number 3, established on December 283.7 19, 1994, by Brooklyn Center Resolution No. 94-273, Minnesota 283.8 Statutes, section 469.1763, subdivision 3, applies to the 283.9 district by permitting a period of ten years for commencement of 283.10 activities within the district. 283.11 Subd. 2. [EFFECTIVE DATE.] This section is effective upon 283.12 approval by the governing body of the city of Brooklyn Center 283.13 and compliance with Minnesota Statutes, section 645.021, 283.14 subdivision 3. 283.15 Sec. 15. [CITY OF BUFFALO LAKE; TAX INCREMENT FINANCING 283.16 DISTRICT.] 283.17 Subdivision 1. [EXTENSION OF TIME FOR 283.18 CERTIFICATION.] Notwithstanding the provisions of Minnesota 283.19 Statutes, section 273.1399, subdivision 6, paragraph (b), clause 283.20 (2), tax increment financing district 1-1 in the city of Buffalo 283.21 Lake is an exempt district under Minnesota Statutes, section 283.22 273.1399, paragraph (b), if the facility is certified by the 283.23 commissioner of agriculture by December 31, 1998. 283.24 Subd. 2. [EFFECTIVE DATE.] This section is effective upon 283.25 approval by the governing body of the city of Buffalo Lake and 283.26 compliance with Minnesota Statutes, section 645.021, subdivision 283.27 3. 283.28 Sec. 16. [GAYLORD.] 283.29 Subdivision 1. [TIF DISTRICT EXTENSION AND EXPANSION.] 283.30 Notwithstanding the provisions of Minnesota Statutes, section 283.31 469.176, subdivision 1c, the city of Gaylord may, by resolution, 283.32 extend the duration of a tax increment financing district 283.33 originally certified in 1978. The city may not extend the 283.34 duration beyond December 31, 2008. 283.35 Subd. 2. [EFFECTIVE DATE.] This section is effective upon 283.36 compliance with the requirements of Minnesota Statutes, sections 284.1 469.1782 and 645.021. 284.2 Sec. 17. [DEFINITIONS.] 284.3 Subdivision 1. [APPLICABILITY.] As used in sections 17 to 284.4 19, the terms defined in this section have the meanings given 284.5 them. 284.6 Subd. 2. [AUTHORITY.] "Authority" or "authorities" means 284.7 the Minneapolis public housing authority and the Minneapolis 284.8 community development agency if and to the extent that the 284.9 governing body has delegated to either the powers and duties 284.10 hereunder pursuant to section 18, subdivision 4, paragraph (b). 284.11 Subd. 3. [CAPTURED NET TAX CAPACITY.] "Captured net tax 284.12 capacity" means the amount by which the current net tax capacity 284.13 of the housing transition district exceeds the original net tax 284.14 capacity, including the value of property normally taxable as 284.15 personal property by reason of its location on or over property 284.16 owned by a tax exempt entity. 284.17 Subd. 4. [CITY.] "City" means the city of Minneapolis, 284.18 Minnesota. 284.19 Subd. 5. [CONSENT DECREE.] "Consent decree" means the 284.20 order of the United States District Court issued in connection 284.21 with Hollman et. al. vs. Cisneros et. al., United States 284.22 District Court, Civil Case 4-92-712, as may be amended from time 284.23 to time. 284.24 Subd. 6. [COUNTY AUDITOR.] "County auditor" means the 284.25 county auditor of Hennepin county, Minnesota. 284.26 Subd. 7. [GOVERNING BODY.] "Governing body" means the city 284.27 council of the city. 284.28 Subd. 8. [HOUSING TRANSITION DISTRICT; DISTRICT.] "Housing 284.29 transition district" or "district" means a geographic area 284.30 designated by the governing body within boundaries commencing at 284.31 the intersection of Humboldt Avenue North and Plymouth Avenue 284.32 North, thence East along Plymouth Avenue North to Seventh Street 284.33 North, thence South along Seventh Street North to Lyndale 284.34 Avenue, thence South along Lyndale Avenue to Glenwood Avenue 284.35 North, thence West along Glenwood Avenue North to Girard Avenue 284.36 North, thence North along Girard Avenue North to Girard Terrace, 285.1 thence North along Girard Terrace to Olson Memorial Highway, 285.2 thence West along Olson Memorial Highway to Humboldt Avenue 285.3 North, thence North on Humboldt Avenue North to the point of 285.4 beginning. 285.5 Subd. 9. [NONTAXABLE PARCEL.] "Nontaxable parcel" means a 285.6 parcel to be included within the housing transition district 285.7 which at the time of certification is not subject to property 285.8 taxation by reason of public ownership. 285.9 Subd. 10. [ORIGINAL NET TAX CAPACITY.] (a) With respect to 285.10 nontaxable parcels within the district, "original net tax 285.11 capacity" means zero. 285.12 (b) With respect to taxable parcels within the district, 285.13 "original net tax capacity" means the net tax capacity of the 285.14 parcels as certified by the commissioner of revenue for the 285.15 appropriate assessment year. For purposes of this subdivision, 285.16 the appropriate assessment year is the previous assessment year, 285.17 if a request by the authority for certification has been made to 285.18 the county auditor by June 30. If the request for certification 285.19 is filed after June 30, the appropriate assessment year is the 285.20 current assessment year. 285.21 Subd. 11. [PARCEL.] "Parcel" means a tract or plat of land 285.22 established prior to the certification of the district as a 285.23 single unit for purposes of assessment. 285.24 Subd. 12. [PREEXISTING DISTRICT.] "Preexisting district" 285.25 means any tax increment district within which is located a 285.26 parcel proposed to be included within the housing transition 285.27 district. 285.28 Subd. 13. [TAXABLE PARCEL.] "Taxable parcel" means a 285.29 parcel to be included within the housing transition district 285.30 which is subject to property taxation at the time of 285.31 certification. 285.32 Sec. 18. [ESTABLISHMENT OF HOUSING TRANSITION DISTRICT.] 285.33 Subdivision 1. [CREATION.] The governing body may 285.34 establish a housing transition district within the city. The 285.35 parcels included within the district need not be contiguous but 285.36 must all be designated and included at the time the district is 286.1 initially established. Parcels must not be added to the 286.2 district after its initial certification. 286.3 Subd. 2. [TAX INCREMENT.] (a) Upon request of the 286.4 authority, the county auditor shall certify the original net tax 286.5 capacity of the district and shall certify in each year 286.6 thereafter the amount by which the original net tax capacity 286.7 increases as a result of the conditions described in Minnesota 286.8 Statutes, section 469.177, subdivision 4, or decreases as a 286.9 result of the conditions described in Minnesota Statutes, 286.10 section 469.177, subdivision 1, paragraph (g). No other changes 286.11 shall be made in original net tax capacity once certified by the 286.12 county auditor. 286.13 (b) The provisions of Minnesota Statutes, section 469.177, 286.14 subdivisions 1a and 3 to 10, apply to the computation of tax 286.15 increment for the housing transition district created under 286.16 sections 17 to 19. 286.17 (c) If an authority request for certification includes 286.18 nontaxable parcels then within a preexisting district, the 286.19 county auditor shall remove the parcels from the preexisting 286.20 district. If an authority request for certification includes 286.21 taxable parcels then within a preexisting district, the county 286.22 auditor shall allocate all taxes derived from the captured net 286.23 tax capacity attributable thereto to the preexisting district. 286.24 Subd. 3. [HOUSING TRANSITION DISTRICT PLAN.] To establish 286.25 a housing transition district, the governing body shall adopt a 286.26 housing transition district plan which constitutes a tax 286.27 increment financing plan, as used in those provisions of 286.28 Minnesota Statutes, sections 469.174 to 469.1781, made 286.29 applicable by sections 17 to 20, and contains the following: 286.30 (1) a general description of the plans for development of 286.31 the district; 286.32 (2) a description of the parcels to be included in the 286.33 district, including such information regarding each as shall 286.34 establish that the district meets the conditions described in 286.35 section 17, subdivision 8; 286.36 (3) the most recent net tax capacity of each parcel 287.1 included in the district; 287.2 (4) a budget containing estimated tax increment collections 287.3 and expenditures as authorized or permitted by sections 17 to 287.4 19; 287.5 (5) estimates of the sources of revenue, public and 287.6 private, other than tax increment to pay estimated or budgeted 287.7 costs; 287.8 (6) statements of the alternate estimated impacts of the 287.9 housing transition district on the net tax capacities of all 287.10 taxing jurisdictions in which the housing transition district is 287.11 located in whole or in part. For purposes of one statement, the 287.12 statement shall assume that the estimated captured net tax 287.13 capacity would be available to the taxing jurisdictions without 287.14 creation of the housing transition district, and for purposes of 287.15 the second statement, it shall be assumed that none of the 287.16 estimated captured net tax capacity would be available to the 287.17 taxing jurisdictions without creation of the housing transition 287.18 district. 287.19 Subd. 4. [PROCEDURE.] (a) The provisions of Minnesota 287.20 Statutes, section 469.175, subdivisions 3, 5, 6, and 6a, apply 287.21 to the establishment and operation of the housing transition 287.22 district created under sections 17 to 19, except the 287.23 determinations required by Minnesota Statutes, section 469.175, 287.24 subdivision 3, clauses (1) and (2), are not required. 287.25 (b) Upon approval of the housing transition district plan, 287.26 the governing body shall delegate to one or both of the 287.27 authorities the powers and duties regarding the implementation 287.28 and administration of the housing transition district it 287.29 determines appropriate. 287.30 Sec. 19. [LIMITATIONS.] 287.31 Subdivision 1. [DURATION.] Tax increment generated by the 287.32 district must cease to be paid to the authority after 20 years 287.33 from the receipt by the authority of the first tax increment 287.34 from the district. 287.35 Subd. 2. [USE.] (a) All tax increment received by the 287.36 authority from the district must be used in accordance with the 288.1 housing transition district plan. 288.2 (b) Tax increment may be used to pay the costs of: 288.3 (1) acquiring title to or an ownership interest in any 288.4 property within the district; 288.5 (2) relocating owners of or tenants in any property within 288.6 the district; 288.7 (3) demolishing all or a part of any structures or other 288.8 improvements within the district; 288.9 (4) site preparation, soil correction, and infrastructure 288.10 improvements within the district; 288.11 (5) rehabilitating or constructing any housing structures 288.12 or other improvements within the district; 288.13 (6) constructing public improvements associated with 288.14 development within the district; 288.15 (7) making loans or grants to public or private entities in 288.16 order to facilitate development within the district; and 288.17 (8) administering the creation and operation of the 288.18 district or the implementation of the consent decree, including 288.19 reimbursement for costs previously incurred or advanced and not 288.20 reimbursed. 288.21 (c) The authority may pay the costs authorized by this 288.22 subdivision, directly, through the issuance and sale of 288.23 obligations pursuant to Minnesota Statutes, section 469.178, by 288.24 means of loans or grants to the current or future owners of 288.25 property within the district, or through the exercise of any 288.26 authority contained in Minnesota Statutes, sections 469.001 to 288.27 469.047. 288.28 (d) Minnesota Statutes, section 469.176, subdivision 4g, 288.29 applies to the district. Minnesota Statutes, section 469.176, 288.30 subdivision 3, applies to the district, except "15" is 288.31 substituted for "ten" in paragraph (a) of subdivision 3. 288.32 Sec. 20. [APPLICABILITY OF OTHER LAWS.] 288.33 Minnesota Statutes, sections 469.174 to 469.179, apply to 288.34 the housing transition district or tax increment generated 288.35 pursuant to sections 17 to 19 only to the extent specified in 288.36 sections 17 to 19. The housing transition district is a 289.1 redevelopment district for purposes of Minnesota Statutes, 289.2 section 273.1399. The housing transition district does not have 289.3 a longer duration than permitted by general law for purposes of 289.4 Minnesota Statutes, section 469.1782. 289.5 Sec. 21. [CITY OF MINNETONKA; HOUSING DEVELOPMENT 289.6 ACCOUNT.] 289.7 Subdivision 1. [DEPOSITS IN ACCOUNT.] The Minnetonka 289.8 economic development authority may deposit the balance of 289.9 revenues derived from tax increment from housing tax increment 289.10 financing district No. 1 in the housing development account of 289.11 the authority. These increments may be expended for housing 289.12 activities in accordance with the tax increment financing plan, 289.13 if before depositing the increments or making any expenditures 289.14 for housing activities under this section, the authority and 289.15 city: 289.16 (1) elect, by resolution, to decertify housing tax 289.17 increment financing district No. 1 as of December 31, 1997; and 289.18 (2) identify in the plan the housing activities that will 289.19 be assisted by the housing development account. 289.20 The election to decertify and any necessary plan amendment 289.21 may be approved before or after the effective date of this 289.22 section. 289.23 Subd. 2. [PERMITTED HOUSING ACTIVITIES.] For the purposes 289.24 of this section, housing activities: 289.25 (1) may include rehabilitation, acquisition, demolition, 289.26 and financing of new or existing single family or multifamily 289.27 housing and public improvements directly related to such 289.28 activities, together with other related activities specified in 289.29 the housing action plan approved by the city or the authority in 289.30 compliance with Minnesota Statutes, sections 473.25 to 473.254; 289.31 (2) may be located anywhere within the city without regard 289.32 to the boundaries of any tax increment financing district or 289.33 project area; and 289.34 (3) for rental and owner-occupied housing, must meet the 289.35 income, rent, or sales price limitations established from time 289.36 to time by the metropolitan council under Minnesota Statutes, 290.1 sections 473.25 to 473.254. 290.2 Subd. 3. [SEPARATE ACCOUNT REQUIRED.] Tax increment to be 290.3 expended for housing activities under this section must be 290.4 segregated by the authority into a special housing development 290.5 account on its official books and records. The account may also 290.6 receive funds from other public and private sources. 290.7 Subd. 4. [EFFECTIVE DATE.] This section is effective upon 290.8 approval by the governing body of the city of Minnetonka and 290.9 compliance with Minnesota Statutes, section 645.021, subdivision 290.10 3. 290.11 Sec. 22. [EAST GRAND FORKS] 290.12 Subdivision 1. [TIF EXTENSION.] The governing body of the 290.13 city of East Grand Forks may extend the duration of tax 290.14 increment financing district No. 2 (Gateway East) by up to five 290.15 additional years. The district terminates no later than the end 290.16 of calendar year 2005. 290.17 Subd. 2. [EFFECTIVE DATE.] This section is effective upon 290.18 compliance by the governing body of the city of East Grand Forks 290.19 with the provisions of Minnesota Statutes, sections 469.1782, 290.20 subdivision 2; and 645.021. 290.21 Sec. 23. [TOWN OF WHITE; ECONOMIC DEVELOPMENT.] 290.22 Subdivision 1. [AUTHORIZATION.] Notwithstanding the 290.23 provisions of Minnesota Statutes, section 469.176, subdivision 290.24 1b, upon approval of the governing body of the town of White by 290.25 resolution, the duration of tax increment financing districts 290.26 numbers 1 and 2 of the joint east range economic development 290.27 authority may be extended by three additional years beyond the 290.28 limit that otherwise applies under Minnesota Statutes, section 290.29 469.176, subdivision 1, to the districts. 290.30 Subd. 2. [SPECIAL RULES.] (a) Tax increment financing 290.31 districts numbers 1 and 2 of the joint east range economic 290.32 development authority are subject to Minnesota Statutes, 290.33 sections 469.174 to 469.179, except as provided in this 290.34 subdivision. 290.35 (b) Minnesota Statutes, sections 273.1399, and 469.1782, 290.36 subdivision 1, do not apply. 291.1 (c) The application of Minnesota Statutes, section 291.2 469.1763, is modified to permit the use of increments from 291.3 either district to be used to pay any promissory notes issued in 291.4 connection with either district. 291.5 Subd. 3. [EFFECTIVE DATE.] This section is effective upon 291.6 compliance by the governing bodies of the town of White, the 291.7 county of St. Louis, and independent school district No. 2711 291.8 with Minnesota Statutes, sections 469.1782, subdivision 2, and 291.9 645.021, subdivision 2. 291.10 Sec. 24. [TASK FORCE; TIF RECODIFICATION.] 291.11 (a) A legislative task force is established on tax 291.12 increment financing and local economic development powers. The 291.13 task force consists of 12 members as follows: 291.14 (1) six members of the house of representatives, at least 291.15 two of whom are members of the minority caucus, appointed by the 291.16 speaker; and 291.17 (2) six members of the senate, at least two of whom are 291.18 members of the minority caucus, appointed by the committee on 291.19 committees. 291.20 (b) The task force shall prepare a bill for the 1998 291.21 legislative session that recodifies the Tax Increment Financing 291.22 Act and combines the statutes providing local economic 291.23 development powers into one law providing a uniform set of 291.24 powers relative to the use of tax increment financing. 291.25 (c) In preparing the bill under this section, the task 291.26 force shall consult with and seek comments from and 291.27 participation by representatives of the affected local 291.28 governments. 291.29 (d) The revisor of statutes and house and senate 291.30 legislative staff shall staff the task force. 291.31 (e) This section expires on March 1, 1998. 291.32 Sec. 25. [EFFECTIVE DATE.] 291.33 Sections 1, 3 to 6, 7, and 10, are effective for districts 291.34 for which the requests for certification are made after June 30, 291.35 1997. 291.36 Section 2, clauses (1) and (4), are effective for districts 292.1 for which the requests for certification were made after July 292.2 31, 1979, and for payments and investment earnings received 292.3 after July 1, 1997. Section 2, clauses (2) and (3), are 292.4 effective for districts for which the request for certification 292.5 was made after June 30, 1982, and proceeds from sales and leases 292.6 of properties purchased by the authority after June 30, 1997, 292.7 and repayments of advances and loans that were made after June 292.8 30, 1997. 292.9 Sections 8 and 9 apply to all tax increment districts, 292.10 whenever certified, insofar as the underlying law applies to 292.11 them, and any uses of tax increment expended prior to the date 292.12 of enactment of this act which are in compliance with the 292.13 provisions of those sections are deemed valid. 292.14 Sections 12 and 13 are effective on the day the chief 292.15 clerical officer of the city of Columbia Heights complies with 292.16 Minnesota Statutes, sections 645.021, subdivision 3. 292.17 Sections 17 to 20 are effective the day following final 292.18 enactment and upon compliance by the governing body with 292.19 Minnesota Statutes, section 645.021, subdivision 3. 292.20 Section 24 is effective the day following final enactment. 292.21 ARTICLE 11 292.22 INTERGOVERNMENTAL RELATIONS 292.23 Section 1. [3.986] [DEFINITIONS.] 292.24 Subdivision 1. [SCOPE.] The terms used in sections 3.986 292.25 to 3.989 have the meanings given them in this section. 292.26 Subd. 2. [LOCAL FISCAL IMPACT.] (a) "Local fiscal impact" 292.27 means increased or decreased costs or revenues that a political 292.28 subdivision would incur as a result of a law enacted after June 292.29 30, 1997, or rule proposed after June 30, 1998: 292.30 (1) that mandates a new program, eliminates an existing 292.31 mandated program, requires an increased level of service of an 292.32 existing program, or permits a decreased level of service in an 292.33 existing mandated program; 292.34 (2) that implements or interprets federal law and, by its 292.35 implementation or interpretation, increases or decreases program 292.36 or service levels beyond the level required by the federal law; 293.1 (3) that implements or interprets a statute or amendment 293.2 adopted or enacted pursuant to the approval of a statewide 293.3 ballot measure by the voters and, by its implementation or 293.4 interpretation, increases or decreases program or service levels 293.5 beyond the levels required by the ballot measure; 293.6 (4) that removes an option previously available to 293.7 political subdivisions, or adds an option previously unavailable 293.8 to political subdivisions, thus requiring higher program or 293.9 service levels or permitting lower program or service levels, or 293.10 prohibits a specific activity and so forces political 293.11 subdivisions to use a more costly alternative to provide a 293.12 mandated program or service; 293.13 (5) that requires that an existing program or service be 293.14 provided in a shorter time period and thus increases the cost of 293.15 the program or service, or permits an existing mandated program 293.16 or service to be provided in a longer time period, thus 293.17 permitting a decrease in the cost of the program or service; 293.18 (6) that adds new requirements to an existing optional 293.19 program or service and thus increases the cost of the program or 293.20 service because the political subdivisions have no reasonable 293.21 alternative other than to continue the optional program; 293.22 (7) that affects local revenue collections by changes in 293.23 property or sales and use tax exemptions; 293.24 (8) that requires costs previously incurred at local option 293.25 that have subsequently been mandated by the state; or 293.26 (9) that requires payment of a new fee or increases the 293.27 amount of an existing fee, or permits the elimination or 293.28 decrease of an existing fee mandated by the state. 293.29 (b) When state law is intended to achieve compliance with 293.30 federal law or court orders, state mandates shall be determined 293.31 as follows: 293.32 (1) if the federal law or court order is discretionary, the 293.33 state law is a state mandate; 293.34 (2) if the state law exceeds what is required by the 293.35 federal law or court order, only the provisions of the state law 293.36 that exceed the federal requirements are a state mandate; and 294.1 (3) if the state law does not exceed what is required by 294.2 the federal statute or regulation or court order, the state law 294.3 is not a state mandate. 294.4 Subd. 3. [MANDATE.] A "mandate" is a requirement imposed 294.5 upon a political subdivision in a law by a state agency or by 294.6 judicial authority that, if not complied with, results in: 294.7 (1) civil liability; 294.8 (2) criminal penalty; or 294.9 (3) administrative sanctions such as reduction or loss of 294.10 funding. 294.11 Subd. 4. [POLITICAL SUBDIVISION.] A "political 294.12 subdivision" is a county, home rule charter or statutory city, 294.13 town, or other taxing district or municipal corporation. 294.14 Subd. 5. [REQUIRING AN INCREASED LEVEL OF 294.15 SERVICE.] "Requiring an increased level of service" includes 294.16 requiring that an existing service be provided in a shorter time. 294.17 Sec. 2. [3.987] [LOCAL IMPACT TO NOTES FOR STATE-MANDATED 294.18 ACTIONS.] 294.19 Subdivision 1. [LOCAL IMPACT NOTES.] The commissioner of 294.20 finance shall coordinate the development of a local impact note 294.21 for any proposed legislation introduced after June 30, 1997, or 294.22 any rule proposed after June 30, 1998, upon request of the chair 294.23 or the ranking minority member of either legislative tax 294.24 committee. The local impact note must be prepared as provided 294.25 in section 3.98, subdivision 2, and made available to the public 294.26 upon request. If the action is among the exceptions listed in 294.27 section 3.988, a local impact note need not be requested nor 294.28 prepared. The commissioner shall make a reasonable and timely 294.29 estimate of the local fiscal impact on each type of political 294.30 subdivision that would result from the proposed legislation. 294.31 The commissioner of finance may require any political 294.32 subdivision or the commissioner of an administrative agency of 294.33 the state to supply in a timely manner any information 294.34 determined to be necessary to determine local fiscal impact. 294.35 The political subdivision, its representative association, or 294.36 commissioner shall convey the requested information to the 295.1 commissioner of finance with a signed statement to the effect 295.2 that the information is accurate and complete to the best of its 295.3 ability. The political subdivision, its representative 295.4 association, or commissioner, when requested, shall update its 295.5 determination of local fiscal impact based on actual cost or 295.6 revenue figures, improved estimates, or both. 295.7 Subd. 2. [MANDATE EXPLANATIONS.] Any bill introduced in 295.8 the legislature after June 30, 1997, that seeks to impose 295.9 program or financial mandates on political subdivisions must 295.10 include an attachment from the author that gives appropriate 295.11 responses to the following guidelines. It must state and list: 295.12 (1) the policy goals that are sought to be attained, the 295.13 performance standards that are to be imposed, and an explanation 295.14 why the goals and standards will best be served by requiring 295.15 compliance by political subdivisions; 295.16 (2) performance standards that will allow political 295.17 subdivisions flexibility and innovation of method in achieving 295.18 those goals; 295.19 (3) the reasons for each prescribed standard and the 295.20 process by which each standard governs input such as staffing 295.21 and other administrative aspects of the program; 295.22 (4) the sources of additional revenue, in addition to 295.23 existing funding for similar programs, that are directly linked 295.24 to imposition of the mandates that will provide adequate and 295.25 stable funding for their requirements; 295.26 (5) what input has been obtained to ensure that the 295.27 implementing agencies have the capacity to carry out the 295.28 delegated responsibilities; and 295.29 (6) the reasons why less intrusive measures such as 295.30 financial incentives or voluntary compliance would not yield the 295.31 equity, efficiency, or desired level of statewide uniformity in 295.32 the proposed program. 295.33 Subd. 3. [LOCAL INVOLVEMENT; LAWS.] Any bill introduced in 295.34 the legislature after June 30, 1997, that seeks to impose a 295.35 program or financial mandate on political subdivisions must 295.36 include an attachment prepared by the author that describes the 296.1 efforts put forth, if any, to involve political subdivisions in 296.2 the creation or development of the proposed mandate. 296.3 Subd. 4. [NO MANDATE RESTRICTION.] Except as specifically 296.4 provided by this article, nothing in this article restricts or 296.5 eliminates the authority of the state to create or impose 296.6 programs by law upon political subdivisions. 296.7 Sec. 3. [3.988] [EXCEPTIONS TO LOCAL IMPACT NOTES.] 296.8 Subdivision 1. [COSTS RESULTING FROM INFLATION.] A local 296.9 impact note need not be prepared for increases in the cost of 296.10 providing an existing service if the increases result directly 296.11 from inflation. "Resulting directly from inflation" means 296.12 attributable to maintaining an existing level of service rather 296.13 than increasing the level of service. A cost-of-living increase 296.14 in welfare benefits is an example of a cost resulting directly 296.15 from inflation. 296.16 Subd. 2. [COSTS NOT THE RESULT OF A NEW PROGRAM OR 296.17 INCREASED SERVICE.] A local impact note need not be prepared for 296.18 increased local costs that do not result from a new program or 296.19 an increased level of service. 296.20 Subd. 3. [MISCELLANEOUS EXCEPTIONS.] A local impact note 296.21 or an attachment as provided in section 3.987, subdivision 2, 296.22 need not be prepared for the cost of a mandated action if the 296.23 law, including a rulemaking, containing the mandate: 296.24 (1) accommodates a specific local request; 296.25 (2) results in no new local government duties; 296.26 (3) leads to revenue losses from exemptions to taxes; 296.27 (4) provided only clarifying or conforming, nonsubstantive 296.28 charges on local government; 296.29 (5) imposes additional net local costs that are minor (less 296.30 than $200 for any single local government if the mandate does 296.31 not apply statewide or less than $3,000,000 if the mandate is 296.32 statewide) and do not cause a financial burden on local 296.33 government; 296.34 (6) is a law or executive order enacted before July 1, 296.35 1997, or a rule initially implementing a law enacted before July 296.36 1, 1997; 297.1 (7) implements something other than a law or executive 297.2 order, such as a federal, court, or voter-approved mandate; 297.3 (8) defines a new crime or redefines an existing crime or 297.4 infraction; 297.5 (9) results in savings that equal or exceed costs; 297.6 (10) requires the holding of elections; 297.7 (11) ensures due process or equal protection; 297.8 (12) provides for the notification and conduct of public 297.9 meetings; 297.10 (13) establishes the procedures for administrative and 297.11 judicial review of actions taken by political subdivisions; 297.12 (14) protects the public from malfeasance, misfeasance, or 297.13 nonfeasance by officials of political subdivisions; 297.14 (15) relates directly to financial administration, 297.15 including the levy, assessment, and collection of taxes; 297.16 (16) relates directly to the preparation and submission of 297.17 financial audits necessary to the administration of state laws; 297.18 or 297.19 (17) requires uniform standards to apply to public and 297.20 private institutions without differentiation. 297.21 Sec. 4. [3.989] [REIMBURSEMENT TO LOCAL POLITICAL 297.22 SUBDIVISIONS FOR COSTS OF STATE MANDATES.] 297.23 Subdivision 1. [DEFINITIONS.] In this section: 297.24 (1) "Class A state mandates" means those laws under which 297.25 the state mandates to political subdivisions, their 297.26 participation, the organizational structure of the program, and 297.27 the procedural regulations under which the law must be 297.28 administered; and 297.29 (2) "Class B state mandates" means those mandates that 297.30 allow the political subdivisions to opt for administration of a 297.31 law with program elements mandated beforehand and with an 297.32 assured revenue level from the state of at least 90 percent of 297.33 full program and administrative costs. 297.34 Subd. 2. [REPORT.] The commissioner of finance shall 297.35 prepare by September 1, 1998, and by September 1 of each 297.36 even-numbered year thereafter, a report by political 298.1 subdivisions of the costs of class A state mandates established 298.2 after June 30, 1997. 298.3 The commissioner shall annually include the statewide total 298.4 of the statement of costs of class A mandates as a notation in 298.5 the state budget for the next fiscal year. 298.6 Subd. 3. [CERTAIN POLITICAL SUBDIVISIONS; REPORT.] The 298.7 political subdivisions that have opted to administer class B 298.8 state mandates shall report to the commissioner of finance by 298.9 September 1, 1998, and by September 1 of each year thereafter, 298.10 identifying each instance when revenue for a class B state 298.11 mandate has fallen below 85 percent of the total cost of the 298.12 program and the political subdivision intends to cease 298.13 administration of the program. 298.14 The commissioner shall forward a copy of the report to the 298.15 chairs of the appropriate funding committees of the senate and 298.16 the house for proposed inclusion of the shortfall as a line item 298.17 appropriation in the state budget for the next fiscal year. 298.18 The political subdivision may exercise its option to cease 298.19 administration only if the legislature has failed to include the 298.20 shortfall as an appropriation in the state budget for the next 298.21 fiscal year. 298.22 Subd. 4. [EXEMPTIONS.] Laws and executive orders 298.23 enumerated in section 3.988 are exempted from this section. 298.24 Sec. 5. [14.431] [PERIODIC REVIEW OF ADMINISTRATIVE 298.25 RULES.] 298.26 Subdivision 1. [DEFINITIONS.] The terms defined in section 298.27 3.986, subdivision 1, apply to this section. 298.28 Subd. 2. [SIGNIFICANT FINANCIAL IMPACT.] The commissioner 298.29 of finance shall review, every five years, rules adopted after 298.30 June 30, 1998, that have significant financial impact upon 298.31 political subdivisions. In this section, "significant financial 298.32 impact" means requiring local political subdivisions to expand 298.33 existing services, employ additional personnel, or increase 298.34 local expenditures. The commissioner shall determine the costs 298.35 and benefits of each rulemaking and submit a report to the 298.36 legislative coordinating commission with its opinion, if any, 299.1 for the continuation, modification, or elimination of the rules 299.2 in the rulemaking. 299.3 Sec. 6. Minnesota Statutes 1996, section 273.1398, 299.4 subdivision 8, is amended to read: 299.5 Subd. 8. [APPROPRIATION.] (a) An amount sufficient to pay 299.6 the aids and credits provided under this section for school 299.7 districts, intermediate school districts, or any group of school 299.8 districts levying as a single taxing entity, is annually 299.9 appropriated from the general fund to the commissioner of 299.10 children, families, and learning. An amount sufficient to pay 299.11 the aids and credits provided under this section for counties, 299.12 cities, towns, and special taxing districts is annually 299.13 appropriated from the general fund to the commissioner of 299.14 revenue. A jurisdiction's aid amount may be increased or 299.15 decreased based on any prior year adjustments for homestead 299.16 credit or other property tax credit or aid programs. 299.17 (b) The commissioner of finance shall bill the commissioner 299.18 of revenue for the cost of preparation of local impact notes as 299.19 required by section 3.987 only to the extent to which those 299.20 costs exceed those costs incurred in fiscal year 1997 and for 299.21 any other new costs attributable to the local impact note 299.22 function required by section 3.987, not to exceed $100,000 in 299.23 fiscal year 1998 and $200,000 in fiscal year 1999 and thereafter. 299.24 The commissioner of revenue shall deduct the amount billed 299.25 under this paragraph from aid payments to be made to cities and 299.26 counties under subdivision 2 on a pro rata basis. The amount 299.27 deducted under this paragraph is appropriated to the 299.28 commissioner of finance for the preparation of local impact 299.29 notes. 299.30 Sec. 7. Minnesota Statutes 1996, section 477A.05, is 299.31 amended to read: 299.32 477A.05 [LOCAL PERFORMANCE AID.] 299.33 Subdivision 1. [QUALIFICATION.] By May15, 1996, and March299.343125 of each yearthereafter, the commissioner shall send a 299.35 local performance aid qualification form to each county and city 299.36 in the state. Jurisdictions that are eligible to receive the 300.1 aid must return the completed form by June 30 in order to 300.2 receive aid in the following calendar year. For each 300.3 determinator specified in subdivision 2, the form shall have a 300.4 space for the jurisdiction to indicate that it has satisfied the 300.5 conditions of the determinator. For counties, the form must be 300.6 signed by the chair of the county board. For cities, the form 300.7 must be signed by the mayor, if the city has a mayor, anda300.8memberthe chair of the city council. Applications may be filed 300.9 jointly by jurisdictions planning to spend the aid jointly. 300.10 Subd. 2. [ELIGIBILITY DETERMINATOR.] For calendar year 300.1119971998 and subsequent calendar years, a jurisdiction is 300.12 eligible to receive local performance aid if the jurisdiction 300.13 affirms thatit(1) the aid will result in a reduction in 300.14 property taxes at least equal to the amount of aid received, and 300.15 (2) the jurisdiction will spend the aid on programs for which it 300.16 has developed a system of performance measuresfor the services300.17provided by the jurisdiction,and that these measuresarewill 300.18 allow for the measurement of continuous improvement and will be 300.19 regularly compiled and presented to the county board or the city 300.20 council at least once a year. The jurisdiction must identify 300.21 the program or programs that are to be funded with the aid. A 300.22 jurisdiction isalsoeligible for aidunder this determinatorif 300.23 it affirms that it is in the process of developing and 300.24 implementing a system of performance measures for the program or 300.25 programs for which the aid is being sought; however,eligibility300.26based upon being in the process of development may not be used300.27for more than two consecutive yearsaid amounts under this 300.28 section may not be spent on the program or programs until the 300.29 performance measurement system has been instituted, unless the 300.30 aid is being used to establish the performance measurement 300.31 system. 300.32 Subd. 3. [DETERMINATION OF AID AMOUNT.] The commissioner 300.33 shall sum the populations of all jurisdictions that have met the 300.34conditionconditions specified in subdivision 2. The 300.35 commissioner shall determine a per capita aid amount by dividing 300.36 the aggregate aid available under subdivision 5 by the sum of 301.1 the populations for all qualifying jurisdictions, separately for 301.2 counties and cities. Each jurisdiction shall then be eligible 301.3 for aid equal to the jurisdictions's population times the per 301.4 capita aid amount. For purposes of this subdivision, population 301.5 means the most recent population established under section 301.6 477A.011, subdivision 3, in the year in which the aid is 301.7 determined. 301.8 Subd. 4. [NOTIFICATION AND PAYMENT.] Jurisdictions shall 301.9 be notified of their aid under this section at the same time as 301.10 the notification for aid under section 477A.014, subdivision 1. 301.11 Payments of aid under this section shall be made on the dates 301.12 prescribed in section 477A.015. 301.13 Subd. 5. [APPROPRIATION.] (a) For payments to counties 301.14 under this section, there is annually appropriated from the 301.15 general fund to the commissioner of revenue an amount equal to 301.16 the sum of $558,625 plus the amount by which county aids were 301.17 reduced under Laws 1996, chapter 471, article 3, section 49, 301.18 adjusted for inflation as provided under section 477A.03, 301.19 subdivision 3. For payments to cities under this section, there 301.20 is annually appropriated from the general fund to the 301.21 commissioner of revenue an amount equal to the sum of $441,735 301.22 plus the amount by which city aids were reduced under Laws 1996, 301.23 chapter 471, article 3, section 49, adjusted for inflation as 301.24 provided under section 477A.03, subdivision 3. 301.25 (b) For aids payable in 1998 under this section, an 301.26 additional amount of $560,000 for counties and $440,000 for 301.27 cities is appropriated from the general fund to the commissioner 301.28 of revenue. 301.29 Sec. 8. [REPEALER.] 301.30 Minnesota Statutes 1996, section 3.982, is repealed. 301.31 Sec. 9. [EFFECTIVE DATE.] 301.32 Section 7 is effective beginning with aids payable in 1998. 301.33 ARTICLE 12 301.34 REGIONAL DEVELOPMENT COMMISSIONS 301.35 Section 1. Minnesota Statutes 1996, section 462.381, is 301.36 amended to read: 302.1 462.381 [TITLE.] 302.2 Sections 462.381 to 462.398 may be cited as the "regional 302.3 development actof 1969." 302.4 Sec. 2. Minnesota Statutes 1996, section 462.383, is 302.5 amended to read: 302.6 462.383 [PURPOSE: GOVERNMENT COOPERATION AND 302.7 COORDINATION.] 302.8 Subdivision 1. [LEGISLATIVE FINDINGS.] The legislature 302.9 finds that problems of growth and development in urban and rural 302.10 regions of the state so transcend the boundary lines of local 302.11 government units that no single unit can plan for their solution 302.12 without affecting other units in the region;that various302.13multicounty planning activities conducted under various laws of302.14the United States are presently being conducted in an302.15uncoordinated mannerthat coordination of multijurisdictional 302.16 activities is essential to the development and implementation of 302.17 effective policies and programs; that intergovernmental 302.18 cooperationon a regional basisis an effective means of pooling 302.19 the resources of local government to approach common problems; 302.20 and that the assistance of the state is needed to make the most 302.21 effective use of local, state, federal, and private programs in 302.22 serving the citizens of such urban and rural regions. 302.23 Subd. 2. [BY CREATING REGIONAL COMMISSION.] It is the 302.24 purpose of sections 462.381 to 462.398 tofacilitate302.25intergovernmental cooperation and to insure the orderly and302.26harmonious coordination of state, federal, and local302.27comprehensive planning and development programs for the solution302.28of economic, social, physical, and governmental problems of the302.29state and its citizens by providing for the creation of regional302.30development commissionsauthorize the establishment of regional 302.31 development commissions to work with and on behalf of local 302.32 units of government to develop plans or implement programs to 302.33 address economic, social, physical, and governmental concerns of 302.34 each region of the state. The commissions may assist with, 302.35 develop, or implement plans or programs for individual local 302.36 units of government. 303.1 Sec. 3. Minnesota Statutes 1996, section 462.384, 303.2 subdivision 5, is amended to read: 303.3 Subd. 5. [DEVELOPMENT REGION, REGION.] "Development 303.4 region" or "region" means a geographic region composed of a 303.5 grouping of countiesembodied in an executive order of the303.6governor orasotherwiseestablished by sections 462.381 to 303.7 462.398. 303.8 Sec. 4. Minnesota Statutes 1996, section 462.385, 303.9 subdivision 1, is amended to read: 303.10 Subdivision 1. [BY GOVERNOR'S ORDER; HEARINGS.] 303.11 Development regions for the state shallbe those regions so303.12designated by the governor by executive order. The order shall303.13provide for public hearings within each proposed region after303.14which any county may request assignment to a region other than303.15that proposed by the order. If a request for reassignment is303.16unacceptable to the commissioner, the county shall remain in the303.17originally designated region until the next session of the303.18legislature for its review and final assignment.consist of the 303.19 following counties: 303.20 Region 1: Kittson, Roseau, Marshall, Pennington, Red Lake, 303.21 Polk, and Norman. 303.22 Region 2: Lake of the Woods, Beltrami, Mahnomen, 303.23 Clearwater, and Hubbard. 303.24 Region 3: Koochiching, Itasca, St. Louis, Lake, Cook, 303.25 Aitkin, and Carlton. 303.26 Region 4: Clay, Becker, Wilkin, Otter Tail, Grant, 303.27 Douglas, Traverse, Stevens, and Pope. 303.28 Region 5: Cass, Wadena, Crow Wing, Todd, and Morrison. 303.29 Region 6E: Kandiyohi, Meeker, Renville, and McLeod. 303.30 Region 6W: Big Stone, Swift, Chippewa, Lac Qui Parle, and 303.31 Yellow Medicine. 303.32 Region 7E: Mille Lacs, Kanabec, Pine, Isanti, and Chisago. 303.33 Region 7W: Stearns, Benton, Sherburne, and Wright. 303.34 Region 8: Lincoln, Lyon, Redwood, Pipestone, Murray, 303.35 Cottonwood, Rock, Nobles, and Jackson. 303.36 Region 9: Sibley, Nicollet, LeSueur, Brown, Blue Earth, 304.1 Waseca, Watonwan, Martin, and Faribault. 304.2 Region 10: Rice, Goodhue, Wabasha, Steele, Dodge, Olmsted, 304.3 Winona, Freeborn, Mower, Fillmore, and Houston. 304.4 Region 11: Anoka, Hennepin, Ramsey, Washington, Carver, 304.5 Scott, and Dakota. 304.6 Sec. 5. Minnesota Statutes 1996, section 462.385, 304.7 subdivision 3, is amended to read: 304.8 Subd. 3. [ONGOING BOUNDARY STUDIES; CHANGES.]The304.9commissioner shall conduct continuous studies and analysis of304.10the boundaries of regions and shall make recommendations for304.11their modification where necessary.Modification of regional 304.12 boundaries may be initiated by a county, a commission, or by the304.13commissioner and will be accomplished in accordance with this304.14section as in the case of initial designationrequesting 304.15 assignment to a region other than that within which it is 304.16 designated. If a request for reassignment is unacceptable to 304.17 the commission whose boundaries would be modified, the county 304.18 requesting reassignment shall remain in the originally 304.19 designated region until the legislature determines the final 304.20 assignment. 304.21 Sec. 6. Minnesota Statutes 1996, section 462.386, 304.22 subdivision 1, is amended to read: 304.23 Subdivision 1. [EXCEPTION, WORKING AGREEMENTS.] All 304.24 coordination, planning, and development regions assisted or 304.25 created by the state of Minnesota or pursuant to federal 304.26 legislation shall conform to the regionsdesignated by the304.27executive orderexcept where, after review and approval by the 304.28commissionergovernor or designee, nonconformance is clearly 304.29 justified. Thecommissionergovernor or designee shall develop 304.30 working agreements with state and federal departments and 304.31 agencies to insure conformance with this subdivision. 304.32 Sec. 7. Minnesota Statutes 1996, section 462.387, is 304.33 amended to read: 304.34 462.387 [REGIONAL DEVELOPMENT COMMISSIONS; ESTABLISHMENT.] 304.35 Subdivision 1. [PETITION.] Any combination of counties or 304.36 municipalities representing a majority of the population of the 305.1 region for which a commission is proposed may petition the 305.2commissionergovernor or designee by formal resolution setting 305.3 forth its desire to establish, and the need for, the 305.4 establishment of a regional development commission. For 305.5 purposes of this section the population of a county does not 305.6 include the population of a municipality within the county. 305.7 Subd. 1a. [OPERATING COMMISSION.] Regional development 305.8 commissions shall be those organizations operating pursuant to 305.9 sections 462.381 to 462.398 which were formed by formal 305.10 resolution of local units of government and those which may 305.11 petition by formal resolution to establish a regional 305.12 development commission. 305.13 Subd. 3. [ESTABLISHMENT.] Upon receipt of a petition as 305.14 provided in subdivision 1 a regional development commission 305.15 shall be established by thecommissionergovernor or designee 305.16 andthe notification ofall local government units within the 305.17 region for which the commission is proposed shall be notified. 305.18 The notification shall be made within 60 days of 305.19 thecommissioner'sgovernor's receipt of a petition under 305.20 subdivision 1. 305.21 Subd. 4. [SELECTION OF MEMBERSHIP.] Thecommissioner305.22 governor or designee shall call together each of the membership 305.23 classifications except citizen groups, defined in section 305.24 462.388, within 60 days of the establishment of a regional 305.25 development commission for the purpose of selecting the 305.26 commission membership. 305.27 Subd. 5. [NAME OF COMMISSION.] The name of the 305.28 organization shall be determined by formal resolution of the 305.29 commission. 305.30 Sec. 8. Minnesota Statutes 1996, section 462.388, is 305.31 amended to read: 305.32 462.388 [COMMISSION MEMBERSHIP.] 305.33 Subdivision 1. [REPRESENTATION OF VARIOUS MEMBERS.] A 305.34 commission shall consist of the following members: 305.35 (1) one member from each county board of every county in 305.36 the development region; 306.1 (2) one additional county board member from each county of 306.2 over 100,000 population; 306.3 (3) the town clerk, town treasurer, or one member of a town 306.4 board of supervisors from each county containing organized 306.5 towns; 306.6 (4) one additional member selected by the county board of 306.7 any county containing no townships; 306.8 (5) one mayor or council member from a municipality of 306.9 under 10,000 population from each county, selected by the mayors 306.10 of all such municipalities in the county; 306.11 (6) one mayor or council member from each municipality of 306.12 over 10,000 in each county; 306.13 (7) two school board members elected by a majority of the 306.14 chairs of school boards in the development region; 306.15 (8) one member from each council of governments; 306.16 (9) one member appointed by each native American tribal 306.17 council located in each region; and 306.18 (10) citizens representing public interests within the 306.19 region including members of minority groups to be selected after 306.20 adoption of the bylaws of the commission; and306.21(10) the chair, who shall be selected by the commission. 306.22 Subd. 2. [TERMS, SELECTION METHOD.] The terms of office 306.23 and method of selection of membersother than the chairshall be 306.24 provided in the bylaws of the commissionwhich shall not be306.25inconsistent with the provisions of subdivision 1. The 306.26 commission shall adopt rules setting forth its procedures. 306.27 Subd. 5. [PER DIEM; BOARD MEMBERS.] Members of the 306.28 regional commission may receive a per diem of not over$35$50, 306.29 the amount to be determined by the commission, and shall be 306.30 reimbursed for their reasonable expenses as determined by the 306.31 commission. The commissionshallmay provide for the election 306.32 of a board of directors, who need not be commission members,and 306.33 provide, at its discretion, for a per diem of not over$35$50 a 306.34 day for meetings of the board and expenses. A member of the 306.35 board of directors who is a member of the commission shall 306.36 receive only the per diem payable to board members when meetings 307.1 of the board of directors and the commission are held on the 307.2 same day. 307.3 Sec. 9. Minnesota Statutes 1996, section 462.389, 307.4 subdivision 1, is amended to read: 307.5 Subdivision 1. [CHAIR.] The chair of the commission shall 307.6 have been a resident of the region for at least one year and 307.7 shall be a person experienced in the field of government 307.8 affairs. The chair shall preside at the meetings of the 307.9 commission and board of directors, appoint all employees307.10thereof, subject to the approval of the commission,and be 307.11 responsible for carrying out all policy decisions of the 307.12 commission. The chair's expense allowances shall be fixed by 307.13 the commission. The term of the first chair shall be one year, 307.14 and the chair shall serve until a successor is selected and 307.15 qualifies. At the expiration of the term of the first chair, 307.16 the chair shall be elected from the membership of the commission 307.17 according to procedures established in its bylaws. 307.18 Sec. 10. Minnesota Statutes 1996, section 462.389, 307.19 subdivision 3, is amended to read: 307.20 Subd. 3. [EXECUTIVE DIRECTOR.]Upon the recommendation of307.21the chair,The commission may appoint an executive director to 307.22 serve as the chief administrative officer. The director may be 307.23 chosen from among the citizens of the nation at large, and shall 307.24 be selected on the basis of training and experience in the field 307.25 of government affairs. 307.26 Sec. 11. Minnesota Statutes 1996, section 462.389, 307.27 subdivision 4, is amended to read: 307.28 Subd. 4. [EMPLOYEES.] The commission mayprepare, in307.29consultation with the state commissioner of employee relations,307.30and mayadopt ameritpersonnel system for its officers and 307.31 employees including terms and conditions for the employment, the 307.32 fixing of compensation, their classification, benefits, and the 307.33 filing of performance and fidelity bonds, and such policies of 307.34 insurance as it may deem advisable, the premiums for which, 307.35 however, shall be paid for by the commission. Officers and 307.36 employees are public employees within the meaning of chapter 308.1 353. The commission shall make the employer's contributions to 308.2 pension funds of its employees. 308.3 Sec. 12. Minnesota Statutes 1996, section 462.39, 308.4 subdivision 2, is amended to read: 308.5 Subd. 2. [FEDERALREGIONAL PROGRAMS.] The commission is 308.6theauthorizedagencyto receivestate and federal grantspublic 308.7 and private funds forregionalpurposesfrom the following308.8programs:308.9(1) Section 403 of the Public Works and Economic308.10Development Act of 1965 (economic development districts);308.11(2) Section 701 of the Housing Act of 1954, as amended308.12(multicounty comprehensive planning);308.13(3) Omnibus Crime Control Act of 1968;308.14and for the following to the extent feasible as determined308.15by the governor:308.16(a) Economic Opportunity Act of 1964;308.17(b) Comprehensive Health Planning Act of 1965;308.18(c) Federal regional manpower planning programs;308.19(d) Resource, conservation, and development districts; or308.20(e) Any state and federal programs providing funds308.21forincluding, but not limited to program administration, 308.22 multicounty planning, coordination, and development 308.23purposes.The director shall, where consistent with state and308.24federal statutes and regulations, review applications for all308.25state and federal regional planning and development grants to a308.26commission.308.27 Sec. 13. Minnesota Statutes 1996, section 462.39, 308.28 subdivision 3, is amended to read: 308.29 Subd. 3. [PLANNING.] The commissionshallmay prepare and 308.30adoptsubmit for adoption, after appropriate study and such 308.31 public hearings as may be necessary,acomprehensivedevelopment308.32planplans for local units of government, individually or 308.33 collectively, within the region.The plan shallPlans may 308.34 consist ofa compilation ofpolicy statements, goals, standards, 308.35 programs, and maps prescribing guides foranorderlyand308.36economicdevelopment, public and private, of the region. The309.1comprehensive development planwithin the jurisdiction subject 309.2 to the plan. The plans shall recognize and incorporate planning 309.3 principles which encompass physical, social, or economic needs 309.4 of the region, and those future developments which will have an309.5impact on the entire region including but not limited to such309.6matters as land use, parks and open space land needs, access to309.7direct sunlight for solar energy systems, the necessity for and309.8location of airports, highways, transit facilities, public309.9hospitals, libraries, schools, public and private, housing, and309.10other public buildings. In preparingthedevelopmentplanplans 309.11 the commission shall use to the maximum extent feasible the 309.12 resources studies and data available from other planning 309.13 agencies within the region, including counties, municipalities, 309.14 special districts, and subregional planning agencies, and it 309.15 shall utilize the resources ofthe directorstate agencies to 309.16 the same purpose.No development plan or portion thereof for309.17the region shall be adopted by the commission until it has been309.18submitted to the director for review and comment and a period of309.1960 days has elapsed after such submission. When a development309.20plan has been adopted, the commission shall distribute it to all309.21local government units within the region.309.22 Sec. 14. Minnesota Statutes 1996, section 462.391, is 309.23 amended by adding a subdivision to read: 309.24 Subd. 1a. [REVIEW OF LOCAL PLANS.] The commission may 309.25 review and provide comments and recommendations on local plans 309.26 or development proposals which in the judgment of the commission 309.27 have a substantial effect on regional development. Local units 309.28 of government may request that a regional commission review, 309.29 comment, and provide advisory recommendations on local plans or 309.30 development proposals. 309.31 Sec. 15. Minnesota Statutes 1996, section 462.391, is 309.32 amended by adding a subdivision to read: 309.33 Subd. 2a. [STAFF SERVICES.] To avoid duplication of staff 309.34 for various regional bodies assisted by federal or state 309.35 government, the commission may provide basic administrative, 309.36 research, and planning services for all regional planning and 310.1 development bodies. The commissions may contract to obtain or 310.2 perform services with state agencies, for-profit or nonprofit 310.3 entities, subdistricts organized as the result of federal or 310.4 state programs, councils of governments organized under section 310.5 471.59, or any other law, and with local governments. 310.6 Sec. 16. Minnesota Statutes 1996, section 462.391, is 310.7 amended by adding a subdivision to read: 310.8 Subd. 3a. [DATA AND INFORMATION.] The commission may be 310.9 designated as a regional data center providing data collection, 310.10 storage, analysis, and dissemination to be used by it and other 310.11 governmental and private users, and may accept gifts or grants 310.12 to provide this service. 310.13 Sec. 17. Minnesota Statutes 1996, section 462.391, 310.14 subdivision 5, is amended to read: 310.15 Subd. 5. [URBAN AND RURALRESEARCH.] Where studies have 310.16 not been otherwise authorized by law the commission may study 310.17 the feasibility of programsrelatingincluding, but not limited 310.18 to, water, land use, economic development,minority problems310.19 housing, demographics, cultural issues, governmentalproblems310.20 issues, humanandservices, natural resources, 310.21 communication, technology, transportation, and other subjects of 310.22 concern to the citizens of the region, may institute 310.23 demonstration projects in connection therewith, and may enter 310.24 into contracts or accept gifts or grants for such purposes as 310.25 otherwise authorized in sections 462.381 to 462.398. 310.26 Sec. 18. Minnesota Statutes 1996, section 462.391, is 310.27 amended by adding a subdivision to read: 310.28 Subd. 11. [PROGRAM OPERATION.] Upon approval of the 310.29 appropriate authority from local, state, and federal government 310.30 units, commissions may be regarded as general purpose units of 310.31 government to receive funds and operate programs on a regional 310.32 or subregional basis to provide economies of scale or to enhance 310.33 program efficiency. 310.34 Sec. 19. Minnesota Statutes 1996, section 462.391, is 310.35 amended by adding a subdivision to read: 310.36 Subd. 12. [PROPERTY OWNERSHIP.] A commission may buy, 311.1 lease, acquire, own, hold, improve, and use real or personal 311.2 property or an interest in property, wherever located in the 311.3 state for purposes of housing the administrative office of the 311.4 regional commission. 311.5 Sec. 20. Minnesota Statutes 1996, section 462.391, is 311.6 amended by adding a subdivision to read: 311.7 Subd. 13. [PROPERTY DISPOSITION.] A commission may sell, 311.8 convey, mortgage, create a security interest in, lease, 311.9 exchange, transfer, or dispose of all or part of its real or 311.10 personal property or an interest in property, wherever located 311.11 in the state. 311.12 Sec. 21. Minnesota Statutes 1996, section 462.393, is 311.13 amended to read: 311.14 462.393 [ANNUAL REPORT TO UNITS, PUBLIC, GOVERNOR, 311.15 LEGISLATURE.] 311.16 Subdivision 1. [CONTENTS.] On or beforeAugustSeptember 1 311.17 of each year, the commission shall prepare a report for the 311.18 governmental units, the public within the region, the 311.19 legislature and the governor. The report shall include: 311.20 (1) A statement of the commission's receipts and 311.21 expenditures by category since the preceding report; 311.22 (2) A detailed budget for the year in which the report is 311.23 filed and a tentative budget for the following year including an 311.24 outline of its program for such period; 311.25 (3) A description of anycomprehensiveplan adopted in 311.26 whole or in part for the region; 311.27 (4) Summaries of any studies and the recommendations 311.28 resulting therefrom made for the region; 311.29 (5) Alisting of all applications for federal grants or311.30loans made by governmental units within the region together with311.31the action taken by the commission in relation theretosummary 311.32 of significant accomplishments; 311.33 (6) A listing of plans of local governmental units 311.34 submitted to the region, and actions taken in relationship 311.35 thereto; 311.36 (7) Recommendations of the commission regarding federal and 312.1 state programs, cooperation, funding, and legislative needs; and 312.2 (8) A summary of any audit report made during the previous 312.3 yearby the state auditorrelative to the commission. 312.4 Subd. 2. [ASSESSMENT EVERY 5 YEARS.] In19812001 and 312.5 every five years thereafter the commission shall review its 312.6 activities and issue a report assessing its performance in 312.7 fulfilling the purposes of the regional development actof312.81969. The report shallstateaddress whether the existence of 312.9 the commission is in the public welfare and interest.The312.10report shall be included in the report required by subdivision 1.312.11 Sec. 22. Minnesota Statutes 1996, section 462.394, is 312.12 amended to read: 312.13 462.394 [CITIZEN PARTICIPATION AND ADVISORY COMMITTEES.] 312.14 The commission may appoint advisory committees of 312.15 interested and affected citizens to assist in the review of 312.16 plans, programs, and other matters referred for review by the 312.17 commission. Whenever a special advisory committee is required 312.18 by any federal or state regional program the commissionchair312.19 shall, as far as practical, appoint such committees as advisory 312.20 groups to the commission. Members of the advisory committees 312.21 shall serve without compensation but shall be reimbursed for 312.22 their reasonable expenses as determined by the commission. 312.23 Sec. 23. Minnesota Statutes 1996, section 462.396, 312.24 subdivision 1, is amended to read: 312.25 Subdivision 1. [GRANTMAKING, TAX LEVY.] Thedirector312.26 governor and the legislature shall determine the amount of state 312.27 assistance and designate an agency to make grants to any 312.28 commission created under sections 462.381 to 462.398 from 312.29 appropriations made available for those purposes, provided a312.30work program is submitted acceptable to the director. Any 312.31 regional commission may levy a tax on all taxable property in 312.32 the region to provide money for the purposes of sections 462.381 312.33 to 462.398. 312.34 Sec. 24. Minnesota Statutes 1996, section 462.396, 312.35 subdivision 3, is amended to read: 312.36 Subd. 3. [GIFTS, GRANTS, LOANS.] The commission is a 313.1 special purpose unit of government which may accept gifts, apply 313.2 for and use grants or loans of money or other property from the 313.3 United States, the state, or any person, local or governmental 313.4 body for any commission purpose and may enter into agreements 313.5 required in connection therewith and may hold, use, and dispose 313.6 of such moneys or property in accordance with the terms of the 313.7 gift, grant, loan, agreement, or contract relating thereto. 313.8 For purposes of receipt of state or federal funds for 313.9 community and economic development, regional commissions shall 313.10 be considered general purpose units of government. 313.11 Sec. 25. Minnesota Statutes 1996, section 462.396, 313.12 subdivision 4, is amended to read: 313.13 Subd. 4. [ACCOUNTING; CHECKS; ANNUAL AUDIT.] The 313.14 commission shall keep an accurate account of its receipts and 313.15 disbursement. Disbursements of funds of the commission shall be 313.16 made by check signed by the chair or vice-chair or secretary of 313.17 the commission and countersigned by the executive director or an 313.18 authorized deputy thereof after such auditing and approval of 313.19 the expenditure as may be provided by rules of the commission. 313.20 The state auditorshallmay audit the books and accounts of the 313.21 commission once each year, or as often as funds and personnel of 313.22 the state auditor permit. The commission shall pay to the state 313.23 the total cost and expenses of such examination, including the 313.24 salaries paid to the auditors while actually engaged in making 313.25 such examination. The general fund shall be credited with all 313.26 collections made for any such examination. In lieu of an annual 313.27 audit by the state auditor, the commissionmayshall contract 313.28 with a certified public accountant for the annual audit of the 313.29 books and accounts of the commission. If a certified public 313.30 accountant performs the audit, the commission shall send a copy 313.31 of the audit to the state auditor. 313.32 Sec. 26. Minnesota Statutes 1996, section 462.398, is 313.33 amended to read: 313.34 462.398 [TERMINATION OF COMMISSION.] 313.35 Subdivision 1. [PETITION; POPULATION.] Any combination of 313.36 counties or municipalities representing a majority of the 314.1 population of the region for which a commission exists may 314.2 petition thedirectorgovernor by formal resolution stating that 314.3 the existence of the commission is no longer in the public 314.4 welfare and interest and is not needed to accomplish the 314.5 purposes of the regional development actof 1969. For purposes 314.6 of this section the population of a county does not include the 314.7 population of a municipality within the county. Any formal 314.8 resolution adopted by the governing body of a county or 314.9 municipality for the termination of a commission shall be 314.10 effective for a period of one year for the purpose of 314.11 determining the requisite population of the region needed to 314.12 petition thedirectorgovernor. 314.13 Subd. 2. [HEARINGS; RECOMMENDATION, TERMINATION DATE.] 314.14 Within 35 days of thereceiptfiling of the petition, the 314.15directorgovernor or designee shall fix a time and place within 314.16 the region for a hearing. The director shall give notice of the 314.17 hearing by publication once each week for two successive weeks 314.18 before the date of the hearing in a legal newspaper in each of 314.19 the counties which the commission represents. The hearing shall 314.20 be conducted by members of the commission. If the commission 314.21 determines that the existence of the commission is no longer in 314.22 the public welfare and interest and that it is not needed to 314.23 accomplish the purposes of the regional development actof 1969, 314.24 the commission shall recommend to thedirectorgovernor or 314.25 designee that thedirectorgovernor or designee terminate the 314.26 commission. Within 60 days after receipt of the recommendation, 314.27 thedirectorgovernor or designee shall terminate the commission 314.28 by giving notice of the termination to all government units 314.29 within the region for which the commission was established. 314.30 Unless otherwise provided by this subdivision, the hearing shall 314.31 be in accordance with sections 14.001 to 14.69. 314.32 Subd. 3. [30 MONTHS BETWEEN PETITIONS.] The 314.33directorgovernor or designee shall not accept a petition for 314.34 termination more than once in 30 months for each regional 314.35 development commission. 314.36 Sec. 27. [REPEALER.] 315.1 Minnesota Statutes 1996, sections 462.384, subdivision 7; 315.2 462.385, subdivision 2; 462.389, subdivision 5; 462.391, 315.3 subdivisions 1, 2, 3, 4, 6, 7, 8, and 9; and 462.392, are 315.4 repealed. 315.5 ARTICLE 13 315.6 WASTE MANAGEMENT TAXES 315.7 Section 1. Minnesota Statutes 1996, section 270B.01, 315.8 subdivision 8, is amended to read: 315.9 Subd. 8. [MINNESOTA TAX LAWS.] For purposes of this 315.10 chapter only, "Minnesota tax laws" means the taxes administered 315.11 by or paid to the commissioner under chapters 289A (except taxes 315.12 imposed under sections 298.01, 298.015, and 298.24), 290, 290A, 315.13 291,and297A, and 297F and sections 295.50 to 295.59, or any 315.14 similar Indian tribal tax administered by the commissioner 315.15 pursuant to any tax agreement between the state and the Indian 315.16 tribal government, and includes any laws for the assessment, 315.17 collection, and enforcement of those taxes. 315.18 Sec. 2. Minnesota Statutes 1996, section 297A.01, 315.19 subdivision 3, is amended to read: 315.20 Subd. 3. A "sale" and a "purchase" includes, but is not 315.21 limited to, each of the following transactions: 315.22 (a) Any transfer of title or possession, or both, of 315.23 tangible personal property, whether absolutely or conditionally, 315.24 and the leasing of or the granting of a license to use or 315.25 consume tangible personal property other than manufactured homes 315.26 used for residential purposes for a continuous period of 30 days 315.27 or more, for a consideration in money or by exchange or barter; 315.28 (b) The production, fabrication, printing, or processing of 315.29 tangible personal property for a consideration for consumers who 315.30 furnish either directly or indirectly the materials used in the 315.31 production, fabrication, printing, or processing; 315.32 (c) The furnishing, preparing, or serving for a 315.33 consideration of food, meals, or drinks. "Sale" does not 315.34 include: 315.35 (1) meals or drinks served to patients, inmates, or persons 315.36 residing at hospitals, sanitariums, nursing homes, senior 316.1 citizens homes, and correctional, detention, and detoxification 316.2 facilities; 316.3 (2) meals or drinks purchased for and served exclusively to 316.4 individuals who are 60 years of age or over and their spouses or 316.5 to the handicapped and their spouses by governmental agencies, 316.6 nonprofit organizations, agencies, or churches or pursuant to 316.7 any program funded in whole or part through 42 USCA sections 316.8 3001 through 3045, wherever delivered, prepared or served; or 316.9 (3) meals and lunches served at public and private schools, 316.10 universities, or colleges. 316.11 Notwithstanding section 297A.25, subdivision 2, taxable food or 316.12 meals include, but are not limited to, the following: 316.13 (i) heated food or drinks; 316.14 (ii) sandwiches prepared by the retailer; 316.15 (iii) single sales of prepackaged ice cream or ice milk 316.16 novelties prepared by the retailer; 316.17 (iv) hand-prepared or dispensed ice cream or ice milk 316.18 products including cones, sundaes, and snow cones; 316.19 (v) soft drinks and other beverages prepared or served by 316.20 the retailer; 316.21 (vi) gum; 316.22 (vii) ice; 316.23 (viii) all food sold in vending machines; 316.24 (ix) party trays prepared by the retailers; and 316.25 (x) all meals and single servings of packaged snack food, 316.26 single cans or bottles of pop, sold in restaurants and bars; 316.27 (d) The granting of the privilege of admission to places of 316.28 amusement, recreational areas, or athletic events, except a 316.29 world championship football game sponsored by the national 316.30 football league, and the privilege of having access to and the 316.31 use of amusement devices, tanning facilities, reducing salons, 316.32 steam baths, turkish baths, health clubs, and spas or athletic 316.33 facilities; 316.34 (e) The furnishing for a consideration of lodging and 316.35 related services by a hotel, rooming house, tourist court, motel 316.36 or trailer camp and of the granting of any similar license to 317.1 use real property other than the renting or leasing thereof for 317.2 a continuous period of 30 days or more; 317.3 (f) The furnishing for a consideration of electricity, gas, 317.4 water, or steam for use or consumption within this state, or 317.5 local exchange telephone service, intrastate toll service, and 317.6 interstate toll service, if that service originates from and is 317.7 charged to a telephone located in this state. Telephone service 317.8 includes paging services and private communication service, as 317.9 defined in United States Code, title 26, section 4252(d), except 317.10 for private communication service purchased by an agent acting 317.11 on behalf of the state lottery. The furnishing for a 317.12 consideration of access to telephone services by a hotel to its 317.13 guests is a sale under this clause. Sales by municipal 317.14 corporations in a proprietary capacity are included in the 317.15 provisions of this clause. The furnishing of water and sewer 317.16 services for residential use shall not be considered a sale. 317.17 The sale of natural gas to be used as a fuel in vehicles 317.18 propelled by natural gas shall not be considered a sale for the 317.19 purposes of this section; 317.20 (g) The furnishing for a consideration of cable television 317.21 services, including charges for basic service, charges for 317.22 premium service, and any other charges for any other 317.23 pay-per-view, monthly, or similar television services; 317.24 (h) The furnishing for a consideration of parking services, 317.25 whether on a contractual, hourly, or other periodic basis, 317.26 except for parking at a meter; 317.27 (i) The furnishing for a consideration of services listed 317.28 in this paragraph: 317.29 (i) laundry and dry cleaning services including cleaning, 317.30 pressing, repairing, altering, and storing clothes, linen 317.31 services and supply, cleaning and blocking hats, and carpet, 317.32 drapery, upholstery, and industrial cleaning. Laundry and dry 317.33 cleaning services do not include services provided by coin 317.34 operated facilities operated by the customer; 317.35 (ii) motor vehicle washing, waxing, and cleaning services, 317.36 including services provided by coin-operated facilities operated 318.1 by the customer, and rustproofing, undercoating, and towing of 318.2 motor vehicles; 318.3 (iii) building and residential cleaning, maintenance, and 318.4 disinfecting and exterminating services; 318.5 (iv) detective services, security services, burglar, fire 318.6 alarm, and armored car services not including services performed 318.7 within the jurisdiction they serve by off-duty licensed peace 318.8 officers as defined in section 626.84, subdivision 1; 318.9 (v) pet grooming services; 318.10 (vi) lawn care, fertilizing, mowing, spraying and sprigging 318.11 services; garden planting and maintenance; tree, bush, and shrub 318.12 pruning, bracing, spraying, and surgery; tree, bush, shrub and 318.13 stump removal; and tree trimming for public utility lines. 318.14 Services performed under a construction contract for the 318.15 installation of shrubbery, plants, sod, trees, bushes, and 318.16 similar items are not taxable; 318.17 (vii)mixed municipal solid waste management services as318.18described in section 297A.45;318.19(viii)massages, except when provided by a licensed health 318.20 care facility or professional or upon written referral from a 318.21 licensed health care facility or professional for treatment of 318.22 illness, injury, or disease; and 318.23(ix)(viii) the furnishing for consideration of lodging, 318.24 board and care services for animals in kennels and other similar 318.25 arrangements, but excluding veterinary and horse boarding 318.26 services. 318.27 The services listed in this paragraph are taxable under section 318.28 297A.02 if the service is performed wholly within Minnesota or 318.29 if the service is performed partly within and partly without 318.30 Minnesota and the greater proportion of the service is performed 318.31 in Minnesota, based on the cost of performance. In applying the 318.32 provisions of this chapter, the terms "tangible personal 318.33 property" and "sales at retail" include taxable services and the 318.34 provision of taxable services, unless specifically provided 318.35 otherwise. Services performed by an employee for an employer 318.36 are not taxable under this paragraph. Services performed by a 319.1 partnership or association for another partnership or 319.2 association are not taxable under this paragraph if one of the 319.3 entities owns or controls more than 80 percent of the voting 319.4 power of the equity interest in the other entity. Services 319.5 performed between members of an affiliated group of corporations 319.6 are not taxable. For purposes of this section, "affiliated 319.7 group of corporations" includes those entities that would be 319.8 classified as a member of an affiliated group under United 319.9 States Code, title 26, section 1504, and who are eligible to 319.10 file a consolidated tax return for federal income tax purposes; 319.11 (j) A "sale" and a "purchase" includes the transfer of 319.12 computer software, meaning information and directions that 319.13 dictate the function performed by data processing equipment. A 319.14 "sale" and a "purchase" does not include the design, 319.15 development, writing, translation, fabrication, lease, or 319.16 transfer for a consideration of title or possession of a custom 319.17 computer program; and 319.18 (k) The granting of membership in a club, association, or 319.19 other organization if: 319.20 (1) the club, association, or other organization makes 319.21 available for the use of its members sports and athletic 319.22 facilities (without regard to whether a separate charge is 319.23 assessed for use of the facilities); and 319.24 (2) use of the sports and athletic facilities is not made 319.25 available to the general public on the same basis as it is made 319.26 available to members. 319.27 Granting of membership includes both one-time initiation fees 319.28 and periodic membership dues. Sports and athletic facilities 319.29 include golf courses, tennis, racquetball, handball and squash 319.30 courts, basketball and volleyball facilities, running tracks, 319.31 exercise equipment, swimming pools, and other similar athletic 319.32 or sports facilities. The provisions of this paragraph do not 319.33 apply to camps or other recreation facilities owned and operated 319.34 by an exempt organization under section 501(c)(3) of the 319.35 Internal Revenue Code of 1986, as amended through December 31, 319.36 1992, for educational and social activities for young people 320.1 primarily age 18 and under. 320.2 Sec. 3. Minnesota Statutes 1996, section 297A.25, 320.3 subdivision 11, is amended to read: 320.4 Subd. 11. [SALES TO GOVERNMENT.] The gross receipts from 320.5 all sales, including sales in which title is retained by a 320.6 seller or a vendor or is assigned to a third party under an 320.7 installment sale or lease purchase agreement under section 320.8 465.71, of tangible personal property to, and all storage, use 320.9 or consumption of such property by, the United States and its 320.10 agencies and instrumentalities, the University of Minnesota, 320.11 state universities, community colleges, technical colleges, 320.12 state academies, the Lola and Rudy Perpich Minnesota center for 320.13 arts education, and school districts are exempt. 320.14 As used in this subdivision, "school districts" means 320.15 public school entities and districts of every kind and nature 320.16 organized under the laws of the state of Minnesota, including, 320.17 without limitation, school districts, intermediate school 320.18 districts, education districts, service cooperatives, secondary 320.19 vocational cooperative centers, special education cooperatives, 320.20 joint purchasing cooperatives, telecommunication cooperatives, 320.21 regional management information centers, and any instrumentality 320.22 of a school district, as defined in section 471.59. 320.23 Sales exempted by this subdivision include sales under 320.24 section 297A.01, subdivision 3, paragraph (f), but do not320.25include sales under section 297A.01, subdivision 3, paragraph320.26(j), clause (vii). 320.27 Sales to hospitals and nursing homes owned and operated by 320.28 political subdivisions of the state are exempt under this 320.29 subdivision. 320.30 The sales to and exclusively for the use of libraries of 320.31 books, periodicals, audio-visual materials and equipment, 320.32 photocopiers for use by the public, and all cataloguing and 320.33 circulation equipment, and cataloguing and circulation software 320.34 for library use are exempt under this subdivision. For purposes 320.35 of this paragraph "libraries" means libraries as defined in 320.36 section 134.001, county law libraries under chapter 134A, the 321.1 state library under section 480.09, and the legislative 321.2 reference library. 321.3 Sales of supplies and equipment used in the operation of an 321.4 ambulance service owned and operated by a political subdivision 321.5 of the state are exempt under this subdivision provided that the 321.6 supplies and equipment are used in the course of providing 321.7 medical care. Sales to a political subdivision of repair and 321.8 replacement parts for emergency rescue vehicles and fire trucks 321.9 and apparatus are exempt under this subdivision. 321.10 Sales to a political subdivision of machinery and 321.11 equipment, except for motor vehicles, used directly for mixed 321.12 municipal solid waste management services at a solid waste 321.13 disposal facility as defined in section 115A.03, subdivision 10, 321.14 are exempt under this subdivision. 321.15 Sales to political subdivisions of chore and homemaking 321.16 services to be provided to elderly or disabled individuals are 321.17 exempt. 321.18 Sales of telephone services to the department of 321.19 administration that are used to provide telecommunications 321.20 services through the intertechnologies revolving fund are exempt 321.21 under this subdivision. 321.22 This exemption shall not apply to building, construction or 321.23 reconstruction materials purchased by a contractor or a 321.24 subcontractor as a part of a lump-sum contract or similar type 321.25 of contract with a guaranteed maximum price covering both labor 321.26 and materials for use in the construction, alteration, or repair 321.27 of a building or facility. This exemption does not apply to 321.28 construction materials purchased by tax exempt entities or their 321.29 contractors to be used in constructing buildings or facilities 321.30 which will not be used principally by the tax exempt entities. 321.31 This exemption does not apply to the leasing of a motor 321.32 vehicle as defined in section 297B.01, subdivision 5, except for 321.33 leases entered into by the United States or its agencies or 321.34 instrumentalities. 321.35 The tax imposed on sales to political subdivisions of the 321.36 state under this section applies to all political subdivisions 322.1 other than those explicitly exempted under this subdivision, 322.2 notwithstanding section 115A.69, subdivision 6, 116A.25, 322.3 360.035, 458A.09, 458A.30, 458D.23, 469.101, subdivision 2, 322.4 469.127, 473.448, 473.545, or 473.608 or any other law to the 322.5 contrary enacted before 1992. 322.6 Sales exempted by this subdivision include sales made to 322.7 other states or political subdivisions of other states, if the 322.8 sale would be exempt from taxation if it occurred in that state, 322.9 but do not include sales under section 297A.01, subdivision 3, 322.10 paragraphs (c) and (e). 322.11 Sec. 4. Minnesota Statutes 1996, section 297A.25, 322.12 subdivision 16, is amended to read: 322.13 Subd. 16. [SALES TO NONPROFIT GROUPS.] The gross receipts 322.14 from the sale of tangible personal property to, and the storage, 322.15 use or other consumption of such property by, any corporation, 322.16 society, association, foundation, or institution organized and 322.17 operated exclusively for charitable, religious, or educational 322.18 purposes if the property purchased is to be used in the 322.19 performance of charitable, religious, or educational functions, 322.20 or any senior citizen group or association of groups that in 322.21 general limits membership to persons who are either (1) age 55 322.22 or older, or (2) physically disabled, and is organized and 322.23 operated exclusively for pleasure, recreation, and other 322.24 nonprofit purposes, no part of the net earnings of which inures 322.25 to the benefit of any private shareholders, are exempt. For 322.26 purposes of this subdivision, charitable purpose includes the 322.27 maintenance of a cemetery owned by a religious organization. 322.28 Sales exempted by this subdivision include sales pursuant to 322.29 section 297A.01, subdivision 3, paragraphs (d) and (f), but do322.30not include sales under section 297A.01, subdivision 3,322.31paragraph (j), clause (vii). This exemption shall not apply to 322.32 building, construction, or reconstruction materials purchased by 322.33 a contractor or a subcontractor as a part of a lump-sum contract 322.34 or similar type of contract with a guaranteed maximum price 322.35 covering both labor and materials for use in the construction, 322.36 alteration, or repair of a building or facility. This exemption 323.1 does not apply to construction materials purchased by tax exempt 323.2 entities or their contractors to be used in constructing 323.3 buildings or facilities which will not be used principally by 323.4 the tax exempt entities. This exemption does not apply to the 323.5 leasing of a motor vehicle as defined in section 297B.01, 323.6 subdivision 5. 323.7 Sec. 5. Minnesota Statutes 1996, section 297A.44, 323.8 subdivision 1, is amended to read: 323.9 Subdivision 1. (a) Except as provided in paragraphs 323.10 (b),and (c),and (d),all revenues, including interest and 323.11 penalties, derived from the excise and use taxes imposed by 323.12 sections 297A.01 to 297A.44 shall be deposited by the 323.13 commissioner in the state treasury and credited to the general 323.14 fund. 323.15 (b) All excise and use taxes derived from sales and use of 323.16 property and services purchased for the construction and 323.17 operation of an agricultural resource project, from and after 323.18 the date on which a conditional commitment for a loan guaranty 323.19 for the project is made pursuant to section 41A.04, subdivision 323.20 3, shall be deposited in the Minnesota agricultural and economic 323.21 account in the special revenue fund. The commissioner of 323.22 finance shall certify to the commissioner the date on which the 323.23 project received the conditional commitment. The amount 323.24 deposited in the loan guaranty account shall be reduced by any 323.25 refunds and by the costs incurred by the department of revenue 323.26 to administer and enforce the assessment and collection of the 323.27 taxes. 323.28 (c) All revenues, including interest and penalties, derived 323.29 from the excise and use taxes imposed on sales and purchases 323.30 included in section 297A.01, subdivision 3, paragraphs (d) and 323.31 (l), clauses (1) and (2), must be deposited by the commissioner 323.32 in the state treasury, and credited as follows: 323.33 (1) first to the general obligation special tax bond debt 323.34 service account in each fiscal year the amount required by 323.35 section 16A.661, subdivision 3, paragraph (b); and 323.36 (2) after the requirements of clause (1) have been met, the 324.1 balance must be credited to the general fund. 324.2(d) The revenues, including interest and penalties, derived324.3from the taxes imposed on solid waste collection services as324.4described in section 297A.45, shall be deposited by the324.5commissioner in the state treasury and credited to the general324.6fund to be used for funding solid waste reduction and recycling324.7programs.324.8 Sec. 6. [297F.01] [SOLID WASTE MANAGEMENT TAX 324.9 DEFINITIONS.] 324.10 Subdivision 1. [SCOPE.] When used in this chapter, the 324.11 following terms have the meanings given to them in this 324.12 section. For terms not defined in this section, the definitions 324.13 contained in chapter 115A are incorporated into this chapter. 324.14 Subd. 2. [COMMERCIAL GENERATOR.] "Commercial generator" 324.15 means any of the following: 324.16 (1) an owner or operator of a business, including a 324.17 home-operated business, industry, church, nursing home, 324.18 nonprofit organization, school, or any other commercial or 324.19 institutional enterprise that generates mixed municipal solid 324.20 waste or non-mixed-municipal solid waste; or 324.21 (2) any other generator of taxable waste that is not a 324.22 residential generator defined in subdivision 8. A commercial 324.23 generator does not include a self-hauler. 324.24 Subd. 3. [CUBIC YARD.] "Cubic yard" means a cubic yard of 324.25 non-mixed-municipal solid waste that is not compacted. 324.26 Subd. 4. [MARKET PRICE.] "Market price" means the lowest 324.27 price available in the area, assuming transactions between 324.28 separate parties that are willing buyers and willing sellers in 324.29 a market. 324.30 Subd. 5. [MIXED MUNICIPAL SOLID WASTE.] "Mixed municipal 324.31 solid waste" means mixed municipal solid waste as defined in 324.32 section 115A.03, subdivision 21. 324.33 Subd. 6. [NON-MIXED-MUNICIPAL SOLID 324.34 WASTE.] "Non-mixed-municipal solid waste" means: 324.35 (1) infectious waste as defined in section 116.76, 324.36 subdivision 12; 325.1 (2) pathological waste as defined in section 116.76, 325.2 subdivision 14; 325.3 (3) industrial waste as defined in section 115A.03, 325.4 subdivision 13a; and 325.5 (4) construction debris as defined in section 115A.03, 325.6 subdivision 7. 325.7 Subd. 7. [PERIODIC WASTE COLLECTION.] "Periodic waste 325.8 collection" means each time a waste container is emptied by the 325.9 person that collects the non-mixed-municipal solid waste at the 325.10 point that the waste has been aggregated for collection by the 325.11 generator. 325.12 Subd. 8. [RESIDENTIAL GENERATOR.] "Residential generator" 325.13 means any of the following: 325.14 (1) a detached single family residence that generates mixed 325.15 municipal solid waste or non-mixed-municipal solid waste; 325.16 (2) a person residing in a building or site containing 325.17 multiple residences that generates mixed municipal solid waste, 325.18 including apartment buildings, condominiums, manufactured home 325.19 parks, or townhomes, where each residence is separately billed 325.20 by the waste service provider; 325.21 (3) an owner of a building or site containing multiple 325.22 residences or an association representing residences that 325.23 generate mixed municipal solid waste or non-mixed-municipal 325.24 solid waste, including apartment buildings, condominiums, 325.25 manufactured home parks, or townhomes where no residence is 325.26 separately billed for such service by the waste management 325.27 service provider and the owner or association is billed directly 325.28 for the waste management services. A residential generator does 325.29 not include a self-hauler. 325.30 Subd. 9. [SALES PRICE.] "Sales price" means total 325.31 consideration valued in money for waste management services, 325.32 excluding separately stated charges for exemptions listed under 325.33 section 297F.06. 325.34 Subd. 10. [SELF-HAULER.] "Self-hauler" means a person who 325.35 transports mixed municipal solid waste or non-mixed-municipal 325.36 solid waste generated by that person or another person without 326.1 compensation. 326.2 Subd. 11. [WASTE MANAGEMENT SERVICE PROVIDER.] "Waste 326.3 management service provider" means the person who directly bills 326.4 the generator or self-hauler for waste management services, and 326.5 includes, but is not limited to, waste-haulers, waste management 326.6 facilities, utility services, and political subdivisions, to the 326.7 extent they directly bill for waste management services. 326.8 Subd. 12. [WASTE MANAGEMENT SERVICES.] "Waste management 326.9 services" means waste collection, transportation, processing, 326.10 and disposal. 326.11 Sec. 7. [297F.02] [RESIDENTIAL GENERATORS.] 326.12 Subdivision 1. [IMPOSITION.] (a) A tax is imposed upon the 326.13 sales price of mixed municipal solid waste management services 326.14 received by a residential generator. 326.15 (b) The tax is imposed upon the difference between the 326.16 market price and the tip fee at a processing or disposal 326.17 facility where the tip fee is less than the market price and the 326.18 political subdivision subsidizes the cost of service at the 326.19 facility. The political subdivision is liable for the tax. 326.20 (c) The tax is imposed upon the market price of waste 326.21 management services where a political subdivision directly bills 326.22 on a property tax statement for organized collection of mixed 326.23 municipal solid waste. The political subdivision is liable for 326.24 the tax. 326.25 (d) The political subdivision shall, by resolution, 326.26 identify the market price. The political subdivision shall 326.27 submit the market price to the director of the office of 326.28 environmental assistance for review by October 1 of the year 326.29 prior to the calendar year in which the market price will be in 326.30 effect. The prices that the state pays for waste management 326.31 services in that jurisdiction or the county where the 326.32 jurisdiction is located must be a guideline in determining the 326.33 market price. The director shall consult with the commissioner 326.34 of the pollution control agency in reviewing the market price 326.35 and shall inform the political subdivisions of any necessary 326.36 changes to market price by November 15 of that year. The market 327.1 price shall be effective as of January 1 of the next calendar 327.2 year following review. The director may consider adjustment to 327.3 the market price if a political subdivision submits a resolution 327.4 for adjustment by May 1 of any year. The effective date of the 327.5 adjustment shall be July 1. 327.6 If the commissioner of revenue believes a market price 327.7 declared by resolution is not accurate, the commissioner may 327.8 request that the office of environmental assistance advise the 327.9 political subdivision to identify by resolution an updated 327.10 market price and submit the updated market price to the office 327.11 of environmental assistance for review. 327.12 Subd. 2. [RATES.] The rate of tax under this section is 327.13 9.75 percent. 327.14 Subd. 3. [SALES PRICE OF BAGS, STICKERS, OR OTHER 327.15 INDICIA.] When the sales price of a bag, sticker, or other 327.16 indicia includes mixed municipal solid waste management services 327.17 for residential generators, the tax on the bag, sticker, and 327.18 other indicia sold by vendors on behalf of a political 327.19 subdivision or waste hauler shall be collected when the bag, 327.20 sticker, or other indicia are sold to the vendor by the 327.21 political subdivision or waste hauler, and shall be taxed at the 327.22 rate imposed under subdivision 2. The solid waste management 327.23 service and the solid waste management tax shall be included in 327.24 the sales price of the bag, sticker, or other indicia. 327.25 Sec. 8. [297F.03] [MIXED MUNICIPAL SOLID WASTE COMMERCIAL 327.26 GENERATORS.] 327.27 Subdivision 1. [IMPOSITION.] (a) A tax is imposed upon the 327.28 sales price of mixed municipal solid waste management services 327.29 received by a commercial generator. 327.30 (b) The tax is imposed upon the difference between the 327.31 market price and the tip fee at a processing or disposal 327.32 facility where the tip fee is less than the market price and the 327.33 political subdivision subsidizes the cost of service at the 327.34 facility. The political subdivision is liable for the tax. 327.35 (c) The tax is imposed upon the market price of waste 327.36 management services where a political subdivision directly bills 328.1 on a property tax statement for organized collection of mixed 328.2 municipal solid waste. The political subdivision is liable for 328.3 the tax. 328.4 (d) Section 297F.02, subdivision 1, paragraph (d), applies 328.5 to paragraphs (b) and (c) of this subdivision. 328.6 Subd. 2. [RATE.] The rate of the tax under this section is 328.7 17 percent. 328.8 Subd. 3. [SALES PRICE OF BAGS, STICKERS, OR OTHER 328.9 INDICIA.] When the sales price of a bag, sticker, or other 328.10 indicia includes mixed municipal solid waste management services 328.11 for commercial generators, the tax on the bag, sticker, and 328.12 other indicia sold by vendors on behalf of a political 328.13 subdivision or waste hauler shall be collected when the bag, 328.14 sticker, or other indicia are sold to the vendor by the 328.15 political subdivision or waste hauler, and shall be taxed at the 328.16 rate imposed under subdivision 2. The solid waste management 328.17 service and the solid waste management tax shall be included in 328.18 the sales price of the bag, sticker, or other indicia. 328.19 Sec. 9. [297F.04] [NON-MIXED-MUNICIPAL SOLID WASTE.] 328.20 Subdivision 1. [IMPOSITION.] A tax is imposed upon the 328.21 volume of non-mixed-municipal solid waste that is managed. 328.22 Subd. 2. [RATE.] (a) Commercial generators that generate 328.23 non-mixed-municipal solid waste shall pay a solid waste 328.24 management tax of 60 cents per noncompacted cubic yard of 328.25 periodic waste collection capacity purchased by the generator, 328.26 based on the size of the container for the non-mixed-municipal 328.27 solid waste, the actual volume, or the weight-to-volume 328.28 conversion schedule in paragraph (c). However, the tax must be 328.29 calculated by the waste management service provider using the 328.30 same method for calculating the waste management service fee so 328.31 that both are calculated according to container capacity, actual 328.32 volume, or weight. 328.33 (b) Notwithstanding section 297F.02, a residential 328.34 generator that generates non-mixed-municipal solid waste shall 328.35 pay a solid waste management tax in the same manner as provided 328.36 in paragraph (a). 329.1 (c) The weight-to-volume conversion schedule for: 329.2 (1) construction debris as defined in section 115A.03, 329.3 subdivision 7, is one ton equals 3.33 cubic yards, or $2 per 329.4 ton; 329.5 (2) industrial waste as defined in section 115A.03, 329.6 subdivision 13a, is equal to 60 cents per cubic yard. The 329.7 commissioner of revenue after consultation with the commissioner 329.8 of the pollution control agency, shall determine, and may 329.9 publish by notice, a conversion schedule for various industrial 329.10 wastes; and 329.11 (3) infectious waste as defined in section 116.76, 329.12 subdivision 12, and pathological waste as defined in section 329.13 116.76, subdivision 14, is 150 pounds equals one cubic yard, or 329.14 60 cents per 150 pounds. 329.15 Sec. 10. [297F.05] [SELF-HAULERS.] 329.16 (a) A self-hauler of mixed municipal solid waste shall pay 329.17 the tax to the operator of the waste management facility to 329.18 which the waste is delivered at the rate imposed under section 329.19 297F.03, based on the sales price of the waste management 329.20 services. 329.21 (b) A self-hauler of non-mixed-municipal solid waste shall 329.22 pay the tax to the operator of the waste management facility to 329.23 which the waste is delivered at the rate imposed under section 329.24 297F.04. 329.25 (c) The tax imposed on the self-hauler of 329.26 non-mixed-municipal solid waste may be based either on the 329.27 capacity of the container, the actual volume, or the 329.28 weight-to-volume conversion schedule in paragraph (d). However, 329.29 the tax must be calculated by the operator using the same method 329.30 for calculating the tipping fee so that both are calculated 329.31 according to container capacity, actual volume, or weight. 329.32 (d) The weight-to-volume conversion schedule for: 329.33 (1) construction debris as defined in section 115A.03, 329.34 subdivision 7, is one ton equals 3.33 cubic yards, or $2 per 329.35 ton; 329.36 (2) industrial waste as defined in section 115A.03, 330.1 subdivision 13a, is equal to 60 cents per cubic yard. The 330.2 commissioner of revenue, after consultation with the 330.3 commissioner of the pollution control agency, shall determine, 330.4 and may publish by notice, a conversion schedule for various 330.5 industrial wastes; and 330.6 (3) infectious waste as defined in section 116.76, 330.7 subdivision 12, and pathological waste as defined in section 330.8 116.76, subdivision 14, is 150 pounds equals one cubic yard, or 330.9 60 cents per 150 pounds. 330.10 Sec. 11. [297F.06] [EXEMPTIONS.] 330.11 Subdivision 1. [CERTAIN SURCHARGES OR FEES.] The amount of 330.12 a surcharge, fee, or charge established pursuant to section 330.13 115A.919, 115A.921, 115A.923, or 473.843 is exempt from the 330.14 solid waste management tax. The amount shown on a property tax 330.15 statement as a county charge for solid waste management service 330.16 or as a surcharge, fee, or charge established pursuant to 330.17 section 400.08, subdivision 3, or section 473.811, subdivision 330.18 3a, is exempt from the solid waste management tax. The 330.19 exemption does not apply to the tax imposed on market price 330.20 under section 297F.02, subdivision 1, paragraphs (b) and (c), or 330.21 section 297F.03, subdivision 1, paragraphs (b) and (c). 330.22 Subd. 2. [MATERIALS.] The tax is not imposed upon charges 330.23 to generators of mixed municipal solid waste or upon the volume 330.24 of non-mixed-municipal solid waste for waste management services 330.25 to manage the following materials: 330.26 (1) mixed municipal solid waste and non-mixed-municipal 330.27 solid waste generated outside of Minnesota; 330.28 (2) recyclable materials that are separated for recycling 330.29 by the generator, collected separately from other waste, and 330.30 recycled, to the extent the price of the service for handling 330.31 recyclable material is separately itemized; 330.32 (3) recyclable non-mixed-municipal solid waste that is 330.33 separated for recycling by the generator, collected separately 330.34 from other waste, delivered to a waste facility for the purpose 330.35 of recycling, and recycled; 330.36 (4) industrial waste, when it is transported to a facility 331.1 owned and operated by the same person that generated it; 331.2 (5) mixed municipal solid waste from a recycling facility 331.3 that separates or processes recyclable materials and reduces the 331.4 volume of the waste by at least 85 percent, provided that the 331.5 exempted waste is managed separately from other waste; 331.6 (6) recyclable materials that are separated from mixed 331.7 municipal solid waste by the generator, collected and delivered 331.8 to a waste facility that recycles at least 85 percent of its 331.9 waste, and are collected with mixed municipal solid waste that 331.10 is segregated in leakproof bags, provided that the mixed 331.11 municipal solid waste does not exceed five percent of the total 331.12 weight of the materials delivered to the facility and is 331.13 ultimately delivered to a waste facility identified as a 331.14 preferred waste management facility in county solid waste plans 331.15 under section 115A.46; 331.16 (7) through December 31, 2002, source-separated compostable 331.17 waste, if the waste is delivered to a facility exempted as 331.18 described in this clause. To initially qualify for an 331.19 exemption, a facility must apply for an exemption in its 331.20 application for a new or amended solid waste permit to the 331.21 pollution control agency. The first time a facility applies to 331.22 the agency it must certify in its application that it will 331.23 comply with the criteria in items (i) to (v) and the 331.24 commissioner of the agency shall so certify to the commissioner 331.25 of revenue who must grant the exemption. For each subsequent 331.26 calendar year, by October 1 of the preceding year, the facility 331.27 must apply to the agency for certification to renew its 331.28 exemption for the following year. The application must be filed 331.29 according to the procedures of, and contain the information 331.30 required by, the agency. The commissioner of revenue shall 331.31 grant the exemption if the commissioner of the pollution control 331.32 agency finds and certifies to the commissioner of revenue that 331.33 based on an evaluation of the composition of incoming waste and 331.34 residuals and the quality and use of the product: 331.35 (i) generators separate materials at the source; 331.36 (ii) the separation is performed in a manner appropriate to 332.1 the technology specific to the facility that: 332.2 (A) maximizes the quality of the product; 332.3 (B) minimizes the toxicity and quantity of residuals; and 332.4 (C) provides an opportunity for significant improvement in 332.5 the environmental efficiency of the operation; 332.6 (iii) the operator of the facility educates generators, in 332.7 coordination with each county using the facility, about 332.8 separating the waste to maximize the quality of the waste stream 332.9 for technology specific to the facility; 332.10 (iv) process residuals do not exceed 15 percent of the 332.11 weight of the total material delivered to the facility; and 332.12 (v) the final product is accepted for use; and 332.13 (8) waste and waste by-products for which the tax has been 332.14 paid. 332.15 Sec. 12. [297F.07] [BILLING.] 332.16 The amount of the tax imposed under this chapter shall be 332.17 itemized separately on the generator's bill, and shall be 332.18 designated as the "solid waste management tax." 332.19 Sec. 13. [297F.08] [PAYMENT; REPORTING.] 332.20 (a) The waste management service provider, or a political 332.21 subdivision specified in section 297F.02, subdivision 1, and 332.22 section 297F.03, subdivision 1, shall report the tax on a return 332.23 prescribed by the commissioner of revenue, and shall remit the 332.24 tax with the return. The return and the tax must be filed using 332.25 the filing cycle and due dates provided for taxes imposed under 332.26 chapter 297A. 332.27 (b) The waste hauler or political subdivision that sells 332.28 bags, stickers, or other indicia to vendors must report and 332.29 remit the tax imposed by section 297F.02, subdivision 3, and 332.30 section 297F.03, subdivision 3, on a return prescribed by the 332.31 commissioner of revenue, and shall remit the tax with the 332.32 return. The return and the tax must be filed using the filing 332.33 cycle provided for taxes imposed under chapter 297A. 332.34 (c) Any partial payments received by waste management 332.35 service providers for waste management services shall be 332.36 prorated between the tax imposed under section 297F.02, 297F.03, 333.1 or 297F.04 and the service. 333.2 Sec. 14. [297F.09] [BAD DEBTS.] 333.3 The remitter of the solid waste management tax may offset 333.4 against the tax payable, with respect to any reporting period, 333.5 the amount of tax imposed by this chapter previously remitted to 333.6 the commissioner of revenue which qualified as a bad debt under 333.7 section 166(a) of the Internal Revenue Code, as amended through 333.8 December 31, 1993, during such reporting period, but only in 333.9 proportion to the portion of such debt which became 333.10 uncollectable. This section applies only to accrual basis 333.11 remitters that remit tax before it is collected and to the 333.12 extent they are unable to collect the tax. 333.13 Sec. 15. [297F.10] [ADMINISTRATION; ENFORCEMENT; PENALTY.] 333.14 Subdivision 1. [ADMINISTRATION AND ENFORCEMENT.] The 333.15 audit, assessment, refund, penalty, interest, enforcement, 333.16 collection remedies, appeal, and administrative provisions of 333.17 chapters 270 and 289A that are applicable to taxes imposed under 333.18 chapter 297A apply to this chapter. 333.19 Subd. 2. [PENALTY.] If the form prescribed by the 333.20 commissioner of revenue for remitting the tax is the sales tax 333.21 return, a penalty is imposed on a person or political 333.22 subdivision who fails to separately report the amount of tax due 333.23 under this chapter. The specified penalties are ten percent for 333.24 the first violation and 20 percent for the second and subsequent 333.25 violations. The penalty applies only to that portion of the tax 333.26 that should have been reported on the separate lines for the tax 333.27 due under this chapter and that was included on other lines of 333.28 the sales tax return. 333.29 Sec. 16. [297F.11] [REQUIREMENTS AND POTENTIAL LIABILITY 333.30 OF WASTE MANAGEMENT SERVICE PROVIDERS.] 333.31 Subdivision 1. [REQUIREMENTS.] Waste management service 333.32 providers are required to: 333.33 (1) separately and accurately state the amount of the tax 333.34 in the appropriate statement of charges for waste management 333.35 services, or other statement if there are no charges for waste 333.36 management services, and in any action to enforce payment on 334.1 delinquent accounts; 334.2 (2) accurately account for and remit tax received; and 334.3 (3) work with the commissioner of revenue to ensure that 334.4 generators pay the tax. 334.5 Subd. 2. [LIABILITY.] A waste management service provider 334.6 is liable for an amount equal to the solid waste management tax 334.7 that was either: 334.8 (1) received by the waste management service provider but 334.9 not timely remitted to the commissioner of revenue; or 334.10 (2) not received by the waste management service provider 334.11 and the waste management service provider failed to separately 334.12 and accurately state the amount of the tax in the appropriate 334.13 statement of charges for waste management services and in any 334.14 action to enforce payment on delinquent accounts. 334.15 Subd. 3. [RECOVERY.] A person who is liable under 334.16 subdivision 2 is not prohibited from recovering from the 334.17 generator or self-hauler the amount of the liability paid to the 334.18 commissioner of revenue that is equal to the solid waste 334.19 management tax owed by the generator or self-hauler. 334.20 Sec. 17. [297F.12] [INFORMATION REGARDING THE SOLID WASTE 334.21 MANAGEMENT TAX.] 334.22 The director of the office of environmental assistance, 334.23 after consulting with the commissioner of revenue, the 334.24 commissioner of the pollution control agency, and waste 334.25 management service providers, shall develop information 334.26 regarding the solid waste management tax for distribution to 334.27 waste generators in the state. The information shall include 334.28 facts about the substitution of the solid waste management tax 334.29 for the sales tax on solid waste services and the solid waste 334.30 generator assessment and the purposes for which revenue from the 334.31 tax will be spent. 334.32 Sec. 18. [297F.13] [DEPOSIT OF REVENUES; USE OF PROCEEDS; 334.33 FUNDING SHORTFALLS; REPORT ON RECEIPTS.] 334.34 Subdivision 1. [DEPOSIT OF REVENUES.] The revenues derived 334.35 from the taxes imposed on waste management services under this 334.36 chapter, less the costs to the department of revenue for 335.1 administering the tax under this chapter, shall be deposited by 335.2 the commissioner of revenue in the state treasury. 335.3 The amounts retained by the department of revenue shall be 335.4 deposited in a separate revenue department fund which is hereby 335.5 created. Money in this fund is hereby appropriated, up to a 335.6 maximum annual amount of $200,000, to the commissioner of 335.7 revenue for the costs incurred in administration of the solid 335.8 waste management tax under this chapter. 335.9 Subd. 2. [ALLOCATION OF REVENUES.] (a) $22,000,000, or 50 335.10 percent, whichever is greater, of the amounts remitted under 335.11 this chapter must be credited to the solid waste fund 335.12 established in section 115B.42. 335.13 (b) The remainder must be deposited into the general fund. 335.14 Subd. 3. [FUNDING SHORTFALLS.] If less than $22,000,000 is 335.15 projected to be available for new encumbrances in any fiscal 335.16 year after fiscal year 1999 from all existing dedicated revenue 335.17 sources for landfill cleanup and reimbursement costs under 335.18 sections 115B.39 to 115B.445, by October 1 before the next 335.19 fiscal year in which the shortfall is projected, the 335.20 commissioner of the pollution control agency shall certify to 335.21 the commissioner of revenue the amount of the shortfall and 335.22 notify persons required to collect and remit the tax. To 335.23 provide for the shortfall, the commissioner of revenue shall 335.24 increase the tax under sections 297F.03, 297F.04, and 297F.05, 335.25 proportionately for both mixed municipal solid waste and 335.26 non-mixed-municipal solid waste, by an amount sufficient to 335.27 generate revenue equal to the amount of the shortfall effective 335.28 the following January 1 and shall provide notice of the 335.29 increased assessment by November 1 following certification to 335.30 persons who are required to collect and remit the tax under this 335.31 chapter. 335.32 Subd. 4. [EXCESS REVENUE ADJUSTMENT.] If the total tax 335.33 revenues collected from the taxes imposed under this chapter in 335.34 fiscal year 1999 is projected to exceed $44,500,000, the 335.35 commissioner of revenue shall decrease proportionately the 335.36 amount of the tax under sections 297F.02, 297F.03, 297F.04, and 336.1 297F.05, by an amount sufficient to eliminate the excess 336.2 effective October 1, 1999, and shall provide notice of the 336.3 decreased tax by August 1, 1999, to waste management service 336.4 providers. 336.5 Subd. 5. [REPORT ON RECEIPTS.] The commissioner of revenue 336.6 shall report to the chairs of the house and senate environment 336.7 and natural resources committees; the house environment and 336.8 natural resources finance division; the senate environment and 336.9 agriculture budget division; the house tax committee and the 336.10 senate taxes and tax laws committee; the commissioner of the 336.11 pollution control agency; and the director of the office of 336.12 environmental assistance on the total tax revenues received from 336.13 the taxes imposed under this chapter. The reports shall be made 336.14 as follows: 336.15 (1) a report by May 31, 1998, based on amounts received by 336.16 the commissioner of revenue from January 1, 1998, through April 336.17 30, 1998; 336.18 (2) a report by September 30, 1998, based on amounts 336.19 received by the commissioner of revenue from May 1, 1998, 336.20 through August 31, 1998; and 336.21 (3) a report by January 31, 1999, based on amounts received 336.22 by the commissioner of revenue from September 1, 1998, through 336.23 December 31, 1998. 336.24 Subd. 6. [ORGANIZED COLLECTION BILLING PRACTICES.] In 336.25 preparing the report required under section 115A.981, including 336.26 the duty to consider information filed by political subdivisions 336.27 under section 115A.929, the commissioner of the pollution 336.28 control agency shall report the extent, if any, to which the 336.29 solid waste management tax is not being collected on the full 336.30 cost of organized collection service because of billings that do 336.31 not reflect the full cost of service. 336.32 Sec. 19. [MORATORIUM.] 336.33 The commissioner of revenue shall not initiate or continue 336.34 any action to collect any underpayment from political 336.35 subdivisions, or to reimburse any overpayment to any political 336.36 subdivisions, of use taxes on solid waste management services 337.1 under Minnesota Statutes, section 297A.45, for the period from 337.2 January 1, 1990, through December 31, 1996. 337.3 Sec. 20. [REPEALER.] 337.4 Minnesota Statutes 1996, sections 116.07, subdivision 10; 337.5 297A.01, subdivision 21; and 297A.45, as amended by Laws 1997, 337.6 chapter 84, article 3, section 8, are repealed. 337.7 Sec. 21. [EFFECTIVE DATES.] 337.8 Sections 1 to 18 and 20 are effective January 1, 1998. 337.9 Section 19 is effective the day following final enactment. 337.10 ARTICLE 14 337.11 SENIOR CITIZENS PROPERTY TAX DEFERRAL 337.12 Section 1. Minnesota Statutes 1996, section 270B.12, is 337.13 amended by adding a subdivision to read: 337.14 Subd. 12. [PROPERTY TAX DEFERRAL.] The commissioner may 337.15 disclose to a county auditor and treasurer, and to their 337.16 designated agents or employees, the annual deferral amounts and 337.17 the cumulative deferral and interest as determined by the 337.18 commissioner under chapter 290B for each parcel of homestead 337.19 property in the county that is enrolled in the senior citizen 337.20 property tax deferral program under chapter 290B. 337.21 Sec. 2. Minnesota Statutes 1996, section 275.065, 337.22 subdivision 3, is amended to read: 337.23 Subd. 3. [NOTICE OF PROPOSED PROPERTY TAXES.] (a) The 337.24 county auditor shall prepare and the county treasurer shall 337.25 deliver after November 10 and on or before November 24 each 337.26 year, by first class mail to each taxpayer at the address listed 337.27 on the county's current year's assessment roll, a notice of 337.28 proposed property taxes and, in the case of a town, final 337.29 property taxes. 337.30 (b) The commissioner of revenue shall prescribe the form of 337.31 the notice. 337.32 (c) The notice must inform taxpayers that it contains the 337.33 amount of property taxes each taxing authority other than a town 337.34 proposes to collect for taxes payable the following year and, 337.35 for a town, the amount of its final levy. It must clearly state 337.36 that each taxing authority, including regional library districts 338.1 established under section 134.201, and including the 338.2 metropolitan taxing districts as defined in paragraph (i), but 338.3 excluding all other special taxing districts and towns, will 338.4 hold a public meeting to receive public testimony on the 338.5 proposed budget and proposed or final property tax levy, or, in 338.6 case of a school district, on the current budget and proposed 338.7 property tax levy. It must clearly state the time and place of 338.8 each taxing authority's meeting and an address where comments 338.9 will be received by mail. 338.10 (d) The notice must state for each parcel: 338.11 (1) the market value of the property as determined under 338.12 section 273.11, and used for computing property taxes payable in 338.13 the following year and for taxes payable in the current year; 338.14 and, in the case of residential property, whether the property 338.15 is classified as homestead or nonhomestead. The notice must 338.16 clearly inform taxpayers of the years to which the market values 338.17 apply and that the values are final values; 338.18 (2) by county, city or town, school district excess 338.19 referenda levy, remaining school district levy, regional library 338.20 district, if in existence, the total of the metropolitan special 338.21 taxing districts as defined in paragraph (i) and the sum of the 338.22 remaining special taxing districts, and as a total of the taxing 338.23 authorities, including all special taxing districts, the 338.24 proposed or, for a town, final net tax on the property for taxes 338.25 payable the following year and the actual tax for taxes payable 338.26 the current year. If a school district has certified under 338.27 section 124A.03, subdivision 2, that a referendum will be held 338.28 in the school district at the November general election, the 338.29 county auditor must note next to the school district's proposed 338.30 amount that a referendum is pending and that, if approved by the 338.31 voters, the tax amount may be higher than shown on the notice. 338.32 For the purposes of this subdivision, "school district excess 338.33 referenda levy" means school district taxes for operating 338.34 purposes approved at referendums, including those taxes based on 338.35 net tax capacity as well as those based on market value. 338.36 "School district excess referenda levy" does not include school 339.1 district taxes for capital expenditures approved at referendums 339.2 or school district taxes to pay for the debt service on bonds 339.3 approved at referenda. In the case of the city of Minneapolis, 339.4 the levy for the Minneapolis library board and the levy for 339.5 Minneapolis park and recreation shall be listed separately from 339.6 the remaining amount of the city's levy. In the case of a 339.7 parcel where tax increment or the fiscal disparities areawide 339.8 tax under chapter 276A or 473F applies, the proposed tax levy on 339.9 the captured value or the proposed tax levy on the tax capacity 339.10 subject to the areawide tax must each be stated separately and 339.11 not included in the sum of the special taxing districts; and 339.12 (3) the increase or decrease in the amounts in clause (2) 339.13 from taxes payable in the current year to proposed or, for a 339.14 town, final taxes payable the following year, expressed as a 339.15 dollar amount and as a percentage. 339.16 For purposes of this section, the amount of the tax on 339.17 homesteads qualifying under the senior citizens' property tax 339.18 deferral program under chapter 290B is the total amount of 339.19 property tax before subtraction of the deferred property tax 339.20 amount. 339.21 (e) The notice must clearly state that the proposed or 339.22 final taxes do not include the following: 339.23 (1) special assessments; 339.24 (2) levies approved by the voters after the date the 339.25 proposed taxes are certified, including bond referenda, school 339.26 district levy referenda, and levy limit increase referenda; 339.27 (3) amounts necessary to pay cleanup or other costs due to 339.28 a natural disaster occurring after the date the proposed taxes 339.29 are certified; 339.30 (4) amounts necessary to pay tort judgments against the 339.31 taxing authority that become final after the date the proposed 339.32 taxes are certified; and 339.33 (5) the contamination tax imposed on properties which 339.34 received market value reductions for contamination. 339.35 (f) Except as provided in subdivision 7, failure of the 339.36 county auditor to prepare or the county treasurer to deliver the 340.1 notice as required in this section does not invalidate the 340.2 proposed or final tax levy or the taxes payable pursuant to the 340.3 tax levy. 340.4 (g) If the notice the taxpayer receives under this section 340.5 lists the property as nonhomestead and the homeowner provides 340.6 satisfactory documentation to the county assessor that the 340.7 property is owned and used as the owner's homestead, the 340.8 assessor shall reclassify the property to homestead for taxes 340.9 payable in the following year. 340.10 (h) In the case of class 4 residential property used as a 340.11 residence for lease or rental periods of 30 days or more, the 340.12 taxpayer must either: 340.13 (1) mail or deliver a copy of the notice of proposed 340.14 property taxes to each tenant, renter, or lessee; or 340.15 (2) post a copy of the notice in a conspicuous place on the 340.16 premises of the property. 340.17 The notice must be mailed or posted by the taxpayer by 340.18 November 27 or within three days of receipt of the notice, 340.19 whichever is later. A taxpayer may notify the county treasurer 340.20 of the address of the taxpayer, agent, caretaker, or manager of 340.21 the premises to which the notice must be mailed in order to 340.22 fulfill the requirements of this paragraph. 340.23 (i) For purposes of this subdivision, subdivisions 5a and 340.24 6, "metropolitan special taxing districts" means the following 340.25 taxing districts in the seven-county metropolitan area that levy 340.26 a property tax for any of the specified purposes listed below: 340.27 (1) metropolitan council under section 473.132, 473.167, 340.28 473.249, 473.325, 473.446, 473.521, 473.547, or 473.834; 340.29 (2) metropolitan airports commission under section 473.667, 340.30 473.671, or 473.672; and 340.31 (3) metropolitan mosquito control commission under section 340.32 473.711. 340.33 For purposes of this section, any levies made by the 340.34 regional rail authorities in the county of Anoka, Carver, 340.35 Dakota, Hennepin, Ramsey, Scott, or Washington under chapter 340.36 398A shall be included with the appropriate county's levy and 341.1 shall be discussed at that county's public hearing. 341.2 (j) For taxes levied in 1996, payable in 1997 only, in the 341.3 case of a statutory or home rule charter city or town that 341.4 exercises the local levy option provided in section 473.388, 341.5 subdivision 7, the notice of its proposed taxes may include a 341.6 statement of the amount by which its proposed tax increase for 341.7 taxes payable in 1997 is attributable to its exercise of that 341.8 option, together with a statement that the levy of the 341.9 metropolitan council was decreased by a similar amount because 341.10 of the exercise of that option. 341.11 Sec. 3. Minnesota Statutes 1996, section 276.04, 341.12 subdivision 2, is amended to read: 341.13 Subd. 2. [CONTENTS OF TAX STATEMENTS.] (a) The treasurer 341.14 shall provide for the printing of the tax statements. The 341.15 commissioner of revenue shall prescribe the form of the property 341.16 tax statement and its contents. The statement must contain a 341.17 tabulated statement of the dollar amount due to each taxing 341.18 authority from the parcel of real property for which a 341.19 particular tax statement is prepared. The dollar amounts due 341.20 the county, township or municipality, the total of the 341.21 metropolitan special taxing districts as defined in section 341.22 275.065, subdivision 3, paragraph (i), school district excess 341.23 referenda levy, remaining school district levy, and the total of 341.24 other voter approved referenda levies based on market value 341.25 under section 275.61 must be separately stated. The amounts due 341.26 all other special taxing districts, if any, may be aggregated. 341.27 The amount of the tax on homesteads qualifying under the senior 341.28 citizens' property tax deferral program under chapter 290B is 341.29 the total amount of property tax before subtraction of the 341.30 deferred property tax amount. For the purposes of this 341.31 subdivision, "school district excess referenda levy" means 341.32 school district taxes for operating purposes approved at 341.33 referenda, including those taxes based on net tax capacity as 341.34 well as those based on market value. "School district excess 341.35 referenda levy" does not include school district taxes for 341.36 capital expenditures approved at referendums or school district 342.1 taxes to pay for the debt service on bonds approved at 342.2 referenda. The amount of the tax on contamination value imposed 342.3 under sections 270.91 to 270.98, if any, must also be separately 342.4 stated. The dollar amounts, including the dollar amount of any 342.5 special assessments, may be rounded to the nearest even whole 342.6 dollar. For purposes of this section whole odd-numbered dollars 342.7 may be adjusted to the next higher even-numbered dollar. The 342.8 amount of market value excluded under section 273.11, 342.9 subdivision 16, if any, must also be listed on the tax 342.10 statement. The statement shall include the following sentence, 342.11 printed in upper case letters in boldface print: "THE STATE OF 342.12 MINNESOTA DOES NOT RECEIVE ANY PROPERTY TAX REVENUES. THE STATE 342.13 OF MINNESOTA REDUCES YOUR PROPERTY TAX BY PAYING CREDITS AND 342.14 REIMBURSEMENTS TO LOCAL UNITS OF GOVERNMENT." 342.15 (b) The property tax statements for manufactured homes and 342.16 sectional structures taxed as personal property shall contain 342.17 the same information that is required on the tax statements for 342.18 real property. 342.19 (c) Real and personal property tax statements must contain 342.20 the following information in the order given in this paragraph. 342.21 The information must contain the current year tax information in 342.22 the right column with the corresponding information for the 342.23 previous year in a column on the left: 342.24 (1) the property's estimated market value under section 342.25 273.11, subdivision 1; 342.26 (2) the property's taxable market value after reductions 342.27 under section 273.11, subdivisions 1a and 16; 342.28 (3) the property's gross tax, calculated by multiplying the 342.29 property's gross tax capacity times the total local tax rate and 342.30 adding to the result the sum of the aids enumerated in clause 342.31 (4); 342.32 (4) a total of the following aids: 342.33 (i) education aids payable under chapters 124 and 124A; 342.34 (ii) local government aids for cities, towns, and counties 342.35 under chapter 477A; and 342.36 (iii) disparity reduction aid under section 273.1398; 343.1 (5) for homestead residential and agricultural properties, 343.2 the homestead and agricultural credit aid apportioned to the 343.3 property. This amount is obtained by multiplying the total 343.4 local tax rate by the difference between the property's gross 343.5 and net tax capacities under section 273.13. This amount must 343.6 be separately stated and identified as "homestead and 343.7 agricultural credit." For purposes of comparison with the 343.8 previous year's amount for the statement for taxes payable in 343.9 1990, the statement must show the homestead credit for taxes 343.10 payable in 1989 under section 273.13, and the agricultural 343.11 credit under section 273.132 for taxes payable in 1989; 343.12 (6) any credits received under sections 273.119; 273.123; 343.13 273.135; 273.1391; 273.1398, subdivision 4; 469.171; and 343.14 473H.10, except that the amount of credit received under section 343.15 273.135 must be separately stated and identified as "taconite 343.16 tax relief";and343.17 (7) any deferred property tax amount under the senior 343.18 citizens' property tax deferral program under chapter 290B, as 343.19 well as the total deferred amount plus accrued interest; and 343.20 (8) the net tax payable in the manner required in paragraph 343.21 (a). 343.22 (d) If the county uses envelopes for mailing property tax 343.23 statements and if the county agrees, a taxing district may 343.24 include a notice with the property tax statement notifying 343.25 taxpayers when the taxing district will begin its budget 343.26 deliberations for the current year, and encouraging taxpayers to 343.27 attend the hearings. If the county allows notices to be 343.28 included in the envelope containing the property tax statement, 343.29 and if more than one taxing district relative to a given 343.30 property decides to include a notice with the tax statement, the 343.31 county treasurer or auditor must coordinate the process and may 343.32 combine the information on a single announcement. 343.33 The commissioner of revenue shall certify to the county 343.34 auditor the actual or estimated aids enumerated in clauses (3) 343.35 and (4) that local governments will receive in the following 343.36 year. In the case of a county containing a city of the first 344.1 class, for taxes levied in 1991, and for all counties for taxes 344.2 levied in 1992 and thereafter, the commissioner must certify 344.3 this amount by September 1. 344.4 Sec. 4. [290B.01] [PURPOSE.] 344.5 Minnesota's system of ad valorem property taxation does not 344.6 adequately recognize the unique financial circumstances of 344.7 homestead property owned and occupied by low-income senior 344.8 citizens. It is therefore declared to be in the public interest 344.9 of this state to stabilize tax burdens on homestead property 344.10 owned by qualifying low-income senior citizens through a 344.11 deferral of certain property taxes. 344.12 Sec. 5. [290B.02] [CITATION.] 344.13 This program shall be named the "senior citizens' property 344.14 tax deferral program." 344.15 Sec. 6. [290B.03] [DEFERRAL OF PROPERTY TAXES.] 344.16 Subdivision 1. [PROGRAM QUALIFICATIONS.] The 344.17 qualifications for the senior citizens' property tax deferral 344.18 program are as follows: 344.19 (1) the property must be owned and occupied as a homestead 344.20 by a person 65 years of age or older. In the case of a married 344.21 couple, both of the spouses must be at least 65 years old at the 344.22 time the first property tax deferral is granted, regardless of 344.23 whether the property is titled in the name of one spouse or both 344.24 spouses, or titled in another way that permits the property to 344.25 have homestead status; 344.26 (2) the total household income of the qualifying 344.27 homeowners, as defined in section 290A.03, subdivision 5, for 344.28 the calendar year preceding the year of the initial application 344.29 may not exceed $30,000; 344.30 (3) the homestead must have been owned and occupied as the 344.31 homestead of at least one of the qualifying homeowners for at 344.32 least 15 years prior to the year the initial application is 344.33 filed; 344.34 (4) there are no delinquent property taxes, penalties, or 344.35 interest on the homesteaded property; 344.36 (5) there are no delinquent special assessments on the 345.1 homesteaded property; 345.2 (6) there are no state or federal tax liens or judgment 345.3 liens on the homesteaded property; 345.4 (7) there are no mortgages or other liens on the property 345.5 that secure future advances, except for those subject to credit 345.6 limits that result in compliance with clause (8); and 345.7 (8) the total unpaid balances of debts secured by mortgages 345.8 and other liens on the property, including unpaid special 345.9 assessments, but not including property taxes payable during the 345.10 year, does not exceed 30 percent of the assessor's estimated 345.11 market value for the year. 345.12 Subd. 2. [QUALIFYING HOMESTEAD; DEFINED.] Qualifying 345.13 homestead property is defined as the dwelling occupied as the 345.14 homeowner's principal residence and so much of the land 345.15 surrounding it, not exceeding one acre, as is reasonably 345.16 necessary for use of the dwelling as a home and any other 345.17 property used for purposes of a homestead as defined in section 345.18 273.13, subdivisions 22 and 23. The homestead may be part of a 345.19 multidwelling building and the land on which it is built. 345.20 Sec. 7. [290B.04] [APPLICATION FOR DEFERRAL.] 345.21 Subdivision 1. [INITIAL APPLICATION.] A taxpayer meeting 345.22 the program qualifications under section 290B.03 may apply to 345.23 the commissioner of revenue for the deferral of taxes. 345.24 Applications are due on or before July 1 for deferral of any of 345.25 the following year's property taxes. A taxpayer may apply in 345.26 the year in which the taxpayer becomes 65 years old, provided 345.27 that no deferral of property taxes will be made until the 345.28 calendar year after the taxpayer becomes 65 years old. The 345.29 application, which shall be prescribed by the commissioner of 345.30 revenue, shall include the following items and any other 345.31 information which the commissioner deems necessary: 345.32 (1) the name, address, and social security number of the 345.33 owner or owners; 345.34 (2) a copy of the property tax statement for the current 345.35 payable year for the homesteaded property; 345.36 (3) the initial year of ownership and occupancy as a 346.1 homestead; 346.2 (4) the owner's household income for the previous calendar 346.3 year; and 346.4 (5) information on any mortgage loans or other amounts 346.5 secured by mortgages or other liens against the property, for 346.6 which purpose the commissioner may require the applicant to 346.7 provide a copy of the mortgage note, the mortgage, or a 346.8 statement of the balance owing on the mortgage loan provided by 346.9 the mortgage holder. The commissioner may require the 346.10 appropriate documents in connection with obtaining and 346.11 confirming information on unpaid amounts secured by other liens. 346.12 The application must state that program participation is 346.13 voluntary. The application must also state that the deferred 346.14 amount depends directly on the applicant's household income, and 346.15 that program participation includes authorization for the 346.16 deferred amount for each year and the cumulative deferral and 346.17 interest to appear on each year's property tax statement as 346.18 public data. 346.19 Subd. 2. [APPROVAL; RECORDING.] The commissioner shall 346.20 approve all initial applications that qualify under this chapter 346.21 and shall notify qualifying homeowners on or before December 1. 346.22 The commissioner may investigate the facts or require 346.23 confirmation in regard to an application. The commissioner 346.24 shall record or file a notice of qualification for deferral, 346.25 including the names of the qualifying homeowners and a legal 346.26 description of the property, in the office of the county 346.27 recorder, or registrar of titles, whichever is applicable, in 346.28 the county where the qualifying property is located. The notice 346.29 must state that it serves as a notice of lien and that it 346.30 includes deferrals under this section for future years. The 346.31 homeowner shall pay the recording or filing fees. 346.32 Subd. 3. [ANNUAL CERTIFICATION BY TAXPAYER.] Annually on 346.33 or before July 1, a taxpayer whose initial application has been 346.34 approved under subdivision 2, shall complete the certification 346.35 form and return it to the commissioner of revenue. The 346.36 certification must state whether or not the taxpayer wishes to 347.1 have property taxes deferred for the following year provided the 347.2 taxes exceed the maximum property tax amount under section 347.3 290B.05. If the taxpayer does wish to have property taxes 347.4 deferred, the certification must state the homeowner's total 347.5 household income for the previous calendar year and any other 347.6 information which the commissioner deems necessary. 347.7 Sec. 8. [290B.05] [MAXIMUM PROPERTY TAX AMOUNT AND 347.8 DEFERRED PROPERTY TAX AMOUNT.] 347.9 Subdivision 1. [DETERMINATION BY COMMISSIONER.] The 347.10 commissioner shall annually determine the qualifying homeowner's 347.11 "maximum property tax amount" and "maximum allowable deferral." 347.12 The maximum property tax amount calculated for taxes payable in 347.13 the following year is equal to five percent of the homeowner's 347.14 total household income for the previous calendar year. No tax 347.15 may be deferred for any homeowner whose total household income 347.16 for the previous year exceeds $30,000. No tax shall be deferred 347.17 in any year in which the homeowner does not meet the program 347.18 qualifications in section 290B.03. The maximum allowable total 347.19 deferral is equal to 75 percent of the assessor's estimated 347.20 market value for the year, less (1) the balance of any mortgage 347.21 loans and other amounts secured by liens against the property at 347.22 the time of application, including any unpaid special 347.23 assessments but not including property taxes payable during the 347.24 year; and (2) any outstanding deferral and interest. 347.25 Subd. 2. [CERTIFICATION BY COMMISSIONER.] On or before 347.26 December 1, the commissioner shall certify to the county auditor 347.27 of the county in which the qualifying homestead is located (1) 347.28 the maximum property tax amount; (2) the maximum allowable 347.29 deferral for the year; and (3) the cumulative deferral and 347.30 interest for all years preceding the next taxes payable year. 347.31 Subd. 3. [CALCULATION OF DEFERRED PROPERTY TAX AMOUNT.] 347.32 When final property tax amounts for the following year have been 347.33 determined, the county auditor shall calculate the "deferred 347.34 property tax amount." The deferred property tax amount is equal 347.35 to the lesser of (1) the maximum allowable deferral for the 347.36 year; or (2) the difference between the total amount of property 348.1 taxes levied upon the qualifying homestead by all taxing 348.2 jurisdictions and the maximum property tax amount. Any special 348.3 assessments levied by any local unit of government must not be 348.4 included in the total tax used to calculate the deferred tax 348.5 amount. No deferral of the current year's property taxes is 348.6 allowed if there are any delinquent property taxes or delinquent 348.7 special assessments for any previous year. Any tax attributable 348.8 to new improvements made to the property after the initial 348.9 application has been approved under section 290B.04, subdivision 348.10 2, must be excluded when determining any subsequent deferred 348.11 property tax amount. The county auditor shall annually, on or 348.12 before April 15, certify to the commissioner of revenue the 348.13 property tax deferral amounts determined under this subdivision 348.14 by property and by owner. 348.15 Subd. 4. [LIMITATION ON TOTAL AMOUNT OF DEFERRED TAXES.] 348.16 On or before September 1 of each year, the commissioner shall 348.17 request, and each county or city assessor shall provide, the 348.18 current year's estimated market value of each property on the 348.19 list supplied by the commissioner that may be eligible for 348.20 deferral under this section for taxes payable in the following 348.21 year. The total amount of deferred taxes and interest on a 348.22 property, when added to (1) the balance owing on any mortgages 348.23 on the property at the time of initial application; and (2) 348.24 other amounts secured by liens on the property at the time of 348.25 the initial application, may not exceed 75 percent of the 348.26 assessor's current estimated market value of the property. 348.27 Sec. 9. [290B.06] [PROPERTY TAX REFUNDS.] 348.28 For purposes of qualifying for the regular property tax 348.29 refund or the special refund for homeowners under chapter 290A, 348.30 the qualifying tax is the full amount of taxes, including the 348.31 deferred portion of the tax. In any year in which a program 348.32 participant chooses to have property taxes deferred under this 348.33 section, any regular or special property tax refund awarded 348.34 based upon those property taxes must be taken first as a 348.35 deduction from the amount of the deferred tax for that year, and 348.36 second as a deduction against any outstanding deferral from 349.1 previous years, rather than as a cash payment to the homeowner. 349.2 The commissioner shall cancel any current year's deferral or 349.3 previous years' deferral and interest that is offset by the 349.4 property tax refunds. If the total of the regular and the 349.5 special property tax refund amounts exceeds the sum of the 349.6 deferred tax for the current year and cumulative deferred tax 349.7 and interest for previous years, the commissioner shall then 349.8 remit the excess amount to the homeowner. On or before the date 349.9 on which the commissioner issues property tax refunds, the 349.10 commissioner shall notify program participants of any reduction 349.11 in the deferred amount for the current and previous years 349.12 resulting from property tax refunds. 349.13 Sec. 10. [290B.07] [LIEN; DEFERRED PORTION.] 349.14 Payment by the state to the county treasurer of taxes 349.15 deferred under this section is deemed a loan from the state to 349.16 the program participant. The commissioner must compute the 349.17 interest as provided in section 270.75, subdivision 5, but not 349.18 to exceed five percent, and maintain records of the total 349.19 deferred amount and interest for each participant. Interest 349.20 shall accrue beginning September 1 of the payable year for which 349.21 the taxes are deferred. The lien created under section 272.31 349.22 continues to secure payment by the taxpayer, or by the 349.23 taxpayer's successors or assigns, of the amount deferred, 349.24 including interest, with respect to all years for which amounts 349.25 are deferred. The lien for deferred taxes and interest has the 349.26 same priority as any other lien under section 272.31, except 349.27 that liens, including mortgages, recorded or filed prior to the 349.28 recording or filing of the notice under section 290B.04, 349.29 subdivision 2, have priority over the lien for deferred taxes 349.30 and interest. A seller's interest in a contract for deed, in 349.31 which a qualifying homeowner is the purchaser or an assignee of 349.32 the purchaser, has priority over deferred taxes and interest on 349.33 deferred taxes, regardless of whether the contract for deed is 349.34 recorded or filed. The lien for deferred taxes and interest for 349.35 future years has the same priority as the lien for deferred 349.36 taxes and interest for the first year, which is always higher in 350.1 priority than any mortgages or other liens filed, recorded, or 350.2 created after the notice recorded or filed under section 350.3 290B.04, subdivision 2. The county treasurer or auditor shall 350.4 maintain records of the deferred portion and shall list the 350.5 amount of deferred taxes for the year and the cumulative 350.6 deferral and interest for all previous years as a lien against 350.7 the property on the property tax statement. In any 350.8 certification of unpaid taxes for a tax parcel, the county 350.9 auditor shall clearly distinguish between taxes payable in the 350.10 current year, deferred taxes and interest, and delinquent 350.11 taxes. Payment of the deferred portion becomes due and owing at 350.12 the time specified in section 290B.08. Upon receipt of the 350.13 payment, the commissioner shall issue a receipt for it to the 350.14 person making the payment upon request and shall notify the 350.15 auditor of the county in which the parcel is located, within ten 350.16 days, identifying the parcel to which the payment applies. Upon 350.17 receipt by the commissioner of revenue of collected funds in the 350.18 amount of the deferral, the state's loan to the program 350.19 participant is deemed paid in full. 350.20 Sec. 11. [290B.08] [TERMINATION OF DEFERRAL; PAYMENT OF 350.21 DEFERRED TAXES.] 350.22 Subdivision 1. [TERMINATION.] (a) The deferral of taxes 350.23 granted under this chapter terminates when one of the following 350.24 occurs: 350.25 (1) the property is sold or transferred; 350.26 (2) the death of the qualifying homeowner(s); 350.27 (3) the homeowner notifies the commissioner in writing that 350.28 the homeowner desires to discontinue the deferral; or 350.29 (4) the property no longer qualifies as a homestead. 350.30 (b) A property is not terminated from the program because 350.31 no deferred property tax amount is determined on the homestead 350.32 for any given year after the homestead's initial enrollment into 350.33 the program. 350.34 Subd. 2. [PAYMENT UPON TERMINATION.] Upon the termination 350.35 of the deferral under subdivision 1, the amount of deferred 350.36 taxes and interest plus the recording or filing fees under both 351.1 section 290B.04, subdivision 2, and this subdivision becomes due 351.2 and payable to the commissioner within 90 days of termination of 351.3 the deferral. No additional interest is due on the deferral if 351.4 timely paid. On receipt of payment, the commissioner shall 351.5 within ten days notify the auditor of the county in which the 351.6 parcel is located, identifying the parcel to which the payment 351.7 applies and shall remit the recording or filing fees under 351.8 section 290B.04, subdivision 2, and this subdivision to the 351.9 auditor. A notice of termination of deferral, containing the 351.10 legal description and the recording or filing data for the 351.11 notice of qualification for deferral under section 290B.04, 351.12 subdivision 2, shall be prepared and recorded or filed by the 351.13 county auditor in the same office in which the notice of 351.14 qualification for deferral under section 290B.04, subdivision 2, 351.15 was recorded or filed, and the county auditor shall mail a copy 351.16 of the notice of termination to the property owner. The 351.17 property owner shall pay the recording or filing fees. Upon 351.18 recording or filing of the notice of termination of deferral, 351.19 the notice of qualification for deferral under section 290B.04, 351.20 subdivision 2, and the lien created by it are discharged. If 351.21 the deferral is not timely paid, the penalty, interest, lien, 351.22 forfeiture, and other rules for the collection of ad valorem 351.23 property taxes apply. 351.24 Sec. 12. [290B.09] [STATE REIMBURSEMENT.] 351.25 Subdivision 1. [DETERMINATION; PAYMENT.] The commissioner 351.26 of revenue shall determine the deferred amount of property tax 351.27 in each county, basing determinations on a review of abstracts 351.28 of tax lists submitted by the county auditors under section 351.29 275.29. The commissioner may make changes in the abstracts of 351.30 tax lists as deemed necessary. The commissioner of revenue, 351.31 after such review, shall pay the deferred amount of property tax 351.32 to each county treasurer on or before August 31. 351.33 At least once each year, the commissioner shall report to 351.34 the county auditor the total cumulative amount of deferred taxes 351.35 and interest that constitute a lien against the property. 351.36 The county treasurer shall distribute as part of the 352.1 October settlement the funds received as if they had been 352.2 collected as a part of the property tax. 352.3 Subd. 2. [APPROPRIATION.] An amount sufficient to pay the 352.4 total amount of property tax determined under subdivision 1 is 352.5 annually appropriated from the general fund to the commissioner 352.6 of revenue. 352.7 Sec. 13. [DEPARTMENT OF REVENUE APPROPRIATION.] 352.8 There is appropriated to the commissioner of revenue 352.9 $33,000 for fiscal year 1999 for the purposes of administering 352.10 the provisions of this article. 352.11 Sec. 14. [EFFECTIVE DATE.] 352.12 Sections 1 to 12 are effective for deferral of property 352.13 taxes payable in 1999, and thereafter. 352.14 ARTICLE 15 352.15 INSURANCE PROVISIONS 352.16 Section 1. Minnesota Statutes 1996, section 60A.075, 352.17 subdivision 1, is amended to read: 352.18 Subdivision 1. [DEFINITIONS.] For the purposes of this 352.19 section, the terms in this subdivision have the meanings given 352.20 them. 352.21 (a) "Eligible member" means a policyholder whose policy is 352.22 in force as of the record date, which is the date that the 352.23 mutual company's board of directors adopts a plan of conversion 352.24 or some other date specified as the record date in the plan of 352.25 conversion and approved by the commissioner. Unless otherwise 352.26 provided in the plan, a person insured under a group policy is 352.27 not an eligible member, unless on the record date: 352.28 (1) the person is insured or covered under a group life 352.29 policy or group annuity contract under which funds are 352.30 accumulated and allocated to the respective covered persons; 352.31 (2) the person has the right to direct the application of 352.32 the funds so allocated; 352.33 (3) the group policyholder makes no contribution to the 352.34 premiums or deposits for the policy or contract; and 352.35 (4) the converting mutual company has the names and 352.36 addresses of the persons covered under the group life policy or 353.1 group annuity contract. 353.2 (b) "Reorganized company" means a Minnesota domestic stock 353.3 insurance company that has converted from a Minnesota domestic 353.4 mutual insurance company according to this section. 353.5 (c) "Plan of conversion" or "plan" means a plan adopted by 353.6 a Minnesota domestic mutual insurance company's board of 353.7 directors under this section to convert the mutual company into 353.8 a Minnesota domestic stock insurance company. 353.9 (d) "Policy" means a policy or contract of insurance issued 353.10 by a converting mutual company, including an annuity contract. 353.11 (e) "Commissioner" means the commissioner of commerce. 353.12 (f) "Converting mutual company" means a Minnesota domestic 353.13 mutual insurance company seeking to convert to a Minnesota 353.14 domestic stock insurance company according to this section. 353.15 (g) "Effective date of a conversion" means the date 353.16 determined according to subdivision 6. 353.17 (h) "Membership interests" means all policyholders' rights 353.18 as members of the converting mutual company, including but not 353.19 limited to, rights to vote and to participate in any 353.20 distributions of surplus, whether or not incident to the 353.21 company's liquidation. 353.22 (i) "Equitable surplus" means the converting mutual 353.23 company's surplus as regards policyholders as of the 353.24effectiverecord date of the conversion or other date approved 353.25 by the commissioner determined in a manner that is not unfair or 353.26 inequitable to policyholders. 353.27 (j) "Permitted issuer" means: (1) a corporation organized 353.28 and owned by the converting mutual company or by any other 353.29 insurance company or insurance holding company for the purpose 353.30 of purchasing and holdingall of the stocksecurities 353.31 representing a majority of voting control of the reorganized 353.32 company; (2) a stock insurance company owned by the converting 353.33 mutual company or by any other insurance company or insurance 353.34 holding company into which the converting mutual company will be 353.35 merged; or (3) any other corporation approved by the 353.36 commissioner. 354.1 Sec. 2. Minnesota Statutes 1996, section 60A.075, 354.2 subdivision 8, is amended to read: 354.3 Subd. 8. [SHARE CONVERSION.] A plan of conversion under 354.4 this subdivision shall provide for exchange of policyholders' 354.5 membership interests in return for shares in the reorganized 354.6 company, according to paragraphs (a) to (c). 354.7 (a) The policyholders' membership interests shall be 354.8 exchanged, in a manner that takes into account the estimated 354.9 proportionate contribution of equitable surplus of each class of 354.10 participating policies and contracts, for all of the common 354.11 shares of the reorganized company or common shares of its parent 354.12 company or a permitted issuer, or for a combination of the 354.13 common shares of the reorganized company or common shares of its 354.14 parent company or a permitted issuer. 354.15 (b) Unless the anticipated issuance within a shorter period 354.16 is disclosed in the plan of conversion, the issuer of common 354.17 shares shall not, within two years after the effective date of 354.18 reorganization, issue either of the following: 354.19 (1) any of its common shares or any securities convertible 354.20 with or without consideration into the common shares or carrying 354.21 any warrant to subscribe to or purchase common shares; and 354.22 (2) any warrant, right, or option to subscribe to or 354.23 purchase the common shares or other securities described in 354.24 paragraph (a), except for the issue of common shares to or for 354.25 the benefit of policyholders according to the plan of conversion 354.26 and the issue ofoptionsnontransferable subscription rights for 354.27 the purchase of common shares being granted to officers, 354.28 directors, oremployeesa tax qualified employee benefit plan of 354.29 the reorganized company or its parent company, if any, or a 354.30 permitted issuer, according tothis sectionsubdivision 11. 354.31 (c) Unless the common shares have a public market when 354.32 issued, the issuer shall use its best efforts to encourage and 354.33 assist in the establishment of a public market for the common 354.34 shares within two years of the effective date of the conversion 354.35 or a longer period as disclosed in the plan of conversion. 354.36 Within one year after any offering of stock other than the 355.1 initial distribution, but no later than six years after the 355.2 effective date of the conversion, the reorganized company shall 355.3 offer to make available to policyholders who received and 355.4 retained shares of common stock or securities described in 355.5 paragraph (b), clause (1), a procedure to dispose of those 355.6 shares of stock at market value without brokerage commissions or 355.7 similar fees. 355.8 Sec. 3. Minnesota Statutes 1996, section 60A.075, 355.9 subdivision 9, is amended to read: 355.10 Subd. 9. [SURPLUS DISTRIBUTION.] A plan of conversion 355.11 under this subdivision shall provide for the exchange of the 355.12 policyholders' membership interests in return for the operation 355.13 of the converting mutual company's participating policies as a 355.14 closed block of business and for the distribution of the 355.15 company's equitable surplus to policyholders, and shall provide 355.16 for the issuance of new shares of the reorganized company or its 355.17 parent corporation, each according to paragraphs (a) to (i). 355.18 (a) The converting mutual company's participating business, 355.19 comprised of its participating policies and contracts in force 355.20 on the effective date of the conversion or other reasonable date 355.21 as provided in the plan, shall be operated by the reorganized 355.22 company as a closed block of participating business. However, 355.23 at the option of the converting mutual company, group policies 355.24 and group contracts may be omitted from the closed block. 355.25 (b) Assets of the converting mutual company must be 355.26 allocated to the closed block of participating business in an 355.27 amount equal to the reserves and liabilities for the converting 355.28 mutual life insurer's participating policies and contracts in 355.29 force on the effective date of the conversion. The plan must be 355.30 accompanied by an opinion of an independent qualified actuary 355.31 who meets the standards set forth in the insurance laws or 355.32 regulations for the submission of actuarial opinions as to the 355.33 adequacy of reserves or assets. The opinion must relate to the 355.34 adequacy of the assets allocated to support the closed block of 355.35 business. The actuarial opinion must be based on methods of 355.36 analysis considered appropriate for those purposes by the 356.1 Actuarial Standards Board. 356.2 (c) The reorganized company shall keep a separate 356.3 accounting for the closed block and shall make and include in 356.4 the annual statement to be filed with the commissioner each year 356.5 a separate statement showing the gains, losses, and expenses 356.6 properly attributable to the closed block. 356.7 (d) Notwithstanding the establishment of a closed block, 356.8 the entire assets of the reorganized company shall be available 356.9 for the payment of benefits to policyholders. Payment must 356.10 first be made from the assets supporting the closed block until 356.11 exhausted, and then from the general assets of the reorganized 356.12 company. 356.13 (e) The converting mutual company's equitable surplus shall 356.14 be distributed to eligible participating policyholders in a form 356.15 or forms selected by the converting mutual company. The form of 356.16 distribution may consist of cash, securities of the reorganized 356.17 company, securities of another institution, a certificate of 356.18 contribution, additional life insurance, annuity benefits, 356.19 increased dividends, reduced premiums, or other equitable 356.20 consideration or any combination of forms of consideration. The 356.21 consideration, if any, given to a class or category of 356.22 policyholders may differ from the consideration given to another 356.23 class or category of policyholders. A certificate of 356.24 contribution must be repayable in ten years, be equal to 100 356.25 percent of the value of the policyholders' membership interest, 356.26 and bear interest at the highest rate charged by the reorganized 356.27 company for policy loans on the effective date of the conversion. 356.28 (f) The consideration must be allocated among the 356.29 policyholders in a manner that is fair and equitable to the 356.30 policyholders. 356.31 (g) The reorganized company or its parent corporation shall 356.32 issue and sell shares of one or more classes having a total 356.33 price equal to the estimated value in the market of the shares 356.34 on the initial offering date. The estimated value must take 356.35 into account all of the following: 356.36 (1) the pro forma market value of the reorganized company; 357.1 (2) the consideration to be given to policyholders 357.2 according to paragraph (e); 357.3 (3) the proceeds of the sale of the shares; and 357.4 (4) any additional value attributable to the shares as a 357.5 result of a purchaser or a group of purchasers who acted in 357.6 concert to obtain shares in the initial offering, attaining, 357.7 through such purchase, control of the reorganized company or its 357.8 parent corporation. 357.9 (h) If a purchaser or a group of purchasers acting in 357.10 concert is to attain control in the initial offering, the mutual 357.11 company shall not, directly or indirectly, pay for any of the 357.12 costs or expenses of conversion of the mutual company, whether 357.13 or not the conversion is effected, except with permission of the 357.14 commissioner. 357.15 (i) Periodically, with the commissioner's approval, the 357.16 reorganized company may share in the profits of the closed block 357.17 of participating business for the benefit of stockholders if the 357.18 assets allocated to the closed block are in excess of those 357.19 necessary to support the closed block. 357.20 Sec. 4. Minnesota Statutes 1996, section 60A.077, 357.21 subdivision 1, is amended to read: 357.22 Subdivision 1. [FORMATION.] (a) A domestic mutual 357.23 insurance company, upon approval of the commissioner, may 357.24 reorganize by forming an insurance holding company based upon a 357.25 mutual plan and continuing the corporate existence of the 357.26 reorganizing insurance company as a stock insurance company. 357.27 The commissioner, if satisfied that the interests of the 357.28 policyholders are properly protected and that the plan of 357.29 reorganization is fair and equitable to the policyholders, may 357.30 approve the proposed plan of reorganization and may require as a 357.31 condition of approval the modifications of the proposed plan of 357.32 reorganization as the commissioner finds necessary for the 357.33 protection of the policyholders' interests. The commissioner 357.34 shall retain jurisdiction over the mutual insurance holding 357.35 company according to this section and chapter 60D to assure that 357.36 policyholder and member interests are protected. 358.1 (b) All of the initial voting shares of the capital stock 358.2 of the reorganized insurance company must be issued to the 358.3 mutual insurance holding company or to an intermediate stock 358.4 holding companythat is wholly owned by the mutual insurance358.5holding company. The membership interests of the policyholders 358.6 of the reorganized insurance company become membership interests 358.7 in the mutual insurance holding company. "Membership interests" 358.8 means those interests described in section 60A.075, subdivision 358.9 1, paragraph (h). Policyholders of the reorganized insurance 358.10 company shall be members of the mutual insurance holding company 358.11 and their voting rights must be determined in accordance with 358.12 the articles of incorporation and bylaws of the mutual insurance 358.13 holding company. The mutual insurance holding company shall, at 358.14 all times, directly or throughanone or more intermediate stock 358.15 holdingcompanycompanies, control a majority of the voting 358.16 shares of the capital stock of the reorganized insurance 358.17 company, taking into account any potential dilution resulting 358.18 from convertible securities. 358.19 (c) A majority of the board of directors of a mutual 358.20 insurance holding company must be disinterested directors. For 358.21 purposes of this section, a director is disinterested if (i) the 358.22 director is not or has not within the past two years been an 358.23 officer or employee of the mutual insurance holding company or 358.24 any subsidiary or predecessor corporation, and (ii) the director 358.25 does not hold, directly or indirectly, a material ownership 358.26 interest in any subsidiary of the mutual insurance holding 358.27 company. An ownership interest is material if it represents 358.28 more than one-half of one percent of the voting securities of 358.29 the issuer, or a larger percentage as the commissioner may 358.30 approve. 358.31 Sec. 5. Minnesota Statutes 1996, section 60A.077, 358.32 subdivision 2, is amended to read: 358.33 Subd. 2. [MERGER.] (a) A domestic or foreign mutual 358.34 insurance company, upon the approval of the commissioner, may 358.35 reorganize by merging its policyholders' membership interests 358.36 into a mutual insurance holding company formed according to 359.1 subdivision 1 and continuing the corporate existence of the 359.2 reorganizing insurance company as a stock insurance company 359.3 subsidiary of the mutual insurance holding company or of an 359.4 intermediate stock holding company. "Membership interests" 359.5 means those interests described in section 60A.075, subdivision 359.6 1, paragraph (h). The commissioner, if satisfied that the 359.7 interests of thepolicyholderpolicyholders of the reorganizing 359.8 company and the interests of the existing members of the mutual 359.9 insurance holding company are properly protected and that the 359.10 merger is fair and equitable tothe policyholdersthose parties, 359.11 may approve the proposed merger and may require as a condition 359.12 of approval the modifications of the proposed merger as the 359.13 commissioner finds necessary for the protection of the 359.14 policyholders' or members' interests. The commissioner shall 359.15 retain jurisdiction, under chapter 60D, over the mutual 359.16 insurance holding company organized according to this section to 359.17 assure that policyholder and member interests are protected. 359.18 (b) All of the initial voting shares of the capital stock 359.19 of the reorganized insurance company must be issued to the 359.20 mutual insurance holding company, or to an intermediate stock 359.21 holding companythat is wholly owned by the mutual insurance359.22holding company. The membership interests of the policyholders 359.23 of the reorganized insurance company become membership interests 359.24 in the mutual insurance holding company. Policyholders of the 359.25 reorganized insurance company shall be members of the mutual 359.26 insurance holding company and their voting rights must be 359.27 determined according to the articles of incorporation and bylaws 359.28 of the mutual insurance holding company. The mutual insurance 359.29 holding company shall, at all times, directly or through one or 359.30 more intermediate stock holding companies, control a majority of 359.31 the voting shares of the capital stock of the reorganized 359.32 insurance company, taking into account any potential dilution 359.33 resulting from convertible securities. 359.34 (c) A domestic mutual insurance holding company may merge 359.35 with a domestic or foreign mutual insurance holding company in 359.36 the manner prescribed for the merger of insurance companies set 360.1 forth in section 60A.16, with any exceptions or modifications 360.2 the commissioner may approve. 360.3 Sec. 6. Minnesota Statutes 1996, section 60A.077, 360.4 subdivision 3, is amended to read: 360.5 Subd. 3. [PLAN OF REORGANIZATION; APPROVAL BY 360.6 COMMISSIONER.] (a)TheA reorganizing or merging insurer or a 360.7 merging mutual insurance holding company shallfile a plan of360.8reorganization, approved, by the affirmative vote of a majority 360.9 of its board of directors,for review and approval by the360.10commissioneradopt a plan of reorganization or merger consistent 360.11 with the requirements of this section and file the plan with the 360.12 commissioner. At any time before the approval of a plan by the 360.13 commissioner, the company, by the affirmative vote of a majority 360.14 of its directors, may amend or withdraw the plan. The plan must 360.15 provide for the following: 360.16 (1) in the case of a reorganization under subdivision 1, 360.17 establishing a mutual insurance holding company with at least 360.18 one stock insurance company subsidiary,the majority of shares360.19of which must be owned, either directly or through an360.20intermediate stock holding company, by the mutual insurance360.21holding companyor in the case of a reorganization under 360.22 subdivision 2, a description of the terms and conditions of the 360.23 proposed merger; 360.24 (2) analyzing the benefits and risks attendant to the 360.25 proposed reorganization, including the rationale for the 360.26 reorganization and analysis of the comparative benefits and 360.27 risks of a demutualization under section 60A.075; 360.28 (3) protecting the immediate and long-term interests of 360.29 existing policyholders; 360.30 (4) ensuring immediate membership in the mutual insurance 360.31 holding company of all existing policyholders of the 360.32 reorganizing domestic insurance company; 360.33 (5) describing a plan providing for membership interests of 360.34 future policyholders; 360.35 (6) describing the number of members of the board of 360.36 directors of the mutual insurance holding company required to be 361.1 policyholders; 361.2 (7)ensuring that, in the event of proceedings under361.3chapter 60B involving a stock insurance company subsidiary of361.4the mutual insurance holding company that resulted from the361.5reorganization of a domestic mutual insurance company, the361.6assets of the mutual insurance holding company will be available361.7to satisfy the policyholder obligations of the stock insurance361.8company;361.9(8) for periodic distribution of accumulated holding361.10company earnings to membersdescribing the mutual insurance 361.11 holding company's plan for distributions to members or other 361.12 uses of accumulated mutual holding company earnings; 361.13(9)(8) describing the nature and content of the annual 361.14 report and financial statement to be sent to each member; 361.15(10)(9) a copy of the proposed mutual insurance holding 361.16 company's articles of incorporation and bylaws specifying all 361.17 membership rights; 361.18(11)(10) the names, addresses, and occupational 361.19 information of all corporate officers and members of the 361.20 proposed mutual insurance holding company board of directors; 361.21(12)(11) information sufficient to demonstrate that the 361.22 financial condition of the reorganizing or merging company will 361.23 not be materially diminished upon reorganization, including 361.24 information concerning any subsidiaries of the reorganizing or 361.25 merging insurers that will become subsidiaries of the mutual 361.26 insurance holding company or an intermediate holding company as 361.27 part of the reorganization; 361.28(13)(12) a copy of the articles of incorporation and 361.29 bylaws for any proposed insurance company subsidiary or 361.30 intermediate holding company subsidiary; 361.31(14)(13) describing any plans forthean initial sale or 361.32 subscription of stockforor other securities of the reorganized 361.33 insurance company or any intermediate holding company; and 361.34(15)(14) any other information requested by the 361.35 commissioner or required by rule. 361.36 (b) The commissioner may approve the plan upon finding that 362.1 the requirements of this section have been fully met and the 362.2 plan will protect the immediate and long-term interests of 362.3 policyholders. 362.4 (c) The commissioner may retain, at the reorganizing or 362.5 merging mutual company's expense, any qualified experts not 362.6 otherwise a part of the commissioner's staff to assist in 362.7 reviewing the plan. 362.8 (d) The commissioner may, but need not, conduct a public 362.9 hearing regarding the proposed plan. The hearing must be held 362.10 within 30 days after submission of a completed plan of 362.11 reorganization to the commissioner. The commissioner shall give 362.12 the reorganizing mutual company at least 20 days' notice of the 362.13 hearing. At the hearing, the reorganizing mutual company, its 362.14 policyholders, and any other person whose interest may be 362.15 affected by the proposed reorganization, may present evidence, 362.16 examine and cross-examine witnesses, and offer oral and written 362.17 arguments or comments according to the procedure for contested 362.18 cases under chapter 14. The persons participating may conduct 362.19 discovery proceedings in the same manner as prescribed for the 362.20 district courts of this state. All discovery proceedings must 362.21 be concluded no later than three days before the scheduled 362.22 commencement of the public hearing. 362.23 Sec. 7. Minnesota Statutes 1996, section 60A.077, 362.24 subdivision 5, is amended to read: 362.25 Subd. 5. [APPROVAL BY MEMBERS.] The plan shall be approved 362.26by the membersas provided in section 60A.075, subdivision 5.by 362.27 the eligible members described in paragraphs (a) to (c). 362.28 (a) In the case of a formation under subdivision 1, the 362.29 plan must be approved by the eligible members of the 362.30 reorganizing insurance company. 362.31 (b) In the case of a merger under subdivision 2, paragraph 362.32 (a), the plan must be approved by the eligible members of the 362.33 merging insurance company and by the eligible members of the 362.34 mutual insurance holding company into which the policyholders' 362.35 membership interests are to be merged. The vote of the eligible 362.36 members of the mutual insurance holding company is not required 363.1 if the commissioner determines that the merger would not be 363.2 material to the financial condition of the mutual insurance 363.3 holding company. 363.4 (c) In the case of a merger of two mutual insurance holding 363.5 companies under subdivision 2, paragraph (c), the plan must be 363.6 approved by the eligible members of both companies. The vote of 363.7 the eligible members of the surviving mutual holding company is 363.8 not required if the commissioner determines that the merger 363.9 would not be material to the financial condition of the 363.10 surviving company. 363.11 Sec. 8. Minnesota Statutes 1996, section 60A.077, 363.12 subdivision 6, is amended to read: 363.13 Subd. 6. [INCORPORATION.] A mutual insurance holding 363.14 companyresulting from the reorganization of a domestic mutual363.15insurance company organized under chapter 300shall be 363.16 incorporated pursuant to chapter 300. The articles of 363.17 incorporation and any amendments to the articles of the mutual 363.18 insurance holding company are subject to approval of the 363.19 commissioner in the same manner as those of an insurance 363.20 company. Members of a mutual insurance holding company shall be 363.21 entitled to vote on all matters required to be submitted to 363.22 members under chapter 300 and shall additionally be treated as 363.23 shareholders for purposes of the voting approval requirements of 363.24 section 300.09. 363.25 Sec. 9. Minnesota Statutes 1996, section 60A.077, 363.26 subdivision 7, is amended to read: 363.27 Subd. 7. [APPLICABILITY OF CERTAIN PROVISIONS.] (a)AIn 363.28 the event of the insolvency of a mutual insurance holding 363.29 company, the mutual insurance holding company is considered to 363.30 be an insurer subject to chapter 60B.and shall automatically363.31be a party to any proceeding under chapter 60B involving an363.32insurance company that, as a result of a reorganization363.33according to subdivision 1 or 2, is a subsidiary of the mutual363.34insurance holding company. In any proceeding under chapter 60B363.35involving the reorganized insurance company, the assets of the363.36mutual insurance holding company are considered to be assets of364.1the estate of the reorganized insurance company for purposes of364.2satisfying the claims of the reorganized insurance company's364.3policyholders.A mutual insurance holding company shall not 364.4 dissolve or liquidate without the approval of the commissioner 364.5 or as ordered bythe districta courtaccording to chapter364.660Bof competent jurisdiction. 364.7 (b) A mutual insurance holding company is subject to 364.8 chapter 60Dto the extent consistent with this section. 364.9 (c) As a condition to approval of the plan, the 364.10 commissioner may require the mutual insurance holding company to 364.11 comply with any provision of the insurance laws necessary to 364.12 protect the interests of the policyholders as if the mutual 364.13 insurance holding company were a domestic mutual insurance 364.14 company. 364.15 (d) No person or group of persons other than the chief 364.16 executive officer of a mutual insurance holding company, or the 364.17 chief executive officer's designee, shall seek to obtain proxies 364.18 from the members of the mutual insurance holding company for the 364.19 purposes of affecting a change of control of the mutual 364.20 insurance holding company unless that person or persons have 364.21 filed with the commissioner and have sent to the mutual 364.22 insurance holding company a statement containing the information 364.23 required by section 60D.17. Section 60D.17, subdivisions 2 to 364.24 7, apply in the event of a proxy solicitation regulated by this 364.25 paragraph. 364.26 (e) For purposes of this subdivision, the term "control," 364.27 including the terms "controlling," "controlled by," and "under 364.28 common control with," means the possession, direct or indirect, 364.29 of the power to direct or cause the direction of the management 364.30 and policies of a person, whether through membership voting 364.31 interests, by contract other than a commercial contract for 364.32 goods or nonmanagement services, or otherwise, unless the power 364.33 is the result of an official position with, corporate office 364.34 held by, or court appointment of, the person. Control is 364.35 presumed to exist if any person, directly or indirectly, owns, 364.36 controls, holds with the power to vote, or holds proxies 365.1 representing, ten percent or more of the membership voting 365.2 interests of the mutual insurance holding company. This 365.3 presumption may be rebutted by a showing made in the manner 365.4 provided by section 60D.19, subdivision 11, that control does 365.5 not exist in fact. The commissioner may determine after 365.6 furnishing all persons in interest notice and opportunity to be 365.7 heard and making specific findings of fact to support the 365.8 determination, that control exists in fact, notwithstanding the 365.9 absence of a presumption to that effect. 365.10 Sec. 10. Minnesota Statutes 1996, section 60A.077, 365.11 subdivision 8, is amended to read: 365.12 Subd. 8. [APPLICABILITY OF DEMUTUALIZATION PROVISIONS.] 365.13 (a) Except as otherwise provided, section 60A.075 is not 365.14 applicable to a reorganization or merger according to this 365.15 section, except for section 60A.075, subdivisions 14 to 16. 365.16 (b) Section 60A.075 is applicable to demutualization of a 365.17 mutual insurance holding companythat resulted from the365.18reorganization of a domestic mutual insurance company organized365.19under chapter 300as if it were a mutual insurance company. 365.20 (c) Section 60A.075, subdivisions 14 to 16, are applicable 365.21 to a reorganization or merger under this section. 365.22 Sec. 11. Minnesota Statutes 1996, section 60A.077, 365.23 subdivision 9, is amended to read: 365.24 Subd. 9. [MEMBERSHIP INTERESTS.] A membership interest in 365.25 a domestic mutual insurance holding company does not constitute 365.26 a security as defined in section 80A.14, subdivision 18. No 365.27 member of a mutual insurance holding company may transfer or 365.28 pledge membership in the mutual insurance holding company or any 365.29 right arising from the membership except as attendant to the 365.30 valid transfer or assignment of the member's policy in any 365.31 reorganized company that gave rise to the member's membership 365.32 interest. A member of a mutual insurance holding company is 365.33 not, as a member, personally liable for the acts, debts, 365.34 liabilities, or obligations of the company. No assessments of 365.35 any kind may be imposed upon the members of a mutual insurance 365.36 holding company by the directors or members, or because of any 366.1 liability of any company owned or controlled by the mutual 366.2 insurance holding company or because of any act, debt, or 366.3 liability of the mutual insurance holding company. A member's 366.4 interest in the mutual insurance holding company shall 366.5 automatically terminate upon cancellation, nonrenewal, 366.6 expiration, or termination of the member's policy in any 366.7 insurance company that gave rise to the member's membership 366.8 interest. 366.9 Sec. 12. Minnesota Statutes 1996, section 60A.077, 366.10 subdivision 10, is amended to read: 366.11 Subd. 10. [FINANCIAL STATEMENT REQUIREMENTS.] (a) In 366.12 addition to any items required under chapter 60D, each mutual 366.13 insurance holding company shall file with the commissioner, by 366.14 April 1 of each year, an annual statement consisting of the 366.15 following: 366.16 (1) an income statement, balance sheet, and cashflow 366.17 statement prepared in accordance with generally accepted 366.18 accounting principles; 366.19 (2) complete information on the status of any closed block 366.20 formed as part of a plan of reorganization; 366.21 (3) an investment plan covering all assets; and 366.22 (4) a statement disclosing any intention to pledge, borrow 366.23 against, alienate, hypothecate, or in any way encumber the 366.24 assets of the mutual insurance holding company or an 366.25 intermediate stock holding company.Action taken according to366.26the statement is subject to the commissioner's prior written366.27approval.366.28 (b) The aggregate pledges and encumbrances of a mutual 366.29 insurance holding company's assets shall not affect more than 49 366.30 percent of thecompany'sstock in ownership of any subsidiary 366.31 insurance holding company or subsidiary insurance company that 366.32 resulted from a reorganization or merger. 366.33 (c) At least 50 percent of the generally accepted 366.34 accounting principles (GAAP) net worth of a mutual insurance 366.35 holding company must be invested in insurance company 366.36 subsidiaries. 367.1 Sec. 13. Minnesota Statutes 1996, section 60A.077, 367.2 subdivision 11, is amended to read: 367.3 Subd. 11. [SALE OF STOCK AND PAYMENT OF DIVIDENDS.] (a) A 367.4 reorganized insurance company and an intermediate stock holding 367.5 company may issue subscription rights and may issue or grant any 367.6 other securities, rights, options, and similar items to the same 367.7 extent as any business corporation organized under chapter 367.8 302A. However, except as provided in paragraphs (b) to (d), 367.9 nosolicitation for thesale ofthe stocksecurities of the 367.10 reorganized insurance company, or of an intermediate stock 367.11 holding companyof the mutual insurance holding company,that 367.12 directly or indirectly controls a majority of voting shares of 367.13 the reorganized insurance company, may be made without the 367.14 commissioner's prior written approval. 367.15 (b) A registration statement covering securities that has 367.16 been approved by the commissioner and filed with and declared 367.17 effective by the Securities and Exchange Commission under the 367.18 Securities Act of 1933 pursuant to any provision of that statute 367.19 or rule that allows registration of securities to be sold on a 367.20 delayed or continuous basis may be sold without further approval. 367.21 (c) Unless the commissioner has granted the mutual 367.22 insurance holding company a written exemption from the 367.23 requirements of this paragraph, any securities which are 367.24 regularly traded on the New York Stock Exchange, the American 367.25 Stock Exchange, or another exchange approved by the 367.26 commissioner, or designated on the National Association of 367.27 Securities Dealers automated quotations (NASDAQ) national market 367.28 system, shall be sold according to the procedure in this 367.29 paragraph. If the mutual insurance holding company, an 367.30 intermediate holding company, or a reorganized insurance company 367.31 intends to offer securities that are governed by this paragraph, 367.32 that entity shall deliver to the commissioner, not less than ten 367.33 days before the offering, a notice of the planned offering and 367.34 information regarding: (1) the approximate number of shares 367.35 intended to be offered; (2) the target date of sale; (3) 367.36 evidence the security is regularly traded on one of the public 368.1 exchanges noted above; and (4) the recent history of the trading 368.2 price and trading volume of the security. The commissioner is 368.3 considered to have approved the sale unless within ten days 368.4 following receipt of the notice, the commissioner issues an 368.5 objection to the sale. If the commissioner issues an objection 368.6 to the sale, the security may not be sold until the commissioner 368.7 issues an order approving the sale. 368.8 (d) A reorganized insurance company or intermediate holding 368.9 company that has issued securities that are regularly traded on 368.10 one of the exchanges or markets described in paragraph (c), may 368.11 establish stock option, incentive, and share ownership plans 368.12 customary for publicly traded companies in the same or similar 368.13 industries. If the reorganized insurance company or 368.14 intermediate holding company intends to establish a stock 368.15 option, incentive or share ownership plan, that entity shall 368.16 deliver to the commissioner, not less than 30 days before the 368.17 establishment of the plan, a notice of the proposed plan along 368.18 with any information about the proposed plan the commissioner 368.19 requires. The commissioner is considered to have approved the 368.20 plan unless within 30 days following receipt of the notice, the 368.21 commissioner issues an objection to the proposed plan. If the 368.22 commissioner issues an objection to the proposed plan, the plan 368.23 may not be established until the commissioner issues an order 368.24 approving the plan. If the commissioner approves the 368.25 establishment of the stock option, incentive, or share ownership 368.26 plan, the reorganized insurance company or the intermediate 368.27 holding company that obtained the approval may sell or issue 368.28 securities according to the approved plan without further 368.29 approval. 368.30 (e) The total number of shares of capital stock issued by 368.31 the reorganized insurance company or an intermediate holding 368.32 company that may be held by directors and officers of the mutual 368.33 insurance holding company, any intermediate holding company, and 368.34 of any reorganized insurance company, and acquired according to 368.35 subscription rights or stock option, incentive, and share 368.36 ownership plans, may not exceed the percentage limits set forth 369.1 in section 60A.075, subdivision 11, paragraph (b). Subject to 369.2 the requirements of subdivision 1, paragraph (c), nothing in 369.3 this section prohibits the acquisition of any securities of a 369.4 reorganized insurance company or intermediate stock holding 369.5 company through a licensed securities broker-dealer by any 369.6 officer or director of the reorganized company, an intermediate 369.7 stock holding company, or the mutual insurance holding company. 369.8 (f) Dividends and other distributions to the shareholders 369.9 of the reorganized stock insurance company or of an intermediate 369.10 stock holding companyshall not be made except in369.11compliancemust comply with section 60D.20. Any dividends and 369.12 other distributions to the members of the mutual insurance 369.13 holding company must comply with section 60D.20 and any other 369.14 approval requirements contained in the mutual insurance holding 369.15 company's articles of incorporation. 369.16 (g) Unless previously approved as part of the plan of 369.17 reorganization, the initial offering of any voting shares to the 369.18 public by a reorganized company, a stock insurance company 369.19 subsidiary, or an intermediate holding company which holds a 369.20 majority of the voting shares of a reorganized insurance company 369.21 or stock insurance company subsidiary, must be approved by a 369.22 majority of votes cast at a regular or special meeting of the 369.23 members of the mutual insurance holding company. Any issuer 369.24 repurchase program, plan of exchange, recapitalization, or 369.25 offering of capital securities to the public, shall, in addition 369.26 to any other approvals required by law or by the issuer's 369.27 articles of incorporation, be approved by a majority of the 369.28 board of directors of the mutual insurance holding company and 369.29 by a majority of the disinterested members of the board of 369.30 directors of the mutual insurance holding company. 369.31 Sec. 14. Minnesota Statutes 1996, section 60A.077, is 369.32 amended by adding a subdivision to read: 369.33 Subd. 12. [PROVISIONS IN THE EVENT OF INSURER 369.34 INSOLVENCY.] (a) In the event of any insolvency proceeding 369.35 involving an insolvent stock subsidiary, the assets of the 369.36 mutual insurance holding company, together with any assets of 370.1 any intermediate holding company that directly or indirectly 370.2 controls the insolvent stock subsidiary, must be available to 370.3 satisfy the policyholder obligations of the insolvent stock 370.4 subsidiary in an amount determined by the commissioner, but in 370.5 no event more than the total amount of nonpolicyholder dividends 370.6 paid by the insolvent stock subsidiary to the mutual insurance 370.7 holding company, or any intermediate holding company that 370.8 controls the insolvent stock subsidiary, during the ten-year 370.9 period immediately preceding the date of insolvency. 370.10 (b) In determining the required contribution by the mutual 370.11 insurance holding company or any intermediate stock holding 370.12 company which controls the insolvent stock subsidiary, the 370.13 commissioner shall take into account among other factors: 370.14 (1) the possible direct or indirect negative effects of any 370.15 required contribution on any insurance company affiliate of the 370.16 insolvent stock subsidiary; and 370.17 (2) the possible direct or indirect, long-term, or 370.18 short-term negative effects on the members of the mutual 370.19 insurance holding company, other than those members who, are, or 370.20 were policyholders of the insolvent stock subsidiary. 370.21 Nothing in this subdivision limits the powers of the 370.22 commissioner or the liquidator under chapter 60B. 370.23 (c) For purposes of this subdivision, the following terms 370.24 have the meanings given: 370.25 (1) "date of insolvency" means, as to an insolvent stock 370.26 subsidiary, the date established in accordance with chapter 60B 370.27 or comparable statute of another state governing the 370.28 rehabilitation or liquidation of a foreign insolvent stock 370.29 subsidiary; 370.30 (2) "insolvency proceeding" means any proceeding under 370.31 chapter 60B or comparable statute of another state governing the 370.32 rehabilitation and liquidation of a foreign insolvent stock 370.33 subsidiary; 370.34 (3) "insolvent stock subsidiary" means any stock insurance 370.35 company subsidiary of a mutual insurance holding company that 370.36 resulted from the reorganization of a domestic or foreign mutual 371.1 insurance company according to subdivision 1 or 2, or any other 371.2 stock insurance company subsidiary that is subject to an 371.3 insolvency proceeding, which on the date of insolvency has in 371.4 force policies that have given rise to membership interests in 371.5 the mutual insurance holding company; 371.6 (4) "control" has the meaning given in section 60D.15, 371.7 subdivision 4; and 371.8 (5) "dividends" include distributions of cash or any other 371.9 assets. 371.10 Sec. 15. Minnesota Statutes 1996, section 290.01, is 371.11 amended by adding a subdivision to read: 371.12 Subd. 4c. [MUTUAL INSURANCE HOLDING COMPANIES.] A "mutual 371.13 insurance holding company" is not an insurance company for 371.14 purposes of this chapter. 371.15 Sec. 16. Minnesota Statutes 1996, section 290.17, 371.16 subdivision 4, is amended to read: 371.17 Subd. 4. [UNITARY BUSINESS PRINCIPLE.] (a) If a trade or 371.18 business conducted wholly within this state or partly within and 371.19 partly without this state is part of a unitary business, the 371.20 entire income of the unitary business is subject to 371.21 apportionment pursuant to section 290.191. Notwithstanding 371.22 subdivision 2, paragraph (c), none of the income of a unitary 371.23 business is considered to be derived from any particular source 371.24 and none may be allocated to a particular place except as 371.25 provided by the applicable apportionment formula. The 371.26 provisions of this subdivision do not apply to farm income 371.27 subject to subdivision 5, paragraph (a), business income subject 371.28 to subdivision 5, paragraph (b) or (c), income of an insurance 371.29 company determined under section 290.35, or income of an 371.30 investment company determined under section 290.36. 371.31 (b) The term "unitary business" means business activities 371.32 or operations which are of mutual benefit, dependent upon, or 371.33 contributory to one another, individually or as a group. The 371.34 term may be applied within a single legal entity or between 371.35 multiple entities and without regard to whether each entity is a 371.36 corporation, a partnership or a trust. 372.1 (c) Unity is presumed whenever there is unity of ownership, 372.2 operation, and use, evidenced by centralized management or 372.3 executive force, centralized purchasing, advertising, 372.4 accounting, or other controlled interaction, but the absence of 372.5 these centralized activities will not necessarily evidence a 372.6 nonunitary business. 372.7 (d) Where a business operation conducted in Minnesota is 372.8 owned by a business entity that carries on business activity 372.9 outside the state different in kind from that conducted within 372.10 this state, and the other business is conducted entirely outside 372.11 the state, it is presumed that the two business operations are 372.12 unitary in nature, interrelated, connected, and interdependent 372.13 unless it can be shown to the contrary. 372.14 (e) Unity of ownership is not deemed to exist when a 372.15 corporation is involved unless that corporation is a member of a 372.16 group of two or more business entities and more than 50 percent 372.17 of the voting stock of each member of the group is directly or 372.18 indirectly owned by a common owner or by common owners, either 372.19 corporate or noncorporate, or by one or more of the member 372.20 corporations of the group. For this purpose, the term "voting 372.21 stock" shall include membership interests of mutual insurance 372.22 holding companies formed under section 60A.077. 372.23 (f) The net income and apportionment factors under section 372.24 290.191 or 290.20 of foreign corporations and other foreign 372.25 entities which are part of a unitary business shall not be 372.26 included in the net income or the apportionment factors of the 372.27 unitary business. A foreign corporation or other foreign entity 372.28 which is required to file a return under this chapter shall file 372.29 on a separate return basis. The net income and apportionment 372.30 factors under section 290.191 or 290.20 of foreign operating 372.31 corporations shall not be included in the net income or the 372.32 apportionment factors of the unitary business except as provided 372.33 in paragraph (g). 372.34 (g) The adjusted net income of a foreign operating 372.35 corporation shall be deemed to be paid as a dividend on the last 372.36 day of its taxable year to each shareholder thereof, in 373.1 proportion to each shareholder's ownership, with which such 373.2 corporation is engaged in a unitary business. Such deemed 373.3 dividend shall be treated as a dividend under section 290.21, 373.4 subdivision 4. 373.5 Dividends actually paid by a foreign operating corporation 373.6 to a corporate shareholder which is a member of the same unitary 373.7 business as the foreign operating corporation shall be 373.8 eliminated from the net income of the unitary business in 373.9 preparing a combined report for the unitary business. The 373.10 adjusted net income of a foreign operating corporation shall be 373.11 its net income adjusted as follows: 373.12 (1) any taxes paid or accrued to a foreign country, the 373.13 commonwealth of Puerto Rico, or a United States possession or 373.14 political subdivision of any of the foregoing shall be a 373.15 deduction; and 373.16 (2) the subtraction from federal taxable income for 373.17 payments received from foreign corporations or foreign operating 373.18 corporations under section 290.01, subdivision 19d, clause (11), 373.19 shall not be allowed. 373.20 If a foreign operating corporation incurs a net loss, 373.21 neither income nor deduction from that corporation shall be 373.22 included in determining the net income of the unitary business. 373.23 (h) For purposes of determining the net income of a unitary 373.24 business and the factors to be used in the apportionment of net 373.25 income pursuant to section 290.191 or 290.20, there must be 373.26 included only the income and apportionment factors of domestic 373.27 corporations or other domestic entities other than foreign 373.28 operating corporations that are determined to be part of the 373.29 unitary business pursuant to this subdivision, notwithstanding 373.30 that foreign corporations or other foreign entities might be 373.31 included in the unitary business. 373.32 (i) Deductions for expenses, interest, or taxes otherwise 373.33 allowable under this chapter that are connected with or 373.34 allocable against dividends, deemed dividends described in 373.35 paragraph (g), or royalties, fees, or other like income 373.36 described in section 290.01, subdivision 19d, clause (11), shall 374.1 not be disallowed. 374.2 (j) Each corporation or other entity that is part of a 374.3 unitary business must file combined reports as the commissioner 374.4 determines. On the reports, all intercompany transactions 374.5 between entities included pursuant to paragraph (h) must be 374.6 eliminated and the entire net income of the unitary business 374.7 determined in accordance with this subdivision is apportioned 374.8 among the entities by using each entity's Minnesota factors for 374.9 apportionment purposes in the numerators of the apportionment 374.10 formula and the total factors for apportionment purposes of all 374.11 entities included pursuant to paragraph (h) in the denominators 374.12 of the apportionment formula. 374.13 (k) If a corporation has been divested from a unitary 374.14 business and is included in a combined report for a fractional 374.15 part of the common accounting period of the combined report: 374.16 (1) its income includable in the combined report is its 374.17 income incurred for that part of the year determined by 374.18 proration or separate accounting; and 374.19 (2) its sales, property, and payroll included in the 374.20 apportionment formula must be prorated or accounted for 374.21 separately. 374.22 ARTICLE 16 374.23 MISCELLANEOUS 374.24 Section 1. Minnesota Statutes 1996, section 6.76, is 374.25 amended to read: 374.26 6.76 [LOCAL GOVERNMENTAL EXPENDITURES FOR LOBBYISTS.] 374.27 (a) On or before January 31, 1990, andof each year 374.28thereafter, all counties, cities, school districts, metropolitan 374.29 agencies, regional railroad authorities, and the metropolitan 374.30 council shall report to the state auditor, on forms prescribed 374.31 by the auditor, their estimated expenditures paid for the 374.32 previous calendar year to a lobbyist as defined in section 374.33 10A.01, subdivision 11, except payments to associations of local 374.34 governments that are reported under paragraph (b), and to any 374.35 staff person not registered as a lobbyist, over 25 percent of 374.36 whose time is spent during the legislative session on 375.1 legislative matters. 375.2 (b) Associations of local governments subject to this 375.3 section shall report annually, on or before January 31, to the 375.4 state auditor and the association's members the proportionate 375.5 amount of each member's dues spent for lobbying purposes. 375.6 Sec. 2. Minnesota Statutes 1996, section 115A.554, is 375.7 amended to read: 375.8 115A.554 [AUTHORITY OF SANITARY DISTRICTS.] 375.9 A sanitary district has the authorities and duties of 375.10 counties within the district's boundary for purposes of sections 375.11 115A.0716; 115A.46, subdivisions 4 and 5; 115A.48; 115A.551; 375.12 115A.552; 115A.553; 115A.919; 115A.929; 115A.93; 115A.96, 375.13 subdivision 6; 115A.961; 116.072; 375.18, subdivision 14; 375.14 400.08, except subdivision 4, paragraph (b); 400.16; and 400.161. 375.15 Sec. 3. Minnesota Statutes 1996, section 117.155, is 375.16 amended to read: 375.17 117.155 [PAYMENTS; PARTIAL PAYMENT PENDING APPEAL.] 375.18 Except as otherwise provided herein payment of damages 375.19 awarded may be made or tendered at any time after the filing of 375.20 the report; and the duty of the petitioner to pay the amount of 375.21 any award or final judgment upon appeal shall, for all purposes, 375.22 be held and construed to be full and just compensation to the 375.23 respective owners or the persons interested in the lands. If 375.24 either the petitioner or any respondent appeals from an award, 375.25 the respondent or respondents, if there is more than one, except 375.26 encumbrancers having an interest in the award which has been 375.27 appealed, may demand of the petitioner a partial payment of the 375.28 award pending the final determination thereof, and it shall be 375.29 the duty of the petitioner to comply with such demand and to 375.30 promptly pay the amount demanded but not in excess of an amount 375.31 equal to three-fourths of the award of damages for the parcel 375.32 which has been appealed, less any payments made by petitioner 375.33 pursuant to section 117.042; provided, however, that the 375.34 petitioner may by motion after due notice to all interested 375.35 parties request, and the court may order, reduction in the 375.36 amount of the partial payment for cause shown. If an appeal is 376.1 taken from an award the petitioner may, but it cannot be 376.2 compelled to, pay the entire amount of the award pending the 376.3 final determination thereof. If any respondent or respondents 376.4 having an interest in the award refuses to accept such payment 376.5 the petitioner may pay the amount thereof to the court 376.6 administrator of district court to be paid out under direction 376.7 of the court. A partial or full payment as herein provided 376.8 shall not draw interest from the condemner from the date of 376.9 payment or deposit, and upon final determination of any appeal 376.10 the total award of damages shall be reduced by the amount of the 376.11 partial or full payment. If any partial or full payment exceeds 376.12 the amount of the award of compensation as finally determined, 376.13the petitioner shall have a claim against the respondents376.14receiving such payment for the amount thereof, to be recoverable376.15in the same manner as in any civil actionupon petitioner's 376.16 motion, final judgment must be entered in the condemnation 376.17 action in favor of the petitioner in the amount of the balance 376.18 owed to the petitioner and is recoverable within the original 376.19 condemnation action. 376.20 Sec. 4. Minnesota Statutes 1996, section 121.15, is 376.21 amended by adding a subdivision to read: 376.22 Subd. 1a. [PROJECT.] The construction, remodeling, or 376.23 improvement of a building or site of an educational facility at 376.24 an estimated cost exceeding $100,000 is a project under section 376.25 177.42, subdivision 2. 376.26 Sec. 5. Minnesota Statutes 1996, section 161.45, is 376.27 amended by adding a subdivision to read: 376.28 Subd. 3. [UTILITY INTERESTS WHEN REAL PROPERTY 376.29 CONVEYED.] In proceedings to vacate, transfer, turn back, or 376.30 otherwise convey an interest in real property owned or 376.31 controlled by the department, when the property is owned in fee 376.32 by the state, the commissioner may specify that the conveyance 376.33 of the department's interest does not affect a prior, existing 376.34 utility easement in the property or use of the property granted 376.35 to a utility under permit issued by the department. In 376.36 addition, the commissioner may convey interests in real 377.1 property, including an easement, subject to the right of a 377.2 utility to enter upon the right-of-way to maintain, repair, 377.3 replace, reconstruct, improve, remove, or otherwise attend to 377.4 its equipment. Where the utility had no preexisting easement 377.5 over the real property, this subdivision does not prohibit a 377.6 political subdivision, government agency, or private entity from 377.7 negotiating or contracting with a utility with regard to the 377.8 utility's easement or other interest in the property, but the 377.9 utility shall continue to hold the interest in the property and 377.10 the right of reasonable entry unless and until the utility 377.11 agrees in writing to relinquish its interests. 377.12 Sec. 6. Minnesota Statutes 1996, section 270.60, is 377.13 amended by adding a subdivision to read: 377.14 Subd. 4. [PAYMENTS TO COUNTIES.] (a) The commissioner 377.15 shall pay to a qualified county in which an Indian gaming casino 377.16 is located ten percent of the state share of all taxes generated 377.17 from activities on reservations and collected under a tax 377.18 agreement under this section with the tribal government for the 377.19 reservation located in the county. If the tribe has casinos 377.20 located in more than one county, the payment must be divided 377.21 equally among the counties in which the casinos are located. 377.22 (b) A county qualifies for payments under this subdivision 377.23 only if one of the following conditions is met: 377.24 (1) the county's per capita income is less than 80 percent 377.25 of the state per capita personal income, based on the most 377.26 recent estimates made by the United States Bureau of Economic 377.27 Analysis; or 377.28 (2) 30 percent or more of the total market value of real 377.29 property in the county is exempt from ad valorem taxation. 377.30 (c) The commissioner shall make the payments required under 377.31 this subdivision by February 28 of the year following the year 377.32 the taxes are collected. 377.33 (d) To make the payments authorized by this subdivision, 377.34 $1,100,000 is annually appropriated from the general fund to the 377.35 commissioner. If the authorized payments exceed the amount of 377.36 the appropriation, the commissioner shall proportionately reduce 378.1 the rate so that the total amount equals the appropriation. 378.2 Sec. 7. Minnesota Statutes 1996, section 271.19, is 378.3 amended to read: 378.4 271.19 [COSTS AND DISBURSEMENTS.] 378.5 Upon the determination of any appeal under this chapter 378.6 before the tax court, or of any review hereunder by the supreme 378.7 court, the costs and disbursements shall be taxed and allowed in 378.8 favor of the prevailing party and against the losing party as in 378.9 civil actions or, if there has been an offer of judgment or 378.10 settlement by a party prior to ten days before the court hears 378.11 the appeal, pursuant to Minnesota Rules of Civil Procedure, rule 378.12 68. In any case where a person liable for a tax or other 378.13 obligation has lost an appeal or review instituted by the 378.14 person, and the tax court or court shall determine that the 378.15 person instituted the same merely for the purposes of delay, or 378.16 that the taxpayer's position in the proceedings is frivolous, 378.17 additional costs, commensurate with the expense incurred and 378.18 services performed by the agencies of the state in connection 378.19 with the appeal, but not exceeding $5,000 in any case, may be 378.20 allowed against the taxpayer, in the discretion of the tax court 378.21 or court. Costs and disbursements allowed against any such 378.22 person shall be added to the tax or other obligation determined 378.23 to be due, and shall be payable therewith. To the extent 378.24 described in section 15.471, where an award of costs and 378.25 attorney fees is authorized under section 15.472, the costs and 378.26 fees shall be allowed against the state, including expenses 378.27 incurred by the taxpayer to administratively protest or appeal 378.28 to the department of revenue the order, decision, or report of 378.29 the commissioner that is the subject of the tax court 378.30 proceedings. Costs and disbursements allowed against the state 378.31 or other public agencies shall be paid out of funds received 378.32 from taxes or other obligations of the kind involved in the 378.33 proceeding, or other funds of the agency concerned appropriated 378.34 and available therefor. Witnesses in proceedings under this 378.35 chapter shall receive like fees as in the district court, to be 378.36 paid in the first instance by the parties by whom the witnesses 379.1 were called, and to be taxed and allowed as herein provided. 379.2 Sec. 8. Minnesota Statutes 1996, section 278.07, is 379.3 amended to read: 379.4 278.07 [JUDGMENT; AMOUNT; COSTS.] 379.5 Judgment shall be for the amount of the taxes for the year 379.6 as the court shall determine the same, less the amount paid 379.7 thereon, if any. If the tax is sustained in the full amount 379.8 levied or increased, costs and disbursements may, in the 379.9 discretion of the court, be taxed and allowed as in delinquent 379.10 tax proceedings and shall be included in the judgment. If the 379.11 tax so determinedshall be less thanis decreased from the 379.12 amountthereof asoriginally levied, the court may, in its 379.13 discretion, award disbursements to the petitioner, which shall 379.14 be taxed and allowed and be deducted from the amount of the 379.15 taxes as determined unless there has been a previous offer of 379.16 reduced taxes that was rejected by the petitioner, in which case 379.17 the award of costs and disbursements is governed by Minnesota 379.18 Rules of Civil Procedure, rule 68. If there be no judgment for 379.19 taxes, a judgment may be entered determining the right of the 379.20 parties and for the costs and disbursements as taxed and allowed. 379.21 Sec. 9. Minnesota Statutes 1996, section 287.22, is 379.22 amended to read: 379.23 287.22 [EXCEPTIONS.] 379.24 The tax imposed by section 287.21 shall not apply to: 379.25 A. Any executory contract for the sale of land under which 379.26 the vendee is entitled to or does take possession thereof, or 379.27 any assignment or cancellation thereof. 379.28 B. Any mortgage or any assignment, extension, partial 379.29 release, or satisfaction thereof. 379.30 C. Any will. 379.31 D. Any plat. 379.32 E. Any lease. 379.33 F. Any deed, instrument, or writing in which the United 379.34 States or any agency or instrumentality thereof is the grantor, 379.35 assignor, transferor, conveyor, grantee or assignee. 379.36 G. Deeds for cemetery lots. 380.1 H. Deeds of distribution by personal representatives. 380.2 I. Deeds to or from coowners partitioning undivided 380.3 interests in the same piece of property. 380.4 J. Any deed or other instrument of conveyance issued 380.5 pursuant to a land exchange under section 92.121 and related 380.6 laws. 380.7 K. A referee's or sheriff's certificate of sale in a 380.8 mortgage or lien foreclosure sale. 380.9 L. A referee's or sheriff's certificate of redemption from 380.10 a mortgage or lien foreclosure sale issued to the redeeming 380.11 mortgagor or lienee. 380.12 M. A decree of marriage dissolution, as defined in section 380.13 287.01, subdivision 4, or any deed or other instrument between 380.14 the parties to the dissolution made pursuant to the terms of the 380.15 decree. 380.16 Sec. 10. [287.221] [NEW RESIDENTIAL CONSTRUCTION.] 380.17 The commissioner of revenue may not enforce a deed tax 380.18 assessment on the consideration paid for an improvement in the 380.19 case of new residential construction if, at or before the time 380.20 the first residential owners of the improvement take possession, 380.21 the deed tax has been paid on the consideration paid for the 380.22 improvement. 380.23 Sec. 11. Minnesota Statutes 1996, section 308A.705, 380.24 subdivision 1, is amended to read: 380.25 Subdivision 1. [DISTRIBUTION OF NET INCOME.] Net income in 380.26 excess of dividends on capital stock and additions to reserves 380.27 shall be distributed on the basis of patronage. A cooperative 380.28 may establish allocation units, whether the units are 380.29 functional, divisional, departmental, geographic, or otherwise, 380.30 and pooling arrangements and may account for and distribute net 380.31 income on the basis of allocation units and pooling 380.32 arrangements. A cooperative may offset the net loss of an 380.33 allocation unit or pooling arrangement against the net income of 380.34 other allocation units or pooling arrangements to the extent 380.35 permitted by section 1388(j) of the Internal Revenue Code of 380.36 1986, as amended through December 31, 1996. 381.1 Sec. 12. Minnesota Statutes 1996, section 325D.33, 381.2 subdivision 3, is amended to read: 381.3 Subd. 3. [REBATES OR CONCESSIONS.] It is unlawful for a 381.4 wholesaler to offer a rebate in price, to give a rebate in 381.5 price, to offer a concession of any kind, or to give a 381.6 concession of any kind in connection with the sale of 381.7 cigarettes. For purposes of this chapter, the term "discount" 381.8 is included in the definition of a rebate. For purposes of this 381.9 subdivision, the term "wholesaler" does not include a 381.10 manufacturer or manufacturer's representative. 381.11 Sec. 13. [383A.80] [RAMSEY COUNTY DEED AND MORTGAGE TAX.] 381.12 Subdivision 1. [AUTHORITY TO IMPOSE; RATE.] (a) The 381.13 governing body of Ramsey county may impose a mortgage registry 381.14 and deed tax. 381.15 (b) The rate of the mortgage registry tax equals one cent 381.16 for each $100 or fraction of the principal. 381.17 (c) The rate of the deed tax equals five cents for each 381.18 $500 or fraction of the amount. 381.19 Subd. 2. [GENERAL LAW PROVISIONS APPLY.] The taxes under 381.20 this section apply to the same base and must be imposed, 381.21 collected, administered, and enforced in the same manner as 381.22 provided under chapter 287 for the state mortgage registry and 381.23 deed taxes. All the provisions of chapter 287 apply to these 381.24 taxes, except the rate is as specified in subdivision 1, the 381.25 term "Ramsey county" must be substituted for "the state," and 381.26 the revenue must be deposited as provided in subdivision 3. 381.27 Subd. 3. [DEPOSIT OF REVENUES.] All revenues from the tax 381.28 are for the use of the Ramsey county board of commissioners and 381.29 must be deposited in the county's environmental response fund 381.30 under section 383B.81. 381.31 Subd. 4. [EXPIRATION.] The authority to impose the tax 381.32 under this section expires January 1, 2003. 381.33 Sec. 14. [383A.81] [ENVIRONMENTAL RESPONSE FUND.] 381.34 Subdivision 1. [CREATION.] An environmental response fund 381.35 is created for the purposes specified in this section. The 381.36 taxes imposed by section 383B.80 must be deposited in the fund. 382.1 The board of county commissioners shall administer the fund 382.2 either as a county board, a housing and redevelopment authority, 382.3 or a regional rail authority. 382.4 Subd. 2. [USES OF FUND.] The fund created in subdivision 1 382.5 must be used for the following purposes: 382.6 (1) acquisition through purchase or condemnation of lands 382.7 or property which are polluted or contaminated with hazardous 382.8 substances; 382.9 (2) paying the costs associated with indemnifying or 382.10 holding harmless the entity taking title to lands or property 382.11 from any liability arising out of the ownership, remediation, or 382.12 use of the land or property; 382.13 (3) paying for the costs of remediating the acquired land 382.14 or property; 382.15 (4) paying the costs associated with remediating lands or 382.16 property which are polluted or contaminated with hazardous 382.17 substances; or 382.18 (5) paying for the costs associated with improving the 382.19 property for economic development, recreational, housing, 382.20 transportation or rail traffic. 382.21 Subd. 3. [MATCHING FUNDS.] In expending funds under this 382.22 section, the county shall seek matching funds from contamination 382.23 clean up funds administered by the commissioner of the 382.24 department of trade and economic development, the metropolitan 382.25 council, the federal government, the private sector, and any 382.26 other source. 382.27 Subd. 4. [BONDS.] The county may pledge the proceeds from 382.28 the taxes imposed by section 383B.80 to bonds issued under this 382.29 chapter and chapters 398A, 462, 469, and 475. 382.30 Subd. 5. [PRIORITIES.] The first priority for the use of 382.31 the environmental response fund created in this section is to 382.32 clean up the site located in the city of St. Paul known as the 382.33 Dale Street Shops and Maxson Steel site or other sites at or 382.34 near rail lines that are blighted and the clean up of which will 382.35 lead to living wage jobs, and to improve the land for economic 382.36 development. 383.1 Subd. 6. [LAND SALES.] Land or property acquired under 383.2 this section may be resold at fair market value. Proceeds from 383.3 the sale of the land must be deposited in the environmental 383.4 response fund. 383.5 Subd. 7. [DOT ASSISTANCE.] The commissioner of 383.6 transportation shall collaborate with the county and any 383.7 affected municipality by providing technical assistance and 383.8 support in cleaning up a contaminated site related to a trunk 383.9 highway or railroad improvement. 383.10 Sec. 15. [383B.80] [HENNEPIN COUNTY DEED AND MORTGAGE 383.11 TAX.] 383.12 Subdivision 1. [AUTHORITY TO IMPOSE; RATE.] (a) The 383.13 governing body of Hennepin county may impose a mortgage registry 383.14 and deed tax. 383.15 (b) The rate of the mortgage registry tax equals one cent 383.16 for each $100 or fraction of the principal. 383.17 (c) The rate of the deed tax equals five cents for each 383.18 $500 or fraction of the amount. 383.19 Subd. 2. [GENERAL LAW PROVISIONS APPLY.] The taxes under 383.20 this section apply to the same base and must be imposed, 383.21 collected, administered, and enforced in the same manner as 383.22 provided under Minnesota Statutes, chapter 287 for the state 383.23 mortgage registry and deed taxes. All the provisions of chapter 383.24 287 apply to these taxes, except the rate is as specified in 383.25 subdivision 1, the term "Hennepin county" must be substituted 383.26 for the "state," and the revenue must be deposited as provided 383.27 in subdivision 3. 383.28 Subd. 3. [DEPOSIT OF REVENUES.] All revenues from the tax 383.29 are for the use of the Hennepin county board of commissioners 383.30 and must be deposited in the county's environmental response 383.31 fund under section 383B.81. 383.32 Subd. 4. [EXPIRATION.] The authority to impose the tax 383.33 under this section expires January 1, 2003. 383.34 Sec. 16. [383B.81] [ENVIRONMENTAL RESPONSE FUND.] 383.35 Subdivision 1. [CREATION.] An environmental response fund 383.36 is created for the purposes specified in this section. The 384.1 taxes imposed by section 383B.80 must be deposited in the fund. 384.2 The board of county commissioners shall administer the fund 384.3 either as a county board, a housing and redevelopment authority, 384.4 or a regional rail authority. 384.5 Subd. 2. [USES OF FUND.] The fund created in subdivision 1 384.6 must be used for the following purposes: 384.7 (1) acquisition through purchase or condemnation of lands 384.8 or property which are polluted or contaminated with hazardous 384.9 substances; 384.10 (2) paying the costs associated with indemnifying or 384.11 holding harmless the entity taking title to lands or property 384.12 from any liability arising out of the ownership, remediation, or 384.13 use of the land or property; 384.14 (3) paying for the costs of remediating the acquired land 384.15 or property; 384.16 (4) paying the costs associated with remediating lands or 384.17 property which are polluted or contaminated with hazardous 384.18 substances; or 384.19 (5) paying for the costs associated with improving the 384.20 property for economic development, recreational, housing, 384.21 transportation or rail traffic. 384.22 Subd. 3. [MATCHING FUNDS.] In expending funds under this 384.23 section the county shall seek matching funds from contamination 384.24 cleanup funds administered by the commissioners of the 384.25 department of trade and economic development, the metropolitan 384.26 council, the federal government, the private sector and any 384.27 other source. 384.28 Subd. 4. [CITY APPROVAL.] The county may not expend funds 384.29 under this section unless the governing body of the city in 384.30 which the site is located approves the project. 384.31 Subd. 5. [BONDS.] The county may pledge the proceeds from 384.32 the taxes imposed by section 383B.80 to bonds issued under this 384.33 chapter and chapters 398A, 462, 469, and 475. 384.34 Subd. 6. [PRIORITIES.] The first priority for the use of 384.35 the the environmental response fund created in this section is 384.36 to clean up the site located in the city of St. Louis Park known 385.1 as NL Industries/Tara Corporation/Golden Auto, EPA I.D. No. 385.2 MND097891634 and to provide adequate right-of-way for a portion 385.3 of the rail line to replace the 29th street line in the city of 385.4 Minneapolis, including making rail improvements, changing the 385.5 curve of the railroad track and eliminating a switching 385.6 facility, and improving the land for economic development. No 385.7 money from the environmental response fund may be expended for 385.8 remediating the site until the site has been acquired through 385.9 purchase or condemnation. 385.10 Subd. 7. [LAND SALES.] Land or property acquired under 385.11 this section may be resold at fair market value. Proceeds from 385.12 the sale of the land must be deposited in the environmental 385.13 response fund. 385.14 Subd. 8. [DOT ASSISTANCE.] With respect to the site 385.15 described in subdivision 6, the commissioner of transportation 385.16 shall collaborate with the county and any affected municipality 385.17 by providing technical assistance and support in facilitating 385.18 the railroad improvement and testing at that portion of the site 385.19 to be used for the railroad improvement. 385.20 Sec. 17. Minnesota Statutes 1996, section 398A.04, 385.21 subdivision 1, is amended to read: 385.22 Subdivision 1. [GENERAL.] An authority may exercise all 385.23 the powers necessary or desirable to implement the powers 385.24 specifically granted in this section, and in exercising the 385.25 powers is deemed to be performing an essential governmental 385.26 function and exercising a part of the sovereign power of the 385.27 state, and is a local government unit and political subdivision 385.28 of the state. Without limiting the generality of the foregoing, 385.29 the authority may: 385.30 (a) Sue and be sued, have a seal, which may but need not be 385.31 affixed to documents as directed by the board, make and perform 385.32 contracts, and have perpetual succession; 385.33 (b) Acquire real and personal property within or outside 385.34 its taxing jurisdiction, by purchase, gift, devise, 385.35 condemnation, conditional sale, lease, lease purchase, or 385.36 otherwise; or for purposes, including the facilitation of an 386.1 economic development project pursuant to section 383B.81 or 386.2 469.091 or 469.175, subdivision 7, that also improve rail 386.3 service; and 386.4 (c) Hold, manage, control, sell, convey, lease, mortgage, 386.5 or otherwise dispose of real or personal property. 386.6 Sec. 18. [458D.111] [COLLECTION OF SOLID WASTE MANAGEMENT 386.7 SERVICE CHARGES.] 386.8 Subdivision 1. [AUTHORITY.] The board shall have the 386.9 powers of a county as specified in section 400.08. 386.10 Subd. 2. [METHOD OF COLLECTING CERTAIN SERVICE 386.11 CHARGES.] The board shall determine the method of collecting 386.12 service charges in a service area by resolution. 386.13 Subd. 3. [SERVICE CHARGES ON REAL ESTATE INCLUDING EXEMPT 386.14 PROPERTY.] In addition to any methods provided in section 386.15 400.08, the board may assess and collect service charges as 386.16 follows. On or before October 15 of each year, the board shall 386.17 certify to each county auditor an itemized list of solid waste 386.18 management service charges and a description of parcels of lands 386.19 against which the charges arise. It shall be the duty of the 386.20 county auditors to include the charges upon the tax rolls of the 386.21 county for the taxes due and payable for the following year. 386.22 The solid waste management service charge shall be enforced and 386.23 collected in the manner provided for the enforcement and 386.24 collection of real property taxes. The service charges shall be 386.25 subject to the same penalties, interest, and other conditions 386.26 provided for the collection of property taxes. The board shall 386.27 reimburse each county auditor for the costs of collection of the 386.28 service charge. 386.29 Sec. 19. [465.715] [POLITICAL SUBDIVISIONS; LEASE PURCHASE 386.30 AGREEMENTS.] 386.31 Subdivision 1. [STATUTORY AUTHORIZATION REQUIRED.] A 386.32 county, home rule charter city, statutory city, town, school 386.33 district, or other political subdivision may not create a 386.34 corporation, whether for profit or not for profit, unless 386.35 explicitly authorized to do so by law. 386.36 Subd. 2. [PRE-DECEMBER 1, 1996, LEASE PURCHASE 387.1 AGREEMENTS.] The validity of any lease purchase agreement 387.2 entered into prior to December 1, 1996, and subsequent 387.3 refinancings are not affected by either the amount of 387.4 consideration paid by a lessor for an interest in real property 387.5 or, in the case of lessors organized by or on behalf of the 387.6 city, county, town, or school district, any defect in or lack of 387.7 authority to organize such entity. A nonprofit corporation 387.8 organized by or on behalf of a city, county, town, or school 387.9 district, for the purpose of a lease purchase agreement, may 387.10 continue in existence until the end of any lease agreement in 387.11 effect on December 1, 1996, but thereafter is dissolved. During 387.12 its existence, the nonprofit corporation shall conduct only 387.13 business that is necessary and directly related to the lease 387.14 agreement. The nonprofit corporation is a public corporation 387.15 for purposes of section 465.035 and is subject to all laws as if 387.16 it were a part of the city, county, town, or school district. 387.17 Sec. 20. Minnesota Statutes 1996, section 469.169, is 387.18 amended by adding a subdivision to read: 387.19 Subd. 11. [ADDITIONAL BORDER CITY ALLOCATIONS.] In 387.20 addition to tax reductions authorized in subdivisions 7, 8, 9, 387.21 and 10, the commissioner may allocate $1,500,000 for tax 387.22 reductions to border city enterprise zones in cities located on 387.23 the western border of the state. The commissioner shall make 387.24 allocations to zones in cities on the western border on a per 387.25 capita basis. Allocations made under this subdivision may be 387.26 used for tax reductions as provided in section 469.171, or other 387.27 offsets of taxes imposed on or remitted by businesses located in 387.28 the enterprise zone, but only if the municipality determines 387.29 that the granting of the tax reduction or offset is necessary in 387.30 order to retain a business within or attract a business to the 387.31 zone. Limitations on allocations under section 469.169, 387.32 subdivision 7, do not apply to this allocation. Enterprise 387.33 zones that receive allocations under this subdivision may 387.34 continue in effect for purposes of those allocations through 387.35 December 31, 1998. 387.36 Sec. 21. Minnesota Statutes 1996, section 473.39, is 388.1 amended by adding a subdivision to read: 388.2 Subd. 1d. [OBLIGATIONS; 1998-2000.] In addition to the 388.3 authority in subdivisions 1a, 1b, and 1c, the council may issue 388.4 certificates of indebtedness, bonds, or other obligations under 388.5 this section in an amount not exceeding $30,000,000, which may 388.6 be used for capital expenditures as prescribed in the council's 388.7 transit capital improvement program and for related costs, 388.8 including the costs of issuance and sale of the obligations. 388.9 Sec. 22. [PUBLIC SAFETY TRAINING FACILITY.] 388.10 Subdivision 1. [JOINT POWERS AGREEMENT; BONDS.] Each of 388.11 the cities of Bloomington, Chanhassen, Eden Prairie, Edina, 388.12 Minnetonka, and Richfield may issue general obligation bonds of 388.13 the city in an amount not to exceed $1,000,000 for its share of 388.14 the cost of the acquisition, construction, and equipping of a 388.15 public safety training facility to be jointly operated by a 388.16 joint powers association consisting of two or more municipal or 388.17 public corporations of which that city is a member. The 388.18 issuance of the bonds is subject to Minnesota Statutes, chapter 388.19 475, except that no election shall be required except as 388.20 provided in subdivision 2. 388.21 Subd. 2. [REVERSE REFERENDUM.] Before the adoption by the 388.22 governing body of a city of any resolution authorizing the 388.23 issuance of any bonds authorized by subdivision 1, the city 388.24 shall publish a notice in the official newspaper of the city 388.25 stating that the governing body of the city intends to consider 388.26 the authorization of the issuance of the bonds, stating the 388.27 amount, purpose, and, in general, the security and source of 388.28 payment for the bonds. The resolution authorizing the issuance 388.29 of the bonds shall not be adopted by the governing body of the 388.30 city for at least 15 days after publication of the notice of 388.31 intention. If within 15 days after publication of the notice of 388.32 intention a petition asking for an election on the proposition 388.33 that the city issue the bonds signed by the voters equal to at 388.34 least ten percent of the registered voters in the city is filed 388.35 with the clerk, no bonds may be issued by the city unless 388.36 approved by a majority of the voters of the city voting on the 389.1 question of the issuance at a regular or special election. 389.2 Subd. 3. [EFFECTIVE DATE; LOCAL APPROVAL.] This section is 389.3 effective with respect to any of the cities of Bloomington, 389.4 Chanhassen, Eden Prairie, Edina, Minnetonka, and Richfield the 389.5 day after compliance by that city with Minnesota Statutes, 389.6 section 645.021, subdivision 3. 389.7 Sec. 23. [CONTAMINATION CLEANUP AND RAIL IMPROVEMENT.] 389.8 Subdivision 1. [CONTAMINATION CLEANUP FUNDS.] The 389.9 commissioner of the department of trade and economic 389.10 development, pursuant to Minnesota Statutes, section 116J.555, 389.11 subdivision 1, and the metropolitan council, pursuant to 389.12 Minnesota Statutes, section 473.252, subdivision 3, paragraph 389.13 (b), clause (1), shall designate the site located in the city of 389.14 St. Louis Park and known as NL Industries/Tara Corp./Golden 389.15 Auto, EPA ID. No. MND 097891634 to be an eligible site for 389.16 receipt of contamination cleanup funds from the contaminated 389.17 site cleanup and development account in the general fund and 389.18 from the tax base revitalization account in the metropolitan 389.19 livable communities fund. Grants from these accounts shall be 389.20 available only upon confirmation from the commissioner of 389.21 transportation that Hennepin county and the city of St. Louis 389.22 Park have entered into an agreement as described in subdivision 389.23 2. 389.24 Subd. 2. [AGREEMENT BETWEEN HENNEPIN COUNTY AND CITY OF ST. 389.25 LOUIS PARK.] To qualify for receipt of funds under subdivision 389.26 1, or from the environmental response fund established in 389.27 Minnesota Statutes, section 383B.81, which funds are to be used 389.28 for the site described in subdivision 1, Hennepin county and the 389.29 city of St. Louis Park must, after consultation and negotiation 389.30 with representatives of affected neighborhoods along the 389.31 impacted and proposed rail lines, enter into an agreement with 389.32 respect to the following: 389.33 (1) acquisition through purchase or condemnation of the 389.34 entire site described in subdivision 1. A portion of the site 389.35 must be used to provide adequate rights-of-way for transferring 389.36 railroad traffic from the Canadian Pacific railroad line from 390.1 Louisiana Avenue in St. Louis Park easterly to trunk highway 390.2 55/Hiawatha Avenue, commonly referred to as the 29th street 390.3 depression, to the Canadian Pacific railroad line from the 29th 390.4 street rail line northerly to the Burlington Northern 390.5 connection, entirely within the city of St. Louis Park; 390.6 (2) responsibility for the costs of the railroad 390.7 improvement, including changing the curve of the railroad track 390.8 and eliminating a switching facility; 390.9 (3) obtaining by Hennepin county and the city of St. Louis 390.10 Park of all applicable assurances, including, but not limited 390.11 to, letters of assurance, certificates of completion, and no 390.12 association determinations available from the United States 390.13 Environmental Protection Agency and the Minnesota pollution 390.14 control agency; 390.15 (4) respective responsibilities of the parties in 390.16 remediating the acquired property and in assuming responsibility 390.17 for any required matching funds; and 390.18 (5) entitlement to proceeds from any ultimate disposition 390.19 of the property consistent with any statutory restrictions 390.20 applicable to the source of the acquisition funds. 390.21 Subd. 3. [COMMISSIONER OF TRANSPORTATION.] The 390.22 commissioner of transportation shall confirm that St. Louis Park 390.23 and Hennepin county have entered into an agreement. The 390.24 commissioner of transportation shall collaborate with the city 390.25 and county by providing technical assistance and support in 390.26 facilitating the railroad improvement and testing at that 390.27 portion of the site to be used for the railroad improvement. 390.28 The project shall proceed only if the city of St. Louis Park, 390.29 Hennepin county, and the commissioner have entered into an 390.30 agreement regarding responsibility for safety and noise 390.31 mitigation measures to be implemented or constructed on or 390.32 adjacent to the Canadian Pacific railroad line from the 29th 390.33 street rail line northerly to the Burlington Northern 390.34 connection, entirely within the city of St. Louis Park. 390.35 Sec. 24. [CITY OF ST. PAUL; RAINLEADER DISCONNECTION AND 390.36 SEWER CONNECTION PROGRAM.] 391.1 Subdivision 1. [PUBLIC PURPOSE.] The legislature finds 391.2 that the disconnection of rainleaders and the repair of 391.3 defective sanitary sewer connections is a public purpose and 391.4 that providing financing to owners of residences and businesses 391.5 to disconnect rainleaders and repair defective sanitary sewer 391.6 connections located on their private property is a public 391.7 purpose. 391.8 Subd. 2. [PROGRAM AUTHORIZED.] The city of Saint Paul may 391.9 undertake a program to disconnect rainleaders, connect buildings 391.10 to storm sewers, or correct defective sanitary sewer connections 391.11 located on private property at the written request of the owner 391.12 of the property. The city may contract for the disconnection of 391.13 rainleaders, the connection of buildings to storm sewers, and 391.14 the repair of defective sanitary sewer connections, or may pay 391.15 or reimburse the cost for disconnection of rainleaders, the 391.16 connection of buildings to storm sewers, and the repair of 391.17 defective sanitary sewer connections for which the owner of the 391.18 property has entered into contracts. As part of the program, 391.19 the city may identify criteria for private contractors and may 391.20 limit the payment or reimbursement of costs to those situations 391.21 in which the work has been performed by contractors whose 391.22 participation in the program has been approved by the city in 391.23 advance. The city need not hold any hearing in connection with 391.24 the request of individual property owners for participation in 391.25 the program. 391.26 Subd. 3. [CHARGES AUTHORIZED.] The city may charge the 391.27 cost of the program to the owners who have requested the 391.28 disconnection of their rainleaders, the connection of buildings 391.29 to storm sewers, or the repair of their sanitary sewer 391.30 connections. The amount charged may include the full amount 391.31 paid or reimbursed, the cost of administration, and the cost of 391.32 financing. The amount charged may be made payable with interest 391.33 at a rate determined by the city in installments over a period 391.34 determined by the city not to exceed 20 years and the 391.35 installments may be certified, added to, and collected in the 391.36 same manner as municipal taxes by the county department of 392.1 property taxation or similar department and paid over to the 392.2 city in the same manner as are municipal taxes. The city may 392.3 certify due and unpaid installments to the county auditor along 392.4 with taxes against the benefited property for collection as 392.5 other real property taxes are collected, in which event the 392.6 installments may be enforced in the manner required for 392.7 enforcement of real property taxes in accordance with state law. 392.8 Subd. 4. [CHARGES TO PROPERTY OWNERS.] Instead of charging 392.9 the cost of the program as provided above, the city may charge 392.10 the cost of the program to the owners who have requested the 392.11 disconnection of their rainleaders, the connection of buildings 392.12 to storm sewers, or the repair of their defective sanitary sewer 392.13 connections. The amount charged may include the full amount 392.14 paid or reimbursed, the cost of administration, and the cost of 392.15 financing. The amount charged must be payable with interest at 392.16 a rate determined by the city in installments over a period 392.17 determined by the city not to exceed 20 years. All charges for 392.18 the program are valid and enforceable without regard to 392.19 valuation of the property or the benefit conferred. After the 392.20 amount to be charged has been determined, whether or not the 392.21 work has been performed, the city must hold a public hearing on 392.22 the charges after notice mailed to the owner of the property to 392.23 be charged not less than 14 days before the published hearing. 392.24 Notice of the hearing is not required. The city shall select 392.25 Minnesota Statutes, chapter 429, or the city charter to govern 392.26 the procedure for the levy and collection of the charges, and 392.27 except as a different procedure is provided in this section, 392.28 proceedings for the imposition, appeal, repeal, supplementation, 392.29 and collection of the charges must conform to the procedures 392.30 selected. 392.31 Subd. 5. [NATURE OF CHARGES.] The charges, with accruing 392.32 interest, are a lien upon all private and public property 392.33 included in the charges, from the date of the resolution 392.34 adopting the charges, concurrent with general taxes. All 392.35 charges and interest on them must be collected and paid over in 392.36 the same manner as municipal taxes. 393.1 Subd. 6. [OBLIGATIONS AUTHORIZED.] To pay the costs of the 393.2 program, the city may issue general or special obligations in 393.3 one or more series without an election and without being subject 393.4 to limits on net debt, but otherwise in accordance with 393.5 Minnesota Statutes, chapter 475. To the payment of the 393.6 obligations, the city must pledge receipts of the charges, and 393.7 may in addition pledge revenues or net revenues of the city's 393.8 sewer service fund. The city may pledge its full faith, credit, 393.9 and taxing powers to pay the obligations, and may levy taxes to 393.10 pay the obligations. 393.11 Subd. 7. [LOCAL APPROVAL.] This section is effective the 393.12 day after the governing body of the city of Saint Paul complies 393.13 with Minnesota Statutes, section 645.021, subdivision 3. 393.14 Sec. 25. [MINNESOTA INVESTMENT FUND; CITY OF WORTHINGTON.] 393.15 Notwithstanding the grant limit contained in Minnesota 393.16 Statutes, section 116J.8731, subdivision 5, a grant of up to 393.17 $1,000,000 may be made to the city of Worthington to offset 393.18 severe job losses due to plant closings. 393.19 Sec. 26. [DESIGNATION OF KOOCHICHING COUNTY AS AN 393.20 ENTERPRISE ZONE.] 393.21 Notwithstanding the limitation in Minnesota Statutes, 393.22 section 469.167, subdivision 3, the commissioner of trade and 393.23 economic development shall designate Koochiching county as an 393.24 enterprise zone under Minnesota Statutes, sections 469.166 to 393.25 469.173. 393.26 Sec. 27. [YEAR 2000 READY.] 393.27 Any computer software or hardware that is purchased by the 393.28 state or a political subdivision with money appropriated in this 393.29 bill must be year 2000 ready. 393.30 Sec. 28. [APPROPRIATION; PAYMENT OF CLAIMS.] 393.31 $16,600,000 is appropriated in fiscal year 1998 from the 393.32 general fund to the commissioner of revenue to pay claims filed 393.33 under the Cambridge Bank Judgment. 393.34 Sec. 29. [APPROPRIATION; ADMINISTRATION OF ACT.] 393.35 $2,132,000 is appropriated from the general fund for fiscal 393.36 year 1998 and $48,000 is appropriated for fiscal year 1999 to 394.1 the commissioner of revenue to pay the costs of administering 394.2 the provisions of this act. 394.3 Sec. 30. [REPEALER.] 394.4 1997 H.F. 2158, article 1, section 25, if enacted, is 394.5 repealed. This section repeals 1997 H.F. 2158, article 1, 394.6 section 25, without regard to order of final enactment. 394.7 Sec. 31. [EFFECTIVE DATE.] 394.8 Section 9 is effective for decrees of marriage dissolution, 394.9 deeds, or other instruments executed and delivered after July 1, 394.10 1997. 394.11 Section 10 is effective for assessments made on or after 394.12 the effective date of laws 1996, chapter 471, article 2, section 394.13 32. 394.14 Section 19 is effective the day following final enactment.