2nd Engrossment - 80th Legislature (1997 - 1998) Posted on 12/15/2009 12:00am
1.1 A bill for an act 1.2 relating to the financing and operation of state and 1.3 local government; providing for property tax reform; 1.4 providing for education financing; limiting education 1.5 revenue referenda for 1997; changing property tax 1.6 refunds for homeowners and renters; changing 1.7 truth-in-taxation requirements; providing for joint 1.8 truth-in-taxation hearings; imposing levy limits on 1.9 cities and counties; changing fiscal note requirements 1.10 for state mandates; providing for reimbursement for 1.11 costs of state mandates; providing for certain 1.12 property tax exemptions; establishing a property tax 1.13 reform account; providing a refundable credit for 1997 1.14 property taxes; making miscellaneous property tax 1.15 changes; providing a senior citizens property tax 1.16 deferral program; changing aids to local governments; 1.17 changing tax increment financing provisions; 1.18 authorizing certain tax increment districts; exempting 1.19 certain tax increment districts from certain 1.20 requirements; authorizing local taxes, levies, and 1.21 abatements; conforming certain income tax laws with 1.22 changes in federal law; providing income tax credits; 1.23 modifying the application of sales and excise taxes; 1.24 exempting certain purchases from the sales tax; 1.25 modifying waste management tax and taconite tax 1.26 provisions; increasing the budget reserve; revising 1.27 the law governing regional development commissions; 1.28 providing for certain payments to counties; making 1.29 miscellaneous technical changes and corrections; 1.30 requiring studies; appropriating money; amending 1.31 Minnesota Statutes 1996, sections 6.76; 16A.152, 1.32 subdivision 2; 69.021, subdivision 7; 93.41; 103D.905, 1.33 subdivisions 4, 5, and by adding a subdivision; 1.34 115A.554; 116.07, subdivision 10; 117.155; 121.15, by 1.35 adding a subdivision; 122.247, subdivision 3; 122.45, 1.36 subdivision 3a; 122.531, subdivisions 4a and 9; 1.37 122.533; 122.535, subdivision 6; 124.2131, subdivision 1.38 1; 124.239, subdivision 5, and by adding subdivisions; 1.39 124.2601, subdivisions 2 and 3; 124.2711, subdivisions 1.40 1 and 5; 124.2713, subdivision 1; 124.2714; 124.2715, 1.41 subdivision 1; 124.2716, subdivision 2; 124.2725, 1.42 subdivisions 2, 6, 13, and 14; 124.2726, subdivisions 1.43 1 and 3; 124.2727, subdivision 6a; 124.312, 1.44 subdivision 5; 124.313; 124.4945; 124.83, subdivision 1.45 3; 124.91, subdivisions 1, 2, 5, and 7; 124.912, 1.46 subdivisions 1, 3, 6, and 7; 124.914, subdivisions 1, 2.1 2, 3, and 4; 124.916, subdivisions 1, 3, and 4; 2.2 124.918, subdivision 8; 124.95, subdivision 1; 2.3 124A.03, subdivision 1g; 124A.23, subdivision 1; 2.4 124A.292, subdivision 2; 161.45, by adding a 2.5 subdivision; 216B.16, by adding subdivisions; 270.60, 2.6 by adding a subdivision; 270B.02, by adding a 2.7 subdivision; 270B.12, by adding a subdivision; 271.01, 2.8 subdivision 5; 271.19; 272.02, subdivision 1, and by 2.9 adding a subdivision; 272.115; 273.11, subdivisions 2.10 1a, 16, and by adding a subdivision; 273.111, 2.11 subdivisions 3 and 6; 273.112, by adding a 2.12 subdivision; 273.121; 273.124, subdivisions 1, 14, and 2.13 by adding a subdivision; 273.13, subdivisions 1, 22, 2.14 23, 24, 25, 31, and by adding subdivisions; 273.135, 2.15 subdivision 2; 273.1391, subdivision 2; 273.1398, 2.16 subdivisions 1, 1a, 6, 8, and by adding subdivisions; 2.17 273.18; 274.01; 274.13, by adding subdivisions; 2.18 275.065, subdivisions 1, 3, 5a, 6, 8, and by adding 2.19 subdivisions; 275.07, subdivision 4; 275.08, 2.20 subdivision 1b; 276.04, subdivision 2; 276A.04; 2.21 276A.05, subdivisions 1 and 5; 276A.06, subdivisions 2.22 2, 3, 5, and 9; 278.07; 281.13; 281.23, subdivision 6; 2.23 281.273; 281.276; 282.01, subdivision 8; 282.04, 2.24 subdivision 1; 287.22; 289A.02, subdivision 7; 2.25 289A.26, subdivisions 2, 3, 6, and 7; 289A.56, 2.26 subdivision 4; 290.01, subdivisions 19, 19a, 19b, 19c, 2.27 19d, 19g, and 31; 290.014, subdivisions 2 and 3; 2.28 290.015, subdivision 5; 290.06, subdivision 22, and by 2.29 adding subdivisions; 290.067, subdivision 1; 290.068, 2.30 subdivision 1; 290.0922, subdivision 1; 290.17, 2.31 subdivision 1; 290.371, subdivision 2; 290.92, by 2.32 adding a subdivision; 290.9725; 290.9727, subdivision 2.33 1; 290.9728, subdivision 1; 290A.03, subdivisions 6, 2.34 7, 11, and 13; 290A.04, subdivisions 1, 2, 6, and by 2.35 adding a subdivision; 290A.19; 291.005, subdivision 1; 2.36 295.50, subdivision 6; 295.58; 296.141, subdivision 4; 2.37 296.18, subdivision 1; 297A.01, subdivisions 3, 4, 7, 2.38 11, 15, and 16; 297A.02, subdivision 2; 297A.14, 2.39 subdivision 4; 297A.211, subdivision 1; 297A.25, 2.40 subdivisions 2, 3, 7, 11, 56, 59, and by adding 2.41 subdivisions; 297A.45; 297B.01, subdivisions 7 and 8; 2.42 297E.02, subdivision 6; 297E.04, subdivision 3; 2.43 298.24, subdivision 1; 298.28, subdivisions 2, 3, 4, 2.44 5, 9a, and by adding subdivisions; 298.2961, 2.45 subdivision 1; 298.75, subdivisions 1, 4, and by 2.46 adding a subdivision; 325D.33, subdivision 3; 349.12, 2.47 subdivision 26a; 349.154, subdivision 2; 349.163, 2.48 subdivision 8; 349.19, subdivision 2a; 349.191, 2.49 subdivision 1b; 373.40, subdivision 7; 398A.04, 2.50 subdivision 1; 462.381; 462.383; 462.384, subdivision 2.51 5; 462.385; 462.386, subdivision 1; 462.387; 462.388; 2.52 462.389, subdivisions 1, 3, and 4; 462.39, 2.53 subdivisions 2 and 3; 462.391, subdivision 5, and by 2.54 adding subdivisions; 462.393; 462.394; 462.396; 2.55 462.398; 469.012, subdivision 1; 469.033, subdivision 2.56 6; 469.040, subdivision 3, and by adding a 2.57 subdivision; 469.174, subdivisions 10, 19, and by 2.58 adding subdivisions; 469.175, subdivision 3, and by 2.59 adding subdivisions; 469.176, subdivisions 1b, 2, 4c, 2.60 4g, 4j, and 6; 469.177, subdivisions 1, 3, and 4; 2.61 473F.06; 473F.07, subdivisions 1 and 5; 473F.08, 2.62 subdivisions 2, 3, 5, and 8a; 477A.011, subdivisions 2.63 20, 34, 35, 36, 37, and by adding subdivisions; 2.64 477A.013, subdivisions 1 and 9; 477A.03, subdivision 2.65 2; and 477A.05; Laws 1992, chapter 511, article 2, 2.66 section 52; Laws 1993, chapter 375, article 9, section 2.67 45, subdivisions 2, 3, 4, and by adding a subdivision; 2.68 Laws 1995, chapter 264, article 5, sections 44, 2.69 subdivision 4, as amended; and 45, subdivision 1, as 2.70 amended; Laws 1997, chapter 34, section 2; proposing 2.71 coding for new law in Minnesota Statutes, chapters 3; 3.1 14; 16A; 124; 124A; 270; 273; 275; 290; 297A; 383A; 3.2 383B; 458D; 462A; 469; 477A; proposing coding for new 3.3 law as Minnesota Statutes, chapter 290B; repealing 3.4 Minnesota Statutes 1996, sections 3.982; 124.2131, 3.5 subdivision 3a; 124.2134; 124.225, subdivisions 1, 3a, 3.6 7a, 7b, 7d, 7e, 7f, 8a, 8k, 8l, 8m, 9, 10, 13, 14, 15, 3.7 16, and 17; 124.226; 124.2442; 124.2601, subdivisions 3.8 4, 5, and 6; 124.2711, subdivisions 2a and 3; 3.9 124.2713, subdivisions 6, 6a, 6b, and 7; 124.2715, 3.10 subdivisions 2 and 3; 124.2716, subdivisions 3 and 4; 3.11 124.2725, subdivisions 3, 4, 5, and 7; 124.2727, 3.12 subdivisions 6b, 6c, and 9; 124.314, subdivision 2; 3.13 124.321; 124.91, subdivisions 2, 4, and 7; 124.912, 3.14 subdivision 2; 124A.029; 124A.03, subdivisions 2a and 3.15 3b; 124A.0311; 124A.22, subdivisions 4a, 4b, 8a, 8b, 3.16 13d, and 13e; 124A.23, subdivisions 1, 2, 3, and 4; 3.17 124A.26, subdivisions 2 and 3; 124A.292, subdivisions 3.18 3 and 4; 270B.12, subdivision 11; 273.13, subdivisions 3.19 21a and 32; 273.1315; 273.1317; 273.1318; 273.1398, 3.20 subdivisions 2, 2c, 2d, 3, and 3a; 273.1399; 273.166; 3.21 275.08, subdivisions 1c and 1d; 275.61; 276.012; 3.22 276A.06, subdivision 9; 290A.03, subdivisions 12a and 3.23 14; 290A.055; 290A.26; 297A.01, subdivisions 20 and 3.24 21; 297A.02, subdivision 5; 297A.25, subdivision 29; 3.25 462.384, subdivision 7; 462.385, subdivision 2; 3.26 462.389, subdivision 5; 462.391, subdivisions 1, 2, 3, 3.27 4, 6, 7, 8, and 9; 462.392; 469.176, subdivisions 1a 3.28 and 5; 469.1782, subdivision 1; 469.181; 473F.08, 3.29 subdivision 8a; and 645.34; Laws 1995, chapter 264, 3.30 article 4, as amended. 3.31 BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA: 3.32 ARTICLE 1 3.33 PROPERTY TAX REFORM 3.34 Section 1. Minnesota Statutes 1996, section 273.124, is 3.35 amended by adding a subdivision to read: 3.36 Subd. 19. [LEASE-PURCHASE PROGRAM.] Qualifying buildings 3.37 and appurtenances, together with the land on which they are 3.38 located, are classified as homesteads, if the following 3.39 qualifications are met: 3.40 (1) the property is leased for up to a five-year period by 3.41 the occupant under a lease-purchase program administered by the 3.42 Minnesota housing finance agency or a housing and redevelopment 3.43 authority under sections 469.001 to 469.047; 3.44 (2) the occupant's income is no greater than 80 percent of 3.45 the county or area median income, adjusted for family size; 3.46 (3) the building consists of one or two dwelling units; 3.47 (4) the lease agreement provides that part of the lease 3.48 payment is escrowed as a nonrefundable down payment on the 3.49 housing; 3.50 (5) the administering agency verifies the occupant's income 4.1 eligibility and certifies to the county assessor that the 4.2 occupant meets the income standards; and 4.3 (6) the property owner applies to the county assessor by 4.4 May 30 of each year. 4.5 For purposes of this subdivision, "qualifying buildings and 4.6 appurtenances" means a one- or two-unit residential building 4.7 which was unoccupied, abandoned, and boarded for at least six 4.8 months. 4.9 Sec. 2. [273.126] [QUALIFYING LOW-INCOME RENTAL HOUSING.] 4.10 Subdivision 1. [QUALIFYING RULES.] The market value of a 4.11 rental housing unit qualifies for assessment under class 4d if: 4.12 (1) it is occupied by individuals meeting the income limits 4.13 under subdivision 2; 4.14 (2) a rent restriction agreement under subdivision 3 4.15 applies; 4.16 (3) the unit meets the minimum housing quality standards 4.17 under subdivision 4; and 4.18 (4) the Minnesota housing finance agency certifies to the 4.19 local assessor that the unit qualifies. 4.20 Subd. 2. [INCOME LIMITS.] (a) In order to qualify under 4.21 class 4d, a unit must be occupied by an individual or 4.22 individuals whose income is at or below 60 percent of the median 4.23 area gross income. If the resident's income met the requirement 4.24 when the resident first occupied the unit, the income of the 4.25 resident continues to qualify. If an individual first occupied 4.26 a unit before January 1, 1998, the individual's income for 4.27 purposes of the preceding sentence is the income for calendar 4.28 year 1996. 4.29 (b) For purposes of this section, "median area gross income" 4.30 means the greater of (1) the median gross income for the area 4.31 determined under section 42 of the Internal Revenue Code of 4.32 1986, as amended through December 31, 1996, or (2) the median 4.33 gross income for the state. 4.34 (c) The median gross income must be adjusted for family 4.35 size. 4.36 (d) Vacant units qualify as meeting the requirements of 5.1 this subdivision in the same proportion that total units in the 5.2 building are subject to rent restriction agreements under 5.3 subdivision 3 and meet minimum housing standards under 5.4 subdivision 4. This paragraph applies only to the extent that 5.5 units subject to a rent restriction agreement and meeting the 5.6 minimum housing quality standards are vacant. 5.7 (e) The owner or manager of the property may comply with 5.8 this subdivision by obtaining written statements from the 5.9 residents that their incomes are at or below the limit. 5.10 Subd. 3. [RENT RESTRICTIONS.] (a) In order to qualify 5.11 under class 4d, a unit must be subject to a rent restriction 5.12 agreement with the housing finance agency for a period of at 5.13 least five years. The agreement must be in effect and apply to 5.14 the rents to be charged for the year in which the property taxes 5.15 are payable. The agreement must provide that the restrictions 5.16 apply to each year of the period, regardless of whether the unit 5.17 is occupied by an individual with qualifying income or whether 5.18 class 4d applies. The rent restriction agreement must provide 5.19 for rents for the unit to be no higher than 30 percent of 60 5.20 percent of the median gross income. The definition of median 5.21 gross income specified in this section applies. "Rent" means 5.22 "gross rent" as defined in section 42(g)(2)(B) of the Internal 5.23 Revenue Code of 1986, as amended through December 31, 1996. 5.24 (b) Notwithstanding maximum rent levels permitted, an owner 5.25 or manager must make available to families with section 8 5.26 certificates on property located in the metropolitan area as 5.27 defined in section 473.121, subdivision 2, the greater of (i) 5.28 one unit, or (ii) ten percent of all units qualifying under 5.29 class 4d; or in the case of property located in the remaining 80 5.30 nonmetropolitan counties, the greater of (i) one unit, or (ii) 5.31 five percent of all units qualifying under class 4d. 5.32 (c) The rent restriction agreement runs with the land and 5.33 binds any successor to title to the property, without regard to 5.34 whether the successor had actual notice or knowledge of the 5.35 agreement. The owner must promptly record the agreement in the 5.36 office of the county recorder or must file it in the office of 6.1 the registrar of titles, in the county where the property is 6.2 located. If the agreement is not recorded, class 4d does not 6.3 apply to the property. 6.4 Subd. 4. [MINIMUM HOUSING STANDARDS.] In order to qualify 6.5 under class 4d, a unit must be certified by the housing finance 6.6 agency to meet the minimum housing standards established under 6.7 section 462A.071. 6.8 Subd. 5. [MONITORING RENT LEVELS.] The housing finance 6.9 agency is directed to monitor changes in rent levels and the use 6.10 of section 8 certificates in units qualifying under class 4d. 6.11 Subd. 6. [ADDITIONAL TAXES.] (a) Notwithstanding the 6.12 provisions of section 273.01, 274.01, or any other law, if the 6.13 Minnesota housing finance agency notifies the assessor that the 6.14 provisions of this section have not been met for any period 6.15 during which a unit was classified under class 4d, an additional 6.16 tax is imposed. The additional tax equals, as certified by the 6.17 housing finance agency, either (1) a dollar amount, or (2) the 6.18 increased tax which would have been imposed if the property had 6.19 not been classified under class 4d, and the tax actually 6.20 imposed, during the period of noncompliance. 6.21 (b) The additional tax must be extended against the 6.22 property on the tax list for the current year. No interest or 6.23 penalties may be levied on additional taxes if timely paid. The 6.24 tax imposed by this subdivision is a lien upon the property 6.25 assessed to the same extent and for the same duration as other 6.26 taxes imposed on the property. 6.27 Sec. 3. [273.127] [TRANSITION CLASS RATES.] 6.28 Subdivision 1. [APPLICATION.] (a) The class rates under 6.29 this section apply for property taxes payable in 1999 for the 6.30 market value of properties: 6.31 (1)(i) which were classified as class 4c or class 4d for 6.32 taxes payable in 1998; or 6.33 (ii) which are constructed or substantially rehabilitated 6.34 during calendar year 1997 and would qualify as class 4c or class 6.35 4d for taxes payable in 1999; and 6.36 (2) which do not qualify as class 4d property as a result 7.1 of the eligibility criteria specified in section 273.126. 7.2 (b) To qualify for the class rates under this section, the 7.3 building's owner must annually certify to the assessor in 7.4 writing that the property, building, or unit continues to 7.5 qualify under the laws in effect and applicable to its 7.6 classification for taxes payable in 1998. 7.7 (c) A property no longer qualifies under this section: 7.8 (1) if it is transferred or sold; or 7.9 (2) if loans, that have a principal amount equal to more 7.10 than 25 percent of the property's market value and that are 7.11 secured by the property, are refinanced. 7.12 Subd. 2. [CLASS 4C PROPERTIES.] For the market value of 7.13 properties that were classified as class 4c for taxes payable in 7.14 1998 and which no longer qualify as a result of the eligibility 7.15 criteria specified in section 273.126, a class rate of 2.4 7.16 percent applies for taxes payable in 1999. 7.17 Subd. 3. [CLASS 4D PROPERTIES.] For the market value of 7.18 properties that were classified as class 4d for taxes payable in 7.19 1998 and which no longer qualify as a result of the eligibility 7.20 criteria specified in section 273.126, a class rate of 2.2 7.21 percent applies for taxes payable in 1999. 7.22 Sec. 4. Minnesota Statutes 1996, section 273.13, 7.23 subdivision 22, is amended to read: 7.24 Subd. 22. [CLASS 1.] (a) Except as provided in subdivision 7.25 23, real estate which is (i) residential and used for homestead 7.26 purposes; and (ii) other residential real estate containing one 7.27 unit, other than seasonal residential recreational; and (iii) a 7.28 dwelling, garage, and surrounding one acre of property on a 7.29 nonhomestead farm classified under subdivision 23, paragraph 7.30 (b), is class11a. The market value of class 1a property must 7.31 be determined based upon the value of the house, garage, and 7.32 land. 7.33 For taxes payable in 1998 and thereafter, the first 7.34$72,000$80,000 of market value of class 1a property has a net 7.35 class rate of one percent of its market valueand a gross class7.36rate of 2.17 percent of its market value. For taxes payable in8.11992,; and the market value of class 1a property that 8.2 exceeds$72,000 but does not exceed $115,000$80,000 has a class 8.3 rate of two percent of its market value; and the market value of8.4class 1a property that exceeds $115,000 has a class rate of 2.58.5percent of its market value. For taxes payable in 1993 and8.6thereafter, the market value of class 1a property that exceeds8.7$72,000 has a class rate of two percent. 8.8 (b) Real estate that would otherwise qualify under 8.9 paragraph (a), clause (ii), only qualifies as class 1a property 8.10 if it is in compliance with all rental licensing requirements 8.11 and codes applicable to housing on the property at the time of 8.12 payment of the property taxes. If the property is found to be 8.13 out of compliance, the class rates that apply are the rates that 8.14 would have applied if the property were not included in class 8.15 1a. Any tax delinquency is subject to penalties and interest. 8.16(b)(c) Class 1b property includes homestead real estate or 8.17 homestead manufactured homes used for the purposes of a 8.18 homestead by 8.19 (1) any blind person, or the blind person and the blind 8.20 person's spouse; or 8.21 (2) any person, hereinafter referred to as "veteran," who: 8.22 (i) served in the active military or naval service of the 8.23 United States; and 8.24 (ii) is entitled to compensation under the laws and 8.25 regulations of the United States for permanent and total 8.26 service-connected disability due to the loss, or loss of use, by 8.27 reason of amputation, ankylosis, progressive muscular 8.28 dystrophies, or paralysis, of both lower extremities, such as to 8.29 preclude motion without the aid of braces, crutches, canes, or a 8.30 wheelchair; and 8.31 (iii) has acquired a special housing unit with special 8.32 fixtures or movable facilities made necessary by the nature of 8.33 the veteran's disability, or the surviving spouse of the 8.34 deceased veteran for as long as the surviving spouse retains the 8.35 special housing unit as a homestead; or 8.36 (3) any person who: 9.1 (i) is permanently and totally disabled and 9.2 (ii) receives 90 percent or more of total income from 9.3 (A) aid from any state as a result of that disability; or 9.4 (B) supplemental security income for the disabled; or 9.5 (C) workers' compensation based on a finding of total and 9.6 permanent disability; or 9.7 (D) social security disability, including the amount of a 9.8 disability insurance benefit which is converted to an old age 9.9 insurance benefit and any subsequent cost of living increases; 9.10 or 9.11 (E) aid under the federal Railroad Retirement Act of 1937, 9.12 United States Code Annotated, title 45, section 228b(a)5; or 9.13 (F) a pension from any local government retirement fund 9.14 located in the state of Minnesota as a result of that 9.15 disability; or 9.16 (G) pension, annuity, or other income paid as a result of 9.17 that disability from a private pension or disability plan, 9.18 including employer, employee, union, and insurance plans and 9.19 (iii) has household income as defined in section 290A.03, 9.20 subdivision 5, of $50,000 or less; or 9.21 (4) any person who is permanently and totally disabled and 9.22 whose household income as defined in section 290A.03, 9.23 subdivision 5, is150275 percent or less of the federal poverty 9.24 level. 9.25 Property is classified and assessed under clause (4) only 9.26 if the government agency or income-providing source certifies, 9.27 upon the request of the homestead occupant, that the homestead 9.28 occupant satisfies the disability requirements of this paragraph. 9.29 Property is classified and assessed pursuant to clause (1) 9.30 only if the commissioner of economic security certifies to the 9.31 assessor that the homestead occupant satisfies the requirements 9.32 of this paragraph. 9.33 Permanently and totally disabled for the purpose of this 9.34 subdivision means a condition which is permanent in nature and 9.35 totally incapacitates the person from working at an occupation 9.36 which brings the person an income. The first $32,000 market 10.1 value of class 1b property has a net class rate of .45 percent 10.2 of its market value and a gross class rate of .87 percent of its 10.3 market value. The remaining market value of class 1b property 10.4 has a gross or net class rate using the rates for class 1 or 10.5 class 2a property, whichever is appropriate, of similar market 10.6 value. 10.7(c)(d) Class 1c property is commercial use real property 10.8 that abuts a lakeshore line and is devoted to temporary and 10.9 seasonal residential occupancy for recreational purposes but not 10.10 devoted to commercial purposes for more than 250 days in the 10.11 year preceding the year of assessment, and that includes a 10.12 portion used as a homestead by the owner, which includes a 10.13 dwelling occupied as a homestead by a shareholder of a 10.14 corporation that owns the resort or a partner in a partnership 10.15 that owns the resort, even if the title to the homestead is held 10.16 by the corporation or partnership. For purposes of this clause, 10.17 property is devoted to a commercial purpose on a specific day if 10.18 any portion of the property, excluding the portion used 10.19 exclusively as a homestead, is used for residential occupancy 10.20 and a fee is charged for residential occupancy. Class 1c 10.21 property has a class rate of one percent of total market value 10.22for taxes payable in 1993 and thereafterwith the following 10.23 limitation: the area of the property must not exceed 100 feet 10.24 of lakeshore footage for each cabin or campsite located on the 10.25 property up to a total of 800 feet and 500 feet in depth, 10.26 measured away from the lakeshore. 10.27 Sec. 5. Minnesota Statutes 1996, section 273.13, 10.28 subdivision 24, is amended to read: 10.29 Subd. 24. [CLASS 3.] (a) Commercial and industrial 10.30 property and utility real and personal property, except class 5 10.31 property as identified in subdivision 31, clause (1), is class 10.32 3a.ItEach parcel has a class rate ofthree2.8 percent of the 10.33 first$100,000tier of market value for taxes payable in199310.34 1998 and thereafter, and 5.06. Commercial and industrial 10.35 property has a class rate of 4.3 percent of the remaining market 10.36 valueover $100,000, except that in the case of contiguous 11.1 parcels of commercial and industrial property owned by the same 11.2 person or entity, only the value equal to the first-tier value 11.3 of the contiguous parcels qualifies for the reduced class rate. 11.4 Utility real and personal property has a class rate of 4.5 11.5 percent of the remaining market value. For the purposes of this 11.6 subdivision, the first tier means the first $150,000 of market 11.7 value.In the case of state-assessed commercial, industrial,11.8and utility property owned by one person or entity, only one11.9parcel has a reduced class rate on the first $100,000 of market11.10value.In the case ofother commercial, industrial, andutility 11.11 property owned by one person or entity, only one parcel in each 11.12 county has a reduced class rate on the first$100,000tier of 11.13 market value, except that:. 11.14(1) if the market value of the parcel is less than11.15$100,000, and additional parcels are owned by the same person or11.16entity in the same city or town within that county, the reduced11.17class rate shall be applied up to a combined total market value11.18of $100,000 for all parcels owned by the same person or entity11.19in the same city or town within the county;11.20(2) in the case of grain, fertilizer, and feed elevator11.21facilities, as defined in section 18C.305, subdivision 1, or11.22232.21, subdivision 8, the limitation to one parcel per owner11.23per county for the reduced class rate shall not apply, but there11.24shall be a limit of $100,000 of preferential value per site of11.25contiguous parcels owned by the same person or entity. Only the11.26value of the elevator portion of each parcel shall qualify for11.27treatment under this clause. For purposes of this subdivision,11.28contiguous parcels include parcels separated only by a railroad11.29or public road right-of-way; and11.30(3) in the case of property owned by a nonprofit charitable11.31organization that qualifies for tax exemption under section11.32501(c)(3) of the Internal Revenue Code of 1986, as amended11.33through December 31, 1993, if the property is used as a business11.34incubator, the limitation to one parcel per owner per county for11.35the reduced class rate shall not apply, provided that the11.36reduced rate applies only to the first $100,000 of value per12.1parcel owned by the organization. As used in this clause, a12.2"business incubator" is a facility used for the development of12.3nonretail businesses, offering access to equipment, space,12.4services, and advice to the tenant businesses, for the purpose12.5of encouraging economic development, diversification, and job12.6creation in the area served by the organization.12.7To receive the reduced class rate on additional parcels12.8under clause (1), (2), or (3), the taxpayer must notify the12.9county assessor that the taxpayer owns more than one parcel that12.10qualifies under clause (1), (2), or (3).12.11 For purposes of this paragraph, parcels are considered to 12.12 be contiguous even if they are separated from each other by a 12.13 road, street, vacant lot, waterway, or other similar intervening 12.14 type of property. 12.15 (b) Employment property defined in section 469.166, during 12.16 the period provided in section 469.170, shall constitute class 12.17 3b and has a class rate of 2.3 percent of the first $50,000 of 12.18 market value and 3.6 percent of the remainder, except that for 12.19 employment property located in a border city enterprise zone 12.20 designated pursuant to section 469.168, subdivision 4, paragraph 12.21 (c), the class rate of the first$100,000tier of market value 12.22 and the class rate of the remainder is determined under 12.23 paragraph (a), unless the governing body of the city designated 12.24 as an enterprise zone determines that a specific parcel shall be 12.25 assessed pursuant to the first clause of this sentence. The 12.26 governing body may provide for assessment under the first clause 12.27 of the preceding sentence only for property which is located in 12.28 an area which has been designated by the governing body for the 12.29 receipt of tax reductions authorized by section 469.171, 12.30 subdivision 1. 12.31 (c) Structures which are (i) located on property classified 12.32 as class 3a, (ii) constructed under an initial building permit 12.33 issued after January 2, 1996, (iii) located in a transit zone as 12.34 defined under section 473.3915, subdivision 3, (iv) located 12.35 within the boundaries of a school district, and (v) not 12.36 primarily used for retail or transient lodging purposes, shall 13.1 have a class rate of four percent onthatany portion of the 13.2 market valuein excess of $100,000 and any market value under13.3$100,000that does not qualify for thethree percentfirst tier 13.4 class rate under paragraph (a). As used in item (v), a 13.5 structure is primarily used for retail or transient lodging 13.6 purposes if over 50 percent of its square footage is used for 13.7 those purposes. The four percent rate shall also apply to 13.8 improvements to existing structures that meet the requirements 13.9 of items (i) to (v) if the improvements are constructed under an 13.10 initial building permit issued after January 2, 1996, even if 13.11 the remainder of the structure was constructed prior to January 13.12 2, 1996. For the purposes of this paragraph, a structure shall 13.13 be considered to be located in a transit zone if any portion of 13.14 the structure lies within the zone. If any property once 13.15 eligible for treatment under this paragraph ceases to remain 13.16 eligible due to revisions in transit zone boundaries, the 13.17 property shall continue to receive treatment under this 13.18 paragraph for a period of three years. 13.19 Sec. 6. Minnesota Statutes 1996, section 273.13, 13.20 subdivision 25, is amended to read: 13.21 Subd. 25. [CLASS 4.] (a) Class 4a is residential real 13.22 estate containing four or more units and used or held for use by 13.23 the owner or by the tenants or lessees of the owner as a 13.24 residence for rental periods of 30 days or more. Class 4a also 13.25 includes hospitals licensed under sections 144.50 to 144.56, 13.26 other than hospitals exempt under section 272.02, and contiguous 13.27 property used for hospital purposes, without regard to whether 13.28 the property has been platted or subdivided. Class 4a property 13.29 in a city with a population of 5,000 or less, that is (1) 13.30 located outside of the metropolitan area, as defined in section 13.31 473.121, subdivision 2, or outside any county contiguous to the 13.32 metropolitan area, and (2) whose city boundary is at least 15 13.33 miles from the boundary of any city with a population greater 13.34 than 5,000 has a class rate of 2.3 percent of market valuefor13.35taxes payable in 1996 and thereafter. All other class 4a 13.36 property has a class rate of3.42.8 percent of market value for 14.1 taxes payable in19961998 and thereafter. For purposes of this 14.2 paragraph, population has the same meaning given in section 14.3 477A.011, subdivision 3. 14.4 (b) Class 4b includes: 14.5 (1) residential real estate containingless than fourtwo 14.6 or three units, other than seasonal residential, and 14.7 recreational; 14.8 (2) manufactured homes not classified under any other 14.9 provision; 14.10 (3)a dwelling, garage, and surrounding one acre of14.11property on a nonhomestead farm classified under subdivision 23,14.12paragraph (b)unimproved property that is classified residential 14.13 as determined under section 273.13, subdivision 33. 14.14 Class 4b property has a class rate of2.8 percent of market14.15value for taxes payable in 1992, 2.5 percent of market value for14.16taxes payable in 1993, and2.3 percent of market value for taxes 14.17 payable in19941998, and thereafter. 14.18 (c) Class 4c property includes: 14.19 (1)a structure that is:14.20(i) situated on real property that is used for housing for14.21the elderly or for low- and moderate-income families as defined14.22in Title II, as amended through December 31, 1990, of the14.23National Housing Act or the Minnesota housing finance agency law14.24of 1971, as amended, or rules promulgated by the agency and14.25financed by a direct federal loan or federally insured loan made14.26pursuant to Title II of the Act; or14.27(ii) situated on real property that is used for housing the14.28elderly or for low- and moderate-income families as defined by14.29the Minnesota housing finance agency law of 1971, as amended, or14.30rules adopted by the agency pursuant thereto and financed by a14.31loan made by the Minnesota housing finance agency pursuant to14.32the provisions of the act.14.33This clause applies only to property of a nonprofit or14.34limited dividend entity. Property is classified as class 4c14.35under this clause for 15 years from the date of the completion14.36of the original construction or substantial rehabilitation, or15.1for the original term of the loan.15.2(2) a structure that is:15.3(i) situated upon real property that is used for housing15.4lower income families or elderly or handicapped persons, as15.5defined in section 8 of the United States Housing Act of 1937,15.6as amended; and15.7(ii) owned by an entity which has entered into a housing15.8assistance payments contract under section 8 which provides15.9assistance for 100 percent of the dwelling units in the15.10structure, other than dwelling units intended for management or15.11maintenance personnel. Property is classified as class 4c under15.12this clause for the term of the housing assistance payments15.13contract, including all renewals, or for the term of its15.14permanent financing, whichever is shorter; and15.15(3) a qualified low-income building as defined in section15.1642(c)(2) of the Internal Revenue Code of 1986, as amended15.17through December 31, 1990, that (i) receives a low-income15.18housing credit under section 42 of the Internal Revenue Code of15.191986, as amended through December 31, 1990; or (ii) meets the15.20requirements of that section and receives public financing,15.21except financing provided under sections 469.174 to 469.179,15.22which contains terms restricting the rents; or (iii) meets the15.23requirements of section 273.1317. Classification pursuant to15.24this clause is limited to a term of 15 years. The public15.25financing received must be from at least one of the following15.26sources: government issued bonds exempt from taxes under15.27section 103 of the Internal Revenue Code of 1986, as amended15.28through December 31, 1993, the proceeds of which are used for15.29the acquisition or rehabilitation of the building; programs15.30under section 221(d)(3), 202, or 236, of Title II of the15.31National Housing Act; rental housing program funds under Section15.328 of the United States Housing Act of 1937 or the market rate15.33family graduated payment mortgage program funds administered by15.34the Minnesota housing finance agency that are used for the15.35acquisition or rehabilitation of the building; public financing15.36provided by a local government used for the acquisition or16.1rehabilitation of the building, including grants or loans from16.2federal community development block grants, HOME block grants,16.3or residential rental bonds issued under chapter 474A; or other16.4rental housing program funds provided by the Minnesota housing16.5finance agency for the acquisition or rehabilitation of the16.6building.16.7For all properties described in clauses (1), (2), and (3)16.8and in paragraph (d), the market value determined by the16.9assessor must be based on the normal approach to value using16.10normal unrestricted rents unless the owner of the property16.11elects to have the property assessed under Laws 1991, chapter16.12291, article 1, section 55. If the owner of the property elects16.13to have the market value determined on the basis of the actual16.14restricted rents, as provided in Laws 1991, chapter 291, article16.151, section 55, the property will be assessed at the rate16.16provided for class 4a or class 4b property, as appropriate.16.17Properties described in clauses (1)(ii), (3), and (4) may apply16.18to the assessor for valuation under Laws 1991, chapter 291,16.19article 1, section 55. The land on which these structures are16.20situated has the class rate given in paragraph (b) if the16.21structure contains fewer than four units, and the class rate16.22given in paragraph (a) if the structure contains four or more16.23units. This clause applies only to the property of a nonprofit16.24or limited dividend entity.16.25(4) a parcel of land, not to exceed one acre, and its16.26improvements or a parcel of unimproved land, not to exceed one16.27acre, if it is owned by a neighborhood real estate trust and at16.28least 60 percent of the dwelling units, if any, on all land16.29owned by the trust are leased to or occupied by lower income16.30families or individuals. This clause does not apply to any16.31portion of the land or improvements used for nonresidential16.32purposes. For purposes of this clause, a lower income family is16.33a family with an income that does not exceed 65 percent of the16.34median family income for the area, and a lower income individual16.35is an individual whose income does not exceed 65 percent of the16.36median individual income for the area, as determined by the17.1United States Secretary of Housing and Urban Development. For17.2purposes of this clause, "neighborhood real estate trust" means17.3an entity which is certified by the governing body of the17.4municipality in which it is located to have the following17.5characteristics:17.6(a) it is a nonprofit corporation organized under chapter17.7317A;17.8(b) it has as its principal purpose providing housing for17.9lower income families in a specific geographic community17.10designated in its articles or bylaws;17.11(c) it limits membership with voting rights to residents of17.12the designated community; and17.13(d) it has a board of directors consisting of at least17.14seven directors, 60 percent of whom are members with voting17.15rights and, to the extent feasible, 25 percent of whom are17.16elected by resident members of buildings owned by the trust; and17.17(5)except as provided in subdivision 22, paragraph (c), 17.18 real property devoted to temporary and seasonal residential 17.19 occupancy for recreation purposes, including real property 17.20 devoted to temporary and seasonal residential occupancy for 17.21 recreation purposes and not devoted to commercial purposes for 17.22 more than 250 days in the year preceding the year of 17.23 assessment. For purposes of this clause, property is devoted to 17.24 a commercial purpose on a specific day if any portion of the 17.25 property is used for residential occupancy, and a fee is charged 17.26 for residential occupancy. Class 4c also includes commercial 17.27 use real property used exclusively for recreational purposes in 17.28 conjunction with class 4c property devoted to temporary and 17.29 seasonal residential occupancy for recreational purposes, up to 17.30 a total of two acres, provided the property is not devoted to 17.31 commercial recreational use for more than 250 days in the year 17.32 preceding the year of assessment and is located within two miles 17.33 of the class 4c property with which it is used. Class 4c 17.34 property classified in this clause also includes the remainder 17.35 of class 1c resorts. Owners of real property devoted to 17.36 temporary and seasonal residential occupancy for recreation 18.1 purposes and all or a portion of which was devoted to commercial 18.2 purposes for not more than 250 days in the year preceding the 18.3 year of assessment desiring classification as class 1c or 4c, 18.4 must submit a declaration to the assessor designating the cabins 18.5 or units occupied for 250 days or less in the year preceding the 18.6 year of assessment by January 15 of the assessment year. Those 18.7 cabins or units and a proportionate share of the land on which 18.8 they are located will be designated class 1c or 4c as otherwise 18.9 provided. The remainder of the cabins or units and a 18.10 proportionate share of the land on which they are located will 18.11 bedesignatedclassified as class 3a.The first $100,000 of the18.12market value of the remainder of the cabins or units and a18.13proportionate share of the land on which they are located shall18.14have a class rate of three percent.The owner of property 18.15 desiring designation as class 1c or 4c property must provide 18.16 guest registers or other records demonstrating that the units 18.17 for which class 1c or 4c designation is sought were not occupied 18.18 for more than 250 days in the year preceding the assessment if 18.19 so requested. The portion of a property operated as a (1) 18.20 restaurant, (2) bar, (3) gift shop, and (4) other nonresidential 18.21 facility operated on a commercial basis not directly related to 18.22 temporary and seasonal residential occupancy for recreation 18.23 purposes shall not qualify for class 1c or 4c; 18.24(6)(2) real property up to a maximum of one acre of land 18.25 owned by a nonprofit community service oriented organization; 18.26 provided that the property is not used for a revenue-producing 18.27 activity for more than six days in the calendar year preceding 18.28 the year of assessment and the property is not used for 18.29 residential purposes on either a temporary or permanent basis. 18.30 For purposes of this clause, a "nonprofit community service 18.31 oriented organization" means any corporation, society, 18.32 association, foundation, or institution organized and operated 18.33 exclusively for charitable, religious, fraternal, civic, or 18.34 educational purposes, and which is exempt from federal income 18.35 taxation pursuant to section 501(c)(3), (10), or (19) of the 18.36 Internal Revenue Code of 1986, as amended through December 31, 19.1 1990. For purposes of this clause, "revenue-producing 19.2 activities" shall include but not be limited to property or that 19.3 portion of the property that is used as an on-sale intoxicating 19.4 liquor or 3.2 percent malt liquor establishment licensed under 19.5 chapter 340A, a restaurant open to the public, bowling alley, a 19.6 retail store, gambling conducted by organizations licensed under 19.7 chapter 349, an insurance business, or office or other space 19.8 leased or rented to a lessee who conducts a for-profit 19.9 enterprise on the premises. Any portion of the property which 19.10 is used for revenue-producing activities for more than six days 19.11 in the calendar year preceding the year of assessment shall be 19.12 assessed as class 3a. The use of the property for social events 19.13 open exclusively to members and their guests for periods of less 19.14 than 24 hours, when an admission is not charged nor any revenues 19.15 are received by the organization shall not be considered a 19.16 revenue-producing activity; 19.17(7)(3) post-secondary student housing of not more than one 19.18 acre of land that is owned by a nonprofit corporation organized 19.19 under chapter 317A and is used exclusively by a student 19.20 cooperative, sorority, or fraternity for on-campus housing or 19.21 housing located within two miles of the border of a college 19.22 campus;and19.23(8)(4) manufactured home parks as defined in section 19.24 327.14, subdivision 3; and 19.25 (5) real property devoted to a seasonal golf operation, 19.26 which is privately owned and open to the public on a daily fee 19.27 basis. Any portion of the real estate used for commercial 19.28 purposes beyond the length of the golf season in the year 19.29 preceding the year of assessment shall be classified as class 3a 19.30 property under subdivision 24, paragraph (a). In order to 19.31 qualify for class 4c under this paragraph, the golf course must 19.32 be open to the public and can charge membership fees or dues, 19.33 but a membership is not required in order to use the property 19.34 for golfing. To qualify under this paragraph, the property must 19.35 meet the requirements of section 273.112, subdivision 3, 19.36 paragraph (d). 20.1 Class 4c property has a class rate of 2.3 percent of market 20.2 value, except that (i) for each parcel of seasonal residential 20.3 recreational property not used for commercial purposes under 20.4 clause(5)(1) the first$72,000$80,000 of market value on each 20.5 parcel has a class rate of1.75 percent for taxes payable in20.61997 and1.5 percent for taxes payable in 1998 and thereafter, 20.7 and the market value of each parcel that exceeds$72,000$80,000 20.8 has a class rate of 2.5 percent for taxes payable in 1997, 2.25 20.9 percent for taxes payable in 1998, and two percent for taxes 20.10 payable in 1999 and thereafter, and (ii) manufactured home parks 20.11 assessed under clause(8)(4) have a class rate of two 20.12 percentfor taxes payable in 1996, and thereafter. 20.13 (d) Class 4d propertyincludes:20.14(1) a structure that is:20.15(i) situated on real property that is used for housing for20.16the elderly or for low and moderate income families as defined20.17by the Farmers Home Administration;20.18(ii) located in a municipality of less than 10,00020.19population; and20.20(iii) financed by a direct loan or insured loan from the20.21Farmers Home Administration. Property is classified under this20.22clause for 15 years from the date of the completion of the20.23original construction or for the original term of the loan.20.24The class rates in paragraph (c), clauses (1), (2), and (3)20.25and this clause apply to the properties described in them, only20.26in proportion to occupancy of the structure by elderly or20.27handicapped persons or low and moderate income families as20.28defined in the applicable laws unless construction of the20.29structure had been commenced prior to January 1, 1984; or the20.30project had been approved by the governing body of the20.31municipality in which it is located prior to June 30, 1983; or20.32financing of the project had been approved by a federal or state20.33agency prior to June 30, 1983. For those properties, 4c or 4d20.34classification is available only for those units meeting the20.35requirements of section 273.1318.20.36Classification under this clause is only available to21.1property of a nonprofit or limited dividend entity.21.2In the case of a structure financed or refinanced under any21.3federal or state mortgage insurance or direct loan program21.4exclusively for housing for the elderly or for housing for the21.5handicapped, a unit shall be considered occupied so long as it21.6is actually occupied by an elderly or handicapped person or, if21.7vacant, is held for rental to an elderly or handicapped person.21.8(2) For taxes payable in 1992, 1993, and 1994, only,21.9buildings and appurtenances, together with the land upon which21.10they are located, leased by the occupant under the community21.11lending model lease-purchase mortgage loan program administered21.12by the Federal National Mortgage Association, provided the21.13occupant's income is no greater than 60 percent of the county or21.14area median income, adjusted for family size and the building21.15consists of existing single family or duplex housing. The lease21.16agreement must provide for a portion of the lease payment to be21.17escrowed as a nonrefundable down payment on the housing. To21.18qualify under this clause, the taxpayer must apply to the county21.19assessor by May 30 of each year. The application must be21.20accompanied by an affidavit or other proof required by the21.21assessor to determine qualification under this clause.21.22(3) Qualifying buildings and appurtenances, together with21.23the land upon which they are located, leased for a period of up21.24to five years by the occupant under a lease-purchase program21.25administered by the Minnesota housing finance agency or a21.26housing and redevelopment authority authorized under sections21.27469.001 to 469.047, provided the occupant's income is no greater21.28than 80 percent of the county or area median income, adjusted21.29for family size, and the building consists of two or less21.30dwelling units. The lease agreement must provide for a portion21.31of the lease payment to be escrowed as a nonrefundable down21.32payment on the housing. The administering agency shall verify21.33the occupants income eligibility and certify to the county21.34assessor that the occupant meets the income criteria under this21.35paragraph. To qualify under this clause, the taxpayer must21.36apply to the county assessor by May 30 of each year. For22.1purposes of this section, "qualifying buildings and22.2appurtenances" shall be defined as one or two unit residential22.3buildings which are unoccupied and have been abandoned and22.4boarded for at least six monthsis qualifying low-income rental 22.5 housing certified to the assessor by the housing finance agency 22.6 under sections 273.126 and 462A.071. Class 4d includes land in 22.7 proportion to the total market value of the building that is 22.8 qualifying low-income rental housing. For all properties 22.9 qualifying as class 4d, the market value determined by the 22.10 assessor must be based on the normal approach to value using 22.11 normal unrestricted rents. 22.12 Class 4d property has a class rate oftwo1.5 percent of 22.13 market valueexcept that property classified under clause (3),22.14shall have the same class rate as class 1a property. 22.15 (e)Residential rental property that would otherwise be22.16assessed as class 4 property under paragraph (a); paragraph (b),22.17clauses (1) and (3); paragraph (c), clause (1), (2), (3), or22.18(4), is assessed at the class rate applicable to it under22.19Minnesota Statutes 1988, section 273.13, if it is found to be a22.20substandard building under section 273.1316. Residential rental22.21property that would otherwise be assessed as class 4 property22.22under paragraph (d) is assessed at 2.3 percent of market value22.23if it is found to be a substandard building under section22.24273.1316.22.25(f)Class 4e property consists of the residential portion 22.26 of any structure located within a city that was converted from 22.27 nonresidential use to residential use, provided that: 22.28 (1) the structure had formerly been used as a warehouse; 22.29 (2) the structure was originally constructed prior to 1940; 22.30 (3) the conversion was done after December 31, 1995, but 22.31 before January 1, 2003; and 22.32 (4) the conversion involved an investment of at least 22.33 $25,000 per residential unit. 22.34 Class 4e property has a class rate of 2.3 percent, provided 22.35 that a structure is eligible for class 4e classification only in 22.36 the 12 assessment years immediately following the conversion. 23.1 Sec. 7. Minnesota Statutes 1996, section 273.13, 23.2 subdivision 31, is amended to read: 23.3 Subd. 31. [CLASS 5.] Class 5 property includes: 23.4 (1) tools, implements, and machinery of an electric 23.5 generating, transmission, or distribution system or a pipeline 23.6 system transporting or distributing water, gas, crude oil, or 23.7 petroleum products or mains and pipes used in the distribution 23.8 of steam or hot or chilled water for heating or cooling 23.9 buildings, which are fixtures; 23.10 (2) unmined iron ore and low-grade iron-bearing formations 23.11 as defined in section 273.14; and 23.12 (3) all other property not otherwise classified. 23.13 Class 5 property has a class rate of5.064.5 percent of 23.14 market value for taxes payable in 1998 and thereafter. 23.15 Sec. 8. Minnesota Statutes 1996, section 273.1398, 23.16 subdivision 1, is amended to read: 23.17 Subdivision 1. [DEFINITIONS.] (a) In this section, the 23.18 terms defined in this subdivision have the meanings given them. 23.19 (b) "Unique taxing jurisdiction" means the geographic area 23.20 subject to the same set of local tax rates. 23.21 (c) "Previous net tax capacity" means the product of the 23.22 appropriate net class rates for the year previous to the year in 23.23 which the aid is payable, and estimated market values for the 23.24 assessment two years prior to that in which aid is payable. 23.25 "Total previous net tax capacity" means the previous net tax 23.26 capacities for all property within the unique taxing 23.27 jurisdiction. The total previous net tax capacity shall be 23.28 reduced by the sum of (1) the unique taxing jurisdiction's 23.29 previous net tax capacity of commercial-industrial property as 23.30 defined in section 473F.02, subdivision 3, or 276A.02, 23.31 subdivision 3, multiplied by the ratio determined pursuant to 23.32 section 473F.08, subdivision 6, or 276A.06, subdivision 7, for 23.33 the municipality, as defined in section 473F.02, subdivision 8, 23.34 or 276A.06, subdivision 7, in which the unique taxing 23.35 jurisdiction is located, (2) the previous net tax capacity of 23.36 the captured value of tax increment financing districts as 24.1 defined in section 469.177, subdivision 2, and (3) the previous 24.2 net tax capacity of transmission lines deducted from a local 24.3 government's total net tax capacity under section 273.425. 24.4 Previous net tax capacity cannot be less than zero. 24.5 (d) "Equalized market values" are market values that have 24.6 been equalized by dividing the assessor's estimated market value 24.7 for the second year prior to that in which the aid is payable by 24.8 the assessment sales ratios determined by class in the 24.9 assessment sales ratio study conducted by the department of 24.10 revenue pursuant to section 124.2131 in the second year prior to 24.11 that in which the aid is payable. The equalized market values 24.12 shall equal the unequalized market values divided by the 24.13 assessment sales ratio. 24.14 (e) "Equalized school levies" means the amounts levied for: 24.15 (1) general education under section 124A.23, subdivision 2; 24.16 (2) supplemental revenue under section 124A.22, subdivision 24.17 8a; 24.18 (3) transition revenue under section 124A.22, subdivision 24.19 13c; 24.20 (4) basic transportation under section 124.226, subdivision 24.21 1; and 24.22 (5) referendum revenue under section 124A.03. 24.23 (f) "Current local tax rate" means the quotient derived by 24.24 dividing the taxes levied within a unique taxing jurisdiction 24.25 for taxes payable in the year prior to that for which aids are 24.26 being calculated by the total previous net tax capacity of the 24.27 unique taxing jurisdiction. 24.28 (g) For purposes of calculating and allocating homestead 24.29 and agricultural credit aid authorized pursuant to subdivision 2 24.30 and the disparity reduction aid authorized in subdivision 3, 24.31 "gross taxes levied on all properties," "gross taxes," or "taxes 24.32 levied" means the total net tax capacity based taxes levied on 24.33 all properties except that levied on the captured value of tax 24.34 increment districts as defined in section 469.177, subdivision 24.35 2, and that levied on the portion of commercial industrial 24.36 properties' assessed value or gross tax capacity, as defined in 25.1 section 473F.02, subdivision 3, subject to the areawide tax as 25.2 provided in section 473F.08, subdivision 6, in a unique taxing 25.3 jurisdiction. "Gross taxes" are before any reduction for 25.4 disparity reduction aid but "taxes levied" are after any 25.5 reduction for disparity reduction aid. Gross taxes levied or 25.6 taxes levied cannot be less than zero. 25.7 "Taxes levied" excludes equalized school levies. 25.8 (h) "Household adjustment factor" means the number of 25.9 households for the second most recent year preceding that in 25.10 which the aids are payable divided by the number of households 25.11 for the third most recent year. The household adjustment factor 25.12 cannot be less than one. 25.13 (i) "Growth adjustment factor" means the household 25.14 adjustment factor in the case of counties. In the case of 25.15 cities, towns, school districts, and special taxing districts, 25.16 the growth adjustment factor equals one. The growth adjustment 25.17 factor cannot be less than one. 25.18 (j) "Homestead and agricultural credit base" means the 25.19 previous year's certified homestead and agricultural credit aid 25.20 determined under subdivision 2 less any permanent aid reduction 25.21 in the previous year to homestead and agricultural credit aid. 25.22 (k) "Net tax capacity adjustment" means (1) the tax base 25.23 differential defined in subdivision 1a, multiplied by (2) the 25.24 unique taxing jurisdiction's current local tax rate. The net 25.25 tax capacity adjustment cannot be less than zero. 25.26 (l) "Fiscal disparity adjustment" means a taxing 25.27 jurisdiction's fiscal disparity distribution levy under section 25.28 473F.08, subdivision 3, clause (a), or 276A.06, subdivision 3, 25.29 clause (a), for taxes payable in the year prior to that for 25.30 which aids are being calculated, multiplied by the ratio of the 25.31 tax base differential percent referenced in subdivision 1a for 25.32 the highest class rate for class 3 property for taxes payable in 25.33 the yearprior to thatfor which aids are being calculated to 25.34 the highest class rate for class 3 property for taxes payable in 25.35 thesecond prioryear prior to that for which aids are being 25.36 calculated. In the case of school districts, the fiscal 26.1 disparity distribution levy shall exclude that part of the levy 26.2 attributable to equalized school levies. 26.3 Sec. 9. Minnesota Statutes 1996, section 273.1398, 26.4 subdivision 1a, is amended to read: 26.5 Subd. 1a. [TAX BASE DIFFERENTIAL.] (a) For aids payable in 26.6 1997, the tax base differential is 0.25 percent of the 26.7 assessment year 1995 taxable market value of class 4c 26.8 noncommercial seasonal recreational residential property up to 26.9 $72,000. 26.10 (b) For aids payable in 1998, the tax base differential is 26.110.25 percentthe sum of the following percentages of the 26.12 assessment year 1996 taxable market value of the following 26.13 classes of property, excluding that portion of any property's 26.14 value which is captured value of a tax increment financing 26.15 district as defined in section 469.177, subdivision 2: 26.16 (i) 0.25 percent of class 4c noncommercial seasonal 26.17 recreational residential property up to $72,000.; 26.18 (ii) 0.2 percent of all class 3a and class 5 26.19 commercial/industrial/public utility property which has a class 26.20 rate of three percent for taxes payable in 1997; 26.21 (iii) 0.3 percent of all class 3a commercial/industrial 26.22 property which has a class rate of 4.6 percent for taxes payable 26.23 in 1997; 26.24 (iv) 0.1 percent of all class 3a public utility property 26.25 and all class 5 property which has a class rate of 4.6 percent 26.26 for taxes payable in 1997; 26.27 (v) 0.1 percent of all class 2 property which has a class 26.28 rate of 1.5 percent for taxes payable in 1997; 26.29 (vi) 0.25 percent of class 4c noncommercial seasonal 26.30 recreational residential property over $72,000; and 26.31 (vii) 0.6 percent of all class 4a apartment property which 26.32 has a class rate of 3.4 percent for taxes payable in 1997. 26.33 For properties lying within the area defined in section 26.34 473F.02, subdivision 2, the value of properties in clauses (ii) 26.35 through (iv) must be reduced by the ratio determined under 26.36 section 473F.08, subdivision 6. 27.1 For properties lying within the area defined in section 27.2 276A.01, subdivision 2, the value of properties in clauses (ii) 27.3 through (iv) must be reduced by the ratio determined under 27.4 section 276A.06, subdivision 7. 27.5 (c) For aids payable in 1999, the tax base differential is 27.6 0.25 percent of the assessment year 1997 taxable market value of 27.7 class 4c noncommercial seasonal recreational residential 27.8 property over $80,000. 27.9 Sec. 10. Minnesota Statutes 1996, section 273.1398, is 27.10 amended by adding a subdivision to read: 27.11 Subd. 2e. [STATE GENERAL EDUCATION HOMESTEAD AND 27.12 AGRICULTURAL CREDIT AID.] (a) Each year, a state general 27.13 education homestead and agricultural credit aid adjustment shall 27.14 be computed for each school district in the state equal to (1) 27.15 the district's current local tax rate for equalized school 27.16 levies multiplied by the tax rate differential defined in 27.17 subdivision 1a, plus (2) an amount computed analogously to the 27.18 fiscal disparity adjustment, utilizing the portion of the levy 27.19 attributable to equalized school levies. The sum of the amounts 27.20 determined for each district shall be the state general 27.21 education homestead and agricultural credit aid adjustment. 27.22 (b) Each county's calendar year 1998 homestead and 27.23 agricultural credit aid under subdivision 2 shall be permanently 27.24 reduced by an amount equal to three percent of the county's 1996 27.25 adjusted net tax capacity. Each city's and town's calendar year 27.26 1998 homestead and agricultural credit aid under subdivision 2 27.27 shall be permanently reduced by an amount equal to two percent 27.28 of the jurisdiction's 1996 adjusted net tax capacity. The 27.29 reductions shall be made after all other computations, except 27.30 for the reduction in subdivision 2f, for calendar year 1998 27.31 homestead and agricultural credit aid have been made. State 27.32 general education homestead and agricultural credit aid shall be 27.33 permanently increased by an amount equal to the reductions in 27.34 county, city, and town homestead and agricultural credit aid. 27.35 For the purposes of this paragraph, adjusted net tax capacity 27.36 for a county, city, or town is computed in the same way as it is 28.1 computed for school districts under section 124.2131. 28.2 (c) The state general education homestead and agricultural 28.3 credit aid adjustment for the current year shall be added to the 28.4 sum of the adjustment amounts from previous years to derive 28.5 total state general education homestead and agricultural credit 28.6 aid. By June 25 of each year, the commissioner of revenue shall 28.7 certify to the commissioner of children, families, and learning 28.8 the amount of total state general education homestead and 28.9 agricultural credit aid for taxes payable in the following 28.10 year. The amount certified shall be subtracted from the general 28.11 education levy amount stated in section 124A.23, subdivision 1, 28.12 in determining the general education tax rate. 28.13 Sec. 11. Minnesota Statutes 1996, section 273.1398, is 28.14 amended by adding a subdivision to read: 28.15 Subd. 2f. [REDUCTION FOR INCREASED CITY LOCAL GOVERNMENT 28.16 AID FUNDING.] In 1998, each city's homestead and agricultural 28.17 credit aid shall be permanently reduced by an amount equal to 28.18 (a) the product of its calendar year 1998 homestead and 28.19 agricultural credit aid after all other computations for 28.20 calendar year 1998 homestead and agricultural credit aid have 28.21 been made and (b) the ratio of $17,967,225 to the total calendar 28.22 year 1998 homestead and agricultural credit aid for all cities 28.23 after all other computations. 28.24 Sec. 12. Minnesota Statutes 1996, section 273.1398, 28.25 subdivision 8, is amended to read: 28.26 Subd. 8. [APPROPRIATION.] An amount sufficient to pay the 28.27 aids and credits provided under this section for the state, 28.28 school districts, intermediate school districts, or any group of 28.29 school districts levying as a single taxing entity, is annually 28.30 appropriated from the general fund to the commissioner of 28.31 children, families, and learning. An amount sufficient to pay 28.32 the aids and credits provided under this section for counties, 28.33 cities, towns, and special taxing districts is annually 28.34 appropriated from the general fund to the commissioner of 28.35 revenue. A jurisdiction's aid amount may be increased or 28.36 decreased based on any prior year adjustments for homestead 29.1 credit or other property tax credit or aid programs. 29.2 Sec. 13. Minnesota Statutes 1996, section 276A.06, 29.3 subdivision 9, is amended to read: 29.4 Subd. 9. [FISCAL DISPARITIES ADJUSTMENT.] In any year in 29.5 which the highest class rate for class 3a property changes from 29.6 the rate in the previous year, the following adjustments shall 29.7 be made to the procedures described in sections 276A.04 to 29.8 276A.06: 29.9 (1) An initial contribution tax capacity shall be 29.10 determined for each municipality based on the previous year's 29.11 class rates. 29.12 (2)Each jurisdiction's distribution tax capacity shall be29.13determined based upon the areawide tax base determined by29.14summing the tax capacities computed under clause (1) for all29.15municipalities and apportioning the resulting sum pursuant to29.16section 276A.05, subdivision 5.29.17(3) Each jurisdiction's distribution levy shall be29.18determined by applying the procedures described in subdivision29.193, clause (a), to the distribution tax capacity determined29.20pursuant to clause (2).29.21(4)Each municipality's final contribution tax capacity 29.22 shall be determined equal to its initial contribution tax 29.23 capacity multiplied by the ratio of thenewhighest class rate 29.24 for class 3a property for the forthcoming tax year to the 29.25previous year'shighest class rate for class 3a property in the 29.26 current year. 29.27(5) For the purposes of computing education aids and any29.28other state aids requiring the addition of the fiscal29.29disparities distribution tax capacity to the local tax capacity,29.30each municipality's final distribution tax capacity shall be29.31determined equal to its initial distribution tax capacity29.32multiplied by the ratio of the new highest class rate for class29.333a property to the previous year's highest class rate for class29.343a property.29.35(6) The areawide tax rate shall be determined by dividing29.36the sum of the amounts determined in clause (3) by the sum of30.1the values determined in clause (4).30.2(7) The final contribution tax capacity determined in30.3clause (4) shall also be used to determine the portion of each30.4commercial-industrial property's tax capacity subject to the30.5areawide tax rate pursuant to subdivision 7.30.6 (3) All other computations shall be made as described in 30.7 sections 276A.04 to 276A.06, using the final contribution tax 30.8 capacity amounts determined in paragraph (2). 30.9 Sec. 14. Minnesota Statutes 1996, section 290.06, is 30.10 amended by adding a subdivision to read: 30.11 Subd. 25. [PROPERTY TAX CREDIT.] (a) A credit is allowed 30.12 against the tax imposed on an individual under this chapter 30.13 equal to 8.5 percent of the qualified property tax paid in 30.14 calendar year 1997. 30.15 (b) For property owned and occupied by the taxpayer, 30.16 qualified tax means property taxes payable as defined in section 30.17 290A.03, subdivision 11, assessed in 1996 and payable in 1997. 30.18 In the case of property classified as class 2a under section 30.19 273.13, the qualified tax is limited to the tax on the house, 30.20 garage, and immediately surrounding one acre of land. 30.21 (c) For a renter, the qualified property tax means the 30.22 amount of rent constituting property taxes under section 30.23 290A.03, subdivision 11, based on rent paid in 1997. 30.24 (d) For an individual who both owned and rented principal 30.25 residences in calendar year 1997, qualified taxes are sum of the 30.26 amounts under paragraphs (a) and (b). 30.27 (e) If the amount of the credit under this subdivision 30.28 exceeds the taxpayer's tax liability under this chapter, the 30.29 commissioner shall refund the excess. 30.30 (f) To claim a credit under this subdivision, the taxpayer 30.31 must attach a copy of the property tax statement and certificate 30.32 of rent paid, as applicable, and provide any additional 30.33 information the commissioner requires. 30.34 (g) An amount sufficient to pay refunds under this 30.35 subdivision is appropriated to the commissioner from the 30.36 property tax reform account. 31.1 (h) This credit applies to taxable years beginning after 31.2 December 31, 1996, and before January 1, 1998. 31.3 Sec. 15. Minnesota Statutes 1996, section 290.06, is 31.4 amended by adding a subdivision to read: 31.5 Subd. 26. [CREDIT FOR PROPERTY TAXES PAID ON SEASONAL 31.6 RESIDENTIAL RECREATIONAL PROPERTY.] A taxpayer may take as a 31.7 credit against the tax due from the taxpayer and a spouse, if 31.8 any, under this chapter the credit allowed under section 31.9 290A.04, subdivision 2j. The credit allowed may not exceed the 31.10 tax due under this chapter. In the case of a nonresident, or a 31.11 part-year resident, the credit must be allocated based on the 31.12 ratio in subdivision 2c. 31.13 Sec. 16. Minnesota Statutes 1996, section 290.067, 31.14 subdivision 1, is amended to read: 31.15 Subdivision 1. [AMOUNT OF CREDIT.] (a) A taxpayer may take 31.16 as a credit against the tax due from the taxpayer and a spouse, 31.17 if any, under this chapter an amount equal to the dependent care 31.18 credit for which the taxpayer is eligible pursuant to the 31.19 provisions of section 21 of the Internal Revenue Code subject to 31.20 the limitations provided in subdivision 2 except that in 31.21 determining whether the child qualified as a dependent, income 31.22 received as an aid to families with dependent children grant or 31.23 allowance to or on behalf of the child, or as a grant or 31.24 allowance to or on behalf of the child under the successor 31.25 program pursuant to Public Law 104-193, must not be taken into 31.26 account in determining whether the child received more than half 31.27 of the child's support from the taxpayer, and the provisions of 31.28 section 32(b)(1)(D) of the Internal Revenue Code do not apply. 31.29 (b) If a child who has not attained the age of six years at 31.30 the close of the taxable year is cared for at a licensed family 31.31 day care home operated by the child's parent, the taxpayer is 31.32 deemed to have paid employment-related expenses. If the child 31.33 is 16 months old or younger at the close of the taxable year, 31.34 the amount of expenses deemed to have been paid equals the 31.35 maximum limit for one qualified individual under section 21(c) 31.36 and (d) of the Internal Revenue Code. If the child is older 32.1 than 16 months of age but has not attained the age of six years 32.2 at the close of the taxable year, the amount of expenses deemed 32.3 to have been paid equals the amount the licensee would charge 32.4 for the care of a child of the same age for the same number of 32.5 hours of care. 32.6 (c) If a married couple: 32.7 (1) has a child who has not attained the age of one year at 32.8 the close of the taxable year; 32.9 (2) files a joint tax return for the taxable year; and 32.10 (3) does not participate in a dependent care assistance 32.11 program as defined in section 129 of the Internal Revenue Code, 32.12 in lieu of the actual employment related expenses paid for that 32.13 child under paragraph (a) or the deemed amount under paragraph 32.14 (b), the lesser of (i) the combined earned income of the couple 32.15 or (ii) $2,400 will be deemed to be the employment related 32.16 expense paid for that child. The earned income limitation of 32.17 section 21(d) of the Internal Revenue Code shall not apply to 32.18 this deemed amount. These deemed amounts apply regardless of 32.19 whether any employment-related expenses have been paid. 32.20 (d) If the taxpayer is not required and does not file a 32.21 federal individual income tax return for the tax year, no credit 32.22 is allowed for any amount paid to any person unless: 32.23 (1) the name, address, and taxpayer identification number 32.24 of the person are included on the return claiming the credit; or 32.25 (2) if the person is an organization described in section 32.26 501(c)(3) of the Internal Revenue Code and exempt from tax under 32.27 section 501(a) of the Internal Revenue Code, the name and 32.28 address of the person are included on the return claiming the 32.29 credit. 32.30 In the case of a failure to provide the information required 32.31 under the preceding sentence, the preceding sentence does not 32.32 apply if it is shown that the taxpayer exercised due diligence 32.33 in attempting to provide the information required. 32.34 In the case of a nonresident, part-year resident, or a 32.35 person who has earned income not subject to tax under this 32.36 chapter, the credit determined under section 21 of the Internal 33.1 Revenue Code must be allocated based on the ratio by which the 33.2 earned income of the claimant and the claimant's spouse from 33.3 Minnesota sources bears to the total earned income of the 33.4 claimant and the claimant's spouse. 33.5 Sec. 17. Minnesota Statutes 1996, section 290A.03, 33.6 subdivision 7, is amended to read: 33.7 Subd. 7. [DEPENDENT.] "Dependent" means any person who is 33.8 considered a dependent under sections 151 and 152 of the 33.9 Internal Revenue Code. In the case of a son, stepson, daughter, 33.10 or stepdaughter of the claimant, amounts received as an aid to 33.11 families with dependent children grant, allowance to or on 33.12 behalf of the child, or as a grant or allowance to or on behalf 33.13 of the child under the successor program pursuant to Public Law 33.14 Number 104-193, surplus food, or other relief in kind supplied 33.15 by a governmental agency must not be taken into account in 33.16 determining whether the child received more than half of the 33.17 child's support from the claimant. 33.18 Sec. 18. Minnesota Statutes 1996, section 290A.03, 33.19 subdivision 11, is amended to read: 33.20 Subd. 11. [RENT CONSTITUTING PROPERTY TAXES.] "Rent 33.21 constituting property taxes" meansthe amount of gross rent33.22actually paid in cash, or its equivalent, which is attributable33.23(a) to the property tax paid on the unit or (b) to the33.24amountfor claims based on rent paid in calendar years 1997 and 33.25 1998, 17 percent and 20 percent thereafter of the gross rent 33.26 actually paid in cash, or its equivalent, or the portion of rent 33.27 paid in lieu of property taxes, in any calendar year by a 33.28 claimant for the right of occupancy of the claimant's Minnesota 33.29 homestead in the calendar year, and which rent constitutes the 33.30 basis, in the succeeding calendar year of a claim for relief 33.31 under this chapter by the claimant.The amount of rent33.32attributable to property taxes paid or payments in lieu made on33.33the unit shall be determined by multiplying the gross rent paid33.34by the claimant for the calendar year for the unit by a33.35fraction, the numerator of which is the net tax on the property33.36where the unit is located and the denominator of which is the34.1total scheduled rent. In no case may the rent constituting34.2property taxes exceed 50 percent of the gross rent paid by the34.3claimant during that calendar year. In the case of a claimant34.4who resides in a unit for which (1) a rent subsidy is paid to,34.5or for, the claimant based on the income of the claimant or the34.6claimant's family, or (2) a subsidy is paid to a public housing34.7authority that owns or operates the claimant's rental unit,34.8pursuant to United States Code, title 42, section 1437c, 2034.9percent of gross rent actually paid in cash or its equivalent34.10shall be the claimant's "rent constituting property taxes34.11paid." For purposes of this subdivision, "rent subsidy" does34.12not include any housing assistance received under aid to34.13families with dependent children, general assistance, Minnesota34.14supplemental assistance, supplemental security income, or34.15similar income maintenance programs.34.16 Sec. 19. Minnesota Statutes 1996, section 290A.03, 34.17 subdivision 13, is amended to read: 34.18 Subd. 13. [PROPERTY TAXES PAYABLE.] "Property taxes 34.19 payable" means the property tax exclusive of special 34.20 assessments, penalties, and interest payable on a claimant's 34.21 homestead before reductions made under section 273.13 but after 34.22 deductions made under sections 273.135, 273.1391, 273.42, 34.23 subdivision 2, and any other state paid property tax credits in 34.24 any calendar year. In the case of a claimant who makes ground 34.25 lease payments, "property taxes payable" includes the amount of 34.26 the payments directly attributable to the property taxes 34.27 assessed against the parcel on which the house is located. No 34.28 apportionment or reduction of the "property taxes payable" shall 34.29 be required for the use of a portion of the claimant's homestead 34.30 for a business purpose if the claimant does not deduct any 34.31 business depreciation expenses for the use of a portion of the 34.32 homestead in the determination of federal adjusted gross 34.33 income. For homesteads which are manufactured homes as defined 34.34 in section 273.125, subdivision 8, and for homesteads which are 34.35 park trailers taxed as manufactured homes under section 168.012, 34.36 subdivision 9, "property taxes payable" shall also includethe35.1amountfor claims based on rent paid in calendar years 1997 and 35.2 1998, 17 percent and 20 percent thereafter of the gross rent 35.3 paid in the preceding year for the site on which the homestead 35.4 is located, which is attributable to the net tax paid on the35.5site. The amount attributable to property taxes shall be35.6determined by multiplying the net tax on the parcel by a35.7fraction, the numerator of which is the gross rent paid for the35.8calendar year for the site and the denominator of which is the35.9gross rent paid for the calendar year for the parcel. When a 35.10 homestead is owned by two or more persons as joint tenants or 35.11 tenants in common, such tenants shall determine between them 35.12 which tenant may claim the property taxes payable on the 35.13 homestead. If they are unable to agree, the matter shall be 35.14 referred to the commissioner of revenue whose decision shall be 35.15 final. Property taxes are considered payable in the year 35.16 prescribed by law for payment of the taxes. 35.17 In the case of a claim relating to "property taxes 35.18 payable," the claimant must have owned and occupied the 35.19 homestead on January 2 of the year in which the tax is payable 35.20 and (i) the property must have been classified as homestead 35.21 property pursuant to section273.13, subdivision 22 or 2335.22 273.124, on or before December 15 of the assessment year to 35.23 which the "property taxes payable" relate; or (ii) the claimant 35.24 must provide documentation from the local assessor that 35.25 application for homestead classification has been made on or 35.26 before December 15 of the year in which the "property taxes 35.27 payable" were payable and that the assessor has approved the 35.28 application. 35.29 Sec. 20. Minnesota Statutes 1996, section 290A.19, is 35.30 amended to read: 35.31 290A.19 [OWNER OR MANAGING AGENT TO FURNISH RENT 35.32 CERTIFICATE.] 35.33(a)The owner or managing agent of any property for which 35.34 rent is paid for occupancy as a homestead must furnish a 35.35 certificate of rentconstituting property taxpaid to a person 35.36 who is a renter on December 31, in the form prescribed by the 36.1 commissioner. If the renter moves before December 31, the owner 36.2 or managing agent may give the certificate to the renter at the 36.3 time of moving, or mail the certificate to the forwarding 36.4 address if an address has been provided by the renter. The 36.5 certificate must be made available to the renter before February 36.6 1 of the year following the year in which the rent was paid. 36.7 The owner or managing agent must retain a duplicate of each 36.8 certificate or an equivalent record showing the same information 36.9 for a period of three years. The duplicate or other record must 36.10 be made available to the commissioner upon request. For the 36.11 purposes of this section, "owner" includes a park owner as 36.12 defined under section 327C.01, subdivision 6, and "property" 36.13 includes a lot as defined under section 327C.01, subdivision 3. 36.14(b) The certificate of rent constituting property taxes36.15must include the address of the property, including the county,36.16and the property tax parcel identification number and any36.17additional information that the commissioner determines is36.18appropriate.36.19(c) If the owner or managing agent fails to provide the36.20renter with a certificate of rent constituting property taxes,36.21the commissioner shall allocate the net tax on the building to36.22the unit on a square footage basis or other appropriate basis as36.23the commissioner determines. The renter shall supply the36.24commissioner with a statement from the county treasurer that36.25gives the amount of property tax on the parcel, the address and36.26property tax parcel identification number of the property, and36.27the number of units in the building.36.28(d) By January 31 of the year following the year in which36.29the rent was collected, each owner or managing agent shall36.30report to the commissioner on a form prescribed by the36.31commissioner the net tax pertaining to the rental residential36.32part of the property, the total scheduled rent, and the fraction36.33computed under section 290A.03, subdivision 11. A copy of the36.34property tax statement for taxes payable in that year must be36.35attached.36.36 Sec. 21. Minnesota Statutes 1996, section 290A.04, is 37.1 amended by adding a subdivision to read: 37.2 Subd. 2j. [SEASONAL RESIDENTIAL RECREATIONAL CREDIT.] If 37.3 the net property taxes payable on a seasonal residential 37.4 recreational property not used for commercial purposes, 37.5 classified under section 273.13, subdivision 25, increase more 37.6 than ten percent over its net property taxes payable in the 37.7 previous year, and if the amount of the increase is $100 or 37.8 more, a claimant who is an owner of the property in both years 37.9 is allowed a credit under section 290.06, subdivision 26, equal 37.10 to 75 percent of the first $300 of the excess of the increase 37.11 over ten percent. This subdivision does not apply to the 37.12 portion of an increase in taxes payable that are attributable to 37.13 improvements to the property. 37.14 In addition to the other proofs required by this chapter, 37.15 each claimant under this subdivision shall file with the 37.16 application a copy of the property tax statement for property 37.17 taxes payable in the current year and the previous year and any 37.18 other documents required by the commissioner. 37.19 For purposes of this subdivision, "net property taxes 37.20 payable" means property taxes payable minus credit amounts for 37.21 which a claimant qualify's under this subdivision for the 37.22 previous year. 37.23 The credit under this subdivision is effective for property 37.24 taxes payable in 1998, for credits under section 290.06, 37.25 subdivision 26, for tax year 1998, income tax returns filed in 37.26 1999; and for property taxes payable in 1999, for credits under 37.27 section 290.06, subdivision 26, for tax year 1999, income tax 37.28 returns filed in 2000. 37.29 Sec. 22. [462A.071] [CERTIFICATION OF HOUSING QUALIFYING 37.30 FOR REDUCED PROPERTY TAX RATE.] 37.31 Subdivision 1. [CERTIFICATION.] By June 30 of each year, 37.32 the agency must certify to local assessors the units of 37.33 low-income rental properties that qualify for class 4d under 37.34 sections 273.126 and 273.13. In making these certifications, 37.35 the agency may rely on the application and supporting 37.36 information supplied by the property owner as to compliance with 38.1 the income limits under section 273.126, subdivision 2, and 38.2 satisfaction of the minimum housing quality standards under 38.3 subdivision 4. 38.4 Subd. 2. [APPLICATION.] (a) In order to qualify for 38.5 certification under subdivision 1, the owner or manager of the 38.6 property must annually apply to the agency. The application 38.7 must be in the form prescribed by the agency, contain the 38.8 information required by the agency, and be submitted by the date 38.9 and time specified by the agency. 38.10 (b) Each application must include: 38.11 (1) the property tax identification number; 38.12 (2) the number, type, and size of units the applicant seeks 38.13 to qualify as low-income housing under class 4d; 38.14 (3) the number, type, and size of units in the property for 38.15 which the applicant is not seeking qualification, if any; 38.16 (4) a certification that the property has been inspected by 38.17 a qualified inspector within the past three years and meets the 38.18 minimum housing quality standards or is exempt from the 38.19 inspection requirement under subdivision 4; 38.20 (5) a statement indicating the building is in compliance 38.21 with the income limits; 38.22 (6) an executed agreement to restrict rents meeting the 38.23 requirements specified by the agency or executed leases for the 38.24 units for which qualification as low-income housing as class 4d 38.25 under section 273.13 is sought and the rent schedule; and 38.26 (7) any additional information the agency deems appropriate 38.27 to require. 38.28 (c) The applicant must pay a per-unit application fee to be 38.29 set by the agency. The application fee charged by the agency 38.30 must approximately equal the costs of processing and reviewing 38.31 the applications. The fee must be deposited in the general fund. 38.32 Subd. 3. [AGREEMENT TO RESTRICT RENTS.] The agency may 38.33 prescribe one or more standard form agreements to restrict rents 38.34 that meet the requirements of section 273.126, subdivision 3. 38.35 The agreements must be in recordable form. The agency may 38.36 require applicants to execute a rent restriction agreement in 39.1 this form as a condition of entering an agreement to restrict 39.2 rents. 39.3 Subd. 4. [MINIMUM HOUSING QUALITY STANDARDS.] (a) To 39.4 qualify for taxation under class 4d under section 273.13, a unit 39.5 must meet both the housing maintenance code of the local unit of 39.6 government in which the unit is located, if such a code has been 39.7 adopted, and the housing quality standards adopted by the United 39.8 States Department of Housing and Urban Development. 39.9 (b) In order to meet the minimum housing quality standards, 39.10 a building must be inspected by an independent designated 39.11 inspector at least once every three years. The inspector must 39.12 certify that the building complies with the minimum standards. 39.13 The property owner must pay the cost of the inspection. 39.14 (c) The agency may exempt from the inspection requirement 39.15 housing units that are financed by a governmental entity and 39.16 subject to regular inspection or other compliance checks with 39.17 regard to minimum housing quality. Written certification must 39.18 be available, however, showing that these exempt units have been 39.19 inspected within the last three years and comply with the 39.20 requirements under the public financing or local requirements. 39.21 Subd. 5. [HOUSING INSPECTORS.] (a) Housing inspections 39.22 required by this section may be conducted only by persons 39.23 designated by the agency. The agency may designate one or more 39.24 persons to conduct inspections for all or part of the state. A 39.25 designated inspector may charge a fee for an inspection up to a 39.26 maximum amount approved by the agency. The inspector must be 39.27 independent of the owner or manager of the inspected property. 39.28 (b) The agency must maintain a list of persons eligible to 39.29 conduct housing inspections under this section. 39.30 Subd. 6. [SECTION 8 AND TAX CREDIT UNITS.] (a) The agency 39.31 may deem units as meeting the requirements of section 273.126 39.32 and this section, if the units either: 39.33 (1) are subject to a housing assistance payments contract 39.34 under section 8 of the United States Housing Act of 1937, as 39.35 amended; or 39.36 (2) are rent and income restricted units of a qualified 40.1 low-income housing project receiving tax credits under section 40.2 42(g) of the Internal Revenue Code of 1986, as amended. 40.3 (b) The agency may certify these deemed units under 40.4 subdivision 1 based on a simplified application procedure that 40.5 verifies the unit's qualifications under paragraph (a). 40.6 Subd. 7. [MONITORING COMPLIANCE.] (a) The agency must 40.7 monitor compliance by building owners with the requirements of 40.8 section 273.126 and this section. The agency must annually 40.9 conduct on-site examinations of a sample of the buildings 40.10 receiving class 4d taxation to monitor compliance. The agency 40.11 may contract with third parties to monitor compliance. 40.12 (b) An inspector, designated by the agency under 40.13 subdivision 5, shall notify the agency if, in conducting an 40.14 inspection under subdivision 4, the inspector finds that: 40.15 (1) a unit is receiving class 4d taxation; 40.16 (2) the unit is not in compliance with the requirements of 40.17 subdivision 4; and 40.18 (3) the owner or manager fails or refuses to cure the 40.19 violations within a reasonable time after receiving notification 40.20 of the violation. 40.21 Subd. 8. [PENALTIES.] (a) The penalties provided by this 40.22 subdivision apply to each unit that received class 4d taxation 40.23 for a year and failed to meet the requirements of section 40.24 273.126 and this section. 40.25 (b) If the owner or manager does not comply with the rent 40.26 restriction agreement, a penalty applies equal to the lesser of: 40.27 (1) the increased taxes that would have been imposed, if 40.28 the property had not been classified under class 4d for any year 40.29 in which the agreement was violated; or 40.30 (2) 150 percent of the rent charged in excess of the rent 40.31 restriction agreement. 40.32 (c) If the owner or manager does not comply with the income 40.33 restrictions or minimum housing quality standards, a penalty 40.34 applies equal to the increased taxes that would have been 40.35 imposed, if the property had not been classified under class 4d 40.36 for any year in which restrictions were violated. 41.1 (d) If the agency finds that the violations were 41.2 inadvertent and insubstantial, a penalty of $....... per unit 41.3 per year applies in lieu of the penalties specified under 41.4 paragraphs (b) and (c). In order to qualify under this 41.5 paragraph, violations of the minimum housing quality standards 41.6 must be corrected within a reasonable period of time and rent 41.7 charged in excess of the agreement must be rebated to the 41.8 tenants. 41.9 (e) The agency may abate the penalties under this 41.10 subdivision for reasonable cause. 41.11 (f) Penalties assessed under paragraph (d) are payable to 41.12 the agency and must be deposited in the general fund. If an 41.13 owner or manager fails to timely pay a penalty imposed under 41.14 paragraph (d), the agency may choose to: 41.15 (1) impose the penalty under paragraph (b) or (c); or 41.16 (2) certify the penalty under paragraph (d) to the assessor 41.17 to be added to and collected under section 273.126. 41.18 The agency shall certify to the assessor and county auditor 41.19 penalties assessed under paragraphs (b) and (c) and clause (2). 41.20 The assessor or auditor shall impose and collect the certified 41.21 penalties as additional taxes under section 273.126. Any 41.22 penalty collected under section 273.126 as additional taxes must 41.23 be distributed to taxing districts in the same manner as 41.24 property taxes on the property. 41.25 Subd. 9. [TAX COURT REVIEW.] (a) An owner may appeal to 41.26 tax court as provided in section 271.06: 41.27 (1) a denial of a request for certification of a property 41.28 as qualifying for class 4d taxation; 41.29 (2) imposition of a penalty under this section; or 41.30 (3) denial of a request to abate a penalty. 41.31 (b) The county attorney shall represent the public in 41.32 opposing the appeal. 41.33 Subd. 10. [RULEMAKING.] (a) The agency may adopt 41.34 administrative rules under chapter 14 to carry out the 41.35 provisions of this section, including establishing standards for 41.36 abating penalties, violations that are inadvertent and 42.1 insubstantial, selection of inspectors, selection of persons to 42.2 monitor compliance, establishing rent restriction agreement 42.3 terms, or any other purpose. 42.4 (b) The agency may adopt emergency rules under chapter 14. 42.5 Any emergency rules adopted under this authority expire on 42.6 January 1, 1999. 42.7 Sec. 23. Minnesota Statutes 1996, section 469.040, is 42.8 amended by adding a subdivision to read: 42.9 Subd. 1a. [LIMITS FOR EXEMPT HOUSING PROJECTS.] (a) The 42.10 provisions of this subdivision apply to housing projects and 42.11 housing development projects acquired, constructed, financed, or 42.12 refinanced after December 31, 1997. 42.13 (b) For a project to qualify for the property tax exemption 42.14 under this section, the authority must establish income 42.15 guidelines meeting the requirements of paragraph (c). 42.16 (c) The housing authority must establish and make good 42.17 faith efforts to abide by one of the following income limits for 42.18 the housing project: 42.19 (1) at least 20 percent of the housing units are occupied 42.20 by individuals whose incomes are 50 percent or less of the area 42.21 median gross income; or 42.22 (2) at least 40 percent of the housing units are occupied 42.23 by individuals whose incomes are 60 percent or less of the area 42.24 median gross income. 42.25 For purposes of this paragraph, the terms defined in 42.26 section 42 of the Internal Revenue Code of 1986 apply, except 42.27 "median area gross income" means the greater of (1) the median 42.28 gross income for the area determined under section 42 of the 42.29 Internal Revenue Code of 1986, as amended, or (2) the median 42.30 gross income for the state. 42.31 (d) The provisions of this subdivision do not apply to all 42.32 or part of a housing project that is subject to the requirements 42.33 of section 5 of the United States Housing Act of 1937. 42.34 Sec. 24. Minnesota Statutes 1996, section 469.040, 42.35 subdivision 3, is amended to read: 42.36 Subd. 3. [STATEMENT FILED WITH ASSESSOR; PERCENTAGE TAX ON 43.1 RENTALS.] Notwithstanding the provisions of subdivision 1, after 43.2 a housing project or a housing development project carried on 43.3 under sections 469.016 to 469.026 has become occupied, in whole 43.4 or in part, an authority shall file with the assessor, on or 43.5 before April 15 of each year, a statement of the aggregate 43.6 shelter rentals of that project collected during the preceding 43.7 calendar year. Unless a greater amount has been agreed upon 43.8 between the authority and the governing body or bodies for which 43.9 the authority was created, in whose jurisdiction the project is 43.10 located, five percent of the aggregate shelter rentals shall be 43.11 charged to the authority as a service charge for the services 43.12 and facilities to be furnished with respect to that project. 43.13 The service charge shall be collected from the authority in the 43.14 manner provided by law for the assessment and collection of 43.15 taxes. The amount so collected shall be distributed to the 43.16 several taxing bodies in the same proportion as the tax rate of 43.17 each bears to the total tax rate of those taxing bodies. The 43.18 governing body or bodies for which the authority has been 43.19 created, in whose jurisdiction the project is located, may agree 43.20 with the authority for the payment of a service charge for a 43.21 housing project or a housing development project in an amount 43.22 greater than five percent of the aggregate annual shelter 43.23 rentals of any project, upon the basis of shelter rentals or 43.24 upon another basis agreed upon. The service charge may not 43.25 exceed the amount which would be payable in taxes were the 43.26 property not exempt. If such an agreement is made, the service 43.27 charge so agreed upon shall be collected and distributed in the 43.28 manner above provided. If the project has become occupied, or 43.29 if the land upon which the project is to be constructed has been 43.30 acquired, the agreement shall specify the location of the 43.31 project for which the agreement is made. "Shelter rental" means 43.32 the total rentals of a housing project exclusive of any charge 43.33 for utilities and special services such as heat, water, 43.34 electricity, gas, sewage disposal, or garbage removal. "Service 43.35 charge" means payment in lieu of taxes. The records of each 43.36housingproject shall be open to inspection by the proper 44.1 assessing officer. 44.2 Sec. 25. Minnesota Statutes 1996, section 473F.08, 44.3 subdivision 8a, is amended to read: 44.4 Subd. 8a. [FISCAL DISPARITIES ADJUSTMENT.] In any year in 44.5 which the highest class rate for class 3a property changes from 44.6 the rate in the previous year, the following adjustments shall 44.7 be made to the procedures described in sections 473F.06 to 44.8 473F.08. 44.9 (1) An initial contribution tax capacity shall be 44.10 determined for each municipality based on the previous year's 44.11 class rates. 44.12 (2)Each jurisdiction's distribution tax capacity shall be44.13determined based upon the areawide tax base determined by44.14summing the tax capacities computed under clause (1) for all44.15municipalities and apportioning the resulting sum pursuant to44.16section 473F.07, subdivision 5.44.17(3) Each jurisdiction's distribution levy shall be44.18determined by applying the procedures described in subdivision44.193, clause (a), to the distribution tax capacity determined44.20pursuant to clause (2).44.21(4)Each municipality's final contribution tax capacity 44.22 shall be determined equal to its initial contribution tax 44.23 capacity multiplied by the ratio of the new highest class rate 44.24 for class 3a property for the forthcoming tax year to the 44.25previous year'shighest class rate for class 3a property in the 44.26 current year. 44.27(5) For the purposes of computing education aids and any44.28other state aids requiring the addition of the fiscal44.29disparities distribution tax capacity to the local tax capacity,44.30each municipality's final distribution tax capacity shall be44.31determined equal to its initial distribution tax capacity44.32multiplied by the ratio of the new highest class rate for class44.333a property to the previous year's highest class rate for class44.343a property.44.35(6) The areawide tax rate shall be determined by dividing44.36the sum of the amounts determined in clause (3) by the sum of45.1the values determined in clause (4).45.2(7) The final contribution tax capacity determined in45.3clause (4) shall also be used to determined the portion of each45.4commercial/industrial property's tax capacity subject to the45.5areawide tax rate pursuant to subdivision 6.45.6 (3) All other computations shall be made as described in 45.7 sections 473.06 to 473F.08, using the final contribution tax 45.8 capacity amounts determined in paragraph (2). 45.9 Sec. 26. Minnesota Statutes 1996, section 477A.011, 45.10 subdivision 34, is amended to read: 45.11 Subd. 34. [CITY REVENUE NEED.] (a) For a city with a 45.12 population equal to or greater than 2,500, "city revenue need" 45.13 is the sum of (1) 3.462312 times the pre-1940 housing 45.14 percentage; plus (2) 2.093826 times the commercial industrial 45.15 percentage; plus (3) 6.862552 times the population decline 45.16 percentage; plus (4) .00026 times the city population; plus (5) 45.17 152.0141. 45.18 (b) For a city with a population less than 2,500, "city 45.19 revenue need" is the average of (a) the sum of (1) 1.795919 45.20 times the pre-1940 housing percentage; plus (2) 1.562138 times 45.21 the commercial industrial percentage; plus (3) 4.177568 times 45.22 the population decline percentage; plus (4) 1.04013 times the 45.23 transformed population; minus (5) 107.475, and (b) the sum of 45.24 the city's revenue base for 1996, 1997, and 1998 divided by 45.25 three, multiplied by 1.06 and divided by its population. 45.26 (c) The city revenue need cannot be less than zero. 45.27 (d) The city revenue need for a city under paragraphs (a) 45.28 and (b) is increased by 15 percent if the city is either (i) a 45.29 city in the metropolitan area that is contiguous to a city of 45.30 the first class or contiguous to a city that is contiguous to a 45.31 city of the first class and the city has a median income of 45.32 $50,000 or less as reported in the most recent federal census, 45.33 or (ii) a city outside the metropolitan area with a population 45.34 of 5,000 or more. Cities of the first class do not qualify for 45.35 the adjustment under this clause. 45.36 (e) For calendar year19951998 and subsequent years, the 46.1 city revenue need for a city, as determined in paragraphs (a) 46.2 to(c)(d), is multiplied by the ratio of the annual implicit 46.3 price deflator for state and local government purchases, as 46.4 prepared by the United States Department of Commerce, for the 46.5 most recently available year to the 1993 implicit price deflator 46.6 for state and local government purchases. 46.7 Sec. 27. Minnesota Statutes 1996, section 477A.011, 46.8 subdivision 37, is amended to read: 46.9 Subd. 37. [BASE REDUCTION PERCENTAGE.] "Base reduction 46.10 percentage" is (1) the difference between (a) the amount 46.11 available for city aid under section 477A.03 for the year for 46.12 which aid is being calculated and (b) the sum of the amount 46.13 available for city aid under section 477A.03 for calendar 46.14 year19941997 and the total amount of the homestead and 46.15 agricultural credit aid reduction under section 273.1398, 46.16 subdivision 2f, (2) divided by the sum of the city aid base for 46.17 all cities and (3) multiplied by 100. The reduction percentage 46.18 for any year may not be less than the reduction percentage from 46.19 the previous year.For aid paid in calendar year 1994, the46.20reduction percentage is zero.The reduction percentage may not 46.21 be more than 100 percent. 46.22 Sec. 28. Minnesota Statutes 1996, section 477A.013, 46.23 subdivision 9, is amended to read: 46.24 Subd. 9. [CITY AID DISTRIBUTION.] (a) In calendar year 46.2519941998 and thereafter, each city shall receive an aid 46.26 distribution equal to the sum of (1) the city formula aid under 46.27 subdivision 8, and (2) its city aid base multiplied by a 46.28 percentage equal to 100 minus the base reduction percentage. 46.29 (b)The percentage increase for a first class city in46.30calendar year 1995 and thereafter shall not exceed the46.31percentage increase in the sum of the aid to all cities under46.32this section in the current calendar year compared to the sum of46.33the aid to all cities in the previous year.46.34(c) The total aid for any city, except a first class city,46.35shall not exceed the sum of (1) ten percent of the city's net46.36levy for the year prior to the aid distribution plus (2) its47.1total aid in the previous year before any increases or decreases47.2under sections 16A.711, subdivision 5, and 477A.0132.47.3(d) Notwithstanding paragraph (c), in 1995 only, for cities47.4which in 1992 or 1993 transferred an amount from governmental47.5funds to their sewer and water fund in an amount greater than47.6their net levy for taxes payable in the year in which the47.7transfer occurred, the total aid shall not exceed the sum of (1)47.820 percent of the city's net levy for the year prior to the aid47.9distribution plus (2) its total aid in the previous year before47.10any increases or decreases under sections 16A.711, subdivision47.115, and 477A.0132No city may receive an aid distribution that is 47.12 less than $5 multiplied by the city's population. 47.13 Sec. 29. Minnesota Statutes 1996, section 477A.03, 47.14 subdivision 2, is amended to read: 47.15 Subd. 2. [ANNUAL APPROPRIATION.] A sum sufficient to 47.16 discharge the duties imposed by sections 477A.011 to 477A.014 is 47.17 annually appropriated from the general fund to the commissioner 47.18 of revenue. For aids payable in19961998 and thereafter, the 47.19 total aids paid under sections477A.013, subdivision 947.20 477A.0121, and 477A.0122 are the amounts certified to be paid in 47.21 the previous year, adjusted for inflation as provided under 47.22 subdivision 3. Aid payments tocounties under section 477A.012147.23are limited to $20,265,000 in 1996. Aid payments to counties47.24under section 477A.0121 are limited to $27,571,625 in47.251997cities under section 477A.013, subdivision 9 are limited to 47.26 the sum of (a) the amount certified in the previous year 47.27 adjusted for twice the inflation provided for under subdivision 47.28 3 and (b) the total amount of the homestead and agricultural 47.29 credit aid reduction under section 273.1398, subdivision 2f for 47.30 aids payable in 1998. For aid payable in19981999 and 47.31 thereafter, the total aids paid under section477A.012147.32 477A.013, subdivision 9, are the amounts certified to be paid in 47.33 the previous year, adjusted for inflation as provided under 47.34 subdivision 3. 47.35 Sec. 30. [TEMPORARY EXEMPTIONS FROM INSPECTION 47.36 REQUIREMENTS.] 48.1 (a) The Minnesota housing finance agency may provide a 48.2 temporary exemption to the inspection requirement under 48.3 Minnesota Statutes, sections 273.126, subdivision 4, and 48.4 462A.071, if the agency finds that: 48.5 (1) the property owner made a good faith effort to obtain 48.6 an inspection; and 48.7 (2) the owner was unable to obtain an inspection in time to 48.8 apply because the designated inspectors were unable to conduct 48.9 all the requested inspections. 48.10 (b) If a unit that is exempted under this section does not 48.11 ultimately obtain a certification from a designated inspector 48.12 that it is in compliance with the minimum housing quality 48.13 standards, the additional taxes under Minnesota Statutes, 48.14 section 273.126, subdivision 5, apply. 48.15 (c) Procedures or rules for granting exemptions under this 48.16 section are not subject to the administrative rulemaking under 48.17 Minnesota Statutes, chapter 14. 48.18 (d) The authority under this section expires December 31, 48.19 2000. 48.20 Sec. 31. [YEAR 2000 READY.] 48.21 Any computer software or hardware that is purchased by the 48.22 state or a political subdivision with money appropriated in this 48.23 bill must be year 2000 ready. 48.24 Sec. 32. [APPROPRIATION.] 48.25 (a) $500,000 is appropriated for fiscal years 1998 and 1999 48.26 from the general fund to the housing finance agency for purposes 48.27 of administering the certification of qualifying low-income 48.28 residential properties for property taxation under class 4d. 48.29 (b) $2,000,000 is appropriated for fiscal year 1998 to the 48.30 commissioner of revenue for distribution to the 87 counties for 48.31 implementing the various provisions of this act, including the 48.32 added expenses of the truth in taxation provisions. The 48.33 commissioner shall develop a formula for distribution of the 48.34 total amount to the counties. 48.35 Sec. 33. [REPEALER.] 48.36 (a) Minnesota Statutes 1996, section 124.2134, is repealed. 49.1 (b) Minnesota Statutes 1996, section 273.13, subdivision 49.2 32, is repealed. 49.3 (c) Minnesota Statutes 1996, sections 273.1317; and 49.4 273.1318, are repealed. 49.5 (d) Minnesota Statutes 1996, section 290A.03, subdivisions 49.6 12a and 14, are repealed. 49.7 Sec. 34. [EFFECTIVE DATE.] 49.8 Sections 1, 2, and 33, paragraph (c), are effective for 49.9 property taxes payable in 1999. Sections 4, 5 to 7, 13, and 33, 49.10 paragraph (b), are effective for taxes payable in 1998 and 49.11 thereafter, except the low-income housing provisions in class 4c 49.12 and 4d are effective for taxes payable in 1999 and thereafter. 49.13 Sections 8 to 12, 26 to 29, and 33, paragraph (a), are effective 49.14 for aids payable in 1998 and subsequent years. 49.15 Sections 18 to 20 and 33, paragraph (d) are effective 49.16 beginning for property tax refunds based on rent paid after 49.17 December 31, 1996. Sections 22, 30, and 31 are effective the 49.18 day following final enactment. Sections 23 and 24 are effective 49.19 August 1, 1997. 49.20 ARTICLE 2 49.21 EDUCATION FINANCE REFORM 49.22 Section 1. Minnesota Statutes 1996, section 124.239, is 49.23 amended by adding a subdivision to read: 49.24 Subd. 4a. [ALTERNATIVE FACILITIES REVENUE.] A district's 49.25 alternative facilities revenue for a fiscal year equals its 49.26 costs related to an approved facility plan as follows: 49.27 (1) if the district has indicated to the commissioner that 49.28 bonds will be issued, the principal and interest payments on 49.29 outstanding bonds issued according to subdivision 3; or 49.30 (2) if the district has indicated to the commissioner that 49.31 the plan will be funded on a pay-as-you-go basis, the district's 49.32 costs according to the schedule approved in the plan. 49.33 Sec. 2. Minnesota Statutes 1996, section 124.239, 49.34 subdivision 5, is amended to read: 49.35 Subd. 5. [LEVY AUTHORIZED.]A district, after local board49.36approval, may levy for costs related to an approved facility50.1plan as follows:50.2(a) if the district has indicated to the commissioner that50.3bonds will be issued, the district may levy for the principal50.4and interest payments on outstanding bonds issued according to50.5subdivision 3; or50.6(b) if the district has indicated to the commissioner that50.7the plan will be funded through levy, the district may levy50.8according to the schedule approved in the planTo obtain 50.9 alternative facilities revenue, a school district may levy an 50.10 amount equal to the district's alternative facilities revenue as 50.11 defined in subdivision 4a, multiplied by the lesser of one, or 50.12 the ratio of the quotient derived by dividing the adjusted net 50.13 tax capacity of the district for the year before the year the 50.14 levy is certified by the actual pupil units in the district for 50.15 the school year to which the levy is attributable, to the 50.16 equalizing factor under section 124A.02. 50.17 Sec. 3. Minnesota Statutes 1996, section 124.239, is 50.18 amended by adding a subdivision to read: 50.19 Subd. 5a. [ALTERNATIVE FACILITIES AID.] A district's 50.20 alternative facilities aid is the difference between its 50.21 alternative facilities revenue and its alternative facilities 50.22 levy. If a district does not levy the entire amount permitted, 50.23 alternative facilities aid must be reduced in proportion to the 50.24 actual amount levied. 50.25 Sec. 4. Minnesota Statutes 1996, section 124.2601, 50.26 subdivision 2, is amended to read: 50.27 Subd. 2. [PROGRAMS FUNDED.] Adult basic education programs 50.28 established under section 124.26 and approved by the 50.29 commissioner are eligible forrevenueaid under this section. 50.30 Sec. 5. Minnesota Statutes 1996, section 124.2601, 50.31 subdivision 3, is amended to read: 50.32 Subd. 3. [AID.] Adult basic education aid for each 50.33 approved program equals the sum of 65 percent of the general 50.34 education formula allowance times the number of full-time 50.35 equivalent students in its adult basic education program and an 50.36 amount equal to .12 percent times the district's adjusted net 51.1 tax capacity for assessment year 1997. 51.2 Sec. 6. Minnesota Statutes 1996, section 124.2711, 51.3 subdivision 1, is amended to read: 51.4 Subdivision 1. [REVENUEAID.]The revenueState aid for 51.5 early childhood family education programs for a school district 51.6 equals $101.25for 1993 and later fiscal yearstimes the greater 51.7 of: 51.8 (1) 150; or 51.9 (2) the number of people under five years of age residing 51.10 in the school district on October 1 of the previous school year. 51.11 Sec. 7. Minnesota Statutes 1996, section 124.2711, 51.12 subdivision 5, is amended to read: 51.13 Subd. 5. [HOME VISITINGLEVYAID.] A school district that 51.14 enters into a collaborative agreement to provide education 51.15 services and social services to families with young childrenmay51.16levy an amountis eligible for state aid equal to $1.60 times 51.17 the number of people under five years of age residing in the 51.18 district on September 1 of the last school year.Levy revenue51.19under this subdivision shall not be included as revenue under51.20subdivision 1.The revenue shall be used for home visiting 51.21 programs under section 121.882, subdivision 2b. 51.22 Sec. 8. Minnesota Statutes 1996, section 124.2713, 51.23 subdivision 1, is amended to read: 51.24 Subdivision 1. [TOTAL COMMUNITY EDUCATION REVENUE.] 51.25 Community education revenue equals the sum of a district's 51.26 general community education revenue and youth service program 51.27 revenue. Community education revenue is provided entirely 51.28 through state aid. 51.29 Sec. 9. Minnesota Statutes 1996, section 124.2714, is 51.30 amended to read: 51.31 124.2714 [ADDITIONAL COMMUNITY EDUCATION REVENUE.] 51.32 (a) A district that is eligible under section 124.2713, 51.33 subdivision 2,may levy an amount upis eligible for aid equal 51.34 to the amount of revenue authorized by Minnesota Statutes 1986, 51.35 section 275.125, subdivision 8, clause (2). 51.36 (b) Beginning withleviesrevenue for fiscal year 1995, 52.1 thislevyrevenue must be reduced each year by the amount of any 52.2 increase in thelevyingdistrict's general community education 52.3 revenue under section 124.2713, subdivision 3, for that fiscal 52.4 year over the amount received by the district under section 52.5 124.2713, subdivision 3, for fiscal year 1994. 52.6 (c) Theproceeds of the levyrevenue may be used for the 52.7 purposes set forth in section 124.2713, subdivision 8. 52.8 Sec. 10. Minnesota Statutes 1996, section 124.2715, 52.9 subdivision 1, is amended to read: 52.10 Subdivision 1. [REVENUE AMOUNT.] A district that is 52.11 eligible according to section 124.2713, subdivision 2, may 52.12 receive revenue for a program for adults with disabilities. 52.13 Revenue for the program for adults with disabilities for a 52.14 district or a group of districts equals the lesser of: 52.15 (1) the actual expenditures for approved programs and 52.16 budgets; or 52.17 (2) $60,000. 52.18 Revenue is provided through state aid. 52.19 Sec. 11. Minnesota Statutes 1996, section 124.2716, 52.20 subdivision 2, is amended to read: 52.21 Subd. 2. [EXTENDED DAY REVENUE.] The extended day revenue 52.22 for an eligible school district equals the approved additional 52.23 cost of providing services to children with disabilities or 52.24 children experiencing family or related problems of a temporary 52.25 nature who participate in the extended day program. Extended 52.26 day revenue is provided through state aid. 52.27 Sec. 12. [124.913] [LEASE PURCHASE; INSTALLMENT BUYS.] 52.28 Subdivision 1. [LEASE PURCHASE; INSTALLMENT BUYS.] (a) 52.29 Upon application to, and approval by, the commissioner in 52.30 accordance with the procedures and limits in section 124.91, 52.31 subdivision 1, a district, as defined in this subdivision, may: 52.32 (1) purchase real or personal property under an installment 52.33 contract; or 52.34 (2) may lease real or personal property with an option to 52.35 purchase under a lease purchase agreement, by which installment 52.36 contract or lease purchase agreement title is kept by the seller 53.1 or vendor or assigned to a third party as security for the 53.2 purchase price, including interest, if any. 53.3 (b) The obligation created by the installment contract or 53.4 the lease purchase agreement must not be included in the 53.5 calculation of net debt for purposes of section 475.53, and does 53.6 not constitute debt under other law. An election is not 53.7 required in connection with the execution of the installment 53.8 contract or the lease purchase agreement. 53.9 (c) The proceeds of the revenue authorized by this section 53.10 must not be used to acquire a facility to be primarily used for 53.11 athletic or school administration purposes. 53.12 (d) For purposes of this subdivision, "district" means: 53.13 (1) a school district required to have a comprehensive plan 53.14 for the elimination of segregation whose plan has been 53.15 determined by the commissioner to be in compliance with the 53.16 state board of education rules relating to equality of 53.17 educational opportunity and school desegregation; or 53.18 (2) a school district that participates in a joint program 53.19 for interdistrict desegregation with a district defined in 53.20 clause (1), if the facility acquired under this subdivision is 53.21 to be primarily used for the joint program. 53.22 (e) Notwithstanding section 124.91, subdivision 1, the 53.23 prohibition against a levy by a district to lease or rent a 53.24 district-owned building to itself does not apply to levies 53.25 otherwise authorized by this subdivision. 53.26 (f) For the purposes of this subdivision, any references in 53.27 section 124.91, subdivision 1, to building or land shall include 53.28 personal property. 53.29 Subd. 2. [LEASE PURCHASE; INSTALLMENT BUYS REVENUE.] A 53.30 district's lease purchase and installment buys revenue for a 53.31 fiscal year equals the amount needed to make payments required 53.32 by a lease purchase agreement, installment purchase agreement, 53.33 or other deferred payment agreement: 53.34 (1) that was authorized by Minnesota Statutes 1989 53.35 Supplement, section 465.71, if: 53.36 (i) the agreement was approved by the commissioner before 54.1 July 1, 1990, according to Minnesota Statutes 1989 Supplement, 54.2 section 275.125, subdivision 11d; or 54.3 (ii) the district levied in 1989 for the payments; or 54.4 (2) authorized by subdivision 1, or Minnesota Statutes 54.5 1996, section 124.91, subdivision 7. 54.6 Subd. 3. [LEASE PURCHASE AND INSTALLMENT BUYS LEVY.] To 54.7 receive lease purchase and installment buys revenue, a school 54.8 district may levy an amount equal to the district's lease 54.9 purchase and installment buys revenue as defined in subdivision 54.10 2, multiplied by the lesser of one, or the ratio of the quotient 54.11 derived by dividing the adjusted net tax capacity of the 54.12 district for the year before the year the levy is certified by 54.13 the actual pupil units in the district for the school year to 54.14 which the levy is attributable, to the equalizing factor under 54.15 section 124A.02. 54.16 Subd. 4. [LEASE PURCHASE AND INSTALLMENT BUYS AID.] A 54.17 district's lease purchase and installment buys aid is the 54.18 difference between its lease purchase and installment buys 54.19 revenue and its lease purchase and installment buys levy. If a 54.20 district does not levy the entire amount permitted, lease 54.21 purchase and installment buys aid must be reduced in proportion 54.22 to the actual amount levied. 54.23 Sec. 13. Minnesota Statutes 1996, section 124.95, 54.24 subdivision 1, is amended to read: 54.25 Subdivision 1. [DEFINITIONS.] (a) For purposes of this 54.26 section, the eligible debt service revenue of a district is 54.27 defined as follows: 54.28 (1) the amount needed to produce between five and six 54.29 percent in excess of the amount needed to meet when due the 54.30 principal and interest payments on the obligations of the 54.31 district for eligible projects according to subdivision 2, 54.32 including the amounts necessary for repayment of energy loans 54.33 according to section 216C.37 or sections 298.292 to 298.298, 54.34 debt service loans and capital loans,lease purchase payments54.35under section 124.91, subdivisions 2 and 3, alternative54.36facilities levies under section 124.239, subdivision 5,minus 55.1 (2) the amount of debt service excess levy reduction for 55.2 that school year calculated according to the procedure 55.3 established by the commissioner. 55.4 (b) The obligations in this paragraph are excluded from 55.5 eligible debt service revenue: 55.6 (1) obligations under section 124.2445; 55.7 (2) the part of debt service principal and interest paid 55.8 from the taconite environmental protection fund or northeast 55.9 Minnesota economic protection trust; 55.10 (3) obligations issued under Laws 1991, chapter 265, 55.11 article 5, section 18, as amended by Laws 1992, chapter 499, 55.12 article 5, section 24; and 55.13 (4) obligations under section 124.2455. 55.14 (c) For purposes of this section, if a preexisting school 55.15 district reorganized under section 122.22, 122.23, or 122.241 to 55.16 122.248 is solely responsible for retirement of the preexisting 55.17 district's bonded indebtedness, capital loans or debt service 55.18 loans, debt service equalization aid must be computed separately 55.19 for each of the preexisting school districts. 55.20 Sec. 14. Minnesota Statutes 1996, section 124A.23, 55.21 subdivision 1, is amended to read: 55.22 Subdivision 1. [GENERAL EDUCATION TAX RATE.] The 55.23 commissioner shall establish the general education tax rate by 55.24 July 1 of each year for levies payable in the following year. 55.25 The general education tax capacity rate shall be a rate, rounded 55.26 up to the nearest tenth of a percent, that, when applied to the 55.27 adjusted net tax capacity for all districts, raises the amount 55.28 specified in this subdivision. The general education tax rate 55.29 shall be the rate that raises$1,054,000,000 for fiscal year55.301996 and$1,359,000,000 for fiscal year19971998 and 55.31 $1,368,000,000 for fiscal year 1999, and $1,482,300,000 for 55.32 fiscal year 2000 and later fiscal years. The general education 55.33 tax rate may not be changed due to changes or corrections made 55.34 to a district's adjusted net tax capacity after the tax rate has 55.35 been established. 55.36 Sec. 15. [GENERAL EDUCATION LEVY REDUCTION.] 56.1 Notwithstanding the provisions of Minnesota Statutes, 56.2 section 124A.23, subdivision 1, the general education levy shall 56.3 be reduced by $210,000,000 for taxes payable in 1998 and 56.4 $250,000,000 for taxes payable in 1999. $82,500,000 in fiscal 56.5 year 1999 and $123,000,000 in fiscal year 2000 is appropriated 56.6 from the property tax reform account established in article 12, 56.7 section 2, to the commissioner of children, families, and 56.8 learning to offset a portion of the costs of the levy reductions 56.9 contained in this section. $106,500,000 in fiscal year 1999 and 56.10 $102,000,000 in fiscal year 2000 is appropriated from the 56.11 general fund to the commissioner of children, families, and 56.12 learning to offset the remaining costs of the levy reductions 56.13 contained in this section. 56.14 Sec. 16. [FISCAL YEAR 1998 SHIFT COST.] 56.15 $30,800,000 is appropriated in fiscal year 1998 from the 56.16 general fund to the commissioner of children, families, and 56.17 learning for additional general education aid as a result of the 56.18 property tax revenue recognition shift and the reduction of the 56.19 general education levy for property taxes payable in 1998. 56.20 Sec. 17. [CALENDAR YEAR 1997 REFERENDUM REVENUE LIMIT.] 56.21 (a) Notwithstanding any law to the contrary, a school 56.22 district may not conduct a referendum under section 124A.03 from 56.23 the effective date of this act to December 31, 1997 unless the 56.24 commissioner of children, families and learning has authorized 56.25 the election. 56.26 (b) Elections to renew existing referendum revenue 56.27 authority in amounts not to exceed the current level of 56.28 referendum revenue authority per pupil unit are exempt from the 56.29 limit and requirements of this section. 56.30 (c) The aggregate amount of referendum revenue authorized 56.31 for referendum elections by the commissioner under this section 56.32 may not exceed $16,500,000. 56.33 (d) A school district that desires to hold an election 56.34 under Minnesota Statutes, section 124A.03, must submit an 56.35 application to the commissioner by August 1, 1997. 56.36 (e) The commissioner shall prioritize applications and 57.1 grant authority to hold an election to districts in the 57.2 following order: 57.3 (1) districts without authority for an operating referendum 57.4 under Minnesota Statutes, section 124A.03 or districts that can 57.5 document a financial hardship; and 57.6 (2) districts that are in statutory operating debt and have 57.7 an approved plan or have received an extension from the 57.8 commissioner to file a plan to eliminate the statutory operating 57.9 debt. 57.10 (f) The commissioner must approve, deny or modify each 57.11 district's application for authority to hold a referendum 57.12 election authority by August 31, 1997. Copies of each 57.13 application shall be forwarded to the chairs of the house and 57.14 senate education finance committees and the chairs of the house 57.15 and senate tax committees, with a notation as to whether the 57.16 commissioner approved, denied, or modified the application. 57.17 Sec. 18. [REPEALER.] 57.18 (a) Minnesota Statutes 1996, section 124.91, subdivisions 2 57.19 and 7, are repealed. 57.20 (b) Minnesota Statutes 1996, sections 124.2601, 57.21 subdivisions 4, 5, and 6; 124.2711, subdivisions 2a and 3; 57.22 124.2713, subdivisions 6, 6a, 6b, and 7; 124.2715, subdivisions 57.23 2 and 3; 124.2716, subdivisions 3 and 4, are repealed for 57.24 revenue for fiscal year 2000 and later. 57.25 Sec. 19. [EFFECTIVE DATE.] 57.26 Sections 1, 2, 3, 12, 13, 15, and 18, paragraph (a), are 57.27 effective beginning in fiscal year 1999. Sections 4 to 11, 14, 57.28 and 18, paragraph (b), are effective beginning in fiscal year 57.29 2000. Section 16 is effective for fiscal year 1998. 57.30 ARTICLE 3 57.31 PROPERTY TAX 57.32 Section 1. Minnesota Statutes 1996, section 69.021, 57.33 subdivision 7, is amended to read: 57.34 Subd. 7. [APPORTIONMENT OF FIRE STATE AID TO 57.35 MUNICIPALITIES AND RELIEF ASSOCIATIONS.] (a) The commissioner 57.36 shall apportion the fire state aid relative to the premiums 58.1 reported on the Minnesota Firetown Premium Reports filed under 58.2 this chapter to each municipality and/or firefighters' relief 58.3 association. 58.4 (b) The commissioner shall calculate an initial fire state 58.5 aid allocation amount for each municipality or fire department 58.6 under paragraph (c) and a minimum fire state aid allocation 58.7 amount for each municipality or fire department under paragraph 58.8 (d). The municipality or fire department must receive the 58.9 larger fire state aid amount. 58.10 (c) The initial fire state aid allocation amount is the 58.11 amount available for apportionment as fire state aid under 58.12 subdivision 5, without inclusion of any additional funding 58.13 amount to support a minimum fire state aid amount under section 58.14 423A.02, subdivision 3, allocated one-half in proportion to the 58.15 population as shown in the last official statewide federal 58.16 census for each fire town and one-half in proportion to the 58.17 market value of each fire town, including (1) the market value 58.18 of tax exempt property and (2) the market value of natural 58.19 resources lands receiving in lieu payments under sections 58.20 477A.11 to 477A.14, but excluding the market value of minerals. 58.21 In the case of incorporated or municipal fire departments 58.22 furnishing fire protection to other cities, towns, or townships 58.23 as evidenced by valid fire service contracts filed with the 58.24 commissioner, the distribution must be adjusted proportionately 58.25 to take into consideration the crossover fire protection 58.26 service. Necessary adjustments shall be made to subsequent 58.27 apportionments. In the case of municipalities or independent 58.28 fire departments qualifying for the aid, the commissioner shall 58.29 calculate the state aid for the municipality or relief 58.30 association on the basis of the population and the market value 58.31 of the area furnished fire protection service by the fire 58.32 department as evidenced by duly executed and valid fire service 58.33 agreements filed with the commissioner. If one or more fire 58.34 departments are furnishing contracted fire service to a city, 58.35 town, or township, only the population and market value of the 58.36 area served by each fire department may be considered in 59.1 calculating the state aid and the fire departments furnishing 59.2 service shall enter into an agreement apportioning among 59.3 themselves the percent of the population and the market value of 59.4 each service area. The agreement must be in writing and must be 59.5 filed with the commissioner. 59.6 (d) The minimum fire state aid allocation amount is the 59.7 amount in addition to the initial fire state allocation amount 59.8 that is derived from any additional funding amount to support a 59.9 minimum fire state aid amount under section 423A.02, subdivision 59.10 3, and allocated to municipalities with volunteer firefighter 59.11 relief associations based on the number of active volunteer 59.12 firefighters who are members of the relief association as 59.13 reported in the annual financial reporting for the calendar year 59.14 1993 to the office of the state auditor, but not to exceed 30 59.15 active volunteer firefighters, so that all municipalities or 59.16 fire departments with volunteer firefighter relief associations 59.17 receive in total at least a minimum fire state aid amount per 59.18 1993 active volunteer firefighter to a maximum of 30 59.19 firefighters. 59.20 (e) The fire state aid must be paid to the treasurer of the 59.21 municipality where the fire department is located and the 59.22 treasurer of the municipality shall, within 30 days of receipt 59.23 of the fire state aid, transmit the aid to the relief 59.24 association if the relief association has filed a financial 59.25 report with the treasurer of the municipality and has met all 59.26 other statutory provisions pertaining to the aid apportionment. 59.27 (f) The commissioner may make rules to permit the 59.28 administration of the provisions of this section. Any 59.29 adjustments needed to correct prior misallocations must be made 59.30 to subsequent apportionments. 59.31 Sec. 2. Minnesota Statutes 1996, section 93.41, is amended 59.32 to read: 59.33 93.41 [STATE-OWNED IRON-BEARING MATERIALS.] 59.34 Subdivision 1. [USE FOR ROAD CONSTRUCTION AND OTHER 59.35 PURPOSES.] In case the commissioner of natural resources shall 59.36 determine that any paint rock, taconite, or other iron-bearing 60.1 material belonging to the stateand containing not more than 4560.2percent dried iron by analysisis needed and suitable for use in 60.3 the construction or maintenance of any road, tailings basin, 60.4 settling basin, dike, dam, bank fill, or other works on public 60.5 or private property, and that such use would be in the best 60.6 interests of the public, the commissioner may authorize the 60.7 disposal of such material therefor as hereinafter provided. 60.8 Subd. 2. [MATERIALS SUBJECT TO STATE IRON ORE MINING 60.9 LEASE.] If such material is subject to an existing state iron 60.10 ore mining lease or located on property subject to an existing 60.11 state iron ore mining lease, the commissioner, by written 60.12 agreement with the holder of the lease, may authorize the use of 60.13 the material for any purpose specified in subdivision 1 that 60.14 will facilitate the mining and disposal of the iron ore therein 60.15 on such terms as the commissioner may prescribe consistent with 60.16 the interests of the state, or may authorize the holder of the 60.17 lease to dispose of the material otherwise for any purpose 60.18 specified in subdivision 1 upon payment of an amount therefor 60.19 equivalent to the royalty that would be payable under the terms 60.20 of the lease if the material were shipped or otherwise disposed 60.21 of as iron ore, but not less than the applicable minimum rate 60.22 prescribed by section 93.20. 60.23 Subd. 3. [ISSUANCE OF LEASES, ROYALTIES.] If such 60.24 material, whether in the ground or in stockpile, is not subject 60.25 to an existing lease, the commissioner may issue leases for the 60.26 taking and removal thereof for the purposes specified in 60.27 subdivision 1 in like manner as provided by section 92.50 for 60.28 leases for the taking and removal of sand, gravel, and other 60.29 materials specified in said section, and subject to all the 60.30 provisions thereof, so far as applicable; provided, that the60.31amount payable for such material shall be at least equivalent to60.32the minimum royalty that would be payable therefor under the60.33provisions of section 93.20. 60.34 Subd. 4. [SALE OF STOCKPILED IRON-BEARING MATERIAL IN 60.35 PLACE.] If such material is in stockpile and is not subject to 60.36 an existing lease, the commissioner may sell stockpiled 61.1 iron-bearing material in place. The sale must be to a person 61.2 holding an interest in the surface of the property upon which 61.3 the stockpile is located or to a person holding an interest in 61.4 publicly or privately owned stockpiled iron-bearing material 61.5 located in the same stockpile. 61.6 Sec. 3. Minnesota Statutes 1996, section 103D.905, 61.7 subdivision 4, is amended to read: 61.8 Subd. 4. [BOND FUND.] A bond fund consists of the proceeds 61.9 of special assessments, storm water charges, loan repayments, 61.10 and ad valorem tax levies pledged by the watershed district for 61.11 the payment of bonds or notes issued by the watershed district 61.12secured by the property of the watershed district that is61.13producing or is likely to produce a regular income. The bond 61.14 fund is to be used for the payment of thepurchase price of the61.15property or the value of the property as determined by the court61.16in proper proceedings and for the improvement and development of61.17the propertyprincipal of, premium or administrative surcharge, 61.18 if any, and interest on the bonds and notes issued by the 61.19 watershed district and for payments required to be made to the 61.20 federal government under section 148(f) of the Internal Revenue 61.21 Code of 1986, as amended. 61.22 Sec. 4. Minnesota Statutes 1996, section 103D.905, 61.23 subdivision 5, is amended to read: 61.24 Subd. 5. [CONSTRUCTION OR IMPLEMENTATION FUND.] (a) A 61.25 construction or implementation fund consists of: 61.26 (1) the proceeds of watershed district bonds or notes or of 61.27 the sale of county bonds; 61.28 (2) construction or implementation loans from the pollution 61.29 control agency under sections 103F.701 to 103F.761, or from any 61.30 agency of the federal government; and 61.31 (3) special assessments, storm water charges, loan 61.32 repayments, and ad valorem tax levies levied or to be levied to 61.33 supply funds for the construction or implementation of the 61.34 projects of the watershed district, including reservoirs, 61.35 ditches, dikes, canals, channels, storm water facilities, sewage 61.36 treatment facilities, wells, and other works, and the expenses 62.1 incident to and connected with the construction or 62.2 implementation. 62.3 (b) Construction or implementation loans from the pollution 62.4 control agency under sections 103F.701 to 103F.761, or from an 62.5 agency of the federal government may be repaid frommoney62.6collected bythe proceeds of watershed district bonds or notes 62.7 or from the collections of storm water charges, loan repayments, 62.8 ad valorem tax levies, or special assessments on properties 62.9 benefited by the project. 62.10 Sec. 5. Minnesota Statutes 1996, section 103D.905, is 62.11 amended by adding a subdivision to read: 62.12 Subd. 9. [PROJECT TAX LEVY.] In addition to other tax 62.13 levies provided in this section or in any other law, a watershed 62.14 district may levy a tax: 62.15 (1) to pay the costs of projects undertaken by the 62.16 watershed district which are to be funded, in whole or in part, 62.17 with the proceeds of grants or construction or implementation 62.18 loans from an agency of the state of Minnesota under the 62.19 authority of sections 103F.701 to 103F.761; 62.20 (2) to pay the principal of, or premium or administrative 62.21 surcharge, if any, and interest on, the bonds and notes issued 62.22 by the watershed district pursuant to section 103F.725; or 62.23 (3) to repay the construction or implementation loans under 62.24 sections 103F.701 to 103F.761. 62.25 Taxes levied with respect to payment of bonds and notes 62.26 shall comply with section 475.61. 62.27 Sec. 6. Minnesota Statutes 1996, section 216B.16, is 62.28 amended by adding a subdivision to read: 62.29 Subd. 6d. [WIND ENERGY; PROPERTY TAX.] An owner of a wind 62.30 energy conversion facility which is required to pay property 62.31 taxes under section 272.02, subdivision 1, paragraph (21), may 62.32 petition the public utilities commission to include in any power 62.33 purchase agreement between the owner of the facility and a 62.34 public utility regulated by the commission the amount of 62.35 property taxes paid by the owner of the facility. The public 62.36 utilities commission shall require the public utility to amend 63.1 the power purchase agreement to include the property taxes paid 63.2 by the owner of the facility in the price paid by the utility 63.3 for wind generated electricity only if the commission finds: 63.4 (a) the owner of the facility has paid the property taxes 63.5 required by this subdivision; 63.6 (b) the power purchase agreement between the public utility 63.7 and the owner does not already require the utility to pay the 63.8 amount of property taxes the owner has paid under this 63.9 subdivision; and 63.10 (c) the commission has approved a rate schedule containing 63.11 provisions for the automatic adjustment of charges for utility 63.12 service in direct relation to the charges ordered by the 63.13 commission under section 272.02, subdivision 1, paragraph (21). 63.14 Sec. 7. Minnesota Statutes 1996, section 271.01, 63.15 subdivision 5, is amended to read: 63.16 Subd. 5. [JURISDICTION.] The tax court shall have 63.17 statewide jurisdiction. Except for an appeal to the supreme 63.18 court or any other appeal allowed under this subdivision, the 63.19 tax court shall be the sole, exclusive, and final authority for 63.20 the hearing and determination of all questions of law and fact 63.21 arising under the tax laws of the state, as defined in this 63.22 subdivision, in those cases that have been appealed to the tax 63.23 court and in any case that has been transferred by the district 63.24 court to the tax court. The tax court shall have no 63.25 jurisdiction in any case that does not arise under the tax laws 63.26 of the state or in any criminal case or in any case determining 63.27 or granting title to real property or in any case that is under 63.28 the probate jurisdiction of the district court. The small 63.29 claims division of the tax court shall have no jurisdiction in 63.30 any case dealing with property valuation or assessment for 63.31 property tax purposes until the taxpayer has appealed the 63.32 valuation or assessment to the county board of equalization, and 63.33 in those towns and cities which have not transferred their 63.34 duties to the county, the town or city board of equalizationand63.35to the county board of equalization, except for those taxpayers 63.36 whose original assessments are determined by the commissioner of 64.1 revenue. The tax court shall have no jurisdiction in any case 64.2 involving an order of the state board of equalization unless a 64.3 taxpayer contests the valuation of property. Laws governing 64.4 taxes, aids, and related matters administered by the 64.5 commissioner of revenue, laws dealing with property valuation, 64.6 assessment or taxation of property for property tax purposes, 64.7 and any other laws that contain provisions authorizing review of 64.8 taxes, aids, and related matters by the tax court shall be 64.9 considered tax laws of this state subject to the jurisdiction of 64.10 the tax court. This subdivision shall not be construed to 64.11 prevent an appeal, as provided by law, to an administrative 64.12 agency, board of equalization, review under section 274.13, 64.13 subdivision 1c, or to the commissioner of revenue. Wherever 64.14 used in this chapter, the term commissioner shall mean the 64.15 commissioner of revenue, unless otherwise specified. 64.16 Sec. 8. Minnesota Statutes 1996, section 272.02, 64.17 subdivision 1, is amended to read: 64.18 Subdivision 1. All property described in this section to 64.19 the extent herein limited shall be exempt from taxation: 64.20 (1) All public burying grounds. 64.21 (2) All public schoolhouses. 64.22 (3) All public hospitals. 64.23 (4) All academies, colleges, and universities, and all 64.24 seminaries of learning. 64.25 (5) All churches, church property, and houses of worship. 64.26 (6) Institutions of purely public charity except parcels of 64.27 property containing structures and the structures described in 64.28 section 273.13, subdivision 25, paragraph (c), clauses (1), (2), 64.29 and (3), or paragraph (d), other than those that qualify for 64.30 exemption under clause (25). 64.31 (7) All public property exclusively used for any public 64.32 purpose. 64.33 (8) Except for the taxable personal property enumerated 64.34 below, all personal property and the property described in 64.35 section 272.03, subdivision 1, paragraphs (c) and (d), shall be 64.36 exempt. 65.1 The following personal property shall be taxable: 65.2 (a) personal property which is part of an electric 65.3 generating, transmission, or distribution system or a pipeline 65.4 system transporting or distributing water, gas, crude oil, or 65.5 petroleum products or mains and pipes used in the distribution 65.6 of steam or hot or chilled water for heating or cooling 65.7 buildings and structures; 65.8 (b) railroad docks and wharves which are part of the 65.9 operating property of a railroad company as defined in section 65.10 270.80; 65.11 (c) personal property defined in section 272.03, 65.12 subdivision 2, clause (3); 65.13 (d) leasehold or other personal property interests which 65.14 are taxed pursuant to section 272.01, subdivision 2; 273.124, 65.15 subdivision 7; or 273.19, subdivision 1; or any other law 65.16 providing the property is taxable as if the lessee or user were 65.17 the fee owner; 65.18 (e) manufactured homes and sectional structures, including 65.19 storage sheds, decks, and similar removable improvements 65.20 constructed on the site of a manufactured home, sectional 65.21 structure, park trailer or travel trailer as provided in section 65.22 273.125, subdivision 8, paragraph (f); and 65.23 (f) flight property as defined in section 270.071. 65.24 (9) Personal property used primarily for the abatement and 65.25 control of air, water, or land pollution to the extent that it 65.26 is so used, and real property which is used primarily for 65.27 abatement and control of air, water, or land pollution as part 65.28 of an agricultural operation, as a part of a centralized 65.29 treatment and recovery facility operating under a permit issued 65.30 by the Minnesota pollution control agency pursuant to chapters 65.31 115 and 116 and Minnesota Rules, parts 7001.0500 to 7001.0730, 65.32 and 7045.0020 to 7045.1260, as a wastewater treatment facility 65.33 and for the treatment, recovery, and stabilization of metals, 65.34 oils, chemicals, water, sludges, or inorganic materials from 65.35 hazardous industrial wastes, or as part of an electric 65.36 generation system. For purposes of this clause, personal 66.1 property includes ponderous machinery and equipment used in a 66.2 business or production activity that at common law is considered 66.3 real property. 66.4 Any taxpayer requesting exemption of all or a portion of 66.5 any real property or any equipment or device, or part thereof, 66.6 operated primarily for the control or abatement of air or water 66.7 pollution shall file an application with the commissioner of 66.8 revenue. The equipment or device shall meet standards, rules, 66.9 or criteria prescribed by the Minnesota pollution control 66.10 agency, and must be installed or operated in accordance with a 66.11 permit or order issued by that agency. The Minnesota pollution 66.12 control agency shall upon request of the commissioner furnish 66.13 information or advice to the commissioner. On determining that 66.14 property qualifies for exemption, the commissioner shall issue 66.15 an order exempting the property from taxation. The equipment or 66.16 device shall continue to be exempt from taxation as long as the 66.17 permit issued by the Minnesota pollution control agency remains 66.18 in effect. 66.19 (10) Wetlands. For purposes of this subdivision, 66.20 "wetlands" means: (i) land described in section 103G.005, 66.21 subdivision 15a; (ii) land which is mostly under water, produces 66.22 little if any income, and has no use except for wildlife or 66.23 water conservation purposes, provided it is preserved in its 66.24 natural condition and drainage of it would be legal, feasible, 66.25 and economically practical for the production of livestock, 66.26 dairy animals, poultry, fruit, vegetables, forage and grains, 66.27 except wild rice; or (iii) land in a wetland preservation area 66.28 under sections 103F.612 to 103F.616. "Wetlands" under items (i) 66.29 and (ii) include adjacent land which is not suitable for 66.30 agricultural purposes due to the presence of the wetlands, but 66.31 do not include woody swamps containing shrubs or trees, wet 66.32 meadows, meandered water, streams, rivers, and floodplains or 66.33 river bottoms. Exemption of wetlands from taxation pursuant to 66.34 this section shall not grant the public any additional or 66.35 greater right of access to the wetlands or diminish any right of 66.36 ownership to the wetlands. 67.1 (11) Native prairie. The commissioner of the department of 67.2 natural resources shall determine lands in the state which are 67.3 native prairie and shall notify the county assessor of each 67.4 county in which the lands are located. Pasture land used for 67.5 livestock grazing purposes shall not be considered native 67.6 prairie for the purposes of this clause. Upon receipt of an 67.7 application for the exemption provided in this clause for lands 67.8 for which the assessor has no determination from the 67.9 commissioner of natural resources, the assessor shall refer the 67.10 application to the commissioner of natural resources who shall 67.11 determine within 30 days whether the land is native prairie and 67.12 notify the county assessor of the decision. Exemption of native 67.13 prairie pursuant to this clause shall not grant the public any 67.14 additional or greater right of access to the native prairie or 67.15 diminish any right of ownership to it. 67.16 (12) Property used in a continuous program to provide 67.17 emergency shelter for victims of domestic abuse, provided the 67.18 organization that owns and sponsors the shelter is exempt from 67.19 federal income taxation pursuant to section 501(c)(3) of the 67.20 Internal Revenue Code of 1986, as amended through December 31, 67.21 1992, notwithstanding the fact that the sponsoring organization 67.22 receives funding under section 8 of the United States Housing 67.23 Act of 1937, as amended. 67.24 (13) If approved by the governing body of the municipality 67.25 in which the property is located, property not exceeding one 67.26 acre which is owned and operated by any senior citizen group or 67.27 association of groups that in general limits membership to 67.28 persons age 55 or older and is organized and operated 67.29 exclusively for pleasure, recreation, and other nonprofit 67.30 purposes, no part of the net earnings of which inures to the 67.31 benefit of any private shareholders; provided the property is 67.32 used primarily as a clubhouse, meeting facility, or recreational 67.33 facility by the group or association and the property is not 67.34 used for residential purposes on either a temporary or permanent 67.35 basis. 67.36 (14) To the extent provided by section 295.44, real and 68.1 personal property used or to be used primarily for the 68.2 production of hydroelectric or hydromechanical power on a site 68.3 owned by the state or a local governmental unit which is 68.4 developed and operated pursuant to the provisions of section 68.5 103G.535. 68.6 (15) If approved by the governing body of the municipality 68.7 in which the property is located, and if construction is 68.8 commenced after June 30, 1983: 68.9 (a) a "direct satellite broadcasting facility" operated by 68.10 a corporation licensed by the federal communications commission 68.11 to provide direct satellite broadcasting services using direct 68.12 broadcast satellites operating in the 12-ghz. band; and 68.13 (b) a "fixed satellite regional or national program service 68.14 facility" operated by a corporation licensed by the federal 68.15 communications commission to provide fixed satellite-transmitted 68.16 regularly scheduled broadcasting services using satellites 68.17 operating in the 6-ghz. band. 68.18 An exemption provided by clause (15) shall apply for a period 68.19 not to exceed five years. When the facility no longer qualifies 68.20 for exemption, it shall be placed on the assessment rolls as 68.21 provided in subdivision 4. Before approving a tax exemption 68.22 pursuant to this paragraph, the governing body of the 68.23 municipality shall provide an opportunity to the members of the 68.24 county board of commissioners of the county in which the 68.25 facility is proposed to be located and the members of the school 68.26 board of the school district in which the facility is proposed 68.27 to be located to meet with the governing body. The governing 68.28 body shall present to the members of those boards its estimate 68.29 of the fiscal impact of the proposed property tax exemption. 68.30 The tax exemption shall not be approved by the governing body 68.31 until the county board of commissioners has presented its 68.32 written comment on the proposal to the governing body or 30 days 68.33 have passed from the date of the transmittal by the governing 68.34 body to the board of the information on the fiscal impact, 68.35 whichever occurs first. 68.36 (16) Real and personal property owned and operated by a 69.1 private, nonprofit corporation exempt from federal income 69.2 taxation pursuant to United States Code, title 26, section 69.3 501(c)(3), primarily used in the generation and distribution of 69.4 hot water for heating buildings and structures. 69.5 (17) Notwithstanding section 273.19, state lands that are 69.6 leased from the department of natural resources under section 69.7 92.46. 69.8 (18) Electric power distribution lines and their 69.9 attachments and appurtenances, that are used primarily for 69.10 supplying electricity to farmers at retail. 69.11 (19) Transitional housing facilities. "Transitional 69.12 housing facility" means a facility that meets the following 69.13 requirements. (i) It provides temporary housing to individuals, 69.14 couples, or families. (ii) It has the purpose of reuniting 69.15 families and enabling parents or individuals to obtain 69.16 self-sufficiency, advance their education, get job training, or 69.17 become employed in jobs that provide a living wage. (iii) It 69.18 provides support services such as child care, work readiness 69.19 training, and career development counseling; and a 69.20 self-sufficiency program with periodic monitoring of each 69.21 resident's progress in completing the program's goals. (iv) It 69.22 provides services to a resident of the facility for at least 69.23 three months but no longer than three years, except residents 69.24 enrolled in an educational or vocational institution or job 69.25 training program. These residents may receive services during 69.26 the time they are enrolled but in no event longer than four 69.27 years. (v) It is owned and operated or under lease from a unit 69.28 of government or governmental agency under a property 69.29 disposition program and operated by one or more organizations 69.30 exempt from federal income tax under section 501(c)(3) of the 69.31 Internal Revenue Code of 1986, as amended through December 31, 69.32 1992. This exemption applies notwithstanding the fact that the 69.33 sponsoring organization receives financing by a direct federal 69.34 loan or federally insured loan or a loan made by the Minnesota 69.35 housing finance agency under the provisions of either Title II 69.36 of the National Housing Act or the Minnesota housing finance 70.1 agency law of 1971 or rules promulgated by the agency pursuant 70.2 to it, and notwithstanding the fact that the sponsoring 70.3 organization receives funding under Section 8 of the United 70.4 States Housing Act of 1937, as amended. 70.5 (20) Real and personal property, including leasehold or 70.6 other personal property interests, owned and operated by a 70.7 corporation if more than 50 percent of the total voting power of 70.8 the stock of the corporation is owned collectively by: (i) the 70.9 board of regents of the University of Minnesota, (ii) the 70.10 University of Minnesota Foundation, an organization exempt from 70.11 federal income taxation under section 501(c)(3) of the Internal 70.12 Revenue Code of 1986, as amended through December 31, 1992, and 70.13 (iii) a corporation organized under chapter 317A, which by its 70.14 articles of incorporation is prohibited from providing pecuniary 70.15 gain to any person or entity other than the regents of the 70.16 University of Minnesota; which property is used primarily to 70.17 manage or provide goods, services, or facilities utilizing or 70.18 relating to large-scale advanced scientific computing resources 70.19 to the regents of the University of Minnesota and others. 70.20 (21)(a) Small scale wind energy conversion systems, as70.21defined in section 216C.06, subdivision 12,installed after 70.22 January 1, 1991, andbefore January 2, 1995, andused as an 70.23 electric power source,are exempt. 70.24(b)"Small scale wind energy conversion systems" are wind 70.25 energy conversion systems, as defined in section 216C.06, 70.26 subdivision 12,installed after January 1, 1995,including the 70.27 foundation or support pad, which are (i) used as an electric 70.28 power source; (ii) located within one county and owned by the 70.29 same owner; and (iii) produce two megawatts or less of 70.30 electricity as measured by nameplate ratings, are exempt. 70.31(c)(b) Medium scale wind energy conversion systems, as70.32defined in section 216C.06, subdivision 12,installed after 70.33 January 1,19951991,and used as an electric power source but70.34not exempt under item (b),are treated as follows: (i) the 70.35 foundation and support pad are taxable; (ii) the associated 70.36 supporting and protective structures are exempt for the first 71.1 five assessment years after they have been constructed, and 71.2 thereafter, 30 percent of the market value of the associated 71.3 supporting and protective structures are taxable; and (iii) the 71.4 turbines, blades, transformers, and its related equipment, are 71.5 exempt. "Medium scale wind energy conversion systems" are wind 71.6 energy conversion systems as defined in section 216C.06, 71.7 subdivision 12, including the foundation or support pad, which 71.8 are: (i) used as an electric power source; (ii) located within 71.9 one county and owned by the same owner; and (iii) produce more 71.10 than two but equal to or less than 12 megawatts of energy as 71.11 measured by nameplate ratings. 71.12 (c) Large scale wind energy conversion systems installed 71.13 after January 1, 1991, are treated as follows: 30 percent of 71.14 the market value of all property is taxable, including (i) the 71.15 foundation and support pad; (ii) the associated supporting and 71.16 protective structures; and (iii) the turbines, blades, 71.17 transformers, and its related equipment. "Large scale wind 71.18 energy conversion systems" are wind energy conversion systems as 71.19 defined in section 216C.06, subdivision 12, including the 71.20 foundation or support pad, which are: (i) used as an electric 71.21 power source; and (ii) produce more than 12 megawatts of energy 71.22 as measured by nameplate ratings. 71.23 (22) Containment tanks, cache basins, and that portion of 71.24 the structure needed for the containment facility used to 71.25 confine agricultural chemicals as defined in section 18D.01, 71.26 subdivision 3, as required by the commissioner of agriculture 71.27 under chapter 18B or 18C. 71.28 (23) Photovoltaic devices, as defined in section 216C.06, 71.29 subdivision 13, installed after January 1, 1992, and used to 71.30 produce or store electric power. 71.31 (24) Real and personal property owned and operated by a 71.32 private, nonprofit corporation exempt from federal income 71.33 taxation pursuant to United States Code, title 26, section 71.34 501(c)(3), primarily used for an ice arena or ice rink, and used 71.35 primarily for youth and high school programs. 71.36 (25) A structure that is situated on real property that is 72.1 used for: 72.2 (i) housing for the elderly or for low- and moderate-income 72.3 families as defined in Title II of the National Housing Act, as 72.4 amended through December 31, 1990, and funded by a direct 72.5 federal loan or federally insured loan made pursuant to Title II 72.6 of the act; or 72.7 (ii) housing lower income families or elderly or 72.8 handicapped persons, as defined in Section 8 of the United 72.9 States Housing Act of 1937, as amended. 72.10 In order for a structure to be exempt under (i) or (ii), it 72.11 must also meet each of the following criteria: 72.12 (A) is owned by an entity which is operated as a nonprofit 72.13 corporation organized under chapter 317A; 72.14 (B) is owned by an entity which has not entered into a 72.15 housing assistance payments contract under Section 8 of the 72.16 United States Housing Act of 1937, or, if the entity which owns 72.17 the structure has entered into a housing assistance payments 72.18 contract under Section 8 of the United States Housing Act of 72.19 1937, the contract provides assistance for less than 90 percent 72.20 of the dwelling units in the structure, excluding dwelling units 72.21 intended for management or maintenance personnel; 72.22 (C) operates an on-site congregate dining program in which 72.23 participation by residents is mandatory, and provides assisted 72.24 living or similar social and physical support services for 72.25 residents; and 72.26 (D) was not assessed and did not pay tax under chapter 273 72.27 prior to the 1991 levy, while meeting the other conditions of 72.28 this clause. 72.29 An exemption under this clause remains in effect for taxes 72.30 levied in each year or partial year of the term of its permanent 72.31 financing. 72.32 (26) Real and personal property that is located in the 72.33 Superior National Forest, and owned or leased and operated by a 72.34 nonprofit organization that is exempt from federal income 72.35 taxation under section 501(c)(3) of the Internal Revenue Code of 72.36 1986, as amended through December 31, 1992, and primarily used 73.1 to provide recreational opportunities for disabled veterans and 73.2 their families. 73.3 (27) Manure pits and appurtenances, which may include 73.4 slatted floors and pipes, installed or operated in accordance 73.5 with a permit, order, or certificate of compliance issued by the 73.6 Minnesota pollution control agency. The exemption shall 73.7 continue for as long as the permit, order, or certificate issued 73.8 by the Minnesota pollution control agency remains in effect. 73.9 (28) Notwithstanding clause (8), item (a), attached 73.10 machinery and other personal property which is part of a 73.11 facility containing a cogeneration system as described in 73.12 section 216B.166, subdivision 2, paragraph (a), if the 73.13 cogeneration system has met the following criteria: (i) the 73.14 system utilizes natural gas as a primary fuel and the 73.15 cogenerated steam initially replaces steam generated from 73.16 existing thermal boilers utilizing coal; (ii) the facility 73.17 developer is selected as a result of a procurement process 73.18 ordered by the public utilities commission; and (iii) 73.19 construction of the facility is commenced after July 1, 1994, 73.20 and before July 1, 1997. 73.21 (29) Real property acquired by a home rule charter city, 73.22 statutory city, county, town, or school district under a lease 73.23 purchase agreement or an installment purchase contract during 73.24 the term of the lease purchase agreement as long as and to the 73.25 extent that the property is used by the city, county, town, or 73.26 school district and devoted to a public use and to the extent it 73.27 is not subleased to any private individual, entity, association, 73.28 or corporation in connection with a business or enterprise 73.29 operated for profit. 73.30 Sec. 9. Minnesota Statutes 1996, section 272.02, is 73.31 amended by adding a subdivision to read: 73.32 Subd. 9. [PERSONAL PROPERTY; BIOMASS FACILITY.] (a) 73.33 Notwithstanding clause (8), item (a), of subdivision 1, attached 73.34 machinery and other personal property that is part of a system 73.35 that generates biomass electric energy that satisfies the 73.36 mandate, in whole or in part, established in section 216B.2424, 74.1 or a system that generates electric energy using waste wood, is 74.2 exempt if it meets the requirements of this subdivision. 74.3 (b) The governing bodies of the county, city or town, and 74.4 school district must each approve by resolution the exemption of 74.5 the personal property under this subdivision. Each of the 74.6 governing bodies shall file a copy of the resolution with the 74.7 county auditor. The county auditor shall publish the 74.8 resolutions in newspapers of general circulation within the 74.9 county. The voters of the county may request a referendum on 74.10 the proposed exemption by filing a petition within 30 days after 74.11 the resolutions are published. The petition must be signed by 74.12 voters who reside in the county. The number of signatures must 74.13 equal at least five percent of the number of persons voting in 74.14 the county in the last general election. If such a petition is 74.15 timely filed, the resolutions are not effective until they have 74.16 been submitted to the voters residing in the county at a general 74.17 or special election and a majority of votes cast on the question 74.18 of approving the resolution are in the affirmative. The 74.19 commissioner of revenue shall prepare a suggested form of 74.20 question to be presented at the referendum. 74.21 (c) The exemption under this subdivision is limited to a 74.22 maximum of five years, beginning with the assessment year 74.23 immediately following when the personal property is put in 74.24 operation. 74.25 Sec. 10. Minnesota Statutes 1996, section 273.111, 74.26 subdivision 3, is amended to read: 74.27 Subd. 3. (a) Real estate consisting of ten acres or more 74.28 or a nursery or greenhouse, and qualifying for classification as 74.29 class 1b, 2a, or 2b under section 273.13, subdivision 23, 74.30 paragraph (d), shall be entitled to valuation and tax deferment 74.31 under this section only if it isactively and exclusively74.32 primarily devoted to agricultural useas defined, and meets the 74.33 qualifications in subdivision 6, and either: 74.34 (1) is the homestead of the owner, or of a surviving 74.35 spouse, child, or sibling of the owner or is real estate which 74.36 is farmed with the real estate which contains the homestead 75.1 property; or 75.2 (2) has been in possession of the applicant, the 75.3 applicant's spouse, parent, or sibling, or any combination 75.4 thereof, for a period of at least seven years prior to 75.5 application for benefits under the provisions of this section, 75.6 or is real estate which is farmed with the real estate which 75.7 qualifies under this clause and is within two townships or 75.8 cities or combination thereof from the qualifying real estate; 75.9 or 75.10 (3) is the homestead of a shareholder in a family farm 75.11 corporation as defined in section 500.24, notwithstanding the 75.12 fact that legal title to the real estate may be held in the name 75.13 of the family farm corporation; or 75.14 (4) is in the possession of a nursery or greenhouse or an 75.15 entity owned by a proprietor, partnership, or corporation which 75.16 also owns the nursery or greenhouse operations on the parcel or 75.17 parcels. 75.18 (b) Valuation of real estate under this section is limited 75.19 to parcels the ownership of which is in noncorporate entities 75.20 except for: 75.21 (1) family farm corporations organized pursuant to section 75.22 500.24; and 75.23 (2) corporations that derive 80 percent or more of their 75.24 gross receipts from the wholesale or retail sale of 75.25 horticultural or nursery stock. 75.26 Corporate entities who previously qualified for tax 75.27 deferment pursuant to this section and who continue to otherwise 75.28 qualify under subdivisions 3 and 6 for a period of at least 75.29 three years following the effective date of Laws 1983, chapter 75.30 222, section 8, will not be required to make payment of the 75.31 previously deferred taxes, notwithstanding the provisions of 75.32 subdivision 9. Special assessments are payable at the end of 75.33 the three-year period or at time of sale, whichever comes first. 75.34 (c) Land that previously qualified for tax deferment 75.35pursuant tounder this section and no longer qualifies because 75.36 it is notclassified asprimarily used for agriculturalland76.1 purposes but would otherwise qualify under subdivisions 3 and 6 76.2 for a period of at least three years will not be required to 76.3 make payment of the previously deferred taxes, notwithstanding 76.4 the provisions of subdivision 9. Sale of the land prior to the 76.5 expiration of the three-year period requires payment of deferred 76.6 taxes as follows: sale in the year the land no longer qualifies 76.7 requires payment of the current year's deferred taxes plus 76.8 payment of deferred taxes for the two prior years; sale during 76.9 the second year the land no longer qualifies requires payment of 76.10 the current year's deferred taxes plus payment of the deferred 76.11 taxes for the prior year; and sale during the third year the 76.12 land no longer qualifies requires payment of the current year's 76.13 deferred taxes. Deferred taxes shall be paid even if the land 76.14 qualifies pursuant to subdivision 11a. When such property is 76.15 sold or no longer qualifies under this paragraph, or at the end 76.16 of the three-year period, whichever comes first, all deferred 76.17 special assessments plus interest are payable in equal 76.18 installments spread over the time remaining until the last 76.19 maturity date of the bonds issued to finance the improvement for 76.20 which the assessments were levied. If the bonds have matured, 76.21 the deferred special assessments plus interest are payable 76.22 within 90 days. The provisions of section 429.061, subdivision 76.23 2, apply to the collection of these installments. Penalties are 76.24 not imposed on any such special assessments if timely paid. 76.25 Sec. 11. Minnesota Statutes 1996, section 273.111, 76.26 subdivision 6, is amended to read: 76.27 Subd. 6. Real property qualifying under subdivision 3 76.28 shall be considered to be in agricultural use provided that 76.29 annually: 76.30 (1) at least 33-1/3 percent of the total family income of 76.31 the owner is derived therefrom, or the total production income 76.32 including rental from the property is $300 plus $10 per tillable 76.33 acre; and 76.34 (2) it is devoted to the production for sale of 76.35 agricultural products as defined in section 273.13, subdivision 76.36 23, paragraph (e). 77.1 Slough, wasteland, and woodland contiguous to or surrounded 77.2 by land that is entitled to valuation and tax deferment under 77.3 this section is considered to be in agricultural use if under 77.4 the same ownership and management. 77.5 Sec. 12. Minnesota Statutes 1996, section 273.112, is 77.6 amended by adding a subdivision to read: 77.7 Subd. 3a. Real estate shall be entitled to valuation and 77.8 tax deferment under this section only if it is: 77.9 (1) nonresidential real estate, excluding the part of the 77.10 property that is not used directly for recreational uses, that 77.11 has been operated as an amusement park for at least 45 years; 77.12 and 77.13 (2) the governing bodies of the county, home rule charter 77.14 or statutory city or town, and school district in which the real 77.15 estate is located have each approved by resolution the valuation 77.16 and tax deferment under this section and have each filed a 77.17 notice of the approval with the county assessor within the time 77.18 limits of subdivision 6. 77.19 Sec. 13. Minnesota Statutes 1996, section 272.115, is 77.20 amended to read: 77.21 272.115 [CERTIFICATE OF VALUE; FILING.] 77.22 Subdivision 1. [REQUIREMENT.] Except as otherwise provided 77.23 in subdivision 5, whenever any real estate is sold for a 77.24 consideration in excess of $1,000, whether by warranty deed, 77.25 quitclaim deed, contract for deed or any other method of sale, 77.26 the grantor, grantee or the legal agent of either shall file a 77.27 certificate of value with the county auditor in the county in 77.28 which the property is located when the deed or other document is 77.29 presented for recording. Contract for deeds are subject to 77.30 recording under section 507.235, subdivision 1. Value shall, in 77.31 the case of any deed not a gift, be the amount of the full 77.32 actual consideration thereof, paid or to be paid, including the 77.33 amount of any lien or liens assumed. The items and value of 77.34 personal property transferred with the real property must be 77.35 listed and deducted from the sale price. The certificate of 77.36 value shall include the classification to which the property 78.1 belongs for the purpose of determining the fair market value of 78.2 the property. The certificate shall include financing terms and 78.3 conditions of the sale which are necessary to determine the 78.4 actual, present value of the sale price for purposes of the 78.5 sales ratio study. The commissioner of revenue shall promulgate 78.6 administrative rules specifying the financing terms and 78.7 conditions which must be included on the certificate. Pursuant 78.8 to the authority of the commissioner of revenue in section 78.9 270.066, the certificate of value must include the social 78.10 security number or the federal employer identification number of 78.11 the grantors and grantees. The identification numbers of the 78.12 grantors and grantees are private data on individuals or 78.13 nonpublic data as defined in section 13.02, subdivisions 9 and 78.14 12, but, notwithstanding that section, the private or nonpublic 78.15 data may be disclosed to the commissioner of revenue for 78.16 purposes of tax administration. 78.17 Subd. 2. [FORM; INFORMATION REQUIRED.] The certificate of 78.18 value shall require such facts and information as may be 78.19 determined by the commissioner to be reasonably necessary in the 78.20 administration of the state education aid formulas. The form of 78.21 the certificate of value shall be prescribed by the department 78.22 of revenue which shall provide an adequate supply of forms to 78.23 each county auditor. 78.24 Subd. 3. [COPIES TRANSMITTED; HOMESTEAD STATUS.] The 78.25 county auditor shall transmit two true copies of the certificate 78.26 of value to the assessor who shall insert the most recent market 78.27 value and when available, the year of original construction of 78.28 each parcel of property on both copies and shall transmit one 78.29 copy to the department of revenue. Upon the request of a city 78.30 council located within the county, a copy of each certificate of 78.31 value for property located in that city shall be made available 78.32 to the governing body of the city. The assessor shall remove 78.33 the homestead classification for the following assessment year 78.34 from a property which is sold or transferred, unless the grantee 78.35 or the person to whom the property is transferred completes a 78.36 homestead application under section 273.124, subdivision 13, and 79.1 qualifies for homestead status. 79.2 Subd. 4. [ELIGIBILITY FOR HOMESTEAD STATUS.] No real 79.3 estate sold or transferred on or after January 1, 1993, under 79.4 subdivision 1 shall be classified as a homestead, unless (1) a 79.5 certificate of value has been filed with the county auditor in 79.6 accordance with this section, or (2) the real estate was 79.7 conveyed by the federal government, the state, a political 79.8 subdivision of the state, or combination of them to a person 79.9 otherwise eligible to receive homestead classification of the 79.10 property. 79.11 This subdivision shall apply to any real estate taxes that 79.12 are payable the year or years following the sale or transfer of 79.13 the property. 79.14 Subd. 5. [EXEMPTION FOR GOVERNMENT BODIES.] A certificate 79.15 of real estate value is not required when the real estate is 79.16 being conveyed to or by a public authority or agency of the 79.17 federal government, the state of Minnesota, a political 79.18 subdivision of the state, or any combination of them, provided 79.19 that the authority, agency, or governmental unit has agreed to 79.20 file a list of the real estate conveyed by or to the authority, 79.21 agency, or governmental unit with the commissioner of revenue by 79.22 June 1 of the year following the year of the conveyance. 79.23 Sec. 14. Minnesota Statutes 1996, section 273.11, 79.24 subdivision 1a, is amended to read: 79.25 Subd. 1a. [LIMITED MARKET VALUE.] In the case of all 79.26 property classified as agricultural homestead or nonhomestead, 79.27 residential homestead or nonhomestead, or noncommercial seasonal 79.28 recreational residential, the assessor shall compare the value 79.29 with that determined in the preceding assessment. The amount of 79.30 the increase entered in the current assessment shall not exceed 79.31 the greater of (1) ten percent of the value in the preceding 79.32 assessment, or (2)one-thirdone-fourth of the difference 79.33 between the current assessment and the preceding assessment. 79.34 This limitation shall not apply to increases in value due to 79.35 improvements. For purposes of this subdivision, the term 79.36 "assessment" means the value prior to any exclusion under 80.1 subdivision 16. 80.2 The provisions of this subdivision shall be in effect only 80.3 for assessment years 1993 through19972001. 80.4 For purposes of the assessment/sales ratio study conducted 80.5 under section 124.2131, and the computation of state aids paid 80.6 under chapters 124, 124A, and 477A, market values and net tax 80.7 capacities determined under this subdivision and subdivision 16, 80.8 shall be used. 80.9 Sec. 15. Minnesota Statutes 1996, section 273.11, 80.10 subdivision 16, is amended to read: 80.11 Subd. 16. [VALUATION EXCLUSION FOR CERTAIN IMPROVEMENTS.] 80.12 Improvements to homestead property made before January 2, 2003, 80.13 shall be fully or partially excluded from the value of the 80.14 property for assessment purposes provided that (1) the house is 80.15 at least 35 years old at the time of the improvement and (2) 80.16 either 80.17 (a) the assessor's estimated market value of the house on 80.18 January 2 of the current year is equal to or less than $150,000, 80.19 or 80.20 (b) if the estimated market value of the house is over 80.21 $150,000 market value but is less than $300,000 on January 2 of 80.22 the current year, the property qualifies if 80.23 (i) it is located in a city or town in which 50 percent or 80.24 more of the owner-occupied housing units were constructed before 80.25 1960 based upon the 1990 federal census, and 80.26 (ii) the city or town's median family income based upon the 80.27 1990 federal census is less than the statewide median family 80.28 income based upon the 1990 federal census, or 80.29 (c) if the estimated market value of the house is $300,000 80.30 or more on January 2 of the current year, the property qualifies 80.31 if 80.32 (i) it is located in a city or town in which 45 percent or 80.33 more of the homes were constructed before 1940 based upon the 80.34 1990 federal census, and 80.35 (ii) it is located in a city or town in which 45 percent or 80.36 more of the housing units were rental based upon the 1990 81.1 federal census, and 81.2 (iii) the city or town's median value of owner-occupied 81.3 housing units based upon the 1990 federal census is less than 81.4 the statewide median value of owner-occupied housing units based 81.5 upon the 1990 federal census. 81.6 For purposes of determining this eligibility, "house" means 81.7 land and buildings. 81.8 The age of a residence is either (1) the number of years 81.9 that the residence has existed at its present site, or, (2) the 81.10 original year of its construction if the residence has been 81.11 relocated and if the relocation site is in the same city or town 81.12 as the original site. In the case of a qualifying relocated 81.13 residence under clause (2), an improvement is eligible for 81.14 exclusion under this subdivision only if a building permit was 81.15 issued to the homeowner after the residence was relocated to its 81.16 present site, and the improvement was undertaken during or after 81.17 the year the residence was initially occupied by the homeowner. 81.18 In the case of an owner-occupied duplex or triplex, the 81.19 improvement is eligible regardless of which portion of the 81.20 property was improved. 81.21 If the property lies in a jurisdiction which is subject to 81.22 a building permit process, a building permit must have been 81.23 issued prior to commencement of the improvement. Any 81.24 improvement must add at least $1,000 to the value of the 81.25 property to be eligible for exclusion under this subdivision. 81.26 Only improvements to the structure which is the residence of the 81.27 qualifying homesteader or construction of or improvements to no 81.28 more than one two-car garage per residence qualify for the 81.29 provisions of this subdivision. If an improvement was begun 81.30 between January 2, 1992, and January 2, 1993, any value added 81.31 from that improvement for the January 1994 and subsequent 81.32 assessments shall qualify for exclusion under this subdivision 81.33 provided that a building permit was obtained for the improvement 81.34 between January 2, 1992, and January 2, 1993. Whenever a 81.35 building permit is issued for property currently classified as 81.36 homestead, the issuing jurisdiction shall notify the property 82.1 owner of the possibility of valuation exclusion under this 82.2 subdivision. The assessor shall require an application, 82.3 including documentation of the age of the house from the owner, 82.4 if unknown by the assessor. The application may be filed 82.5 subsequent to the date of the building permit provided that the 82.6 application must be filed within three years of the date the 82.7 building permit was issued for the improvement. If the property 82.8 lies in a jurisdiction which is not subject to a building permit 82.9 process, the application must be filed within three years of the 82.10 date the improvement was made. The assessor may require proof 82.11 from the taxpayer of the date the improvement was made. 82.12 Applications must be received prior to July 1 of any year in 82.13 order to be effective for taxes payable in the following year. 82.14 No exclusion may be granted for an improvement by a local 82.15 board of review or county board of equalization and no abatement 82.16 of the taxes for qualifying improvements may be granted by the 82.17 county board unless (1) a building permit was issued prior to 82.18 the commencement of the improvement if the jurisdiction requires 82.19 a building permit, and (2) an application was completed. 82.20 The assessor shall note the qualifying value of each 82.21 improvement on the property's record, and the sum of those 82.22 amounts shall be subtracted from the value of the property in 82.23 each year for ten years after the improvement has been made, at 82.24 which time an amount equal to 20 percent of the qualifying value 82.25 shall be added back in each of the five subsequent assessment 82.26 years. If an application is filed after the first assessment 82.27 date at which an improvement could have been subject to the 82.28 valuation exclusion under this subdivision, the ten-year period 82.29 during which the value is subject to exclusion is reduced by the 82.30 number of years that have elapsed since the property would have 82.31 qualified initially. The valuation exclusion shall terminate 82.32 whenever (1) the property is sold, or (2) the property is 82.33 reclassified to a class which does not qualify for treatment 82.34 under this subdivision. Improvements made by an occupant who is 82.35 the purchaser of the property under a conditional purchase 82.36 contract do not qualify under this subdivision unless the seller 83.1 of the property is a governmental entity. The qualifying value 83.2 of the property shall be computed based upon the increase from 83.3 that structure's market value as of January 2 preceding the 83.4 acquisition of the property by the governmental entity. 83.5 The total qualifying value for a homestead may not exceed 83.6 $50,000. The total qualifying value for a homestead with a 83.7 house that is less than 70 years old may not exceed $25,000. 83.8 The term "qualifying value" means the increase in estimated 83.9 market value resulting from the improvement if the improvement 83.10 occurs when the house is at least 70 years old, or one-half of 83.11 the increase in estimated market value resulting from the 83.12 improvement otherwise. The $25,000 and $50,000 maximum 83.13 qualifying value under this subdivision may result from up to 83.14 three separate improvements to the homestead. The application 83.15 shall state, in clear language, that if more than three 83.16 improvements are made to the qualifying property, a taxpayer may 83.17 choose which three improvements are eligible, provided that 83.18 after the taxpayer has made the choice and any valuation 83.19 attributable to those improvements has been excluded from 83.20 taxation, no further changes can be made by the taxpayer. 83.21 If 50 percent or more of the square footage of a structure 83.22 is voluntarily razed or removed, the valuation increase 83.23 attributable to any subsequent improvements to the remaining 83.24 structure does not qualify for the exclusion under this 83.25 subdivision. If a structure is unintentionally or accidentally 83.26 destroyed by a natural disaster, the property is eligible for an 83.27 exclusion under this subdivision provided that the structure was 83.28 not completely destroyed. The qualifying value on property 83.29 destroyed by a natural disaster shall be computed based upon the 83.30 increase from that structure's market value as determined on 83.31 January 2 of the year in which the disaster occurred. A 83.32 property receiving benefits under the homestead disaster 83.33 provisions under section 273.123 is not disqualified from 83.34 receiving an exclusion under this subdivision. If any 83.35 combination of improvements made to a structure after January 1, 83.36 1993, increases the size of the structure by 100 percent or 84.1 more, the valuation increase attributable to the portion of the 84.2 improvement that causes the structure's size to exceed 100 84.3 percent does not qualify for exclusion under this subdivision. 84.4 Sec. 16. Minnesota Statutes 1996, section 273.11, is 84.5 amended by adding a subdivision to read: 84.6 Subd. 19. [VALUATION EXCLUSION FOR IMPROVEMENTS TO CERTAIN 84.7 BUSINESS PROPERTY.] Property classified under section 273.13, 84.8 subdivision 24, which is eligible for the preferred class rate 84.9 on the market value up to $150,000, shall qualify for a 84.10 valuation exclusion for assessment purposes, provided all of the 84.11 following conditions are met: 84.12 (1) the building must be at least 50 years old at the time 84.13 of the improvement or damaged by the 1997 floods; 84.14 (2) the building must be located in a city or town with a 84.15 population of 10,000 or less that is located outside the 84.16 seven-county metropolitan area, as defined in section 473.121, 84.17 subdivision 2; 84.18 (3) the total estimated market value of the land and 84.19 buildings must be $100,000 or less prior to the improvement and 84.20 prior to the damage caused by the 1997 floods; 84.21 (4) the current year's estimated market value of the 84.22 property must be equal to or less than the property's estimated 84.23 market value in each of the two previous years' assessments; 84.24 (5) a building permit must have been issued prior to the 84.25 commencement of the improvement, or if the building is located 84.26 in a city or town which does not have a building permit process, 84.27 the property owner must notify the assessor prior to the 84.28 commencement of the improvement; 84.29 (6) the property, including its improvements, has received 84.30 no public assistance, grants or financing; and 84.31 (7) the property is not receiving a property tax abatement 84.32 under section 469.1813. 84.33 The assessor shall estimate the market value of the 84.34 building in the assessment year immediately following the year 84.35 that (1) the building permit was taken out, or (2) the taxpayer 84.36 notified the assessor that an improvement was to be made. If 85.1 the estimated market value of the building has increased over 85.2 the prior year's assessment, the assessor shall note the amount 85.3 of the increase on the property's record, and that amount shall 85.4 be subtracted from the value of the property in each year for 85.5 five years after the improvement has been made, at which time an 85.6 amount equal to 20 percent of the excluded value shall be added 85.7 back in each of the five subsequent assessment years. 85.8 For any property, there can be no more than two 85.9 improvements qualifying for exclusion under this subdivision. 85.10 The maximum amount of value that can be excluded from any 85.11 property under this subdivision is $50,000. 85.12 The assessor shall require an application, including 85.13 documentation of the age of the building from the owner, if 85.14 unknown by the assessor. Applications must be received prior to 85.15 July 1 of any year in order to be effective for taxes payable in 85.16 the following year. 85.17 For purposes of this subdivision, "population" has the same 85.18 meaning given in section 477A.011, subdivision 3. 85.19 Sec. 17. Minnesota Statutes 1996, section 273.121, is 85.20 amended to read: 85.21 273.121 [VALUATION OF REAL PROPERTY, NOTICE.] 85.22 Any county assessor or city assessor having the powers of a 85.23 county assessor, valuing or classifying taxable real property 85.24 shall in each year notify those persons whose property is to be 85.25 assessed or reclassified that year if the person's address is 85.26 known to the assessor, otherwise the occupant of the property. 85.27 The notice shall be in writing and shall be sent by ordinary 85.28 mail at least ten days before the meeting of the local board of 85.29 review or equalization under section 274.01 or the review 85.30 process established under section 274.13, subdivision 1c. It 85.31 shall contain: (1) the market value, (2) the limited market 85.32 value under section 273.11, subdivision 1a, (3) the qualifying 85.33 amount of any improvements under section 273.11, subdivision 16, 85.34 (4) the market value subject to taxation after subtracting the 85.35 amount of any qualifying improvements, (5) the new 85.36 classification, (6) a note that if the property is homestead and 86.1 at least 35 years old, improvements made to the property may be 86.2 eligible for a valuation exclusion under section 273.11, 86.3 subdivision 16, (7) the assessor's office address, and (8) the 86.4 dates, places, and times set for the meetings of the local board 86.5 of review or equalization, the review process established under 86.6 section 274.13, subdivision 1c, and the county board of 86.7 equalization. If the assessment roll is not complete, the 86.8 notice shall be sent by ordinary mail at least ten days prior to 86.9 the date on which the board of review has adjourned. The 86.10 assessor shall attach to the assessment roll a statement that 86.11 the notices required by this section have been mailed. Any 86.12 assessor who is not provided sufficient funds from the 86.13 assessor's governing body to provide such notices, may make 86.14 application to the commissioner of revenue to finance such 86.15 notices. The commissioner of revenue shall conduct an 86.16 investigation and, if satisfied that the assessor does not have 86.17 the necessary funds, issue a certification to the commissioner 86.18 of finance of the amount necessary to provide such notices. The 86.19 commissioner of finance shall issue a warrant for such amount 86.20 and shall deduct such amount from any state payment to such 86.21 county or municipality. The necessary funds to make such 86.22 payments are hereby appropriated. Failure to receive the notice 86.23 shall in no way affect the validity of the assessment, the 86.24 resulting tax, the procedures of any board of review or 86.25 equalization, or the enforcement of delinquent taxes by 86.26 statutory means. 86.27 Sec. 18. Minnesota Statutes 1996, section 273.124, 86.28 subdivision 1, is amended to read: 86.29 Subdivision 1. [GENERAL RULE.] (a) Residential real estate 86.30 that is occupied and used for the purposes of a homestead by its 86.31 owner, who must be a Minnesota resident, is a residential 86.32 homestead. 86.33 Agricultural land, as defined in section 273.13, 86.34 subdivision 23, that is occupied and used as a homestead by its 86.35 owner, who must be a Minnesota resident, is an agricultural 86.36 homestead. 87.1 Dates for establishment of a homestead and homestead 87.2 treatment provided to particular types of property are as 87.3 provided in this section. 87.4 Property of a trustee, beneficiary, or grantor of a trust 87.5 is not disqualified from receiving homestead benefits if the 87.6 homestead requirements under this chapter are satisfied. 87.7 The assessor shall require proof, as provided in 87.8 subdivision 13, of the facts upon which classification as a 87.9 homestead may be determined. Notwithstanding any other law, the 87.10 assessor may at any time require a homestead application to be 87.11 filed in order to verify that any property classified as a 87.12 homestead continues to be eligible for homestead status. 87.13 Notwithstanding any other law to the contrary, the department of 87.14 revenue may, upon request from an assessor, verify whether an 87.15 individual who is requesting or receiving homestead 87.16 classification has filed a Minnesota income tax return as a 87.17 resident for the most recent taxable year for which the 87.18 information is available. 87.19 When there is a name change or a transfer of homestead 87.20 property, the assessor may reclassify the property in the next 87.21 assessment unless a homestead application is filed to verify 87.22 that the property continues to qualify for homestead 87.23 classification. 87.24 (b) For purposes of this section, homestead property shall 87.25 include property which is used for purposes of the homestead but 87.26 is separated from the homestead by a road, street, lot, 87.27 waterway, or other similar intervening property. The term "used 87.28 for purposes of the homestead" shall include but not be limited 87.29 to uses for gardens, garages, or other outbuildings commonly 87.30 associated with a homestead, but shall not include vacant land 87.31 held primarily for future development. In order to receive 87.32 homestead treatment for the noncontiguous property, the owner 87.33 shall apply for it to the assessor by July 1 of the year when 87.34 the treatment is initially sought. After initial qualification 87.35 for the homestead treatment, additional applications for 87.36 subsequent years are not required. 88.1 (c) Residential real estate that is occupied and used for 88.2 purposes of a homestead by a relative of the owner is a 88.3 homestead but only to the extent of the homestead treatment that 88.4 would be provided if the related owner occupied the property. 88.5 For purposes of this paragraph and paragraph(f)(g), "relative" 88.6 means a parent, stepparent, child, stepchild, grandparent, 88.7 grandchild, brother, sister, uncle, or aunt. This relationship 88.8 may be by blood or marriage. Property that has been classified 88.9 as seasonal recreational residential property at any time during 88.10 which it has been owned by the current owner or spouse of the 88.11 current owner will not be reclassified as a homestead unless it 88.12 is occupied as a homestead by the owner; this prohibition also 88.13 applies to property that, in the absence of this paragraph, 88.14 would have been classified as seasonal recreational residential 88.15 property at the time when the residence was constructed. 88.16 Neither the related occupant nor the owner of the property may 88.17 claim a property tax refund under chapter 290A for a homestead 88.18 occupied by a relative. In the case of a residence located on 88.19 agricultural land, only the house, garage, and immediately 88.20 surrounding one acre of land shall be classified as a homestead 88.21 under this paragraph, except as provided in paragraph (d). 88.22 (d) Agricultural property that is occupied and used for 88.23 purposes of a homestead by a relative of the owner, is a 88.24 homestead, only to the extent of the homestead treatment that 88.25 would be provided if the related owner occupied the property, 88.26 and only if all of the following criteria are met: 88.27 (1) the relative who is occupying the agricultural property 88.28 is a son, daughter, father, or mother of the owner of the 88.29 agricultural property or a son or daughter of the spouse of the 88.30 owner of the agricultural property, 88.31 (2) the owner of the agricultural property must be a 88.32 Minnesota resident, 88.33 (3) the owner of the agricultural property must not receive 88.34 homestead treatment on any other agricultural property in 88.35 Minnesota, and 88.36 (4) the owner of the agricultural property is limited to 89.1 only one agricultural homestead per family under this paragraph. 89.2 Neither the related occupant nor the owner of the property 89.3 may claim a property tax refund under chapter 290A for a 89.4 homestead occupied by a relative qualifying under this 89.5 paragraph. For purposes of this paragraph, "agricultural 89.6 property" means the house, garage, other farm buildings and 89.7 structures, and agricultural land. 89.8 Application must be made to the assessor by the owner of 89.9 the agricultural property to receive homestead benefits under 89.10 this paragraph. The assessor may require the necessary proof 89.11 that the requirements under this paragraph have been met. 89.12 (e) In the case of property owned by a property owner who 89.13 is married, the assessor must not deny homestead treatment in 89.14 whole or in part if only one of the spouses occupies the 89.15 property and the other spouse is absent due to: (1) marriage 89.16 dissolution proceedings, (2) legal separation, (3) employment or 89.17 self-employment in another location, or (4)residence in a89.18nursing home or boarding care facility, or (5)other personal 89.19 circumstances causing the spouses to live separately, not 89.20 including an intent to obtain two homestead classifications for 89.21 property tax purposes. To qualify under clause (3), the 89.22 spouse's place of employment or self-employment must be at least 89.23 50 miles distant from the other spouse's place of employment, 89.24 and the homesteads must be at least 50 miles distant from each 89.25 other. Homestead treatment, in whole or in part, shall not be 89.26 denied to the owner's spouse who previously occupied the 89.27 residence with the owner if the absence of the owner is due to 89.28 one of the exceptions provided in this paragraph. 89.29 (f) The assessor must not deny homestead treatment in whole 89.30 or in part if: 89.31 (1) in the case of a property owner who is not married, the 89.32 owner is absent due to residence in a nursing home or boarding 89.33 care facility and the property is not otherwise occupied; or 89.34 (2) in the case of a property owner who is married, the 89.35 owner or the owner's spouse or both are absent due to residence 89.36 in a nursing home or boarding care facility and the property is 90.1 not occupied or is occupied only by the owner's spouse. 90.2 (g) If an individual is purchasing property with the intent 90.3 of claiming it as a homestead and is required by the terms of 90.4 the financing agreement to have a relative shown on the deed as 90.5 a coowner, the assessor shall allow a full homestead 90.6 classification. This provision only applies to first-time 90.7 purchasers, whether married or single, or to a person who had 90.8 previously been married and is purchasing as a single individual 90.9 for the first time. The application for homestead benefits must 90.10 be on a form prescribed by the commissioner and must contain the 90.11 data necessary for the assessor to determine if full homestead 90.12 benefits are warranted. 90.13 Sec. 19. Minnesota Statutes 1996, section 273.13, 90.14 subdivision 23, is amended to read: 90.15 Subd. 23. [CLASS 2.] (a) Class 2a property is agricultural 90.16 land including any improvements that is homesteaded. The market 90.17 value of the house and garage and immediately surrounding one 90.18 acre of land has the same class rates as class 1a property under 90.19 subdivision 22. The value of the remaining land including 90.20 improvements up to $115,000 has a net class rate of .45 percent 90.21 of market value and a gross class rate of 1.75 percent of market 90.22 value. The remaining value of class 2a property over $115,000 90.23 of market value that does not exceed 320 acres has a net class 90.24 rate of one percent of market value, and a gross class rate of 90.25 2.25 percent of market value. The remaining property over the 90.26 $115,000 market value in excess of 320 acres has a class rate of 90.271.51.4 percent of market value, and a gross class rate of 2.25 90.28 percent of market value. 90.29 (b) Class 2b property is (1) real estate, rural in 90.30 character and used exclusively for growing trees for timber, 90.31 lumber, and wood and wood products; (2) real estate that is not 90.32 improved with a structure and is used exclusively for growing 90.33 trees for timber, lumber, and wood and wood products, if the 90.34 owner has participated or is participating in a cost-sharing 90.35 program for afforestation, reforestation, or timber stand 90.36 improvement on that particular property, administered or 91.1 coordinated by the commissioner of natural resources; (3) real 91.2 estate that is nonhomestead agricultural land; or (4) a landing 91.3 area or public access area of a privately owned public use 91.4 airport. Class 2b property has a net class rate of1.51.4 91.5 percent of market value, and a gross class rate of 2.25 percent 91.6 of market value. 91.7 (c) Agricultural land as used in this section means 91.8 contiguous acreage of ten acres or more,primarilyused during 91.9 the preceding year for agricultural purposes.Agricultural use91.10may include"Agricultural purposes" as used in this section 91.11 means the raising or cultivation of agricultural products or 91.12 enrollment in the Reinvest in Minnesota program under sections 91.13 103F.501 to 103F.535 or the federal Conservation Reserve Program 91.14 as contained in Public Law Number 99-198. Contiguous acreage on 91.15 the same parcel, or contiguous acreage on an immediately 91.16 adjacent parcel under the same ownership, may also qualify as 91.17 agricultural land, but only if it is pasture, timber, waste, 91.18 unusable wild land,andor land included in state or federal 91.19 farmor conservationprograms."Agricultural purposes" as used91.20in this section means the raising or cultivation of agricultural91.21products. Land enrolled in the Reinvest in Minnesota program91.22under sections 103F.505 to 103F.531 or the federal Conservation91.23Reserve Program as contained in Public Law Number 99-198, and91.24consisting of a minimum of ten contiguous acres, shall be91.25classified as agricultural.Agricultural classification for 91.26 property shall be determinedwith respect to the use of the91.27whole parcel,excluding the house, garage, and immediately 91.28 surrounding one acre of land, and shall not be based upon the 91.29 market value of any residential structures on the parcel or 91.30 contiguous parcels under the same ownership. 91.31 (d) Real estate, excluding the house, garage, and 91.32 immediately surrounding one acre of land, of less than ten acres 91.33 which is exclusively or intensively usedprincipallyfor raising 91.34 or cultivating agricultural products, shall be considered as 91.35 agricultural land, if it is not used primarily for residential91.36purposes. 92.1 Land shall be classified as agricultural even if all or a 92.2 portion of the agricultural use of that property is the leasing 92.3 to, or use by another person for agricultural purposes. 92.4 Classification under this subdivision is not determinative 92.5 for qualifying under section 273.111. 92.6 The property classification under this section supersedes, 92.7 for property tax purposes only, any locally administered 92.8 agricultural policies or land use restrictions that define 92.9 minimum or maximum farm acreage. 92.10 (e) The term "agricultural products" as used in this 92.11 subdivision includes production for sale of: 92.12 (1) livestock, livestock products, dairy animals, dairy 92.13 products, poultry and poultry products, fur-bearing animals, 92.14 horticultural and nursery stock described in sections 18.44 to 92.15 18.61, fruit of all kinds, vegetables, forage, grains, bees, and 92.16 apiary products by the owner; 92.17 (2) fish bred for sale and consumption if the fish breeding 92.18 occurs on land zoned for agricultural use; 92.19 (3) the commercial boarding of horses if the boarding is 92.20 done in conjunction with raising or cultivating agricultural 92.21 products as defined in clause (1); 92.22 (4) property which is owned and operated by nonprofit 92.23 organizations used for equestrian activities, excluding racing; 92.24 and 92.25 (5) game birds and waterfowl bred and raised for use on a 92.26 shooting preserve licensed under section 97A.115. 92.27 (f) If a parcel used for agricultural purposes is also used 92.28 for commercial or industrial purposes, including but not limited 92.29 to: 92.30 (1) wholesale and retail sales; 92.31 (2) processing of raw agricultural products or other goods; 92.32 (3) warehousing or storage of processed goods; and 92.33 (4) office facilities for the support of the activities 92.34 enumerated in clauses (1), (2), and (3), 92.35 the assessor shall classify the part of the parcel used for 92.36 agricultural purposes as class 1b, 2a, or 2b, whichever is 93.1 appropriate, and the remainder in the class appropriate to its 93.2 use. The grading, sorting, and packaging of raw agricultural 93.3 products for first sale is considered an agricultural purpose. 93.4 A greenhouse or other building where horticultural or nursery 93.5 products are grown that is also used for the conduct of retail 93.6 sales must be classified as agricultural if it is primarily used 93.7 for the growing of horticultural or nursery products from seed, 93.8 cuttings, or roots and occasionally as a showroom for the retail 93.9 sale of those products. Use of a greenhouse or building only 93.10 for the display of already grown horticultural or nursery 93.11 products does not qualify as an agricultural purpose. 93.12 The assessor shall determine and list separately on the 93.13 records the market value of the homestead dwelling and the one 93.14 acre of land on which that dwelling is located. If any farm 93.15 buildings or structures are located on this homesteaded acre of 93.16 land, their market value shall not be included in this separate 93.17 determination. 93.18 (g) To qualify for classification under paragraph (b), 93.19 clause (4), a privately owned public use airport must be 93.20 licensed as a public airport under section 360.018. For 93.21 purposes of paragraph (b), clause (4), "landing area" means that 93.22 part of a privately owned public use airport properly cleared, 93.23 regularly maintained, and made available to the public for use 93.24 by aircraft and includes runways, taxiways, aprons, and sites 93.25 upon which are situated landing or navigational aids. A landing 93.26 area also includes land underlying both the primary surface and 93.27 the approach surfaces that comply with all of the following: 93.28 (i) the land is properly cleared and regularly maintained 93.29 for the primary purposes of the landing, taking off, and taxiing 93.30 of aircraft; but that portion of the land that contains 93.31 facilities for servicing, repair, or maintenance of aircraft is 93.32 not included as a landing area; 93.33 (ii) the land is part of the airport property; and 93.34 (iii) the land is not used for commercial or residential 93.35 purposes. 93.36 The land contained in a landing area under paragraph (b), clause 94.1 (4), must be described and certified by the commissioner of 94.2 transportation. The certification is effective until it is 94.3 modified, or until the airport or landing area no longer meets 94.4 the requirements of paragraph (b), clause (4). For purposes of 94.5 paragraph (b), clause (4), "public access area" means property 94.6 used as an aircraft parking ramp, apron, or storage hangar, or 94.7 an arrival and departure building in connection with the airport. 94.8 (h) A structure is classified as an agricultural building 94.9 if all of the following criteria are met: 94.10 (1) the structure is located on property that is classified 94.11 as agricultural property under this subdivision; 94.12 (2) the structure is occupied exclusively by seasonal farm 94.13 workers during the time when they work on that farm, and the 94.14 occupants are not charged rent for the privilege of occupying 94.15 the property; 94.16 (3) the structure meets all applicable health and safety 94.17 requirements for the appropriate season; and 94.18 (4) the structure is not salable as residential property 94.19 because it does not comply with local ordinances relating to 94.20 location in relation to streets or roads. 94.21 Sec. 20. Minnesota Statutes 1996, section 273.13, is 94.22 amended by adding a subdivision to read: 94.23 Subd. 25a. [ELDERLY ASSISTED LIVING FACILITY 94.24 PROPERTY.] "Elderly assisted living facility property" means 94.25 residential real estate containing more than one unit held for 94.26 use by the tenants or lessees as a residence for periods of 30 94.27 days or more, along with community rooms, lounges, activity 94.28 rooms, and related facilities, designed to meet the housing, 94.29 health, and financial security needs of the elderly. The real 94.30 estate may be owned by an individual, partnership, limited 94.31 partnership, for-profit corporation or nonprofit corporation 94.32 exempt from federal income taxation under United States Code, 94.33 title 26, section 501(c)(3) or related sections. 94.34 An admission or initiation fee may be required of tenants. 94.35 Monthly charges may include charges for the residential unit, 94.36 meals, housekeeping, utilities, social programs, a health care 95.1 alert system, or any combination of them. On-site health care 95.2 may be provided by in-house staff or an outside health care 95.3 provider. 95.4 The assessor shall classify elderly assisted living 95.5 facility property, depending upon the property's ownership, 95.6 occupancy, and use. The applicable class rates apply based on 95.7 its classification. If a skilled care nursing home facility is 95.8 located on the same parcel as an elderly assisted living 95.9 facility, the portion of the property devoted to the elderly 95.10 assisted living facility shall be classified under this 95.11 subdivision. 95.12 Sec. 21. [273.1651] [TAXATION AND FORFEITURE OF STOCKPILED 95.13 METALLIC MINERALS MATERIAL.] 95.14 Subdivision 1. [DEFINITION.] "Stockpiled metallic minerals 95.15 material" for purposes of this section, means surface 95.16 overburden, rock, lean ore, tailings, or other material that has 95.17 been removed from the ground and deposited elsewhere on the 95.18 surface in the process of iron ore, taconite, or other metallic 95.19 minerals mining, or in the process of beneficiation. Stockpiled 95.20 metallic minerals material does not include processed metallic 95.21 minerals concentrates in the form of pellets, chips, briquettes, 95.22 fines, or other form which have been prepared for or are in the 95.23 process of shipment. 95.24 Subd. 2. [PURPOSE.] The purpose of this section is to 95.25 clarify the ownership of stockpiled metallic minerals material 95.26 in this state. Depending on the intent of the person who 95.27 extracted the material from the ground, stockpiled metallic 95.28 minerals material may or may not be owned separately and apart 95.29 from the fee title to the surface of the real property. The 95.30 legislature finds that the uncertainty of ownership of 95.31 stockpiled metallic minerals material located on real property 95.32 that becomes tax forfeited has created a burden on the public 95.33 owner of the surface of the real property and an impediment to 95.34 productive management or use of a public resource. 95.35 Subd. 3. [TAXATION AND FORFEITURE.] From and after the 95.36 effective date of this section, for purposes of taxation, the 96.1 definition of "real property," as contained in section 272.03, 96.2 subdivision 1, includes stockpiled metallic minerals material. 96.3 Nothing in this subdivision shall be construed to subject 96.4 stockpiled metallic minerals material to the general property 96.5 tax when the stockpiled metallic minerals material is exempt 96.6 from the general property tax pursuant to section 298.015 or 96.7 298.25. If the surface of the real property forfeits for 96.8 delinquent taxes, stockpiled metallic minerals material located 96.9 on the real property forfeits with the surface of the property. 96.10 Subd. 4. [PRIOR FORFEITURE.] Stockpiled metallic minerals 96.11 material located on real property that forfeited prior to the 96.12 effective date of this section or forfeits due to a judgment for 96.13 delinquent taxes issued prior to the effective date of this 96.14 section shall be assessed and taxed as real property. The tax 96.15 applies only to stockpiled metallic minerals material located on 96.16 real property that remains in the ownership of the state or a 96.17 political subdivision of the state. The tax shall be based on 96.18 the market value of the rental of the property for storage of 96.19 stockpiled metallic minerals material. 96.20 Subd. 5. [EXCEPTIONS; TAX LAWS.] (a) The tax imposed 96.21 pursuant to this section shall not be imposed on the following: 96.22 (1) stockpiled metallic minerals material valued and taxed 96.23 under other laws relating to the taxation of minerals, gas, 96.24 coal, oil, or other similar interests; 96.25 (2) stockpiled metallic minerals material that is exempt 96.26 from taxation pursuant to constitutional or related statutory 96.27 provisions; or 96.28 (3) stockpiled metallic minerals material that is owned by 96.29 the state. 96.30 (b) All laws for the enforcement of taxes on real property 96.31 shall apply to the tax imposed pursuant to this section on 96.32 stockpiled metallic minerals material. 96.33 Subd. 6. [FEE OWNER.] For purposes of section 276.041, the 96.34 owner of stockpiled metallic minerals material is a fee owner. 96.35 Sec. 22. Minnesota Statutes 1996, section 273.18, is 96.36 amended to read: 97.1 273.18 [LISTING, VALUATION, AND ASSESSMENT OF EXEMPT 97.2 PROPERTY BY COUNTY AUDITORS.] 97.3 (a) In every sixth year after the year 1926, the county 97.4 auditor shall enter, in a separate place in the real estate 97.5 assessment books, the description of each tract of real property 97.6 exempt by law from taxation, with the name of the owner, if 97.7 known, and the assessor shall value and assess the same in the 97.8 same manner that other real property is valued and assessed, and 97.9 shall designate in each case the purpose for which the property 97.10 is used. 97.11 (b) For purposes of the apportionment of fire state aid 97.12 under section 69.021, subdivision 7, the county auditor shall 97.13 include on the abstract of assessment of exempt real property 97.14 filed under this section, the total number of acres of all 97.15 natural resources lands for which in lieu payments are made 97.16 under sections 477A.11 to 477A.14. The assessor shall estimate 97.17 its market value, provided that if the assessor is not able to 97.18 estimate the market value of the land on a per parcel basis, the 97.19 assessor shall furnish the commissioner of revenue with an 97.20 estimate of the average value per acre of this land within the 97.21 county. 97.22 Sec. 23. Minnesota Statutes 1996, section 274.01, is 97.23 amended to read: 97.24 274.01 [BOARD OF REVIEW.] 97.25 Subdivision 1. [ORDINARY BOARD; MEETINGS, DEADLINES, 97.26 GRIEVANCES.] (a) The town board of a town, or the council or 97.27 other governing body of a city, is the board of review 97.28 except (1) in cities whose charters provide for a board of 97.29 equalization or (2) in any city or town that has transferred its 97.30 local board of review power and duties to the county board as 97.31 provided in subdivision 3. The county assessor shall fix a day 97.32 and time when the board or the board of equalization shall meet 97.33 in the assessment districts of the county. On or before 97.34 February 15 of each year the assessor shall give written notice 97.35 of the time to the city or town clerk. Notwithstanding the 97.36 provisions of any charter to the contrary, the meetings must be 98.1 held between April 1 and May 31 each year. The clerk shall give 98.2 published and posted notice of the meeting at least ten days 98.3 before the date of the meeting. 98.4 If in any county, at least 25 percent of the total net tax 98.5 capacity of a city or town is noncommercial seasonal residential 98.6 recreational property classified under section 273.13, 98.7 subdivision 25, the county must hold two countywide 98.8 informational meetings on Saturdays. The meetings will allow 98.9 noncommercial seasonal residential recreational taxpayers to 98.10 discuss their property valuation with the appropriate assessment 98.11 staff. These Saturday informational meetings must be scheduled 98.12 to allow the owner of the noncommercial seasonal residential 98.13 recreational property the opportunity to attend one of the 98.14 meetings prior to the scheduled board of review for their city 98.15 or town. The Saturday meeting dates must be contained on the 98.16 notice of valuation of real property under section 273.121. 98.17 The board shall meet at the office of the clerk to review 98.18 the assessment and classification of property in the town or 98.19 city. No changes in valuation or classification which are 98.20 intended to correct errors in judgment by the county assessor 98.21 may be made by the county assessor after the board of reviewor98.22the county board of equalization has adjournedin those cities 98.23 or towns that hold a local board of review; however, corrections 98.24 of errors that are merely clerical in nature or changes that 98.25 extend homestead treatment to property are permitted after 98.26 adjournment until the tax extension date for that assessment 98.27 year. The changes must be fully documented and maintained in 98.28 the assessor's office and must be available for review by any 98.29 person. A copy of the changes made during this period in those 98.30 cities or towns that hold a local board of review must be sent 98.31 to the county board no later than December 31 of the assessment 98.32 year. 98.33 (b) The board shall determine whether the taxable property 98.34 in the town or city has been properly placed on the list and 98.35 properly valued by the assessor. If real or personal property 98.36 has been omitted, the board shall place it on the list with its 99.1 market value, and correct the assessment so that each tract or 99.2 lot of real property, and each article, parcel, or class of 99.3 personal property, is entered on the assessment list at its 99.4 market value. No assessment of the property of any person may 99.5 be raised unless the person has been duly notified of the intent 99.6 of the board to do so. On application of any person feeling 99.7 aggrieved, the board shall review the assessment or 99.8 classification, or both, and correct it as appears just. 99.9 (c) A local board of review may reduce assessments upon 99.10 petition of the taxpayer but the total reductions must not 99.11 reduce the aggregate assessment made by the county assessor by 99.12 more than one percent. If the total reductions would lower the 99.13 aggregate assessments made by the county assessor by more than 99.14 one percent, none of the adjustments may be made. The assessor 99.15 shall correct any clerical errors or double assessments 99.16 discovered by the board of review without regard to the one 99.17 percent limitation. 99.18 (d) A majority of the members may act at the meeting, and 99.19 adjourn from day to day until they finish hearing the cases 99.20 presented. The assessor shall attend, with the assessment books 99.21 and papers, and take part in the proceedings, but must not 99.22 vote. The county assessor, or an assistant delegated by the 99.23 county assessor shall attend the meetings. The board shall list 99.24 separately, on a form appended to the assessment book, all 99.25 omitted property added to the list by the board and all items of 99.26 property increased or decreased, with the market value of each 99.27 item of property, added or changed by the board, placed opposite 99.28 the item. The county assessor shall enter all changes made by 99.29 the board in the assessment book. 99.30 (e) Except as provided in subdivision 3, if a person fails 99.31 to appear in person, by counsel, or by written communication 99.32 before the board after being duly notified of the board's intent 99.33 to raise the assessment of the property, or if a person feeling 99.34 aggrieved by an assessment or classification fails to apply for 99.35 a review of the assessment or classification, the person may not 99.36 appear before the county board of equalization for a review of 100.1 the assessment or classification. This paragraph does not apply 100.2 if an assessment was made after the board meeting, as provided 100.3 in section 273.01, or if the person can establish not having 100.4 received notice of market value at least five days before the 100.5 local board of review meeting. 100.6 (f) The board of review or the board of equalization must 100.7 complete its work and adjourn within 20 days from the time of 100.8 convening stated in the notice of the clerk, unless a longer 100.9 period is approved by the commissioner of revenue. No action 100.10 taken after that date is valid. All complaints about an 100.11 assessment or classification made after the meeting of the board 100.12 must be heard and determined by the county board of 100.13 equalization. A nonresident may, at any time, before the 100.14 meeting of the board of review file written objections to an 100.15 assessment or classification with the county assessor. The 100.16 objections must be presented to the board of review at its 100.17 meeting by the county assessor for its consideration. 100.18 Subd. 2. [SPECIAL BOARD; DUTIES DELEGATED.] The governing 100.19 body of a city, including a city whose charter provides for a 100.20 board of equalization, may appoint a special board of review. 100.21 The city may delegate to the special board of review all of the 100.22 powers and duties in subdivision 1. The special board of review 100.23 shall serve at the direction and discretion of the appointing 100.24 body, subject to the restrictions imposed by law. The 100.25 appointing body shall determine the number of members of the 100.26 board, the compensation and expenses to be paid, and the term of 100.27 office of each member. At least one member of the special board 100.28 of review must be an appraiser, realtor, or other person 100.29 familiar with property valuations in the assessment district. 100.30 Subd. 3. [LOCAL BOARD DUTIES TRANSFERRED TO COUNTY.] The 100.31 town board of any town or the governing body of any home rule 100.32 charter or statutory city may transfer its powers and duties 100.33 under subdivision 1 to the county board, and no longer perform 100.34 the function of a local board. Before the town board or the 100.35 governing body of a city transfers the powers and duties to the 100.36 county board, the town board or city's governing body shall give 101.1 public notice of the meeting at which the proposal for transfer 101.2 is to be considered. The public notice shall follow the 101.3 procedure contained in section 471.705, subdivision 1c, 101.4 paragraph (b). A transfer of duties as permitted under this 101.5 subdivision must be communicated to the county assessor, in 101.6 writing, before December 1 of any year to be effective for the 101.7 following year's assessment. This transfer of duties to the 101.8 county may either be permanent or for a specified number of 101.9 years, provided that the transfer cannot be for less than three 101.10 years. Its length must be stated in writing. A town or city 101.11 may renew its option to transfer. The option to transfer duties 101.12 under this subdivision is only available to a town or city whose 101.13 assessment is done by the county. 101.14 Sec. 24. Minnesota Statutes 1996, section 274.13, is 101.15 amended by adding a subdivision to read: 101.16 Subd. 1b. [ASSESSMENT CHANGES.] No changes in valuation or 101.17 classification that are intended to correct errors in judgment 101.18 by the county assessor may be made by the county assessor after 101.19 the county board of equalization has adjourned; however, 101.20 corrections of errors that are merely clerical in nature or 101.21 changes that extend homestead treatment to property are 101.22 permitted after adjournment until the tax extension date for 101.23 that assessment year. The changes must be fully documented and 101.24 maintained in the assessor's office and must be available for 101.25 review by any person. 101.26 Sec. 25. Minnesota Statutes 1996, section 274.13, is 101.27 amended by adding a subdivision to read: 101.28 Subd. 1c. [ALTERNATIVE REVIEW OPTION.] The county shall 101.29 notify taxpayers whose town or city elected to transfer its 101.30 powers and duties under section 274.01 to the county. Prior to 101.31 the time of the county board of equalization, the county shall 101.32 make available to those taxpayers a procedure for a review of 101.33 its assessments, including, but not limited to, open book 101.34 meetings. This alternative review process shall take place in 101.35 April and May. 101.36 Sec. 26. Minnesota Statutes 1996, section 281.13, is 102.1 amended to read: 102.2 281.13 [NOTICE OF EXPIRATION OF REDEMPTION.] 102.3 Every person holding a tax certificate after expiration of 102.4 three years, or the redemption period specified in section 102.5 281.17 if shorter, after the date of the tax sale under which 102.6 the same was issued, may present such certificate to the county 102.7 auditor; and thereupon the auditor shall prepare, under the 102.8 auditor's hand and official seal, a notice, directed to the 102.9 person or persons in whose name such lands are assessed, 102.10 specifying the description thereof, the amount for which the 102.11 same was sold, the amount required to redeem the same, exclusive 102.12 of the costs to accrue upon such notice, and the time when the 102.13 redemption period will expire. If, at the time when any tax 102.14 certificate is so presented, such lands are assessed in the name 102.15 of the holder of the certificate, such notice shall be directed 102.16 also to the person or persons in whose name title in fee of such 102.17 land appears of record in the office of the county recorder. 102.18 The auditor shall deliver such notice to the party applying 102.19 therefor, who shall deliver it to the sheriff of the proper 102.20 county or any other person not less than 18 years of age for 102.21 service. Within 20 days after receiving it, the sheriff or 102.22 other person serving the notice shall serve such notice upon the 102.23 persons to whom it is directed, if to be found in thesheriff's102.24 county, in the manner prescribed for serving a summons in a 102.25 civil action; if not so found, then upon the person in 102.26 possession of the land, and make return thereof to the auditor. 102.27 In the case of land held in joint tenancy the notice shall be 102.28 served upon each joint tenant. If one or more of the persons to 102.29 whom the notice is directed cannot be found in the county, and 102.30 there is no one in possession of the land, of each of which 102.31 facts the return of the sheriff or other person serving the 102.32 notice so specifying shall be prima facie evidence, service 102.33 shall be made upon those persons that can be found and service 102.34 shall also be made by two weeks' published notice, proof of 102.35 which publication shall be filed with the auditor. 102.36 When the records in the office of the county recorder show 103.1 that any lot or tract of land is encumbered by an unsatisfied 103.2 mortgage or other lien, and show the post office address of the 103.3 mortgagee or lienee, or if the same has been assigned, the post 103.4 office address of the assignee, the person holding such tax 103.5 certificate shall serve a copy of such notice upon such 103.6 mortgagee, lienee, or assignee by certified mail addressed to 103.7 such mortgagee, lienee, or assignee at the post office address 103.8 of the mortgagee, lienee, or assignee as disclosed by the 103.9 records in the office of the county recorder, at least 60 days 103.10 prior to the time when the redemption period will expire. 103.11 The notice herein provided for shall be sufficient if 103.12 substantially in the following form: 103.13 "NOTICE OF EXPIRATION OF REDEMPTION 103.14 Office of the County Auditor 103.15 County of ......................., State of Minnesota. 103.16 To .............................. 103.17 You are hereby notified that the following described piece 103.18 or parcel of land, situated in the county of 103.19 ......................., and State of Minnesota, and known and 103.20 described as follows: ......... 103.21 ............................................................ 103.22 .........., is now assessed in your name; that on the 103.23 ........................ day of May, ....................., at 103.24 the sale of land pursuant to the real estate tax judgment, duly 103.25 given and made in and by the district court in and for said 103.26 county of ......................................, on the 103.27 ................................. day of March, .............., 103.28 in proceedings to enforce the payment of taxes delinquent upon 103.29 real estate for the year .............. for said county of 103.30 ........... ......................., the above described piece 103.31 or parcel of land was sold for the sum of $............., and 103.32 the amount required to redeem such piece or parcel of land from 103.33 such sale, exclusive of the cost to accrue upon this notice, is 103.34 the sum of $............, and interest at the rate of 103.35 ............... percent per annum from said 103.36 ............................. day of ......................, 104.1 ..................., to the day such redemption is made, and 104.2 that the tax certificate has been presented to me by the holder 104.3 thereof, and the time for redemption of such piece or parcel of 104.4 land from such sale will expire 60 days after the service of 104.5 this notice and proof thereof has been filed in my office. 104.6 Witness my hand and official seal this 104.7 ............................ day of ................, 104.8 ................. 104.9 ................. 104.10 (OFFICIAL SEAL) 104.11 County Auditor of 104.12 ...................... County, Minnesota." 104.13 Sec. 27. Minnesota Statutes 1996, section 281.23, 104.14 subdivision 6, is amended to read: 104.15 Subd. 6. [SERVICEBY SHERIFFOF NOTICE.] Forthwith after 104.16 the commencement of such publication the county auditor shall 104.17 deliver to the sheriff of the county or any other person not 104.18 less than 18 years of age a sufficient number of copies of such 104.19 notice of expiration of redemption for service upon the persons 104.20 in possession of all parcels of such land as are actually 104.21 occupied. Within 30 days after receipt thereof, the sheriff or 104.22 other person serving the notice shall make such investigation as 104.23 may be necessary to ascertain whether the parcels covered by 104.24 such notice are actually occupied or not, and shall serve a copy 104.25 of such notice of expiration of redemption upon the person in 104.26 possession of each parcel found to be so occupied, in the manner 104.27 prescribed for serving summons in a civil action. The 104.28 sheriff or other person serving the notice shall make prompt 104.29 return to the auditor as to all notices so served and as to all 104.30 parcels found vacant and unoccupied. Such return shall be made 104.31 upon a copy of such notice and shall be prima facie evidence of 104.32 the facts therein stated. 104.33Unless compensation for such services is otherwise provided104.34by lawIf the notice is served by the sheriff, the sheriff shall 104.35 receive from the county, in addition to other compensation 104.36 prescribed by law, such fees and mileage for service on persons 105.1 in possession as are prescribed by law for such service in other 105.2 cases, and shall also receive such compensation for making 105.3 investigation and return as to vacant and unoccupied lands as 105.4 the county board may fix, subject to appeal to the district 105.5 court as in case of other claims against the county. As to 105.6 either service upon persons in possession or return as to vacant 105.7 lands, the sheriff shall charge mileage only for one trip if the 105.8 occupants of more than two tracts are served simultaneously, and 105.9 in such case mileage shall be prorated and charged equitably 105.10 against all such owners. 105.11 Sec. 28. Minnesota Statutes 1996, section 281.273, is 105.12 amended to read: 105.13 281.273 [EXPIRATION OF TIME OF REDEMPTION ON LANDS OWNED BY 105.14 PERSONS IN MILITARY SERVICE.] 105.15 When a county sheriff or other person serves notice of 105.16 expiration of the time for redemption of any parcel of real 105.17 property from delinquent taxes upon any occupant of the real 105.18 property, the sheriff or other person shall inquire of the 105.19 occupant and otherwise as the sheriff or other person may deem 105.20 proper whether the real property was owned and occupied for 105.21 dwelling, professional, business or agricultural purposes by a 105.22 person in the military service of the United States as defined 105.23 in the Soldiers' and Sailors' Civil Relief Act of 1940, as 105.24 amended, or the person's dependents at the commencement of the 105.25 period of military service. On finding that the real property 105.26 is so owned, the sheriff or other person shall make a 105.27 certificate to the county auditor, setting forth the description 105.28 of the property, the name of the owner, the particulars of the 105.29 owner's military service so far as ascertained or claimed, and 105.30 the names and addresses of the persons of whom the sheriff or 105.31 other person made inquiry. The certificate shall be filed with 105.32 the county auditor and shall be prima facie evidence of the 105.33 facts stated. If the real property described in the certificate 105.34 becomes forfeited to the state, it shall be withheld from sale 105.35 or conveyance as tax-forfeited property in accordance with and 105.36 subject to the provisions of the Soldiers' and Sailors' Civil 106.1 Relief Act of 1940, as amended, except that the requirement in 106.2 United States Code, title 50, section 560, that the property be 106.3 occupied by the dependent or employee of the person in military 106.4 service does not apply. The period of withholding from sale or 106.5 conveyance shall be no longer than is required by that act. If 106.6 upon further investigation the sheriff or other person finds at 106.7 any time that the certificate is erroneous in any particular, 106.8 the sheriff or other person shall file a supplemental 106.9 certificate referring to the matter in error and stating the 106.10 facts as found. The supplemental certificate shall be prima 106.11 facie evidence of the facts stated, and shall supersede any 106.12 prior certificate so far as in conflict therewith. If it 106.13 appears from the supplemental certificate that the owner of the 106.14 real property affected is not entitled to have the same withheld 106.15 from sale under the Soldiers' and Sailors' Civil Relief Act of 106.16 1940, as amended, the property shall not be withheld from sale 106.17 further under this section. 106.18 Sec. 29. Minnesota Statutes 1996, section 281.276, is 106.19 amended to read: 106.20 281.276 [RETURNOF SHERIFFMUST SHOW MILITARY SERVICE.] 106.21 Unless asheriff'scertificate showing military service is 106.22 filed as required by section 281.273, it shall be presumed that 106.23 the owner of the property described in the notice of expiration 106.24 of the time for redemption from delinquent taxes is not in such 106.25 service. The filing of thesheriff'scertificate provided for 106.26 in section 281.273 shall not affect the forfeiture of the real 106.27 property described in such notice of the expiration of the time 106.28 for redemption from delinquent taxes or their proceedings 106.29 relating thereto except as expressly herein provided. 106.30 Sec. 30. Minnesota Statutes 1996, section 282.01, 106.31 subdivision 8, is amended to read: 106.32 Subd. 8. [MINERALS IN TAX-FORFEITED LAND AND TAX-FORFEITED 106.33 STOCKPILED METALLIC MINERALS MATERIAL SUBJECT TO MINING; 106.34 PROCEDURES.] In case the commissioner of natural resources shall 106.35 notify the county auditor of any county in writing that the 106.36 minerals in any tax-forfeited land or tax-forfeited stockpiled 107.1 metallic minerals material located on tax-forfeited land in such 107.2 county have been designated as a mining unit as provided by law, 107.3 or that such minerals or tax-forfeited stockpiled metallic 107.4 minerals material are subject to a mining permit or lease issued 107.5 therefor as provided by law, the surface of such tax-forfeited 107.6 land shall be subject to disposal and use for mining purposes 107.7 pursuant to such designation, permit, or lease, and shall be 107.8 withheld from sale or lease by the county auditor until the 107.9 commissioner shall notify the county auditor that such land has 107.10 been removed from the list of mining units or that any mining 107.11 permit or lease theretofore issued thereon is no longer in 107.12 force; provided, that the surface of such tax-forfeited land may 107.13 be leased by the county auditor as provided by law, with the 107.14 written approval of the commissioner, subject to disposal and 107.15 use for mining purposes as herein provided and to any special 107.16 conditions relating thereto that the commissioner may prescribe, 107.17 also subject to cancellation for mining purposes on three months 107.18 written notice from the commissioner to the county auditor. 107.19 Sec. 31. Minnesota Statutes 1996, section 282.04, 107.20 subdivision 1, is amended to read: 107.21 Subdivision 1. [TIMBER SALES; LAND LEASES AND USES.] (a) 107.22 The county auditor may sell timber upon any tract that may be 107.23 approved by the natural resources commissioner. Such sale of 107.24 timber shall be made for cash at not less than the appraised 107.25 value determined by the county board to the highest bidder after 107.26 not less than one week's published notice in an official paper 107.27 within the county. Any timber offered at such public sale and 107.28 not sold may thereafter be sold at private sale by the county 107.29 auditor at not less than the appraised value thereof, until such 107.30 time as the county board may withdraw such timber from sale. 107.31 The appraised value of the timber and the forestry practices to 107.32 be followed in the cutting of said timber shall be approved by 107.33 the commissioner of natural resources. 107.34 (b) Payment of the full sale price of all timber sold on 107.35 tax-forfeited lands shall be made in cash at the time of the 107.36 timber sale, except in the case of oral or sealed bid auction 108.1 sales, the down payment shall be no less than 15 percent of the 108.2 appraised value, and the balance shall be paid prior to entry. 108.3 In the case of auction sales that are partitioned and sold as a 108.4 single sale with predetermined cutting blocks, the down payment 108.5 shall be no less than 15 percent of the appraised price of the 108.6 entire timber sale which may be held until the satisfactory 108.7 completion of the sale or applied in whole or in part to the 108.8 final cutting block. The value of each separate block must be 108.9 paid in full before any cutting may begin in that block. With 108.10 the permission of the county administrator the purchaser may 108.11 enter unpaid blocks and cut necessary timber incidental to 108.12 developing logging roads as may be needed to log other blocks 108.13 provided that no timber may be removed from an unpaid block 108.14 until separately scaled and paid for. 108.15 (c) The county board may require final settlement on the 108.16 basis of a scale of cut products. Any parcels of land from 108.17 which timber is to be sold by scale of cut products shall be so 108.18 designated in the published notice of sale above mentioned, in 108.19 which case the notice shall contain a description of such 108.20 parcels, a statement of the estimated quantity of each species 108.21 of timber thereon and the appraised price of each specie of 108.22 timber for 1,000 feet, per cord or per piece, as the case may 108.23 be. In such cases any bids offered over and above the appraised 108.24 prices shall be by percentage, the percent bid to be added to 108.25 the appraised price of each of the different species of timber 108.26 advertised on the land. The purchaser of timber from such 108.27 parcels shall pay in cash at the time of sale at the rate bid 108.28 for all of the timber shown in the notice of sale as estimated 108.29 to be standing on the land, and in addition shall pay at the 108.30 same rate for any additional amounts which the final scale shows 108.31 to have been cut or was available for cutting on the land at the 108.32 time of sale under the terms of such sale. Where the final 108.33 scale of cut products shows that less timber was cut or was 108.34 available for cutting under terms of such sale than was 108.35 originally paid for, the excess payment shall be refunded from 108.36 the forfeited tax sale fund upon the claim of the purchaser, to 109.1 be audited and allowed by the county board as in case of other 109.2 claims against the county. No timber, except hardwood pulpwood, 109.3 may be removed from such parcels of land or other designated 109.4 landings until scaled by a person or persons designated by the 109.5 county board and approved by the commissioner of natural 109.6 resources. Landings other than the parcel of land from which 109.7 timber is cut may be designated for scaling by the county board 109.8 by written agreement with the purchaser of the timber. The 109.9 county board may, by written agreement with the purchaser and 109.10 with a consumer designated by the purchaser when the timber is 109.11 sold by the county auditor, and with the approval of the 109.12 commissioner of natural resources, accept the consumer's scale 109.13 of cut products delivered at the consumer's landing. No timber 109.14 shall be removed until fully paid for in cash. Small amounts of 109.15 timber not exceeding $3,000 in appraised valuation may be sold 109.16 for not less than the full appraised value at private sale to 109.17 individual persons without first publishing notice of sale or 109.18 calling for bids, provided that in case of such sale involving a 109.19 total appraised value of more than $200 the sale shall be made 109.20 subject to final settlement on the basis of a scale of cut 109.21 products in the manner above provided and not more than two such 109.22 sales, directly or indirectly to any individual shall be in 109.23 effect at one time. 109.24 (d) As directed by the county board, the county auditor may 109.25 lease tax-forfeited land to individuals, corporations or 109.26 organized subdivisions of the state at public or private vendue, 109.27 and at such prices and under such terms as the county board may 109.28 prescribe, for use as cottage and camp sites and for 109.29 agricultural purposes and for the purpose of taking and removing 109.30 of hay, stumpage, sand, gravel, clay, rock, marl, and black dirt 109.31 therefrom, and for garden sites and other temporary uses 109.32 provided that no leases shall be for a period to exceed ten 109.33 years; provided, further that any leases involving a 109.34 consideration of more than $1,500 per year, except to an 109.35 organized subdivision of the state shall first be offered at 109.36 public sale in the manner provided herein for sale of timber. 110.1 Upon the sale of any such leased land, it shall remain subject 110.2 to the lease for not to exceed one year from the beginning of 110.3 the term of the lease. Any rent paid by the lessee for the 110.4 portion of the term cut off by such cancellation shall be 110.5 refunded from the forfeited tax sale fund upon the claim of the 110.6 lessee, to be audited and allowed by the county board as in case 110.7 of other claims against the county. 110.8 (e) As directed by the county board, the county auditor may 110.9 lease tax-forfeited land to individuals, corporations, or 110.10 organized subdivisions of the state at public or private vendue, 110.11 at such prices and under such terms as the county board may 110.12 prescribe, for the purpose of taking and removing for use for 110.13 road construction and other purposes tax-forfeited stockpiled 110.14 iron-bearing material. The county auditor must determine that 110.15 the material is needed and suitable for use in the construction 110.16 or maintenance of a road, tailings basin, settling basin, dike, 110.17 dam, bank fill, or other works on public or private property, 110.18 and that the use would be in the best interests of the public. 110.19 No lease shall exceed ten years. The use of a stockpile for 110.20 these purposes must first be approved by the commissioner of 110.21 natural resources. The request shall be deemed approved unless 110.22 the requesting county is notified to the contrary by the 110.23 commissioner of natural resources within six months after 110.24 receipt of a request for approval for use of a stockpile. Once 110.25 use of a stockpile has been approved, the county may continue to 110.26 lease it for these purposes until approval is withdrawn by the 110.27 commissioner of natural resources. 110.28 (f) The county auditor, with the approval of the county 110.29 board is authorized to grant permits, licenses, and leases to 110.30 tax-forfeited lands for the depositing of stripping, lean ores, 110.31 tailings, or waste products from mines or ore milling plants, 110.32 upon such conditions and for such consideration and for such 110.33 period of time, not exceeding 15 years, as the county board may 110.34 determine; said permits, licenses, or leases to be subject to 110.35 approval by the commissioner of natural resources. 110.36 (g) Any person who removes any timber from tax-forfeited 111.1 land before said timber has been scaled and fully paid for as 111.2 provided in this subdivision is guilty of a misdemeanor. 111.3 (h) The county auditor may, with the approval of the county 111.4 board, and without first offering at public sale, grant leases, 111.5 for a term not exceeding 25 years, for the removal of peat from 111.6 tax-forfeited lands upon such terms and conditions as the county 111.7 board may prescribe. Any lease for the removal of peat from 111.8 tax-forfeited lands must first be reviewed and approved by the 111.9 commissioner of natural resources if the lease covers 320 or 111.10 more acres. No lease for the removal of peat shall be made by 111.11 the county auditor pursuant to this section without first 111.12 holding a public hearing on the auditor's intention to lease. 111.13 One printed notice in a legal newspaper in the county at least 111.14 ten days before the hearing, and posted notice in the courthouse 111.15 at least 20 days before the hearing shall be given of the 111.16 hearing. 111.17 Sec. 32. Minnesota Statutes 1996, section 469.012, 111.18 subdivision 1, is amended to read: 111.19 Subdivision 1. [SCHEDULE OF POWERS.] An authority shall be 111.20 a public body corporate and politic and shall have all the 111.21 powers necessary or convenient to carry out the purposes of 111.22 sections 469.001 to 469.047, except that the power to levy and 111.23 collect taxes or special assessments is limited to the power 111.24 provided in sections 469.027 to 469.033. Its powers include the 111.25 following powers in addition to others granted in sections 111.26 469.001 to 469.047: 111.27 (1) to sue and be sued; to have a seal, which shall be 111.28 judicially noticed, and to alter it; to have perpetual 111.29 succession; and to make, amend, and repeal rules consistent with 111.30 sections 469.001 to 469.047; 111.31 (2) to employ an executive director, technical experts, and 111.32 officers, agents, and employees, permanent and temporary, that 111.33 it requires, and determine their qualifications, duties, and 111.34 compensation; for legal services it requires, to call upon the 111.35 chief law officer of the city or to employ its own counsel and 111.36 legal staff; so far as practicable, to use the services of local 112.1 public bodies in its area of operation, provided that those 112.2 local public bodies, if requested, shall make the services 112.3 available; 112.4 (3) to delegate to one or more of its agents or employees 112.5 the powers or duties it deems proper; 112.6 (4) within its area of operation, to undertake, prepare, 112.7 carry out, and operate projects and to provide for the 112.8 construction, reconstruction, improvement, extension, 112.9 alteration, or repair of any project or part thereof; 112.10 (5) subject to the provisions of section 469.026, to give, 112.11 sell, transfer, convey, or otherwise dispose of real or personal 112.12 property or any interest therein and to execute leases, deeds, 112.13 conveyances, negotiable instruments, purchase agreements, and 112.14 other contracts or instruments, and take action that is 112.15 necessary or convenient to carry out the purposes of these 112.16 sections; 112.17 (6) within its area of operation, to acquire real or 112.18 personal property or any interest therein by gifts, grant, 112.19 purchase, exchange, lease, transfer, bequest, devise, or 112.20 otherwise, and by the exercise of the power of eminent domain, 112.21 in the manner provided by chapter 117, to acquire real property 112.22 which it may deem necessary for its purposes, after the adoption 112.23 by it of a resolution declaring that the acquisition of the real 112.24 property is necessary to eliminate one or more of the conditions 112.25 found to exist in the resolution adopted pursuant to section 112.26 469.003 or to provide decent, safe, and sanitary housing for 112.27 persons of low and moderate income, or is necessary to carry out 112.28 a redevelopment project. Real property needed or convenient for 112.29 a project may be acquired by the authority for the project by 112.30 condemnation pursuant to this section. This includes any 112.31 property devoted to a public use, whether or not held in trust, 112.32 notwithstanding that the property may have been previously 112.33 acquired by condemnation or is owned by a public utility 112.34 corporation, because the public use in conformity with the 112.35 provisions of sections 469.001 to 469.047 shall be deemed a 112.36 superior public use. Property devoted to a public use may be so 113.1 acquired only if the governing body of the municipality has 113.2 approved its acquisition by the authority. An award of 113.3 compensation shall not be increased by reason of any increase in 113.4 the value of the real property caused by the assembly, clearance 113.5 or reconstruction, or proposed assembly, clearance or 113.6 reconstruction for the purposes of sections 469.001 to 469.047 113.7 of the real property in an area; 113.8 (7) within its area of operation, and without the adoption 113.9 of an urban renewal plan, to acquire, by all means as set forth 113.10 in clause (6) but without the adoption of a resolution provided 113.11 for in clause (6), real property, and to demolish, remove, 113.12 rehabilitate, or reconstruct the buildings and improvements or 113.13 construct new buildings and improvements thereon, or to so 113.14 provide through other means as set forth in Laws 1974, chapter 113.15 228, or to grade, fill, and construct foundations or otherwise 113.16 prepare the site for improvements. The authority may dispose of 113.17 the property pursuant to section 469.029, provided that the 113.18 provisions of section 469.029 requiring conformance to an urban 113.19 renewal plan shall not apply. The authority may finance these 113.20 activities by means of the redevelopment project fund or by 113.21 means of tax increments or tax increment bonds or by the methods 113.22 of financing provided for in section 469.033 or by means of 113.23 contributions from the municipality provided for in section 113.24 469.041, clause (9), or by any combination of those means. Real 113.25 property with buildings or improvements thereon shall only be 113.26 acquired under this clause when the buildings or improvements 113.27 are substandard. The exercise of the power of eminent domain 113.28 under this clause shall be limited to real property which 113.29 contains, or has contained within the three years immediately 113.30 preceding the exercise of the power of eminent domain and is 113.31 currently vacant, buildings and improvements which are vacated 113.32 and substandard. Notwithstanding the prior sentence, in cities 113.33 of the first class the exercise of the power of eminent domain 113.34 under this clause shall be limited to real property which 113.35 contains, or has contained within the three years immediately 113.36 preceding the exercise of the power of eminent domain, buildings 114.1 and improvements which are substandard. For the purpose of this 114.2 clause, substandard buildings or improvements mean hazardous 114.3 buildings as defined in section 463.15, subdivision 3, or 114.4 buildings or improvements that are dilapidated or obsolescent, 114.5 faultily designed, lack adequate ventilation, light, or sanitary 114.6 facilities, or any combination of these or other factors that 114.7 are detrimental to the safety or health of the community; 114.8 (8) within its area of operation, to determine the level of 114.9 income constituting low or moderate family income. The 114.10 authority may establish various income levels for various family 114.11 sizes. In making its determination, the authority may consider 114.12 income levels that may be established by the Department of 114.13 Housing and Urban Development or a similar or successor federal 114.14 agency for the purpose of federal loan guarantees or subsidies 114.15 for persons of low or moderate income. The authority may use 114.16 that determination as a basis for the maximum amount of income 114.17 for admissions to housing development projects or housing 114.18 projects owned or operated by it; 114.19 (9) to provide in federally assisted projects any 114.20 relocation payments and assistance necessary to comply with the 114.21 requirements of the Federal Uniform Relocation Assistance and 114.22 Real Property Acquisition Policies Act of 1970, and any 114.23 amendments or supplements thereto; 114.24 (10) to make an agreement with the governing body or bodies 114.25 creating the authority which provides exemption from all ad 114.26 valorem real and personal property taxes levied or imposed by 114.27 thestate, city, county, or other political subdivisions, for114.28which the authority shall make payments in lieu of taxes to the114.29state, city, county, or other political subdivisions as provided114.30in section 469.040body or bodies creating the authority. The 114.31 governing body shall agree on behalf of all the applicable 114.32 governing bodies affected that local cooperation as required by 114.33 the federal government shall be provided by the local governing 114.34 body or bodies in whose jurisdiction the project is to be 114.35 located, at no cost or at no greater cost than the same public 114.36 services and facilities furnished to other residents; 115.1 (11) to cooperate with or act as agent for the federal 115.2 government, the state or any state public body, or any agency or 115.3 instrumentality of the foregoing, in carrying out any of the 115.4 provisions of sections 469.001 to 469.047 or of any other 115.5 related federal, state, or local legislation; and upon the 115.6 consent of the governing body of the city to purchase, lease, 115.7 manage, or otherwise take over any housing project already owned 115.8 and operated by the federal government; 115.9 (12) to make plans for carrying out a program of voluntary 115.10 repair and rehabilitation of buildings and improvements, and 115.11 plans for the enforcement of laws, codes, and regulations 115.12 relating to the use of land and the use and occupancy of 115.13 buildings and improvements, and to the compulsory repair, 115.14 rehabilitation, demolition, or removal of buildings and 115.15 improvements. The authority may develop, test, and report 115.16 methods and techniques, and carry out demonstrations and other 115.17 activities for the prevention and elimination of slums and 115.18 blight; 115.19 (13) to borrow money or other property and accept 115.20 contributions, grants, gifts, services, or other assistance from 115.21 the federal government, the state government, state public 115.22 bodies, or from any other public or private sources; 115.23 (14) to include in any contract for financial assistance 115.24 with the federal government any conditions that the federal 115.25 government may attach to its financial aid of a project, not 115.26 inconsistent with purposes of sections 469.001 to 469.047, 115.27 including obligating itself (which obligation shall be 115.28 specifically enforceable and not constitute a mortgage, 115.29 notwithstanding any other laws) to convey to the federal 115.30 government the project to which the contract relates upon the 115.31 occurrence of a substantial default with respect to the 115.32 covenants or conditions to which the authority is subject; to 115.33 provide in the contract that, in case of such conveyance, the 115.34 federal government may complete, operate, manage, lease, convey, 115.35 or otherwise deal with the project until the defaults are cured 115.36 if the federal government agrees in the contract to reconvey to 116.1 the authority the project as then constituted when the defaults 116.2 have been cured; 116.3 (15) to issue bonds for any of its corporate purposes and 116.4 to secure the bonds by mortgages upon property held or to be 116.5 held by it or by pledge of its revenues, including grants or 116.6 contributions; 116.7 (16) to invest any funds held in reserves or sinking funds, 116.8 or any funds not required for immediate disbursement, in 116.9 property or securities in which savings banks may legally invest 116.10 funds subject to their control or in the manner and subject to 116.11 the conditions provided in section 118A.04 for the deposit and 116.12 investment of public funds; 116.13 (17) within its area of operation, to determine where 116.14 blight exists or where there is unsafe, unsanitary, or 116.15 overcrowded housing; 116.16 (18) to carry out studies of the housing and redevelopment 116.17 needs within its area of operation and of the meeting of those 116.18 needs. This includes study of data on population and family 116.19 groups and their distribution according to income groups, the 116.20 amount and quality of available housing and its distribution 116.21 according to rentals and sales prices, employment, wages, 116.22 desirable patterns for land use and community growth, and other 116.23 factors affecting the local housing and redevelopment needs and 116.24 the meeting of those needs; to make the results of those studies 116.25 and analyses available to the public and to building, housing, 116.26 and supply industries; 116.27 (19) if a local public body does not have a planning agency 116.28 or the planning agency has not produced a comprehensive or 116.29 general community development plan, to make or cause to be made 116.30 a plan to be used as a guide in the more detailed planning of 116.31 housing and redevelopment areas; 116.32 (20) to lease or rent any dwellings, accommodations, lands, 116.33 buildings, structures, or facilities included in any project 116.34 and, subject to the limitations contained in sections 469.001 to 116.35 469.047 with respect to the rental of dwellings in housing 116.36 projects, to establish and revise the rents or charges therefor; 117.1 (21) to own, hold, and improve real or personal property 117.2 and to sell, lease, exchange, transfer, assign, pledge, or 117.3 dispose of any real or personal property or any interest 117.4 therein; 117.5 (22) to insure or provide for the insurance of any real or 117.6 personal property or operations of the authority against any 117.7 risks or hazards; 117.8 (23) to procure or agree to the procurement of government 117.9 insurance or guarantees of the payment of any bonds or parts 117.10 thereof issued by an authority and to pay premiums on the 117.11 insurance; 117.12 (24) to make expenditures necessary to carry out the 117.13 purposes of sections 469.001 to 469.047; 117.14 (25) to enter into an agreement or agreements with any 117.15 state public body to provide informational service and 117.16 relocation assistance to families, individuals, business 117.17 concerns, and nonprofit organizations displaced or to be 117.18 displaced by the activities of any state public body; 117.19 (26) to compile and maintain a catalog of all vacant, open 117.20 and undeveloped land, or land which contains substandard 117.21 buildings and improvements as that term is defined in clause 117.22 (7), that is owned or controlled by the authority or by the 117.23 governing body within its area of operation and to compile and 117.24 maintain a catalog of all authority owned real property that is 117.25 in excess of the foreseeable needs of the authority, in order to 117.26 determine and recommend if the real property compiled in either 117.27 catalog is appropriate for disposal pursuant to the provisions 117.28 of section 469.029, subdivisions 9 and 10; 117.29 (27) to recommend to the city concerning the enforcement of 117.30 the applicable health, housing, building, fire prevention, and 117.31 housing maintenance code requirements as they relate to 117.32 residential dwelling structures that are being rehabilitated by 117.33 low- or moderate-income persons pursuant to section 469.029, 117.34 subdivision 9, for the period of time necessary to complete the 117.35 rehabilitation, as determined by the authority; 117.36 (28) to recommend to the city the initiation of municipal 118.1 powers, against certain real properties, relating to repair, 118.2 closing, condemnation, or demolition of unsafe, unsanitary, 118.3 hazardous, and unfit buildings, as provided in section 469.041, 118.4 clause (5); 118.5 (29) to sell, at private or public sale, at the price or 118.6 prices determined by the authority, any note, mortgage, lease, 118.7 sublease, lease purchase, or other instrument or obligation 118.8 evidencing or securing a loan made for the purpose of economic 118.9 development, job creation, redevelopment, or community 118.10 revitalization by a public agency to a business, for-profit or 118.11 nonprofit organization, or an individual; 118.12 (30) within its area of operation, to acquire and sell real 118.13 property that is benefited by federal housing assistance 118.14 payments, other rental subsidies, interest reduction payments, 118.15 or interest reduction contracts for the purpose of preserving 118.16 the affordability of low- and moderate-income multifamily 118.17 housing; 118.18 (31) to apply for, enter into contracts with the federal 118.19 government, administer, and carry out a section 8 program. 118.20 Authorization by the governing body creating the authority to 118.21 administer the program at the authority's initial application is 118.22 sufficient to authorize operation of the program in its area of 118.23 operation for which it was created without additional local 118.24 governing body approval. Approval by the governing body or 118.25 bodies creating the authority constitutes approval of a housing 118.26 program for purposes of any special or general law requiring 118.27 local approval of section 8 programs undertaken by city, county, 118.28 or multicounty authorities; and 118.29 (32) to secure a mortgage or loan for a rental housing 118.30 project by obtaining the appointment of receivers or assignments 118.31 of rents and profits under sections 559.17 and 576.01, except 118.32 that the limitation relating to the minimum amounts of the 118.33 original principal balances of mortgages specified in sections 118.34 559.17, subdivision 2, clause (2); and 576.01, subdivision 2, 118.35 does not apply. 118.36 Sec. 33. Minnesota Statutes 1996, section 469.033, 119.1 subdivision 6, is amended to read: 119.2 Subd. 6. [OPERATION AREA AS TAXING DISTRICT, SPECIAL TAX.] 119.3 All of the territory included within the area of operation of 119.4 any authority shall constitute a taxing district for the purpose 119.5 of levying and collecting special benefit taxes as provided in 119.6 this subdivision. All of the taxable property, both real and 119.7 personal, within that taxing district shall be deemed to be 119.8 benefited by projects to the extent of the special taxes levied 119.9 under this subdivision. Subject to the consent by resolution of 119.10 the governing body of the city in and for which it was created, 119.11 an authority may levy a tax upon all taxable property within 119.12 that taxing district. The tax shall be extended, spread, and 119.13 included with and as a part of the general taxes for state, 119.14 county, and municipal purposes by the county auditor, to be 119.15 collected and enforced therewith, together with the penalty, 119.16 interest, and costs. As the tax, including any penalties, 119.17 interest, and costs, is collected by the county treasurer it 119.18 shall be accumulated and kept in a separate fund to be known as 119.19 the "housing and redevelopment project fund." The money in the 119.20 fund shall be turned over to the authority at the same time and 119.21 in the same manner that the tax collections for the city are 119.22 turned over to the city, and shall be expended only for the 119.23 purposes of sections 469.001 to 469.047. It shall be paid out 119.24 upon vouchers signed by the chair of the authority or an 119.25 authorized representative. The amount of the levy shall be an 119.26 amount approved by the governing body of the city, but shall not 119.27 exceed0.01310.0144 percent of taxable market value.The119.28authority may levy an additional levy, not to exceed 0.0013119.29percent of taxable market value, to be used to defray costs of119.30providing informational service and relocation assistance as set119.31forth in section 469.012, subdivision 1.The authority shall 119.32 each year formulate and file a budget in accordance with the 119.33 budget procedure of the city in the same manner as required of 119.34 executive departments of the city or, if no budgets are required 119.35 to be filed, by August 1. The amount of the tax levy for the 119.36 following year shall be based on that budget. 120.1 Sec. 34. [469.1812] [DEFINITIONS.] 120.2 Subdivision 1. [SCOPE.] For purposes of sections 469.1812 120.3 to 469.1815, the following terms have the meanings given. 120.4 Subd. 2. [GOVERNING BODY.] "Governing body" means, for a 120.5 city, the city council; for a school district, the school board; 120.6 for a county, the county board; and for a town, the annual 120.7 meeting of the town. 120.8 Subd. 3. [MUNICIPALITY.] "Municipality" means a statutory 120.9 or home rule charter city or a town. 120.10 Subd. 4. [POLITICAL SUBDIVISION OR 120.11 SUBDIVISION.] "Political subdivision" or "subdivision" means a 120.12 statutory or home rule charter city, town, school district, or 120.13 county. 120.14 Sec. 35. [469.1813] [ABATEMENT AUTHORITY.] 120.15 Subdivision 1. [AUTHORITY.] The governing body of a 120.16 political subdivision may grant an abatement of the taxes 120.17 imposed by the political subdivision on a parcel of property, if: 120.18 (a) it expects the benefits to the political subdivision of 120.19 the proposed abatement agreement to at least equal the costs to 120.20 the political subdivision of the proposed agreement; and 120.21 (b) it finds that doing so is in the public interest 120.22 because it will: 120.23 (1) increase or preserve tax base; 120.24 (2) provide employment opportunities in the political 120.25 subdivision; 120.26 (3) provide or help acquire or construct public facilities; 120.27 (4) help redevelop or renew blighted areas; or 120.28 (5) help provide access to services for residents of the 120.29 political subdivision. 120.30 Subd. 2. [ABATEMENT RESOLUTION.] The governing body of a 120.31 political subdivision may grant an abatement only by adopting an 120.32 abatement resolution, specifying the terms of the abatement. 120.33 The resolution must also include a specific statement as to the 120.34 nature and extent of the public benefits which the governing 120.35 body expects to result from the agreement. The abatement may 120.36 reduce all or part of the property tax levied by the political 121.1 subdivision on the parcel. The political subdivision may limit 121.2 the abatement: 121.3 (1) to a specific dollar amount per year or in total; 121.4 (2) to the increase in property taxes resulting from 121.5 improvement of the property; 121.6 (3) to the increases in property taxes resulting from 121.7 increases in the market value or tax capacity of the property; 121.8 or 121.9 (4) in any other manner the governing body of the 121.10 subdivision determines is appropriate. 121.11 The political subdivision may not abate tax attributable to the 121.12 value of the land or the areawide tax under chapter 276A or 473F. 121.13 Subd. 3. [SCHOOL DISTRICT ABATEMENT 121.14 PROCEDURE.] Notwithstanding the amounts in subdivision 2, a 121.15 school district that grants an abatement under this section must 121.16 limit the abatement for any property to not more than an amount 121.17 equal to the product of: (1) the property's net tax capacity, 121.18 and (2) the difference between the district's total tax rate for 121.19 that year and one-half of the general education tax rate for 121.20 that year. An abatement granted under this section is not an 121.21 abatement for purposes of state aid or local levy under chapter 121.22 124. A school district may levy in the following year for the 121.23 total amount of any revenue foregone through the abatement 121.24 awarded under this subdivision. 121.25 Subd. 4. [PROPERTY LOCATED IN TAX INCREMENT FINANCING 121.26 DISTRICTS.] The governing body of a governmental subdivision may 121.27 not enter into a property tax abatement agreement under sections 121.28 469.1812 to 469.1815 if the property is located in a tax 121.29 increment financing district. 121.30 Subd. 5. [NOTICE AND PUBLIC HEARING.] (a) The governing 121.31 body of the political subdivision may approve an abatement under 121.32 sections 469.1812 to 469.1815 only after holding a public 121.33 hearing on the abatement. 121.34 (b) Notice of the hearing must be published in a newspaper 121.35 of general circulation in the political subdivision at least 121.36 once more than ten days but less than 30 days before the 122.1 hearing. The newspaper must be one of general interest and 122.2 readership in the community, and not one of limited subject 122.3 matter. The newspaper must be published at least once per 122.4 week. The notice must indicate that the governing body will 122.5 consider granting a property tax abatement, identify the 122.6 property or properties for which an abatement is under 122.7 consideration, and the total estimated amount of the abatement. 122.8 Subd. 6. [DURATION LIMIT.] (a) A political subdivision 122.9 other than a school district may grant an abatement for a period 122.10 no longer than ten years. The subdivision may specify in the 122.11 abatement resolution a shorter duration. If the resolution does 122.12 not specify a period of time, the abatement is for eight years. 122.13 If an abatement has been granted to a parcel of property and the 122.14 period of the abatement has expired, the political subdivision 122.15 that granted the abatement may not grant another abatement for 122.16 eight years after the expiration of the first abatement. This 122.17 prohibition does not apply to improvements added after and not 122.18 subject to the first abatement. 122.19 (b) A school district may grant an abatement for only one 122.20 year at a time. Once a school district has authorized an 122.21 abatement for a property, it may reauthorize the abatement in 122.22 any subsequent year for the next seven years, or nine years if 122.23 provided in the original abatement agreement. This prohibition 122.24 does not apply to improvements added after and not subject to 122.25 the original abatement agreement. 122.26 Subd. 7. [REVIEW AND MODIFICATION OF ABATEMENTS.] The 122.27 political subdivision may provide in the abatement resolution 122.28 that the abatement may not be modified or changed during its 122.29 term. If the abatement resolution does not provide that the 122.30 abatement may not be modified or changed, the governing body of 122.31 the political subdivision may review and modify the abatement 122.32 every second year after it was approved. 122.33 Subd. 8. [LIMITATION ON ABATEMENTS.] In any year, the 122.34 total amount of property taxes abated by a political subdivision 122.35 under this section may not exceed (1) five percent of the 122.36 current levy, or (2) $100,000, whichever is greater. 123.1 Sec. 36. [469.1814] [BONDING AUTHORITY.] 123.2 Subdivision 1. [AUTHORITY.] A political subdivision may 123.3 issue bonds or other obligations to provide an amount equal to 123.4 the sum of the abatements granted for a property under section 123.5 469.1813. The maximum principal amount of these bonds may not 123.6 exceed the estimated sum of the abatements for the property for 123.7 the years authorized. The bonds may be general obligations of 123.8 the political subdivision if the governing body of the political 123.9 subdivision elects to pledge the full faith and credit of the 123.10 subdivision in the resolution issuing the bonds. 123.11 Subd. 2. [BOND CODE APPLIES.] Chapter 475 applies to the 123.12 obligations authorized by this section, except bonds are 123.13 excluded from the calculation of the net debt limit. 123.14 Subd. 3. [MUNICIPAL ISSUE FOR COMBINED ABATEMENTS.] If two 123.15 or more political subdivisions decide to grant abatements for 123.16 the same property, the municipality in which the property is 123.17 located may issue bonds to provide an amount equal to the sum of 123.18 the abatements for each of the jurisdictions that agrees. The 123.19 governing body of each of the other jurisdictions must guarantee 123.20 and pledge to pay annually to the municipality the amount of the 123.21 abatement. This pledge and guarantee is a binding obligation of 123.22 the political subdivision and must be included in the abatement 123.23 resolution. 123.24 Subd. 4. [BONDED ABATEMENTS NOT SUBJECT TO REVIEW.] If 123.25 bonds are issued to provide advance payment of abatements under 123.26 this section, the amount of abatement is not subject to periodic 123.27 review by the political subdivision under section 469.1813, 123.28 subdivision 7. 123.29 Subd. 5. [USE OF PROCEEDS.] The proceeds of bonds issued 123.30 under this section may be used to (1) pay for public 123.31 improvements that benefit the property, (2) to acquire and 123.32 convey land or other property, as provided under this section, 123.33 (3) to reimburse the property owner for the cost of improvements 123.34 made to the property, or (4) to pay the costs of issuance of the 123.35 bonds. 123.36 Sec. 37. [469.1815] [ADMINISTRATIVE.] 124.1 Subdivision 1. [INCLUSION IN PROPOSED AND FINAL 124.2 LEVIES.] The political subdivision must add to its levy amount 124.3 for the current year under sections 275.065 and 275.07 the total 124.4 estimated amount of all current year abatements granted. The 124.5 tax amounts shown on the proposed notice under section 275.065, 124.6 subdivision 3, and on the property tax statement under section 124.7 276.04, subdivision 2, are the total amounts before the 124.8 reduction of any abatements that will be granted on the property. 124.9 Subd. 2. [PROPERTY TAXES; ABATEMENT PAYMENT.] The total 124.10 property taxes shall be levied on the property and shall be due 124.11 and payable to the county at the times provided under section 124.12 279.01. The political subdivision will pay the abatement to the 124.13 property owner, lessee, or a representative of the bondholders, 124.14 as provided by the abatement resolution. 124.15 Sec. 38. Minnesota Statutes 1996, section 477A.011, 124.16 subdivision 36, is amended to read: 124.17 Subd. 36. [CITY AID BASE.] (a) Except as provided in 124.18 paragraphs (b)and, (c), and (d), "city aid base" means, for 124.19 each city, the sum of the local government aid and equalization 124.20 aid it was originally certified to receive in calendar year 1993 124.21 under Minnesota Statutes 1992, section 477A.013, subdivisions 3 124.22 and 5, and the amount of disparity reduction aid it received in 124.23 calendar year 1993 under Minnesota Statutes 1992, section 124.24 273.1398, subdivision 3. 124.25 (b) For aids payable in 1996 and thereafter, a city that in 124.26 1992 or 1993 transferred an amount from governmental funds to 124.27 its sewer and water fund, which amount exceeded its net levy for 124.28 taxes payable in the year in which the transfer occurred, has a 124.29 "city aid base" equal to the sum of (i) its city aid base, as 124.30 calculated under paragraph (a), and (ii) one-half of the 124.31 difference between its city aid distribution under section 124.32 477A.013, subdivision 9, for aids payable in 1995 and its city 124.33 aid base for aids payable in 1995. 124.34 (c) The city aid base for any city with a population less 124.35 than 500 is increased by $40,000 for aids payable in calendar 124.36 year 1995 and thereafter, and the maximum amount of total aid it 125.1 may receive under section 477A.013, subdivision 9, paragraph 125.2 (c), is also increased by $40,000 for aids payable in calendar 125.3 year 1995 only, provided that: 125.4 (i) the average total tax capacity rate for taxes payable 125.5 in 1995 exceeds 200 percent; 125.6 (ii) the city portion of the tax capacity rate exceeds 100 125.7 percent; and 125.8 (iii) its city aid base is less than $60 per capita. 125.9 (d) The city aid base for a city is increased by $20,000 in 125.10 1998 and thereafter and the maximum amount of total aid it may 125.11 receive under section 477A.013, subdivision 9, paragraph (c), is 125.12 also increased by $20,000 in calendar year 1998 only, provided 125.13 that: 125.14 (i) the city has a population in 1994 of 2,500 or more; 125.15 (ii) the city is located in a county, outside of the 125.16 metropolitan area, which contains a city of the first class; 125.17 (iii) the city's net tax capacity used in calculating its 125.18 1996 aid under section 477A.013 is less than $400 per capita; 125.19 and 125.20 (iv) at least four percent of the total net tax capacity, 125.21 for taxes payable in 1996, of property located in the city is 125.22 classified as railroad property. 125.23 Sec. 39. Laws 1992, chapter 511, article 2, section 52, is 125.24 amended to read: 125.25 Sec. 52. [WATERSHED DISTRICT LEVIES.] 125.26 (a) The Nine Mile Creek watershed district, the 125.27 Riley-Purgatory Bluff Creek watershed district, the Minnehaha 125.28 Creek watershed district, the Coon Creek watershed district, and 125.29 the Lower Minnesota River watershed district may levy in 1992 125.30 and thereafter a tax not to exceed $200,000 on property within 125.31 the district for the administrative fund. The levy authorized 125.32 under this section is in lieu of section 103D.905, subdivision 125.33 3. The administrative fund shall be used for the purposes 125.34 contained in Minnesota Statutes, section 103D.905, subdivision 125.35 3. The board of managers shall make the levy for the 125.36 administrative fund in accordance with Minnesota Statutes, 126.1 section 103D.915. 126.2 (b) The Wild Rice watershed district may levy, for taxes 126.3 payable in 1993, 1994, 1995, 1996,and1997, 1998, 1999, 2000, 126.4 2001, and 2002, an ad valorem tax not to exceed $200,000 on 126.5 property within the district for the administrative fund. The 126.6 additional $75,000 above the amount authorized in Minnesota 126.7 Statutes, section 103D.905, subdivision 3, must be used for 126.8 costs incurred in connection with the development and 126.9 maintenance of cost-sharing projects with the United States Army 126.10 Corps of Engineers. The board of managers shall make the levy 126.11 for the administrative fund in accordance with Minnesota 126.12 Statutes, section 103D.915. 126.13 Sec. 40. [FLOODWOOD JOINT RECREATION BOARD TAX.] 126.14 Subdivision 1. [LEVY AUTHORIZATION.] Each year, the 126.15 Floodwood joint recreation board may levy a tax not to exceed 126.16 $25,000 on the value of property situated in the territory of 126.17 independent school district No. 698 in accordance with this 126.18 section. Property in territory in the school district may be 126.19 made subject to the tax permitted by this section by the 126.20 agreement of the governing body or town board of the city or 126.21 town where it is located. The agreement may be by resolution of 126.22 a governing body or town board or by a joint powers agreement 126.23 pursuant to Minnesota Statutes, section 471.59. If levied, the 126.24 tax is in addition to all other taxes on the property subject to 126.25 it permitted to be levied for park and recreation purposes by 126.26 the cities and towns other than for the support of the joint 126.27 recreation board. It shall be disregarded in the calculation of 126.28 all other mill rate or per capita tax levy limitations imposed 126.29 by law or charter upon them. A city or town may withdraw its 126.30 agreement to future taxes by notice to the recreation board and 126.31 the county auditor unless provided otherwise by a joint powers 126.32 agreement. The tax shall be collected by the applicable county 126.33 auditor and treasurer and paid directly to the Floodwood joint 126.34 recreation board. 126.35 Subd. 2. [LOCAL APPROVAL.] This section is effective in 126.36 the city of Floodwood, the towns of Arrowhead, Fine Lakes, 127.1 Floodwood, Halden, Van Buren, Cedar Valley, Prairie Lake, and 127.2 Unorganized Township 52-21 in St. Louis county, and Unorganized 127.3 Township 52-22 in Aitkin county the day after compliance with 127.4 Minnesota Statutes, section 645.021, subdivision 3, by the 127.5 governing body of each. This section is effective for each 127.6 city, town, and unorganized township regardless of the action of 127.7 the others. 127.8 Approval of this section is not agreement to be subject to 127.9 the tax permitted by it. Agreement to the tax must be by 127.10 separate action in accordance with subdivision 1. 127.11 Sec. 41. [SAUK RIVER WATERSHED DISTRICT.] 127.12 Subdivision 1. [LEVY AUTHORIZATION.] Notwithstanding 127.13 Minnesota Statutes, section 103D.905, subdivision 3, the Sauk 127.14 River watershed district may levy up to $150,000 for its 127.15 administrative fund for taxes levied in 1997, payable in 1998. 127.16 Subd. 2. [EFFECTIVE DATE.] This section is effective the 127.17 day following final enactment. 127.18 Sec. 42. [VIRGINIA AREA AMBULANCE DISTRICT.] 127.19 Subdivision 1. [AGREEMENT; POWERS; GENERAL 127.20 DESCRIPTION.] (a) The cities of Virginia, Mountain Iron, 127.21 Eveleth, Leonidas, Iron Junction, and Gilbert, and the towns of 127.22 Pike, Clinton, McDavitt, Colvin, Sandy, Cherry, Ellsburg, Wouri, 127.23 Lavell, Fayal, Cotton, and Embarrass, may by resolution of their 127.24 city councils and town boards establish the Virginia area 127.25 ambulance district. 127.26 (b) The St. Louis county board may by resolution provide 127.27 that property located in unorganized townships described in 127.28 clauses (1) to (7) may be included within the district: 127.29 (1) Township 61 North, Range 17 West; 127.30 (2) Township 59 North, Ranges 16 and 18 West; 127.31 (3) Township 56 North, Range 16 West; 127.32 (4) Township 60 North, Range 18 West; 127.33 (5) Township 55 North, Range 15; 127.34 (6) Township 56, Range 17; and 127.35 (7) Township 57, Range 16. 127.36 (c) The district shall make payments of the proceeds of the 128.1 tax authorized in this section to the city of Virginia, which 128.2 shall provide ambulance services throughout the district and may 128.3 exercise all the powers of the cities and towns that relate to 128.4 ambulance service anywhere within its territory. 128.5 (d) Any other contiguous town or home rule charter or 128.6 statutory city may join the district with the agreement of the 128.7 cities and towns that comprise the district at the time of its 128.8 application to join. Action to join the district may be taken 128.9 by the city council or town board of the city or town. 128.10 Subd. 2. [BOARD.] The district shall be governed by a 128.11 board composed of one member appointed by the city council or 128.12 town board of each city and town in the district. A district 128.13 board member may, but is not required to, be a member of a city 128.14 council or town board. Except as provided in this section, 128.15 members shall serve two-year terms ending the first Monday in 128.16 January and until their successors are appointed and qualified. 128.17 Of the members first appointed, as far as possible, the terms of 128.18 one-half shall expire on the first Monday in January in the 128.19 first year following appointment and one-half the first Monday 128.20 in January in the second year. The terms of those initially 128.21 appointed must be determined by lot. If an additional member is 128.22 added because an additional city or town joins the district, the 128.23 member's term must be fixed so that, as far as possible, the 128.24 terms of one-half of all the members expire on the same date. 128.25 Subd. 3. [TAX.] The district may impose a property tax on 128.26 real and personal property in the district in an amount 128.27 sufficient to discharge its operating expenses and debt payable 128.28 in each year, but not to exceed .0528 percent of the district's 128.29 taxable market value. The St. Louis county auditor shall 128.30 collect the tax and distribute it to the Virginia area ambulance 128.31 district. 128.32 Subd. 4. [EXPENDITURES.] The taxes collected under 128.33 subdivision 3 shall be used for licensed ambulance services and 128.34 first responders. Licensed ambulance services shall receive 80 128.35 percent of the available funds and first responders shall 128.36 receive 20 percent of the available funds. The amounts 129.1 allocated to first responders shall be used for education, 129.2 training, and reimbursement for their allowable expenses. Only 129.3 education and training that meets the recognized education and 129.4 training guidelines set by the emergency medical services 129.5 regulatory board under Minnesota Statutes, chapter 144E, shall 129.6 be reimbursable under this subdivision. 129.7 Subd. 5. [PUBLIC INDEBTEDNESS.] The district may incur 129.8 debt in the manner provided for a municipality by Minnesota 129.9 Statutes, chapter 475, when necessary to accomplish a duty 129.10 charged to it. 129.11 Subd. 6. [WITHDRAWAL.] Upon two years' notice, a city or 129.12 town may withdraw from the district. Its territory shall remain 129.13 subject to taxation for debt incurred prior to its withdrawal 129.14 under Minnesota Statutes, chapter 475. 129.15 Subd. 7. [EFFECTIVE DATE.] This section is effective (1) 129.16 in the cities of Virginia, Mountain Iron, Eveleth, Leonidas, 129.17 Iron Junction, and Gilbert, and the towns of Pike, Clinton, 129.18 McDavitt, Colvin, Sandy, Cherry, Ellsburg, Wouri, Lavell, Fayal, 129.19 Cotton, and Embarrass, the day after compliance with Minnesota 129.20 Statutes, section 645.021, subdivision 2, by the governing body 129.21 of each, and (2) for unorganized townships described in 129.22 subdivision 1, paragraph (b), clauses (1) to (7), the day after 129.23 compliance with Minnesota Statutes, section 645.021, subdivision 129.24 2, by the St. Louis county board, provided that the district 129.25 must be established by September 1, 2000. Any of the cities, 129.26 towns, and unorganized townships listed in subdivision 1 that do 129.27 not join the district initially may join the district after its 129.28 establishment. 129.29 Sec. 43. [BROOKLYN CENTER, RICHFIELD, AND ST. LOUIS PARK; 129.30 APARTMENT EXCLUSIONS.] 129.31 Subdivision 1. [IMPROVEMENTS MADE TO CERTAIN 129.32 APARTMENTS.] (a) Notwithstanding any other provisions to the 129.33 contrary, the market value of qualifying property located in the 129.34 city of Brooklyn Center, Richfield, or St. Louis Park shall not 129.35 be increased for assessment purposes under the conditions 129.36 provided in this subdivision. 130.1 (b) "Qualifying property" means property that meets all of 130.2 the following criteria: 130.3 (1) the building is at least 30 years old at the time of 130.4 the improvements; 130.5 (2) the building is residential real estate of four or more 130.6 units and is classified under Minnesota Statutes, section 130.7 273.13, subdivision 25, as class 4a, 4c, or 4d property; and 130.8 (3) the building has been improved after January 1, 1997, 130.9 and those total improvements exceed $5,000 per unit. 130.10 (c) A building permit must have been issued prior to the 130.11 commencement of the improvements. Only improvements to the 130.12 residential structure and garages qualify for the market value 130.13 freeze as provided in this subdivision. The assessor shall 130.14 require an application, including, if unknown by the assessor, 130.15 documentation of the age of the building from the owner. The 130.16 application may be filed subsequent to the date of the building 130.17 permit provided that the application is filed prior to the next 130.18 assessment date. 130.19 (d) If the property qualifies under this subdivision, the 130.20 assessor shall not increase that qualifying property's market 130.21 value for the five assessment years immediately following the 130.22 year in which the improvements were completed, at which time the 130.23 assessor shall determine the property's estimated market value, 130.24 and 20 percent of the increased market value over the base value 130.25 shall be added back in each of the next five subsequent 130.26 assessment years. The assessor may require from the owner any 130.27 documentation necessary to verify that the amount of 130.28 improvements exceed the $5,000 per unit minimum. Improvements 130.29 made subsequent to the initial improvements which allowed the 130.30 building to qualify shall also be disregarded by the assessor in 130.31 any determination of market value during the initial five-year 130.32 time period; provided, however, that beginning in the sixth year 130.33 when the increased market value is added back, the assessor's 130.34 estimate of market value shall include all improvements made in 130.35 the entire five-year time period. 130.36 Subd. 2. [SUNSET.] This section is effective beginning 131.1 with the 1998 assessment and ending with the 2000 assessment, 131.2 provided that any property that originally qualifies in that 131.3 time period will be allowed to receive the benefits provided 131.4 under that section for the full time period prescribed in that 131.5 section. 131.6 Subd. 3. [EFFECTIVE DATE.] This section is effective for 131.7 each of the cities of Brooklyn Center, Richfield, and St. Louis 131.8 Park upon compliance with Minnesota Statutes, section 645.021, 131.9 subdivision 3, by the governing body of that city. 131.10 Sec. 44. [ST. LOUIS COUNTY; UTILITY PERSONAL PROPERTY 131.11 EXEMPTION.] 131.12 (a) An electric generating facility with a capacity of 131.13 110,000 kilowatts located in St. Louis County whose operation is 131.14 integral to the development and operation of a new, adjacent 131.15 industrial park is exempt from property taxes on attached 131.16 machinery and other personal property for replacement equipment 131.17 and improvements installed after July 1, 1997. If the 131.18 industrial park is not built by July 1, 2001, this exemption 131.19 expires. 131.20 (b) The governing bodies of the county, city or town, and 131.21 school district must each approve by resolution the exemption of 131.22 the personal property under this section. The resolution shall 131.23 contain the number of years for which the exemption is granted. 131.24 Each of the governing bodies shall file a copy of the resolution 131.25 with the county auditor. The county auditor shall publish the 131.26 resolutions in newspapers of general circulation within the 131.27 county. The voters of the county may request a referendum on 131.28 the proposed exemption by filing a petition within 30 days after 131.29 the resolutions are published. The petition must be signed by 131.30 voters who reside in the county. The number of signatures must 131.31 equal at least five percent of the number of persons voting in 131.32 the county in the last general election. If such a petition is 131.33 timely filed, the resolutions are not effective until they have 131.34 been submitted to the voters residing in the county at a general 131.35 or special election and a majority of votes cast on the question 131.36 of approving the resolution are in the affirmative. The 132.1 commissioner of revenue shall prepare a suggested form of 132.2 question to be presented at the referendum. 132.3 (c) The exemption under this section is limited to a 132.4 maximum of five years, beginning with the assessment year 132.5 immediately following when the personal property is put in 132.6 operation and expires thereafter. 132.7 Sec. 45. [REPORT; ELDERLY ASSISTED LIVING CARE 132.8 FACILITIES.] 132.9 The department of revenue shall conduct a survey with all 132.10 county assessors of the tax status of all elderly assisted 132.11 living care facilities as defined in Minnesota Statutes, section 132.12 273.13, subdivision 25a, located in the state, and report to the 132.13 chairs of the house and senate tax committees by February 1, 132.14 1998, on its findings. The survey shall include, but not be 132.15 limited to, estimates of the amount of charitable contributions, 132.16 if any, for each elderly assisted living care facility and the 132.17 relative portion of those charitable contributions to the total 132.18 operating costs of the elderly assisted living care facility. 132.19 Sec. 46. [REPEALER.] 132.20 (a) Minnesota Statutes 1996, sections 270B.12, subdivision 132.21 11; 276.012; 290A.055; and 290A.26; and Laws 1995, chapter 264, 132.22 article 4, as amended by Laws 1996, chapter 471, article 3, are 132.23 repealed. Notwithstanding Minnesota Statutes, section 645.34, 132.24 the sections of statutes amended by the repealed Laws 1995, 132.25 chapter 264, article 4, as amended, remain in effect as if not 132.26 so amended. 132.27 (b) Minnesota Statutes 1996, section 469.181, is repealed. 132.28 Sec. 47. [EFFECTIVE DATE.] 132.29 Section 1 is effective for aids distributed in 1999 and 132.30 thereafter. 132.31 Sections 3 to 5, 7, 17, 23 to 25, 41, 45, and 46, paragraph 132.32 (a), are effective the day following final enactment. 132.33 Sections 8, 9 to 11, 18 and 19, and 33 to 37 are effective 132.34 for the 1997 assessment and thereafter, for taxes payable in 132.35 1998 and thereafter. 132.36 Section 12 is effective for the 1997 assessment and 133.1 thereafter, for taxes payable in 1998 and thereafter. 133.2 Notwithstanding Minnesota Statutes, section 273.112, application 133.3 for deferment and the notices of approval under section 12 for 133.4 the 1997 assessment must be filed with the county assessor by 133.5 August 1, 1997. 133.6 Section 14 is effective beginning with the 1997 assessment. 133.7 Section 15 is effective beginning with the 1997 assessment 133.8 and ending with the 2002 assessment, for qualifying improvements 133.9 made after January 2, 1993, to a residence that has been 133.10 relocated; provided, that any residence that originally 133.11 qualifies in that time period will be allowed to receive the 133.12 benefits provided under section 15 for the full ten-year time 133.13 period. In order to qualify for a market value exclusion under 133.14 Minnesota Statutes, section 273.11, subdivision 10, for the 1997 133.15 assessment for improvements made to a relocated residence, a 133.16 homeowner must notify the assessor by July 1, 1997. 133.17 Section 16 is effective for the 1998 assessment, taxes 133.18 payable in 1999 and thereafter, for improvements made after 133.19 January 2, 1997. 133.20 Section 20 is effective for taxes levied in 1997, payable 133.21 in 1998, only, provided that any elderly assisted living care 133.22 facility that is tax exempt for the taxes payable year 1997, 133.23 will remain tax exempt for the taxes payable year 1998, and any 133.24 elderly assisted living care facility that is taxable for the 133.25 taxes payable year 1997 will remain taxable for the taxes 133.26 payable year 1998. 133.27 Section 23 is effective for the abstracts of exempt real 133.28 property filed in 1998 and thereafter. 133.29 Section 33 is effective for agreements executed on or after 133.30 the day following final enactment. 133.31 Section 39 is effective for aids paid in 1998 and 133.32 thereafter. 133.33 Section 47, paragraph (b), is effective for property tax 133.34 deferrals granted after June 30, 1997. 133.35 ARTICLE 4 133.36 LEVY LIMITS 134.1 Section 1. [275.70] [LEVY LIMITATIONS; DEFINITIONS.] 134.2 Subdivision 1. [APPLICATION.] For the purposes of sections 134.3 275.70 to 275.74, the following terms shall have these meanings, 134.4 unless provided otherwise. 134.5 Subd. 2. [IMPLICIT PRICE DEFLATOR.] "Implicit price 134.6 deflator" means the implicit price deflator for government 134.7 purchases of goods and services for state and local governments 134.8 prepared by the bureau of economic analysis of the United States 134.9 Department of Commerce for the 12-month period ending in June of 134.10 the levy year. 134.11 Subd. 3. [LOCAL GOVERNMENTAL UNIT.] "Local governmental 134.12 unit" means a county, or a statutory or home rule charter city. 134.13 Subd. 4. [POPULATION AND HOUSEHOLD ESTIMATES.] "Population" 134.14 or "number of households" means the population or number of 134.15 households for the local governmental unit as established by the 134.16 last federal census, by a census taken under section 275.14, or 134.17 by an estimate made by the metropolitan council or by the state 134.18 demographer under section 4A.02, whichever is most recent as to 134.19 the stated date of the count or estimate up to and including 134.20 July 1 of the current levy year. 134.21 Subd. 5. [SPECIAL LEVIES.] "Special levies" means those 134.22 portions of ad valorem taxes levied by a local governmental unit 134.23 for the following purposes or in the following manner: 134.24 (1) to pay the costs of the principal and interest on 134.25 bonded indebtedness or to reimburse for the amount of liquor 134.26 store revenues used to pay the principal and interest due on 134.27 municipal liquor store bonds in the year preceding the year for 134.28 which the levy limit is calculated; 134.29 (2) to pay the costs of principal and interest on 134.30 certificates of indebtedness issued for any corporate purpose 134.31 except for the following: 134.32 (i) tax anticipation or aid anticipation certificates of 134.33 indebtedness; 134.34 (ii) certificates of indebtedness issued under sections 134.35 298.28 and 298.282; 134.36 (iii) certificates of indebtedness used to fund current 135.1 expenses or to pay the costs of extraordinary expenditures that 135.2 result from a public emergency; or 135.3 (iv) certificates of indebtedness used to fund an 135.4 insufficiency in tax receipts or an insufficiency in other 135.5 revenue sources; 135.6 (3) to provide for the bonded indebtedness portion of 135.7 payments made to another political subdivision of the state of 135.8 Minnesota; 135.9 (4) to fund payments made to the Minnesota state armory 135.10 building commission under section 193.145, subdivision 2, to 135.11 retire the principal and interest on armory construction bonds; 135.12 (5) for counties only, to fund increased county costs 135.13 associated with the reform of income maintenance programs 135.14 enacted by the 1997 legislature including increased 135.15 administration and program costs of the income maintenance 135.16 programs and also related support services as they relate 135.17 directly to the reform of income maintenance programs; 135.18 (6) for un-reimbursed expenses related to flooding that 135.19 occurred during the first half of calendar year 1997, as allowed 135.20 by the commissioner of revenue under section 275.74, paragraph 135.21 (c); 135.22 (7) for local units of government located in an area 135.23 designated by the Federal Emergency Management Agency pursuant 135.24 to a major disaster declaration issued for Minnesota by 135.25 President Clinton after April 1, 1997, and before April 21, 135.26 1997, only for levies authorized under section 273.123, 135.27 subdivision 7, to the extent that they are due to abatements 135.28 related to the major disaster; 135.29 (8) property taxes approved by voters which are levied 135.30 against the referendum market value as provided under section 135.31 275.61; 135.32 (9) to fund matching requirements needed to qualify for 135.33 federal or state grants or programs to the extent that either 135.34 (a) the matching requirement exceeds the matching requirement in 135.35 calendar year 1997, or (b) it is a new matching requirement that 135.36 didn't exist prior to 1998; and 136.1 (10) to pay the expenses reasonably and necessarily 136.2 incurred in preparing for or repairing the effects of natural 136.3 disaster including the occurrence or threat of widespread or 136.4 severe damage, injury, or loss of life or property resulting 136.5 from natural causes, in accordance with standards formulated by 136.6 the emergency services division of the state department of 136.7 public safety, as allowed by the commissioner of revenue under 136.8 section 275.70, paragraph (c). 136.9 Sec. 2. [275.71] [LEVY LIMITS.] 136.10 Subdivision 1. [LIMIT ON LEVIES.] Notwithstanding any 136.11 other provision of law or municipal charter to the contrary 136.12 which authorize ad valorem taxes in excess of the limits 136.13 established by sections 275.70 to 275.74, the provision of this 136.14 section shall apply to local governmental units for all purposes 136.15 other than those for which special levies and special 136.16 assessments are made. 136.17 Subd. 2. [LEVY LIMIT BASE.] (a) The levy limit base for a 136.18 local governmental unit for taxes levied in 1997 shall be equal 136.19 to the sum of: 136.20 (1) the amount the local governmental unit levied in 1996, 136.21 less any amount levied for debt, as reported to the department 136.22 of revenue under section 275.62, subdivision 1, clause (1), and 136.23 less any tax levied in 1996 against market value as provided for 136.24 in section 275.61; 136.25 (2) the amount of aids the local governmental unit was 136.26 certified to receive in calendar year 1997 under sections 136.27 477A.011 to 477A.03 before any reductions for state tax 136.28 increment financing aid under section 273.1399, subdivision 5; 136.29 (3) the amount of homestead and agricultural credit aid the 136.30 local governmental unit was certified to receive under section 136.31 273.1398 in calendar year 1997 before any reductions for tax 136.32 increment financing aid under section 273.1399, subdivision 5; 136.33 (4) the amount of local performance aid the local 136.34 governmental unit was certified to receive in calendar year 1997 136.35 under section 477A.05; and 136.36 (5) the amount of any payments certified to the local 137.1 government unit in 1997 under sections 298.28 and 298.282. 137.2 If a governmental unit was not required to report under 137.3 section 275.62 for taxes levied in 1997, the commissioner shall 137.4 request information on levies used for debt from the local 137.5 governmental unit and adjust its levy limit base accordingly. 137.6 (b) The levy limit base for a local governmental unit for 137.7 taxes levied in 1998 and 1999 is limited to its adjusted levy 137.8 limit base in the previous year, subject to any adjustments 137.9 under section 275.72. 137.10 Subd. 3. [ADJUSTED LEVY LIMIT BASE.] For taxes levied in 137.11 1997, 1998, and 1999, the adjusted levy limit is equal to the 137.12 levy limit base computed under subdivision 2, multiplied by: 137.13 (a) one plus a percentage equal to the percentage growth in 137.14 the implicit price deflator; and 137.15 (b) one plus a percentage equal to the percentage increase 137.16 in number of households, if any, for the most recent 12-month 137.17 period for which data is available. 137.18 Subd. 4. [PROPERTY TAX LEVY LIMIT.] For taxes levied in 137.19 1997, 1998, and 1999, the property tax levy limit for a local 137.20 governmental unit is equal to its adjusted levy limit base 137.21 determined under subdivision 3 plus any additional levy 137.22 authorized under section 275.73, which is levied against net tax 137.23 capacity, reduced by the sum of (a) the total amount of aids 137.24 that the local governmental unit is certified to receive under 137.25 sections 477A.011 to 477A.014, (b) homestead and agricultural 137.26 aids it is certified to receive under section 273.1398, (c) 137.27 local performance aid it is certified to receive under section 137.28 477A.05, and (d) taconite aids under sections 298.28 and 298.282 137.29 including any aid which was required to be placed in a special 137.30 fund for expenditure in the next succeeding year. 137.31 Subd. 5. [LEVIES IN EXCESS OF LEVY LIMITS.] If the levy 137.32 made by a city exceeds the levy limit provided in sections 137.33 275.70 to 275.74, except when the excess levy is due to the 137.34 rounding of the rate in accordance with section 275.28, the 137.35 county auditor shall only extend the amount of taxes permitted 137.36 under sections 275.70 to 275.74, as provided for in section 138.1 275.16. 138.2 Sec. 3. [275.72] [LEVY LIMIT ADJUSTMENTS FOR CONSOLIDATION 138.3 AND ANNEXATION.] 138.4 Subdivision 1. [ADJUSTMENTS FOR CONSOLIDATION.] If all of 138.5 the area included in two or more local governmental units is 138.6 consolidated, merged, or otherwise combined to constitute a 138.7 single governmental unit, the levy limit base for the resulting 138.8 governmental unit in the first levy year in which the 138.9 consolidation is effective shall be equal to (a) the highest tax 138.10 rate in any of the merging governmental units in the previous 138.11 year multiplied by the net tax capacity of all the merging 138.12 governmental units in the previous year, minus (b) the sum of 138.13 all levies in the merging governmental units in the previous 138.14 year that qualify as special levies under section 275.70, 138.15 subdivision 3. 138.16 Subd. 2. [ADJUSTMENTS FOR ANNEXATION.] If a local 138.17 governmental unit increases its tax base through annexation of 138.18 an area which is not the area of an entire local governmental 138.19 unit, the levy limit base of the local governmental unit in the 138.20 first year in which the annexation is effective shall be equal 138.21 to its adjusted levy limit base from the previous year 138.22 multiplied by the ratio of the net tax capacity in the local 138.23 governmental unit after the annexation compared to its net tax 138.24 capacity before the annexation. 138.25 Subd. 3. [TRANSFER OF GOVERNMENTAL FUNCTIONS.] If a 138.26 function or service of one local governmental unit is 138.27 transferred to another local governmental unit, the levy limits 138.28 established under section 275.71 shall be adjusted by the 138.29 commissioner of revenue in such manner so as to fairly and 138.30 equitably reflect the reduced or increased property tax burden 138.31 resulting from the transfer. The aggregate of the adjusted 138.32 limitations shall not exceed the aggregate of the limitations 138.33 prior to adjustment. 138.34 Subd. 4. [EFFECTIVE DATE FOR LEVY LIMITS PURPOSES.] 138.35 Annexations, mergers, and shifts in services and functional 138.36 responsibilities that are effective by June 30 of the levy year 139.1 are included in the calculation of the levy limit for that levy 139.2 year. Annexations, mergers, and shifts in services and 139.3 functional responsibilities that are effective after June 30 of 139.4 a levy year are not included in the calculation of the levy 139.5 limit until the subsequent levy year. 139.6 Sec. 4. [275.73] [ELECTIONS FOR ADDITIONAL LEVIES.] 139.7 Subdivision 1. [ADDITIONAL LEVY AUTHORIZATION.] 139.8 Notwithstanding the provisions of sections 275.70 to 275.72, but 139.9 subject to other law or charter provisions establishing other 139.10 limitations on the amount of property taxes a local governmental 139.11 unit may levy, a local governmental unit may levy an additional 139.12 levy in any amount which is approved by the majority of voters 139.13 of the governmental unit voting on the question at a general or 139.14 special election. Notwithstanding section 275.61, any levy 139.15 authorized under this section shall be levied against net tax 139.16 capacity unless the levy required voter approval under another 139.17 general or special law or any charter provisions. When the 139.18 governing body of the local governmental unit resolves to 139.19 increase the levy pursuant to this section, it shall provide for 139.20 submission of the proposition of an additional levy at a general 139.21 or special election. Notice of the election shall be given in 139.22 the manner required by law. The notice shall state the purpose 139.23 and the maximum yearly amount of the additional levy. 139.24 Subd. 2. [LEVY EFFECTIVE DATE.] An additional levy 139.25 approved under subdivision 1 at a general or special election 139.26 held prior to October 1 in any levy year may be levied in that 139.27 same levy year and subsequent levy years. An additional levy 139.28 approved under subdivision 1 at a general or special election 139.29 held after September 30 in any levy year shall not be levied in 139.30 that same levy but may be levied in subsequent levy years. 139.31 Sec. 5. [275.74] [STATE REGULATION OF LEVIES.] 139.32 (a) The commissioner of revenue shall make all necessary 139.33 calculations for determining levy limits for local governmental 139.34 units and notify the affected governmental units of their levy 139.35 limits directly by August 1 of each levy year. In addition, the 139.36 commissioner of revenue shall notify all county auditors of the 140.1 levy limits imposed on local governmental units located within 140.2 their boundaries so that they may fix the levies as required in 140.3 section 275.16. The local governmental units shall provide the 140.4 commissioner of revenue with all information that the 140.5 commissioner deems necessary to make the calculations provided 140.6 for in sections 275.70 to 275.73. 140.7 (b) Counties shall report annually to the commissioner of 140.8 revenue on the purposes for which the special levy authorized 140.9 under section 275.70, subdivision 5, clause (5), is used. The 140.10 report shall be made on a form developed by the commissioner, in 140.11 consultation with the commissioner of human services, and 140.12 provide information on the costs to the county for the relevant 140.13 programs both before and after the reform of the income 140.14 maintenance programs enacted by the 1997 legislature. 140.15 (c) A local governmental unit may request authorization to 140.16 levy under section 275.70, clause (6) if (i) the governmental 140.17 unit is located in an area designated by the Federal Emergency 140.18 Management Agency pursuant to a major disaster declaration 140.19 issued for Minnesota by President Clinton after April 1, 1997, 140.20 and before April 21, 1997, and (ii) the amount of direct 140.21 un-reimbursed costs incurred by the governmental unit related to 140.22 the flooding and its clean-up, including emergency disaster 140.23 assistance to residents, exceeds five percent of its levy in 140.24 1997. A local governmental unit may request authorization to 140.25 levy for unreimbursed costs for other natural disasters, except 140.26 the 1997 floods, under section 275.70, clause (10). The local 140.27 governmental unit must submit a request to levy under section 140.28 275.70, subdivision 5, clause (6) or (10), to the commissioner 140.29 of revenue by July 1 of the levy year and the request must 140.30 include information documenting the estimated un-reimbursed 140.31 costs. The commissioner of revenue may grant levy authority, up 140.32 to the amount requested based on the documentation submitted. 140.33 All decisions of the commissioner are final. The commissioner 140.34 shall send a report to the chairs of the house and senate tax 140.35 committees on the levies authorized and levied under this 140.36 provision by January 15 of the year following the levy year. 141.1 Sec. 6. [FARIBAULT COUNTY; CITY OF BLUE EARTH; SPECIAL 141.2 LEVY.] 141.3 The amount of taxes levied by Faribault county and by the 141.4 city of Blue Earth is a special levy for the purposes of levy 141.5 limits under Minnesota Statutes, sections 275.70 to 275.73, if 141.6 the levy's purpose is to raise the matching funds required to 141.7 receive restitution funds awarded by plea agreement in the case 141.8 of United States v. Darling International, Inc., for developing 141.9 environmental projects that will improve water quality in the 141.10 Blue Earth and Minnesota rivers. 141.11 Sec. 7. [EFFECTIVE DATE.] 141.12 Sections 1 to 5 are effective for taxes levied in 1997, 141.13 1998, and 1999, payable in 1998, 1999, and 2000. 141.14 Upon compliance with Minnesota Statutes, section 645.021, 141.15 subdivision 3, by the governing body of Faribault county or the 141.16 city of Blue Earth, section 6 is effective for taxes levied in 141.17 1997, 1998, and 1999, in the city or county that approves it. 141.18 ARTICLE 5 141.19 TRUTH IN TAXATION 141.20 Section 1. Minnesota Statutes 1996, section 275.065, 141.21 subdivision 1, is amended to read: 141.22 Subdivision 1. [PROPOSED LEVY.] (a) Notwithstanding any 141.23 law or charter to the contrary, on or before September 15, each 141.24 taxing authority, other than a school district, shall adopt a 141.25 proposed budget and shall certify to the county auditor the 141.26 proposed or, in the case of a town, the final property tax levy 141.27 for taxes payable in the following year. 141.28 (b) On or before September 30, each school district shall 141.29 certify to the county auditor the proposed property tax levy for 141.30 taxes payable in the following year. The school districtmay141.31 shall certify the proposed levy as: 141.32 (1)a specific dollar amount; orthe state determined 141.33 school levy amount as prescribed under section 124A.23, 141.34 subdivision 2; 141.35 (2) voter approved referendum and debt levies; and 141.36(2) an amount equal to(3) the sum of the remaining school 142.1 levies, or the maximum levy limitation certified by the 142.2 commissioner of children, families, and learningto the county142.3auditoraccording to section 124.918, subdivision 1, less the 142.4 amounts levied under clauses (1) and (2). 142.5 (c) If the board of estimate and taxation or any similar 142.6 board that establishes maximum tax levies for taxing 142.7 jurisdictions within a first class city certifies the maximum 142.8 property tax levies for funds under its jurisdiction by charter 142.9 to the county auditor by September 15, the city shall be deemed 142.10 to have certified its levies for those taxing jurisdictions. 142.11 (d) For purposes of this section, "taxing authority" 142.12 includes all home rule and statutory cities, towns, counties, 142.13 school districts, and special taxing districts as defined in 142.14 section 275.066. Intermediate school districts that levy a tax 142.15 under chapter 124 or 136D, joint powers boards established under 142.16 sections 124.491 to 124.495, and common school districts No. 142.17 323, Franconia, and No. 815, Prinsburg, are also special taxing 142.18 districts for purposes of this section. 142.19 Sec. 2. Minnesota Statutes 1996, section 275.065, is 142.20 amended by adding a subdivision to read: 142.21 Subd. 1a. [LEVY; SHARED, MERGED, CONSOLIDATED 142.22 SERVICES.] If two or more taxing authorities are in the process 142.23 of negotiating an agreement for sharing, merging, or 142.24 consolidating services between those taxing authorities at the 142.25 time the proposed levy is to be certified under subdivision 1, 142.26 each taxing authority involved in the negotiation shall certify 142.27 its total proposed levy as provided in that subdivision, 142.28 including a notification to the county auditor of the specific 142.29 service involved in the agreement which is not yet finalized. 142.30 The affected taxing authorities may amend their proposed levies 142.31 under subdivision 1 until October 10 for levy amounts relating 142.32 only to the specific service involved. 142.33 Sec. 3. Minnesota Statutes 1996, section 275.065, 142.34 subdivision 3, is amended to read: 142.35 Subd. 3. [NOTICE OF PROPOSED PROPERTY TAXES.] (a) The 142.36 county auditor shall prepare and the county treasurer shall 143.1 deliver after November 10 and on or before November 24 each 143.2 year, by first class mail to each taxpayer at the address listed 143.3 on the county's current year's assessment roll, a notice of 143.4 proposed property taxesand, in the case of a town, final143.5property taxes. 143.6 (b) The commissioner of revenue shall prescribe the form of 143.7 the notice. 143.8 (c) The notice must inform taxpayers that it contains the 143.9 amount of property taxes each taxing authorityother than a town143.10 proposes to collect for taxes payable the following yearand,143.11for a town, the amount of its final levy.ItIn the case of a 143.12 town, or in the case of the state determined portion of the 143.13 school district levy, the final tax amount will be its proposed 143.14 tax. The notice must clearly state that each taxing authority, 143.15 including regional library districts established under section 143.16 134.201, and including the metropolitan taxing districts as 143.17 defined in paragraph (i), but excluding all other special taxing 143.18 districts and towns, will hold a public meeting to receive 143.19 public testimony on the proposed budget and proposed or final 143.20 property tax levy, or, in case of a school district, on the 143.21 current budget and proposed property tax levy. It must clearly 143.22 state the time and place of each taxing authority's meeting and 143.23 an address where comments will be received by mail. 143.24 (d) The notice must state for each parcel: 143.25 (1) the market value of the property as determined under 143.26 section 273.11, and used for computing property taxes payable in 143.27 the following year and for taxes payable in the current year; 143.28 and, in the case of residential property, whether the property 143.29 is classified as homestead or nonhomestead. The notice must 143.30 clearly inform taxpayers of the years to which the market values 143.31 apply and that the values are final values; 143.32 (2) the items listed below, shown separately by county, 143.33 city or town,school district excess referenda levystate 143.34 determined school tax,remainingvoter approved school levy, 143.35 other local schooldistrictlevy,regional library district, if143.36in existence, the total of the metropolitan special taxing144.1districts as defined in paragraph (i)and the sum of 144.2 theremainingspecial taxing districts, and as a total ofthe144.3 all taxing authorities, including all special taxing districts,144.4the proposed or, for a town, final net tax on the property for144.5taxes payable the following year and the actual tax for taxes144.6payable the current year: 144.7 (i) the actual tax for taxes payable in the current year; 144.8 (ii) the tax change due to spending factors, defined as the 144.9 proposed tax minus the constant spending tax amount; 144.10 (iii) the tax change due to other factors, defined as the 144.11 constant spending tax amount minus the actual current year tax; 144.12 and 144.13 (iv) the proposed tax amount. 144.14 In the case of a town or the state determined school tax, 144.15 the final tax shall also be its proposed tax. If a school 144.16 district has certified under section 124A.03, subdivision 2, 144.17 that a referendum will be held in the school district at the 144.18 November general election, the county auditor must note next to 144.19 the school district's proposed amount that a referendum is 144.20 pending and that, if approved by the voters, the tax amount may 144.21 be higher than shown on the notice.For the purposes of this144.22subdivision, "school district excess referenda levy" means144.23school district taxes for operating purposes approved at144.24referendums, including those taxes based on net tax capacity as144.25well as those based on market value. "School district excess144.26referenda levy" does not include school district taxes for144.27capital expenditures approved at referendums or school district144.28taxes to pay for the debt service on bonds approved at144.29referenda.In the case of the city of Minneapolis, the levy for 144.30 the Minneapolis library board and the levy for Minneapolis park 144.31 and recreation shall belisted separately from the remaining144.32amount of the city's levyconsidered as special taxing district 144.33 levies for the purposes of this subdivision. In the case of a 144.34 parcel where tax increment or the fiscal disparities areawide 144.35 tax under chapter 276A or 473F applies, the proposed tax levy on 144.36 the captured value or the proposed tax levy on the tax capacity 145.1 subject to the areawide tax must each be stated separately and 145.2 not included in the sum of the special taxing districts; and 145.3 (3) the increase or decreasein the amounts in clause (2)145.4frombetween the total taxes payable in the current yeartoand 145.5 the total proposedor, for a town, final taxes payable the145.6following yeartaxes, expressedas a dollar amount andas a 145.7 percentage. 145.8 (e) The notice must clearly state that the proposed or 145.9 final taxes do not include the following: 145.10 (1) special assessments; 145.11 (2) levies approved by the voters after the date the 145.12 proposed taxes are certified, including bond referenda, school 145.13 district levy referenda, and levy limit increase referenda; 145.14 (3) amounts necessary to pay cleanup or other costs due to 145.15 a natural disaster occurring after the date the proposed taxes 145.16 are certified; 145.17 (4) amounts necessary to pay tort judgments against the 145.18 taxing authority that become final after the date the proposed 145.19 taxes are certified; and 145.20 (5) the contamination tax imposed on properties which 145.21 received market value reductions for contamination. 145.22 (f) Except as provided in subdivision 7, failure of the 145.23 county auditor to prepare or the county treasurer to deliver the 145.24 notice as required in this section does not invalidate the 145.25 proposed or final tax levy or the taxes payable pursuant to the 145.26 tax levy. 145.27 (g) If the notice the taxpayer receives under this section 145.28 lists the property as nonhomestead and the homeowner provides 145.29 satisfactory documentation to the county assessor that the 145.30 property is owned and used as the owner's homestead, the 145.31 assessor shall reclassify the property to homestead for taxes 145.32 payable in the following year. 145.33 (h) In the case of class 4 residential property used as a 145.34 residence for lease or rental periods of 30 days or more, the 145.35 taxpayer must either: 145.36 (1) mail or deliver a copy of the notice of proposed 146.1 property taxes to each tenant, renter, or lessee; or 146.2 (2) post a copy of the notice in a conspicuous place on the 146.3 premises of the property. 146.4 The notice must be mailed or posted by the taxpayer by 146.5 November 27 or within three days of receipt of the notice, 146.6 whichever is later. A taxpayer may notify the county treasurer 146.7 of the address of the taxpayer, agent, caretaker, or manager of 146.8 the premises to which the notice must be mailed in order to 146.9 fulfill the requirements of this paragraph. 146.10 (i) For purposes of this subdivision, subdivisions 5a and 146.11 6, "metropolitan special taxing districts" means the following 146.12 taxing districts in the seven-county metropolitan area that levy 146.13 a property tax for any of the specified purposes listed below: 146.14 (1) metropolitan council under section 473.132, 473.167, 146.15 473.249, 473.325, 473.446, 473.521, 473.547, or 473.834; 146.16 (2) metropolitan airports commission under section 473.667, 146.17 473.671, or 473.672; and 146.18 (3) metropolitan mosquito control commission under section 146.19 473.711. 146.20 For purposes of this section, any levies made by the 146.21 regional rail authorities in the county of Anoka, Carver, 146.22 Dakota, Hennepin, Ramsey, Scott, or Washington under chapter 146.23 398A shall be included with the appropriate county's levy and 146.24 shall be discussed at that county's public hearing. 146.25(j) For taxes levied in 1996, payable in 1997 only, in the146.26case of a statutory or home rule charter city or town that146.27exercises the local levy option provided in section 473.388,146.28subdivision 7, the notice of its proposed taxes may include a146.29statement of the amount by which its proposed tax increase for146.30taxes payable in 1997 is attributable to its exercise of that146.31option, together with a statement that the levy of the146.32metropolitan council was decreased by a similar amount because146.33of the exercise of that option.146.34 Sec. 4. Minnesota Statutes 1996, section 275.065, is 146.35 amended by adding a subdivision to read: 146.36 Subd. 3a. [CONSTANT SPENDING LEVY AMOUNT.] (a) For 147.1 purposes of this section, "constant spending levy amount" for a 147.2 county, city, town, or special taxing district means the 147.3 property tax levy that the taxing authority would need to levy 147.4 so that the sum of its levy, including its fiscal disparities 147.5 distribution levy under section 276A.06, subdivision 3, clause 147.6 (a), or 473F.08, subdivision 3, clause (a), plus its property 147.7 tax aid amounts would remain constant from the current year to 147.8 the proposed year, taking into account the fiscal disparities 147.9 distribution levy amounts and the property tax aid amounts that 147.10 have been certified for the proposed year. For the purposes of 147.11 this paragraph, property tax aids include homestead and 147.12 agricultural credit aid under section 273.1398, subdivision 2, 147.13 local government aid under section 477A.013, local performance 147.14 aid under section 477A.05, county criminal justice aid under 147.15 section 477A.0121, and family preservation aid under section 147.16 477A.0122. 147.17 (b) For school districts, for the state determined school 147.18 tax, "constant spending levy amount" is the same as the proposed 147.19 tax. For the other school district levies, the commissioner 147.20 shall compute the constant spending levy amount by separately 147.21 calculating each program levy using the current year's revenue 147.22 per pupil unit and the proposed year's tax base, pupil units and 147.23 aid amounts, and then adding the resulting amounts. In no case 147.24 shall the constant spending levy amount be less than $0. The 147.25 commissioner shall also determine the apportionment of the 147.26 fiscal disparities distribution levy between the state 147.27 determined school levy and the other school district levies. On 147.28 or before September 30 annually, the commissioner must report to 147.29 the county auditor each school district's constant spending 147.30 state determined school levy and its constant spending levy 147.31 amount for the other school district levies. 147.32 Sec. 5. Minnesota Statutes 1996, section 275.065, 147.33 subdivision 5a, is amended to read: 147.34 Subd. 5a. [PUBLIC ADVERTISEMENT.] (a) A city that has a 147.35 population of more than 2,500, county, a metropolitan special 147.36 taxing district as defined in subdivision 3, paragraph (i), a 148.1 regional library district established under section 134.201, or 148.2 school district shall advertise in a newspaper a notice of its 148.3 intent to adopt a budget and property tax levy or, in the case 148.4 of a school district, to review its current budget and proposed 148.5 property taxes payable in the following year, at a public 148.6 hearing. The notice must be published not less than two 148.7 business days nor more than six business days before the hearing. 148.8 The advertisement must be at least one-eighth page in size 148.9 of a standard-size or a tabloid-size newspaper. The 148.10 advertisement must not be placed in the part of the newspaper 148.11 where legal notices and classified advertisements appear. The 148.12 advertisement must be published in an official newspaper of 148.13 general circulation in the taxing authority. The newspaper 148.14 selected must be one of general interest and readership in the 148.15 community, and not one of limited subject matter. The 148.16 advertisement must appear in a newspaper that is published at 148.17 least once per week. 148.18 For purposes of this section, the metropolitan special 148.19 taxing district's advertisement must only be published in the 148.20 Minneapolis Star and Tribune and the Saint Paul Pioneer Press. 148.21 (b) The advertisement for school districts, metropolitan 148.22 special taxing districts, and regional library districts must be 148.23 in the following form, except that the notice for a school 148.24 district may include references to the current budget in regard 148.25 to proposed property taxes. 148.26 "NOTICE OF 148.27 PROPOSED PROPERTY TAXES 148.28 (City/County/School District/Metropolitan 148.29 Special Taxing District/Regional 148.30 Library District) of ......... 148.31 The governing body of ........ will soon hold budget hearings 148.32 and vote on the property taxes for (city/county/metropolitan 148.33 special taxing district/regional library district services that 148.34 will be provided in199_(year)/school district services that 148.35 will be provided in199_(year) and199_(year)). 148.36 NOTICE OF PUBLIC HEARING: 149.1 All concerned citizens are invited to attend a public hearing 149.2 and express their opinions on the proposed (city/county/school 149.3 district/metropolitan special taxing district/regional library 149.4 district) budget and property taxes, or in the case of a school 149.5 district, its current budget and proposed property taxes, 149.6 payable in the following year. The hearing will be held on 149.7 (Month/Day/Year) at (Time) at (Location, Address)." 149.8 (c) The advertisement for cities and counties must be in 149.9 the following form. 149.10 "NOTICE OF PROPOSED 149.11 TOTAL BUDGET AND PROPERTY TAXES 149.12 The (city/county) governing body or board of commissioners will 149.13 hold a public hearing to discuss the budget and to vote on the 149.14 amount of property taxes to collect for services the 149.15 (city/county) will provide in (year). 149.16 149.17 SPENDING: The total budget amounts below compare 149.18 (city's/county's) (year) total actual budget with the amount the 149.19 (city/county) proposes to spend in (year). 149.20 149.21 (Year) Total Proposed (Year) Change from 149.22 Actual Budget Budget (Year)-(Year) 149.23 149.24 $....... $....... ...% 149.25 149.26 TAXES: The property tax amounts below compare that portion of 149.27 the current budget levied in property taxes in (city/county) for 149.28 (year) with the property taxes the (city/county) proposes to 149.29 collect in (year). 149.30 149.31 (Year) Property Proposed (Year) Change from 149.32 Taxes Property Taxes (Year)-(Year) 149.33 149.34 $....... $....... ...% 149.35 149.36 ATTEND THE PUBLIC HEARING 150.1 All (city/county) residents are invited to attend the public 150.2 hearing of the (city/county) to express your opinions on the 150.3 budget and the proposed amount of (year) property taxes. The 150.4 hearing will be held on: 150.5 (Month/Day/Year/Time) 150.6 (Location/Address) 150.7 If the discussion of the budget cannot be completed, a time and 150.8 place for continuing the discussion will be announced at the 150.9 hearing. You are also invited to send your written comments to: 150.10 (City/County) 150.11 (Location/Address)" 150.12 (d) For purposes of this subdivision, the budget amounts 150.13 listed on the advertisement mean: 150.14 (1) for cities, the total government fund expenditures, as 150.15 defined by the state auditor under section 471.6965, less any 150.16 expenditures for improvements or services that are specially 150.17 assessed or charged under chapter 429, 430, 435, or the 150.18 provisions of any other law or charter; and 150.19 (2) for counties, the total government fund expenditures, 150.20 as defined by the state auditor under section 375.169, less any 150.21 expenditures for direct payments to recipients or providers for 150.22 the human service aids listed in section 273.1398, subdivision 150.23 1, paragraph (i). 150.24(c)(e) A city with a population of over 500 but not more 150.25 than 2,500 must advertise by posted notice as defined in section 150.26 645.12, subdivision 1. The advertisement must be posted at the 150.27 time provided in paragraph (a). It must be in the form required 150.28 in paragraph (b). 150.29(d)(f) For purposes of this subdivision, the population of 150.30 a city is the most recent population as determined by the state 150.31 demographer under section 4A.02. 150.32(e)(g) The commissioner of revenue, subject to the 150.33 approval of the chairs of the house and senate tax committees, 150.34 shall prescribe the form and format of the advertisement. 150.35(f) For calendar year 1993, each taxing authority required150.36to publish an advertisement must include on the advertisement a151.1statement that information on the increases or decreases of the151.2total budget, including employee and independent contractor151.3compensation in the prior year, current year, and proposed151.4budget year will be discussed at the hearing.151.5(g) Notwithstanding paragraph (f), for 1993, the151.6commissioner of revenue shall prescribe the form, format, and151.7content of an advertisement comparing current and proposed151.8expense budgets for the metropolitan council, the metropolitan151.9airports commission, and the metropolitan mosquito control151.10commission. The expense budget must include occupancy,151.11personnel, contractual and capital improvement expenses. The151.12form, format, and content of the advertisement must be approved151.13by the chairs of the house and senate tax committees prior to151.14publication.151.15 Sec. 6. Minnesota Statutes 1996, section 275.065, 151.16 subdivision 6, is amended to read: 151.17 Subd. 6. [PUBLIC HEARING; ADOPTION OF BUDGET AND LEVY.] 151.18 (a) For purposes of this section, the following terms shall 151.19 have the meanings given: 151.20 (1) "Initial hearing" means the first and primary hearing 151.21 held to discuss the taxing authority's proposed budget and 151.22 proposed property tax levy for taxes payable in the following 151.23 year, or, for school districts, the current budget and the 151.24 proposed property tax levy for taxes payable in the following 151.25 year. 151.26 (2) "Continuation hearing" means a hearing held to complete 151.27 the initial hearing, if the initial hearing is not completed on 151.28 its scheduled date. 151.29 (3) "Subsequent hearing" means the hearing held to adopt 151.30 the taxing authority's final property tax levy, and, in the case 151.31 of taxing authorities other than school districts, the final 151.32 budget, for taxes payable in the following year. 151.33 (b) Between November 29 and December 20, the governing 151.34 bodies of a city that has a population over 500, county, 151.35 metropolitan special taxing districts as defined in subdivision 151.36 3, paragraph (i), and regional library districts shall each hold 152.1aan initial public hearing to discuss and seek public comment 152.2 on its final budget and property tax levy for taxes payable in 152.3 the following year, and the governing body of the school 152.4 district shall holdaan initial public hearing to review its 152.5 current budget and proposed property tax levy for taxes payable 152.6 in the following year. The metropolitan special taxing 152.7 districts shall be required to hold only a single joint initial 152.8 public hearing, the location of which will be determined by the 152.9 affected metropolitan agencies. 152.10 (c) The initial hearing must be held after 5:00 p.m. if 152.11 scheduled on a day other than Saturday. No initial hearing may 152.12 be held on a Sunday. 152.13 (d) At the initial hearing under this subdivision, the 152.14 percentage increase in property taxes proposed by the taxing 152.15 authority, if any, and the specific purposes for which property 152.16 tax revenues are being increased must be discussed. During the 152.17 discussion, the governing body shall hear comments regarding a 152.18 proposed increase and explain the reasons for the proposed 152.19 increase. The public shall be allowed to speak and to ask 152.20 questions. At the public hearing, the school district must also 152.21 provide and discuss information on the distribution of its 152.22 revenues by revenue source, and the distribution of its spending 152.23 by program area. 152.24 (e) If the initial hearing is not completed on its 152.25 scheduled date, the taxing authority must announce, prior to 152.26 adjournment of the hearing, the date, time, and place for the 152.27 continuation of the hearing. The continuation hearing must be 152.28 held at least five business days but no more than 14 business 152.29 days after the initial hearing. A continuation hearing may not 152.30 be held later than December 20 except as provided in paragraphs 152.31 (f) and (g). A continuation hearing must be held after 5:00 152.32 p.m. if scheduled on a day other than Saturday. No continuation 152.33 hearing may be held on a Sunday. 152.34 (f) The governing body of a county shall hold its initial 152.35 hearing on the second Tuesday in December each year, and may 152.36 hold additional initial hearings on other dates before December 153.1 20 if necessary for the convenience of county residents. If the 153.2 county needs a continuation of its hearing, the continuation 153.3 hearing shall be held on the third Tuesday in December. If the 153.4 third Tuesday in December falls on December 21, the county's 153.5 continuation hearing shall be held on Monday, December 20. 153.6 (g) The metropolitan special taxing districts shall hold a 153.7 joint initial public hearing on the first Monday of December. A 153.8 continuation hearing, if necessary, shall be held on the second 153.9 Monday of December even if that second Monday is after December 153.10 10. 153.11 (h) The county auditor shall provide for the coordination 153.12 of initial and continuation hearing dates for all school 153.13 districts and cities within the county to prevent conflicts 153.14 under clauses (i) and (j). 153.15 (i) By August 10, each school board and the board of the 153.16 regional library district shall certify to the county auditors 153.17 of the counties in which the school district or regional library 153.18 district is located the dates on which it elects to hold its 153.19 initial hearing and any continuation hearing. If a school board 153.20 or regional library district does not certify these dates by 153.21 August 10, the auditor will assign the initial and continuation 153.22 hearing dates. The dates elected or assigned must not conflict 153.23 with the initial and continuation hearing dates of the county or 153.24 the metropolitan special taxing districts. 153.25 (j) By August 20, the county auditor shall notify the 153.26 clerks of the cities within the county of the dates on which 153.27 school districts and regional library districts have elected to 153.28 hold their initial and continuation hearings. At the time a 153.29 city certifies its proposed levy under subdivision 1 it shall 153.30 certify the dates on which it elects to hold its initial hearing 153.31 and any continuation hearing. If a city does not certify these 153.32 dates by September 15, the auditor will assign the initial and 153.33 continuation hearing dates. The dates elected or assigned must 153.34 not conflict with the initial and continuation hearing dates of 153.35 the county, metropolitan special taxing districts, regional 153.36 library districts, or school districts within which the city is 154.1 located. This paragraph does not apply to cities of 500 154.2 population or less. 154.3 (k) The county initial hearing date and the city, 154.4 metropolitan special taxing district, regional library district, 154.5 and school district initial hearing dates must be designated on 154.6 the notices required under subdivision 3. The continuation 154.7 hearing dates need not be stated on the notices. 154.8 (l) At a subsequent hearing, each county, school district, 154.9 city over 500 population, and metropolitan special taxing 154.10 district may amend its proposed property tax levy and must adopt 154.11 a final property tax levy. Each county, city over 500 154.12 population, and metropolitan special taxing district may also 154.13 amend its proposed budget and must adopt a final budget at the 154.14 subsequent hearing. The final property tax levy must be adopted 154.15 prior to adopting the final budget. A school district is not 154.16 required to adopt its final budget at the subsequent hearing. 154.17 The subsequent hearing of a taxing authority must be held on a 154.18 date subsequent to the date of the taxing authority's initial 154.19 public hearing, or subsequent to the date of its continuation154.20hearing. If a continuation hearing is held, the subsequent 154.21 hearing must be held either immediately following the 154.22 continuation hearing or on a date subsequent to the continuation 154.23 hearing. The subsequent hearing may be held at a regularly 154.24 scheduled board or council meeting or at a special meeting 154.25 scheduled for the purposes of the subsequent hearing. The 154.26 subsequent hearing of a taxing authority does not have to be 154.27 coordinated by the county auditor to prevent a conflict with an 154.28 initial hearing, a continuation hearing, or a subsequent hearing 154.29 of any other taxing authority. All subsequent hearings must be 154.30 held prior to five working days after December 20 of the levy 154.31 year. The date, time, and place of the subsequent hearing must 154.32 be announced at the initial public hearing or at the 154.33 continuation hearing. 154.34 (m) The property tax levy certified under section 275.07 by 154.35 a city of any population, county, metropolitan special taxing 154.36 district, regional library district, or school district must not 155.1 exceed the proposed levy determined under subdivision 1, except 155.2 by an amount up to the sum of the following amounts: 155.3 (1) the amount of a school district levy whose voters 155.4 approved a referendum to increase taxes under section 124.82, 155.5 subdivision 3, 124A.03, subdivision 2, or 124B.03, subdivision 155.6 2, after the proposed levy was certified; 155.7 (2) the amount of a city or county levy approved by the 155.8 voters after the proposed levy was certified; 155.9 (3) the amount of a levy to pay principal and interest on 155.10 bonds approved by the voters under section 475.58 after the 155.11 proposed levy was certified; 155.12 (4) the amount of a levy to pay costs due to a natural 155.13 disaster occurring after the proposed levy was certified, if 155.14 that amount is approved by the commissioner of revenue under 155.15 subdivision 6a; 155.16 (5) the amount of a levy to pay tort judgments against a 155.17 taxing authority that become final after the proposed levy was 155.18 certified, if the amount is approved by the commissioner of 155.19 revenue under subdivision 6a; 155.20 (6) the amount of an increase in levy limits certified to 155.21 the taxing authority by the commissioner of children, families, 155.22 and learning or the commissioner of revenue after the proposed 155.23 levy was certified; and 155.24 (7) the amount required under section 124.755. 155.25At the hearing under this subdivision, the percentage155.26increase in property taxes proposed by the taxing authority, if155.27any, and the specific purposes for which property tax revenues155.28are being increased must be discussed.155.29During the discussion, the governing body shall hear155.30comments regarding a proposed increase and explain the reasons155.31for the proposed increase. The public shall be allowed to speak155.32and to ask questions. At the subsequent hearing held as155.33provided in this subdivision, the governing body, other than the155.34governing body of a school district, shall adopt its final155.35property tax levy prior to adopting its final budget.155.36If the hearing is not completed on its scheduled date, the156.1taxing authority must announce, prior to adjournment of the156.2hearing, the date, time, and place for the continuation of the156.3hearing. The continued hearing must be held at least five156.4business days but no more than 14 business days after the156.5original hearing.156.6The hearing must be held after 5:00 p.m. if scheduled on a156.7day other than Saturday. No hearing may be held on a Sunday.156.8The governing body of a county shall hold a hearing on the156.9second Tuesday in December each year, and may hold additional156.10hearings on other dates before December 20 if necessary for the156.11convenience of county residents. If the county needs a156.12continuation of its hearing, the continued hearing shall be held156.13on the third Tuesday in December. If the third Tuesday in156.14December falls on December 21, the county's continuation hearing156.15shall be held on Monday, December 20. The county auditor shall156.16provide for the coordination of hearing dates for all cities and156.17school districts within the county.156.18The metropolitan special taxing districts shall hold a156.19joint public hearing on the first Monday of December. A156.20continuation hearing, if necessary, shall be held on the second156.21Monday of December.156.22By August 10, each school board and the board of the156.23regional library district shall certify to the county auditors156.24of the counties in which the school district or regional library156.25district is located the dates on which it elects to hold its156.26hearings and any continuations. If a school board or regional156.27library district does not certify the dates by August 10, the156.28auditor will assign the hearing date. The dates elected or156.29assigned must not conflict with the hearing dates of the county156.30or the metropolitan special taxing districts. By August 20, the156.31county auditor shall notify the clerks of the cities within the156.32county of the dates on which school districts and regional156.33library districts have elected to hold their hearings. At the156.34time a city certifies its proposed levy under subdivision 1 it156.35shall certify the dates on which it elects to hold its hearings156.36and any continuations. For its initial hearing and for the157.1subsequent hearing at which the final property tax levy will be157.2adopted, the city must not select dates that conflict with the157.3county hearing dates, metropolitan special taxing district157.4dates, or with those elected by or assigned to the school157.5districts or regional library district in which the city is157.6located. For continuation hearings, the city may select dates157.7that conflict with other taxing authorities' dates if the city157.8deems it necessary.157.9The county hearing dates and the city, metropolitan special157.10taxing district, regional library district, and school district157.11hearing dates must be designated on the notices required under157.12subdivision 3. The continuation dates need not be stated on the157.13notices.157.14 (n) This subdivision does not apply to towns and special 157.15 taxing districts other than regional library districts and 157.16 metropolitan special taxing districts. 157.17 (o) Notwithstanding the requirements of this section, the 157.18 employer is required to meet and negotiate over employee 157.19 compensation as provided for in chapter 179A. 157.20 Sec. 7. Minnesota Statutes 1996, section 275.065, is 157.21 amended by adding a subdivision to read: 157.22 Subd. 6b. [JOINT PUBLIC HEARINGS.] Notwithstanding any 157.23 other provision of law, any city with a population of 10,000 and 157.24 over, may conduct a more comprehensive public hearing than is 157.25 contained in subdivision 6 by including a board member from the 157.26 county, a board member from the school district located within 157.27 the city's boundary, and the member or the member's designee of 157.28 the metropolitan council for the district in which the city is 157.29 located, if the city is in the metropolitan area, as defined in 157.30 section 473.121, subdivision 2, at the city's public hearing. 157.31 All provisions regarding the public hearings under subdivision 6 157.32 are applicable to the joint public hearings under this 157.33 subdivision. 157.34 Upon the adoption of a resolution by the governing body of 157.35 the city to hold a joint hearing, the city shall notify the 157.36 county, the school district, and the metropolitan council if the 158.1 city is in the metropolitan area, of the decision to hold a 158.2 joint public hearing and request a board member from each of 158.3 those taxing authorities, and the member or the designee of the 158.4 metropolitan council if applicable, to be at the joint hearing. 158.5 If the city is located in more than one county, the city may 158.6 choose to request a county board member from each county or only 158.7 from the county containing the majority of the city's market 158.8 value. If more than one school district is partially or totally 158.9 located within the city, the city may choose to request a school 158.10 district board member from each school district, or a board 158.11 member only from the school district containing the majority of 158.12 the city's market value. If, as a result of requests under this 158.13 subdivision, there are not sufficient board members in the 158.14 county or the school district to attend the joint hearing, the 158.15 county or school district may send a nonelected person working 158.16 for its taxing authority to speak on the authority's behalf. 158.17 The city may also invite each state senator and representative 158.18 who represents the city, or a portion of the city, to come to 158.19 the joint hearing. 158.20 The primary purpose of the joint hearing is to discuss the 158.21 city's budget and property tax levy. However, the county and 158.22 school district officials, and metropolitan council 158.23 representative, if the city is in the metropolitan area, should 158.24 be prepared to answer questions relevant to its budget and levy 158.25 and the effect that its levy has on the property owners in the 158.26 city. 158.27 If a city conducts a hearing under this subdivision, this 158.28 hearing is in lieu of the initial hearing required under 158.29 subdivision 6. However, the city is still required to adopt its 158.30 proposed property tax levy at a subsequent hearing as provided 158.31 under subdivision 6. The hearings under this subdivision do not 158.32 relieve a county, school district, or the metropolitan council 158.33 of the requirement to hold its individual hearing under 158.34 subdivision 6. 158.35 Sec. 8. Minnesota Statutes 1996, section 275.065, 158.36 subdivision 8, is amended to read: 159.1 Subd. 8. [HEARING.] Notwithstanding any other provision of 159.2 law, Ramsey county, the city of St. Paul, and independent school 159.3 district No. 625 are authorized to and shall hold their initial 159.4 public hearing jointly. The hearing must be held on the second 159.5 Tuesday of December each year. The advertisement required in 159.6 subdivision 5a may be a joint advertisement. The hearing is 159.7 otherwise subject to the requirements of this section. 159.8 Ramsey county is authorized to hold an additional initial 159.9 hearing or hearings as provided under this section, provided 159.10 that any additional hearings must not conflict with the initial 159.11 or continuation hearing dates of the other taxing districts. 159.12 However, if Ramsey county elects not to hold such 159.13 additional initial hearing or hearings, the joint initial 159.14 hearing required by this subdivision must be held in a St. Paul 159.15 location convenient to residents of Ramsey county. 159.16 Sec. 9. Minnesota Statutes 1996, section 275.07, 159.17 subdivision 4, is amended to read: 159.18 Subd. 4. [REPORT TO COMMISSIONER.] (a) On or before 159.19 October 8 of each year, the county auditor shall report to the 159.20 commissioner of revenue the proposed levy certified by local 159.21 units of government under section 275.065, subdivision 1. If 159.22 any taxing authorities have notified the county auditor that 159.23 they are in the process of negotiating an agreement for sharing, 159.24 merging, or consolidating services but that when the proposed 159.25 levy was certified under section 275.065, subdivision 1a, the 159.26 agreement was not yet finalized, the county auditor shall supply 159.27 that information to the commissioner when filing the report 159.28 under this section and shall recertify the affected levies as 159.29 soon as practical after October 10. 159.30 (b) On or before January 15 of each year, the county 159.31 auditor shall report to the commissioner of revenue the final 159.32 levy certified by local units of government under subdivision 1. 159.33 (c) The levies must be reported in the manner prescribed by 159.34 the commissioner. The reports must show a total levy and the 159.35 amount of each special levy. 159.36 Sec. 10. Minnesota Statutes 1996, section 276.04, 160.1 subdivision 2, is amended to read: 160.2 Subd. 2. [CONTENTS OF TAX STATEMENTS.] (a) The treasurer 160.3 shall provide for the printing of the tax statements. The 160.4 commissioner of revenue shall prescribe the form of the property 160.5 tax statement and its contents. The statement must contain a 160.6 tabulated statement of the dollar amount due to each taxing 160.7 authority and the amount of the state determined school tax from 160.8 the parcel of real property for which a particular tax statement 160.9 is prepared. The dollar amountsdueattributable to the county, 160.10 the state determined school tax, the voter approved school tax, 160.11 the other local school tax, the township or municipality, and 160.12 the total of the metropolitan special taxing districts as 160.13 defined in section 275.065, subdivision 3, paragraph (i),school160.14district excess referenda levy, remaining school district levy,160.15and the total of other voter approved referenda levies based on160.16market value under section 275.61must be separately stated. 160.17 The amounts due all other special taxing districts, if any, may 160.18 be aggregated.For the purposes of this subdivision, "school160.19district excess referenda levy" means school district taxes for160.20operating purposes approved at referenda, including those taxes160.21based on net tax capacity as well as those based on market160.22value. "School district excess referenda levy" does not include160.23school district taxes for capital expenditures approved at160.24referendums or school district taxes to pay for the debt service160.25on bonds approved at referenda.The amount of the tax on 160.26 contamination value imposed under sections 270.91 to 270.98, if 160.27 any, must also be separately stated. The dollar amounts, 160.28 including the dollar amount of any special assessments, may be 160.29 rounded to the nearest even whole dollar. For purposes of this 160.30 section whole odd-numbered dollars may be adjusted to the next 160.31 higher even-numbered dollar. The amount of market value 160.32 excluded under section 273.11, subdivision 16, if any, must also 160.33 be listed on the tax statement. The statement shall include the 160.34 followingsentencesentences, printed in upper case letters in 160.35 boldface print: "EVEN THOUGH THE STATE OF MINNESOTA DOES NOT 160.36 RECEIVE ANY PROPERTY TAX REVENUES, IT DETERMINES THE AMOUNT OF 161.1 THE GENERAL EDUCATION TAX LEVY. THE STATE OF MINNESOTA REDUCES 161.2 YOUR PROPERTY TAX BY PAYING CREDITS AND REIMBURSEMENTS TO LOCAL 161.3 UNITS OF GOVERNMENT." 161.4 (b) The property tax statements for manufactured homes and 161.5 sectional structures taxed as personal property shall contain 161.6 the same information that is required on the tax statements for 161.7 real property. 161.8 (c) Real and personal property tax statements must contain 161.9 the following information in the order given in this paragraph. 161.10 The information must contain the current year tax information in 161.11 the right column with the corresponding information for the 161.12 previous year in a column on the left: 161.13 (1) the property's estimated market value under section 161.14 273.11, subdivision 1; 161.15 (2) the property's taxable market value after reductions 161.16 under section 273.11, subdivisions 1a and 16; 161.17 (3) the property's gross tax, calculated bymultiplying the161.18property's gross tax capacity times the total local tax rate and161.19 adding the property's total property tax tothe resultthe sum 161.20 of the aids enumerated in clause (4); 161.21 (4) a total of the following aids: 161.22 (i) education aids payable under chapters 124 and 124A; and 161.23 (ii) local government aids for cities, towns, and counties 161.24 under chapter 477A;and161.25 (iii) disparity reduction aid under section 273.1398; 161.26(5) for homestead residential and agricultural properties,161.27the homestead and agricultural credit aid apportioned to the161.28property. This amount is obtained by multiplying the total161.29local tax rate by the difference between the property's gross161.30and net tax capacities under section 273.13. This amount must161.31be separately stated and identified as "homestead and161.32agricultural credit." For purposes of comparison with the161.33previous year's amount for the statement for taxes payable in161.341990, the statement must show the homestead credit for taxes161.35payable in 1989 under section 273.13, and the agricultural161.36credit under section 273.132 for taxes payable in 1989;162.1(6)(5) any credits received under sections 273.119; 162.2 273.123; 273.135; 273.1391; 273.1398, subdivision 4; 469.171; 162.3 and 473H.10, except that the amount of credit received under 162.4 section 273.135 must be separately stated and identified as 162.5 "taconite tax relief"; and 162.6(7)(6) the net tax payable in the manner required in 162.7 paragraph (a). 162.8 (d) If the county uses envelopes for mailing property tax 162.9 statements and if the county agrees, a taxing district may 162.10 include a notice with the property tax statement notifying 162.11 taxpayers when the taxing district will begin its budget 162.12 deliberations for the current year, and encouraging taxpayers to 162.13 attend the hearings. If the county allows notices to be 162.14 included in the envelope containing the property tax statement, 162.15 and if more than one taxing district relative to a given 162.16 property decides to include a notice with the tax statement, the 162.17 county treasurer or auditor must coordinate the process and may 162.18 combine the information on a single announcement. 162.19 The commissioner of revenue shall certify to the county 162.20 auditor the actual or estimated aids enumerated inclauses (3)162.21andclause (4) that local governments will receive in the 162.22 following year.In the case of a county containing a city of162.23the first class, for taxes levied in 1991, and for all counties162.24for taxes levied in 1992 and thereafter,The commissioner must 162.25 certify this amount by September 1 of each year. 162.26 Sec. 11. [EFFECTIVE DATE.] 162.27 Sections 1 to 4 and 9 are effective for levies and notices 162.28 for taxes payable in 1998, and thereafter. 162.29 Section 5 is effective for newspaper advertisements 162.30 prepared in 1997 for taxes payable in 1998, and thereafter. 162.31 Sections 6 to 8 are effective for public hearings held in 162.32 1997, and thereafter. 162.33 Section 10 is effective for property tax statements 162.34 prepared in 1998, and thereafter. 162.35 ARTICLE 6 162.36 PROPERTY TAX REFORM PAY 2000 163.1 Section 1. Minnesota Statutes 1996, section 273.124, 163.2 subdivision 14, is amended to read: 163.3 Subd. 14. [AGRICULTURAL HOMESTEADS; SPECIAL PROVISIONS.] 163.4 (a) Real estate of less than ten acres that is the homestead of 163.5 its ownermust be classified as class 2aqualifies for treatment 163.6 as an agricultural homestead under section 273.13,subdivision163.723, paragraph (a),if: 163.8 (1) the parcel on which the house is located is contiguous 163.9 on at least two sides to (i) agricultural land, (ii) land owned 163.10 or administered by the United States Fish and Wildlife Service, 163.11 or (iii) land administered by the department of natural 163.12 resources on which in lieu taxes are paid under sections 477A.11 163.13 to 477A.14; 163.14 (2) its owner also owns a noncontiguous parcel of 163.15 agricultural land that is at least 20 acres; 163.16 (3) the noncontiguous land is located not farther than two 163.17 townships or cities, or a combination of townships or cities 163.18 from the homestead; and 163.19 (4) the agricultural use value of the noncontiguous land 163.20 and farm buildings is equal to at least 50 percent of the market 163.21 value of the house, garage, and one acre of land. 163.22 Homesteads initiallyclassified as class 2aqualifying 163.23 under the provisions of this subdivision shall remainclassified163.24as class 2aqualified, irrespective of subsequent changes in the 163.25 use of adjoining properties, as long as the homestead remains 163.26 under the same ownership, the owner owns a noncontiguous parcel 163.27 of agricultural land that is at least 20 acres, and the 163.28 agricultural use value qualifies under clause (4). 163.29 (b) Noncontiguous land shall be included as part ofaan 163.30 agricultural homesteadunder section 273.13, subdivision 23,163.31paragraph (a), only if thehomestead is classified as class 2a163.32and thedetached land is located in the same township or city, 163.33 or not farther than two townships or cities or combination 163.34 thereof from the remainder of the homestead. 163.35 (c) Agricultural land used for purposes of a homestead and 163.36 actively farmed by a person holding a vested remainder interest 164.1 in it must be classified as a homesteadunder section 273.13,164.2subdivision 23, paragraph (a). If agricultural landis164.3classified class 2aqualifies for homestead treatment, any other 164.4 dwellings on the land usedfor purposes of a homesteadas a 164.5 residence by persons holding vested remainder interests who are 164.6 actively engaged in farming the property, and up to one acre of 164.7 the land surrounding eachhomesteaddwelling and reasonably 164.8 necessary for the use of the dwelling as a home, must alsobe164.9assessed class 2aqualify for homestead treatment. 164.10 Sec. 2. Minnesota Statutes 1996, section 273.13, 164.11 subdivision 1, is amended to read: 164.12 Subdivision 1. [HOW CLASSIFIED.] All real and personal 164.13 property subject to a general property tax and not subject to 164.14 any gross earnings or otherlieuin-lieu tax is hereby 164.15 classified for purposes of taxation as provided by this section. 164.16 All of a property's taxable value must be assigned to the 164.17 classes defined in this section provided, however, that the 164.18 value may be split into more than one class. 164.19 Sec. 3. Minnesota Statutes 1996, section 273.13, is 164.20 amended by adding a subdivision to read: 164.21 Subd. 1a. [CLASS RATES; LOCAL PROPERTY TAX CAPACITY.] The 164.22 following class rates apply to each class of property described 164.23 in this section in determining net tax capacity for levying 164.24 local property taxes: 164.25 Class Class rate 164.26 1 (residential) 1.0 percent 164.27 2 (agricultural) 0.5 percent 164.28 3 (commercial-industrial) 2.0 percent 164.29 4 (apartment) 1.5 percent 164.30 Sec. 4. Minnesota Statutes 1996, section 273.13, is 164.31 amended by adding a subdivision to read: 164.32 Subd. 1b. [CLASS RATES; GENERAL EDUCATION TAX 164.33 CAPACITY.] The following class rates apply to each class of 164.34 property described in this section in determining tax capacity 164.35 for levying the general education property tax: 164.36 Class Education class rate 165.1 1 (residential) 1.2 percent 165.2 2 (agricultural) 1.2 percent 165.3 3 (commercial-industrial) 2.4 percent 165.4 4 (apartments) 1.2 percent 165.5 All property classified as subclass 1a, 2a, 3a, or 4d is 165.6 exempt from the general education property tax. 165.7 Sec. 5. Minnesota Statutes 1996, section 273.13, is 165.8 amended by adding a subdivision to read: 165.9 Subd. 1c. [TRANSITION STATE TAX RATES.] (a) 165.10 Notwithstanding subdivision 1b, the general education class rate 165.11 applying to subclass 4a property is 0.8 percent for taxes 165.12 payable in 2000 and one percent for taxes payable in 2001. 165.13 (b) Notwithstanding subdivision 1b, the general education 165.14 class rates for property qualifying under section 273.127 are as 165.15 follows: 165.16 (1) 0.6 percent for taxes payable in 2000; 165.17 (2) 0.8 percent for taxes payable in 2001; and 165.18 (3) one percent for taxes payable in 2002. 165.19 Sec. 6. Minnesota Statutes 1996, section 273.13, is 165.20 amended by adding a subdivision to read: 165.21 Subd. 34. [EFFECT OF NEW PROPERTY TAX 165.22 CLASSIFICATIONS.] For taxes levied in 1999, payable in 2000 and 165.23 subsequent years, property shall be classified according to 165.24 subdivisions 35 to 38, which shall supersede classification 165.25 under subdivisions 22 to 31. 165.26 Sec. 7. Minnesota Statutes 1996, section 273.13, is 165.27 amended by adding a subdivision to read: 165.28 Subd. 35. [CLASS 1.] (a) Class 1 property consists of real 165.29 estate which is (1) used for residential purposes, including 165.30 residential structures on agricultural property, or (2) devoted 165.31 to temporary and seasonal residential occupancy for recreation 165.32 purposes. 165.33 (b) A residential property qualifies for class 1 only if it 165.34 contains no more than three housing units. 165.35 (c) Seasonal recreational residential property qualifies 165.36 for class 1 only if it is not used for commercial purposes for 166.1 more than 250 days in the year preceding the year of 166.2 assessment. For purposes of this paragraph, property is devoted 166.3 to a commercial purpose on a specific day if any portion of the 166.4 property is used for residential occupancy, and a fee is charged 166.5 for residential occupancy. 166.6 (d) Class 1 includes commercial use real property used 166.7 exclusively for recreational purposes in conjunction with class 166.8 1 property devoted to temporary and seasonal residential 166.9 occupancy for recreational purposes, up to a total of two acres, 166.10 provided the property is not devoted to commercial recreational 166.11 use for more than 250 days in the year preceding the year of 166.12 assessment and is located within two miles of the class 1 166.13 property with which it is used. Owners of real property devoted 166.14 to temporary and seasonal residential occupancy for recreational 166.15 purposes and all or a portion of which was devoted to commercial 166.16 purposes for not more than 250 days in the year preceding the 166.17 year of assessment desiring classification as class 1, must 166.18 submit a declaration to the assessor designating the cabins or 166.19 units occupied for 250 days or less in the year preceding the 166.20 year of assessment by January 15 of the assessment year. Those 166.21 cabins or units and a proportionate share of the land on which 166.22 they are located will be designated class 1 as otherwise 166.23 provided. The remainder of the cabins or units and a 166.24 proportionate share of the land on which they are located will 166.25 be designated as class 3. The owner of property desiring 166.26 designation as class 1 property must provide guest registers or 166.27 other records demonstrating that the units for which class 1 166.28 designation is sought were not occupied for more than 250 days 166.29 in the year preceding the assessment if so requested. The 166.30 portion of a property operated as a (1) restaurant, (2) bar, (3) 166.31 gift shop, and (4) other nonresidential facility operated on a 166.32 commercial basis not directly related to temporary and seasonal 166.33 residential occupancy for recreational purposes shall not 166.34 qualify for class 1. 166.35 (e) Class 1 includes commercial use real property that 166.36 abuts a lakeshore line and is devoted to temporary and seasonal 167.1 residential occupancy for recreational purposes, and that 167.2 includes a portion used as a homestead by the owner, which 167.3 includes a dwelling occupied as a homestead by a shareholder of 167.4 a corporation that owns the resort or a partner in a partnership 167.5 that owns the resort, even if the title to the homestead is held 167.6 by the corporation or partnership. 167.7 (f) Subclass 1a consists of the first tier of market value 167.8 of each class 1 property that (1) is used for residential 167.9 purposes and contains only one dwelling unit, or contains more 167.10 than one dwelling unit but qualifies for homestead treatment 167.11 under section 273.124, (2) is used for noncommercial seasonal 167.12 recreational residential purposes, or (3) is used for homestead 167.13 commercial seasonal recreational residential purposes as defined 167.14 in paragraph (e). 167.15 (g) The valuation limit for the first tier in paragraph 167.16 (f), clause (1), is $115,000, adjusted for inflation under 167.17 subdivision 39. The valuation limit for the first tier in 167.18 paragraph (f), clause (2), is $40,000, adjusted for inflation 167.19 under subdivision 39. The valuation limit for the first tier in 167.20 paragraph (f), clause (3), is $230,000, adjusted for inflation 167.21 under subdivision 39. 167.22 Sec. 8. Minnesota Statutes 1996, section 273.13, is 167.23 amended by adding a subdivision to read: 167.24 Subd. 36. [CLASS 2.] (a) Class 2 property consists of 167.25 agricultural land and structures used for agricultural purposes. 167.26 In the case of a property qualifying as an agricultural 167.27 homestead under section 273.124, the house and garage and 167.28 immediately surrounding one acre of land is class 1 property and 167.29 the remainder of the homestead is class 2. 167.30 (b) Class 2 includes property that is (1) real estate, 167.31 rural in character and used exclusively for growing trees for 167.32 timber, lumber, and wood and wood products; (2) real estate that 167.33 is not improved with a structure and is used exclusively for 167.34 growing trees for timber, lumber, and wood and wood products, if 167.35 the owner has participated or is participating in a cost-sharing 167.36 program for afforestation, reforestation, or timber stand 168.1 improvement on that particular property, administered or 168.2 coordinated by the commissioner of natural resources; or (3) a 168.3 landing area or public access area of a privately owned public 168.4 use airport. 168.5 (c) Agricultural land as used in this section means 168.6 contiguous acreage of ten acres or more, used during the 168.7 preceding year for agricultural purposes. "Agricultural 168.8 purposes" as used in this section means the raising or 168.9 cultivation of agricultural products or enrollment in the 168.10 Reinvest in Minnesota program under sections 103F.501 to 168.11 103F.535 or the federal Conservation Reserve Program as 168.12 contained in Public Law Number 99-198. Contiguous acreage on 168.13 the same parcel, or contiguous acreage on an immediately 168.14 adjacent parcel under the same ownership, may also qualify as 168.15 agricultural land, but only if it is pasture, timber, waste, 168.16 unusable wild land, or land included in state or federal farm 168.17 programs. Agricultural classification for property shall be 168.18 determined excluding the house, garage, and immediately 168.19 surrounding one acre of land, and shall not be based upon the 168.20 market value of any residential structures on the parcel or 168.21 contiguous parcels under the same ownership. 168.22 (d) Real estate, excluding the house, garage, and 168.23 immediately surrounding one acre of land, of less than ten acres 168.24 which is exclusively or intensively used for raising or 168.25 cultivating agricultural products, shall be considered as 168.26 agricultural land. 168.27 Land shall be classified as agricultural even if all or a 168.28 portion of the agricultural use of that property is the leasing 168.29 to, or use by another person for agricultural purposes. 168.30 Classification under this subdivision is not determinative 168.31 for qualifying under section 273.111. 168.32 The property classification under this section supersedes, 168.33 for property tax purposes only, any locally administered 168.34 agricultural policies or land use restrictions that define 168.35 minimum or maximum farm acreage. 168.36 (e) The term "agricultural products" as used in this 169.1 subdivision includes production for sale of: 169.2 (1) livestock, livestock products, dairy animals, dairy 169.3 products, poultry and poultry products, fur-bearing animals, 169.4 horticultural and nursery stock described in sections 18.44 to 169.5 18.61, fruit of all kinds, vegetables, forage, grains, bees, and 169.6 apiary products by the owner; 169.7 (2) fish bred for sale and consumption if the fish breeding 169.8 occurs on land zoned for agricultural use; 169.9 (3) the commercial boarding of horses if the boarding is 169.10 done in conjunction with raising or cultivating agricultural 169.11 products as defined in clause (1); 169.12 (4) property which is owned and operated by nonprofit 169.13 organizations used for equestrian activities, excluding racing; 169.14 and 169.15 (5) game birds and waterfowl bred and raised for use on a 169.16 shooting preserve licensed under section 97A.115. 169.17 (f) If a parcel used for agricultural purposes is also used 169.18 for commercial or industrial purposes, including but not limited 169.19 to: 169.20 (1) wholesale and retail sales; 169.21 (2) processing of raw agricultural products or other goods; 169.22 (3) warehousing or storage of processed goods; and 169.23 (4) office facilities for the support of the activities 169.24 enumerated in clauses (1), (2), and (3), 169.25 the assessor shall classify the part of the parcel used for 169.26 agricultural purposes as class 2 and the remainder in the class 169.27 appropriate to its use. The grading, sorting, and packaging of 169.28 raw agricultural products for first sale is considered an 169.29 agricultural purpose. A greenhouse or other building where 169.30 horticultural or nursery products are grown that is also used 169.31 for the conduct of retail sales must be classified as 169.32 agricultural if it is primarily used for the growing of 169.33 horticultural or nursery products from seed, cuttings, or roots 169.34 and occasionally as a showroom for the retail sale of those 169.35 products. Use of a greenhouse or building only for the display 169.36 of already grown horticultural or nursery products does not 170.1 qualify as an agricultural purpose. 170.2 (g) To qualify for classification under paragraph (b), 170.3 clause (3), a privately owned public use airport must be 170.4 licensed as a public airport under section 360.018. For 170.5 purposes of paragraph (b), clause (3), "landing area" means that 170.6 part of a privately owned public use airport properly cleared, 170.7 regularly maintained, and made available to the public for use 170.8 by aircraft and includes runways, taxiways, aprons, and sites 170.9 upon which are situated landing or navigational aids. A landing 170.10 area also includes land underlying both the primary surface and 170.11 the approach surfaces that comply with all of the following: 170.12 (i) the land is properly cleared and regularly maintained 170.13 for the primary purposes of the landing, taking off, and taxiing 170.14 of aircraft; but that portion of the land that contains 170.15 facilities for servicing, repair, or maintenance of aircraft is 170.16 not included as a landing area; 170.17 (ii) the land is part of the airport property; and 170.18 (iii) the land is not used for commercial or residential 170.19 purposes. 170.20 The land contained in a landing area under paragraph (b), 170.21 clause (3), must be described and certified by the commissioner 170.22 of transportation. The certification is effective until it is 170.23 modified, or until the airport or landing area no longer meets 170.24 the requirements of paragraph (b), clause (3). For purposes of 170.25 paragraph (b), clause (3), "public access area" means property 170.26 used as an aircraft parking ramp, apron, or storage hangar, or 170.27 an arrival and departure building in connection with the airport. 170.28 (h) A structure is classified as an agricultural building 170.29 if all of the following criteria are met: 170.30 (1) the structure is located on property that is classified 170.31 as agricultural property under this subdivision; 170.32 (2) the structure is occupied exclusively by seasonal farm 170.33 workers during the time when they work on that farm, and the 170.34 occupants are not charged rent for the privilege of occupying 170.35 the property; 170.36 (3) the structure meets all applicable health and safety 171.1 requirements for the appropriate season; and 171.2 (4) the structure is not salable as residential property 171.3 because it does not comply with local ordinances relating to 171.4 location in relation to streets or roads. 171.5 (i) Subclass 2a consists of the first tier of class 2 171.6 market value of each homestead agricultural property. The 171.7 valuation limit for the first tier is $200,000, adjusted for 171.8 inflation under subdivision 39. 171.9 Sec. 9. Minnesota Statutes 1996, section 273.13, is 171.10 amended by adding a subdivision to read: 171.11 Subd. 37. [CLASS 3.] (a) Class 3 consists of commercial 171.12 and industrial property and utility real and personal property, 171.13 including: 171.14 (1) tools, implements, and machinery of an electric 171.15 generating, transmission, or distribution system or a pipeline 171.16 system transporting or distributing water, gas, crude oil, or 171.17 petroleum products or mains and pipes used in the distribution 171.18 of steam or hot or chilled water for heating or cooling 171.19 buildings, which are fixtures; 171.20 (2) unmined iron ore and low-grade iron-bearing formations 171.21 as defined in section 273.14; and 171.22 (3) all other property not otherwise classified. 171.23 (b) Subclass 3a consists of the first $70,000 of each 171.24 parcel of class 3 property's market value, provided that in the 171.25 case of contiguous parcels of commercial and industrial property 171.26 owned by the same person or entity, only the first $70,000 of 171.27 market value of the contiguous parcels is eligible for inclusion 171.28 in subclass 3a, and provided that in the case of utility 171.29 property owned by one person or entity, only one parcel in each 171.30 county is eligible for inclusion in subclass 3a. 171.31 For purposes of this paragraph, parcels are considered to 171.32 be contiguous even if they are separated from each other by a 171.33 road, street, vacant lot, waterway, or other similar intervening 171.34 type of property. 171.35 Sec. 10. Minnesota Statutes 1996, section 273.13, is 171.36 amended by adding a subdivision to read: 172.1 Subd. 38. [CLASS 4.] (a) Class 4 consists of residential 172.2 real estate containing four or more units and used or held for 172.3 use by the owner or by the tenants or lessees of the owner as a 172.4 residence for rental periods of 30 days or more. Class 4 also 172.5 includes all property described in paragraph (c), and hospitals 172.6 licensed under sections 144.50 to 144.56, other than hospitals 172.7 exempt under section 272.02, and contiguous property used for 172.8 hospital purposes, without regard to whether the property has 172.9 been platted or subdivided. 172.10 (b) Subclass 4a consists of property in a city with a 172.11 population of 5,000 or less, that is (1) located outside of the 172.12 metropolitan area, as defined in section 473.121, subdivision 2, 172.13 or outside any county contiguous to the metropolitan area, and 172.14 (2) whose city boundary is at least 15 miles from the boundary 172.15 of any city with a population greater than 5,000. For the 172.16 purposes of this paragraph, "population" has the meaning given 172.17 in section 477A.011, subdivision 3. 172.18 (c) Subclass 4d property includes: 172.19 (1) qualifying low-income rental housing certified to the 172.20 assessor by the housing finance agency under sections 273.126 172.21 and 462A.071. Subclass 4d includes land in proportion to the 172.22 total market value of the building that is qualifying low-income 172.23 rental housing. For all properties qualifying as subclass 4d, 172.24 the market value determined by the assessor must be based in the 172.25 normal approach to value using normal unrestricted rents; 172.26 (2) real property up to a maximum of one acre of land owned 172.27 by a nonprofit community service oriented organization; provided 172.28 that the property is not used for a revenue-producing activity 172.29 for more than six days in the calendar year preceding the year 172.30 of assessment and the property is not used for residential 172.31 purposes on either a temporary or permanent basis. For purposes 172.32 of this clause, a "nonprofit community service oriented 172.33 organization" means any corporation, society, association, 172.34 foundation, or institution organized and operated exclusively 172.35 for charitable, religious, fraternal, civic, or educational 172.36 purposes, and which is exempt from federal income taxation 173.1 pursuant to section 501(c)(3), (10), or (19) of the Internal 173.2 Revenue Code of 1986, as amended through December 31, 1990. For 173.3 purposes of this clause, "revenue-producing activities" shall 173.4 include but not be limited to property or that portion of the 173.5 property that is used as an on-sale intoxicating liquor or 3.2 173.6 percent malt liquor establishment licensed under chapter 340A, a 173.7 restaurant open to the public, bowling alley, a retail store, 173.8 gambling conducted by organizations licensed under chapter 349, 173.9 an insurance business, or office or other space leased or rented 173.10 to a lessee who conducts a for-profit enterprise on the 173.11 premises. Any portion of the property which is used for 173.12 revenue-producing activities for more than six days in the 173.13 calendar year preceding the year of assessment shall be assessed 173.14 as class 3. The use of the property for social events open 173.15 exclusively to members and their guests for periods of less than 173.16 24 hours, when an admission is not charged nor any revenues are 173.17 received by the organization shall not be considered a 173.18 revenue-producing activity; 173.19 (3) post-secondary student housing of not more than one 173.20 acre of land that is owned by a nonprofit corporation organized 173.21 under chapter 317A and is used exclusively by a student 173.22 cooperative, sorority, or fraternity for on-campus housing or 173.23 housing located within two miles of the border of a college 173.24 campus; 173.25 (4) manufactured home parks as defined in section 327.14, 173.26 subdivision 3; and 173.27 (5) real property devoted to a seasonal golf operation, 173.28 which is privately owned and open to the public on a daily fee 173.29 basis. Any portion of the real estate used for commercial 173.30 purposes beyond the length of the golf season in the year 173.31 preceding the year of assessment shall be classified as class 3a 173.32 property under subdivision 24, paragraph (a). In order to 173.33 qualify for class 4c under this paragraph, the golf course must 173.34 be open to the public and can charge membership fees or dues, 173.35 but a membership is not required in order to use the property 173.36 for golfing. To qualify under this paragraph, the property must 174.1 meet the requirements of section 273.112, subdivision 3, 174.2 paragraph (d). 174.3 Sec. 11. Minnesota Statutes 1996, section 273.13, is 174.4 amended by adding a subdivision to read: 174.5 Subd. 39. [INFLATION ADJUSTMENT.] Beginning for property 174.6 assessed in 2000, payable in 2001, the commissioner shall 174.7 annually adjust the valuation limits specified in subdivisions 174.8 35 and 36 for inflation. The commissioner shall make the 174.9 inflation adjustments in accordance with section 290.06, 174.10 subdivision 2d, except that for purposes of this subdivision the 174.11 percentage increase shall be determined from the year ending on 174.12 August 31, 1998, to the year ending on August 31 of the year 174.13 preceding the assessment year. The commissioner shall round the 174.14 valuation limits to the nearest $1,000 value. The commissioner 174.15 shall annually announce the adjusted valuation limits at the 174.16 same time provided under section 290.06. The determination of 174.17 the commissioner under this subdivision is not a rule under the 174.18 Administrative Procedure Act. 174.19 Sec. 12. Minnesota Statutes 1996, section 273.135, 174.20 subdivision 2, is amended to read: 174.21 Subd. 2. The amount of the reduction authorized by 174.22 subdivision 1 shall be: 174.23 (a) In the case of property located within the boundaries 174.24 of a municipality which meets the qualifications prescribed in 174.25 section 273.134, 66 percent of the tax, provided that the 174.26 reduction shall not exceed the maximum amounts specified in 174.27 clause (c), and shall not exceed an amount sufficient to reduce 174.28 the effective tax rate on each parcel of property to 95 percent 174.29 of the base year effective tax rate. In no case will the 174.30 reduction for each homestead resulting from this credit be less 174.31 than $10. 174.32 (b) In the case of property located within the boundaries 174.33 of a school district which qualifies as a tax relief area but 174.34 which is outside the boundaries of a municipality which meets 174.35 the qualifications prescribed in section 273.134, 57 percent of 174.36 the tax, provided that the reduction shall not exceed the 175.1 maximum amounts specified in clause (c), and shall not exceed an 175.2 amount sufficient to reduce the effective tax rate on each 175.3 parcel of property to 95 percent of the base year effective tax 175.4 rate. In no case will the reduction for each homestead 175.5 resulting from this credit be less than $10. 175.6 (c) The maximum reduction of the tax is $225.40 on property 175.7 described in clause (a) and $200.10 on property described in 175.8 clause (b), for taxes payable in 1985. These maximum amounts 175.9 shall increase by $15 times the quantity one minus the homestead 175.10 credit equivalency percentage per year for taxes payable in 1986 175.11and subsequent yearsthrough taxes payable in 1999. Beginning 175.12 with taxes payable in 2000 and thereafter, the maximum reduction 175.13 of the tax under this subdivision will be $315.10. 175.14 For the purposes of this subdivision, "homestead credit 175.15 equivalency percentage" means one minus the ratio of the net 175.16 class rate to the gross class rate applicable to the first 175.17 $72,000 of the market value of residential homesteads, 175.18 "effective tax rate" means tax divided by the market value of a 175.19 property, and the "base year effective tax rate" means the 175.20 payable 1988 tax on a property with an identical market value to 175.21 that of the property receiving the credit in the current year 175.22 after the application of the credits payable under Minnesota 175.23 Statutes 1988, section 273.13, subdivisions 22 and 23, and this 175.24 section, divided by the market value of the property. 175.25 Sec. 13. Minnesota Statutes 1996, section 273.1391, 175.26 subdivision 2, is amended to read: 175.27 Subd. 2. The amount of the reduction authorized by 175.28 subdivision 1 shall be: 175.29 (a) In the case of property located within a school 175.30 district which does not meet the qualifications of section 175.31 273.134 as a tax relief area, but which is located in a county 175.32 with a population of less than 100,000 in which taconite is 175.33 mined or quarried and wherein a school district is located which 175.34 does meet the qualifications of a tax relief area, and provided 175.35 that at least 90 percent of the area of the school district 175.36 which does not meet the qualifications of section 273.134 lies 176.1 within such county, 57 percent of the tax on qualified property 176.2 located in the school district that does not meet the 176.3 qualifications of section 273.134, provided that the amount of 176.4 said reduction shall not exceed the maximum amounts specified in 176.5 clause (c), and shall not exceed an amount sufficient to reduce 176.6 the effective tax rate on each parcel of property to the product 176.7 of 95 percent of the base year effective tax rate multiplied by 176.8 the ratio of the current year's tax rate to the payable 1989 tax 176.9 rate. In no case will the reduction for each homestead 176.10 resulting from this credit be less than $10. The reduction 176.11 provided by this clause shall only be applicable to property 176.12 located within the boundaries of the county described therein. 176.13 (b) In the case of property located within a school 176.14 district which does not meet the qualifications of section 176.15 273.134 as a tax relief area, but which is located in a school 176.16 district in a county containing a city of the first class and a 176.17 qualifying municipality, but not in a school district containing 176.18 a city of the first class or adjacent to a school district 176.19 containing a city of the first class unless the school district 176.20 so adjacent contains a qualifying municipality, 57 percent of 176.21 the tax, but not to exceed the maximums specified in clause (c), 176.22 and shall not exceed an amount sufficient to reduce the 176.23 effective tax rate on each parcel of property to the product of 176.24 95 percent of the base year effective tax rate multiplied by the 176.25 ratio of the current year's tax rate to the payable 1989 tax 176.26 rate. In no case will the reduction for each homestead 176.27 resulting from this credit be less than $10. 176.28 (c) The maximum reduction of the tax is $200.10 for taxes 176.29 payable in 1985. This maximum amount shall increase by $15 176.30 multiplied by the quantity one minus the homestead credit 176.31 equivalency percentage per year for taxes payable in 1986and176.32subsequent yearsthrough taxes payable in 1999. Beginning with 176.33 taxes payable in 2000 and thereafter, the maximum reduction of 176.34 the tax under this subdivision will be $289.80. 176.35 For the purposes of this subdivision, "homestead credit 176.36 equivalency percentage" means one minus the ratio of the net 177.1 class rate to the gross class rate applicable to the first 177.2 $72,000 of the market value of residential homesteads, and 177.3 "effective tax rate" means tax divided by the market value of a 177.4 property, and the "base year effective tax rate" means the 177.5 payable 1988 tax on a property with an identical market value to 177.6 that of the property receiving the credit in the current year 177.7 after application of the credits payable under Minnesota 177.8 Statutes 1988, section 273.13, subdivisions 22 and 23, and this 177.9 section, divided by the market value of the property. 177.10 Sec. 14. Minnesota Statutes 1996, section 275.08, 177.11 subdivision 1b, is amended to read: 177.12 Subd. 1b. [COMPUTATION OF TAX RATES.] The amounts 177.13 certified to be levied against net tax capacity under section 177.14 275.07 by an individual local government unit shall be divided 177.15 by the total net tax capacity of all taxable properties within 177.16 the local government unit's taxing jurisdiction. The resulting 177.17 ratio, the local government's local tax rate, multiplied by each 177.18 property's net tax capacity shall be each property's net tax 177.19 capacity tax for that local government unit before reduction by 177.20 any credits. The sum of the general education tax, if any, plus 177.21 each local government's tax is the property's total property 177.22 tax, before reduction by any credits. 177.23Any amount certified to the county auditor to be levied177.24against market value shall be divided by the total referendum177.25market value of all taxable properties within the taxing177.26district. The resulting ratio, the taxing district's new177.27referendum tax rate, multiplied by each property's referendum177.28market value shall be each property's new referendum tax before177.29reduction by any credits. For the purposes of this subdivision,177.30"referendum market value" means the market value as defined in177.31section 124A.02, subdivision 3b.177.32 Sec. 15. Minnesota Statutes 1996, section 290.06, is 177.33 amended by adding a subdivision to read: 177.34 Subd. 25. [PROPERTY TAX CREDIT FOR DISABLED.] (a) A 177.35 disabled individual may claim a credit against the tax imposed 177.36 by this chapter equal to 50 percent of the ad valorem homestead 178.1 property tax paid during the taxable year. The maximum credit 178.2 allowed to an individual or a married couple for the year is 178.3 $300. Homestead tax means the tax paid on the individual's or 178.4 married couple's principal residence, classified as class 1 178.5 under section 273.13, subdivision 22. 178.6 (b) If the amount of the credit under this subdivision 178.7 exceeds the claimant's liability for tax, the commissioner shall 178.8 refund the excess to the individual. An amount sufficient to 178.9 pay the refunds is appropriated to the commissioner from the 178.10 general fund. 178.11 (c) For purposes of this subdivision, a disabled person 178.12 means: 178.13 (1) a blind person; 178.14 (2) a person who: 178.15 (i) served in the active military or naval service of the 178.16 United States; 178.17 (ii) is entitled to compensation under the laws and 178.18 regulations of the United States for permanent and total 178.19 service-connected disability due to the loss, or loss of use, by 178.20 reason of amputation, ankylosis, progressive muscular 178.21 dystrophies, or paralysis of both lower extremities, such as to 178.22 preclude motion without the aid of braces, crutches, canes, or a 178.23 wheelchair; and 178.24 (iii) has acquired a special housing unit with special 178.25 fixtures or movable facilities made necessary by the nature of 178.26 the veteran's disability; 178.27 (3) the surviving spouse of a deceased individual who 178.28 qualified under clause (2), for as long as the surviving spouse 178.29 uses the special housing unit as the spouse's principal 178.30 residence; 178.31 (4) any person who: 178.32 (i) is permanently and totally disabled; and 178.33 (ii) receives 90 percent or more of the person's total 178.34 income from one or more of the following: 178.35 (A) aid from any state as a result of that disability; 178.36 (B) supplemental security income for the disabled; 179.1 (C) workers' compensation based on a finding of total and 179.2 permanent disability; 179.3 (D) social security disability, including the amount of a 179.4 disability insurance benefit which is converted to an old-age 179.5 insurance benefit and any subsequent cost-of-living increases; 179.6 (E) aid under the federal Railroad Retirement Act of 1937, 179.7 United States Code Annotated, title 45, section 228b(a)5; 179.8 (F) a pension from any local government retirement fund 179.9 located in the state of Minnesota as a result of that 179.10 disability; 179.11 (G) pension, annuity, or other income paid as a result of 179.12 that disability from a private pension or disability plan, 179.13 including employer, employee, union, and insurance plans; and 179.14 (iii) has household income as defined in section 290A.03, 179.15 subdivision 5, of $50,000 or less; or 179.16 (5) any person who is permanently and totally disabled and 179.17 whose household income as defined in section 290A.03, 179.18 subdivision 5, is 150 percent or less of the federal poverty 179.19 level. 179.20 Permanently and totally disabled for purposes of this 179.21 subdivision means a condition that is permanent and totally 179.22 incapacitates the person from working at an occupation which 179.23 brings the person an income. 179.24 Sec. 16. Minnesota Statutes 1996, section 290A.03, 179.25 subdivision 6, is amended to read: 179.26 Subd. 6. [HOMESTEAD.] "Homestead" means the dwelling 179.27 occupied as the claimant's principal residence and so much of 179.28 the land surrounding it, not exceeding ten acres, as is 179.29 reasonably necessary for use of the dwelling as a home and any 179.30 other property used for purposes of a homestead as defined in 179.31 section273.13, subdivision 22, except for agricultural land179.32assessed as part of a homestead pursuant to section 273.13,179.33subdivision 23, "homestead" is limited to 320 acres or, where179.34the farm homestead is rented, one acre273.124. The homestead 179.35 may be owned or rented and may be a part of a multidwelling or 179.36 multipurpose building and the land on which it is built. A 180.1 manufactured home, as defined in section 273.125, subdivision 8, 180.2 or a park trailer taxed as a manufactured home under section 180.3 168.012, subdivision 9, assessed as personal property may be a 180.4 dwelling for purposes of this subdivision. 180.5 Sec. 17. Minnesota Statutes 1996, section 290A.04, 180.6 subdivision 1, is amended to read: 180.7 Subdivision 1. A refundshall beis allowed each claimant 180.8in the amount that property taxes payable or rent constituting180.9property taxes exceed the percentage of the household income of180.10the claimant specified in subdivision 2 or 2a in the year for180.11which the taxes were levied or in the year in which the rent was180.12paid as specified inunder subdivision 2 or 2a. If theamount180.13of property taxes payable or rent constituting property taxes is180.14equal to or less than the percentage of theclaimant's household 180.15 incomeof the claimantis greater than the maximum amount 180.16 specified in subdivision 2 or 2a in the year for which the taxes 180.17 were levied or in the year in which the rent was paid, the 180.18 claimantshallis notbeeligible for a state refund pursuant to 180.19 this section. 180.20 Sec. 18. Minnesota Statutes 1996, section 290A.04, 180.21 subdivision 2, is amended to read: 180.22 Subd. 2. [HOMEOWNERS.] Each homeowner is allowed a 180.23 standard refund equal to the lesser of: 180.24 (1) 0.25 percent of the taxable market value of the 180.25 homestead; or 180.26 (2) $180. 180.27 In addition to the standard refund, a claimant whose 180.28 property taxes payable after subtraction of (1) the standard 180.29 refund, and (2) the state education tax are in excess ofthe180.30percentage2.5 percent ofthehousehold incomestated below180.31 shall payan amount equal to the percent of income shown for the180.32appropriate2.5 percent of household incomelevel along180.33withplus the percent to be paid by the claimant of the 180.34 remaining amount of property taxes payable as stated below. The 180.35 total state refund equals the amount of property taxes payable 180.36 that remain plus the standard refund amount, up to the maximum 181.1 state refund amount shown below. 181.2PercentPercentMaximum181.3Household Incomeof IncomePaid byState181.4ClaimantRefund181.5$0 to 1,0291.2 percent18 percent$440181.61,030 to 2,0591.3 percent18 percent$440181.72,060 to 3,0991.4 percent20 percent$440181.83,100 to 4,1291.6 percent20 percent$440181.94,130 to 5,1591.7 percent20 percent$440181.105,160 to 7,2291.9 percent25 percent$440181.117,230 to 8,2592.1 percent25 percent$440181.128,260 to 9,2892.2 percent25 percent$440181.139,290 to 10,3192.3 percent30 percent$440181.1410,320 to 11,3492.4 percent30 percent$440181.1511,350 to 12,3892.5 percent30 percent$440181.1612,390 to 14,4492.6 percent30 percent$440181.1714,450 to 15,4792.8 percent35 percent$440181.1815,480 to 16,5093.0 percent35 percent$440181.1916,510 to 17,5493.2 percent40 percent$440181.2017,550 to 21,6693.3 percent40 percent$440181.2121,670 to 24,7693.4 percent45 percent$440181.2224,770 to 30,9593.5 percent45 percent$440181.2330,960 to 36,1193.5 percent45 percent$440181.2436,120 to 41,2793.7 percent50 percent$440181.2541,280 to 58,8294.0 percent50 percent$440181.2658,830 to 59,8594.0 percent50 percent$310181.2759,860 to 60,8894.0 percent50 percent$210181.2860,890 to 61,9294.0 percent50 percent$100181.29 181.30 Percent Paid Maximum State 181.31 Household Income by Claimant Refund 181.33 $0 to 4,999 20 percent $750 181.34 5,000 to 9,999 20 percent $750 181.35 10,000 to 14,999 30 percent $750 181.36 15,000 to 19,999 35 percent $750 181.37 20,000 to 24,999 40 percent $750 181.38 25,000 to 29,999 45 percent $750 181.39 30,000 to 34,999 50 percent $750 181.40 35,000 to 39,999 55 percent $750 181.41 40,000 to 44,999 60 percent $700 181.42 45,000 to 49,999 60 percent $650 181.43 50,000 to 54,999 60 percent $600 181.44 55,000 to 59,999 60 percent $550 181.45 60,000 to 64,999 60 percent $500 181.46 65,000 to 69,499 60 percent $450 181.47 69,500 to 73,999 60 percent $400 181.48 74,000 to 77,499 60 percent $350 181.49 77,500 to 81,999 60 percent $300 181.50 82,000 to 85,499 60 percent $250 181.51 85,500 to 89,999 60 percent $200 181.52 90,000 to 94,499 60 percent $150 181.53 94,500 to 97,499 60 percent $100 181.54 97,500 to 99,999 60 percent $ 50 181.55 The payment made to a claimant shall be the amount of the 181.56 state refund calculated under this subdivision. No payment is 181.57 allowed if the claimant's household income is$61,930$100,000 181.58 or more. 181.59 Sec. 19. Minnesota Statutes 1996, section 290A.04, 181.60 subdivision 6, is amended to read: 181.61 Subd. 6. [INFLATION ADJUSTMENT.] Beginning for property 182.1 tax refunds payable in calendar year 1996, the commissioner 182.2 shall annually adjust the dollar amounts of the income 182.3 thresholds and the maximum refunds under subdivisions 2 and 2a 182.4 for inflation. The commissioner shall make the inflation 182.5 adjustments in accordance with section 290.06, subdivision 2d, 182.6 except that for purposes of this subdivision the percentage 182.7 increase shall be determined from the year ending on August 31, 182.8 1994, to the year ending on August 31 of the year preceding that 182.9 in which the refund is payable. The commissioner shall not 182.10 adjust the dollar amounts under subdivision 2 for refunds that 182.11 are payable in calendar year 2001. Beginning for refunds 182.12 payable in 2002, the base year for adjustment of the dollar 182.13 amounts in subdivision 2 is the year ending June 30, 2000. The 182.14 commissioner shall use the appropriate percentage increase to 182.15 annually adjust the income thresholds and maximum refunds under 182.16 subdivisions 2 and 2a for inflation without regard to whether or 182.17 not the income tax brackets are adjusted for inflation in that 182.18 year. The commissioner shall round the thresholds and the 182.19 maximum amounts, as adjusted to the nearest $10 amount. If the 182.20 amount ends in $5, the commissioner shall round it up to the 182.21 next $10 amount. 182.22 The commissioner shall annually announce the adjusted 182.23 refund schedule at the same time provided under section 290.06. 182.24 The determination of the commissioner under this subdivision is 182.25 not a rule under the administrative procedure act. 182.26 Sec. 20. Minnesota Statutes 1996, section 298.24, 182.27 subdivision 1, is amended to read: 182.28 Subdivision 1. (a) For concentrate produced in 1992, 1993, 182.29 1994, and 1995 there is imposed upon taconite and iron 182.30 sulphides, and upon the mining and quarrying thereof, and upon 182.31 the production of iron ore concentrate therefrom, and upon the 182.32 concentrate so produced, a tax of $2.054 per gross ton of 182.33 merchantable iron ore concentrate produced therefrom. 182.34 (b) For concentrates produced in1996 and subsequent years182.35 1997, 1998, and 1999, the tax rate shall be equal to the 182.36 preceding year's tax rate plus an amount equal to the preceding 183.1 year's tax rate multiplied by the percentage increase in the 183.2 implicit price deflator from the fourth quarter of the second 183.3 preceding year to the fourth quarter of the preceding year, 183.4 provided that, for concentrates produced in 1996 only, the 183.5 increase in the rate of tax imposed under this section over the 183.6 rate imposed for the previous year may not exceed four cents per 183.7 ton. "Implicit price deflator" for the gross national product 183.8 means the implicit price deflator prepared by the bureau of 183.9 economic analysis of the United States Department of 183.10 Commerce. For concentrates produced in 2000 and subsequent 183.11 years, the tax rate shall be equal to the tax rate determined 183.12 under this subdivision for 1999. 183.13 (c) The tax shall be imposed on the average of the 183.14 production for the current year and the previous two years. The 183.15 rate of the tax imposed will be the current year's tax rate. 183.16 This clause shall not apply in the case of the closing of a 183.17 taconite facility if the property taxes on the facility would be 183.18 higher if this clause and section 298.25 were not applicable. 183.19 (d) If the tax or any part of the tax imposed by this 183.20 subdivision is held to be unconstitutional, a tax of $2.054 per 183.21 gross ton of merchantable iron ore concentrate produced shall be 183.22 imposed. 183.23 (e) Consistent with the intent of this subdivision to 183.24 impose a tax based upon the weight of merchantable iron ore 183.25 concentrate, the commissioner of revenue may indirectly 183.26 determine the weight of merchantable iron ore concentrate 183.27 included in fluxed pellets by subtracting the weight of the 183.28 limestone, dolomite, or olivine derivatives or other basic flux 183.29 additives included in the pellets from the weight of the 183.30 pellets. For purposes of this paragraph, "fluxed pellets" are 183.31 pellets produced in a process in which limestone, dolomite, 183.32 olivine, or other basic flux additives are combined with 183.33 merchantable iron ore concentrate. No subtraction from the 183.34 weight of the pellets shall be allowed for binders, mineral and 183.35 chemical additives other than basic flux additives, or moisture. 183.36 (f)(1) Notwithstanding any other provision of this 184.1 subdivision, for the first five years of a plant's production of 184.2 direct reduced ore, the rate of the tax on direct reduced ore is 184.3 determined under this paragraph. As used in this paragraph, 184.4 "direct reduced ore" is ore that results in a product that has 184.5 an iron content of at least 75 percent. The rate to be applied 184.6 to direct reduced ore is 25 percent of the rate otherwise 184.7 determined under this subdivision for the first 500,000 of 184.8 taxable tons for the production year, and 50 percent of the rate 184.9 otherwise determined for any remainder. If the taxpayer had no 184.10 production in the two years prior to the current production 184.11 year, the tonnage eligible to be taxed at 25 percent of the rate 184.12 otherwise determined under this subdivision is the first 166,667 184.13 tons. If the taxpayer had some production in the year prior to 184.14 the current production year but no production in the second 184.15 prior year, the tonnage eligible to be taxed at 25 percent of 184.16 the rate otherwise determined under this subdivision is the 184.17 first 333,333 tons. 184.18 (2) Production of direct reduced ore in this state is 184.19 subject to the tax imposed by this section, but if that 184.20 production is not produced by a producer of taconite or iron 184.21 sulfides, the production of taconite or iron sulfides consumed 184.22 in the production of direct reduced iron in this state is not 184.23 subject to the tax imposed by this section on taconite or iron 184.24 sulfides. 184.25 Sec. 21. [REPEALER.] 184.26 Minnesota Statutes 1996, sections 273.13, subdivision 21a; 184.27 273.1315; 275.08, subdivisions 1c and 1d; and 275.61, are 184.28 repealed. 184.29 Sec. 22. [EFFECTIVE DATE.] 184.30 Sections 1 to 4 and 6 to 14 and 21 are effective for taxes 184.31 levied in 1999, payable in 2000 and subsequent years. 184.32 Section 15 is effective for tax years beginning after 1999. 184.33 Sections 16 to 19 are effective for refunds payable in 2000 184.34 and following years. 184.35 Section 20 is effective January 1, 2000. 184.36 ARTICLE 7 185.1 EDUCATION FINANCE REFORM PAY 2000 185.2 Section 1. Minnesota Statutes 1996, section 122.247, 185.3 subdivision 3, is amended to read: 185.4 Subd. 3. [TRANSITIONALLEVYREVENUE.] The board of the 185.5 combined district, or the boards of combining districts that 185.6 have received voter approval for the combination under section 185.7 122.243, subdivision 2,may levyare eligible for state aid to 185.8 pay for the expenses of negotiation, administrative expenses 185.9 directly related to the transition from cooperation to 185.10 combination, and the cost of necessary new athletic and music 185.11 uniforms.The board or boards may levy this amount over three185.12or fewer years.All expenses must be approved by the 185.13 commissioner of children, families, and learning. The 185.14 commissioner may pay this state aid to a district over three or 185.15 fewer years. 185.16 Sec. 2. Minnesota Statutes 1996, section 122.45, 185.17 subdivision 3a, is amended to read: 185.18 Subd. 3a. (a) Liabilities of a dissolved district existing 185.19 at the time of the attachment other than bonded debt within the 185.20 purview of subdivision 2 shall be obligations of the 185.21 consolidated district after attachment (in the amount and kind 185.22 determined by the commissioner according to subdivision 1, where 185.23 a dissolved district is divided), for the payment of which the 185.24 consolidated district has a right to reimbursement byspecial185.25levy or leviesstate aid. The amount of reimbursement will be 185.26 equal to the liabilities of the dissolved district for which the 185.27 consolidated district is obligated less the aggregate of the 185.28 following which has been or will be received by the consolidated 185.29 district at or after the time of attachment from or as a result 185.30 of the dissolution and attachment of the dissolved district: 185.31 (1) all taxes inuring to the consolidating district upon 185.32 levies made by the dissolved district; 185.33 (2) all cash, bank accounts, investments, and other current 185.34 assets; 185.35 (3) earned state aids of the dissolved districts; 185.36 (4) returns from the sale of property of the dissolved 186.1 district. 186.2 (b) The amount ofsuch special levy so computed shall be186.3certified to the county auditor with the other tax requirements186.4of the consolidated district but separately stated and186.5identified. The auditor shall add the amount of special levy so186.6certified to the school rate for the territory in the186.7consolidated district which came from the dissolved district and186.8include it in the levy on the taxable property in that186.9territory; provided, the county auditor shall not spread more of186.10the amount certified for special levy in any year than will186.11amount to 20 percent of the school levy without the special186.12levy, leaving the remaining part of the certified amount for186.13levy in successive years without further certification. Any186.14amount of reimbursement to which it is entitled omitted by the186.15consolidated district from its initial certification for special186.16levy may be certified in a subsequent year for levy in the same186.17manner as the levy upon initial certification.186.18The levy authorized by this subdivision shall be in186.19addition to those otherwise authorized for a school district.186.20 state aid shall be calculated by the commissioner and may be 186.21 reduced at the commissioner's discretion for any liabilities 186.22 that the commissioner determines are inappropriate for 186.23 reimbursement. 186.24 Sec. 3. Minnesota Statutes 1996, section 122.531, 186.25 subdivision 4a, is amended to read: 186.26 Subd. 4a. [REORGANIZATION OPERATING DEBTLEVIESREVENUE.] 186.27 (a) A district that receives revenue under section 124.2725 for 186.28 cooperation or has combined according to sections 122.241 to 186.29 122.248may levyis eligible for state aid to eliminate 186.30 reorganization operating debt as defined in section 121.915, 186.31 clause (1).The amount of the debt must be certified over a186.32period of five years. After the effective date of combination186.33according to sections 122.241 to 122.248, the levy may be186.34certified and spread either186.35(1) only on the property in the combined district that186.36would have been taxable in the preexisting district that187.1incurred the debt, or187.2(2) on all of the taxable property in the combined district.187.3 (b) A district that has reorganized according to section 187.4 122.22 or 122.23may levyis eligible for state aid to eliminate 187.5 reorganization operating debt as defined in section 121.915, 187.6 clause (2).The amount of debt must be certified over a period187.7not to exceed five years and may be spread either187.8(1) only on the property in the newly created or enlarged187.9district which was taxable in the preexisting district that187.10incurred the debt, or187.11(2) on all of the taxable property in the newly created or187.12enlarged district.187.13 (c) The commissioner shall calculate the amount of 187.14 reorganization operating debt for each qualifying school 187.15 district. At the commissioner's discretion, the amount of the 187.16 state aid may be reduced for any school district. The 187.17 commissioner shall establish a schedule for the payment of state 187.18 aid. The schedule may extend for up to five years. 187.19 Sec. 4. Minnesota Statutes 1996, section 122.531, 187.20 subdivision 9, is amended to read: 187.21 Subd. 9. [LEVYREVENUE FOR SEVERANCE PAY OR EARLY 187.22 RETIREMENT INCENTIVES.] The school board of a newly created or 187.23 enlarged district to which part or all of a dissolved district 187.24 was attached according to section 122.22may levy foris 187.25 eligible for state aid payments for the cost of severance pay or 187.26 early retirement incentives for licensed and nonlicensed 187.27 employees who resign or retire early as a result of the 187.28 dissolution or consolidation, if the commissioner of children, 187.29 families, and learning approves the incentives and the amountto187.30be levied. The amount may be levied over a period of up to five187.31years and shall be spread in whole or in part on the property of187.32a preexisting district or the newly created or enlarged187.33district, as determined by the school board of the newly created187.34or enlarged districtof the incentives. The commissioner shall 187.35 establish a schedule for the payment of state aid. The schedule 187.36 may extend for up to five years. 188.1 Sec. 5. Minnesota Statutes 1996, section 122.533, is 188.2 amended to read: 188.3 122.533 [EXPENSES OF TRANSITION.] 188.4 The board of a district to which a dissolved district is 188.5 attached pursuant to section 122.22,may,is eligible for state 188.6 aid for the purpose of paying the expenses of negotiations and 188.7 other administrative expenses relating to the transition,. The 188.8 board of the district may enter into agreements with banks or 188.9 any person to take its orders at any rate of interest not to 188.10 exceed seven percent per annum. These orders shall be paid by 188.11 the treasurer of the district from district funds after the 188.12 effective date of the dissolution and attachment. 188.13 Notwithstanding the provisions of sections 124.226, 124.2716, 188.14 124.91, 124.912, 124.914, 124.916, and 124.918, the districtmay188.15 is, in the year the dissolution and attachment becomes 188.16 effective,levyeligible for state aid in an amount equal to the 188.17 amount of the orders issued pursuant to this subdivision and the 188.18 interest on these orders. No district shall issue orders for 188.19 fundsor make a levy pursuantaccording to this subdivision 188.20 without the commissioner's approval of the expenses to be paid 188.21 with the funds from the orders andlevystate aid. 188.22 Sec. 6. Minnesota Statutes 1996, section 122.535, 188.23 subdivision 6, is amended to read: 188.24 Subd. 6. [SEVERANCE PAY.] A district shall pay severance 188.25 pay to a teacher who is placed on unrequested leave of absence 188.26 by the district as a result of the agreement. A teacher is 188.27 eligible under this subdivision if the teacher: 188.28 (1) is a teacher, as defined in section 125.12, subdivision 188.29 1, but not a superintendent; 188.30 (2) has a continuing contract with the district according 188.31 to section 125.12, subdivision 4. 188.32 The amount of severance pay shall be equal to the teacher's 188.33 salary for the school year during which the teacher was placed 188.34 on unrequested leave of absence minus the gross amount the 188.35 teacher was paid during the 12 months following the teacher's 188.36 termination of salary, by an entity whose teachers by statute or 189.1 rule must possess a valid Minnesota teaching license, and minus 189.2 the amount a teacher receives as severance or other similar pay 189.3 according to a contract with the district or district policy. 189.4 These entities include, but are not limited to, the school 189.5 district that placed the teacher on unrequested leave of 189.6 absence, another school district in Minnesota, an education 189.7 district, an intermediate school district, a SC, a board formed 189.8 under section 471.59, a state residential academy, the Lola and 189.9 Rudy Perpich Minnesota center for arts education, a vocational 189.10 center, or a special education cooperative. These entities do 189.11 not include a school district in another state, a Minnesota 189.12 public post-secondary institution, or a state agency. Only 189.13 amounts earned by the teacher as a substitute teacher or in a 189.14 position requiring a valid Minnesota teaching license shall be 189.15 subtracted. A teacher may decline any offer of employment as a 189.16 teacher without loss of rights to severance pay. 189.17 To determine the amount of severance pay that is due for 189.18 the first six months following termination of the teacher's 189.19 salary, the district may require the teacher to provide 189.20 documented evidence of the teacher's employers and gross 189.21 earnings during that period. The district shall pay the teacher 189.22 the amount of severance pay it determines to be due from the 189.23proceeds of the levystate aid for this purpose. To determine 189.24 the amount of severance pay that is due for the second six 189.25 months of the 12 months following the termination of the 189.26 teacher's salary, the district may require the teacher to 189.27 provide documented evidence of the teacher's employers and gross 189.28 earnings during that period. The district shall pay the teacher 189.29 the amount of severance pay it determines to be due from 189.30 theproceeds of the levystate aid for this purpose. 189.31 A teacher who receives severance pay under this subdivision 189.32 waives all further reinstatement rights under section 125.12, 189.33 subdivision 6a or 6b. If the teacher receives severance pay, 189.34 the teacher shall not receive credit for any years of service in 189.35 the district paying severance pay prior to the year in which the 189.36 teacher becomes eligible to receive severance pay. 190.1 The severance pay is subject to section 465.72. The 190.2 districtmay levy annuallyis eligible for state aid according 190.3 to section 124.912, subdivision 1, for the severance pay. 190.4 Sec. 7. Minnesota Statutes 1996, section 124.2131, 190.5 subdivision 1, is amended to read: 190.6 Subdivision 1. [ADJUSTEDNETTAX CAPACITY.] (a) 190.7 [COMPUTATION.] The department of revenue shall annually conduct 190.8 an assessment/sales ratio study of the taxable property in each 190.9 school district in accordance with the procedures in paragraphs 190.10 (b) and (c). Based upon the results of this assessment/sales 190.11 ratio study, the department of revenue shall determine an 190.12 aggregate equalizednetlocal tax capacity forthe various190.13classes of taxable property ineach county, city, town, and 190.14 school district under the definition of tax base contained in 190.15 section 273.13, subdivision 1a, whichtax capacityshall be 190.16 designated as the adjustednetlocal tax capacity. Based upon 190.17 the results of the study, the department shall determine an 190.18 aggregate equalized education tax capacity for each school 190.19 district under the definition of tax base contained in section 190.20 273.13, subdivision 1b, which shall be designated as the 190.21 adjusted education tax capacity. The adjustednettax 190.22 capacities shall be determined using thenettax capacity 190.23 percentages in effect for the assessment year following the 190.24 assessment year of the study. The department of revenue shall 190.25 make whatever estimates are necessary to account for changes in 190.26 the classification system. The department of revenue may incur 190.27 the expense necessary to make the determinations. The 190.28 commissioner of revenue may reimburse any county or governmental 190.29 official for requested services performed in ascertaining the 190.30 adjustednettax capacity. On or before March 15 annually, the 190.31 department of revenue shall file with the chair of the tax 190.32 committee of the house of representatives and the chair of the 190.33 committee on taxes and tax laws of the senate a report of 190.34 adjustednettax capacities. On or before June 15 annually, the 190.35 department of revenue shall file its final report on the 190.36 adjustedneteducation tax capacities established by the 191.1 previous year's assessments and the current year'sneteducation 191.2 tax capacity percentages with the commissioner of children, 191.3 families, and learning and each county auditor for those school 191.4 districts for which the auditor has the responsibility for 191.5 determination of local tax rates. A copy of the report so filed 191.6 shall be mailed to the clerk of each district involved and to 191.7 the county assessor or supervisor of assessments of the county 191.8 or counties in which each district is located. 191.9 (b) [METHODOLOGY.] In making its annual assessment/sales 191.10 ratio studies, the department of revenue shall use a methodology 191.11 consistent with the most recent Standard on Assessment Ratio 191.12 Studies published by the assessment standards committee of the 191.13 International Association of Assessing Officers. The 191.14 commissioner of revenue shall supplement this general 191.15 methodology with specific procedures necessary for execution of 191.16 the study in accordance with other Minnesota laws impacting the 191.17 assessment/sales ratio study. The commissioner shall document 191.18 these specific procedures in writing and shall publish the 191.19 procedures in the State Register, but these procedures will not 191.20 be considered "rules" pursuant to the Minnesota administrative 191.21 procedure act. For purposes of this section, sections 270.12, 191.22 subdivision 2, clause (8), and 278.05, subdivision 4, the 191.23 commissioner of revenue shall exclude from the assessment/sales 191.24 ratio study the sale of any nonagricultural property which does 191.25 not contain an improvement, if (1) the statutory basis on which 191.26 the property's taxable value as most recently assessed is less 191.27 than market value as defined in section 273.11, or (2) the 191.28 property has undergone significant physical change or a change 191.29 of use since the most recent assessment. 191.30 (c) [AGRICULTURAL LANDS.] For purposes of determining the 191.31 adjusted net tax capacity of agricultural lands for the 191.32 calculation of adjusted net tax capacities, the market value of 191.33 agricultural lands shall be the price for which the property 191.34 would sell in an arms length transaction. 191.35 (d) [FORCED SALES.] The commissioner may include forced 191.36 sales in the assessment/sales ratio studies if it is determined 192.1 by the commissioner that these forced sales indicate true market 192.2 value. 192.3 (e) [STIPULATED VALUES AND ABATEMENTS.] The estimated 192.4 market value to be used in calculating sales ratios shall be the 192.5 value established by the assessor before any stipulations 192.6 resulting from appeals by property owners and before any 192.7 abatement unless the abatement was granted for the purpose of 192.8 correcting mere clerical errors. 192.9 (f) [SALES OF INDUSTRIAL PROPERTY.] Separate sales ratios 192.10 shall be calculated for commercial property and for industrial 192.11 property. These two classes shall be combined only in 192.12 jurisdictions in which there is not an adequate sample of sales 192.13 in each class. 192.14 Sec. 8. Minnesota Statutes 1996, section 124.239, 192.15 subdivision 5, is amended to read: 192.16 Subd. 5. [LEVY AUTHORIZED.] A district, after local board 192.17 approval, may levy for costs related to an approved facility 192.18 plan as follows: 192.19 (a) if the district has indicated to the commissioner that 192.20 bonds will be issued, the district may levy for the principal 192.21 and interest payments on outstanding bonds issued according to 192.22 subdivision 3; or 192.23 (b) if the district has indicated to the commissioner that 192.24 the plan will be funded through levy, the district may levy 192.25 according to the schedule approved in the plan. 192.26 The authority to levy for costs related to an approved 192.27 facility plan under this section is limited to facilities plans 192.28 approved prior to July 1, 1999. 192.29 Sec. 9. Minnesota Statutes 1996, section 124.2725, 192.30 subdivision 2, is amended to read: 192.31 Subd. 2. [COOPERATION AND COMBINATION REVENUE.] 192.32 Cooperation and combination revenue equals $100 times the pupil 192.33 units served in the district. For purposes of this section, 192.34 pupil units served means the number of resident and nonresident 192.35 pupil units in average daily membership receiving instruction in 192.36 the cooperating or combined district. A district may not 193.1 receive revenue under this section if itleviesreceives revenue 193.2 under section 124.912, subdivision 4. Cooperation and 193.3 combination revenue is provided through state aid. 193.4 Sec. 10. Minnesota Statutes 1996, section 124.2725, 193.5 subdivision 6, is amended to read: 193.6 Subd. 6. [ADDITIONAL AID.] In addition to the aid in 193.7 subdivision52, districts shall receive aid according to the 193.8 following: 193.9 (1) for districts that did not enter into an agreement 193.10 under section 122.541 at least three years before the date of a 193.11 successful referendum held under section 122.243, subdivision 2, 193.12 and combine without cooperating, $100 times the pupil units 193.13 served in the district in the first year of combination; or 193.14 (2) for districts that combine after one or two years of 193.15 cooperation, $100 times the actual pupil units served in each 193.16 district for the first year of cooperation and $100 times the 193.17 actual pupil units served in the combined district for the first 193.18 year of combination; or 193.19 (3) for districts that entered into an agreement under 193.20 section 122.541 at least three years before the date of a 193.21 successful referendum held under section 122.243, subdivision 2, 193.22 and combine without cooperating, $100 times the pupil units 193.23 served in the combined district for the first two years of 193.24 combination. 193.25 Sec. 11. Minnesota Statutes 1996, section 124.2725, 193.26 subdivision 13, is amended to read: 193.27 Subd. 13. [FAILURE TO COMBINE.] A district has failed to 193.28 combine if the commissioner disapproves of the plan according to 193.29 section 122.243, subdivision 1, or if a third referendum fails 193.30 under section 122.243, subdivision 2, or if the commissioner of 193.31 children, families, and learning determines that the districts 193.32 involved are not making sufficient progress toward combination. 193.33 (a) If a district has failed to combine, cooperation and 193.34 combination aid under subdivisions 5 and 6 shall not be paidand193.35the authority to levy under subdivision 4 ceases. The 193.36 commissioner shall reduce other aids due the district to recover 194.1 an amount equal to the aid paid under subdivision 6 plus the 194.2 difference between the aid paid under subdivision 5 and the aid 194.3 that would have been paid if the revenue had been $50 times the 194.4 pupil units served. 194.5 (b) If a district has failed to combine, theauthority to194.6levyeligibility for revenue for reorganization operating debt 194.7 under section 122.531, subdivision 4a, and for severance pay or 194.8 early retirement incentives under subdivision 15 ceases. 194.9 Sec. 12. Minnesota Statutes 1996, section 124.2725, 194.10 subdivision 14, is amended to read: 194.11 Subd. 14. [CESSATION OF REVENUE.] At any time the 194.12 districts cease cooperating, aid shall not be paidand the194.13authority to levy ceases. If a district ceases to cooperate for194.14all or a portion of a fiscal year for which a levy has been194.15certified under subdivision 3, the department of children,194.16families, and learning shall adjust the next levy certified by194.17the district by an amount in proportion to the part of the194.18fiscal year that the district did not cooperate. 194.19 Sec. 13. Minnesota Statutes 1996, section 124.2726, 194.20 subdivision 1, is amended to read: 194.21 Subdivision 1. [ELIGIBILITY AND USE.] A school district 194.22 that has been reorganized after June 30, 1994, under section 194.23 122.23 is eligible for consolidation transition revenue. 194.24 Revenue is equal to the sum of aid undersubdivision194.25 subdivisions 2 andlevy under subdivision3. Consolidation 194.26 transition revenue may only be used according to this section. 194.27 Revenue must be used for the following purposes and may be 194.28 distributed among these purposes at the discretion of the 194.29 district: 194.30 (1) to offer early retirement incentives as provided by 194.31 section 122.23, subdivision 20; 194.32 (2) to reduce operating debt as defined in section 121.915; 194.33 (3) to enhance learning opportunities for students in the 194.34 reorganized district; and 194.35 (4) for other costs incurred in the reorganization. 194.36 Revenue received and utilized under clause (3) or (4) may 195.1 be expended for operating, facilities, and/or equipment. 195.2 Revenue received under this section shall not be included in the 195.3 determination of the reduction under section 124A.26, 195.4 subdivision 1. 195.5 Sec. 14. Minnesota Statutes 1996, section 124.2726, 195.6 subdivision 3, is amended to read: 195.7 Subd. 3. [LEVYADDITIONAL AID.] If the aid available in 195.8 subdivision 2 is insufficient to cover the costs of the district 195.9 under section 122.23, subdivision 20, the district maylevy195.10 apply to the commissioner for state aid to cover the difference 195.11over a period of time not to exceed. The commissioner shall 195.12 evaluate the aid request and may award additional aid for a 195.13 period not to exceed three years. 195.14 Sec. 15. Minnesota Statutes 1996, section 124.2727, 195.15 subdivision 6a, is amended to read: 195.16 Subd. 6a. [DISTRICT COOPERATION REVENUE.] A district's 195.17 cooperation revenue is equal to the greater of $67 times the 195.18 actual pupil units or $25,000. District cooperation revenue is 195.19 provided through state aid. 195.20 Sec. 16. Minnesota Statutes 1996, section 124.312, 195.21 subdivision 5, is amended to read: 195.22 Subd. 5. [INTEGRATION AID.]For fiscal year 1996 and later195.23fiscal yearsIntegration revenue is provided through state aid 195.24 and equals the following amounts: 195.25 (1) for independent school district No. 709, Duluth, 195.26 $1,385,000 plus the sum of $660,000 and an amount equal to 2.0 195.27 percent times the district's adjusted net tax capacity for 195.28 assessment year 1998; 195.29 (2) for independent school district No. 625, St. Paul, 195.30 $8,090,700 plus the product of $197 and the district's actual 195.31 pupil units for that year; and 195.32 (3) for special school district No. 1, Minneapolis, 195.33 $9,368,300 plus the product of $197 and the district's actual 195.34 pupil units for that year. 195.35 Sec. 17. Minnesota Statutes 1996, section 124.313, is 195.36 amended to read: 196.1 124.313 [TARGETED NEEDS REVENUE.] 196.2 For fiscal year 1996 and thereafter, a school district's 196.3 targeted needs revenue equals the sum of: 196.4 (1) assurance of mastery revenue according to section 196.5 124.311; plus 196.6 (2) the district's limited English proficiency revenue 196.7 computed according to section 124.273, subdivision 1d; plus 196.8 (3) integration revenue computed according to section 196.9 124.312, subdivision 4. 196.10 Sec. 18. Minnesota Statutes 1996, section 124.4945, is 196.11 amended to read: 196.12 124.4945 [LEVYSTATE AID FOR SEVERANCE PAY.] 196.13 A joint powers board established under section 124.494may196.14make a levyis eligible to receive state aid to provide 196.15 severance pay and early retirement incentives under section 196.16 125.611, for any teacher as defined under section 125.12, 196.17 subdivision 1, who is placed on unrequested leave as a result of 196.18 the cooperative secondary facility agreement.A joint powers196.19board making a levy shall certify to each participating district196.20tax levies sufficient to raise the amount necessary to provide196.21the district's portion of severance pay and early retirement196.22incentives. The tax levy certified to each district must be196.23expressed as a local tax rate, that, when applied to the196.24adjusted net tax capacity of all of the participating districts196.25raises the amount necessary to provide severance pay and early196.26retirement incentives. Each participating school district shall196.27include the levy in the next tax roll which it shall certify to196.28the county auditor, and shall remit the collections of the levy196.29to the joint powers board.The commissioner shall approve any 196.30 severance pay agreements or early retirement incentives and 196.31 determine the amount of state aid for the districts. 196.32 Sec. 19. Minnesota Statutes 1996, section 124.83, 196.33 subdivision 3, is amended to read: 196.34 Subd. 3. [HEALTH AND SAFETY REVENUE.] A district's health 196.35 and safety revenue for a fiscal year equals: 196.36 (1) the sum of (a) the total approved cost of the 197.1 district's hazardous substance plan for fiscal years 1985 197.2 through 1989, plus (b) the total approved cost of the district's 197.3 health and safety program for fiscal year 1990 through the 197.4 fiscal year to which the levy is attributable, minus 197.5 (2) the sum of (a) the district's total hazardous substance 197.6 aid and levy for fiscal years 1985 through 1989 under sections 197.7 124.245 and 275.125, subdivision 11c, plus (b) the district's 197.8 health and safety revenue under this subdivision, for years 197.9 before the fiscal year to which the levy is attributable, plus 197.10 (c) the amount of other federal, state, or local receipts for 197.11 the district's hazardous substance or health and safety programs 197.12 for fiscal year 1985 through the fiscal year to which the levy 197.13 is attributable. 197.14 The commissioner shall not approve any new health and 197.15 safety revenue plans after July 1, 1999. 197.16 Sec. 20. Minnesota Statutes 1996, section 124.91, 197.17 subdivision 1, is amended to read: 197.18 Subdivision 1. [TO LEASE BUILDING OR LAND.] When a 197.19 district finds it economically advantageous to rent or lease a 197.20 building or land for any instructional purposes or for school 197.21 storage or furniture repair, and it determines that the capital 197.22 expenditure facilities revenues authorized under sections 197.23 124.243 and 124A.22, subdivision 10, are insufficient for this 197.24 purpose, it may apply to the commissioner for permission to make 197.25 an additional capital expenditure levy for this purpose. The 197.26 commissioner shall not approve any levies under this section 197.27 after July 1, 1999. A school district that has approved levy 197.28 authority under this section may continue to levy for the 197.29 remainder of the lease amounts. An application for permission 197.30 to levy under this subdivision must contain financial 197.31 justification for the proposed levy, the terms and conditions of 197.32 the proposed lease, and a description of the space to be leased 197.33 and its proposed use. The criteria for approval of applications 197.34 to levy under this subdivision must include: the reasonableness 197.35 of the price, the appropriateness of the space to the proposed 197.36 activity, the feasibility of transporting pupils to the leased 198.1 building or land, conformity of the lease to the laws and rules 198.2 of the state of Minnesota, and the appropriateness of the 198.3 proposed lease to the space needs and the financial condition of 198.4 the district. The commissioner must not authorize a levy under 198.5 this subdivision in an amount greater than the cost to the 198.6 district of renting or leasing a building or land for approved 198.7 purposes. The proceeds of this levy must not be used for 198.8 custodial or other maintenance services. A district may not 198.9 levy under this subdivision for the purpose of leasing or 198.10 renting a district-owned building to itself. 198.11 Sec. 21. Minnesota Statutes 1996, section 124.91, 198.12 subdivision 2, is amended to read: 198.13 Subd. 2. [PRE-JULY 1990 LEASE PURCHASE, INSTALLMENT BUYS.] 198.14 For taxes payable prior to 2000, a district may annually levy 198.15 the amount needed to make payments required by a lease purchase 198.16 agreement, installment purchase agreement, or other deferred 198.17 payment agreement authorized by Minnesota Statutes 1989 198.18 Supplement, section 465.71, if: 198.19 (1) the agreement was approved by the commissioner before 198.20 July 1, 1990, according to Minnesota Statutes 1989 Supplement, 198.21 section 275.125, subdivision 11d; or 198.22 (2) the district levied in 1989 for the payments. 198.23 For fiscal years 2001 and later, the commissioner shall pay 198.24 state aid to each district in the amount needed to make the 198.25 payments authorized by this section. 198.26 Sec. 22. Minnesota Statutes 1996, section 124.91, 198.27 subdivision 5, is amended to read: 198.28 Subd. 5. [INTERACTIVE TELEVISION.] (a) A school district 198.29 with its central administrative office located within economic 198.30 development region one, two, three, four, five, six, seven, 198.31 eight, nine, and ten may apply to the commissioner of children, 198.32 families, and learning for ITV revenue up to the greater of .5 198.33 percent of the adjusted net tax capacity of the district or 198.34 $25,000 for the construction, maintenance, and lease costs of an 198.35 interactive television system for instructional purposes. The 198.36 approval by the commissioner of children, families, and learning 199.1 and the application procedures set forth in subdivision 1 shall 199.2 apply to the revenue in this subdivision. In granting the 199.3 approval, the commissioner must consider whether the district is 199.4 maximizing efficiency through peak use and off-peak use pricing 199.5 structures. The commissioner may not approve any new projects 199.6 after July 1, 1999. 199.7 (b) To obtain ITV revenue, a district may levy an amount 199.8 not to exceed the district's ITV revenue times the lesser of one 199.9 or the ratio of: 199.10 (1) the quotient derived by dividing the adjusted net tax 199.11 capacity of the district for the year before the year the levy 199.12 is certified by the actual pupil units in the district for the 199.13 year to which the levy is attributable; to 199.14 (2) 100 percent of the equalizing factor as defined in 199.15 section 124A.02, subdivision 8, for the year to which the levy 199.16 is attributable. 199.17 (c) A district's ITV aid is the difference between its ITV 199.18 revenue and the ITV levy. 199.19 (d) The revenue in the first year after reorganization for 199.20 a district that has reorganized under section 122.22, 122.23, or 199.21 122.241 to 122.247 shall be the greater of: 199.22 (1) the revenue computed for the reorganized district under 199.23 paragraph (a), or 199.24 (2)(i) for two districts that reorganized, 75 percent of 199.25 the revenue computed as if the districts involved in the 199.26 reorganization were separate, or 199.27 (ii) for three or more districts that reorganized, 50 199.28 percent of the revenue computed as if the districts involved in 199.29 the reorganization were separate. 199.30 (e) The revenue in paragraph (d) is increased by the 199.31 difference between the initial revenue and ITV lease costs for 199.32 leases that had been entered into by the preexisting districts 199.33 on the effective date of the consolidation or combination and 199.34 with a term not exceeding ten years. This increased revenue is 199.35 only available for the remaining term of the lease. However, in 199.36 no case shall the revenue exceed the amount available had the 200.1 preexisting districts received revenue separately. 200.2 Sec. 23. Minnesota Statutes 1996, section 124.91, 200.3 subdivision 7, is amended to read: 200.4 Subd. 7. [LEASE PURCHASE, INSTALLMENT BUYS.] (a) Upon 200.5 application to, and approval by, the commissioner in accordance 200.6 with the procedures and limits in subdivision 1, a district, as 200.7 defined in this subdivision, may: 200.8 (1) purchase real or personal property under an installment 200.9 contract or may lease real or personal property with an option 200.10 to purchase under a lease purchase agreement, by which 200.11 installment contract or lease purchase agreement title is kept 200.12 by the seller or vendor or assigned to a third party as security 200.13 for the purchase price, including interest, if any; and 200.14 (2)annually levyreceive state aid in the amounts 200.15 necessary to pay the district's obligations under the 200.16 installment contract or lease purchase agreement. 200.17 (b) The obligation created by the installment contract or 200.18 the lease purchase agreement must not be included in the 200.19 calculation of net debt for purposes of section 475.53, and does 200.20 not constitute debt under other law. An election is not 200.21 required in connection with the execution of the installment 200.22 contract or the lease purchase agreement. 200.23 (c) Theproceeds of the levy authorized bycommissioner 200.24 shall not authorize state aid under this subdivisionmust notto 200.25 be used to acquire a facility to be primarily used for athletic 200.26 or school administration purposes. 200.27 (d) For the purposes of this subdivision, "district" means: 200.28 (1) a school district required to have a comprehensive plan 200.29 for the elimination of segregation whose plan has been 200.30 determined by the commissioner to be in compliance with the 200.31 state board of education rules relating to equality of 200.32 educational opportunity and school desegregation; or 200.33 (2) a school district that participates in a joint program 200.34 for interdistrict desegregation with a district defined in 200.35 clause (1) if the facility acquired under this subdivision is to 200.36 be primarily used for the joint program. 201.1 (e)Notwithstanding subdivision 1, the prohibition against201.2a levy by a district to lease or rent a district-owned building201.3to itself does not apply to levies otherwise authorized by this201.4subdivision.201.5(f)For the purposes of this subdivision, any references in 201.6 subdivision 1 to building or land shall include personal 201.7 property. 201.8 Sec. 24. Minnesota Statutes 1996, section 124.912, 201.9 subdivision 1, is amended to read: 201.10 Subdivision 1. [STATUTORY OBLIGATIONS.](a)A school 201.11 district may levythe amount authorized for liabilities of201.12dissolved districts pursuant to section 122.45; the amounts201.13necessary to pay the district's obligations under section201.14268.06, subdivision 25; the amounts necessary to pay for job201.15placement services offered to employees who may become eligible201.16for benefits pursuant to section 268.08;the amounts necessary 201.17 to pay the district's obligations under section 127.05; the201.18amounts authorized by section 122.531; the amounts necessary to201.19pay the district's obligations under section 122.533; and for201.20severance pay required by sections 120.08, subdivision 3, and201.21122.535, subdivision 6. 201.22(b) Each year, a member district of an education district201.23that levies under this subdivision must transfer the amount of201.24revenue certified under paragraph (b) to the education district201.25board according to this subdivision. By June 20 and November 30201.26of each year, an amount must be transferred equal to:201.27(1) 50 percent times201.28(2) the amount certified in paragraph (b) minus homestead201.29and agricultural credit aid allocated for that levy according to201.30section 273.1398, subdivision 6.A school district is eligible 201.31 for state aid for the following purposes: 201.32 (1) liabilities for dissolved districts under section 201.33 122.45; 201.34 (2) the amounts necessary to pay the district's obligations 201.35 under section 268.06, subdivision 25; 201.36 (3) the amounts necessary to pay for job placement services 202.1 offered to employees who may become eligible for benefits 202.2 pursuant to section 268.08; 202.3 (4) the amounts authorized by section 122.531; 202.4 (5) the amounts necessary to pay the district's obligations 202.5 under section 122.533; and 202.6 (6) for severance pay required by sections 120.08, 202.7 subdivision 3, and 122.535, subdivision 6. 202.8 The commissioner shall consider all requests for state aid 202.9 under this subdivision and shall, at the commissioner's 202.10 discretion, approve, modify, or disapprove aid amounts. 202.11 Sec. 25. Minnesota Statutes 1996, section 124.912, 202.12 subdivision 3, is amended to read: 202.13 Subd. 3. [RULE COMPLIANCE.] Each year a district that is 202.14 required to implement a plan according to the requirements of 202.15 Minnesota Rules, parts 3535.0200 to 3535.2200,may levyis 202.16 eligible for state aid in an amountnot to exceed a net tax rate202.17ofequal to 2.0 percent times the adjusted net tax capacity of 202.18 the district fortaxes payable in 1991 and thereafterthe 202.19 preceding year. A district thatleviesreceives integration 202.20 revenue according tosubdivision 2 may not levy according202.21tosection 124.312 is not eligible for state aid under this 202.22 subdivision.Notwithstanding section 121.904, the entire amount202.23of this levy shall be recognized as revenue for the fiscal year202.24in which the levy is certified. This levy shall not be202.25considered in computing the aid reduction under section 124.155.202.26 Sec. 26. Minnesota Statutes 1996, section 124.912, 202.27 subdivision 6, is amended to read: 202.28 Subd. 6. [CRIME RELATED COSTS.]For taxes levied in 1991202.29and subsequent years, payable in 1992 and subsequent years, each202.30school district may make a levy on all taxable property located202.31within the school district for the purposes specified in this202.32subdivision. The maximum amount which may be levied for all202.33costs under this subdivision shall be equal toState aid for 202.34 crime related costs equals $1 multiplied by the population of 202.35 the school district. For purposes of this subdivision, 202.36 "population" of the school district means the same as contained 203.1 in section 275.14. Theproceeds of the levystate aid must be 203.2 used for reimbursing the cities and counties who contract with 203.3 the school district for the following purposes: (1) to pay the 203.4 costs incurred for the salaries, benefits, and transportation 203.5 costs of peace officers and sheriffs for liaison services in the 203.6 district's middle and secondary schools; (2) to pay the costs 203.7 for a drug abuse prevention program as defined in Minnesota 203.8 Statutes 1991 Supplement, section 609.101, subdivision 3, 203.9 paragraph (f), in the elementary schools; or (3) to pay the 203.10 costs for a gang resistance education training curriculum in the 203.11 middle schools. The school district must initially attempt to 203.12 contract for these services with the police department of each 203.13 city or the sheriff's department of the county within the school 203.14 district containing the school receiving the services. If a 203.15 local police department or a county sheriff's department does 203.16 not wish to provide the necessary services, the district may 203.17 contract for these services with any other police or sheriff's 203.18 department located entirely or partially within the school 203.19 district's boundaries.The levy authorized under this203.20subdivision is not included in determining the school district's203.21levy limitations.203.22 Sec. 27. Minnesota Statutes 1996, section 124.912, 203.23 subdivision 7, is amended to read: 203.24 Subd. 7. [ICE ARENALEVYAID.] (a) Each year, an 203.25 independent school district operating and maintaining an ice 203.26 arena,may levyis eligible for state aid for the net 203.27 operational costs of the ice arena. Thelevyamount of state 203.28 aid may not exceed the net actual costs of operation of the 203.29 arena for the previous year. Net actual costs are defined as 203.30 operating costs less any operating revenues. 203.31 (b) Any school district operating and maintaining an ice 203.32 arena must demonstrate to the satisfaction of the office of 203.33 monitoring in the department of children, families, and learning 203.34 that the district will offer equal sports opportunities for male 203.35 and female students to use its ice arena, particularly in areas 203.36 of access to prime practice time, team support, and providing 204.1 junior varsity and younger level teams for girls' ice sports and 204.2 ice sports offerings. The commissioner shall consider all 204.3 requests for state aid under this subdivision and shall, at the 204.4 commissioner's discretion, approve, modify, or disapprove aid 204.5 amounts. 204.6 Sec. 28. Minnesota Statutes 1996, section 124.914, 204.7 subdivision 1, is amended to read: 204.8 Subdivision 1. [1977 STATUTORY OPERATING DEBT.] (1) In 204.9 each year in which so required by this subdivision, a district 204.10shall make an additional levyis eligible for state aid to 204.11 eliminate its statutory operating debt, determined as of June 204.12 30, 1977, and certified and adjusted by the commissioner.This204.13 State aid payments for fiscal years 2001 and later and the 204.14 previous local levy shall not be made in more than 30 successive 204.15 years and each year before it is made, it must be approved by 204.16 the commissioner and the approval shall specify its 204.17 amount.This levy shall be an amount which is equal to the204.18amount raised by a levy of a net tax rate of 1.66 percent times204.19the adjusted net tax capacity of the district for the preceding204.20year for taxes payable in 1991 and thereafter; provided that in204.21the last year in which the district is required to make this204.22levy, it shall levy an amount not to exceed the amount raised by204.23a levy of a net tax rate of 1.66 percent times the adjusted net204.24tax capacity of the district for the preceding year for taxes204.25payable in 1991 and thereafterThe state aid for each district 204.26 equals the amount raised by the levy for this purpose for taxes 204.27 payable in 1999. When the sum of the cumulativelevies made204.28pursuantrevenue received according to this subdivision and 204.29 transfers made according to section 121.912, subdivision 4, 204.30 equals an amount equal to the statutory operating debt of the 204.31 district, thelevystate aid shall be discontinued. 204.32 (2) The district shall establish a special account in the 204.33 general fund which shall be designated "appropriated fund 204.34 balance reserve account for purposes of reducing statutory 204.35 operating debt" on its books and records. This account shall 204.36 reflect thelevyrevenue authorized pursuant to this subdivision. 205.1 The proceeds of thislevyrevenue shall be used only for cash 205.2 flow requirements and shall not be used to supplement district 205.3 revenues or income for the purposes of increasing the district's 205.4 expenditures or budgets. 205.5 (3)Any district which is required to levy pursuant to this205.6subdivision shall certify the maximum levy allowable under205.7section 124A.23, subdivision 2, in that same year.205.8(4)Each district shall make permanent fund balance 205.9 transfers so that the total statutory operating debt of the 205.10 district is reflected in the general fund as of June 30, 1977. 205.11 Sec. 29. Minnesota Statutes 1996, section 124.914, 205.12 subdivision 2, is amended to read: 205.13 Subd. 2. [1983 OPERATING DEBT.] (1) Each year, a 205.14 districtmay make an additional levyis eligible for state aid 205.15 to eliminate a deficit in the net unappropriated operating funds 205.16 of the district, determined as of June 30, 1983, and certified 205.17 and adjusted by the commissioner. Thislevy may in each year be205.18an amount not to exceed the amount raised by a levy of a net tax205.19rate of 1.85 percent times the adjusted net tax capacity for205.20taxes payable in 1991 and thereafter of the district for the205.21preceding year as determined by the commissionerstate aid for 205.22 each district equals the amount raised by the district's levy 205.23 for this purpose for taxes payable in 1999. However, the total 205.24 amount of thislevyrevenue for all years it ismadereceived 205.25 shall not exceed the lesser of (a) the amount of the deficit in 205.26 the net unappropriated operating funds of the district as of 205.27 June 30, 1983, or (b) the amount of the aid reduction, according 205.28 to Laws 1981, Third Special Session chapter 2, article 2, 205.29 section 2, but excluding clauses (l), (m), (n), (o), and (p), 205.30 and Laws 1982, Third Special Session chapter 1, article 3, 205.31 section 6, to the district in fiscal year 1983. When the 205.32 cumulativelevies made pursuantrevenue received according to 205.33 this subdivisionequalequals the total amount permitted by this 205.34 subdivision, thelevystate aid shall be discontinued. 205.35 (2) The proceeds of thislevystate aid shall be used only 205.36 for cash flow requirements and shall not be used to supplement 206.1 district revenues or income for the purposes of increasing the 206.2 district's expenditures or budgets. 206.3(3) Any district that levies pursuant to this subdivision206.4shall certify the maximum levy allowable under section 124A.23,206.5subdivisions 2 and 2a, in that same year.206.6 Sec. 30. Minnesota Statutes 1996, section 124.914, 206.7 subdivision 3, is amended to read: 206.8 Subd. 3. [1985 OPERATING DEBT.] (1) Each year, a 206.9 districtmay levyis eligible for state aid to eliminate a 206.10 deficit in the net unappropriated balance in the general fund of 206.11 the district, determined as of June 30, 1985, and certified and 206.12 adjusted by the commissioner. Each yearthis levy may be an206.13amount not to exceed the amount raised by a levy of a net tax206.14rate of 1.85 percent times the adjusted net tax capacity for206.15taxes payable in 1991 and thereafter of the district for the206.16preceding yearthe state aid for each district equals the amount 206.17 raised by the district's levy for this purpose for taxes payable 206.18 in 1999. However, the total amount of thislevyrevenue for all 206.19 years it ismadereceived shall not exceed the amount of the 206.20 deficit in the net unappropriated balance in the general fund of 206.21 the district as of June 30, 1985. When the cumulativelevies206.22made pursuant torevenue received under this subdivisionequal206.23 equals the total amount permitted by this subdivision, thelevy206.24 state aid shall be discontinued. 206.25 (2) A district, if eligible, maylevyreceive revenue under 206.26 this subdivision or subdivision 2 but not both. 206.27 (3) The proceeds of thislevyrevenue shall be used only 206.28 for cash flow requirements and shall not be used to supplement 206.29 district revenues or income for the purposes of increasing the 206.30 district's expenditures or budgets. 206.31(4) Any district that levies pursuant to this subdivision206.32shall certify the maximum levy allowable under section 124A.23,206.33subdivision 2, in that same year.206.34 Sec. 31. Minnesota Statutes 1996, section 124.914, 206.35 subdivision 4, is amended to read: 206.36 Subd. 4. [1992 OPERATING DEBT.] (a) Fortaxes payable for207.1calendar year 2003fiscal year 2004 and earlier, a district that 207.2 has filed a plan pursuant to section 121.917, subdivision 4,may207.3levyis eligible for state aid, with the approval of the 207.4 commissioner, to eliminate a deficit in the net unappropriated 207.5 balance in the operating funds of the district, determined as of 207.6 June 30, 1992, and certified and adjusted by the commissioner. 207.7 Each year thislevy may be an amount not tostate aid shall not 207.8 exceed the lesser of: 207.9 (1) an amount raised bya levy of a net tax rate of one207.10percent times the adjusted net tax capacitythe district's levy 207.11 for this purpose for taxes payable in 1999; or 207.12 (2) $100,000. 207.13 This amount shall be reduced by referendum revenue authorized 207.14 under section 124A.03 pursuant to the plan filed under section 207.15 121.917. However, the total amount of thislevyrevenue for all 207.16 years it ismadereceived shall not exceed the amount of the 207.17 deficit in the net unappropriated balance in the operating funds 207.18 of the district as of June 30, 1992. When the cumulativelevies207.19made pursuant torevenue received under this subdivisionequal207.20 equals the total amount permitted by this subdivision, thelevy207.21 state aid shall be discontinued. 207.22 (b) A district, if eligible, maylevyreceive revenue under 207.23 this subdivision or subdivision 2 or 3, or under section 207.24 122.531, subdivision 4a, or Laws 1992, chapter 499, article 7, 207.25 sections 16 or 17, but not under more than one. 207.26 (c) The proceeds of thislevyrevenue shall be used only 207.27 for cash flow requirements and shall not be used to supplement 207.28 district revenues or income for the purposes of increasing the 207.29 district's expenditures or budgets. 207.30(d) Any district that levies pursuant to this subdivision207.31shall certify the maximum levy allowable under section 124A.23,207.32subdivision 2, in that same year.207.33 Sec. 32. Minnesota Statutes 1996, section 124.916, 207.34 subdivision 1, is amended to read: 207.35 Subdivision 1. [HEALTH INSURANCE.] (a) A school 207.36 districtmay levyis eligible for state aid in the amount 208.1 necessary to make employer contributions for insurance for 208.2 retired employees under this subdivision.Notwithstanding208.3section 121.904, 50 percent of the amount levied shall be208.4recognized as revenue for the fiscal year in which the levy is208.5certified. This levy shall not be considered in computing the208.6aid reduction under section 124.155.208.7 (b) The school board of a joint vocational technical 208.8 district formed under sections 136C.60 to 136C.69 and the school 208.9 board of a school district may provide employer-paid hospital, 208.10 medical, and dental benefits to a person who: 208.11 (1) is eligible for employer-paid insurance under 208.12 collective bargaining agreements or personnel plans in effect on 208.13 June 30, 1992; 208.14 (2) has at least 25 years of service credit in the public 208.15 pension plan of which the person is a member on the day before 208.16 retirement or, in the case of a teacher, has a total of at least 208.17 25 years of service credit in the teachers retirement 208.18 association, a first-class city teacher retirement fund, or any 208.19 combination of these; 208.20 (3) upon retirement is immediately eligible for a 208.21 retirement annuity; 208.22 (4) is at least 55 and not yet 65 years of age; and 208.23 (5) retires on or after May 15, 1992, and before July 21, 208.24 1992. 208.25 A school board paying insurance under this subdivision may 208.26 not exclude any eligible employees. 208.27 (c) An employee who is eligible both for the health 208.28 insurance benefit under this subdivision and for an early 208.29 retirement incentive under a collective bargaining agreement or 208.30 personnel plan established by the employer must select either 208.31 the early retirement incentive provided under the collective 208.32 bargaining agreement personnel plan or the incentive provided 208.33 under this subdivision, but may not receive both. For purposes 208.34 of this subdivision, a person retires when the person terminates 208.35 active employment and applies for retirement benefits. The 208.36 retired employee is eligible for single and dependent coverages 209.1 and employer payments to which the person was entitled 209.2 immediately before retirement, subject to any changes in 209.3 coverage and employer and employee payments through collective 209.4 bargaining or personnel plans, for employees in positions 209.5 equivalent to the position from which the employee retired. The 209.6 retired employee is not eligible for employer-paid life 209.7 insurance. Eligibility ceases when the retired employee attains 209.8 the age of 65, or when the employee chooses not to receive the 209.9 retirement benefits for which the employee has applied, or when 209.10 the employee is eligible for employer-paid health insurance from 209.11 a new employer. Coverages must be coordinated with relevant 209.12 health insurance benefits provided through the federally 209.13 sponsored Medicare program. 209.14 (d) Unilateral implementation of this section by a public 209.15 employer is not an unfair labor practice for purposes of chapter 209.16 179A. The authority provided in this subdivision for an 209.17 employer to pay health insurance costs for certain retired 209.18 employees is not subject to the limits in section 179A.20, 209.19 subdivision 2a. 209.20 (e) If a school districtleviesreceives revenue according 209.21 to this subdivision, it may not alsolevyreceive revenue 209.22 according to section 122.531, subdivision 9, for eligible 209.23 employees. 209.24 Sec. 33. Minnesota Statutes 1996, section 124.916, 209.25 subdivision 3, is amended to read: 209.26 Subd. 3. [RETIREMENTLEVIESAID.](1) In addition to the209.27excess levy authorized in 1976 any district within a city of the209.28first class which was authorized in 1975 to make a retirement209.29levy under Minnesota Statutes 1974, section 275.127 and chapter209.30422A may levy an amount per pupil unit which is equal to the209.31amount levied in 1975 payable 1976, under Minnesota Statutes209.321974, section 275.127 and chapter 422A, divided by the number of209.33pupil units in the district in 1976-1977.209.34(2) In 1979 and each year thereafter, any district which209.35qualified in 1976 for an extra levy under paragraph (1) shall be209.36allowed to levy the same amount as levied for retirement in 1978210.1under this clause reduced each year by ten percent of the210.2difference between the amount levied for retirement in 1971210.3under Minnesota Statutes 1971, sections 275.127 and 422.01 to210.4422.54 and the amount levied for retirement in 1975 under210.5Minnesota Statutes 1974, section 275.127 and chapter 422A.210.6(3) In 1991 and each year thereafter, a district to which210.7this subdivision applies may levy an additional amount required210.8for contributions to the Minneapolis employees retirement fund210.9as a result of the maximum dollar amount limitation on state210.10contributions to the fund imposed under section 422A.101,210.11subdivision 3. The additional levy shall not exceed the most210.12recent amount certified by the board of the Minneapolis210.13employees retirement fund as the district's share of the210.14contribution requirement in excess of the maximum state210.15contribution under section 422A.101, subdivision 3.210.16(4) For taxes payable in 1994 and thereafter, special210.17school district No. 1, Minneapolis, and independent school210.18district No. 625, St. Paul, may levy for the increase in the210.19employer retirement fund contributions, under Laws 1992, chapter210.20598, article 5, section 1. Notwithstanding section 121.904, the210.21entire amount of this levy may be recognized as revenue for the210.22fiscal year in which the levy is certified. This levy shall not210.23be considered in computing the aid reduction under section210.24124.155.210.25 (1) For fiscal years 2001 and later, a district is eligible 210.26 for state aid equal to the amount of its retirement levies 210.27 certified under this subdivision for taxes payable in 1999. 210.28(5)(2) If the employer retirement fund contributions under 210.29 section 354A.12, subdivision 2a, are increased for fiscal year 210.30 1994 or later fiscal years, special school district No. 1, 210.31 Minneapolis, and independent school district No. 625, St. Paul, 210.32may levy in payable 1994 or later an amountare eligible for 210.33 state aid equal to the amount derived by applying the net 210.34 increase in the employer retirement fund contribution rate of 210.35 the respective teacher retirement fund association between 210.36 fiscal year 1993 and the fiscal year beginning in the year after 211.1 the levy is certified to the total covered payroll of the 211.2 applicable teacher retirement fund association.Notwithstanding211.3section 121.904, the entire amount of this levy may be211.4recognized as revenue for the fiscal year in which the levy is211.5certified. This levy shall not be considered in computing the211.6aid reduction under section 124.155. If an applicable school211.7district levies under this paragraph, they may not levy under211.8paragraph (4).211.9(6)(3) In addition to thelevystate aid authorized under 211.10 paragraph(5)(2), special school district No. 1, 211.11 Minneapolis,may also levy payable in 1997 or lateris also 211.12 eligible for additional state aid in an amount equal to the 211.13 contributions undersectionsections 423A.02, subdivision 3, and 211.14may also levy in payable 1994 or later an amount equal to the211.15state aid contribution under section354A.12, subdivision 3b. 211.16 Independent school district No. 625, St. Paul,may levy payable211.17in 1997 oris eligible for additional state aid in fiscal years 211.18 2001 and later in an amount equal to the supplemental 211.19 contributions under section 423A.02, subdivision 211.20 3.Notwithstanding section 121.904, the entire amount of these211.21levies may be recognized as revenue for the fiscal year in which211.22the levy is certified. These levies shall not be considered in211.23computing the aid reduction under section 124.155.211.24 Sec. 34. Minnesota Statutes 1996, section 124.916, 211.25 subdivision 4, is amended to read: 211.26 Subd. 4. [MINNEAPOLIS HEALTH INSURANCE SUBSIDY.] Each year 211.27 special school district No. 1, Minneapolis,may make an211.28additional levy not to exceedis eligible for state aid equal to 211.29 the amount raised by a net tax rate of .10 percent times the 211.30 adjusted net tax capacityfor taxes payable in 1991 and211.31thereafterof the property in the district forthe preceding211.32 assessment year 1998. The proceeds may be used only to 211.33 subsidize health insurance costs for eligible teachers as 211.34 provided in this section. 211.35 "Eligible teacher" means a retired teacher who was a basic 211.36 member of the Minneapolis teachers retirement fund association, 212.1 who retired before May 1, 1974, or who had 20 or more years of 212.2 basic member service in the Minneapolis teacher retirement fund 212.3 association and retired before June 30, 1983, and who is not 212.4 eligible to receive the hospital insurance benefits of the 212.5 federal Medicare program of the Social Security Act without 212.6 payment of a monthly premium. The district shall notify 212.7 eligible teachers that a subsidy is available. To obtain a 212.8 subsidy, an eligible teacher must submit to the school district 212.9 a copy of receipts for health insurance premiums paid. The 212.10 school district shall disburse the health insurance premium 212.11 subsidy to each eligible teacher according to a schedule 212.12 determined by the district, but at least annually. An eligible 212.13 teacher may receive a subsidy up to an amount equal to the 212.14 lesser of 90 percent of the cost of the eligible teacher's 212.15 health insurance or up to 90 percent of the cost of the number 212.16 two qualified plan of health coverage for individual policies 212.17 made available by the Minnesota comprehensive health association 212.18 under chapter 62E. 212.19 If funds remaining from the previous year's health 212.20 insurance subsidylevyrevenue, minus the previous year's 212.21 required subsidy amount, are sufficient to pay the estimated 212.22 current year subsidy, thelevystate aid must be discontinued 212.23 until the remaining funds are estimated by the school board to 212.24 be insufficient to pay the subsidy. 212.25 This subdivision does not extend benefits to teachers who 212.26 retire after June 30, 1983, and does not create a contractual 212.27 right or claim for altering the benefits in this subdivision. 212.28 This subdivision does not restrict the school district's right 212.29 to modify or terminate coverage under this subdivision. 212.30 Sec. 35. Minnesota Statutes 1996, section 124.918, 212.31 subdivision 8, is amended to read: 212.32 Subd. 8. [TACONITE PAYMENT AND OTHER REDUCTIONS.] (1) 212.33Reductions in levies pursuant to section 124.918, subdivision 1,212.34and section 273.138, shall be made prior to the reductions in212.35clause (2)A school district's levies shall be reduced according 212.36 to section 298.28, subdivision 4a. 213.1(2) Notwithstanding any other law to the contrary,213.2districts which received payments pursuant to sections 298.018;213.3298.23 to 298.28, except an amount distributed under section213.4298.28, subdivision 4, paragraph (c), clause (ii); 298.34 to213.5298.39; 298.391 to 298.396; 298.405; and any law imposing a tax213.6upon severed mineral values, or recognized revenue pursuant to213.7section 477A.15; shall not include a portion of these aids in213.8their permissible levies pursuant to those sections, but instead213.9shall reduce the permissible levies authorized by this chapter213.10and chapter 124A by the greater of the following:213.11(a) an amount equal to 50 percent of the total dollar213.12amount of the payments received pursuant to those sections or213.13revenue recognized pursuant to section 477A.15 in the previous213.14fiscal year; or213.15(b) an amount equal to the total dollar amount of the213.16payments received pursuant to those sections or revenue213.17recognized pursuant to section 477A.15 in the previous fiscal213.18year less the product of the same dollar amount of payments or213.19revenue times the ratio of the maximum levy allowed the district213.20under Minnesota Statutes 1986, sections 124A.03, subdivision 2,213.21124A.06, subdivision 3a, 124A.08, subdivision 3a, 124A.10,213.22subdivision 3a, 124A.12, subdivision 3a, and 124A.14,213.23subdivision 5a, to the total levy allowed the district under213.24this section and Minnesota Statutes 1986, sections 124A.03,213.25124A.06, subdivision 3a, 124A.08, subdivision 3a, 124A.10,213.26subdivision 3a, 124A.12, subdivision 3a, 124A.14, subdivision213.275a, and 124A.20, subdivision 2, for levies certified in 1986.213.28(3) No reduction pursuant to this subdivision shall reduce213.29the levy made by the district pursuant to section 124A.23, to an213.30amount less than the amount raised by a levy of a net tax rate213.31of 6.82 percent times the adjusted net tax capacity for taxes213.32payable in 1990 and thereafter of that district for the213.33preceding year as determined by the commissioner. The amount of213.34any increased levy authorized by referendum pursuant to section213.35124A.03, subdivision 2, shall not be reduced pursuant to this213.36subdivision. The amount of any levy authorized by section214.1124.912, subdivision 1, to make payments for bonds issued and214.2for interest thereon, shall not be reduced pursuant to this214.3subdivision.214.4(4) Before computing the reduction pursuant to this214.5subdivision of the capital expenditure facilities levy214.6authorized by section 124.243, the capital expenditure equipment214.7levy authorized by section 124.244, the health and safety levy214.8authorized by sections 124.83 and 124.91, subdivision 6, the214.9commissioner shall ascertain from each affected school district214.10the amount it proposes to levy under each section or214.11subdivision. The reduction shall be computed on the basis of214.12the amount so ascertained.214.13(5) Notwithstanding any law to the contrary,(2) Any 214.14 amounts received by districts in any fiscal yearpursuant to214.15sections 298.018; 298.23 to 298.28; 298.34 to 298.39; 298.391 to214.16298.396; 298.405; or any law imposing a tax on severed mineral214.17values; and not deducted from general education aid pursuant to214.18section 124A.035, subdivision 5, clause (2),under this section 214.19 and not applied to reduce levies pursuant to this subdivision 214.20 shall be paid by the district to the St. Louis county auditorin214.21the following amountby March 15 of each year, the amount214.22required to be subtracted from the previous fiscal year's214.23general education aid pursuant to section 124A.035, subdivision214.245, which is in excess of the general education aid earned for214.25that fiscal year. The county auditor shall deposit any amounts 214.26 received pursuant to this clause in the St. Louis county 214.27 treasury for purposes of paying the taconite homestead credit as 214.28 provided in section 273.135. 214.29 Sec. 36. Minnesota Statutes 1996, section 124A.03, 214.30 subdivision 1g, is amended to read: 214.31 Subd. 1g. [REFERENDUM EQUALIZATION LEVY.] (a)For fiscal214.32year 1996, a district's referendum equalization levy equals the214.33district's referendum equalization revenue times the lesser of214.34one or the ratio of the district's adjusted net tax capacity per214.35actual pupil unit to 100 percent of the equalizing factor as214.36defined in section 124A.02, subdivision 8.215.1(b)For fiscalyearyears 1997and thereafterthrough 215.2 2000, a district's referendum equalization levy for a referendum 215.3 levied against the referendum market value of all taxable 215.4 property as defined in section 124A.02, subdivision 3b, equals 215.5 the district's referendum equalization revenue times the lesser 215.6 of one or the ratio of the district's referendum market value 215.7 per actual pupil unit to $476,000. 215.8(c)(b) For fiscalyearyears 1997and215.9thereafterthrough 2000, a district's referendum equalization 215.10 levy for a referendum levied against the net tax capacity of all 215.11 taxable property equals the district's referendum equalization 215.12 revenue times the lesser of one or the ratio of the district's 215.13 adjusted net tax capacity per actual pupil unit to 100 percent 215.14 of the equalizing factor for that year. 215.15 (c) For fiscal years 2001 and later, a district's 215.16 referendum equalization levy equals the district's referendum 215.17 equalization revenue times the lesser of one or the ratio of the 215.18 district's adjusted local tax capacity to the product of 215.19 $476,000 times the ratio of the district's adjusted local tax 215.20 capacity for assessment year 1998 to the district's referendum 215.21 market value for assessment year 1998. 215.22 Sec. 37. [124A.235] [STATEWIDE UNIFORM GENERAL EDUCATION 215.23 LEVY.] 215.24 Subdivision 1. [GENERAL EDUCATION LEVY CALCULATION.] A 215.25 school district's general education levy equals the lesser of: 215.26 (1) an amount equal to the district's adjusted education tax 215.27 capacity; or (2) the sum of its revenue under chapters 124 and 215.28 124A, excluding the revenue for debt service under section 215.29 124.95 and for operating referenda under section 124A.03. The 215.30 general education levy shall be levied against each district's 215.31 general education tax base. 215.32 Subd. 2. [GENERAL EDUCATION AID.] A school district's 215.33 general education aid is the difference between its general 215.34 education revenue computed under section 124A.22 and its levy 215.35 established according to subdivision 1. 215.36 Subd. 3. [COMPUTATION OF TAX INCREMENT.] Notwithstanding 216.1 any law to the contrary, the tax imposed under this section may 216.2 not be used to compute the increment for a tax increment 216.3 financing district. 216.4 Subd. 4. [RELATIONSHIP TO FISCAL DISPARITIES.] The tax 216.5 imposed under this section shall not be subject to the 216.6 provisions of chapters 276A and 473F. 216.7 Sec. 38. Minnesota Statutes 1996, section 124A.292, 216.8 subdivision 2, is amended to read: 216.9 Subd. 2. [REVENUE.] Staff development incentive revenue is 216.10 equal to the number of teachers at the site times $25. Staff 216.11 development incentive revenue is provided through state aid. 216.12 Sec. 39. Minnesota Statutes 1996, section 298.28, 216.13 subdivision 4, is amended to read: 216.14 Subd. 4. [SCHOOL DISTRICTS; REFERENDUM AID.](a) 27.5216.15cents per taxable ton plus the increase provided in paragraph216.16(d) must be allocated to qualifying school districts to be216.17distributed, based upon the certification of the commissioner of216.18revenue, under paragraphs (b) and (c).216.19(b) 5.5 cents per taxable ton must be distributed to the216.20school districts in which the lands from which taconite was216.21mined or quarried were located or within which the concentrate216.22was produced. The distribution must be based on the216.23apportionment formula prescribed in subdivision 2.216.24(c)(i) 22 cents per taxable ton, less any amount216.25distributed under paragraph (e), shall be distributed to a group216.26of school districts comprised of those school districts in which216.27the taconite was mined or quarried or the concentrate produced216.28or in which there is a qualifying municipality as defined by216.29section 273.134 in direct proportion to school district indexes216.30as follows: for each school district, its pupil units216.31determined under section 124.17 for the prior school year shall216.32be multiplied by the ratio of the average adjusted net tax216.33capacity per pupil unit for school districts receiving aid under216.34this clause as calculated pursuant to chapter 124A for the216.35school year ending prior to distribution to the adjusted net tax216.36capacity per pupil unit of the district. Each district shall217.1receive that portion of the distribution which its index bears217.2to the sum of the indices for all school districts that receive217.3the distributions.217.4(ii) Notwithstanding clause (i), each school district that217.5receives a distribution under sections 298.018; 298.23 to217.6298.28, exclusive of any amount received under this clause;217.7298.34 to 298.39; 298.391 to 298.396; 298.405; or any law217.8imposing a tax on severed mineral values that is less than the217.9amount of its levy reduction under section 124.918, subdivision217.108, for the second year prior to the year of the distribution217.11shall receive a distribution equal to the difference; the amount217.12necessary to make this payment shall be derived from217.13proportionate reductions in the initial distribution to other217.14school districts under clause (i).217.15(d) Any school district described in paragraph (c) where a217.16levy increase pursuant to section 124A.03, subdivision 2, is217.17authorized by referendum, shall receive a distribution according217.18to the following formula. In 1994, the amount distributed per217.19ton shall be equal to the amount per ton distributed in 1991217.20under this paragraph increased in the same proportion as the217.21increase between the fourth quarter of 1989 and the fourth217.22quarter of 1992 in the implicit price deflator as defined in217.23section 298.24, subdivision 1. On July 15, 1995, and subsequent217.24years, the increase over the amount established for the prior217.25year shall be determined according to the increase in the217.26implicit price deflator as provided in section 298.24,217.27subdivision 1. Each district shall receive the product of:217.28(i) $175 times the pupil units identified in section217.29124.17, subdivision 1, enrolled in the second previous year or217.30the 1983-1984 school year, whichever is greater, less the217.31product of 1.8 percent times the district's taxable net tax217.32capacity in the second previous year; times217.33(ii) the lesser of:217.34(A) one, or217.35(B) the ratio of the sum of the amount certified pursuant217.36to section 124A.03, subdivision 1g, in the previous year, plus218.1the amount certified pursuant to section 124A.03, subdivision218.21i, in the previous year, plus the referendum aid according to218.3section 124A.03, subdivision 1h, for the current year, plus an218.4amount equal to the reduction under section 124A.03, subdivision218.53b, to the product of 1.8 percent times the district's taxable218.6net tax capacity in the second previous year.218.7If the total amount provided by paragraph (d) is218.8insufficient to make the payments herein required then the218.9entitlement of $175 per pupil unit shall be reduced uniformly so218.10as not to exceed the funds available. Any amounts received by a218.11qualifying school district in any fiscal year pursuant to218.12paragraph (d) shall not be applied to reduce general education218.13aid which the district receives pursuant to section 124A.23 or218.14the permissible levies of the district. Any amount remaining218.15after the payments provided in this paragraph shall be paid to218.16the commissioner of iron range resources and rehabilitation who218.17shall deposit the same in the taconite environmental protection218.18fund and the northeast Minnesota economic protection trust fund218.19as provided in subdivision 11.218.20 For fiscal years 2001 and later, a school district's 218.21 taconite referendum aid equals its taconite referendum aid for 218.22 fiscal year 2000. Each district receiving money according to 218.23 this paragraph shall reserve $25 times the number of pupil units 218.24 in the district. It may use the money for early childhood 218.25 programs or for outcome-based learning programs that enhance the 218.26 academic quality of the district's curriculum. The 218.27 outcome-based learning programs must be approved by the 218.28 commissioner of children, families, and learning. 218.29(e) There shall be distributed to any school district the218.30amount which the school district was entitled to receive under218.31section 298.32 in 1975.218.32 Sec. 40. Minnesota Statutes 1996, section 298.28, is 218.33 amended by adding a subdivision to read: 218.34 Subd. 4a. [SCHOOL DISTRICT LEVY REDUCTION.] For taxes 218.35 payable in 2001 and later, a school district's levy reduction 218.36 under section 124.918, subdivision 8, is equal to one-third of 219.1 its reduction for taxes payable in 1998 times the ratio of the 219.2 taxable tons in the current year to the taxable tons in payable 219.3 year 1998. 219.4 Sec. 41. Minnesota Statutes 1996, section 298.28, is 219.5 amended by adding a subdivision to read: 219.6 Subd. 4b. [SCHOOL DISTRICT AID REDUCTION.] A school 219.7 district's taconite aid reduction to general education aid is 219.8 equal to one-third of its aid reduction for fiscal year 2000 219.9 times the ratio of the taxable tons in the current payable year 219.10 to the taxable tons in the payable year 1998. 219.11 Sec. 42. [CHANGES TO SCHOOL DISTRICT LEVIES.] 219.12 Any school levy programs created or amended after January 219.13 1, 1997, are expired for revenue for fiscal years 2001 and 219.14 later. The state aid appropriation under Minnesota Statutes, 219.15 section 124A.032, is increased by the amount of any levies 219.16 eliminated under this section and that amount shall be paid to 219.17 each school district in the same amount for the same purposes as 219.18 the levy. 219.19 Sec. 43. [REPEALER.] 219.20 (a) Minnesota Statutes 1996, sections 124.2131, subdivision 219.21 3a; 124.2134; 124.225, subdivisions 1, 3a, 7a, 7b, 7d, 7e, 7f, 219.22 8a, 8k, 8l, 8m, 9, 10, 13, 14, 15, 16, and 17; 124.226; 219.23 124.2442; 124.2725, subdivisions 3, 4, 5, and 7; 124.2727, 219.24 subdivisions 6b, 6c, and 9; 124.314, subdivision 2; 124.321; 219.25 124.91, subdivision 4; 124.912, subdivision 2; 124A.029; 219.26 124A.03, subdivisions 2a and 3b; 124A.0311; 124A.22, 219.27 subdivisions 4a, 4b, 8a, 8b, 13d, and 13e; 124A.23, subdivisions 219.28 1, 2, 3, and 4; 124A.26, subdivisions 2 and 3; 124A.292, 219.29 subdivisions 3 and 4, are repealed for revenue for fiscal year 219.30 2001. 219.31 (b) Minnesota Statutes 1996, sections 273.1399; and 219.32 469.1782, subdivision 1, are repealed for taxes payable and aids 219.33 payable in 2000 and subsequent years. 219.34 Sec. 44. [EFFECTIVE DATE.] 219.35 Sections 1 to 43 are effective for revenue for fiscal year 219.36 2001. 220.1 ARTICLE 8 220.2 STATE AID REFORM 220.3 Section 1. Minnesota Statutes 1996, section 273.1398, 220.4 subdivision 6, is amended to read: 220.5 Subd. 6. [PAYMENT.]The commissioner shall certify the220.6aids provided in subdivisions 2, 2b, 3, and 5 before September 1220.7of the year preceding the distribution year to the county220.8auditor of the affected local government. The aids provided in220.9subdivisions 2, 2b, 3, and 5 must be paid to local governments220.10other than school districts at the times provided in section220.11477A.015 for payment of local government aid to taxing220.12jurisdictions, except that the first one-half payment of220.13disparity reduction aid provided in subdivision 3 must be paid220.14on or before August 31.The disparity reduction credit provided 220.15 in subdivision 4 must be paid to taxing jurisdictions other than 220.16 school districts at the time provided in section 473H.10, 220.17 subdivision 3.Aids andCredit reimbursements to school 220.18 districts must be certified to the commissioner of children, 220.19 families, and learning and paid under section 273.1392.Except220.20for education districts and secondary cooperatives that receive220.21revenue according to section 124.575, payment shall not be made220.22to any taxing jurisdiction that has ceased to levy a property220.23tax.220.24 Sec. 2. Minnesota Statutes 1996, section 298.28, 220.25 subdivision 2, is amended to read: 220.26 Subd. 2. [CITY OR TOWN WHERE QUARRIED OR PRODUCED.] 220.274.56.75 cents per gross ton of merchantable iron ore 220.28 concentrate, hereinafter referred to as "taxable ton," must be 220.29 allocated to the city or town in the county in which the lands 220.30 from which taconite was mined or quarried were located or within 220.31 which the concentrate was produced. If the mining, quarrying, 220.32 and concentration, or different steps in either thereof are 220.33 carried on in more than one taxing district, the commissioner 220.34 shall apportion equitably the proceeds of the part of the tax 220.35 going to cities and towns among such subdivisions upon the basis 220.36 of attributing 40 percent of the proceeds of the tax to the 221.1 operation of mining or quarrying the taconite, and the remainder 221.2 to the concentrating plant and to the processes of 221.3 concentration, and with respect to each thereof giving due 221.4 consideration to the relative extent of such operations 221.5 performed in each such taxing district. The commissioner's 221.6 order making such apportionment shall be subject to review by 221.7 the tax court at the instance of any of the interested taxing 221.8 districts, in the same manner as other orders of the 221.9 commissioner. 221.10 Sec. 3. Minnesota Statutes 1996, section 298.28, 221.11 subdivision 3, is amended to read: 221.12 Subd. 3. [CITIES; TOWNS.] (a)12.518.75 cents per taxable 221.13 ton, less any amount distributed under subdivision 8, and 221.14 paragraph (b), must be allocated to the taconite municipal aid 221.15 account to be distributed as provided in section 298.282. 221.16 (b) An amount must be allocated to towns or cities that is 221.17 annually certified by the county auditor of a county containing 221.18 a taconite tax relief area within which there is (1) an 221.19 organized township if, as of January 2, 1982, more than 75 221.20 percent of the assessed valuation of the township consists of 221.21 iron ore or (2) a city if, as of January 2, 1980, more than 75 221.22 percent of the assessed valuation of the city consists of iron 221.23 ore. 221.24 (c) The amount allocated under paragraph (b) will be the 221.25 portion of a township's or city's certified levy equal to the 221.26 proportion of (1) the difference between 50 percent of January 221.27 2, 1982, assessed value in the case of a township and 50 percent 221.28 of the January 2, 1980, assessed value in the case of a city and 221.29 its current assessed value to (2) the sum of its current 221.30 assessed value plus the difference determined in (1), provided 221.31 that the amount distributed shall not exceed $55 per capita in 221.32 the case of a township or $75 per capita in the case of a city. 221.33 For purposes of this limitation, population will be determined 221.34 according to the 1980 decennial census conducted by the United 221.35 States Bureau of the Census. If the current assessed value of 221.36 the township exceeds 50 percent of the township's January 2, 222.1 1982, assessed value, or if the current assessed value of the 222.2 city exceeds 50 percent of the city's January 2, 1980, assessed 222.3 value, this paragraph shall not apply. For purposes of this 222.4 paragraph, "assessed value," when used in reference to years 222.5 other than 1980 or 1982, means, for distributions for production 222.6 year 1989, production taxes payable in 1990, the appropriate net 222.7 tax capacities multiplied by 8.2 and for distributions for 222.8 production year 1990 and thereafter, production taxes payable in 222.9 1991 and thereafter, the appropriate net tax capacities 222.10 multiplied by 10.2. 222.11 Sec. 4. Minnesota Statutes 1996, section 298.28, 222.12 subdivision 5, is amended to read: 222.13 Subd. 5. [COUNTIES.] (a)16.524.75 cents per taxable ton 222.14 is allocated to counties to be distributed, based upon 222.15 certification by the commissioner of revenue, under paragraphs 222.16 (b) to (d). 222.17 (b)1319.5 cents per taxable ton shall be distributed to 222.18 the county in which the taconite is mined or quarried or in 222.19 which the concentrate is produced, less any amount which is to 222.20 be distributed pursuant to paragraph (c). The apportionment 222.21 formula prescribed in subdivision 2 is the basis for the 222.22 distribution. 222.23 (c) If an electric power plant owned by and providing the 222.24 primary source of power for a taxpayer mining and concentrating 222.25 taconite is located in a county other than the county in which 222.26 the mining and the concentrating processes are conducted,one222.27cent1.5 cents per taxable ton of the tax distributed to the 222.28 counties pursuant to paragraph (b) and imposed on and collected 222.29 from such taxpayer shall be paid to the county in which the 222.30 power plant is located. 222.31 (d)3.55.25 cents per taxable ton shall be paid to the 222.32 county from which the taconite was mined, quarried or 222.33 concentrated to be deposited in the county road and bridge 222.34 fund. If the mining, quarrying and concentrating, or separate 222.35 steps in any of those processes are carried on in more than one 222.36 county, the commissioner shall follow the apportionment formula 223.1 prescribed in subdivision 2. 223.2 Sec. 5. Minnesota Statutes 1996, section 477A.011, is 223.3 amended by adding a subdivision to read: 223.4 Subd. 3d. [POVERTY ADJUSTED POPULATION.] "Poverty adjusted 223.5 population" means the sum of (1) the county's population, and 223.6 (2) three times the average unduplicated number of persons who 223.7 receive benefits per month under general assistance, medical 223.8 assistance, or AFDC, or its successor program, as determined 223.9 under section 256E.06. 223.10 Sec. 6. Minnesota Statutes 1996, section 477A.011, 223.11 subdivision 20, is amended to read: 223.12 Subd. 20. [CITYNET TAX CAPACITY.] "CityNet tax capacity" 223.13 for a local taxing jurisdiction means (1) the net tax capacity 223.14 computed using the net tax capacity rates in section 273.13, and 223.15 the market values for taxes payable in the year prior to the aid 223.16 distribution plus (2) acity'sjurisdiction's fiscal disparities 223.17 distribution tax capacity under section 276A.06, subdivision 2, 223.18 paragraph (b), or 473F.08, subdivision 2, paragraph (b), for 223.19 taxes payable in the year prior to that for which aids are being 223.20 calculated. The market value utilized in computingcitya 223.21 jurisdiction's net tax capacity shall be reduced by the sum of 223.22 (1)a city'sthe jurisdiction's market value of commercial 223.23 industrial property as defined in section 276A.01, subdivision 223.24 3, or 473F.02, subdivision 3, multiplied by the ratio determined 223.25 pursuant to section 276A.06, subdivision 2, paragraph (a), or 223.26 473F.08, subdivision 2, paragraph (a), (2) the market value of 223.27 the captured value of tax increment financing districts as 223.28 defined in section 469.177, subdivision 2, and (3) the market 223.29 value of transmission lines deducted froma city'sthe 223.30 jurisdiction's total net tax capacity under section 273.425. 223.31 The county or city net tax capacity will be computed using 223.32 equalized market values. 223.33 Sec. 7. Minnesota Statutes 1996, section 477A.011, 223.34 subdivision 35, is amended to read: 223.35 Subd. 35. [TAX EFFORT RATE.] "Tax effort rate" for a type 223.36 of taxing jurisdiction means the sum of the net levy for 224.1 allcitiesjurisdictions of that type divided by the sum of the 224.2citynet tax capacity for allcitiesjurisdictions of that type. 224.3 For aids payable in 2000 only, the "tax effort rate" for cities 224.4 means (1) the sum of the net levy for all cities plus the 1999 224.5 homestead and agricultural credit aid for all cities, divided by 224.6 (2) the sum of the net tax capacity for all cities. For 224.7 purposes of this section, "net levy" means thecitylevy, after 224.8 all adjustments, used for calculating the local tax rate under 224.9 section 275.08 for taxes payable in the year prior to the aid 224.10 distribution. The fiscal disparity distribution levy under 224.11 chapter 276A or 473F is included in net levy. 224.12 Sec. 8. Minnesota Statutes 1996, section 477A.011, is 224.13 amended by adding a subdivision to read: 224.14 Subd. 38. [ACRES.] The number of acres in a township or a 224.15 county are the number of acres of land in the jurisdiction, 224.16 according to the most recent federal census, adjusted for any 224.17 annexations and detachments as provided under section 477A.014, 224.18 subdivision 1. 224.19 Sec. 9. Minnesota Statutes 1996, section 477A.011, is 224.20 amended by adding a subdivision to read: 224.21 Subd. 39. [AGRICULTURAL NET TAX CAPACITY.] The 224.22 "agricultural net tax capacity" for a township is equal to the 224.23 net tax capacity for all property in the township that is 224.24 classified as class 2 under section 273.13, subdivision 23, 224.25 excluding any airport property, plus any class 1 property under 224.26 section 273.13, subdivision 22, that is part of an agricultural 224.27 homestead. 224.28 Sec. 10. [477A.0125] [COUNTY AID DISTRIBUTIONS.] 224.29 Subdivision 1. [FORMULA AMOUNT.] In calendar year 2000 and 224.30 subsequent years, each county shall receive an aid amount equal 224.31 to the product of (1) an aid percentage, and (2) the sum of (i) 224.32 its poverty weighted population multiplied by 145; and (ii) its 224.33 acres of land multiplied by .40; minus its net tax capacity 224.34 multiplied by 50 percent of the county tax effort rate. The aid 224.35 percentage shall be calculated by the department of revenue so 224.36 that the total aid paid to counties under this section equals 225.1 the amount available for distribution under section 477A.03. 225.2 Subd. 2. [AID LIMITATION.] (a) For aids payable in 2000, 225.3 the amount of aid a county receives under this section shall not 225.4 exceed an amount equal to (1) its 1997 homestead and 225.5 agricultural credit aid, plus (2) ten percent of its net levy 225.6 for taxes payable in 1997. 225.7 (b) For aids payable in 2001 and subsequent years, the 225.8 amount of aid a county receives under this section shall not 225.9 exceed an amount equal to (1) its 1997 homestead and 225.10 agricultural credit aid increased by the percentage increase in 225.11 total aid under this section for the current aid payable year 225.12 compared to the total aid under this section for 2000, plus (2) 225.13 a percentage of its net levy for taxes payable in 1997 equal to 225.14 ten percent plus one percent for each aid payable year since 225.15 2000. 225.16 Sec. 11. Minnesota Statutes 1996, section 477A.013, 225.17 subdivision 1, is amended to read: 225.18 Subdivision 1. [TOWNS.]In 1994 each town that had levied225.19for taxes payable in the prior year a local tax rate of at least225.20.008 shall receive a distribution equal to the amount it225.21received in 1993 under this section before any nonpermanent225.22reductions made under section 477A.0132. In 1995 each town that225.23had levied for taxes payable in 1993 a local tax rate of at225.24least .008 shall receive a distribution equal to 102 percent of225.25the amount it received in 1994 under this section before any225.26increases or reductions under sections 16A.711, subdivision 5,225.27and 477A.0132. In 1996 and subsequent years each town that had225.28levied for taxes payable in 1993 a local tax rate of at least225.29.008 shall receive a distribution equal to the amount it225.30received in the previous year under this section, adjusted for225.31inflation as provided under section 477A.03, subdivision 3.In 225.32 calendar year 2000 and subsequent years, the amount of aid that 225.33 a town receives is equal to (1) the aid factor multiplied by the 225.34 number of acres in the town, less (2) 0.10 multiplied by the 225.35 difference between the town's total net tax capacity and its 225.36 agricultural net tax capacity. In 2000, the aid factor is $1. 226.1 In 2001 and subsequent years, the aid factor is the aid factor 226.2 from the previous year adjusted for inflation as provided under 226.3 section 477A.03, subdivision 3. If the town's agricultural net 226.4 tax capacity is less than 40 percent of its total net tax 226.5 capacity, the amount of aid it receives is zero. No town may 226.6 have an aid amount less than zero. 226.7 Sec. 12. Minnesota Statutes 1996, section 477A.03, 226.8 subdivision 2, is amended to read: 226.9 Subd. 2. [ANNUAL APPROPRIATION.] A sum sufficient to 226.10 discharge the duties imposed by sections 477A.011 to 477A.014 is 226.11 annually appropriated from the general fund to the commissioner 226.12 of revenue. For aids payable in19962000 and thereafter, the 226.13 total aids paid under sections 477A.013, subdivision 9, 226.14 477A.0121, and 477A.0122 are the amounts certified to be paid in 226.15 the previous year, adjusted for inflation as provided under 226.16 subdivision 3. Aid payments to counties under section477A.0121226.17are limited to $20,265,000 in 1996477A.0125 are limited to 226.18 $200,000,000 in 2000.Aid payments to counties under section226.19477A.0121 are limited to $27,571,625 in 1997.For aid payable 226.20 in19982001 and thereafter, the total aids paid under section 226.21477A.0121477A.0125 are the amounts certified to be paid in the 226.22 previous year, adjusted for inflation as provided under 226.23 subdivision 3. 226.24 Sec. 13. [477A.20] [STATE-OWNED BUILDINGS; PAYMENTS IN 226.25 LIEU.] 226.26 Subdivision 1. [STATE-OWNED BUILDINGS.] For purposes of 226.27 this section, "state-owned buildings" means all buildings owned 226.28 or leased by the state of Minnesota, the University of 226.29 Minnesota, state universities, community colleges, and technical 226.30 colleges which are currently exempt from local property taxes, 226.31 with the following exceptions: 226.32 (1) buildings that have less than 2,000 square feet of 226.33 finished floor space, and 226.34 (2) buildings owned or leased and used by the department of 226.35 natural resources for purposes other than as a state or district 226.36 headquarters. 227.1 Subd. 2. [EDUCATIONAL AND CORRECTIONAL BUILDINGS.] For 227.2 purposes of this section, "educational and correctional 227.3 buildings" means correctional facilities and buildings used for 227.4 higher education purposes. 227.5 Subd. 3. [IN LIEU PAYMENT.] (a) A city shall receive a 227.6 payment in lieu of property taxes for state owned buildings in 227.7 the following amount, subject to the limits imposed in 227.8 paragraphs (b) and (c). The in lieu payment shall be equal to 227.9 $.25 for each square foot of finished floor space in state-owned 227.10 educational and correctional buildings plus $.75 for each square 227.11 foot of finished floor space for all other state owned buildings 227.12 located within the city. The department of administration will 227.13 provide the square footage for all qualifying buildings to the 227.14 commissioner of revenue to allow calculation of this payment. 227.15 (b) No city may receive an in lieu payment greater than $15 227.16 per capita, based on the most recent city population estimate, 227.17 as defined in section 477A.011, subdivision 3. 227.18 (c) If the total amount of finished floor space in 227.19 qualifying state owned buildings in a city is less than 8,000 227.20 square feet, the in lieu payment shall be zero. 227.21 Subd. 4. [APPROPRIATION.] A sum sufficient to discharge 227.22 the duties imposed under this section is annually appropriated 227.23 from the general fund to the commissioner of revenue. The 227.24 payments shall be made in the manner in prescribed in section 227.25 477A.014, subdivision 1. The payments shall be made on the 227.26 dates prescribed in section 477A.015. 227.27 Sec. 14. [TIF GRANTS; APPROPRIATIONS.] 227.28 (a) The commissioner of revenue shall pay grants to 227.29 municipalities for deficits in tax increment financing districts 227.30 caused by the changes in class rates, the reduction of school 227.31 district taxes, and the imposition of a state tax that is not 227.32 used in determining tax increment under this act. 227.33 Municipalities must submit applications for the grants in a form 227.34 prescribed by the commissioner by no later than March 1 for 227.35 taxes payable during the calendar year. The maximum grant 227.36 equals the lesser of: 228.1 (1) the reduction in the tax increment financing district's 228.2 revenues derived from increment resulting from the provisions of 228.3 this act; and 228.4 (2) the municipality's total available tax increments, 228.5 including those from previous years, less the amount due during 228.6 the calendar year to pay bonds issued and sold before and 228.7 binding contracts entered into before the day following final 228.8 enactment of this act. 228.9 (b) The amount necessary to make the grants is appropriated 228.10 to the commissioner of revenue from the general fund for 228.11 purposes of this section. 228.12 Sec. 15. [REPEALER.] 228.13 Minnesota Statutes 1996, sections 273.1398, subdivisions 2, 228.14 2c, 2d, 3, and 3a; and 273.166, are repealed. 228.15 Sec. 16. [EFFECTIVE DATE.] 228.16 This article is effective for aids payable in 2000 and 228.17 subsequent years. 228.18 ARTICLE 9 228.19 INCOME AND CORPORATE TAXES 228.20 Section 1. Minnesota Statutes 1996, section 270B.02, is 228.21 amended by adding a subdivision to read: 228.22 Subd. 6. [CLIENT LISTS; THIRD-PARTY BULK FILERS.] Client 228.23 lists required under section 290.92, subdivision 30, are 228.24 classified as private data on individuals or nonpublic data, as 228.25 defined in section 13.02, subdivisions 9 and 12. 228.26 Sec. 2. Minnesota Statutes 1996, section 289A.26, 228.27 subdivision 2, is amended to read: 228.28 Subd. 2. [AMOUNT AND TIME FOR PAYMENT OF INSTALLMENTS.] 228.29 The estimated tax payment required under subdivision 1 must be 228.30 paid in four equal installments on or before the 15th day of the 228.31thirdfourth, sixth, ninth, and 12th month of the taxable year. 228.32 Sec. 3. Minnesota Statutes 1996, section 289A.26, 228.33 subdivision 3, is amended to read: 228.34 Subd. 3. [SHORT TAXABLE YEAR.] (a) An entity with a short 228.35 taxable year of less than 12 months, but at least four months, 228.36 must pay estimated tax in equal installments on or before the 229.1 15th day of thethirdfourth, sixth, ninth, and final month of 229.2 the short taxable year, to the extent applicable based on the 229.3 number of months in the short taxable year. 229.4 (b) An entity is not required to make estimated tax 229.5 payments for a short taxable year unless its tax liability 229.6 before the first day of the last month of the taxable year can 229.7 reasonably be expected to exceed $500. 229.8 (c) No payment is required for a short taxable year of less 229.9 than four months. 229.10 Sec. 4. Minnesota Statutes 1996, section 289A.26, 229.11 subdivision 6, is amended to read: 229.12 Subd. 6. [PERIOD OF UNDERPAYMENT.] The period of the 229.13 underpayment runs from the date the installment was required to 229.14 be paid to the earlier of the following dates: 229.15 (1) the 15th day of thethirdfourth month following the 229.16 close of the taxable year for corporations, and the 15th day of 229.17 the fifth month following the close of the taxable year for 229.18 entities subject to tax under section 290.05, subdivision 3; or 229.19 (2) with respect to any part of the underpayment, the date 229.20 on which that part is paid. For purposes of this clause, a 229.21 payment of estimated tax shall be credited against unpaid 229.22 required installments in the order in which those installments 229.23 are required to be paid. 229.24 Sec. 5. Minnesota Statutes 1996, section 289A.26, 229.25 subdivision 7, is amended to read: 229.26 Subd. 7. [REQUIRED INSTALLMENTS.] (a) Except as otherwise 229.27 provided in this subdivision, the amount of a required 229.28 installment is 25 percent of the required annual payment. 229.29 (b) Except as otherwise provided in this subdivision, the 229.30 term "required annual payment" means the lesser of: 229.31 (1) 100 percent of the tax shown on the return for the 229.32 taxable year, or, if no return is filed, 100 percent of the tax 229.33 for that year; or 229.34 (2) 100 percent of the tax shown on the return of the 229.35 entity for the preceding taxable year provided the return was 229.36 for a full 12-month period, showed a liability, and was filed by 230.1 the entity. 230.2 (c) Except for determining the first required installment 230.3 for any taxable year, paragraph (b), clause (2), does not apply 230.4 in the case of a large corporation. The term "large 230.5 corporation" means a corporation or any predecessor corporation 230.6 that had taxable net income of $1,000,000 or more for any 230.7 taxable year during the testing period. The term "testing 230.8 period" means the three taxable years immediately preceding the 230.9 taxable year involved. A reduction allowed to a large 230.10 corporation for the first installment that is allowed by 230.11 applying paragraph (b), clause (2), must be recaptured by 230.12 increasing the next required installment by the amount of the 230.13 reduction. 230.14 (d) In the case of a required installment, if the 230.15 corporation establishes that the annualized income installment 230.16 is less than the amount determined in paragraph (a), the amount 230.17 of the required installment is the annualized income installment 230.18 and the recapture of previous quarters' reductions allowed by 230.19 this paragraph must be recovered by increasing later required 230.20 installments to the extent the reductions have not previously 230.21 been recovered. 230.22 (e) The "annualized income installment" is the excess, if 230.23 any, of: 230.24 (1) an amount equal to the applicable percentage of the tax 230.25 for the taxable year computed by placing on an annualized basis 230.26 the taxable income: 230.27 (i) for the firsttwothree months of the taxable year, in 230.28 the case of the first required installment; 230.29 (ii) for the firsttwothree monthsor for the first five230.30monthsof the taxable year, in the case of the second required 230.31 installment; 230.32 (iii) for the first six monthsor for the first eight230.33monthsof the taxable year, in the case of the third required 230.34 installment; and 230.35 (iv) for the first nine monthsor for the first 11 months230.36 of the taxable year, in the case of the fourth required 231.1 installment, over 231.2 (2) the aggregate amount of any prior required installments 231.3 for the taxable year. 231.4 (3) For the purpose of this paragraph, the annualized 231.5 income shall be computed by placing on an annualized basis the 231.6 taxable income for the year up to the end of the month preceding 231.7 the due date for the quarterly payment multiplied by 12 and 231.8 dividing the resulting amount by the number of months in the 231.9 taxable year (2, 5, 6, 8, 9, or 11 as the case may be) referred 231.10 to in clause (1). 231.11 (4) The "applicable percentage" used in clause (1) is: 231.12 For the following The applicable 231.13 required installments: percentage is: 231.14 1st 25 231.15 2nd 50 231.16 3rd 75 231.17 4th 100 231.18 (f)(1) If this paragraph applies, the amount determined for 231.19 any installment must be determined in the following manner: 231.20 (i) take the taxable income for the months during the 231.21 taxable year preceding the filing month; 231.22 (ii) divide that amount by the base period percentage for 231.23 the months during the taxable year preceding the filing month; 231.24 (iii) determine the tax on the amount determined under item 231.25 (ii); and 231.26 (iv) multiply the tax computed under item (iii) by the base 231.27 period percentage for the filing month and the months during the 231.28 taxable year preceding the filing month. 231.29 (2) For purposes of this paragraph: 231.30 (i) the "base period percentage" for a period of months is 231.31 the average percent that the taxable income for the 231.32 corresponding months in each of the three preceding taxable 231.33 years bears to the taxable income for the three preceding 231.34 taxable years; 231.35 (ii) the term "filing month" means the month in which the 231.36 installment is required to be paid; 232.1 (iii) this paragraph only applies if the base period 232.2 percentage for any six consecutive months of the taxable year 232.3 equals or exceeds 70 percent; and 232.4 (iv) the commissioner may provide by rule for the 232.5 determination of the base period percentage in the case of 232.6 reorganizations, new corporations, and other similar 232.7 circumstances. 232.8 (3) In the case of a required installment determined under 232.9 this paragraph, if the entity determines that the installment is 232.10 less than the amount determined in paragraph (a), the amount of 232.11 the required installment is the amount determined under this 232.12 paragraph and the recapture of previous quarters' reductions 232.13 allowed by this paragraph must be recovered by increasing later 232.14 required installments to the extent the reductions have not 232.15 previously been recovered. 232.16 Sec. 6. Minnesota Statutes 1996, section 290.01, 232.17 subdivision 19b, is amended to read: 232.18 Subd. 19b. [SUBTRACTIONS FROM FEDERAL TAXABLE INCOME.] For 232.19 individuals, estates, and trusts, there shall be subtracted from 232.20 federal taxable income: 232.21 (1) interest income on obligations of any authority, 232.22 commission, or instrumentality of the United States to the 232.23 extent includable in taxable income for federal income tax 232.24 purposes but exempt from state income tax under the laws of the 232.25 United States; 232.26 (2) if included in federal taxable income, the amount of 232.27 any overpayment of income tax to Minnesota or to any other 232.28 state, for any previous taxable year, whether the amount is 232.29 received as a refund or as a credit to another taxable year's 232.30 income tax liability; 232.31 (3) the amount paid to others not to exceed $650 for each 232.32 dependent in grades kindergarten to 6 and $1,000 for each 232.33 dependent in grades 7 to 12, for tuition, textbooks, and 232.34 transportation of each dependent in attending an elementary or 232.35 secondary school situated in Minnesota, North Dakota, South 232.36 Dakota, Iowa, or Wisconsin, wherein a resident of this state may 233.1 legally fulfill the state's compulsory attendance laws, which is 233.2 not operated for profit, and which adheres to the provisions of 233.3 the Civil Rights Act of 1964 and chapter 363. As used in this 233.4 clause, "textbooks" includes books and other instructional 233.5 materials and equipment used in elementary and secondary schools 233.6 in teaching only those subjects legally and commonly taught in 233.7 public elementary and secondary schools in this state. 233.8 "Textbooks" does not include instructional books and materials 233.9 used in the teaching of religious tenets, doctrines, or worship, 233.10 the purpose of which is to instill such tenets, doctrines, or 233.11 worship, nor does it include books or materials for, or 233.12 transportation to, extracurricular activities including sporting 233.13 events, musical or dramatic events, speech activities, driver's 233.14 education, or similar programs. In order to qualify for the 233.15 subtraction under this clause the taxpayer must elect to itemize 233.16 deductions under section 63(e) of the Internal Revenue Code; 233.17 (4) to the extent included in federal taxable income, 233.18 distributions from a qualified governmental pension plan, an 233.19 individual retirement account, simplified employee pension, or 233.20 qualified plan covering a self-employed person that represent a 233.21 return of contributions that were included in Minnesota gross 233.22 income in the taxable year for which the contributions were made 233.23 but were deducted or were not included in the computation of 233.24 federal adjusted gross income. The distribution shall be 233.25 allocated first to return of contributions until the 233.26 contributions included in Minnesota gross income have been 233.27 exhausted. This subtraction applies only to contributions made 233.28 in a taxable year prior to 1985; 233.29 (5) income as provided under section 290.0802; 233.30 (6) the amount of unrecovered accelerated cost recovery 233.31 system deductions allowed under subdivision 19g; 233.32 (7) to the extent included in federal adjusted gross 233.33 income, income realized on disposition of property exempt from 233.34 tax under section 290.491; 233.35 (8) to the extent not deducted in determining federal 233.36 taxable income, the amount paid for health insurance of 234.1 self-employed individuals as determined under section 162(l) of 234.2 the Internal Revenue Code, except that the 25 percent limit does 234.3 not apply. If the taxpayer deducted insurance payments under 234.4 section 213 of the Internal Revenue Code of 1986, the 234.5 subtraction under this clause must be reduced by the lesser of: 234.6 (i) the total itemized deductions allowed under section 234.7 63(d) of the Internal Revenue Code, less state, local, and 234.8 foreign income taxes deductible under section 164 of the 234.9 Internal Revenue Code and the standard deduction under section 234.10 63(c) of the Internal Revenue Code; or 234.11 (ii) the lesser of (A) the amount of insurance qualifying 234.12 as "medical care" under section 213(d) of the Internal Revenue 234.13 Code to the extent not deducted under section 162(1) of the 234.14 Internal Revenue Code or excluded from income or (B) the total 234.15 amount deductible for medical care under section 213(a);and234.16 (9) the exemption amount allowed under Laws 1995, chapter 234.17 255, article 3, section 2, subdivision 3; and 234.18 (10) to the extent included in federal taxable income, 234.19 postservice benefits for youth community service under section 234.20 121.707 for volunteer service under United States Code, title 234.21 42, section 5011(d), as amended. 234.22 Sec. 7. Minnesota Statutes 1996, section 290.01, 234.23 subdivision 19c, is amended to read: 234.24 Subd. 19c. [CORPORATIONS; ADDITIONS TO FEDERAL TAXABLE 234.25 INCOME.] For corporations, there shall be added to federal 234.26 taxable income: 234.27 (1) the amount of any deduction taken for federal income 234.28 tax purposes for income, excise, or franchise taxes based on net 234.29 income or related minimum taxes paid by the corporation to 234.30 Minnesota, another state, a political subdivision of another 234.31 state, the District of Columbia, or any foreign country or 234.32 possession of the United States; 234.33 (2) interest not subject to federal tax upon obligations 234.34 of: the United States, its possessions, its agencies, or its 234.35 instrumentalities; the state of Minnesota or any other state, 234.36 any of its political or governmental subdivisions, any of its 235.1 municipalities, or any of its governmental agencies or 235.2 instrumentalities; the District of Columbia; or Indian tribal 235.3 governments; 235.4 (3) exempt-interest dividends received as defined in 235.5 section 852(b)(5) of the Internal Revenue Code; 235.6 (4) the amount of any windfall profits tax deducted under 235.7 section 164 or 471 of the Internal Revenue Code; 235.8 (5) the amount of any net operating loss deduction taken 235.9 for federal income tax purposes under section 172 or 832(c)(10) 235.10 of the Internal Revenue Code or operations loss deduction under 235.11 section 810 of the Internal Revenue Code; 235.12 (6) the amount of any special deductions taken for federal 235.13 income tax purposes under sections 241 to 247 of the Internal 235.14 Revenue Code; 235.15 (7) losses from the business of mining, as defined in 235.16 section 290.05, subdivision 1, clause (a), that are not subject 235.17 to Minnesota income tax; 235.18 (8) the amount of any capital losses deducted for federal 235.19 income tax purposes under sections 1211 and 1212 of the Internal 235.20 Revenue Code; 235.21 (9) the amount of any charitable contributions deducted for 235.22 federal income tax purposes under section 170 of the Internal 235.23 Revenue Code; 235.24 (10) the exempt foreign trade income of a foreign sales 235.25 corporation under sections 921(a) and 291 of the Internal 235.26 Revenue Code; 235.27 (11) the amount of percentage depletion deducted under 235.28 sections 611 through 614 and 291 of the Internal Revenue Code; 235.29 (12) for certified pollution control facilities placed in 235.30 service in a taxable year beginning before December 31, 1986, 235.31 and for which amortization deductions were elected under section 235.32 169 of the Internal Revenue Code of 1954, as amended through 235.33 December 31, 1985, the amount of the amortization deduction 235.34 allowed in computing federal taxable income for those 235.35 facilities;and235.36 (13) the amount of any deemed dividend from a foreign 236.1 operating corporation determined pursuant to section 290.17, 236.2 subdivision 4, paragraph (g); and 236.3 (14) the amount of any environmental tax paid under section 236.4 59A of the Internal Revenue Code. 236.5 Sec. 8. Minnesota Statutes 1996, section 290.01, 236.6 subdivision 19d, is amended to read: 236.7 Subd. 19d. [CORPORATIONS; MODIFICATIONS DECREASING FEDERAL 236.8 TAXABLE INCOME.] For corporations, there shall be subtracted 236.9 from federal taxable income after the increases provided in 236.10 subdivision 19c: 236.11 (1) the amount of foreign dividend gross-up added to gross 236.12 income for federal income tax purposes under section 78 of the 236.13 Internal Revenue Code; 236.14 (2) the amount of salary expense not allowed for federal 236.15 income tax purposes due to claiming the federal jobs credit 236.16 under section 51 of the Internal Revenue Code; 236.17 (3) any dividend (not including any distribution in 236.18 liquidation) paid within the taxable year by a national or state 236.19 bank to the United States, or to any instrumentality of the 236.20 United States exempt from federal income taxes, on the preferred 236.21 stock of the bank owned by the United States or the 236.22 instrumentality; 236.23 (4) amounts disallowed for intangible drilling costs due to 236.24 differences between this chapter and the Internal Revenue Code 236.25 in taxable years beginning before January 1, 1987, as follows: 236.26 (i) to the extent the disallowed costs are represented by 236.27 physical property, an amount equal to the allowance for 236.28 depreciation under Minnesota Statutes 1986, section 290.09, 236.29 subdivision 7, subject to the modifications contained in 236.30 subdivision 19e; and 236.31 (ii) to the extent the disallowed costs are not represented 236.32 by physical property, an amount equal to the allowance for cost 236.33 depletion under Minnesota Statutes 1986, section 290.09, 236.34 subdivision 8; 236.35 (5) the deduction for capital losses pursuant to sections 236.36 1211 and 1212 of the Internal Revenue Code, except that: 237.1 (i) for capital losses incurred in taxable years beginning 237.2 after December 31, 1986, capital loss carrybacks shall not be 237.3 allowed; 237.4 (ii) for capital losses incurred in taxable years beginning 237.5 after December 31, 1986, a capital loss carryover to each of the 237.6 15 taxable years succeeding the loss year shall be allowed; 237.7 (iii) for capital losses incurred in taxable years 237.8 beginning before January 1, 1987, a capital loss carryback to 237.9 each of the three taxable years preceding the loss year, subject 237.10 to the provisions of Minnesota Statutes 1986, section 290.16, 237.11 shall be allowed; and 237.12 (iv) for capital losses incurred in taxable years beginning 237.13 before January 1, 1987, a capital loss carryover to each of the 237.14 five taxable years succeeding the loss year to the extent such 237.15 loss was not used in a prior taxable year and subject to the 237.16 provisions of Minnesota Statutes 1986, section 290.16, shall be 237.17 allowed; 237.18 (6) an amount for interest and expenses relating to income 237.19 not taxable for federal income tax purposes, if (i) the income 237.20 is taxable under this chapter and (ii) the interest and expenses 237.21 were disallowed as deductions under the provisions of section 237.22 171(a)(2), 265 or 291 of the Internal Revenue Code in computing 237.23 federal taxable income; 237.24 (7) in the case of mines, oil and gas wells, other natural 237.25 deposits, and timber for which percentage depletion was 237.26 disallowed pursuant to subdivision 19c, clause (11), a 237.27 reasonable allowance for depletion based on actual cost. In the 237.28 case of leases the deduction must be apportioned between the 237.29 lessor and lessee in accordance with rules prescribed by the 237.30 commissioner. In the case of property held in trust, the 237.31 allowable deduction must be apportioned between the income 237.32 beneficiaries and the trustee in accordance with the pertinent 237.33 provisions of the trust, or if there is no provision in the 237.34 instrument, on the basis of the trust's income allocable to 237.35 each; 237.36 (8) for certified pollution control facilities placed in 238.1 service in a taxable year beginning before December 31, 1986, 238.2 and for which amortization deductions were elected under section 238.3 169 of the Internal Revenue Code of 1954, as amended through 238.4 December 31, 1985, an amount equal to the allowance for 238.5 depreciation under Minnesota Statutes 1986, section 290.09, 238.6 subdivision 7; 238.7 (9) the amount included in federal taxable income 238.8 attributable to the credits provided in Minnesota Statutes 1986, 238.9 section 273.1314, subdivision 9, or Minnesota Statutes, section 238.10 469.171, subdivision 6; 238.11 (10) amounts included in federal taxable income that are 238.12 due to refunds of income, excise, or franchise taxes based on 238.13 net income or related minimum taxes paid by the corporation to 238.14 Minnesota, another state, a political subdivision of another 238.15 state, the District of Columbia, or a foreign country or 238.16 possession of the United States to the extent that the taxes 238.17 were added to federal taxable income under section 290.01, 238.18 subdivision 19c, clause (1), in a prior taxable year; 238.19 (11)the following percentage80 percent of royalties, 238.20 fees, or other like income accrued or received from a foreign 238.21 operating corporation or a foreign corporation which is part of 238.22 the same unitary business as the receiving corporation:238.23Taxable Year238.24Beginning After .......... Percentage238.25December 31, 1988 ........ 50 percent238.26December 31, 1990 ........ 80 percent; 238.27 (12) income or gains from the business of mining as defined 238.28 in section 290.05, subdivision 1, clause (a), that are not 238.29 subject to Minnesota franchise tax; 238.30 (13) the amount of handicap access expenditures in the 238.31 taxable year which are not allowed to be deducted or capitalized 238.32 under section 44(d)(7) of the Internal Revenue Code; 238.33 (14) the amount of qualified research expenses not allowed 238.34 for federal income tax purposes under section 280C(c) of the 238.35 Internal Revenue Code, but only to the extent that the amount 238.36 exceeds the amount of the credit allowed under section 290.068; 239.1and239.2 (15) the amount of salary expenses not allowed for federal 239.3 income tax purposes due to claiming the Indian employment credit 239.4 under section 45A(a) of the Internal Revenue Code; and 239.5 (16) the amount of any refund of environmental taxes paid 239.6 under section 59A of the Internal Revenue Code. 239.7 Sec. 9. [290.0672] [LONG-TERM CARE INSURANCE CREDIT.] 239.8 Subdivision 1. [DEFINITIONS.] (a) For purposes of this 239.9 section, the following terms have the meanings given. 239.10 (b) "Long-term care insurance" means a policy that: 239.11 (1) qualifies for a deduction under section 213 of the 239.12 Internal Revenue Code, disregarding the 7.5 percent income test; 239.13 or meets the requirements given in section 62A.46; or provides 239.14 similar coverage issued under the laws of another jurisdiction; 239.15 and 239.16 (2) does not have a lifetime long-term care benefit limit 239.17 of less than $100,000; and 239.18 (3) includes inflation protection that meets or exceeds the 239.19 inflation protection requirements of the long-term care 239.20 insurance model regulation cited under section 239.21 7702B(g)(2)(A)(i)(x) of the Internal Revenue Code. 239.22 (c) "Qualified beneficiary" means the taxpayer or the 239.23 taxpayer's spouse. 239.24 (d) "Premiums deducted in determining federal taxable 239.25 income" means the lesser of (1) long-term care insurance 239.26 premiums that qualify as deductions under section 213 of the 239.27 Internal Revenue Code; and (2) the total amount deductible for 239.28 medical care under section 213 of the Internal Revenue Code. 239.29 Subd. 2. [CREDIT.] A taxpayer is allowed a credit against 239.30 the tax imposed by this chapter for long-term care insurance 239.31 policy premiums paid during the tax year. The credit for each 239.32 policy equals the lesser of (1) 25 percent of premiums paid to 239.33 the extent not deducted in determining federal taxable income; 239.34 or (2) $100. A taxpayer may claim a credit for only one policy 239.35 for each qualified beneficiary. Only one credit may be claimed 239.36 by any taxpayer for each policy. The maximum total credit 240.1 allowed per year is $200 for married couples filing joint 240.2 returns and $100 for all other filers. For a nonresident or 240.3 part-year resident, the credit determined under this section 240.4 must be allocated based on the percentage calculated under 240.5 section 290.06, subdivision 2c, paragraph (e). 240.6 Sec. 10. [290.0673] [JOB TRAINING PROGRAM CREDIT.] 240.7 Subdivision 1. [CREDIT ALLOWED.] (a) A credit is allowed 240.8 against the tax imposed by section 290.06, subdivision 1, equal 240.9 to the sum of: 240.10 (1) placement fees paid to a job training program upon 240.11 hiring a qualified graduate of the program; and 240.12 (2) retention fees paid to a job training program for 240.13 retention of a qualified graduate of the program. 240.14 (b) The maximum placement fee qualifying for a credit under 240.15 this section is $8,000 per qualified graduate in the year 240.16 hired. The maximum retention fee qualifying for a credit under 240.17 this section is $6,000 per qualified graduate retained as an 240.18 employee per year. Only retention fees paid in the second and 240.19 third years after the qualified graduate is hired qualify for 240.20 the credit. 240.21 (c) A credit is allowed only up to the dollar amount of 240.22 certificates, issued under subdivision 4, and provided by the 240.23 job training program to the taxpayer. 240.24 Subd. 2. [QUALIFIED JOB TRAINING PROGRAM.] (a) To qualify 240.25 for credits under this section, a job training program must 240.26 satisfy the following requirements: 240.27 (1) It must be operated by a nonprofit corporation that 240.28 qualifies under section 501(c)(3) of the Internal Revenue Code. 240.29 (2) The organization must spend at least $5,000 per 240.30 graduate of the program. 240.31 (3) The program must provide education and training in: 240.32 (i) basic skills, such as reading, writing, mathematics, 240.33 and communications; 240.34 (ii) thinking skills, such as reasoning, creative thinking, 240.35 decision making, and problem solving; and 240.36 (iii) personal qualities, such as responsibility, 241.1 self-esteem, self-management, honesty, and integrity. 241.2 (4) The program must provide income supplements, when 241.3 needed, to participants for housing, counseling, tuition, and 241.4 other basic needs. 241.5 (5) The education and training course must last for at 241.6 least six months. 241.7 (6) Individuals served by the program must: 241.8 (i) be 18 years old or older; 241.9 (ii) have had federal adjusted gross income of no more than 241.10 $10,000 per year in the last two years; 241.11 (iii) have assets of no more than $5,000, excluding the 241.12 value of a homestead; and 241.13 (iv) not have been claimed as a dependent on the federal 241.14 tax return of another person in the previous taxable year. 241.15 (7) The program must charge placement and retention fees 241.16 that exceed the amount of credit certificates provided to the 241.17 employer by at least 20 percent. 241.18 (b) The program must be certified by the commissioner of 241.19 children, families, and learning as meeting the requirements of 241.20 this subdivision. 241.21 Subd. 3. [QUALIFIED GRADUATE.] A qualified graduate is a 241.22 graduate of a job training program qualifying under subdivision 241.23 1, who is placed in a job in Minnesota that pays at least $9 per 241.24 hour or its equivalent. To qualify for a credit under this 241.25 section for a retention fee, a job in which the graduate is 241.26 retained must pay at least $10 per hour at the end for the first 241.27 and second years of employment. 241.28 Subd. 4. [DUTIES OF PROGRAM.] (a) Each program certified 241.29 by the commissioner under subdivision 2 must comply with the 241.30 requirements of this subdivision. 241.31 (b) Each program must maintain records for each graduate 241.32 for which the program provides a credit certificate to an 241.33 employer. These records must include information sufficient to 241.34 verify the graduate's eligibility under this section, identify 241.35 the employer, describe the job including its compensation rate 241.36 and benefits, and determine the amount of placement and 242.1 retention fees received. 242.2 (c) Each program must report to the commissioner of revenue 242.3 by January 1, 1999, and by January 1, 2001, on its use of the 242.4 credit. Each report must include, at least, information on: 242.5 (1) the number of graduates placed; 242.6 (2) demographic information on the graduates; 242.7 (3) the types of position in which each graduate is placed, 242.8 including compensation information; 242.9 (4) the tenure of each graduate at the placed position or 242.10 in other jobs; 242.11 (5) the amount of employer fees paid to the program; 242.12 (6) the amount of money raised by the program from other 242.13 sources; and 242.14 (7) the types and sizes of employers with which graduates 242.15 have been placed and retained. 242.16 (d) The commissioner shall compile and summarize this 242.17 information and report to the legislature by February 15, 1999, 242.18 and February 15, 2001. 242.19 Subd. 5. [ISSUANCE OF CREDIT CERTIFICATES.] (a) The total 242.20 amount of credits under this section is limited to $1,700,000 242.21 for taxable years beginning after December 31, 1996, and before 242.22 January 1, 2002. The commissioner may issue under paragraph (b) 242.23 no more than the specified amount of certificates for taxable 242.24 years beginning during each calendar year: 242.25 1997 $200,000 242.26 1998 $400,000 242.27 1999 $600,000 242.28 2000 $340,000 242.29 2001 $160,000 242.30 Unused certificates for a taxable year carry over and may 242.31 be used for a later taxable year, regardless of when issued by 242.32 the commissioner. 242.33 (b) Upon application, the commissioner of children, 242.34 families, and learning shall issue certificates to job training 242.35 programs, certified under subdivision 2, up to the dollar amount 242.36 available for the taxable year. The certificates must be in a 243.1 dollar amount that is no greater than the dollar amount applied 243.2 for, and reflects the commissioner's estimate of the job 243.3 training program's projected fees for placements and retentions 243.4 of qualifying graduates. The commissioner shall issue the 243.5 certificates in the order in which applications are received 243.6 until the available authority has been issued. 243.7 (c) To the extent available, the job training program must 243.8 provide to employers of its qualified graduates certificates 243.9 issued by the commissioner of children, families, and learning 243.10 under this subdivision. 243.11 Subd. 6. [NONREFUNDABLE.] The taxpayer must use the tax 243.12 credit for the taxable year in which the certificate is issued 243.13 to the employer. The credit for the taxable year may not exceed 243.14 the liability for tax under section 290.06, subdivision 1, for 243.15 the taxable year, before reduction by the nonrefundable credits 243.16 allowed under this chapter. 243.17 Subd. 7. [MANNER OF CLAIMING.] The commissioner shall 243.18 prescribe the manner in which the credit may be claimed. This 243.19 may include allowing the credit only as a separately processed 243.20 claim for a refund. 243.21 Subd. 8. [EXPIRATION.] This section expires effective for 243.22 taxable years beginning after December 31, 2001. 243.23 Sec. 11. Minnesota Statutes 1996, section 290.92, is 243.24 amended by adding a subdivision to read: 243.25 Subd. 30. [REGISTRATION; THIRD-PARTY BULK FILER.] (a) For 243.26 purposes of this subdivision, the following terms have the 243.27 meanings given: 243.28 (1) Notwithstanding section 290.01, "person" means an 243.29 individual, fiduciary, partnership, corporation, limited 243.30 liability company, association, or other entity organized under 243.31 the laws of this state or any other jurisdiction. 243.32 (2) "Third-party bulk filer" means a person that collects 243.33 withholding taxes from more than one employer for the purpose of 243.34 filing returns and depositing the withheld taxes with the 243.35 commissioner. 243.36 (b) A person shall not act as a third-party bulk filer 244.1 unless the person is registered with the commissioner under this 244.2 subdivision. 244.3 (c) A person may apply to the commissioner, on a form 244.4 prescribed by the commissioner, for registration as a 244.5 third-party bulk filer under this subdivision, and the 244.6 commissioner shall grant the application if the application 244.7 indicates that the person will comply with this subdivision. 244.8 (d) A third-party bulk filer must: 244.9 (1) keep client funds held for payment of federal or state 244.10 withholding taxes or other client obligations in an account 244.11 separate from the third-party bulk filer's own funds; 244.12 (2) permit the commissioner to conduct scheduled or 244.13 unscheduled audits of the third-party bulk filer's books and 244.14 records relating to compliance with this subdivision and fully 244.15 cooperate with the audits or, at the discretion of the 244.16 commissioner, submit an audit conducted by a certified public 244.17 accountant; 244.18 (3) file returns electronically and make deposits 244.19 electronically with the commissioner in compliance with the 244.20 commissioner's requirements for electronic filing and 244.21 depositing; 244.22 (4) provide to the commissioner at least monthly, in the 244.23 form requested by the commissioner, an updated client list that 244.24 includes at least the name, address, tax identification number, 244.25 and federal deposit frequency of each client. The address 244.26 listed for the client must be the client's actual street or post 244.27 office box address and not the third-party bulk filer's address; 244.28 (5) disclose in writing to prospective clients that: 244.29 (i) the third-party bulk filer may invest client funds 244.30 prior to depositing them with the commissioner and with the 244.31 Internal Revenue Service and that earnings from those 244.32 investments will be the property of the third-party bulk filer; 244.33 (ii) if the third-party bulk filer incurs losses on those 244.34 investments or uses the client's funds for other purposes, the 244.35 third-party bulk filer will still be liable to the client for 244.36 the amounts withheld but will be able to make required tax 245.1 deposits on behalf of the client only by using the third-party 245.2 bulk filer's own funds or other assets to replace the funds lost 245.3 through the investments or used for other purposes; and 245.4 (iii) no state or federal agency monitors or assumes any 245.5 responsibility for the financial solvency of third-party bulk 245.6 filers; 245.7 (6) timely file all returns and timely make all tax 245.8 deposits required under its contracts with its clients; 245.9 (7) upon request, provide to the commissioner, within the 245.10 time specified in the request, a copy of any contract with a 245.11 client; and 245.12 (8) comply with all other requirements of this section or 245.13 of rules adopted under this section. 245.14 (e) When the commissioner sends an order of assessment 245.15 issued under section 289A.37, in either paper or electronic 245.16 form, to a third-party bulk filer regarding a client, the 245.17 commissioner shall also send a paper copy of the order of 245.18 assessment to the client. 245.19 (f) If the commissioner determines that a required deposit 245.20 appears not to have been made, the commissioner shall send a 245.21 written notice of the delinquency, in electronic or paper form, 245.22 to the third-party bulk filer, and a copy to the client as 245.23 required under paragraph (e). 245.24 (g) If the commissioner determines that a required deposit 245.25 has not been made, and that continued operation of the 245.26 third-party bulk filer would present a risk of loss to its 245.27 clients, the commissioner may, upon ten business days' written 245.28 notice by certified mail to the third-party bulk filer, suspend 245.29 the registration of the third-party bulk filer for an indefinite 245.30 period, and notify the third-party bulk filer's clients that the 245.31 registration has been suspended. A registration may not be 245.32 suspended if the failure to make a deposit was caused by the 245.33 client's failure to deposit funds or provide the information 245.34 necessary to calculate appropriate tax withholding payments. 245.35 The commissioner shall, upon request, provide the third-party 245.36 bulk filer with the opportunity for an administrative appeal 246.1 under section 289A.65, subdivisions 1, 4, and 10, prior to 246.2 suspension; the hearing, if any, on the administrative appeal 246.3 must occur within the ten-day period unless the commissioner, in 246.4 the commissioner's sole discretion, agrees to delay the 246.5 suspension to permit a later hearing. The 60-day period 246.6 specified in section 289A.65, subdivision 4, does not apply to a 246.7 proceeding under this paragraph. Within 30 days after the 246.8 beginning of a suspension under this paragraph, the commissioner 246.9 may commence a proceeding to suspend or revoke under paragraph 246.10 (h); if the commissioner fails to do so, the suspension under 246.11 this paragraph terminates. 246.12 (h) If the commissioner determines, in compliance with 246.13 paragraph (i), that a third-party bulk filer has violated this 246.14 section without reasonable cause or is no longer eligible for 246.15 registration under this subdivision, the commissioner may 246.16 suspend or revoke the third-party bulk filer's registration or 246.17 may assess a civil penalty upon the third-party bulk filer, not 246.18 to exceed $5,000 per violation. A suspension of registration 246.19 may be for any period of less than six months and may include 246.20 conditions for reinstatement. If the commissioner revokes the 246.21 registration, the third-party bulk filer may not apply for 246.22 reregistration for six months after the revocation. If the 246.23 commissioner suspends or revokes a registration, the 246.24 commissioner shall notify the former registrant's clients that 246.25 the registration has been suspended or revoked. If the 246.26 commissioner assesses a civil penalty, the commissioner shall 246.27 not notify the third-party bulk filer's clients of the 246.28 assessment. 246.29 (i) Prior to a suspension, revocation, or assessment of a 246.30 civil penalty under paragraph (h), the commissioner shall first 246.31 provide 30 days' written notice to the third-party bulk filer, 246.32 specifying the violations and informing the third-party bulk 246.33 filer that the commissioner intends, based upon those 246.34 violations, to take action against the third-party bulk filer as 246.35 permitted under this paragraph and paragraph (h). The notice 246.36 shall advise the third-party bulk filer of the right to contest 247.1 the suspension, revocation, or assessment of a civil penalty and 247.2 of the general procedures for a contested case hearing under 247.3 chapter 14. The notice may be served personally or by mail in 247.4 the manner prescribed for service of an order of assessment 247.5 issued under section 289A.37. A suspension or revocation of 247.6 registration under this paragraph is effective when the 247.7 commissioner serves a notice of suspension or revocation upon 247.8 the third-party bulk filer after 30 days have passed following 247.9 the date of the notice of intent to suspend or revoke without 247.10 the third-party bulk filer requesting a hearing. If a hearing 247.11 is timely requested and held, the suspension or revocation is 247.12 effective upon service by the commissioner of an order of 247.13 suspension or revocation under section 14.62, subdivision 1. 247.14 (j) A third-party bulk filer may terminate its registration 247.15 by written notice to the commissioner, but the termination does 247.16 not affect the commissioner's authority to begin or continue a 247.17 proceeding to take action permitted under paragraph (h). The 247.18 commissioner shall notify the third-party bulk filer's clients 247.19 of a termination of registration under this paragraph. 247.20 (k) The commissioner shall remind employers at least 247.21 annually, through the department's regular informational 247.22 publications that it sends to employers, that employers may 247.23 telephone the department to determine whether a required filing 247.24 or deposit has been made by a third-party bulk filer. 247.25 Sec. 12. Laws 1997, chapter 34, section 2, is amended to 247.26 read: 247.27 Sec. 2. [EFFECTIVE DATE.] 247.28 Section 1 is effective the day following final enactment 247.29 for time limitations which expire or due dates specified in 247.30 Minnesota Statutes, section 289A.20, which fall in the period 247.31 between March 31, 1997, and May 30, 1997. 247.32 Sec. 13. [APPROPRIATION; BUSINESS TAX STUDY.] 247.33 (a) $50,000 is appropriated from the general fund for 247.34 fiscal years 1998 and 1999 to the legislative coordinating 247.35 commission to study alternative methods for taxing business. 247.36 This appropriation may be used to hire a consultant or 248.1 consultants to prepare all or part of the study and related 248.2 costs. 248.3 (b) The study must analyze the following taxes paid by the 248.4 businesses: 248.5 (1) the corporate franchise tax; 248.6 (2) the sales tax on capital or other business inputs; 248.7 (3) the personal property tax on utility property; 248.8 (4) the real property tax on commercial and industrial 248.9 property. 248.10 The study must consider the impact of alternative methods 248.11 of taxing business and the impact of doing so on the fairness, 248.12 efficiency, simplicity, elasticity, and stability of revenues, 248.13 and competitiveness of Minnesota's taxation of business. 248.14 (c) The legislative commission on planning and fiscal 248.15 policy is responsible for managing any contracts under this 248.16 section and for preparing the study. The commission may appoint 248.17 a formal or informal bipartisan working group of house and 248.18 senate members to oversee and coordinate the study. The 248.19 commission shall regularly consult with and report to the chairs 248.20 of the house and senate tax committees on the study process and 248.21 results. The commission shall regularly consult with and 248.22 involve the commissioner of revenue in contracting with 248.23 consultants and preparing the study. 248.24 Sec. 14. [EFFECTIVE DATE.] 248.25 Sections 1 and 13 are effective the day following final 248.26 enactment. 248.27 Sections 2 to 5 are effective for taxable years beginning 248.28 after December 31, 1997. 248.29 Sections 6 to 9 are effective for taxable years beginning 248.30 after December 31, 1996. 248.31 Section 10 is effective for tax credit certificates issued 248.32 after December 31, 1997, and used in taxable years beginning 248.33 after December 31, 1997. 248.34 Section 11 is effective January 1, 1998. 248.35 Section 12 is effective April 16, 1997. 248.36 ARTICLE 10 249.1 FEDERAL UPDATE 249.2 Section 1. Minnesota Statutes 1996, section 289A.02, 249.3 subdivision 7, is amended to read: 249.4 Subd. 7. [INTERNAL REVENUE CODE.] Unless specifically 249.5 defined otherwise, "Internal Revenue Code" means the Internal 249.6 Revenue Code of 1986, as amended throughMarch 22December 31, 249.7 1996, and includes the provisions of section 1(a) and (b) of 249.8 Public Law Number 104-117. 249.9 Sec. 2. Minnesota Statutes 1996, section 290.01, 249.10 subdivision 19, is amended to read: 249.11 Subd. 19. [NET INCOME.] The term "net income" means the 249.12 federal taxable income, as defined in section 63 of the Internal 249.13 Revenue Code of 1986, as amended through the date named in this 249.14 subdivision, incorporating any elections made by the taxpayer in 249.15 accordance with the Internal Revenue Code in determining federal 249.16 taxable income for federal income tax purposes, and with the 249.17 modifications provided in subdivisions 19a to 19f. 249.18 In the case of a regulated investment company or a fund 249.19 thereof, as defined in section 851(a) or 851(h) of the Internal 249.20 Revenue Code, federal taxable income means investment company 249.21 taxable income as defined in section 852(b)(2) of the Internal 249.22 Revenue Code, except that: 249.23 (1) the exclusion of net capital gain provided in section 249.24 852(b)(2)(A) of the Internal Revenue Code does not apply;and249.25 (2) the deduction for dividends paid under section 249.26 852(b)(2)(D) of the Internal Revenue Code must be applied by 249.27 allowing a deduction for capital gain dividends and 249.28 exempt-interest dividends as defined in sections 852(b)(3)(C) 249.29 and 852(b)(5) of the Internal Revenue Code; and 249.30 (3) the deduction for dividends paid must also be applied 249.31 in the amount of any undistributed capital gains which the 249.32 regulated investment company elects to have treated as provided 249.33 in section 852(b)(3)(D) of the Internal Revenue Code. 249.34 The net income of a real estate investment trust as defined 249.35 and limited by section 856(a), (b), and (c) of the Internal 249.36 Revenue Code means the real estate investment trust taxable 250.1 income as defined in section 857(b)(2) of the Internal Revenue 250.2 Code. 250.3 The net income of a designated settlement fund as defined 250.4 in section 468B(d) of the Internal Revenue Code means the gross 250.5 income as defined in section 468B(b) of the Internal Revenue 250.6 Code. 250.7 The Internal Revenue Code of 1986, as amended through 250.8 December 31, 1986, shall be in effect for taxable years 250.9 beginning after December 31, 1986. The provisions of sections 250.10 10104, 10202, 10203, 10204, 10206, 10212, 10221, 10222, 10223, 250.11 10226, 10227, 10228, 10611, 10631, 10632, and 10711 of the 250.12 Omnibus Budget Reconciliation Act of 1987, Public Law Number 250.13 100-203, the provisions of sections 1001, 1002, 1003, 1004, 250.14 1005, 1006, 1008, 1009, 1010, 1011, 1011A, 1011B, 1012, 1013, 250.15 1014, 1015, 1018, 2004, 3041, 4009, 6007, 6026, 6032, 6137, 250.16 6277, and 6282 of the Technical and Miscellaneous Revenue Act of 250.17 1988, Public Law Number 100-647,andthe provisions of sections 250.18 7811, 7816, and 7831 of the Omnibus Budget Reconciliation Act of 250.19 1989, Public Law Number 101-239, and the provisions of sections 250.20 1305, 1704(r), and 1704(e)(1) of the Small Business Job 250.21 Protection Act, Public Law Number 104-188, shall be effective at 250.22 the time they become effective for federal income tax purposes. 250.23 The Internal Revenue Code of 1986, as amended through 250.24 December 31, 1987, shall be in effect for taxable years 250.25 beginning after December 31, 1987. The provisions of sections 250.26 4001, 4002, 4011, 5021, 5041, 5053, 5075, 6003, 6008, 6011, 250.27 6030, 6031, 6033, 6057, 6064, 6066, 6079, 6130, 6176, 6180, 250.28 6182, 6280, and 6281 of the Technical and Miscellaneous Revenue 250.29 Act of 1988, Public Law Number 100-647, the provisions of 250.30 sections 7815 and 7821 of the Omnibus Budget Reconciliation Act 250.31 of 1989, Public Law Number 101-239, and the provisions of 250.32 section 11702 of the Revenue Reconciliation Act of 1990, Public 250.33 Law Number 101-508, shall become effective at the time they 250.34 become effective for federal tax purposes. 250.35 The Internal Revenue Code of 1986, as amended through 250.36 December 31, 1988, shall be in effect for taxable years 251.1 beginning after December 31, 1988. The provisions of sections 251.2 7101, 7102, 7104, 7105, 7201, 7202, 7203, 7204, 7205, 7206, 251.3 7207, 7210, 7211, 7301, 7302, 7303, 7304, 7601, 7621, 7622, 251.4 7641, 7642, 7645, 7647, 7651, and 7652 of the Omnibus Budget 251.5 Reconciliation Act of 1989, Public Law Number 101-239, the 251.6 provision of section 1401 of the Financial Institutions Reform, 251.7 Recovery, and Enforcement Act of 1989, Public Law Number 101-73, 251.8andthe provisions of sections 11701 and 11703 of the Revenue 251.9 Reconciliation Act of 1990, Public Law Number 101-508, and the 251.10 provisions of sections 1702(g) and 1704(f)(2)(A) and (B) of the 251.11 Small Business Job Protection Act, Public Law Number 104-188, 251.12 shall become effective at the time they become effective for 251.13 federal tax purposes. 251.14 The Internal Revenue Code of 1986, as amended through 251.15 December 31, 1989, shall be in effect for taxable years 251.16 beginning after December 31, 1989. The provisions of sections 251.17 11321, 11322, 11324, 11325, 11403, 11404, 11410, and 11521 of 251.18 the Revenue Reconciliation Act of 1990, Public Law Number 251.19 101-508, and the provisions of sections 13224 and 13261 of the 251.20 Omnibus Budget Reconciliation Act of 1993, Public Law Number 251.21 103-66, shall become effective at the time they become effective 251.22 for federal purposes. 251.23 The Internal Revenue Code of 1986, as amended through 251.24 December 31, 1990, shall be in effect for taxable years 251.25 beginning after December 31, 1990. 251.26 The provisions of section 13431 of the Omnibus Budget 251.27 Reconciliation Act of 1993, Public Law Number 103-66, shall 251.28 become effective at the time they became effective for federal 251.29 purposes. 251.30 The Internal Revenue Code of 1986, as amended through 251.31 December 31, 1991, shall be in effect for taxable years 251.32 beginning after December 31, 1991. 251.33 The provisions of sections 1936 and 1937 of the 251.34 Comprehensive National Energy Policy Act of 1992, Public Law 251.35 Number 102-486, and the provisions of sections 13101, 13114, 251.36 13122, 13141, 13150, 13151, 13174, 13239, 13301, and 13442 of 252.1 the Omnibus Budget Reconciliation Act of 1993, Public Law Number 252.2 103-66, shall become effective at the time they become effective 252.3 for federal purposes. 252.4 The Internal Revenue Code of 1986, as amended through 252.5 December 31, 1992, shall be in effect for taxable years 252.6 beginning after December 31, 1992. 252.7 The provisions of sections 13116, 13121, 13206, 13210, 252.8 13222, 13223, 13231, 13232, 13233, 13239, 13262, and 13321 of 252.9 the Omnibus Budget Reconciliation Act of 1993, Public Law Number 252.10 103-66, and the provisions of sections 1703(a), 1703(d), 252.11 1703(i), 1703(l), and 1703(m) of the Small Business Job 252.12 Protection Act, Public Law Number 104-188, shall become 252.13 effective at the time they become effective for federal purposes. 252.14 The Internal Revenue Code of 1986, as amended through 252.15 December 31, 1993, shall be in effect for taxable years 252.16 beginning after December 31, 1993. 252.17 The provision of section 741 of Legislation to Implement 252.18 Uruguay Round of General Agreement on Tariffs and Trade, Public 252.19 Law Number 103-465,andthe provisions of sections 1, 2, and 3, 252.20 of the Self-Employed Health Insurance Act of 1995, Public Law 252.21 Number 104-7, the provision of section 501(b)(2) of the Health 252.22 Insurance Portability and Accountability Act, Public Law Number 252.23 104-191, and the provisions of sections 1604 and 1704(p)(1) and 252.24 (2) of the Small Business Job Protection Act, Public Law Number 252.25 104-188, shall become effective at the time they become 252.26 effective for federal purposes. 252.27 The Internal Revenue Code of 1986, as amended through 252.28 December 31, 1994, shall be in effect for taxable years 252.29 beginning after December 31, 1994. 252.30 The provisions of sections 1119(a), 1120, 1121, 1202(a), 252.31 1444, 1449(b), 1602(a), 1610(a), 1613, and 1805 of the Small 252.32 Business Job Protection Act, Public Law Number 104-188, and the 252.33 provision of section 511 of the Health Insurance Portability and 252.34 Accountability Act, Public Law Number 104-191, shall become 252.35 effective at the time they become effective for federal purposes. 252.36 The Internal Revenue Code of 1986, as amended through March 253.1 22, 1996, is in effect for taxable years beginning after 253.2 December 31, 1995. 253.3 The provisions of sections 1113(a), 1117, 1206(a), 1313(a), 253.4 1402(a), 1403(a), 1443, 1450, 1501(a), 1605, 1611(a), 1612, 253.5 1616, 1617, 1704(l), and 1704(m) of the Small Business Job 253.6 Protection Act, Public Law Number 104-188, and the provisions of 253.7 Public Law Number 104-117 become effective at the time they 253.8 become effective for federal purposes. 253.9 The Internal Revenue Code of 1986, as amended through 253.10 December 31, 1996, shall be in effect for taxable years 253.11 beginning after December 31, 1996. 253.12 Except as otherwise provided, references to the Internal 253.13 Revenue Code in subdivisions 19a to 19g mean the code in effect 253.14 for purposes of determining net income for the applicable year. 253.15 Sec. 3. Minnesota Statutes 1996, section 290.01, 253.16 subdivision 19a, is amended to read: 253.17 Subd. 19a. [ADDITIONS TO FEDERAL TAXABLE INCOME.] For 253.18 individuals, estates, and trusts, there shall be added to 253.19 federal taxable income: 253.20 (1)(i) interest income on obligations of any state other 253.21 than Minnesota or a political or governmental subdivision, 253.22 municipality, or governmental agency or instrumentality of any 253.23 state other than Minnesota exempt from federal income taxes 253.24 under the Internal Revenue Code or any other federal statute, 253.25 and 253.26 (ii) exempt-interest dividends as defined in section 253.27 852(b)(5) of the Internal Revenue Code, except the portion of 253.28 the exempt-interest dividends derived from interest income on 253.29 obligations of the state of Minnesota or its political or 253.30 governmental subdivisions, municipalities, governmental agencies 253.31 or instrumentalities, but only if the portion of the 253.32 exempt-interest dividends from such Minnesota sources paid to 253.33 all shareholders represents 95 percent or more of the 253.34 exempt-interest dividends that are paid by the regulated 253.35 investment company as defined in section 851(a) of the Internal 253.36 Revenue Code, or the fund of the regulated investment company as 254.1 defined in section 851(h) of the Internal Revenue Code, making 254.2 the payment; and 254.3 (iii) for the purposes of items (i) and (ii), interest on 254.4 obligations of an Indian tribal government described in section 254.5 7871(c) of the Internal Revenue Code shall be treated as 254.6 interest income on obligations of the state in which the tribe 254.7 is located; 254.8 (2) the amount of income taxes paid or accrued within the 254.9 taxable year under this chapter and income taxes paid to any 254.10 other state or to any province or territory of Canada, to the 254.11 extent allowed as a deduction under section 63(d) of the 254.12 Internal Revenue Code, but the addition may not be more than the 254.13 amount by which the itemized deductions as allowed under section 254.14 63(d) of the Internal Revenue Code exceeds the amount of the 254.15 standard deduction as defined in section 63(c) of the Internal 254.16 Revenue Code. For the purpose of this paragraph, the 254.17 disallowance of itemized deductions under section 68 of the 254.18 Internal Revenue Code of 1986, income tax is the last itemized 254.19 deduction disallowed; 254.20 (3) the capital gain amount of a lump sum distribution to 254.21 which the special tax under section 1122(h)(3)(B)(ii) of the Tax 254.22 Reform Act of 1986, Public Law Number 99-514, applies;and254.23 (4) the amount of income taxes paid or accrued within the 254.24 taxable year under this chapter and income taxes paid to any 254.25 other state or any province or territory of Canada, to the 254.26 extent allowed as a deduction in determining federal adjusted 254.27 gross income. For the purpose of this paragraph, income taxes 254.28 do not include the taxes imposed by sections 290.0922, 254.29 subdivision 1, paragraph (b), 290.9727, 290.9728, and 290.9729.; 254.30 and 254.31 (5) the amount of loss or expense included in federal 254.32 taxable income under section 1366 of the Internal Revenue Code 254.33 flowing from a corporation having a valid election in effect for 254.34 the taxable year under section 1362 of the Internal Revenue Code 254.35 which is not allowed to be an "S" corporation under section 254.36 290.9725. 255.1 Sec. 4. Minnesota Statutes 1996, section 290.01, 255.2 subdivision 19b, is amended to read: 255.3 Subd. 19b. [SUBTRACTIONS FROM FEDERAL TAXABLE INCOME.] For 255.4 individuals, estates, and trusts, there shall be subtracted from 255.5 federal taxable income: 255.6 (1) interest income on obligations of any authority, 255.7 commission, or instrumentality of the United States to the 255.8 extent includable in taxable income for federal income tax 255.9 purposes but exempt from state income tax under the laws of the 255.10 United States; 255.11 (2) if included in federal taxable income, the amount of 255.12 any overpayment of income tax to Minnesota or to any other 255.13 state, for any previous taxable year, whether the amount is 255.14 received as a refund or as a credit to another taxable year's 255.15 income tax liability; 255.16 (3) the amount paid to others not to exceed $650 for each 255.17 dependent in grades kindergarten to 6 and $1,000 for each 255.18 dependent in grades 7 to 12, for tuition, textbooks, and 255.19 transportation of each dependent in attending an elementary or 255.20 secondary school situated in Minnesota, North Dakota, South 255.21 Dakota, Iowa, or Wisconsin, wherein a resident of this state may 255.22 legally fulfill the state's compulsory attendance laws, which is 255.23 not operated for profit, and which adheres to the provisions of 255.24 the Civil Rights Act of 1964 and chapter 363. As used in this 255.25 clause, "textbooks" includes books and other instructional 255.26 materials and equipment used in elementary and secondary schools 255.27 in teaching only those subjects legally and commonly taught in 255.28 public elementary and secondary schools in this state. 255.29 "Textbooks" does not include instructional books and materials 255.30 used in the teaching of religious tenets, doctrines, or worship, 255.31 the purpose of which is to instill such tenets, doctrines, or 255.32 worship, nor does it include books or materials for, or 255.33 transportation to, extracurricular activities including sporting 255.34 events, musical or dramatic events, speech activities, driver's 255.35 education, or similar programs. In order to qualify for the 255.36 subtraction under this clause the taxpayer must elect to itemize 256.1 deductions under section 63(e) of the Internal Revenue Code; 256.2 (4) to the extent included in federal taxable income, 256.3 distributions from a qualified governmental pension plan, an 256.4 individual retirement account, simplified employee pension, or 256.5 qualified plan covering a self-employed person that represent a 256.6 return of contributions that were included in Minnesota gross 256.7 income in the taxable year for which the contributions were made 256.8 but were deducted or were not included in the computation of 256.9 federal adjusted gross income. The distribution shall be 256.10 allocated first to return of contributions until the 256.11 contributions included in Minnesota gross income have been 256.12 exhausted. This subtraction applies only to contributions made 256.13 in a taxable year prior to 1985; 256.14 (5) income as provided under section 290.0802; 256.15 (6) the amount of unrecovered accelerated cost recovery 256.16 system deductions allowed under subdivision 19g; 256.17 (7) to the extent included in federal adjusted gross 256.18 income, income realized on disposition of property exempt from 256.19 tax under section 290.491; 256.20 (8) to the extent not deducted in determining federal 256.21 taxable income, the amount paid for health insurance of 256.22 self-employed individuals as determined under section 162(l) of 256.23 the Internal Revenue Code, except that the 25 percent limit does 256.24 not apply. If the taxpayer deducted insurance payments under 256.25 section 213 of the Internal Revenue Code of 1986, the 256.26 subtraction under this clause must be reduced by the lesser of: 256.27 (i) the total itemized deductions allowed under section 256.28 63(d) of the Internal Revenue Code, less state, local, and 256.29 foreign income taxes deductible under section 164 of the 256.30 Internal Revenue Code and the standard deduction under section 256.31 63(c) of the Internal Revenue Code; or 256.32 (ii) the lesser of (A) the amount of insurance qualifying 256.33 as "medical care" under section 213(d) of the Internal Revenue 256.34 Code to the extent not deducted under section 162(1) of the 256.35 Internal Revenue Code or excluded from income or (B) the total 256.36 amount deductible for medical care under section 213(a);and257.1 (9) the exemption amount allowed under Laws 1995, chapter 257.2 255, article 3, section 2, subdivision 3.; and 257.3 (10) the amount of income or gain included in federal 257.4 taxable income under section 1366 of the Internal Revenue Code 257.5 flowing from a corporation having a valid election in effect for 257.6 the taxable year under section 1362 of the Internal Revenue Code 257.7 which is not allowed to be an "S" corporation under section 257.8 290.9725. 257.9 Sec. 5. Minnesota Statutes 1996, section 290.01, 257.10 subdivision 19g, is amended to read: 257.11 Subd. 19g. [ACRS MODIFICATION FOR INDIVIDUALS.] (a) An 257.12 individual is allowed a subtraction from federal taxable income 257.13 for the amount of accelerated cost recovery system deductions 257.14 that were added to federal adjusted gross income in computing 257.15 Minnesota gross income for taxable year 1981, 1982, 1983, or 257.16 1984 and that were not deducted in a later taxable year. The 257.17 deduction is allowed beginning in the first taxable year after 257.18 the entire allowable deduction for the property has been allowed 257.19 under federal law or the first taxable year beginning after 257.20 December 31, 1987, whichever is later. The amount of the 257.21 deduction is computed by deducting the amount added to federal 257.22 adjusted gross income in computing Minnesota gross income (less 257.23 any deduction allowed under Minnesota Statutes 1986, section 257.24 290.01, subdivision 20f) in equal annual amounts over five years. 257.25 (b) In the event of a sale or exchange of the property, a 257.26 deduction is allowed equal to the lesser of (1) the remaining 257.27 amount that would be allowed as a deduction under paragraph (a) 257.28 or (2) the amount of capital gain recognized and the amount of 257.29 cost recovery deductions that were subject to recapture under 257.30 sections 1245 and 1250 of the Internal Revenue Code of 1986 for 257.31 the taxable year. 257.32 (c) In the case of a corporationelecting S corporation257.33status under section 1362 of the Internal Revenue Codetreated 257.34 as an "S" corporation under section 290.9725, the amount of the 257.35 corporation's cost recovery allowances that have been deducted 257.36 in computing federal tax, but have been added to federal taxable 258.1 income or not deducted in computing tax under this chapter as a 258.2 result of the application of subdivision 19e, paragraphs (a) and 258.3 (c) or Minnesota Statutes 1986, section 290.09, subdivision 7, 258.4 is allowed as a deduction to the shareholders under the 258.5 provisions of paragraph (a). 258.6 Sec. 6. Minnesota Statutes 1996, section 290.01, 258.7 subdivision 31, is amended to read: 258.8 Subd. 31. [INTERNAL REVENUE CODE.] Unless specifically 258.9 defined otherwise, "Internal Revenue Code" means the Internal 258.10 Revenue Code of 1986, as amended throughMarch 22December 31, 258.11 1996, and includes the provisions of section 1(a) and (b) of 258.12 Public Law Number 104-117. 258.13 Sec. 7. Minnesota Statutes 1996, section 290.014, 258.14 subdivision 2, is amended to read: 258.15 Subd. 2. [NONRESIDENT INDIVIDUALS.] Except as provided in 258.16 section 290.015, a nonresident individual is subject to the 258.17 return filing requirements and to tax as provided in this 258.18 chapter to the extent that the income of the nonresident 258.19 individual is: 258.20 (1) allocable to this state under section 290.17, 290.191, 258.21 or 290.20; 258.22 (2) taxed to the individual under the Internal Revenue Code 258.23 (or not taxed under the Internal Revenue Code by reason of its 258.24 character but of a character which is taxable under this 258.25 chapter) in the individual's capacity as a beneficiary of an 258.26 estate with income allocable to this state under section 290.17, 258.27 290.191, or 290.20 and the income, taking into account the 258.28 income character provisions of section 662(b) of the Internal 258.29 Revenue Code, would be allocable to this state under section 258.30 290.17, 290.191, or 290.20 if realized by the individual 258.31 directly from the source from which realized by the estate; 258.32 (3) taxed to the individual under the Internal Revenue Code 258.33 (or not taxed under the Internal Revenue Code by reason of its 258.34 character but of a character that is taxable under this chapter) 258.35 in the individual's capacity as a beneficiary or grantor or 258.36 other person treated as a substantial owner of a trust with 259.1 income allocable to this state under section 290.17, 290.191, or 259.2 290.20 and the income, taking into account the income character 259.3 provisions of section 652(b), 662(b), or 664(b) of the Internal 259.4 Revenue Code, would be allocable to this state under section 259.5 290.17, 290.191, or 290.20 if realized by the individual 259.6 directly from the source from which realized by the trust; 259.7 (4) taxed to the individual under the Internal Revenue Code 259.8 (or not taxed under the Internal Revenue Code by reason of its 259.9 character but of a character which is taxable under this 259.10 chapter) in the individual's capacity as a limited or general 259.11 partner in a partnership with income allocable to this state 259.12 under section 290.17, 290.191, or 290.20 and the income, taking 259.13 into account the income character provisions of section 702(b) 259.14 of the Internal Revenue Code, would be allocable to this state 259.15 under section 290.17, 290.191, or 290.20 if realized by the 259.16 individual directly from the source from which realized by the 259.17 partnership; or 259.18 (5) taxed to the individual under the Internal Revenue Code 259.19 (or not taxed under the Internal Revenue Code by reason of its 259.20 character but of a character which is taxable under this 259.21 chapter) in the individual's capacity as a shareholder of a 259.22 corporationhaving a valid election in effect under section 1362259.23of the Internal Revenue Codetreated as an "S" corporation under 259.24 section 290.9725, and income allocable to this state under 259.25 section 290.17, 290.191, or 290.20 and the income, taking into 259.26 account the income character provisions of section 1366(b) of 259.27 the Internal Revenue Code, would be allocable to this state 259.28 under section 290.17, 290.191, or 290.20 if realized by the 259.29 individual directly from the source from which realized by the 259.30 corporation. 259.31 Sec. 8. Minnesota Statutes 1996, section 290.014, 259.32 subdivision 3, is amended to read: 259.33 Subd. 3. [TRUSTS AND ESTATES.] Except as provided in 259.34 section 290.015, a trust or estate, whether resident or 259.35 nonresident, is subject to the return filing requirements and to 259.36 tax as provided in this chapter to the extent that the income of 260.1 the trust or estate is: 260.2 (1) allocable to this state under section 290.17, 290.191, 260.3 or 290.20; 260.4 (2) taxed to the trust or estate under the Internal Revenue 260.5 Code (or not taxed under the Internal Revenue Code by reason of 260.6 its character but of a character which is taxable under this 260.7 chapter) in its capacity as a beneficiary of a trust or estate 260.8 with income allocable to this state under section 290.17, 260.9 290.191, or 290.20 and the income, taking into account the 260.10 income character provisions of section 662(b) of the Internal 260.11 Revenue Code, would be allocable to this state under section 260.12 290.17, 290.191, or 290.20 if realized by the trust or 260.13 beneficiary estate directly from the source from which realized 260.14 by the distributing estate; 260.15 (3) taxed to the trust or estate under the Internal Revenue 260.16 Code (or not taxed under the Internal Revenue Code by reason of 260.17 its character but of a character which is taxable under this 260.18 chapter) in its capacity as a beneficiary or grantor or other 260.19 person treated as a substantial owner of a trust with income 260.20 allocable to this state under section 290.17, 290.191, or 290.20 260.21 and the income, taking into account the income character 260.22 provisions of section 652(b), 662(b), or 664(b) of the Internal 260.23 Revenue Code, would be allocable to this state under section 260.24 290.17, 290.191, or 290.20 if realized by the beneficiary trust 260.25 or estate directly from the source from which realized by the 260.26 distributing trust; 260.27 (4) taxed to the trust or estate under the Internal Revenue 260.28 Code (or not taxed under the Internal Revenue Code by reason of 260.29 its character but of a character which is taxable under this 260.30 chapter) in its capacity as a limited or general partner in a 260.31 partnership with income allocable to this state under section 260.32 290.17, 290.191, or 290.20 and the income, taking into account 260.33 the income character provisions of section 702(b) of the 260.34 Internal Revenue Code, would be allocable to this state under 260.35 section 290.17, 290.191, or 290.20 if realized by the trust or 260.36 estate directly from the source from which realized by the 261.1 partnership; or 261.2 (5) taxed to the trust or estate under the Internal Revenue 261.3 Code (or not taxed under the Internal Revenue Code by reason of 261.4 its character but of a character which is taxable under this 261.5 chapter) in its capacity as a shareholder of a 261.6 corporationhaving a valid election in effect under section 1362261.7of the Internal Revenue Codetreated as an "S" corporation under 261.8 section 290.9725, and income allocable to this state under 261.9 section 290.17, 290.191, or 290.20 and the income, taking into 261.10 account the income character provisions of section 1366(b) of 261.11 the Internal Revenue Code, would be allocable to this state 261.12 under section 290.17, 290.191, or 290.20 if realized by the 261.13 trust or estate directly from the source from which realized by 261.14 the corporation. 261.15 Sec. 9. Minnesota Statutes 1996, section 290.015, 261.16 subdivision 5, is amended to read: 261.17 Subd. 5. [DETERMINATION AT ENTITY LEVEL.] Determinations 261.18 under this section with respect to trades or businesses 261.19 conducted by a partnership, trust, estate, or corporationwith261.20an election in effect under section 1362 of the Internal Revenue261.21Codetreated as an "S" corporation under section 290.9725, or 261.22 any other entity, the income of which is or may be taxed to its 261.23 owners or beneficiaries must be made with respect to the entity 261.24 carrying on the trade or business and not with respect to owners 261.25 or beneficiaries of the trade or business, the taxability of 261.26 which under this chapter must be determined under section 261.27 290.014. 261.28 Sec. 10. Minnesota Statutes 1996, section 290.06, 261.29 subdivision 22, is amended to read: 261.30 Subd. 22. [CREDIT FOR TAXES PAID TO ANOTHER STATE.] (a) A 261.31 taxpayer who is liable for taxes on or measured by net income to 261.32 another state or province or territory of Canada, as provided in 261.33 paragraphs (b) through (f), upon income allocated or apportioned 261.34 to Minnesota, is entitled to a credit for the tax paid to 261.35 another state or province or territory of Canada if the tax is 261.36 actually paid in the taxable year or a subsequent taxable year. 262.1 A taxpayer who is a resident of this state pursuant to section 262.2 290.01, subdivision 7, clause (2), and who is subject to income 262.3 tax as a resident in the state of the individual's domicile is 262.4 not allowed this credit unless the state of domicile does not 262.5 allow a similar credit. 262.6 (b) For an individual, estate, or trust, the credit is 262.7 determined by multiplying the tax payable under this chapter by 262.8 the ratio derived by dividing the income subject to tax in the 262.9 other state or province or territory of Canada that is also 262.10 subject to tax in Minnesota while a resident of Minnesota by the 262.11 taxpayer's federal adjusted gross income, as defined in section 262.12 62 of the Internal Revenue Code, modified by the addition 262.13 required by section 290.01, subdivision 19a, clause (1), and the 262.14 subtraction allowed by section 290.01, subdivision 19b, clause 262.15 (1), to the extent the income is allocated or assigned to 262.16 Minnesota under sections 290.081 and 290.17. 262.17 (c) If the taxpayer is an athletic team that apportions all 262.18 of its income under section 290.17, subdivision 5, paragraph 262.19 (c), the credit is determined by multiplying the tax payable 262.20 under this chapter by the ratio derived from dividing the total 262.21 net income subject to tax in the other state or province or 262.22 territory of Canada by the taxpayer's Minnesota taxable income. 262.23 (d) The credit determined under paragraph (b) or (c) shall 262.24 not exceed the amount of tax so paid to the other state or 262.25 province or territory of Canada on the gross income earned 262.26 within the other state or province or territory of Canada 262.27 subject to tax under this chapter, nor shall the allowance of 262.28 the credit reduce the taxes paid under this chapter to an amount 262.29 less than what would be assessed if such income amount was 262.30 excluded from taxable net income. 262.31 (e) In the case of the tax assessed on a lump sum 262.32 distribution under section 290.032, the credit allowed under 262.33 paragraph (a) is the tax assessed by the other state or province 262.34 or territory of Canada on the lump sum distribution that is also 262.35 subject to tax under section 290.032, and shall not exceed the 262.36 tax assessed under section 290.032. To the extent the total 263.1 lump sum distribution defined in section 290.032, subdivision 1, 263.2 includes lump sum distributions received in prior years or is 263.3 all or in part an annuity contract, the reduction to the tax on 263.4 the lump sum distribution allowed under section 290.032, 263.5 subdivision 2, includes tax paid to another state that is 263.6 properly apportioned to that distribution. 263.7 (f) If a Minnesota resident reported an item of income to 263.8 Minnesota and is assessed tax in such other state or province or 263.9 territory of Canada on that same income after the Minnesota 263.10 statute of limitations has expired, the taxpayer shall receive a 263.11 credit for that year under paragraph (a), notwithstanding any 263.12 statute of limitations to the contrary. The claim for the 263.13 credit must be submitted within one year from the date the taxes 263.14 were paid to the other state or province or territory of 263.15 Canada. The taxpayer must submit sufficient proof to show 263.16 entitlement to a credit. 263.17 (g) For the purposes of this subdivision, a resident 263.18 shareholder of a corporationhaving a valid election in effect263.19under section 1362 of the Internal Revenue Codetreated as an "S" 263.20 corporation under section 290.9725, must be considered to have 263.21 paid a tax imposed on the shareholder in an amount equal to the 263.22 shareholder's pro rata share of any net income tax paid by the S 263.23 corporation to another state. For the purposes of the preceding 263.24 sentence, the term "net income tax" means any tax imposed on or 263.25 measured by a corporation's net income. 263.26 (h) For the purposes of this subdivision, a resident member 263.27 of a limited liability company taxed as a partnership under the 263.28 Internal Revenue Code must be considered to have paid a tax 263.29 imposed on the member in an amount equal to the member's pro 263.30 rata share of any net income tax paid by the limited liability 263.31 company to a state that does not measure the income of the 263.32 member of the limited liability company by reference to the 263.33 income of the limited liability company. For purposes of the 263.34 preceding sentence, the term "net income" tax means any tax 263.35 imposed on or measured by a limited liability company's net 263.36 income. 264.1 Sec. 11. Minnesota Statutes 1996, section 290.068, 264.2 subdivision 1, is amended to read: 264.3 Subdivision 1. [CREDIT ALLOWED.] A corporation, other than 264.4 a corporationwith a valid election in effect under section 1362264.5of the Internal Revenue Codetreated as an "S" corporation under 264.6 section 290.9725, is allowed a credit against the portion of the 264.7 franchise tax computed under section 290.06, subdivision 1, for 264.8 the taxable year equal to: 264.9 (a) 5 percent of the first $2 million of the excess (if 264.10 any) of 264.11 (1) the qualified research expenses for the taxable year, 264.12 over 264.13 (2) the base amount; and 264.14 (b) 2.5 percent on all of such excess expenses over $2 264.15 million. 264.16 Sec. 12. Minnesota Statutes 1996, section 290.0922, 264.17 subdivision 1, is amended to read: 264.18 Subdivision 1. [IMPOSITION.] (a) In addition to the tax 264.19 imposed by this chapter without regard to this section, the 264.20 franchise tax imposed on a corporation required to file under 264.21 section 289A.08, subdivision 3, other than a corporationhaving264.22a valid election in effect under section 1362 of the Internal264.23Revenue Codetreated as an "S" corporation under section 264.24 290.9725 for the taxable year includes a tax equal to the 264.25 following amounts: 264.26 If the sum of the corporation's 264.27 Minnesota property, payrolls, and sales 264.28 or receipts is: the tax equals: 264.29 less than $500,000 $0 264.30 $ 500,000 to $ 999,999 $100 264.31 $ 1,000,000 to $ 4,999,999 $300 264.32 $ 5,000,000 to $ 9,999,999 $1,000 264.33 $10,000,000 to $19,999,999 $2,000 264.34 $20,000,000 or more $5,000 264.35 (b) A tax is imposed for each taxable year on a corporation 264.36 required to file a return under section 289A.12, subdivision 3, 265.1 thathas a valid election in effect for the taxable year under265.2section 1362 of the Internal Revenue Codeis treated as an "S" 265.3 corporation under section 290.9725 and on a partnership required 265.4 to file a return under section 289A.12, subdivision 3, other 265.5 than a partnership that derives over 80 percent of its income 265.6 from farming. The tax imposed under this paragraph is due on or 265.7 before the due date of the return for the taxpayer due under 265.8 section 289A.18, subdivision 1. The commissioner shall 265.9 prescribe the return to be used for payment of this tax. The 265.10 tax under this paragraph is equal to the following amounts: 265.11 If the sum of the S corporation's or partnership's 265.12 Minnesota property, payrolls, and sales 265.13 or receipts is: the tax equals: 265.14 less than $500,000 $0 265.15 $ 500,000 to $ 999,999 $100 265.16 $ 1,000,000 to $ 4,999,999 $300 265.17 $ 5,000,000 to $ 9,999,999 $1,000 265.18 $10,000,000 to $19,999,999 $2,000 265.19 $20,000,000 or more $5,000 265.20 Sec. 13. Minnesota Statutes 1996, section 290.17, 265.21 subdivision 1, is amended to read: 265.22 Subdivision 1. [SCOPE OF ALLOCATION RULES.] (a) The income 265.23 of resident individuals is not subject to allocation outside 265.24 this state. The allocation rules apply to nonresident 265.25 individuals, estates, trusts, nonresident partners of 265.26 partnerships, nonresident shareholders of corporationshaving a265.27valid election in effect under section 1362 of the Internal265.28Revenue Codetreated as "S" corporations under section 290.9725, 265.29 and all corporations not having such an election in effect. If 265.30 a partnership or corporation would not otherwise be subject to 265.31 the allocation rules, but conducts a trade or business that is 265.32 part of a unitary business involving another legal entity that 265.33 is subject to the allocation rules, the partnership or 265.34 corporation is subject to the allocation rules. 265.35 (b) Expenses, losses, and other deductions (referred to 265.36 collectively in this paragraph as "deductions") must be 266.1 allocated along with the item or class of gross income to which 266.2 they are definitely related for purposes of assignment under 266.3 this section or apportionment under section 290.191, 290.20, 266.4 290.35, or 290.36. Deductions not definitely related to any 266.5 item or class of gross income are assigned to the taxpayer's 266.6 domicile. 266.7 (c) In the case of an individual who is a resident for only 266.8 part of a taxable year, the individual's income, gains, losses, 266.9 and deductions from the distributive share of a partnership, S 266.10 corporation, trust, or estate are not subject to allocation 266.11 outside this state to the extent of the distributive share 266.12 multiplied by a ratio, the numerator of which is the number of 266.13 days the individual was a resident of this state during the tax 266.14 year of the partnership, S corporation, trust, or estate, and 266.15 the denominator of which is the number of days in the taxable 266.16 year of the partnership, S corporation, trust, or estate. 266.17 Sec. 14. Minnesota Statutes 1996, section 290.371, 266.18 subdivision 2, is amended to read: 266.19 Subd. 2. [EXEMPTIONS.] A corporation is not required to 266.20 file a notice of business activities report if: 266.21 (1) by the end of an accounting period for which it was 266.22 otherwise required to file a notice of business activities 266.23 report under this section, it had received a certificate of 266.24 authority to do business in this state; 266.25 (2) a timely return has been filed under section 289A.08; 266.26 (3) the corporation is exempt from taxation under this 266.27 chapter pursuant to section 290.05; 266.28 (4) the corporation's activities in Minnesota, or the 266.29 interests in property which it owns, consist solely of 266.30 activities or property exempted from jurisdiction to tax under 266.31 section 290.015, subdivision 3, paragraph (b); or 266.32 (5) the corporationhas a valid election in effect under266.33section 1362 of the Internal Revenue Codeis an "S" corporation 266.34 under section 290.9725. 266.35 Sec. 15. Minnesota Statutes 1996, section 290.9725, is 266.36 amended to read: 267.1 290.9725 [S CORPORATION.] 267.2 For purposes of this chapter, the term "S corporation" 267.3 means any corporation having a valid election in effect for the 267.4 taxable year under section 1362 of the Internal Revenue Code, 267.5 except that a corporation which either: 267.6 (1) is a financial institution to which either section 585 267.7 or section 593 of the Internal Revenue Code applies; or 267.8 (2) has a wholly owned subsidiary as described in section 267.9 362(b)(3) of the Internal Revenue Code which is a financial 267.10 institution as described above 267.11 is not an "S" corporation for the purposes of this chapter. An 267.12 S corporation shall not be subject to the taxes imposed by this 267.13 chapter, except the taxes imposed under sections 290.0922, 267.14 290.92, 290.9727, 290.9728, and 290.9729. 267.15 Sec. 16. Minnesota Statutes 1996, section 290.9727, 267.16 subdivision 1, is amended to read: 267.17 Subdivision 1. [TAX IMPOSED.] Foraan "S" corporation 267.18 electing S corporation status pursuant to section 1362 of the 267.19 Internal Revenue Code after December 31, 1986, and having a 267.20 recognized built-in gain as defined in section 1374 of the 267.21 Internal Revenue Code, there is imposed a tax on the taxable 267.22 income of such S corporation, as defined in this section, at the 267.23 rate prescribed by section 290.06, subdivision 1. This 267.24 subdivision does not apply to any corporation having an S 267.25 election in effect for each of its taxable years. An S 267.26 corporation and any predecessor corporation must be treated as 267.27 one corporation for purposes of the preceding sentence. 267.28 Sec. 17. Minnesota Statutes 1996, section 290.9728, 267.29 subdivision 1, is amended to read: 267.30 Subdivision 1. [TAX IMPOSED.] There is imposed a tax on 267.31 the taxable income ofaan "S" corporation that has: 267.32 (1) elected S corporation status pursuant to section 1362 267.33 of the Internal Revenue Code of 1986, as amended through 267.34 December 31, 1986, before January 1, 1987; 267.35 (2) a net capital gain for the taxable year (i) in excess 267.36 of $25,000 and (ii) exceeding 50 percent of the corporation's 268.1 federal taxable income for the taxable year; and 268.2 (3) federal taxable income for the taxable year exceeding 268.3 $25,000. 268.4 The tax is imposed at the rate prescribed by section 268.5 290.06, subdivision 1. For purposes of this section, "federal 268.6 taxable income" means federal taxable income determined under 268.7 section 1374(4)(d) of the Internal Revenue Code. This section 268.8 does not apply to an S corporation which has had an election 268.9 under section 1362 of the Internal Revenue Code of 1954, in 268.10 effect for the three immediately preceding taxable years. This 268.11 section does not apply to an S corporation that has been in 268.12 existence for less than four taxable years and has had an 268.13 election in effect under section 1362 of the Internal Revenue 268.14 Code of 1954 for each of the corporation's taxable years. For 268.15 purposes of this section, an S corporation and any predecessor 268.16 corporation are treated as one corporation. 268.17 Sec. 18. [290.9743] [ELECTION BY FASIT.] 268.18 An entity having a valid election as a Financial Asset 268.19 Securitization Investment Trust in effect for a taxable year 268.20 under section 860L(a) of the Internal Revenue Code shall not be 268.21 subject to the taxes imposed by this chapter, except the tax 268.22 imposed under section 290.92. 268.23 Sec. 19. [290.9744] [FASIT INCOME TAXABLE TO HOLDERS OF 268.24 INTERESTS.] 268.25 The income of a FASIT is taxable to the holders of 268.26 interests in the FASIT as provided in sections 860H to 860L of 268.27 the Internal Revenue Code. The income of the holders must be 268.28 computed under the provisions of this chapter. 268.29 Sec. 20. Minnesota Statutes 1996, section 291.005, 268.30 subdivision 1, is amended to read: 268.31 Subdivision 1. Unless the context otherwise clearly 268.32 requires, the following terms used in this chapter shall have 268.33 the following meanings: 268.34 (1) "Federal gross estate" means the gross estate of a 268.35 decedent as valued and otherwise determined for federal estate 268.36 tax purposes by federal taxing authorities pursuant to the 269.1 provisions of the Internal Revenue Code. 269.2 (2) "Minnesota gross estate" means the federal gross estate 269.3 of a decedent after (a) excluding therefrom any property 269.4 included therein which has its situs outside Minnesota and (b) 269.5 including therein any property omitted from the federal gross 269.6 estate which is includable therein, has its situs in Minnesota, 269.7 and was not disclosed to federal taxing authorities. 269.8 (3) "Personal representative" means the executor, 269.9 administrator or other person appointed by the court to 269.10 administer and dispose of the property of the decedent. If 269.11 there is no executor, administrator or other person appointed, 269.12 qualified, and acting within this state, then any person in 269.13 actual or constructive possession of any property having a situs 269.14 in this state which is included in the federal gross estate of 269.15 the decedent shall be deemed to be a personal representative to 269.16 the extent of the property and the Minnesota estate tax due with 269.17 respect to the property. 269.18 (4) "Resident decedent" means an individual whose domicile 269.19 at the time of death was in Minnesota. 269.20 (5) "Nonresident decedent" means an individual whose 269.21 domicile at the time of death was not in Minnesota. 269.22 (6) "Situs of property" means, with respect to real 269.23 property, the state or country in which it is located; with 269.24 respect to tangible personal property, the state or country in 269.25 which it was normally kept or located at the time of the 269.26 decedent's death; and with respect to intangible personal 269.27 property, the state or country in which the decedent was 269.28 domiciled at death. 269.29 (7) "Commissioner" means the commissioner of revenue or any 269.30 person to whom the commissioner has delegated functions under 269.31 this chapter. 269.32 (8) "Internal Revenue Code" means the United States 269.33 Internal Revenue Code of 1986, as amended throughMarch 22269.34 December 31, 1996, and includes the provisions of section 269.35 1(a)(4) of Public Law Number 104-117. 269.36 Sec. 21. [FEDERAL CHANGES.] 270.1 The changes made by sections 1118(a), 1305, 1603, 1702(e), 270.2 and 1702(f) of the Small Business Job Protection Act, Public Law 270.3 Number 104-188, sections 451(a), 451(b), 909, and 910 of the 270.4 Personal Responsibility and Work Opportunity Reconciliation Act, 270.5 Public Law Number 104-193, and the federal changes to taxable 270.6 income of section 2 of this article which affect the Minnesota 270.7 definition of wages under Minnesota Statutes, section 290.92, 270.8 subdivision 1, S corporation status under Minnesota Statutes, 270.9 section 290.9725, unrelated business income tax under Minnesota 270.10 Statutes, section 290.05, subdivision 3, corporate alternative 270.11 minimum tax under Minnesota Statutes, section 290.0921, 270.12 subdivision 3, estate tax under Minnesota Statutes, sections 270.13 291.005 and 291.03, the Minnesota working family credit under 270.14 Minnesota Statutes, section 290.0671, subdivision 1, and the 270.15 definition of income under Minnesota Statutes, section 290A.03, 270.16 subdivision 3, shall become effective at the same time the 270.17 changes become effective for federal purposes. 270.18 Sec. 22. [INSTRUCTION TO REVISOR.] 270.19 In the next edition of Minnesota Statutes, the revisor of 270.20 statutes shall substitute the phrase "Internal Revenue Code of 270.21 1986, as amended through December 31, 1996," for the words 270.22 "Internal Revenue Code of 1986, as amended through April 15, 270.23 1995," wherever the phrase occurs in chapters 290A, 297, 298, 270.24 and 469. 270.25 Sec. 23. [EFFECTIVE DATE.] 270.26 Sections 3 to 5, 7 to 19 and the provision of section 2 270.27 dealing with regulated investment companies are effective for 270.28 tax years beginning after December 31, 1996. The remainder of 270.29 this article is effective at the same time and for the same 270.30 years as the federal changes made in 1996 were effective for 270.31 federal purposes. 270.32 ARTICLE 11 270.33 SALES AND SPECIAL TAXES 270.34 Section 1. Minnesota Statutes 1996, section 289A.56, 270.35 subdivision 4, is amended to read: 270.36 Subd. 4. [CAPITAL EQUIPMENT REFUNDS; REFUNDS TO 271.1 PURCHASERS.] Notwithstanding subdivision 3, for refunds payable 271.2 undersectionssection 297A.15, subdivision 5,and 289A.50,271.3subdivision 2a,interest is computed from the date the refund 271.4 claim is filed with the commissioner. For refunds payable under 271.5 section 289A.50, subdivision 2a, interest is computed from the 271.6 20th day of the month following the month of the invoice date 271.7 for the purchase which is the subject of the refund. 271.8 Sec. 2. Minnesota Statutes 1996, section 296.141, 271.9 subdivision 4, is amended to read: 271.10 Subd. 4. [CREDIT OR REFUND OF TAX PAID.] The commissioner 271.11 shall allow the distributor credit or refund of the tax paid on 271.12 gasoline and special fuel: 271.13 (1) exported or sold for export from the state, other than 271.14 in the supply tank of a motor vehicle or of an aircraft; 271.15 (2) sold to the United States government to be used 271.16 exclusively in performing its governmental functions and 271.17 activities or to any "cost plus a fixed fee" contractor employed 271.18 by the United States government on any national defense project; 271.19 (3) if the fuel is placed in a tank used exclusively for 271.20 residential heating; 271.21 (4) destroyed by accident while in the possession of the 271.22 distributor; 271.23 (5) in error; 271.24 (6) sold for storage in an on-farm bulk storage tank, 271.25 except undyed diesel fuel, if the tax was not collected on the 271.26 sale; and 271.27(6)(7) in such other cases as the commissioner may permit, 271.28 not inconsistent with the provisions of this chapter and other 271.29 laws relating to the gasoline and special fuel excise taxes. 271.30 Sec. 3. Minnesota Statutes 1996, section 296.18, 271.31 subdivision 1, is amended to read: 271.32 Subdivision 1. [CLAIM; FUEL USED IN OTHER VEHICLES.] Any 271.33 person who shall buy and use gasoline for a qualifying purpose 271.34 other than use in motor vehicles, snowmobiles except as provided 271.35 in clause (2), or motorboats, or special fuel for a qualifying 271.36 purpose other than use in licensed motor vehicles, and who shall 272.1 have paid the Minnesota excise tax directly or indirectly 272.2 through the amount of the tax being included in the price of the 272.3 gasoline or special fuel, or otherwise, shall be reimbursed and 272.4 repaid the amount of the tax paid upon filing with the 272.5 commissioner a claim in the form and manner prescribed by the 272.6 commissioner, and containing the information the commissioner 272.7 shall require. By signing any such claim which is false or 272.8 fraudulent, the applicant shall be subject to the penalties 272.9 provided in this section for knowingly making a false claim. 272.10 The claim shall set forth the total amount of the gasoline so 272.11 purchased and used by the applicant other than in motor 272.12 vehicles, or special fuel so purchased and used by the applicant 272.13 other than in licensed motor vehicles, and shall state when and 272.14 for what purpose it was used. When a claim contains an error in 272.15 computation or preparation, the commissioner is authorized to 272.16 adjust the claim in accordance with the evidence shown on the 272.17 claim or other information available to the commissioner. The 272.18 commissioner, on being satisfied that the claimant is entitled 272.19 to the payments, shall approve the claim and transmit it to the 272.20 commissioner of finance. No repayment shall be made unless the 272.21 claim and invoice shall be filed with the commissioner within 272.22 one year from the date of the purchase. The postmark on the 272.23 envelope in which a written claim is mailed shall determine its 272.24 date of filing. The words "gasoline" or "special fuel" as used 272.25 in this subdivision do not include aviation gasoline or special 272.26 fuel for aircraft. Gasoline or special fuel bought and used for 272.27 a "qualifying purpose" means: 272.28 (1) Gasoline or special fuel used in carrying on a trade or 272.29 business, used on a farm situated in Minnesota, and used for a 272.30 farming purpose. "Farm" and "farming purpose" have the meanings 272.31 given them in section 6420(c)(2), (3), and (4) of the Internal 272.32 Revenue Code of 1986, as amended through December 31, 1988. 272.33 (2) Gasoline or special fuel used for off-highway business 272.34 use. "Off-highway business use" means any use off the public 272.35 highways by a person in that person's trade, business, or 272.36 activity for the production of income. "Off-highway business 273.1 use" includes: 273.2 (a) use of a passenger snowmobile off the public highways 273.3 as part of the operations of a resort as defined in section 273.4 157.15; and 273.5 (b) use of gasoline or special fuel to operate a power 273.6 takeoff unit on a vehicle, but not including fuel consumed 273.7 during idling time. 273.8 "Off-highway business use" does not include use as a fuel 273.9 in a motor vehicle which, at the time of use, is registered or 273.10 is required to be registered for highway use under the laws of 273.11 any state or foreign country. 273.12 (3) Gasoline or special fuel placed in the fuel tanks of 273.13 new motor vehicles, manufactured in Minnesota, and shipped by 273.14 interstate carrier to destinations in other states or foreign 273.15 countries. 273.16 By July 1, 1998, the commissioner shall adopt rules that 273.17 determine the rates and percentages necessary to develop 273.18 formulas for calculating and administering the refund under 273.19 clause (2)(b). 273.20 Sec. 4. Minnesota Statutes 1996, section 297A.01, 273.21 subdivision 3, is amended to read: 273.22 Subd. 3. A "sale" and a "purchase" includes, but is not 273.23 limited to, each of the following transactions: 273.24 (a) Any transfer of title or possession, or both, of 273.25 tangible personal property, whether absolutely or conditionally, 273.26 and the leasing of or the granting of a license to use or 273.27 consume tangible personal property other than manufactured homes 273.28 used for residential purposes for a continuous period of 30 days 273.29 or more, for a consideration in money or by exchange or barter; 273.30 (b) The production, fabrication, printing, or processing of 273.31 tangible personal property for a consideration for consumers who 273.32 furnish either directly or indirectly the materials used in the 273.33 production, fabrication, printing, or processing; 273.34 (c) The furnishing, preparing, or serving for a 273.35 consideration of food, meals, or drinks. "Sale" or "purchase" 273.36 does not include: 274.1 (1) meals or drinks served to patients, inmates, or persons 274.2 residing at hospitals, sanitariums, nursing homes, senior 274.3 citizens homes, and correctional, detention, and detoxification 274.4 facilities; 274.5 (2) meals or drinks purchased for and served exclusively to 274.6 individuals who are 60 years of age or over and their spouses or 274.7 to the handicapped and their spouses by governmental agencies, 274.8 nonprofit organizations, agencies, or churches or pursuant to 274.9 any program funded in whole or part through 42 USCA sections 274.10 3001 through 3045, wherever delivered, prepared or served; or 274.11 (3) meals and lunches served at public and private schools, 274.12 universities, or colleges. 274.13 Notwithstanding section 297A.25, subdivision 2, taxable food or 274.14 meals include, but are not limited to, the following: 274.15 (i)heatedfood or drinks;prepared by the retailer for 274.16 immediate consumption either on or off the retailer's premises. 274.17 For purposes of this subdivision, "food or drinks prepared for 274.18 immediate consumption" includes any food product upon which an 274.19 act of preparation including, but not limited to, cooking, 274.20 mixing, sandwich making, blending, heating, or pouring has been 274.21 performed by the retailer so the food product may be immediately 274.22 consumed by the purchaser. For purposes of this subdivision, 274.23 "premises" means the total space and facilities, including 274.24 buildings, grounds, and parking lots that are made available or 274.25 that are available for use by the retailer or customer for the 274.26 purpose of sale or consumption of prepared food and drinks. 274.27 Food and drinks sold within a building or grounds which require 274.28 an admission charge for entrance are presumed to be sold for 274.29 consumption on the premises. The premises of a caterer is the 274.30 place where the catered food or drinks are served; 274.31(ii) sandwiches prepared by the retailer;274.32(iii) single sales of prepackaged ice cream or ice milk274.33novelties prepared by the retailer;274.34(iv) hand-prepared or dispensed ice cream or ice milk(ii) 274.35 ice cream, ice milk, or frozen yogurt products including 274.36 novelties, cones, sundaes, and snow cones, sold in single or 275.1 individual servings. For purposes of this subdivision, "single 275.2 or individual servings" does not include products prepackaged 275.3 and sold in bulk containers or packaging; 275.4(v)(iii) soft drinks and other beveragesprepared or275.5served by the retailer;including all carbonated and 275.6 noncarbonated beverages or drinks sold in liquid form except 275.7 beverages or drinks which contain a primary dairy product or 275.8 dairy ingredient base, beverages or drinks containing 15 or more 275.9 percent fruit juice, or noncarbonated and noneffervescent 275.10 bottled water sold in individual containers of one-half gallon 275.11 or more in size; 275.12(vi)(iv) gum;, candy, and candy products, except when sold 275.13 for fundraising purposes by a nonprofit organization that 275.14 provides educational and social activities primarily for young 275.15 people 18 years of age and under; 275.16(vii)(v) ice; 275.17(viii)(vi) all food soldinfrom vending machines, 275.18 pushcarts, lunch carts, motor vehicles, or any other form of 275.19 vehicle except home delivery vehicles; 275.20(ix)(vii) party traysprepared by the retailers;and275.21(x)(viii) all meals and single servings of packaged snack 275.22 food, single cans or bottles of pop,sold in restaurants and 275.23 bars; and 275.24 (ix) bakery products prepared by the retailer for 275.25 consumption on the retailer's premises; 275.26 (d) The granting of the privilege of admission to places of 275.27 amusement, recreational areas, or athletic events, except a 275.28 world championship football game sponsored by the national 275.29 football league, and the privilege of having access to and the 275.30 use of amusement devices, tanning facilities, reducing salons, 275.31 steam baths, turkish baths, health clubs, and spas or athletic 275.32 facilities; 275.33 (e) The furnishing for a consideration of lodging and 275.34 related services by a hotel, rooming house, tourist court, motel 275.35 or trailer camp and of the granting of any similar license to 275.36 use real property other than the renting or leasing thereof for 276.1 a continuous period of 30 days or more; 276.2 (f) The furnishing for a consideration of electricity, gas, 276.3 water, or steam for use or consumption within this state, or 276.4 local exchange telephone service, intrastate toll service, and 276.5 interstate toll service, if that service originates from and is 276.6 charged to a telephone located in this state. Telephone service 276.7 does not include services purchased with prepaid telephone 276.8 calling cards. Telephone service includes paging services and 276.9 private communication service, as defined in United States Code, 276.10 title 26, section 4252(d), except for private communication 276.11 service purchased by an agent acting on behalf of the state 276.12 lottery. The furnishing for a consideration of access to 276.13 telephone services by a hotel to its guests is a sale under this 276.14 clause. Sales by municipal corporations in a proprietary 276.15 capacity are included in the provisions of this clause. The 276.16 furnishing of water and sewer services for residential use shall 276.17 not be considered a sale. The sale of natural gas to be used as 276.18 a fuel in vehicles propelled by natural gas shall not be 276.19 considered a sale for the purposes of this section; 276.20 (g) The furnishing for a consideration of cable television 276.21 services, including charges for basic service, charges for 276.22 premium service, and any other charges for any other 276.23 pay-per-view, monthly, or similar television services; 276.24 (h) The furnishing for a consideration of parking services, 276.25 whether on a contractual, hourly, or other periodic basis, 276.26 except for parking at a meter; 276.27 (i) The furnishing for a consideration of services listed 276.28 in this paragraph: 276.29 (i) laundry and dry cleaning services including cleaning, 276.30 pressing, repairing, altering, and storing clothes, linen 276.31 services and supply, cleaning and blocking hats, and carpet, 276.32 drapery, upholstery, and industrial cleaning. Laundry and dry 276.33 cleaning services do not include services provided by coin 276.34 operated facilities operated by the customer; 276.35 (ii) motor vehicle washing, waxing, and cleaning services, 276.36 including services provided by coin-operated facilities operated 277.1 by the customer, and rustproofing, undercoating, and towing of 277.2 motor vehicles; 277.3 (iii) building and residential cleaning, maintenance, and 277.4 disinfecting and exterminating services; 277.5 (iv) detective services, security services, burglar, fire 277.6 alarm, and armored car services; but not including services 277.7 performed within the jurisdiction they serve by off-duty 277.8 licensed peace officers as defined in section 626.84, 277.9 subdivision 1, or services provided by a nonprofit organization 277.10 for monitoring and electronic surveillance of persons placed on 277.11 in-home detention pursuant to court order or under the direction 277.12 of the Minnesota department of corrections; 277.13 (v) pet grooming services; 277.14 (vi) lawn care, fertilizing, mowing, spraying and sprigging 277.15 services; garden planting and maintenance; tree, bush, and shrub 277.16 pruning, bracing, spraying, and surgery; indoor plant care; 277.17 tree, bush, shrub and stump removal; and tree trimming for 277.18 public utility lines. Services performed under a construction 277.19 contract for the installation of shrubbery, plants, sod, trees, 277.20 bushes, and similar items are not taxable; 277.21 (vii) mixed municipal solid waste management services as 277.22 described in section 297A.45; 277.23 (viii) massages, except when provided by a licensed health 277.24 care facility or professional or upon written referral from a 277.25 licensed health care facility or professional for treatment of 277.26 illness, injury, or disease; and 277.27 (ix) the furnishing for consideration of lodging, board and 277.28 care services for animals in kennels and other similar 277.29 arrangements, but excluding veterinary and horse boarding 277.30 services. 277.31 The services listed in this paragraph are taxable under section 277.32 297A.02 if the service is performed wholly within Minnesota or 277.33 if the service is performed partly within and partly without 277.34 Minnesota and the greater proportion of the service is performed 277.35 in Minnesota, based on the cost of performance. In applying the 277.36 provisions of this chapter, the terms "tangible personal 278.1 property" and "sales at retail" include taxable services and the 278.2 provision of taxable services, unless specifically provided 278.3 otherwise. Services performed by an employee for an employer 278.4 are not taxable under this paragraph. Services performed by a 278.5 partnership or association for another partnership or 278.6 association are not taxable under this paragraph if one of the 278.7 entities owns or controls more than 80 percent of the voting 278.8 power of the equity interest in the other entity. Services 278.9 performed between members of an affiliated group of corporations 278.10 are not taxable. For purposes of this section, "affiliated 278.11 group of corporations" includes those entities that would be 278.12 classified as a member of an affiliated group under United 278.13 States Code, title 26, section 1504, as amended through December 278.14 31, 1987, and who are eligible to file a consolidated tax return 278.15 for federal income tax purposes; 278.16 (j) A "sale" and a "purchase" includes the transfer of 278.17 computer software, meaning information and directions that 278.18 dictate the function performed by data processing equipment. A 278.19 "sale" and a "purchase" does not include the design, 278.20 development, writing, translation, fabrication, lease, or 278.21 transfer for a consideration of title or possession of a custom 278.22 computer program; and 278.23 (k) The granting of membership in a club, association, or 278.24 other organization if: 278.25 (1) the club, association, or other organization makes 278.26 available for the use of its members sports and athletic 278.27 facilities (without regard to whether a separate charge is 278.28 assessed for use of the facilities); and 278.29 (2) use of the sports and athletic facilities is not made 278.30 available to the general public on the same basis as it is made 278.31 available to members. 278.32 Granting of membership includes both one-time initiation fees 278.33 and periodic membership dues. Sports and athletic facilities 278.34 include golf courses, tennis, racquetball, handball and squash 278.35 courts, basketball and volleyball facilities, running tracks, 278.36 exercise equipment, swimming pools, and other similar athletic 279.1 or sports facilities. The provisions of this paragraph do not 279.2 apply to camps or other recreation facilities owned and operated 279.3 by an exempt organization under section 501(c)(3) of the 279.4 Internal Revenue Code of 1986, as amended through December 31, 279.5 1992, for educational and social activities for young people 279.6 primarily age 18 and under. 279.7 Sec. 5. Minnesota Statutes 1996, section 297A.01, 279.8 subdivision 4, is amended to read: 279.9 Subd. 4. (a) A "retail sale" or "sale at retail" means a 279.10 sale for any purpose other than resale in the regular course of 279.11 business. 279.12 (b) Property utilized by the owner only by leasing such 279.13 property to others or by holding it in an effort to so lease it, 279.14 and which is put to no use by the owner other than resale after 279.15 such lease or effort to lease, shall be considered property 279.16 purchased for resale. 279.17 (c) Master computer software programs that are purchased 279.18 and used to make copies for sale or lease are considered 279.19 property purchased for resale. 279.20 (d) Sales of building materials, supplies and equipment to 279.21 owners, contractors, subcontractors or builders for the erection 279.22 of buildings or the alteration, repair or improvement of real 279.23 property are "retail sales" or "sales at retail" in whatever 279.24 quantity sold and whether or not for purpose of resale in the 279.25 form of real property or otherwise. 279.26 (e) A sale of carpeting, linoleum, or other similar floor 279.27 covering which includes installation of the carpeting, linoleum, 279.28 or other similar floor covering is a contract for the 279.29 improvement of real property. 279.30 (f) A sale of shrubbery, plants, sod, trees, and similar 279.31 items that includes installation of the shrubbery, plants, sod, 279.32 trees, and similar items is a contract for the improvement of 279.33 real property. 279.34 (g) Aircraft and parts for the repair thereof purchased by 279.35 a nonprofit, incorporated flying club or association utilized 279.36 solely by the corporation by leasing such aircraft to 280.1 shareholders of the corporation shall be considered property 280.2 purchased for resale. The leasing of the aircraft to the 280.3 shareholders by the flying club or association shall be 280.4 considered a sale. Leasing of aircraft utilized by a lessee for 280.5 the purpose of leasing to others, whether or not the lessee also 280.6 utilizes the aircraft for flight instruction where no separate 280.7 charge is made for aircraft rental or for charter service, shall 280.8 be considered a purchase for resale; provided, however, that a 280.9 proportionate share of the lease payment reflecting use for 280.10 flight instruction or charter service is subject to tax pursuant 280.11 to section 297A.14. 280.12 (h) Tangible personal property that is utilized or employed 280.13 in the furnishing or providing of services under section 280.14 297A.01, subdivision 3, paragraph (d), or in conducting lawful 280.15 gambling under chapter 349 or the state lottery under chapter 280.16 349A, including property given as promotional items, shall not 280.17 be considered property purchased for resale. Machines, 280.18 equipment, or devices that are used to furnish, provide, or 280.19 dispense goods or services, including coin-operated devices, 280.20 shall not be considered property purchased for resale. 280.21 (i) Tangible personal property that is awarded as prizes 280.22 shall not be considered property purchased for resale. 280.23 Sec. 6. Minnesota Statutes 1996, section 297A.01, 280.24 subdivision 7, is amended to read: 280.25 Subd. 7. "Storage" and "use" do not include the keeping,280.26 or retainingor exercising of any right or power overin a 280.27 public warehouse of tangible personal property or tickets or 280.28 admissions to places of amusement or athletic events when 280.29 shipped or brought into Minnesota by common carrier, for the 280.30 purpose of subsequently being transported outside Minnesota and 280.31 thereafter used solely outside Minnesota, except in the course 280.32 of interstate commerce, or for the purpose of being processed,280.33fabricated or manufactured into, attached to or incorporated280.34into other tangible personal property to be transported outside280.35Minnesota and not thereafter returned to a point within280.36Minnesota, except in the course of interstate commerce. 281.1 Sec. 7. Minnesota Statutes 1996, section 297A.01, 281.2 subdivision 11, is amended to read: 281.3 Subd. 11. "Tangible personal property" means corporeal 281.4 personal property of any kind whatsoever, including property 281.5 which is to become real property as a result of incorporation, 281.6 attachment, or installation following its acquisition. 281.7 Personal property does not include: 281.8 (a) large ponderous machinery and equipment used in a 281.9 business or production activity which at common law would be 281.10 considered to be real property; 281.11 (b) property which is subject to an ad valorem property 281.12 tax; 281.13 (c) property described in section 272.02, subdivision 1, 281.14 clause (8), paragraphs (a) to (d); 281.15 (d) property described in section 272.03, subdivision 2, 281.16 clauses (3) and (5). 281.17 Tangible personal property includes computer software, 281.18 whether contained on tape, discs, cards, or other 281.19 devices. Tangible personal property also includes prepaid 281.20 telephone calling cards. 281.21 Sec. 8. Minnesota Statutes 1996, section 297A.01, 281.22 subdivision 15, is amended to read: 281.23 Subd. 15. "Farm machinery" means new or used machinery, 281.24 equipment, implements, accessories, and contrivances used 281.25 directly and principally in the production for sale, but not 281.26 including the processing, of livestock, dairy animals, dairy 281.27 products, poultry and poultry products, fruits, 281.28 vegetables, flowering or ornamental plants including nursery 281.29 stock, forage, grains and bees and apiary products. "Farm 281.30 machinery" includes: 281.31 (1) machinery for the preparation, seeding or cultivation 281.32 of soil for growing agricultural crops, as defined in section 281.33 97A.028, and sod, harvesting and threshing of agricultural 281.34 products, harvesting or mowing of sod, and certain machinery for 281.35 dairy, livestock and poultry farms; 281.36 (2) barn cleaners, milking systems, grain dryers, automatic 282.1 feeding systems and similar installations, whether or not the 282.2 equipment is installed by the seller and becomes part of the 282.3 real property; 282.4 (3) irrigation equipment sold for exclusively agricultural 282.5 use, including pumps, pipe fittings, valves, sprinklers and 282.6 other equipment necessary to the operation of an irrigation 282.7 system when sold as part of an irrigation system, whether or not 282.8 the equipment is installed by the seller and becomes part of the 282.9 real property; 282.10 (4) logging equipment, including chain saws used for 282.11 commercial logging; 282.12 (5) fencing used for the containment of farmed cervidae, as 282.13 defined in section 17.451, subdivision 2; and 282.14 (6) primary and backup generator units used to generate 282.15 electricity for the purpose of operating farm machinery, as 282.16 defined in this subdivision, or providing light or space heating 282.17 necessary for the production of livestock, dairy animals, dairy 282.18 products, or poultry and poultry products. 282.19 Repair or replacement parts for farm machineryshall not282.20be, except tires, are included in the definition of farm 282.21 machinery if the part replaces a farm machinery part assigned a 282.22 specific or generic part number by the manufacturer of the farm 282.23 machinery. 282.24 Tools, shop equipment, grain bins, feed bunks, fencing 282.25 material except fencing material covered by clause (5), 282.26 communication equipment and other farm supplies shall not be 282.27 considered to be farm machinery. "Farm machinery" does not 282.28 include motor vehicles taxed under chapter 297B, snowmobiles, 282.29 snow blowers, lawn mowers except those used in the production of 282.30 sod for sale, garden-type tractors or garden tillers and the 282.31 repair and replacement parts for those vehicles and machines. 282.32 Sec. 9. Minnesota Statutes 1996, section 297A.01, 282.33 subdivision 16, is amended to read: 282.34 Subd. 16. [CAPITAL EQUIPMENT.] (a) Capital equipment means 282.35 machinery and equipment purchased or leased for use in this 282.36 state and used by the purchaser or lessee primarily for 283.1 manufacturing, fabricating, mining, or refining tangible 283.2 personal property to be sold ultimately at retail and for 283.3 electronically transmitting results retrieved by a customer of 283.4 an on-line computerized data retrieval system. 283.5 (b) Capital equipment includes all machinery and equipment 283.6 that is essential to the integrated production process. Capital 283.7 equipment includes, but is not limited to: 283.8 (1) machinery and equipment used or required to operate, 283.9 control, or regulate the production equipment; 283.10 (2) machinery and equipment used for research and 283.11 development, design, quality control, and testing activities; 283.12 (3) environmental control devices that are used to maintain 283.13 conditions such as temperature, humidity, light, or air pressure 283.14 when those conditions are essential to and are part of the 283.15 production process;or283.16 (4) materials and supplies necessary to construct and 283.17 install machinery or equipment.; 283.18 (5) repair and replacement parts, including accessories, 283.19 whether purchased as spare parts, repair parts, or as upgrades 283.20 or modifications to machinery or equipment; 283.21 (6) materials used for foundations that support machinery 283.22 or equipment; or 283.23 (7) materials used to construct and install special purpose 283.24 buildings used in the production process. 283.25 (c) Capital equipment does not include the following: 283.26 (1)repair or replacement parts, including accessories,283.27whether purchased as spare parts, repair parts, or as upgrades283.28or modifications, and whether purchased before or after the283.29machinery or equipment is placed into service. Parts or283.30accessories are treated as capital equipment only to the extent283.31that they are a part of and are essential to the operation of283.32the machinery or equipment as initially purchased;283.33(2)motor vehicles taxed under chapter 297B; 283.34(3)(2) machinery or equipment used to receive or store raw 283.35 materials; 283.36(4)(3) building materials; 284.1(5)(4) machinery or equipment used for nonproduction 284.2 purposes, including, but not limited to, the following: 284.3 machinery and equipment used for plant security, fire 284.4 prevention, first aid, and hospital stations; machinery and 284.5 equipment used in support operations or for administrative 284.6 purposes; machinery and equipment used solely for pollution 284.7 control, prevention, or abatement; and machinery and equipment 284.8 used in plant cleaning, disposal of scrap and waste, plant 284.9 communications, space heating, lighting, or safety; 284.10(6)(5) "farm machinery" as defined by subdivision 15, and 284.11 "aquaculture production equipment" as defined by subdivision 19,284.12and "replacement capital equipment" as defined by subdivision284.1320; or 284.14(7)(6) any other item that is not essential to the 284.15 integrated process of manufacturing, fabricating, mining, or 284.16 refining. 284.17 (d) For purposes of this subdivision: 284.18 (1) "Equipment" means independent devices or tools separate 284.19 from machinery but essential to an integrated production 284.20 process, including computers and software, used in operating, 284.21 controlling, or regulating machinery and equipment; and any 284.22 subunit or assembly comprising a component of any machinery or 284.23 accessory or attachment parts of machinery, such as tools, dies, 284.24 jigs, patterns, and molds. 284.25 (2) "Fabricating" means to make, build, create, produce, or 284.26 assemble components or property to work in a new or different 284.27 manner. 284.28 (3) "Machinery" means mechanical, electronic, or electrical 284.29 devices, including computers and software, that are purchased or 284.30 constructed to be used for the activities set forth in paragraph 284.31 (a), beginning with the removal of raw materials from inventory 284.32 through the completion of the product, including packaging of 284.33 the product. 284.34 (4) "Manufacturing" means an operation or series of 284.35 operations where raw materials are changed in form, composition, 284.36 or condition by machinery and equipment and which results in the 285.1 production of a new article of tangible personal property. For 285.2 purposes of this subdivision, "manufacturing" includes the 285.3 generation of electricity or steam to be sold at retail. 285.4 (5) "Mining" means the extraction of minerals, ores, stone, 285.5 and peat. 285.6 (6) "On-line data retrieval system" means a system whose 285.7 cumulation of information is equally available and accessible to 285.8 all its customers. 285.9 (7) "Pollution control equipment" means machinery and 285.10 equipment used to eliminate, prevent, or reduce pollution 285.11 resulting from an activity described in paragraph (a). 285.12 (8) "Primarily" means machinery and equipment used 50 285.13 percent or more of the time in an activity described in 285.14 paragraph (a). 285.15 (9) "Refining" means the process of converting a natural 285.16 resource to a product, including the treatment of water to be 285.17 sold at retail. 285.18 (e) For purposes of this subdivision the requirement that 285.19 the machinery or equipment "must be used by the purchaser or 285.20 lessee" means that the person who purchases or leases the 285.21 machinery or equipment must be the one who uses it for the 285.22 qualifying purpose. When a contractor buys and installs 285.23 machinery or equipment as part of an improvement to real 285.24 property, only the contractor is considered the purchaser. 285.25(f) Notwithstanding prior provisions of this subdivision,285.26machinery and equipment purchased or leased to replace machinery285.27and equipment used in the mining or production of taconite shall285.28qualify as capital equipment.285.29 Sec. 10. Minnesota Statutes 1996, section 297A.02, 285.30 subdivision 2, is amended to read: 285.31 Subd. 2. [MACHINERY AND EQUIPMENT.] Notwithstanding the 285.32 provisions of subdivision 1, the rate of the excise tax imposed 285.33 upon sales of farm machinery and aquaculture production 285.34 equipment is: 285.35 for purchases prior to July 1, 1998, 2.5 percent, 285.36 for purchases after June 30, 1998, and prior to July 1, 286.1 1999, 1.5 percent, 286.2 purchases after June 30, 1999, are exempt. 286.3 Sec. 11. Minnesota Statutes 1996, section 297A.14, 286.4 subdivision 4, is amended to read: 286.5 Subd. 4. [DE MINIMIS EXEMPTION.] Purchases subject to use 286.6 tax under this section are exempt if(1) the purchase is made by286.7an individual for personal use, and (2)the total amount of 286.8 purchases made by a person, other than a person who has or is 286.9 obligated to have a permit under section 297A.04, that are 286.10 subject to the use tax, do not exceed $770 in the calendar 286.11 year.For purposes of this subdivision, "personal use" includes286.12purchases for gifts.Ifan individuala person makes purchases, 286.13 which are subject to use tax, of more than $770 in the calendar 286.14 yearthe individualthe person must pay the use tax on the 286.15 entire amount. 286.16 Sec. 12. Minnesota Statutes 1996, section 297A.211, 286.17 subdivision 1, is amended to read: 286.18 Subdivision 1. Every person, as defined in this chapter, 286.19 who is engaged in interstate for-hire transportation of tangible 286.20 personal property or passengers by motor vehicle may at their 286.21 option, under rules prescribed by the commissioner, register as 286.22 retailers and pay the taxes imposed by this chapter in 286.23 accordance with this section. Any taxes paid under this section 286.24 are deemed use taxes, except local sales taxes when no 286.25 corresponding local use tax is imposed. Persons referred to 286.26 herein are: (1) persons possessing a certificate or permit or 286.27 having completed a registration process that authorizes for-hire 286.28 transportation of property or passengers from the United States 286.29 Department of Transportation, the transportation regulation 286.30 board, or the department of transportation; or (2) persons 286.31 transporting commodities defined as "exempt" in for-hire 286.32 transportation in interstate commerce; or (3) persons who, 286.33 pursuant to contracts with persons described in clause (1) or 286.34 (2) above, transport tangible personal property in interstate 286.35 commerce. Persons qualifying under clauses (2) and (3) must 286.36 maintain on a current basis the same type of mileage records 287.1 that are required by persons specified in clause (1) by the 287.2 United States Department of Transportation. Persons who in the 287.3 course of their business are transporting solely their own goods 287.4 in interstate commerce may also register as retailers pursuant 287.5 to rules prescribed by the commissioner and pay the taxes 287.6 imposed by this chapter in accordance with this section. 287.7 Sec. 13. Minnesota Statutes 1996, section 297A.25, 287.8 subdivision 2, is amended to read: 287.9 Subd. 2. [FOOD PRODUCTS.] The gross receipts from the sale 287.10 of food products including but not limited to cereal and cereal 287.11 products, butter, cheese, milk and milk products, oleomargarine, 287.12 meat and meat products, fish and fish products, eggs and egg 287.13 products, vegetables and vegetable products, fruit and fruit 287.14 products, spices and salt, sugar and sugar products, coffee and 287.15 coffee substitutes, tea, cocoa and cocoa products, and food 287.16 products which are not taxable pursuant to section 297A.01, 287.17 subdivision 3, clause (c) are exempt.This exemption does not287.18include the following:287.19(1) candy and candy products, except when sold for287.20fundraising purposes by a nonprofit organization that provides287.21educational and social activities for young people primarily287.22aged 18 and under;287.23(2) carbonated beverages, beverages commonly referred to as287.24soft drinks containing less than 15 percent fruit juice, or287.25bottled water other than noncarbonated and noneffervescent287.26bottled water sold in individual containers of one-half gallon287.27or more in size.287.28 Sec. 14. Minnesota Statutes 1996, section 297A.25, 287.29 subdivision 3, is amended to read: 287.30 Subd. 3. [MEDICINES; MEDICAL DEVICES.] The gross receipts 287.31 from the sale of prescribed drugs, prescribed medicine and 287.32 insulin, intended for use, internal or external, in the cure, 287.33 mitigation, treatment or prevention of illness or disease in 287.34 human beings are exempt, together with prescription glasses, 287.35 fever thermometers, therapeutic, and prosthetic devices. 287.36 "Prescribed drugs" or "prescribed medicine" includes 288.1 over-the-counter drugs or medicine prescribed by a licensed 288.2 physician. "Therapeutic devices" includes reusable finger 288.3 pricking devices for the extraction of blood, blood glucose 288.4 monitoring machines, and other diagnostic agents used in 288.5 diagnosing, monitoring, or treating diabetes. Nonprescription 288.6 analgesics consisting principally (determined by the weight of 288.7 all ingredients) of acetaminophen, acetylsalicylic acid, 288.8 ibuprofen, ketoprofen, naproxen, and other nonprescription 288.9 analgesics that are approved by the United States Food and Drug 288.10 Administration for internal use by human beings, or a 288.11 combination thereof, are exempt. 288.12 Sec. 15. Minnesota Statutes 1996, section 297A.25, 288.13 subdivision 7, is amended to read: 288.14 Subd. 7. [PETROLEUM PRODUCTS.] The gross receipts from the 288.15 sale of and storage, use or consumption of the following 288.16 petroleum products are exempt: 288.17 (1) products upon which a tax has been imposed and paid 288.18 under the provisions of chapter 296, and no refund has been or 288.19 will be allowed because the buyer used the fuel for nonhighway 288.20 use; 288.21 (2) products which are used in the improvement of 288.22 agricultural land by constructing, maintaining, and repairing 288.23 drainage ditches, tile drainage systems, grass waterways, water 288.24 impoundment, and other erosion control structures; 288.25 (3) products purchased by a transit system receiving 288.26 financial assistance under section 174.24 or 473.384;or288.27 (4) products used in a passenger snowmobile, as defined in 288.28 section 296.01, subdivision 27a, for off-highway business use as 288.29 part of the operations of a resort as provided under section 288.30 296.18, subdivision 1, clause (2); or 288.31 (5) products purchased by a state or a political 288.32 subdivision of a state for use in emergency rescue vehicles and 288.33 fire trucks and apparatus. 288.34 Sec. 16. Minnesota Statutes 1996, section 297A.25, 288.35 subdivision 11, is amended to read: 288.36 Subd. 11. [SALES TO GOVERNMENT.] The gross receipts from 289.1 all sales, including sales in which title is retained by a 289.2 seller or a vendor or is assigned to a third party under an 289.3 installment sale or lease purchase agreement under section 289.4 465.71, of tangible personal property to, and all storage, use 289.5 or consumption of such property by, the United States and its 289.6 agencies and instrumentalities, the University of Minnesota, 289.7 state universities, community colleges, technical colleges, 289.8 state academies, the Lola and Rudy Perpich Minnesota center for 289.9 arts education, and school districts are exempt. 289.10 As used in this subdivision, "school districts" means 289.11 public school entities and districts of every kind and nature 289.12 organized under the laws of the state of Minnesota, including, 289.13 without limitation, school districts, intermediate school 289.14 districts, education districts, service cooperatives, secondary 289.15 vocational cooperative centers, special education cooperatives, 289.16 joint purchasing cooperatives, telecommunication cooperatives, 289.17 regional management information centers, and any instrumentality 289.18 of a school district, as defined in section 471.59. 289.19 Sales exempted by this subdivision include sales under 289.20 section 297A.01, subdivision 3, paragraph (f), but do not 289.21 include sales under section 297A.01, subdivision 3, paragraph 289.22 (j), clause (vii). 289.23 Sales to hospitals and nursing homes owned and operated by 289.24 the state or political subdivisions of the state are exempt 289.25 under this subdivision. 289.26 The sales to and exclusively for the use of libraries of 289.27 books, periodicals, audio-visual materials and equipment, 289.28 photocopiers for use by the public, and all cataloguing and 289.29 circulation equipment, and cataloguing and circulation software 289.30 for library use are exempt under this subdivision. For purposes 289.31 of this paragraph "libraries" means libraries as defined in 289.32 section 134.001, county law libraries under chapter 134A, the 289.33 state library under section 480.09, and the legislative 289.34 reference library. 289.35 Sales of supplies and equipment used in the operation of an 289.36 ambulance service owned and operated by a political subdivision 290.1 of the state are exempt under this subdivision provided that the 290.2 supplies and equipment are used in the course of providing 290.3 medical care. Sales to a political subdivision of repair and 290.4 replacement parts for emergency rescue vehicles and fire trucks 290.5 and apparatus are exempt under this subdivision. 290.6 Sales to a political subdivision of machinery and 290.7 equipment, except for motor vehicles, used directly for mixed 290.8 municipal solid waste management services at a solid waste 290.9 disposal facility as defined in section 115A.03, subdivision 10, 290.10 are exempt under this subdivision. 290.11 Sales to political subdivisions of chore and homemaking 290.12 services to be provided to elderly or disabled individuals are 290.13 exempt. 290.14 Sales of telephone services to the department of 290.15 administration that are used to provide telecommunications 290.16 services through the intertechnologies revolving fund are exempt 290.17 under this subdivision. 290.18 This exemption shall not apply to building, construction or 290.19 reconstruction materials purchased by a contractor or a 290.20 subcontractor as a part of a lump-sum contract or similar type 290.21 of contract with a guaranteed maximum price covering both labor 290.22 and materials for use in the construction, alteration, or repair 290.23 of a building or facility. This exemption does not apply to 290.24 construction materials purchased by tax exempt entities or their 290.25 contractors to be used in constructing buildings or facilities 290.26 which will not be used principally by the tax exempt entities. 290.27 This exemption does not apply to the leasing of a motor 290.28 vehicle as defined in section 297B.01, subdivision 5, except for 290.29 leases entered into by the United States or its agencies or 290.30 instrumentalities. 290.31 The tax imposed on sales to political subdivisions of the 290.32 state under this section applies to all political subdivisions 290.33 other than those explicitly exempted under this subdivision, 290.34 notwithstanding section 115A.69, subdivision 6, 116A.25, 290.35 360.035, 458A.09, 458A.30, 458D.23, 469.101, subdivision 2, 290.36 469.127, 473.448, 473.545, or 473.608 or any other law to the 291.1 contrary enacted before 1992. 291.2 Sales exempted by this subdivision include sales made to 291.3 other states or political subdivisions of other states, if the 291.4 sale would be exempt from taxation if it occurred in that state, 291.5 but do not include sales under section 297A.01, subdivision 3, 291.6 paragraphs (c) and (e). 291.7 Sec. 17. Minnesota Statutes 1996, section 297A.25, 291.8 subdivision 56, is amended to read: 291.9 Subd. 56. [FIREFIGHTERS PERSONAL PROTECTIVE EQUIPMENT.] 291.10 The gross receipts from the sale of and storage, use, or 291.11 consumption of firefighters personal protective equipment are 291.12 exempt if purchased by, or when authorized by and for the use 291.13 of, an organized fire department, fire protection district, or 291.14 fire company, regularly charged with the responsibility of 291.15 providing fire protection to the state or a political 291.16 subdivision. For purposes of this subdivision, "personal 291.17 protective equipment" includes: helmets (including face 291.18 shields, chin straps, and neck liners), bunker coats and pants 291.19 (including pant suspenders), boots, gloves, head covers or 291.20 hoods, wildfire jackets, protective coveralls, goggles, 291.21 self-contained breathing apparatuses, canister filter masks, 291.22 personal alert safety systems, spanner belts, optical or thermal 291.23 imaging search devices, and all safety equipment required by the 291.24 Occupational Safety and Health Administration. 291.25 Sec. 18. Minnesota Statutes 1996, section 297A.25, 291.26 subdivision 59, is amended to read: 291.27 Subd. 59. [FARM MACHINERY.]From July 1, 1994, until June291.2830, 1997,The gross receipts from the sale of used farm 291.29 machinery are exempt. In the case of leased farm machinery, 291.30 used machinery is machinery which has been used for its intended 291.31 purpose for a growing season or a harvest season. 291.32 Sec. 19. Minnesota Statutes 1996, section 297A.25, is 291.33 amended by adding a subdivision to read: 291.34 Subd. 62. [MATERIALS USED IN PROVIDING TAXABLE 291.35 SERVICES.] (a) The gross receipts from the sale of and the 291.36 storage, use, or consumption of all materials used or consumed 292.1 in providing a taxable service intended to be sold ultimately at 292.2 retail are exempt. 292.3 (b) This exemption includes, but is not limited to: 292.4 (1) chemicals, lubricants, packaging materials, seeds, 292.5 trees, fertilizers, and herbicides, used or consumed in 292.6 providing the taxable service; 292.7 (2) chemicals used to treat waste generated as a result of 292.8 providing the taxable service; and 292.9 (3) accessory tools, equipment, and other items that are 292.10 separate detachable units used in providing the service and that 292.11 have an ordinary useful life of less than 12 months. 292.12 (c) This exemption does not include: 292.13 (1) machinery, equipment, implements, tools, accessories, 292.14 appliances, contrivances, furniture, and fixtures used in 292.15 providing the taxable service; and 292.16 (2) fuel, electricity, gas, and steam used for space 292.17 heating or lighting. 292.18 (d) For purposes of this subdivision, "taxable services" 292.19 means the services listed in section 297A.01, subdivision 3, 292.20 paragraph (i), except solid waste management services as 292.21 described in section 297A.45. 292.22 Sec. 20. Minnesota Statutes 1996, section 297A.25, is 292.23 amended by adding a subdivision to read: 292.24 Subd. 63. [HOSPITALS.] The gross receipts from the sale of 292.25 tangible personal property to, and the storage, use, or 292.26 consumption of such property by, a hospital are exempt, if the 292.27 property purchased is to be used in providing hospital services 292.28 to human beings. For purposes of this subdivision, "hospital" 292.29 means a hospital organized and operated for charitable purposes 292.30 within the meaning of section 501(c)(3) of the Internal Revenue 292.31 Code of 1986, as amended, and licensed under chapter 144 or by 292.32 any other jurisdiction. For purposes of this subdivision, 292.33 "hospital services" are services authorized or required to be 292.34 performed by a "hospital" under chapter 144 and regulations 292.35 thereunder or under the applicable licensure law of any other 292.36 jurisdiction. Sales exempted by this subdivision do not include 293.1 sales under section 297A.01, subdivision 3, paragraphs (c), (e), 293.2 and (i), clause (vii). This exemption does not apply to 293.3 building, construction, or reconstruction materials purchased by 293.4 a contractor or a subcontractor as a part of a lump-sum contract 293.5 or similar type of contract with a guaranteed maximum price 293.6 covering both labor and materials for use in the construction, 293.7 alteration, or repair of a hospital. This exemption does not 293.8 apply to construction materials to be used in constructing 293.9 buildings or facilities which will not be used principally by a 293.10 hospital. This exemption does not apply to the leasing of a 293.11 motor vehicle as defined in section 297B.01, subdivision 5. 293.12 Sec. 21. Minnesota Statutes 1996, section 297A.25, is 293.13 amended by adding a subdivision to read: 293.14 Subd. 64. [COPIES OF COURT REPORTER DOCUMENTS.] The gross 293.15 receipts from sales of, and use, storage, or consumption of, 293.16 transcripts or copies of transcripts of verbatim testimony 293.17 produced and sold by court reporters or other transcribers of 293.18 legal proceedings to individuals or entities that are parties to 293.19 or representatives of parties to the proceeding to which the 293.20 transcript relates, are exempt. 293.21 Sec. 22. Minnesota Statutes 1996, section 297A.25, is 293.22 amended by adding a subdivision to read: 293.23 Subd. 65. [REGIONWIDE PUBLIC SAFETY RADIO COMMUNICATION 293.24 SYSTEM; PRODUCTS AND SERVICES.] The gross receipts from the sale 293.25 of, and the storage, use, or consumption of, products and 293.26 services including end user equipment used for construction, 293.27 ownership, operation, maintenance, and enhancement of the 293.28 backbone system of the regionwide public safety radio 293.29 communication system established under sections 473.891 to 293.30 473.905, are exempt. For purposes of this subdivision, backbone 293.31 system is defined in section 473.891, subdivision 9. 293.32 Sec. 23. Minnesota Statutes 1996, section 297A.25, is 293.33 amended by adding a subdivision to read: 293.34 Subd. 66. [FIREWOOD.] The gross receipts from the sale of 293.35 wood used for fires for heating, cooking, or any other purpose, 293.36 except for the generation of electricity, steam, or heat to be 294.1 sold at retail, are exempt. 294.2 Sec. 24. [297A.48] [LOCAL SALES TAX RULES.] 294.3 Subdivision 1. [AUTHORIZATION; SCOPE.] (a) A political 294.4 subdivision of this state may impose a general sales tax if 294.5 permitted by special law or if the subdivision enacted and 294.6 imposed the tax before the effective date of section 477A.016 294.7 and its predecessor provision. 294.8 (b) This section governs the imposition of a general sales 294.9 tax by the political subdivision. The provisions of this 294.10 section preempt the provisions of any special law: 294.11 (1) enacted before its effective date, or 294.12 (2) enacted after its effective date that does not 294.13 explicitly exempt the special law provision from this section's 294.14 rules by reference. 294.15 (c) This section does not apply to or preempt a sales tax 294.16 on motor vehicles or a special excise tax on motor vehicles. 294.17 Subd. 2. [TAX BASE.] (a) The tax applies to sales taxable 294.18 under this chapter that occur within the political subdivision. 294.19 (b) Taxable services are subject to a political 294.20 subdivision's sales tax, if they are performed either: 294.21 (1) within the political subdivision, or 294.22 (2) partly within and partly without the political 294.23 subdivision and more of the service is performed within the 294.24 political subdivision, based on the cost of performance. 294.25 Subd. 3. [TAX RATE.] (a) The tax rate is as specified in 294.26 the special law authorization and as imposed by the political 294.27 subdivision. 294.28 (b) The full political subdivision rate applies to any 294.29 sales that are taxed at a state rate less than or more than the 294.30 state general sales and use tax rate. 294.31 Subd. 4. [USE TAX.] A compensating use tax applies, at the 294.32 same rate as the sales tax, on the use, storage, distribution, 294.33 or consumption of tangible personal property or taxable services. 294.34 Subd. 5. [EXEMPTIONS.] (a) All goods or services that are 294.35 otherwise exempt from taxation under this chapter are exempt 294.36 from a political subdivision's tax. 295.1 (b) The gross receipts from the sale of tangible personal 295.2 property that meets the requirement of section 297A.25, 295.3 subdivision 5, are exempt, except the qualification test applies 295.4 based on the boundaries of the political subdivision instead of 295.5 the state of Minnesota. 295.6 (c) All mobile transportation equipment, and parts and 295.7 accessories attached to or to be attached to the equipment are 295.8 exempt, if purchased by a holder of a motor carrier direct pay 295.9 permit under section 297A.211. 295.10 Subd. 6. [CREDIT FOR OTHER LOCAL TAXES.] If a person paid 295.11 sales or use tax to another political subdivision on tangible 295.12 personal property or another item subject to tax under this 295.13 section, a credit applies against the tax imposed under this 295.14 section. The credit equals the tax the person paid to the other 295.15 political subdivision for the item. 295.16 Subd. 7. [ENFORCEMENT; COLLECTION; AND ADMINISTRATION.] (a) 295.17 The commissioner of revenue shall collect the taxes subject to 295.18 this section. The commissioner may collect the tax with the 295.19 state sales and use tax. All taxes under this section are 295.20 subject to the same penalties, interest, and enforcement 295.21 provisions as apply to the state sales and use tax. 295.22 (b) A request for a refund of state sales tax paid in 295.23 excess of the amount of tax legally due includes a request for a 295.24 refund of the political subdivision taxes paid on the goods or 295.25 services. The commissioner must refund to the taxpayer the full 295.26 amount of the political subdivision taxes paid on exempt sales 295.27 or use. 295.28 (c) A political subdivision that is collecting and 295.29 administering its own sales and use tax before January 1, 1998, 295.30 may elect to be exempt from this subdivision and subdivision 8. 295.31 Subd. 8. [REVENUES; COST OF COLLECTION.] The commissioner 295.32 shall remit the proceeds of the tax, less refunds and a 295.33 proportionate share of the cost of collection, at least 295.34 quarterly, to the political subdivision. The commissioner shall 295.35 deduct from the proceeds remitted an amount that equals 295.36 (1) the direct and indirect costs of the department to 296.1 administer, audit, and collect the political subdivision's tax, 296.2 plus 296.3 (2) the political subdivision's proportionate share of the 296.4 indirect cost of administering all taxes under this section. 296.5 Subd. 9. [EFFECTIVE DATES; NOTIFICATION.] (a) A political 296.6 subdivision may impose a tax under this section starting only on 296.7 the first day of a calendar quarter. A political subdivision 296.8 may repeal a tax under this section stopping only on the last 296.9 day of a calendar quarter. 296.10 (b) The political subdivision must notify the commissioner 296.11 of revenue at least 90 days before imposing or repealing a tax 296.12 under this section. 296.13 Subd. 10. [APPLICATION.] This section applies to all local 296.14 sales taxes authorized on or after the day of enactment of this 296.15 act. Starting January 1, 2000, this section applies to all 296.16 local sales tax that were authorized before the day of enactment 296.17 of this act. 296.18 Sec. 25. Minnesota Statutes 1996, section 297B.01, 296.19 subdivision 7, is amended to read: 296.20 Subd. 7. [SALE, SELLS, SELLING, PURCHASE, PURCHASED, OR 296.21 ACQUIRED.] "Sale," "sells," "selling," "purchase," "purchased," 296.22 or "acquired" means any transfer of title of any motor vehicle, 296.23 whether absolutely or conditionally, for a consideration in 296.24 money or by exchange or barter for any purpose other than resale 296.25 in the regular course of business. Any motor vehicle utilized 296.26 by the owner only by leasing such vehicle to others or by 296.27 holding it in an effort to so lease it, and which is put to no 296.28 other use by the owner other than resale after such lease or 296.29 effort to lease, shall be considered property purchased for 296.30 resale. The terms also shall include any transfer of title or 296.31 ownership of a motor vehicle by way of gift or by any other 296.32 manner or by any other means whatsoever, for or without 296.33 consideration, except that these terms shall not include: 296.34 (a) the acquisition of a motor vehicle by inheritance from 296.35 or by bequest of, a decedent who owned it; 296.36 (b) the transfer of a motor vehicle which was previously 297.1 licensed in the names of two or more joint tenants and 297.2 subsequently transferred without monetary consideration to one 297.3 or more of the joint tenants; 297.4 (c) the transfer of a motor vehicle by way of gift between 297.5 a husband and wife or parent and child;or297.6 (d) the voluntary or involuntary transfer of a motor 297.7 vehicle between a husband and wife in a divorce proceeding.; or 297.8 (e) the transfer of a motor vehicle by way of a gift to an 297.9 organization that is exempt from federal income taxation under 297.10 section 501(c)(3) of the Internal Revenue Code, as amended 297.11 through December 31, 1996, when the motor vehicle will be used 297.12 exclusively for religious, charitable, or educational purposes. 297.13 Sec. 26. Minnesota Statutes 1996, section 297B.01, 297.14 subdivision 8, is amended to read: 297.15 Subd. 8. [PURCHASE PRICE.] "Purchase price" means the 297.16 total consideration valued in money for a sale, whether paid in 297.17 money or otherwise. The purchase price excludes the amount of a 297.18 manufacturer's rebate paid or payable to the purchaser. If a 297.19 motor vehicle is taken in trade as a credit or as part payment 297.20 on a motor vehicle taxable under this chapter, the credit or 297.21 trade-in value allowed by the person selling the motor vehicle 297.22 shall be deducted from the total selling price to establish the 297.23 purchase price of the vehicle being sold and the trade-in 297.24 allowance allowed by the seller shall constitute the purchase 297.25 price of the motor vehicle accepted as a trade-in. The purchase 297.26 price in those instances where the motor vehicle is acquired by 297.27 gift or by any other transfer for a nominal or no monetary 297.28 consideration shall also include the average value of similar 297.29 motor vehicles, established by standards and guides as 297.30 determined by the motor vehicle registrar. The purchase price 297.31 in those instances where a motor vehicle is manufactured by a 297.32 person who registers it under the laws of this state shall mean 297.33 the manufactured cost of such motor vehicle and manufactured 297.34 cost shall mean the amount expended for materials, labor and 297.35 other properly allocable costs of manufacture, except that in 297.36 the absence of actual expenditures for the manufacture of a part 298.1 or all of the motor vehicle, manufactured costs shall mean the 298.2 reasonable value of the completed motor vehicle. 298.3 The term "purchase price" shall not include the portion of 298.4 the value of a motor vehicle due solely to modifications 298.5 necessary to make the motor vehicle handicapped accessible. The 298.6 term "purchase price" shall not include the transfer of a motor 298.7 vehicle by way of gift between a husband and wife or parent and 298.8 child, or to a nonprofit organization as provided under section 298.9 297B.01, paragraph (e), nor shall it include the transfer of a 298.10 motor vehicle by a guardian to a ward when there is no monetary 298.11 consideration and the title to such vehicle was registered in 298.12 the name of the guardian, as guardian, only because the ward was 298.13 a minor. There shall not be included in "purchase price" the 298.14 amount of any tax imposed by the United States upon or with 298.15 respect to retail sales whether imposed upon the retailer or the 298.16 consumer. 298.17 The term "purchase price" shall not include the transfer of 298.18 a motor vehicle as a gift between a foster parent and foster 298.19 child. For purposes of this subdivision, a foster relationship 298.20 exists, regardless of the age of the child, if (1) a foster 298.21 parent's home is or was licensed as a foster family home under 298.22 Minnesota Rules, parts 9545.0010 to 9545.0260, and (2) the 298.23 county verifies that the child was a state ward or in permanent 298.24 foster care. 298.25 Sec. 27. Minnesota Statutes 1996, section 297E.02, 298.26 subdivision 6, is amended to read: 298.27 Subd. 6. [COMBINED RECEIPTS TAX.] In addition to the taxes 298.28 imposed under subdivisions 1 and 4, a tax is imposed on the 298.29 combined receipts of the organization. As used in this section, 298.30 "combined receipts" is the sum of the organization's gross 298.31 receipts from lawful gambling less gross receipts directly 298.32 derived from the conduct of bingo, raffles, and paddlewheels, as 298.33 defined in section 297E.01, subdivision 8, for the fiscal year. 298.34 The combined receipts of an organization are subject to a tax 298.35 computed according to the following schedule: 298.36 If the combined receipts for the The tax is: 299.1 fiscal year are: 299.2Not over $500,000zero299.3Over $500,000, but not over299.4$700,000two percent of the amount299.5over $500,000, but not299.6over $700,000299.7Over $700,000, but not over299.8$900,000$4,000 plus four percent299.9of the amount over299.10$700,000, but not over299.11$900,000299.12Over $900,000$12,000 plus six percent299.13of the amount over299.14$900,000299.15 Not over $700,000 zero 299.16 Over $700,000, but not over 299.17 $900,000 two percent of the amount 299.18 over $700,000, but not 299.19 over $900,000 299.20 Over $900,000, but not over 299.21 $1,100,000 $4,000 plus four percent 299.22 of the amount over 299.23 $900,000, but not over 299.24 $1,100,000 299.25 Over $1,100,000 $12,000 plus six percent 299.26 of the amount over 299.27 $1,100,000 299.28 Sec. 28. Minnesota Statutes 1996, section 297E.04, 299.29 subdivision 3, is amended to read: 299.30 Subd. 3. [PADDLETICKET CARD MASTER FLARES.] Each sealed 299.31 grouping of 100 or fewer paddleticket cards must have its own 299.32 individual master flare. The manufacturer of the paddleticket 299.33 cards must affix to or imprint at the bottom of each master 299.34 flare a bar code that provides: 299.35 (1) the name of the manufacturer; 299.36 (2) the first paddleticket card number in the group; 300.1 (3) the number of paddletickets attached to each 300.2 paddleticket card in the group; and 300.3 (4) all other information required by the commissioner. 300.4This subdivision applies to paddleticket cards (i) sold by a300.5manufacturer after June 30, 1995, for use or resale in Minnesota300.6or (ii) shipped into or caused to be shipped into Minnesota by a300.7manufacturer after June 30, 1995. Paddleticket cards that are300.8subject to this subdivision may not have a registration stamp300.9affixed to the master flare.300.10 Sec. 29. Minnesota Statutes 1996, section 349.12, 300.11 subdivision 26a, is amended to read: 300.12 Subd. 26a. [MASTER FLARE.] "Master flare" is the posted 300.13 display, with registration stamp affixed or bar code imprinted 300.14 or affixed, that is used in conjunction with sealed groupings of 300.15 100 or fewer sequentially numbered paddleticket cards. 300.16 Sec. 30. Minnesota Statutes 1996, section 349.154, 300.17 subdivision 2, is amended to read: 300.18 Subd. 2. [NET PROFIT REPORTS.] (a) Each licensed 300.19 organization must report monthly to the board on a form 300.20 prescribed by the board each expenditure and contribution of net 300.21 profits from lawful gambling. The reports must provide for each 300.22 expenditure or contribution: 300.23 (1) the name, address, and telephone number of the 300.24 recipient of the expenditure or contribution; 300.25 (2) the date the contribution was approved by the 300.26 organization; 300.27 (3) the date, amount, and check number of the expenditure 300.28 or contribution; 300.29 (4) a brief description of how the expenditure or 300.30 contribution meets one or more of the purposes in section 300.31 349.12, subdivision 25; and 300.32 (5) in the case of expenditures authorized under section 300.33 349.12, subdivision 25, paragraph (a), clause (7), whether the 300.34 expenditure is for a facility or activity that primarily 300.35 benefits male or female participants. 300.36 (b) The board shall make available to the commissioners of 301.1 revenue and public safety copies of reports received under this 301.2 subdivision and requested by them. 301.3 (c) The report required under this subdivision must provide 301.4 for a separate accounting for all expenditures made from the 301.5 reporting organization's tax refundandor creditaccount301.6 authorized under section 297E.02, subdivision 4, paragraph (d). 301.7 Sec. 31. Minnesota Statutes 1996, section 349.163, 301.8 subdivision 8, is amended to read: 301.9 Subd. 8. [PADDLETICKET CARD MASTER FLARES.] Each sealed 301.10 grouping of 100 or fewer paddleticket cards must have its own 301.11 individual master flare. The manufacturer must affix to or 301.12 imprint at the bottom of the master flare a bar code that 301.13 provides all information required by the commissioner of revenue 301.14 under section 297E.04, subdivision 3. 301.15This subdivision applies to paddleticket cards sold by a301.16manufacturer after June 30, 1995, for use or resale in Minnesota301.17or shipped into or caused to be shipped into Minnesota by a301.18manufacturer after June 30, 1995. Paddleticket cards which are301.19subject to this subdivision shall not have a registration stamp301.20affixed to the master flare.301.21 Sec. 32. Minnesota Statutes 1996, section 349.19, 301.22 subdivision 2a, is amended to read: 301.23 Subd. 2a. [TAX REFUNDANDOR CREDITACCOUNT.] (a) Each 301.24 organization that receives a refund or credit under section 301.25 297E.02, subdivision 4, paragraph (d), mustestablish a separate301.26account designated as the tax and credit refund account. The301.27organization must (1)within four business days of receiving a 301.28 refund under that paragraph deposit the refund in 301.29 the organization's gambling account, and (2) within four301.30business days of filing a tax return that claims a credit under301.31that paragraph, transfer from the separate account established301.32under subdivision 2 to the tax refund and credit account an301.33amount equal to the tax credit. 301.34(b) The name and address of the bank, the account number301.35for the tax refund and credit account, and the names of301.36organization members authorized as signatories on the account302.1must be provided to the board within 30 days of the date when302.2the organization establishes the account. Changes in the302.3information must be submitted to the board at least ten days302.4before the change is made.302.5(c)(b) The organization may expendmoney in the account302.6 the tax refund or credit issued under section 297E.02, 302.7 subdivision 4, paragraph (d), only for lawful purposes, other 302.8 than lawful purposes described in section 349.012, subdivision 302.9 25, paragraph (a), clauses (8), (9), and (12). Amountsin the302.10accountreceived as refunds or allowed as credits must be spent 302.11 for qualifying lawful purposes no later than one year after the 302.12 refund or credit isdepositedreceived. 302.13 Sec. 33. Minnesota Statutes 1996, section 349.191, 302.14 subdivision 1b, is amended to read: 302.15 Subd. 1b. [CREDIT AND SALES TO DELINQUENT DISTRIBUTORS.] 302.16 (a) If a manufacturer does not receive payment in full from a 302.17 distributor within3035 days of the delivery of gambling 302.18 equipment, the manufacturer must notify the board in writing of 302.19 the delinquency. 302.20 (b) If a manufacturer who has notified the board under 302.21 paragraph (a) has not received payment in full from the 302.22 distributor within 60 days of the notification under paragraph 302.23 (a), the manufacturer must notify the board of the continuing 302.24 delinquency. 302.25 (c) On receipt of a notice under paragraph (a), the board 302.26 shall order all manufacturers that until further notice from the 302.27 board, they may sell gambling equipment to the delinquent 302.28 distributor only on a cash basis with no credit extended. On 302.29 receipt of a notice under paragraph (b), the board shall order 302.30 all manufacturers not to sell any gambling equipment to the 302.31 delinquent distributor. 302.32 (d) No manufacturer may extend credit or sell gambling 302.33 equipment to a distributor in violation of an order under 302.34 paragraph (c) until the board has authorized such credit or sale. 302.35 Sec. 34. Laws 1993, chapter 375, article 9, section 45, 302.36 subdivision 2, is amended to read: 303.1 Subd. 2. [USE OF REVENUES.] (a) Revenues received from 303.2 taxes authorized by subdivision 1 shall be used by Cook county 303.3 to pay the cost of collecting the tax and to pay all or a 303.4 portion of the costs of expanding and improving the health care 303.5 facility located in the county and known as North Shore hospital. 303.6 Authorized costs include, but are not limited to, securing or 303.7 paying debt service on bonds or other obligations issued to 303.8 finance the expansion and improvement of North Shore hospital. 303.9 The total capital expenditures payable from bond proceeds, 303.10 excluding investment earnings on bond proceeds and tax revenues, 303.11 shall not exceed $4,000,000. 303.12 (b) Additional revenues received from taxes authorized by 303.13 subdivision 1 may be used by Cook county to pay all or a portion 303.14 of the costs of remodeling North Shore care center and providing 303.15 additional improvements to North Shore hospital. Authorized 303.16 costs include, but are not limited to, securing or paying debt 303.17 service on bonds or other obligations issued to finance the 303.18 remodeling of North Shore care center and additional 303.19 improvements to North Shore hospital. The total capital 303.20 expenditures payable from bond proceeds, excluding investment 303.21 earnings on bond proceeds and tax revenues, shall not exceed 303.22 $2,200,000. 303.23 Sec. 35. Laws 1993, chapter 375, article 9, section 45, 303.24 subdivision 3, is amended to read: 303.25 Subd. 3. [EXPIRATION OF TAXING AUTHORITY AND EXPENDITURE 303.26 LIMITATION.] The authority granted by subdivision 1 to Cook 303.27 county to impose a sales tax shall expire when the principal and 303.28 interest on any bonds or obligations issued under subdivision 4, 303.29 paragraph (a), to finance the expansion and improvement of North 303.30 Shore hospital described in subdivision 2, paragraph (a), have 303.31 been paid, or at an earlier time as the county shall, by 303.32 resolution, determine. Any funds remaining after completion of 303.33 the improvements and retirement or redemption of the bonds may 303.34 be placed in the general fund of the county. 303.35 Sec. 36. Laws 1993, chapter 375, article 9, section 45, 303.36 subdivision 4, is amended to read: 304.1 Subd. 4. [BONDS.] (a) Cook county may issue general 304.2 obligation bonds in an amount not to exceed $4,000,000 for the 304.3 expansion and improvement of North Shore hospital,. 304.4 (b) Additionally, Cook county may issue general obligation 304.5 bonds in an amount not to exceed $2,200,000 for the remodeling 304.6 of North Shore care center and additional improvements to North 304.7 Shore hospital. 304.8 (c) The bonds may be issued without election under 304.9 Minnesota Statutes, chapter 475, on the question of issuance of 304.10 the bonds or a property tax to pay them. The debt represented 304.11 by the bondsissued for the expansion and improvement of North304.12Shore hospitalshall not be included in computing any debt 304.13 limitations applicable to Cook county, and the levy of taxes 304.14 required by Minnesota Statutes, section 475.61, to pay principal 304.15 of and interest on the bonds shall not be subject to any levy 304.16 limitation or be included in computing or applying any levy 304.17 limitation applicable to the county. 304.18 Sec. 37. Laws 1993, chapter 375, article 9, section 45, is 304.19 amended by adding a subdivision to read: 304.20 Subd. 5a. [REFERENDUM.] If the governing body of Cook 304.21 county intends to use the sales tax proceeds as authorized by 304.22 subdivision 2, paragraph (b), it shall conduct a referendum on 304.23 the issue. The question of so using the tax proceeds must be 304.24 submitted to the voters at a special or general election. The 304.25 tax proceeds may not be used as provided in subdivision 2, 304.26 paragraph (b), unless a majority of votes cast on the question 304.27 are in the affirmative. The commissioner of revenue shall 304.28 prepare a suggested form of question to be presented at the 304.29 election. The referendum must be held at a special or general 304.30 election before December 1, 1997. 304.31 Sec. 38. [ITASCA COUNTY; SALES TAX EXEMPTION FOR JAIL 304.32 CONSTRUCTION MATERIALS.] 304.33 Subdivision 1. [JAIL CONSTRUCTION MATERIALS.] In the case 304.34 of construction materials and supplies purchased for use in a 304.35 project to expand, reconstruct, and otherwise improve the Itasca 304.36 county jail, Minnesota Statutes, section 297A.15, subdivision 7, 305.1 shall apply with the following exceptions: 305.2 (1) the refund is equal to 100 percent of the taxes paid; 305.3 and 305.4 (2) construction materials and supplies used in the 305.5 expansion, reconstruction, or improvement of the portion of the 305.6 facility used as a jail qualifies for the refund. 305.7 Subd. 2. [EFFECTIVE DATE.] Subdivision 1 is effective the 305.8 day after compliance with Minnesota Statutes, section 645.021, 305.9 subdivision 3, and applies to purchases after June 30, 1997. 305.10 Sec. 39. [COOK COUNTY; SALES TAX EXEMPTION FOR JAIL AND 305.11 COURTHOUSE CONSTRUCTION MATERIALS.] 305.12 Subdivision 1. [CONSTRUCTION MATERIALS.] In the case of 305.13 construction materials and supplies purchased for use in a 305.14 project to construct an addition to and otherwise improve the 305.15 Cook county jail and courthouse facility, Minnesota Statutes, 305.16 section 297A.15, subdivision 7, shall apply with the following 305.17 exceptions: 305.18 (1) the refund is equal to 100 percent of the taxes paid; 305.19 and 305.20 (2) construction materials and supplies used in 305.21 construction or improvement of the portion of the facility used 305.22 as a courthouse as well as the portion of the facility used as a 305.23 jail qualify for the refund. 305.24 Subd. 2. [EFFECTIVE DATE.] Subdivision 1 is effective the 305.25 day after compliance with Minnesota Statutes, section 645.021, 305.26 subdivision 3, and applies to purchases after June 30, 1997. 305.27 Sec. 40. [CITY OF FOSSTON; SALES AND USE TAX.] 305.28 Subdivision 1. [SALES AND USE TAX AUTHORIZED.] The city of 305.29 Fosston may, by ordinance, impose for the purposes specified in 305.30 subdivision 3 a sales and use tax of up to one-half of one 305.31 percent. The provisions of Minnesota Statutes, section 297A.48, 305.32 govern the imposition, administration, collection, and 305.33 enforcement of the tax authorized under this section. 305.34 Subd. 2. [USE OF REVENUES.] Revenues received from the tax 305.35 authorized by subdivision 1 must be used to pay the costs of 305.36 collecting the tax, and for economic development and tourism 306.1 purposes, including the expansion of the heritage center and 306.2 construction of a business-industrial park and facilities, and 306.3 including securing or paying debt service on bonds issued for 306.4 those purposes under subdivision 4. 306.5 Subd. 3. [REFERENDUM.] If the Fosston city council 306.6 proposes to impose the sales and use tax authorized by this 306.7 section, it shall conduct a referendum on the issue. The 306.8 question of imposing the tax must be submitted to the voters at 306.9 a special or general election. The tax may not be imposed 306.10 unless a majority of votes cast on the question of imposing the 306.11 tax are in the affirmative. The commissioner of revenue shall 306.12 prepare a suggested form of question to be presented at the 306.13 election. This subdivision applies notwithstanding any city 306.14 charter provision to the contrary. 306.15 Subd. 4. [BONDS.] The city of Fosston, pursuant to the 306.16 approval of the city voters under subdivision 3, may issue 306.17 without additional election general obligation bonds of the city 306.18 to pay capital expenses for the purposes given in subdivision 306.19 2. The debt represented by the bonds must not be included in 306.20 computing any debt limitations applicable to the city, and the 306.21 levy of taxes required by Minnesota Statutes, section 475.61, to 306.22 pay the principal of and interest on the bonds must not be 306.23 subject to any levy limitation or be included in computing or 306.24 applying any levy limitation applicable to the city. 306.25 Subd. 5. [TERMINATION.] The tax authorized under this 306.26 section terminates at the later of (1) five years after the date 306.27 of initial imposition of the tax, or (2) on the first day of the 306.28 second month next succeeding a determination by the city council 306.29 that sufficient funds have been received from the tax to finance 306.30 the improvements described in subdivision 2, and to prepay or 306.31 retire at maturity the principal, interest, and premium due on 306.32 any bonds issued for the improvements. Any funds remaining 306.33 after completion of the improvements and retirement or 306.34 redemption of the bonds may be placed in the general fund of the 306.35 city. 306.36 Subd. 6. [LOCAL APPROVAL; EFFECTIVE DATE.] This section is 307.1 effective August 1, 1997, upon compliance with Minnesota 307.2 Statutes, section 645.021, subdivision 3, by the governing body 307.3 of the city of Fosston. 307.4 Sec. 41. [CITY OF WILLMAR; TAXES.] 307.5 Subdivision 1. [SALES AND USE TAX AUTHORIZED.] Pursuant to 307.6 the approval of the city voters at the general election held on 307.7 November 5, 1996, the city of Willmar may, by ordinance, impose, 307.8 for the purposes specified in subdivision 3, a sales and use tax 307.9 of up to one-half of one percent. The provisions of Minnesota 307.10 Statutes, section 297A.48, govern the imposition, 307.11 administration, collection, and enforcement of the tax 307.12 authorized under this subdivision. 307.13 Subd. 2. [EXCISE TAX AUTHORIZED.] Notwithstanding 307.14 Minnesota Statutes, section 477A.016, or any other contrary 307.15 provision of law, ordinance, or city charter, the city of 307.16 Willmar may, by ordinance, impose, for the purposes specified in 307.17 subdivision 3, an excise tax of up to $20 per motor vehicle, as 307.18 defined by ordinance, purchased or acquired from any person 307.19 engaged within the city in the business of selling motor 307.20 vehicles at retail. 307.21 Subd. 3. [USE OF REVENUES.] Revenues received from taxes 307.22 authorized by subdivisions 1 and 2 must be used to pay the costs 307.23 of collecting the taxes, and to pay all or a part of the capital 307.24 and administrative costs of the acquisition, construction, and 307.25 improvement of public library facilities, including securing or 307.26 paying debt service on bonds issued for the project under 307.27 subdivision 4. The total capital and administrative 307.28 expenditures payable from bond proceeds and revenues received 307.29 from the taxes authorized by subdivisions 1 and 2, excluding 307.30 investment earnings thereon, must not exceed $4,500,000. 307.31 Subd. 4. [BONDS.] The city of Willmar, pursuant to the 307.32 approval of the city voters at the general election held on 307.33 November 5, 1996, may issue without additional election general 307.34 obligation bonds of the city in an amount not to exceed 307.35 $4,500,000 to pay capital and administrative expenses for the 307.36 acquisition, construction, and improvement of public library 308.1 facilities. The debt represented by the bonds must not be 308.2 included in computing any debt limitations applicable to the 308.3 city, and the levy of taxes required by Minnesota Statutes, 308.4 section 475.61, to pay the principal of and interest on the 308.5 bonds must not be subject to any levy limitation or be included 308.6 in computing or applying any levy limitation applicable to the 308.7 city. 308.8 Subd. 5. [TERMINATION OF TAXES.] The taxes imposed under 308.9 subdivisions 1 and 2 expire when the city council determines 308.10 that sufficient funds have been received from the taxes to 308.11 finance the capital and administrative costs for the 308.12 acquisition, construction, and improvement of public library 308.13 facilities and to prepay or retire at maturity the principal, 308.14 interest, and premium due on any bonds issued for the project 308.15 under subdivision 4. Any funds remaining after completion of 308.16 the project and retirement or redemption of the bonds may be 308.17 placed in the general fund of the city. The taxes imposed under 308.18 subdivisions 1 and 2 may expire at an earlier time if the city 308.19 so determines by ordinance. 308.20 Subd. 6. [EFFECTIVE DATE.] This section is effective 308.21 August 1, 1997, upon compliance by the governing body of the 308.22 city of Willmar with Minnesota Statutes, section 645.021, 308.23 subdivision 3. 308.24 Sec. 42. [ADVISORY COUNCIL; TAXATION OF TELECOMMUNICATIONS 308.25 SERVICES.] 308.26 Subdivision 1. [CREATION; MEMBERSHIP.] (a) A state 308.27 advisory council is established to study the taxation of 308.28 telecommunications services in Minnesota and to make 308.29 recommendations to the 1998 legislature. The study shall be 308.30 completed and findings reported to the legislature by February 308.31 1, 1998. 308.32 (b) The advisory council consists of 12 members who serve 308.33 at the pleasure of the appointing authority as follows: 308.34 (1) six legislators; three members of the senate, including 308.35 one member of the minority party, appointed by the subcommittee 308.36 on committees of the committee on rules and administration and 309.1 three members of the house of representatives, including one 309.2 member of the minority party, appointed by the speaker; 309.3 (2) the commissioner of revenue or the commissioner's 309.4 designee; and 309.5 (3) five members of the public including at least two 309.6 representatives of Internet service businesses who are 309.7 knowledgeable about technologies and practices of the Internet; 309.8 two appointed by the subcommittee on committees of the committee 309.9 on rules and administration of the senate, two appointed by the 309.10 speaker of the house, and one appointed by the governor. 309.11 (c) the 12 members will elect a chair from the membership 309.12 of the council. 309.13 Subd. 2. [SCOPE OF STUDY.] (a) The purpose of the advisory 309.14 council is to: 309.15 (1) study existing and emerging tax policies, both 309.16 federally and nationally, that apply to telecommunications and 309.17 computer industries and identify any inequities which may exist 309.18 in the current system of taxation as it applies to those 309.19 industries; 309.20 (2) identify potential for erosion of the sales tax base as 309.21 a result of evolving technologies in the telecommunications and 309.22 computer industries; 309.23 (3) consider methods of addressing potential impediments to 309.24 extension of state taxes to emerging technologies; 309.25 (4) suggest options for changing the tax system to maintain 309.26 or broaden the sales tax base and to provide equitable tax 309.27 treatment for users of existing and emerging technologies. 309.28 Subd. 3. [STAFF.] The department of revenue and 309.29 legislative staff shall provide administrative and staff 309.30 assistance when requested by the advisory council. 309.31 Subd. 4. [COOPERATION BY OTHER AGENCIES.] The commissioner 309.32 of public service, the director of the Minnesota office of 309.33 technology, and any other state department or agency shall, upon 309.34 request by the advisory council, provide data or other 309.35 information that is collected or possessed by their agencies and 309.36 that is necessary or useful in conducting the study and 310.1 preparing the report required by this section. 310.2 Sec. 43. [STATEMENT OF PURPOSE.] 310.3 For purchases and sales occurring after December 31, 1992: 310.4 (a) The purpose of section 5, paragraph (h), is to confirm 310.5 and clarify the intent of the legislature in enacting an 310.6 exemption from the sales tax for property to be resold in the 310.7 normal course of business. 310.8 (b) Section 5, paragraph (h), ratifies the existing state 310.9 interpretation that a resale requires the transfer of title to 310.10 the property or the complete transfer of possession and control 310.11 over the property. This section is not intended to affect any 310.12 litigation pending before the supreme court as of April 22, 1997. 310.13 Sec. 44. [RECODIFICATION.] 310.14 In coordination with legislative staff, the revisor of 310.15 statutes shall prepare a bill for introduction in the 1998 310.16 session of the legislature that clarifies and recodifies chapter 310.17 297A. The department of revenue shall assist in the preparation 310.18 of the legislation as requested by the revisor. The revisor may 310.19 consult professional groups and other interested persons in 310.20 preparing the legislation. 310.21 Sec. 45. [APPLICATION.] 310.22 Section 22 applies in the counties of Anoka, Carver, 310.23 Dakota, Hennepin, Ramsey, Scott, and Washington. 310.24 Sec. 46. [REPEALER.] 310.25 Minnesota Statutes 1996, sections 297A.01, subdivision 20; 310.26 297A.02, subdivision 5; and 297A.25, subdivision 29, are 310.27 repealed. 310.28 Sec. 47. [EFFECTIVE DATES.] 310.29 Section 1 is effective for refund claims filed after June 310.30 30, 1997. 310.31 Sections 2, 6, 7, 14 to 18, 20, 25, 26, 38, and 39 are 310.32 effective for purchases and sales occurring after June 30, 1997. 310.33 Section 3 as applied to fuel used to operate well drilling 310.34 machines is effective the day following final enactment and 310.35 applies to gasoline and special fuel purchased before, on, or 310.36 after the date of final enactment of this act, provided that 311.1 claims for refund must be made within the time period provided 311.2 in Minnesota Statutes, section 296.18, subdivision 1. For all 311.3 other purposes, section 3 is effective on July 1, 1997, or upon 311.4 adoption of the corresponding rules, whichever occurs earlier. 311.5 Section 4, paragraph (i), clause (iv), is effective for 311.6 purchases and sales occurring after September 30, 1987; the 311.7 remainder of section 4 is effective for purchases and sales 311.8 occurring after June 30, 1997. 311.9 Section 5, paragraph (h), is effective for purchases and 311.10 sales occurring after December 31, 1992, and paragraph (i) is 311.11 effective for purchases and sales occurring after June 30, 1997. 311.12 Sections 28, 29, and 31 are effective for purchases and 311.13 sales occurring after December 31, 1997. 311.14 Sections 8 to 10, 13, 19, 21, 32, 33, 42, and 46 are 311.15 effective July 1, 1997. 311.16 Section 11 is effective January 1, 1998. 311.17 Sections 12, 24, 43, and 44 are effective the day following 311.18 final enactment. 311.19 Sections 19 and 27 are effective July 1, 1998. 311.20 Section 22 is effective for purchases and sales occurring 311.21 after July 31, 1997, and before August 1, 2003. 311.22 Section 23 is effective for sales made after December 31, 311.23 1989, and before January 1, 1997. The provisions of Minnesota 311.24 Statutes, section 289A.50, apply to refunds claimed under 311.25 section 23. Refunds claimed under section 23 must be filed by 311.26 the later of December 31, 1997, or the time limit under 311.27 Minnesota Statutes, section 289A.40, subdivision 1. 311.28 Sections 34 to 37 are effective the day after compliance by 311.29 the governing body of Cook county with Minnesota Statutes, 311.30 section 645.021, subdivision 3. 311.31 ARTICLE 12 311.32 BUDGET RESERVE 311.33 Section 1. Minnesota Statutes 1996, section 16A.152, 311.34 subdivision 2, is amended to read: 311.35 Subd. 2. [ADDITIONAL REVENUES; PRIORITY.] If on the basis 311.36 of a forecast of general fund revenues and expenditures after 312.1 November 1 in an odd-numbered year, the commissioner of finance 312.2 determines that there will be a positive unrestricted budgetary 312.3 general fund balance at the close of the biennium, the 312.4 commissioner of finance must allocate moneyto the budget312.5reserve until the total amount in the account is $270,000,000.312.6An amount equal to any additional biennial unrestricted312.7budgetary general fund balance made available as the result of a312.8forecast in an odd-numbered calendar year after November 1 is312.9appropriated in January of the following year to reduce the312.10property tax levy recognition percent under section 121.904,312.11subdivision 4a, to zero before additional money beyond312.12$270,000,000 is allocated to the budget reserve account. The312.13amount appropriated is the full amount forecast to be available312.14at the end of the biennium and is not limited to the amount312.15forecast to be available at the end of the current fiscal year312.16 as follows: 312.17 (a) first, to the budget reserve until the total amount in 312.18 the account equals $522,000,000; then 312.19 (b) 40 percent, to reduce the property tax revenue 312.20 recognition percent in section 121.904, subdivision 4a, to two 312.21 percent and any amount of the 40 percent share that is available 312.22 after the percent is reduced to two is an unrestricted balance 312.23 in the general fund; and 312.24 (c) 60 percent to the property tax reform account 312.25 established in section 16A.1521. 312.26 The amounts necessary to meet the requirements of this 312.27 section are appropriated from the general fund within two weeks 312.28 of the forecast. 312.29 Sec. 2. [16A.1521] [PROPERTY TAX REFORM ACCOUNT.] 312.30 A property tax reform account is established in the general 312.31 fund. On July 1, 1997, $487,000,000 is appropriated to the 312.32 property tax reform account. The balance in the account does 312.33 not cancel and remains in the account until appropriated for 312.34 property tax reform in fiscal years 1999, 2000, and 2001. 312.35 Investment earnings on the account are credited to the account. 312.36 Sec. 3. [BUDGET RESERVE APPROPRIATION.] 313.1 An amount sufficient to increase the budget reserve to 313.2 $522,000,000 less any amounts expended under Laws 1997, chapter 313.3 30, on July 1, 1997, is appropriated from the general fund. 313.4 ARTICLE 13 313.5 TAX INCREMENT FINANCING 313.6 Section 1. Minnesota Statutes 1996, section 469.174, 313.7 subdivision 10, is amended to read: 313.8 Subd. 10. [REDEVELOPMENT DISTRICT.] (a) "Redevelopment 313.9 district" means a type of tax increment financing district 313.10 consisting of a project, or portions of a project, within which 313.11 the authority finds by resolution that one of the following 313.12 conditions, reasonably distributed throughout the district, 313.13 exists: 313.14 (1) parcels consisting of 70 percent of the area of the 313.15 district are occupied by buildings, streets, utilities, or other 313.16 improvements and more than 50 percent of the buildings, not 313.17 including outbuildings, are structurally substandard to a degree 313.18 requiring substantial renovation or clearance; or 313.19 (2) the property consists of vacant, unused, underused, 313.20 inappropriately used, or infrequently used railyards, rail 313.21 storage facilities, or excessive or vacated railroad 313.22 rights-of-way. 313.23 (b) For purposes of this subdivision, "structurally 313.24 substandard" shall mean containing defects in structural 313.25 elements or a combination of deficiencies in essential utilities 313.26 and facilities, light and ventilation, fire protection including 313.27 adequate egress, layout and condition of interior partitions, or 313.28 similar factors, which defects or deficiencies are of sufficient 313.29 total significance to justify substantial renovation or 313.30 clearance. 313.31 (c) A building is not structurally substandard if it is in 313.32 compliance with the building code applicable to new buildings or 313.33 could be modified to satisfy the building code at a cost of less 313.34 than 15 percent of the cost of constructing a new structure of 313.35 the same square footage and type on the site. The municipality 313.36 may find that a building is not disqualified as structurally 314.1 substandard under the preceding sentence on the basis of 314.2 reasonably available evidence, such as the size, type, and age 314.3 of the building, the average cost of plumbing, electrical, or 314.4 structural repairs, or other similar reliable evidence.If the314.5evidence supports a reasonable conclusion that the building is314.6not disqualified as structurally substandard,The municipality 314.7 may not make such a determination without an interior inspection 314.8orof the property, but need not have an independent, expert 314.9 appraisal prepared of the cost of repair and rehabilitation of 314.10 the building. An interior inspection of the property is not 314.11 required, if the municipality finds that (1) the municipality or 314.12 authority is unable to gain access to the property after using 314.13 its best efforts to obtain permission from the party that owns 314.14 or controls the property; and (2) the evidence otherwise 314.15 supports a reasonable conclusion that the building is 314.16 structurally substandard. Items of evidence that support such a 314.17 conclusion include recent fire or police inspections, on-site 314.18 property tax appraisals or housing inspections, exterior 314.19 evidence of deterioration, or other similar reliable evidence. 314.20 Written documentation of the findings and reasons why an 314.21 interior inspection was not conducted must be made and retained 314.22 under section 469.175, subdivision 3, clause (1). 314.23 (d) A parcel is deemed to be occupied by a structurally 314.24 substandard building for purposes of the finding under paragraph 314.25 (a) if all of the following conditions are met: 314.26 (1) the parcel was occupied by a substandard building 314.27 within three years of the filing of the request for 314.28 certification of the parcel as part of the district with the 314.29 county auditor; 314.30 (2) the substandard building was demolished or removed by 314.31 the authority or the demolition or removal was financed by the 314.32 authority or was done by a developer under a development 314.33 agreement with the authority; 314.34 (3) the authority found by resolution before the demolition 314.35 or removal that the parcel was occupied by a structurally 314.36 substandard building and that after demolition and clearance the 315.1 authority intended to include the parcel within a district; and 315.2 (4) upon filing the request for certification of the tax 315.3 capacity of the parcel as part of a district, the authority 315.4 notifies the county auditor that the original tax capacity of 315.5 the parcel must be adjusted as provided by section 469.177, 315.6 subdivision 1, paragraph (h). 315.7(c)(e) For purposes of this subdivision, a parcel is not 315.8 occupied by buildings, streets, utilities, or other improvements 315.9 unless 15 percent of the area of the parcel contains 315.10 improvements. 315.11(d)(f) For districts consisting of two or more 315.12 noncontiguous areas, each area must qualify as a redevelopment 315.13 district under paragraph (a) to be included in the district, and 315.14 the entire area of the district must satisfy paragraph (a). 315.15 Sec. 2. Minnesota Statutes 1996, section 469.174, 315.16 subdivision 19, is amended to read: 315.17 Subd. 19. [SOILS CONDITION DISTRICT.] (a) "Soils condition 315.18 district" means a type of tax increment financing district 315.19 consisting of a project, or portions of a project, within which 315.20 the authority finds by resolution that the following conditions 315.21 exist: 315.22 (1) the presence of hazardous substances, pollution, or 315.23 contaminants requires removal or remedial action for use; 315.24 (2) the estimated cost of the proposed removal and remedial 315.25 action exceeds the fair market value of the land before 315.26 completion of the preparation. 315.27 The requirements of clause (2) need not be satisfied, if 315.28 each parcel of property in the district either satisfies the 315.29 requirements of clause (2) or the estimated costs of the 315.30 proposed removal or remedial action exceeds$2$4 per square 315.31 foot for the area of the parcel. 315.32 (b) The proposed removal or remediation action must be 315.33 specified in a development action response plan to satisfy the 315.34 requirements of paragraph (a). 315.35 Sec. 3. Minnesota Statutes 1996, section 469.174, is 315.36 amended by adding a subdivision to read: 316.1 Subd. 25. [INCREMENT.] "Increment," "tax increment," "tax 316.2 increment revenues," "revenues derived from tax increment," and 316.3 other similar terms for a district include: 316.4 (1) taxes paid by the captured net tax capacity, but 316.5 excluding any excess taxes, as computed under section 469.177; 316.6 (2) the proceeds from the sale or lease of property, 316.7 tangible or intangible, purchased by the authority with tax 316.8 increments; 316.9 (3) repayments of loans or other advances made by the 316.10 authority with tax increments; and 316.11 (4) interest or other investment earnings on or from tax 316.12 increments. 316.13 Sec. 4. Minnesota Statutes 1996, section 469.174, is 316.14 amended by adding a subdivision to read: 316.15 Subd. 26. [POPULATION.] "Population" means the population 316.16 established as of December 31 by the most recent of the 316.17 following: 316.18 (1) the federal census; 316.19 (2) a special census conducted under contract with the 316.20 United States Bureau of the Census; 316.21 (3) a population estimate made by the metropolitan council; 316.22 and 316.23 (4) a population estimate made by the state demographer 316.24 under section 4A.02. 316.25 The population so established applies to the following 316.26 calendar year. 316.27 Sec. 5. Minnesota Statutes 1996, section 469.174, is 316.28 amended by adding a subdivision to read: 316.29 Subd. 27. [SMALL CITY.] "Small city" means any home rule 316.30 charter or statutory city that has a population of 5,000 or less 316.31 and that is located ten miles or more from a home rule charter 316.32 or statutory city, located in this state, with a population of 316.33 10,000 or more. For purposes of this definition, the distance 316.34 between cities is measured by drawing a straight line from the 316.35 nearest boundaries of the two cities. 316.36 Sec. 6. Minnesota Statutes 1996, section 469.175, 317.1 subdivision 3, is amended to read: 317.2 Subd. 3. [MUNICIPALITY APPROVAL.] A county auditor shall 317.3 not certify the original net tax capacity of a tax increment 317.4 financing district until the tax increment financing plan 317.5 proposed for that district has been approved by the municipality 317.6 in which the district is located. If an authority that proposes 317.7 to establish a tax increment financing district and the 317.8 municipality are not the same, the authority shall apply to the 317.9 municipality in which the district is proposed to be located and 317.10 shall obtain the approval of its tax increment financing plan by 317.11 the municipality before the authority may use tax increment 317.12 financing. The municipality shall approve the tax increment 317.13 financing plan only after a public hearing thereon after 317.14 published notice in a newspaper of general circulation in the 317.15 municipality at least once not less than ten days nor more than 317.16 30 days prior to the date of the hearing. The published notice 317.17 must include a map of the area of the district from which 317.18 increments may be collected and, if the project area includes 317.19 additional area, a map of the project area in which the 317.20 increments may be expended. The hearing may be held before or 317.21 after the approval or creation of the project or it may be held 317.22 in conjunction with a hearing to approve the project. Before or 317.23 at the time of approval of the tax increment financing plan, the 317.24 municipality shall make the following findings, and shall set 317.25 forth in writing the reasons and supporting facts for each 317.26 determination: 317.27 (1) that the proposed tax increment financing district is a 317.28 redevelopment district, a renewal or renovation district, a 317.29 mined underground space development district, a housing 317.30 district, a soils condition district, or an economic development 317.31 district; if the proposed district is a redevelopment district 317.32 or a renewal or renovation district, the reasons and supporting 317.33 facts for the determination that the district meets the criteria 317.34 of section 469.174, subdivision 10, paragraph (a), clauses (1) 317.35 and (2), or subdivision 10a, must be documented in writing and 317.36 retained and made available to the public by the authority until 318.1 the district has been terminated. 318.2 (2) that the proposed development or redevelopment, in the 318.3 opinion of the municipality, would not reasonably be expected to 318.4 occur solely through private investment within the reasonably 318.5 foreseeable future and that the increased market value of the 318.6 site that could reasonably be expected to occur without the use 318.7 of tax increment financing would be less than the increase in 318.8 the market value estimated to result from the proposed 318.9 development after subtracting the present value of the projected 318.10 tax increments for the maximum duration of the district 318.11 permitted by the plan. The requirements of this clause do not 318.12 apply if the district is a qualified housing district, as 318.13 defined in section 273.1399, subdivision 1. 318.14 (3) that the tax increment financing plan conforms to the 318.15 general plan for the development or redevelopment of the 318.16 municipality as a whole. 318.17 (4) that the tax increment financing plan will afford 318.18 maximum opportunity, consistent with the sound needs of the 318.19 municipality as a whole, for the development or redevelopment of 318.20 the project by private enterprise. 318.21 (5) that the municipality elects the method of tax 318.22 increment computation set forth in section 469.177, subdivision 318.23 3, clause (b), if applicable. 318.24 When the municipality and the authority are not the same, 318.25 the municipality shall approve or disapprove the tax increment 318.26 financing plan within 60 days of submission by the authority, or 318.27 the plan shall be deemed approved. When the municipality and 318.28 the authority are not the same, the municipality may not amend 318.29 or modify a tax increment financing plan except as proposed by 318.30 the authority pursuant to subdivision 4. Once approved, the 318.31 determination of the authority to undertake the project through 318.32 the use of tax increment financing and the resolution of the 318.33 governing body shall be conclusive of the findings therein and 318.34 of the public need for the financing. 318.35 Sec. 7. Minnesota Statutes 1996, section 469.175, is 318.36 amended by adding a subdivision to read: 319.1 Subd. 3a. [BUT-FOR TEST; MODIFICATIONS.] (a) The 319.2 provisions of this subdivision apply, if after municipal 319.3 approval was obtained under subdivision 3, clause (2), the 319.4 authority: 319.5 (1) amends the tax increment financing plan, adopts or 319.6 amends a development or redevelopment plan under the authority's 319.7 law, enters into or amends a development or similar agreement, 319.8 or adopts a resolution or approves an amended budget to permit 319.9 increments to be spent, unless binding official action has 319.10 already occurred with respect to the expenditure; and 319.11 (2) the actions taken that satisfy clause (1) are estimated 319.12 to permit spending of revenues derived from increments of 319.13 $50,000 or more. 319.14 (b) No action that satisfies the requirements of paragraph 319.15 (a) is effective, unless the municipality after notice and 319.16 hearing in accordance with section 469.175, subdivision 3, finds 319.17 that, in its opinion: 319.18 (1) the proposed development or redevelopment to be 319.19 financed would not reasonably be expected to occur solely 319.20 through private investment within the reasonably foreseeable 319.21 future; and 319.22 (2) the increased taxable market value of the site that 319.23 could reasonably be expected to occur without the spending of 319.24 tax increments would be less than the increase in the taxable 319.25 market value estimated to result from the proposed development 319.26 after subtracting the present value of the projected tax 319.27 increments authorized to be spent on the development or 319.28 redevelopment. 319.29 (c) The requirements of this subdivision do not apply to 319.30 expenditures to assist a development that meets the requirements 319.31 for a qualified housing district, as defined in section 319.32 273.1399, subdivision 1. 319.33 (d) "Binding official action" means, with respect to 319.34 revenues derived from tax increments considered expended on an 319.35 activity, that the expenditure is authorized under the tax 319.36 increment financing plan and that at least one of the following 320.1 has occurred: 320.2 (1) the revenues are actually paid to a third party with 320.3 respect to the activity; 320.4 (2) bonds, the proceeds of which must be used to finance 320.5 the activity, are issued and sold to a third party, the revenues 320.6 are spent to repay the bonds, and the proceeds of the bonds are, 320.7 on the date of issuance, reasonably expected to be spent before 320.8 the end of a reasonable temporary period within the meaning of 320.9 the use of that term under section 148(c)(1) of the Internal 320.10 Revenue Code, or are deposited in a reasonably required reserve 320.11 or replacement fund; 320.12 (3) binding contracts with a third party are entered into 320.13 for performance of the activity, if the revenues are spent under 320.14 the contractual obligation; or 320.15 (4) the costs with respect to the activity are paid, if the 320.16 revenues are spent to reimburse a party for payment of the 320.17 costs, including any interest on unreimbursed costs. 320.18 (e) For purposes of this subdivision, bonds include 320.19 subsequent refunding bonds if the original refunded bonds meet 320.20 the requirements of paragraph (d), clause (2). 320.21 (f) For purposes of this subdivision, the terms "activity" 320.22 and "third party" have the meanings given in section 469.1763, 320.23 subdivision 1. 320.24 Sec. 8. Minnesota Statutes 1996, section 469.175, is 320.25 amended by adding a subdivision to read: 320.26 Subd. 9. [DEVELOPER FINANCING; RESTRICTIONS.] (a) The 320.27 provisions of this subdivision apply if the authority enters 320.28 into an agreement or other arrangement with a developer that 320.29 provides for the developer to be paid with increments for costs 320.30 the developer incurs or pays for a project under the tax 320.31 increment financing plan. 320.32 (b) A "developer" means a nongovernmental entity that has 320.33 an ownership interest in or a contract to improve, operate, or 320.34 manage property in the project area. 320.35 (c) The agreement with the developer: 320.36 (1) must be in writing; 321.1 (2) must require that the developer submit written 321.2 documentation that it has paid costs for which increments may be 321.3 spent under sections 469.174 to 469.178 and under the plan for 321.4 the district before reimbursement may be paid; and 321.5 (3) may provide for interest on payments at a reasonable 321.6 rate, not to exceed the authority's cost of borrowing under 321.7 similar terms. 321.8 Sec. 9. Minnesota Statutes 1996, section 469.176, 321.9 subdivision 1b, is amended to read: 321.10 Subd. 1b. [DURATION LIMITS; TERMS.] (a) No tax increment 321.11 shall in any event be paid to the authority 321.12 (1) after 25 years from date of receipt by the authority of 321.13 the first tax increment for a mined underground space 321.14 development district, 321.15 (2) after 15 years after receipt by the authority of the 321.16 first increment for a renewal and renovation district, 321.17 (3) after1220 yearsfrom approval of the tax increment321.18financing planafter receipt by the authority of the first 321.19 increment for a soils condition district, 321.20 (4) after nine years from the date of the receipt, or 11 321.21 years from approval of the tax increment financing plan, 321.22 whichever is less, for an economic development district, 321.23 (5) for a housing district or a redevelopment district, 321.24 after 20 years from the date of receipt by the authority of the 321.25 first tax increment by the authority pursuant to section 321.26 469.175, subdivision 1, paragraph (b); or, if no provision is 321.27 made under section 469.175, subdivision 1, paragraph (b), after 321.28 25 years from the date of receipt by the authority of the first 321.29 increment. 321.30 (b) For purposes of determining a duration limit under this 321.31 subdivision or subdivision 1e that is based on the receipt of an 321.32 increment, any increments from taxes payable in the year in 321.33 which the district terminates shall be paid to the authority. 321.34 This paragraph does not affect a duration limit calculated from 321.35 the date of approval of the tax increment financing plan or 321.36 based on the recovery of costs or to a duration limit under 322.1 subdivision 1c. This paragraph does not supersede the 322.2 restrictions on payment of delinquent taxes in subdivision 1f. 322.3 Sec. 10. Minnesota Statutes 1996, section 469.176, 322.4 subdivision 2, is amended to read: 322.5 Subd. 2. [EXCESS TAX INCREMENTS.] (a) In any year in which 322.6 the tax increment exceeds the amount necessary to pay the costs 322.7 authorized by the tax increment financing plan, including the 322.8 amount necessary to cancel any tax levy as provided in section 322.9 475.61, subdivision 3, the authority shall use the excess amount 322.10 to do any of the following: (1) prepay any outstanding bonds, 322.11 (2) discharge the pledge of tax increment therefor, (3) pay into 322.12 an escrow account dedicated to the payment of such bond, or (4) 322.13 return the excess amount to the county auditor who shall 322.14 distribute the excess amount to the municipality, county, and 322.15 school district in which the tax increment financing district is 322.16 located in direct proportion to their respective local tax 322.17 rates. The county auditor must report to the commissioner of 322.18 children, families, and learning the amount of any excess tax 322.19 increment distributed to a school district within 30 days of the 322.20 distribution. 322.21 (b) Any revenues derived from tax increments from a 322.22 district that are unspent or unencumbered upon decertification 322.23 must be returned to the county auditor as provided in paragraph 322.24 (a), clause (4). "Decertification of a district" means the last 322.25 day of the earlier of (1) the last calendar year in which the 322.26 district is permitted to collect increments under this section, 322.27 or (2) the calendar year in which the authority elects to stop 322.28 collecting increments. "Unencumbered" means the revenues 322.29 derived from tax increments have not been designated to pay for 322.30 goods or services received by the authority or to be received 322.31 under a binding contract. This paragraph does not apply to the 322.32 portion of the increments permitted to be spent outside the 322.33 district under section 469.1763, subdivision 2, if the district 322.34 is subject to that subdivision. 322.35 Sec. 11. Minnesota Statutes 1996, section 469.176, 322.36 subdivision 4c, is amended to read: 323.1 Subd. 4c. [ECONOMIC DEVELOPMENT DISTRICTS.] (a) Revenue 323.2 derived from tax increment from an economic development district 323.3 may not be used to provide improvements, loans, subsidies, 323.4 grants, interest rate subsidies, or assistance in any form to 323.5 developments consisting of buildings and ancillary facilities, 323.6 if more than 15 percent of the buildings and facilities 323.7 (determined on the basis of square footage) are used for a 323.8 purpose other than: 323.9 (1) the manufacturing or production of tangible personal 323.10 property, including processing resulting in the change in 323.11 condition of the property; 323.12 (2) warehousing, storage, and distribution of tangible 323.13 personal property, excluding retail sales; 323.14 (3) research and development related to the activities 323.15 listed in clause (1) or (2); 323.16 (4) telemarketing if that activity is the exclusive use of 323.17 the property; 323.18 (5) tourism facilities; or 323.19 (6) qualified border retail facilities; 323.20 (7) space necessary for and related to the activities 323.21 listed in clauses (1) to(5)(6). 323.22 (b) Notwithstanding the provisions of this subdivision, 323.23 revenue derived from tax increment from an economic development 323.24 district may be used to pay for site preparation and public 323.25 improvements, if the following conditions are met: 323.26 (1) bedrock soils conditions are present in 80 percent or 323.27 more of the acreage of the district; 323.28 (2) the estimated cost of physical preparation of the site 323.29 exceeds the fair market value of the land before completion of 323.30 the preparation; and 323.31 (3) revenues from tax increments are expended only for the 323.32 additional costs of preparing the site because of unstable soils 323.33 and the bedrock soils condition, the additional cost of 323.34 installing public improvements because of unstable soils or the 323.35 bedrock soils condition, and reasonable administrative costs. 323.36 (c)(1) Notwithstanding the provisions of this subdivision, 324.1 revenues derived from tax increment from an economic development 324.2 district may be used to provide improvements, loans, subsidies, 324.3 grants, interest rate subsidies, or assistance in any form for 324.4 up to 15,000 square feet of any separately owned commercial 324.5 facility located within the municipal jurisdiction of a small 324.6 city, if the revenues derived from increments are spent only to 324.7 assist the facility directly or for administrative costs, the 324.8 assistance is necessary to develop the facility, and the 324.9 increments are spent only within the district. 324.10 (2) A city is a small city for purposes of this paragraph 324.11 if the city was a small city in the year in which the request 324.12 for certification was made and applies for the rest of the 324.13 duration of the district, regardless of whether the city 324.14 qualifies or ceases to qualify as a small city. 324.15 (d) For purposes of this subdivision, a qualified border 324.16 retail facility is a development consisting of a shopping center 324.17 or one or more retail stores, if the authority finds that all of 324.18 the following conditions are satisfied: 324.19 (1) the district is in a small city located within one mile 324.20 or less of the border of the state; 324.21 (2) the development is not located in the seven county 324.22 metropolitan area, as defined in section 473.121, subdivision 2; 324.23 (3) the development will contain new buildings or will 324.24 substantially rehabilitate existing buildings that together 324.25 contain at least 25,000 square feet of retail space; and 324.26 (4) without the use of tax increment financing for the 324.27 development, the development or a similar competing development 324.28 will instead occur in the bordering state or province. 324.29 Sec. 12. Minnesota Statutes 1996, section 469.176, 324.30 subdivision 4g, is amended to read: 324.31 Subd. 4g. [GENERAL GOVERNMENT USE PROHIBITED.] (a) These 324.32 revenues shall not be used to circumvent existing levy limit law. 324.33 (b) No revenues derived from tax increment from any 324.34 district, whether certified before or after August 1, 1979, 324.35 shall be used for the acquisition, construction, renovation, 324.36 operation, or maintenance of a building to be used primarily and 325.1 regularly for conducting the business of a municipality, county, 325.2 school district, or any other local unit of government or the 325.3 state or federal government. "Conducting the business of the 325.4 unit of government" includes, but is not limited to, the 325.5 production or sale of goods or the provision of any service the 325.6 unit of government provides in its normal course of operations. 325.7 This provision shall not prohibit the use of revenues derived 325.8 from tax increments for the construction or renovation of a 325.9 parking structure, a commons area used as a public park,ora 325.10 facility used for social, recreational, or conference 325.11 purposesand not primarily for conducting the business of the325.12municipalityor a wastewater treatment facility, water treatment 325.13 facility, or similar facility used in connection with public 325.14 utilities, but only (1) if the construction or renovation is 325.15 necessary to obtain a binding commitment by a third party to 325.16 construct private taxable improvements as part of the 325.17 development or redevelopment and (2) a binding commitment has 325.18 been obtained, in writing, from the third party. The market 325.19 value of the taxable improvements must be substantial in 325.20 relation to the cost of the construction or renovation of the 325.21 public improvements paid with revenues derived from tax 325.22 increments. For purposes of this subdivision, "third party" 325.23 means any person or entity other than the municipality, the 325.24 authority, or other entity substantially under the control of 325.25 the municipality. 325.26(b)(c) If any publicly owned facility used for social, 325.27 recreational, or conference purposes and financed in whole or in 325.28 part from revenues derived from a district is operated or 325.29 managed by an entity other than the authority, the operating and 325.30 management policies of the facility must be approved by the 325.31 governing body of the authority. 325.32 Sec. 13. Minnesota Statutes 1996, section 469.176, 325.33 subdivision 4j, is amended to read: 325.34 Subd. 4j. [REDEVELOPMENT DISTRICTS.] (a) At least 90 325.35 percent of the revenues derived from tax increments from a 325.36 redevelopment district or renewal and renovation district must 326.1 be used to finance the cost of correcting conditions that allow 326.2 designation of redevelopment and renewal and renovation 326.3 districts under section 469.174. 326.4 (b) These costs include and are limited to: 326.5 (1) acquiring properties containing structurally 326.6 substandard buildings or improvements,or properties described 326.7 in section 469.174, subdivision 10, paragraph (a), clause (2); 326.8 (2) acquiring adjacent parcels necessary to provide a site 326.9 of sufficient size to permit development,of the parcels 326.10 containing substandard structures or properties described in 326.11 section 469.174, subdivision 10, paragraph (a), clause (2); 326.12 (3) demolition of structures,including any required 326.13 relocation costs; 326.14 (4) clearing of the land,and other site preparation; 326.15 (5) repair or rehabilitation of substandard buildings and 326.16 improvements where necessary to eliminate unhealthful, 326.17 unsanitary, or unsafe conditions or to remove or prevent the 326.18 spread of blight; 326.19 (6) removal or remediation of hazardous substance; and 326.20 (7) installation of utilities, roads, sidewalks, and 326.21 parking facilities for the site. 326.22 (c) All costs must relate directly to financing 326.23 redevelopment of the parcels containing substandard structures 326.24 or property described in section 469.174, subdivision 10, 326.25 paragraph (a), clause (2). 326.26 (d) The allocated administrative expenses of the authority, 326.27 costs required under section 469.175, subdivision 1a, for the 326.28 district, and expenses under section 469.175, subdivision 7, 326.29 paragraphs (f) and (g), for the district may be included in the 326.30 qualifying costs. 326.31 Sec. 14. Minnesota Statutes 1996, section 469.176, 326.32 subdivision 6, is amended to read: 326.33 Subd. 6. [ACTION REQUIRED.] If, afterfourthree years 326.34 from the date of certification of the original net tax capacity 326.35 of the tax increment financing district pursuant to section 326.36 469.177, no demolition, rehabilitation, or renovation of 327.1 property or other site preparation, including qualified 327.2 improvement of a street adjacent to a parcel but not 327.3 installation of utility service including sewer or water 327.4 systems, has been commenced on a parcel located within a tax 327.5 increment financing district by the authority or by the owner of 327.6 the parcel in accordance with the tax increment financing plan, 327.7 no additional tax increment may be taken from that parcel, and 327.8 the original net tax capacity of that parcel shall be excluded 327.9 from the original net tax capacity of the tax increment 327.10 financing district. If the authority or the owner of the parcel 327.11 subsequently commences demolition, rehabilitation, or renovation 327.12 or other site preparation on that parcel including qualified 327.13 improvement of a street adjacent to that parcel, in accordance 327.14 with the tax increment financing plan, the authority shall 327.15 certify to the county auditor that the activity has commenced, 327.16 and the county auditor shall certify the net tax capacity 327.17 thereof as most recently certified by the commissioner of 327.18 revenue and add it to the original net tax capacity of the tax 327.19 increment financing district. The county auditor must enforce 327.20 the provisions of this subdivision. The authority must submit 327.21 to the county auditor evidence that the required activity has 327.22 taken place for each parcel in the district. The evidence for a 327.23 parcel must be submitted by February 1 of thefifthfourth year 327.24 following the year in which the parcel was certified as included 327.25 in the district. For purposes of this subdivision, qualified 327.26 improvements of a street are limited to (1) construction or 327.27 opening of a new street, (2) relocation of a street, and (3) 327.28 substantial reconstruction or rebuilding of an existing street. 327.29 For purposes of this subdivision, a public improvement is only 327.30 made in accordance with the tax increment financing plan, if it 327.31 was specifically included in the plan before the improvement was 327.32 undertaken or if at least 20 percent of the cost of the 327.33 improvement was financed by increment from the district or 327.34 obligations secured by increment from the district. 327.35 Sec. 15. Minnesota Statutes 1996, section 469.177, 327.36 subdivision 1, is amended to read: 328.1 Subdivision 1. [ORIGINAL NET TAX CAPACITY.] (a) Upon or 328.2 after adoption of a tax increment financing plan, the auditor of 328.3 any county in which the district is situated shall, upon request 328.4 of the authority, certify the original net tax capacity of the 328.5 tax increment financing district and that portion of the 328.6 district overlying any subdistrict as described in the tax 328.7 increment financing plan and shall certify in each year 328.8 thereafter the amount by which the original net tax capacity has 328.9 increased or decreased as a result of a change in tax exempt 328.10 status of property within the district and any subdistrict, 328.11 reduction or enlargement of the district or changes pursuant to 328.12 subdivision 4. 328.13 (b) In the case of a mined underground space development 328.14 district the county auditor shall certify the original net tax 328.15 capacity as zero, plus the net tax capacity, if any, previously 328.16 assigned to any subsurface area included in the mined 328.17 underground space development district pursuant to section 328.18 272.04. 328.19 (c) For districts approved under section 469.175, 328.20 subdivision 3, or parcels added to existing districts after May 328.21 1, 1988, if the classification under section 273.13 of property 328.22 located in a district changes to a classification that has a 328.23 different assessment ratio, the original net tax capacity of 328.24 that property must be redetermined at the time when its use is 328.25 changed as if the property had originally been classified in the 328.26 same class in which it is classified after its use is changed. 328.27 (d) The amount to be added to the original net tax capacity 328.28 of the district as a result of previously tax exempt real 328.29 property within the district becoming taxable equals the net tax 328.30 capacity of the real property as most recently assessed pursuant 328.31 to section 273.18 or, if that assessment was made more than one 328.32 year prior to the date of title transfer rendering the property 328.33 taxable, the net tax capacity assessed by the assessor at the 328.34 time of the transfer. If substantial taxable improvements were 328.35 made to a parcel after certification of the district and if the 328.36 property later becomes tax exempt, in whole or part, as a result 329.1 of the authority acquiring the property through foreclosure or 329.2 exercise of remedies under a lease or other revenue agreement or 329.3 as a result of tax forfeiture, the amount to be added to the 329.4 original net tax capacity of the district as a result of the 329.5 property again becoming taxable is the amount of the parcel's 329.6 value that was included in original net tax capacity when the 329.7 parcel was first certified. The amount to be added to the 329.8 original net tax capacity of the district as a result of 329.9 enlargements equals the net tax capacity of the added real 329.10 property as most recently certified by the commissioner of 329.11 revenue as of the date of modification of the tax increment 329.12 financing plan pursuant to section 469.175, subdivision 4. 329.13 (e) For districts approved under section 469.175, 329.14 subdivision 3, or parcels added to existing districts after May 329.15 1, 1988, if the net tax capacity of a property increases because 329.16 the property no longer qualifies under the Minnesota 329.17 agricultural property tax law, section 273.111; the Minnesota 329.18 open space property tax law, section 273.112; or the 329.19 metropolitan agricultural preserves act, chapter 473H, or 329.20 because platted, unimproved property is improved or three years 329.21 pass after approval of the plat under section 273.11, 329.22 subdivision 1, the increase in net tax capacity must be added to 329.23 the original net tax capacity. 329.24 (f) Each year the auditor shall also add to the original 329.25 net tax capacity of each economic development district an amount 329.26 equal to the original net tax capacity for the preceding year 329.27 multiplied by the average percentage increase in the market 329.28 value of all property included in the economic development 329.29 district during the five years prior to certification of the 329.30 district. In computing the average percentage increase in 329.31 market value, the auditor shall exclude the market value, as 329.32 estimated by the assessor, that is attributable to new 329.33 construction; extension of sewer, water, roads, or other public 329.34 utilities; or platting of the land. 329.35 (g) The amount to be subtracted from the original net tax 329.36 capacity of the district as a result of previously taxable real 330.1 property within the district becoming tax exempt, or a reduction 330.2 in the geographic area of the district, shall be the amount of 330.3 original net tax capacity initially attributed to the property 330.4 becoming tax exempt or being removed from the district. If the 330.5 net tax capacity of property located within the tax increment 330.6 financing district is reduced by reason of a court-ordered 330.7 abatement, stipulation agreement, voluntary abatement made by 330.8 the assessor or auditor or by order of the commissioner of 330.9 revenue, the reduction shall be applied to the original net tax 330.10 capacity of the district when the property upon which the 330.11 abatement is made has not been improved since the date of 330.12 certification of the district and to the captured net tax 330.13 capacity of the district in each year thereafter when the 330.14 abatement relates to improvements made after the date of 330.15 certification. The county auditor may specify reasonable form 330.16 and content of the request for certification of the authority 330.17 and any modification thereof pursuant to section 469.175, 330.18 subdivision 4. 330.19 (h) If a parcel of property contained a substandard 330.20 building that was demolished or removed and if the authority 330.21 elects to treat the parcel as occupied by a substandard building 330.22 under section 469.174, subdivision 10, paragraph (b), the 330.23 auditor shall certify the original net tax capacity of the 330.24 parcel using the greater of (1) the current net tax capacity of 330.25 the parcel, or (2) the estimated market value of the parcel for 330.26 the year in which the building was demolished or removed, but 330.27 applying the class rates for the current year. 330.28 Sec. 16. Minnesota Statutes 1996, section 469.177, 330.29 subdivision 3, is amended to read: 330.30 Subd. 3. [TAX INCREMENT, RELATIONSHIP TO CHAPTERS 276A AND 330.31 473F.] (a)UnlessThe governing bodyelects pursuant to clause330.32(b)may, by resolution approving the tax increment financing 330.33 plan under section 469.175, subdivision 3, for a redevelopment 330.34 district, elect that the following method of computationshall330.35applyapplies: 330.36 (1) The original net tax capacity and the current net tax 331.1 capacity shall be determined before the application of the 331.2 fiscal disparity provisions of chapter 276A or 473F. Where the 331.3 original net tax capacity is equal to or greater than the 331.4 current net tax capacity, there is no captured net tax capacity 331.5 and no tax increment determination. Where the original net tax 331.6 capacity is less than the current net tax capacity, the 331.7 difference between the original net tax capacity and the current 331.8 net tax capacity is the captured net tax capacity. This amount 331.9 less any portion thereof which the authority has designated, in 331.10 its tax increment financing plan, to share with the local taxing 331.11 districts is the retained captured net tax capacity of the 331.12 authority. 331.13 (2) The county auditor shall exclude the retained captured 331.14 net tax capacity of the authority from the net tax capacity of 331.15 the local taxing districts in determining local taxing district 331.16 tax rates. The local tax rates so determined are to be extended 331.17 against the retained captured net tax capacity of the authority 331.18 as well as the net tax capacity of the local taxing districts. 331.19 The tax generated by the extension of the lesser of (A) the 331.20 local taxing district tax rates or (B) the original local tax 331.21 rate to the retained captured net tax capacity of the authority 331.22 is the tax increment of the authority. 331.23 (b)The governing body may, by resolution approving the tax331.24increment financing plan pursuant to section 469.175,331.25subdivision 3, electIf no election has been made under 331.26 paragraph (a), the following method of computation applies to 331.27 determine the amount of tax increment: 331.28 (1) The original net tax capacity shall be determined 331.29 before the application of the fiscal disparity provisions of 331.30 chapter 276A or 473F. The current net tax capacity shall 331.31 exclude any fiscal disparity commercial-industrial net tax 331.32 capacity increase between the original year and the current year 331.33 multiplied by the fiscal disparity ratio determined pursuant to 331.34 section 276A.06, subdivision 7, or 473F.08, subdivision 6. 331.35 Where the original net tax capacity is equal to or greater than 331.36 the current net tax capacity, there is no captured net tax 332.1 capacity and no tax increment determination. Where the original 332.2 net tax capacity is less than the current net tax capacity, the 332.3 difference between the original net tax capacity and the current 332.4 net tax capacity is the captured net tax capacity. This amount 332.5 less any portion thereof which the authority has designated, in 332.6 its tax increment financing plan, to share with the local taxing 332.7 districts is the retained captured net tax capacity of the 332.8 authority. 332.9 (2) The county auditor shall exclude the retained captured 332.10 net tax capacity of the authority from the net tax capacity of 332.11 the local taxing districts in determining local taxing district 332.12 tax rates. The local tax rates so determined are to be extended 332.13 against the retained captured net tax capacity of the authority 332.14 as well as the net tax capacity of the local taxing districts. 332.15 The tax generated by the extension of the lesser of (A) the 332.16 local taxing district tax rates or (B) the original local tax 332.17 rate to the retained captured net tax capacity of the authority 332.18 is the tax increment of the authority. 332.19 (3) An election by the governing body pursuant to paragraph 332.20(b)(a) shall be submitted to the county auditor by the 332.21 authority at the time of the request for certification pursuant 332.22 to subdivision 1. 332.23 (c) The method of computation of tax increment applied to a 332.24 district pursuant to paragraph (a) or (b) shall remain the same 332.25 for the duration of the district, except that the governing body 332.26 may elect to change its election from the method of computation 332.27 in paragraph (a) to the method in paragraph (b). 332.28 Sec. 17. Minnesota Statutes 1996, section 469.177, 332.29 subdivision 4, is amended to read: 332.30 Subd. 4. [PRIOR PLANNED IMPROVEMENTS.] The authority 332.31 shall, after diligent search, accompany its request for 332.32 certification to the county auditor pursuant to subdivision 1, 332.33 or its notice of district enlargement pursuant to section 332.34 469.175, subdivision 4, with a listing of all properties within 332.35 the tax increment financing district or area of enlargement for 332.36 which building permits have been issued during the 18 months 333.1 immediately preceding approval of the tax increment financing 333.2 plan by the municipality pursuant to section 469.175, 333.3 subdivision 3. The county auditor shall increase the original 333.4 net tax capacity of the district by the net tax capacity of each 333.5 improvement for which a building permit was issued. For 333.6 purposes of this subdivision, the term "building permit" means 333.7 any permit issued by municipality or another political 333.8 subdivision as a final condition for construction of an 333.9 improvement to real property. 333.10 Sec. 18. [BUFFALO LAKE.] 333.11 Subdivision 1. [EXTENSION OF TIME FOR CERTIFICATION.] 333.12 Notwithstanding the provisions of Minnesota Statutes, section 333.13 273.1399, subdivision 6, paragraph (b), clause (2), tax 333.14 increment financing district No. 1-1 in the city of Buffalo Lake 333.15 is an exempt district under Minnesota Statutes, section 333.16 273.1399, paragraph (b), if the facility is certified by the 333.17 commissioner of agriculture by December 31, 1998. 333.18 Subd. 2. [EFFECTIVE DATE.] This section is effective upon 333.19 approval by the governing body of the city of Buffalo Lake under 333.20 Minnesota Statutes, section 645.021, subdivision 2. 333.21 Sec. 19. [EAST GRAND FORKS] 333.22 Subdivision 1. [TIF EXTENSION.] The governing body of the 333.23 city of East Grand Forks may extend the duration of tax 333.24 increment financing district No. 2 (Gateway East) by up to 12 333.25 additional years. The district terminates no later than the end 333.26 of calendar year 2012. 333.27 Subd. 2. [EFFECTIVE DATE.] This section is effective upon 333.28 compliance by the governing body of the city of East Grand Forks 333.29 with the provisions of Minnesota Statutes, sections 469.1782, 333.30 subdivision 2; and 645.021. 333.31 Sec. 20. [COON RAPIDS; ECONOMIC DEVELOPMENT.] 333.32 Subdivision 1. [AUTHORIZATION.] Notwithstanding the 333.33 provisions of Minnesota Statutes, section 469.176, subdivision 333.34 1b, upon approval of the governing body of the city of Coon 333.35 Rapids by resolution, the duration of the tax increment 333.36 financing districts of the Coon Rapids economic development 334.1 authority designated 2-1, 2-2, and 2-3 may be extended to 334.2 December 31, 2010. 334.3 Subd. 2. [SPECIAL RULES.] (a) The tax increment financing 334.4 districts of the Coon Rapids economic development authority 334.5 designated 2-1, 2-2, and 2-3 are subject to Minnesota Statutes, 334.6 sections 469.174 to 469.178, except as provided in this 334.7 subdivision. 334.8 (b) Tax increment revenues derived from the districts may 334.9 only be applied to the payment of project costs described in the 334.10 tax increment plans for the tax increment financing districts on 334.11 the date of final enactment of this section and to the payment 334.12 of the costs incurred with respect to the reconstruction and 334.13 upgrading of the existing state and county bridges and roadways 334.14 within the project area of the districts. 334.15 (c) Notwithstanding Minnesota Statutes, section 469.176, 334.16 subdivision 1, tax increment revenue generated from each 334.17 district may be paid to the authority until the earlier of (1) 334.18 December 31, 2010; or (2) the date upon which all bonded 334.19 indebtedness or contractual obligations of the authority 334.20 relating to the districts have terminated. 334.21 Subd. 3. [EFFECTIVE DATE.] This section is effective upon 334.22 compliance by the governing bodies of the city of Coon Rapids, 334.23 the county of Anoka, and independent school district No. 11, 334.24 Anoka-Hennepin, with Minnesota Statutes, section 645.021, 334.25 subdivision 2. 334.26 Sec. 21. [GAYLORD.] 334.27 Subdivision 1. [TIF DISTRICT EXTENSION AND EXPANSION.] 334.28 Notwithstanding the provisions of Minnesota Statutes, section 334.29 469.176, subdivision 1c, the city of Gaylord may, by resolution, 334.30 extend the duration of a tax increment financing district 334.31 originally certified in 1978. The city may not extend the 334.32 duration beyond December 31, 2008. 334.33 Subd. 2. [EFFECTIVE DATE.] This section is effective upon 334.34 compliance with the requirements of Minnesota Statutes, sections 334.35 469.1782 and 645.021. 334.36 Sec. 22. [BROOKLYN CENTER.] 335.1 Subdivision 1. [USE OF TAX INCREMENT FINANCING.] Tax 335.2 increment financing district No. 3, established on December 19, 335.3 1994, by Brooklyn Center Resolution No. 94-273, which includes 335.4 the Brookdale regional shopping center, is exempt from Minnesota 335.5 Statutes, section 469.1763, subdivision 3, until December 19, 335.6 2004. 335.7 Subd. 2. [EFFECTIVE DATE.] This section is effective upon 335.8 compliance by the city council of Brooklyn Center with the 335.9 requirements of Minnesota Statutes, section 645.021. 335.10 Sec. 23. [ECONOMIC DEVELOPMENT TIF DISTRICT; DOUGLAS 335.11 COUNTY.] 335.12 Subdivision 1. [AUTHORIZATION.] The Douglas county housing 335.13 and redevelopment authority or the Brandon economic development 335.14 authority may establish a tax increment financing district for a 335.15 tourism facility including a theme park, amusement park, 335.16 cultural facilities, recreational facilities, lodging 335.17 facilities, retail facilities, and associated commercial 335.18 development. 335.19 Subd. 2. [SPECIAL RULES.] (a) The tax increment financing 335.20 district is subject to Minnesota Statutes, sections 469.174 to 335.21 469.179, with the exceptions listed in this subdivision. 335.22 (b) The tax increment financing district may encompass up 335.23 to 360 acres and all taxable improvements within the district 335.24 are deemed a tourism facility and qualified as an economic 335.25 development district for purposes of Minnesota Statutes, 335.26 sections 469.174, subdivisions 12 and 22; and 469.176, 335.27 subdivision 4c. 335.28 (c) Minnesota Statutes, section 469.1763, subdivision 3, 335.29 does not apply to the tax increment financing district. 335.30 (d) Notwithstanding Minnesota Statutes, section 469.176, 335.31 subdivision 1b, the maximum duration of the tax increment 335.32 financing district is 20 years from the receipt of the first tax 335.33 increment financing district. The authority must decertify the 335.34 district after all the costs of the public improvements 335.35 identified in the increment financing plan have been paid. 335.36 Subd. 3. [EFFECTIVE DATE.] This section is effective upon 336.1 approval of the original tax increment financing plan for the 336.2 tax increment financing district by the affected school board, 336.3 county board, and township board or city council and upon 336.4 approval of the governing body of the authority under Minnesota 336.5 Statutes, section 645.021, subdivision 2. 336.6 Sec. 24. [CITY OF MINNETONKA; HOUSING DEVELOPMENT 336.7 ACCOUNT.] 336.8 Subdivision 1. [DEPOSITS IN ACCOUNT.] The Minnetonka 336.9 economic development authority may deposit the balance of 336.10 revenues derived from tax increment from housing tax increment 336.11 financing district No. 1 in the housing development account of 336.12 the authority. These increments may be expended for housing 336.13 activities in accordance with the tax increment financing plan, 336.14 if before depositing the increments or making any expenditures 336.15 for housing activities under this section, the authority and 336.16 city: 336.17 (1) elect, by resolution, to decertify housing tax 336.18 increment financing district No. 1 as of December 31, 1997; and 336.19 (2) identify in the plan the housing activities that will 336.20 be assisted by the housing development account. 336.21 The election to decertify and any necessary plan amendment 336.22 may be approved before or after the effective date of this 336.23 section. 336.24 Subd. 2. [PERMITTED HOUSING ACTIVITIES.] For the purposes 336.25 of this section, housing activities: 336.26 (1) may include rehabilitation, acquisition, demolition, 336.27 and financing of new or existing single family or multifamily 336.28 housing and public improvements directly related to such 336.29 activities, together with other related activities specified in 336.30 the housing action plan approved by the city or the authority in 336.31 compliance with Minnesota Statutes, sections 473.25 to 473.254; 336.32 (2) may be located anywhere within the city without regard 336.33 to the boundaries of any tax increment financing district or 336.34 project area; and 336.35 (3) for rental and owner-occupied housing, must meet the 336.36 income, rent, or sales price limitations established from time 337.1 to time by the metropolitan council under Minnesota Statutes, 337.2 sections 473.25 to 473.254. 337.3 Subd. 3. [SEPARATE ACCOUNT REQUIRED.] Tax increment to be 337.4 expended for housing activities under this section must be 337.5 segregated by the authority into a special housing development 337.6 account on its official books and records. The account may also 337.7 receive funds from other public and private sources. 337.8 Subd. 4. [EFFECTIVE DATE.] This section is effective upon 337.9 approval by the governing body of the city of Minnetonka under 337.10 Minnesota Statutes, section 645.021, subdivision 2. 337.11 Sec. 25. Laws 1995, chapter 264, article 5, section 44, 337.12 subdivision 4, as amended by Laws 1996, chapter 471, article 7, 337.13 section 21, is amended to read: 337.14 Subd. 4. [AUTHORITY.] For housing replacement projects in 337.15 the city of Crystal, "authority" means the Crystal economic 337.16 development authority. For housing replacement projects in the 337.17 city of Fridley, "authority" means the housing and redevelopment 337.18 authority in and for the city of Fridley or a successor in 337.19 interest. For housing replacement projects in the city of 337.20 Minneapolis, "authority" means the Minneapolis community 337.21 development agency. For housing replacement projects in the 337.22 city of St. Paul, "authority" means the St. Paul housing and 337.23 redevelopment authority. For housing replacement projects in 337.24 the city of Duluth, "authority" means the Duluth economic 337.25 development authority. For housing replacement projects in the 337.26 city of Richfield, "authority" is the authority as defined in 337.27 Minnesota Statutes, section 469.174, subdivision 2, that is 337.28 designated by the governing body of the city of Richfield. For 337.29 housing replacement projects in the city of Columbia Heights, 337.30 "authority" is the authority as defined in Minnesota Statutes, 337.31 section 469.174, subdivision 2, that is designated by the 337.32 governing body of the city of Columbia Heights. 337.33 Sec. 26. Laws 1995, chapter 264, article 5, section 45, 337.34 subdivision 1, as amended by Laws 1996, chapter 471, article 7, 337.35 section 22, is amended to read: 337.36 Subdivision 1. [CREATION OF PROJECTS.] (a) An authority 338.1 may create a housing replacement project under sections 44 to 338.2 47, as provided in this section. 338.3 (b) For the cities of Crystal, Fridley,andRichfield, and 338.4 Columbia Heights, the authority may designate up to 50 parcels 338.5 in the city to be included in a housing replacement district. 338.6 No more than ten parcels may be included in year one of the 338.7 district, with up to ten additional parcels added to the 338.8 district in each of the following nine years. For the cities of 338.9 Minneapolis, St. Paul, and Duluth, each authority may designate 338.10 up to 100 parcels in the city to be included in a housing 338.11 replacement district over the life of the district. The only 338.12 parcels that may be included in a district are (1) vacant sites, 338.13 (2) parcels containing vacant houses, or (3) parcels containing 338.14 houses that are structurally substandard, as defined in 338.15 Minnesota Statutes, section 469.174, subdivision 10. 338.16 (c) The city in which the authority is located must pay at 338.17 least 25 percent of the housing replacement project costs from 338.18 its general fund, a property tax levy, or other unrestricted 338.19 money, not including tax increments. 338.20 (d) The housing replacement district plan must have as its 338.21 sole object the acquisition of parcels for the purpose of 338.22 preparing the site to be sold for market rate housing. As used 338.23 in this section, "market rate housing" means housing that has a 338.24 market value that does not exceed 150 percent of the average 338.25 market value of single-family housing in that municipality. 338.26 Sec. 27. [DEFINITIONS.] 338.27 Subdivision 1. [AUTHORITY.] "Authority" or "authorities" 338.28 means the Minneapolis public housing authority and the 338.29 Minneapolis community development agency if and to the extent 338.30 that the governing body has delegated to either the powers and 338.31 duties hereunder pursuant to section 28, subdivision 4, 338.32 paragraph (b). 338.33 Subd. 2. [CAPTURED NET TAX CAPACITY.] "Captured net tax 338.34 capacity" means the amount by which the current net tax capacity 338.35 of the housing transition district exceeds the original net tax 338.36 capacity, including the value of property normally taxable as 339.1 personal property by reason of its location on or over property 339.2 owned by a tax exempt entity. 339.3 Subd. 3. [CITY.] "City" means the city of Minneapolis, 339.4 Minnesota. 339.5 Subd. 4. [CONSENT DECREE.] "Consent decree" means the 339.6 order of the United States District Court issued in connection 339.7 with Hollman et. al. vs. Cisneros et. al., United States 339.8 District Court, Civil Case 4-92-712, as may be amended from time 339.9 to time. 339.10 Subd. 5. [COUNTY AUDITOR.] "County auditor" means the 339.11 county auditor of Hennepin county, Minnesota. 339.12 Subd. 6. [GOVERNING BODY.] "Governing body" means the city 339.13 council of the city. 339.14 Subd. 7. [HOUSING TRANSITION DISTRICT; DISTRICT.] "Housing 339.15 transition district" or "district" means a geographic area 339.16 within the city designated by the governing body that consists 339.17 of (1) parcels that contain or contained public housing 339.18 structures scheduled for demolition or demolished in accordance 339.19 with the terms of the consent decree and (2) additional parcels 339.20 not to exceed ten percent of the size of the area under clause 339.21 (1). 339.22 Subd. 8. [NONTAXABLE PARCEL.] "Nontaxable parcel" means a 339.23 parcel to be included within the housing transition district 339.24 which at the time of certification is not subject to property 339.25 taxation by reason of public ownership. 339.26 Subd. 9. [ORIGINAL NET TAX CAPACITY.] (a) With respect to 339.27 nontaxable parcels within the district, "original net tax 339.28 capacity" means zero. 339.29 (b) With respect to taxable parcels within the district, 339.30 "original net tax capacity" means the net tax capacity of the 339.31 parcels as certified by the commissioner of revenue for the 339.32 appropriate assessment year. For purposes of this subdivision, 339.33 the appropriate assessment year is the previous assessment year, 339.34 if a request by the authority for certification has been made to 339.35 the county auditor by June 30. If the request for certification 339.36 is filed after June 30, the appropriate assessment year is the 340.1 current assessment year. 340.2 Subd. 10. [PARCEL.] "Parcel" means a tract or plat of land 340.3 established prior to the certification of the district as a 340.4 single unit for purposes of assessment. 340.5 Subd. 11. [PREEXISTING DISTRICT.] "Preexisting district" 340.6 means any tax increment district within which is located a 340.7 parcel proposed to be included within the housing transition 340.8 district. 340.9 Subd. 12. [TAXABLE PARCEL.] "Taxable parcel" means a 340.10 parcel to be included within the housing transition district 340.11 which is subject to property taxation at the time of 340.12 certification. 340.13 Sec. 28. [ESTABLISHMENT OF HOUSING TRANSITION DISTRICT.] 340.14 Subdivision 1. [CREATION.] The governing body may 340.15 establish a housing transition district within the city. The 340.16 parcels included within the district need not be contiguous but 340.17 must all be designated and included at the time the district is 340.18 initially established. Parcels must not be added to the 340.19 district after its initial certification. 340.20 Subd. 2. [TAX INCREMENT.] (a) Upon request of the 340.21 authority, the county auditor shall certify the original net tax 340.22 capacity of the district and shall certify in each year 340.23 thereafter the amount by which the original net tax capacity 340.24 increases as a result of the conditions described in Minnesota 340.25 Statutes, section 469.177, subdivision 4, or decreases as a 340.26 result of the conditions described in Minnesota Statutes, 340.27 section 469.177, subdivision 1, paragraph (g). No other changes 340.28 shall be made in original net tax capacity once certified by the 340.29 county auditor. 340.30 (b) The provisions of Minnesota Statutes, section 469.177, 340.31 subdivisions 1a and 3 to 10, apply to the computation of tax 340.32 increment for the housing transition district created under 340.33 sections 27 to 29. 340.34 (c) If an authority request for certification includes 340.35 nontaxable parcels then within a preexisting district, the 340.36 county auditor shall remove such parcels from the preexisting 341.1 district. If an authority request for certification includes 341.2 taxable parcels then within a preexisting district, the county 341.3 auditor shall allocate all taxes derived from the captured net 341.4 tax capacity attributable thereto to the preexisting district. 341.5 Subd. 3. [HOUSING TRANSITION DISTRICT PLAN.] To establish 341.6 a housing transition district, the governing body shall adopt a 341.7 housing transition district plan which constitutes a tax 341.8 increment financing plan, as used in those provisions of 341.9 Minnesota Statutes, sections 469.174 to 469.1781, made 341.10 applicable by sections 27 to 30, and contains the following: 341.11 (1) a general description of the plans for development of 341.12 the district; 341.13 (2) a description of the parcels to be included in the 341.14 district, including such information regarding each as shall 341.15 establish that the district meets the conditions described in 341.16 section 27, subdivision 7; 341.17 (3) the most recent net tax capacity of each parcel 341.18 included in the district; 341.19 (4) a budget containing estimated tax increment collections 341.20 and expenditures as authorized or permitted by sections 27 to 341.21 29; 341.22 (5) estimates of the sources of revenue, public and 341.23 private, other than tax increment to pay estimated or budgeted 341.24 costs; 341.25 (6) statements of the alternate estimated impacts of the 341.26 housing transition district on the net tax capacities of all 341.27 taxing jurisdictions in which the housing transition district is 341.28 located in whole or in part. For purposes of one statement, the 341.29 statement shall assume that the estimated captured net tax 341.30 capacity would be available to the taxing jurisdictions without 341.31 creation of the housing transition district, and for purposes of 341.32 the second statement, it shall be assumed that none of the 341.33 estimated captured net tax capacity would be available to the 341.34 taxing jurisdictions without creation of the housing transition 341.35 district. 341.36 Subd. 4. [PROCEDURE.] (a) The provisions of Minnesota 342.1 Statutes, section 469.175, subdivisions 3, 5, 6, and 6a, apply 342.2 to the establishment and operation of the housing transition 342.3 district created under sections 27 to 29, except the 342.4 determinations required by Minnesota Statutes, section 469.175, 342.5 subdivision 3, clauses (1) and (2), are not required. 342.6 (b) Upon approval of the housing transition district plan, 342.7 the governing body shall delegate to one or both of the 342.8 authorities the powers and duties regarding the implementation 342.9 and administration of the housing transition district it 342.10 determines appropriate. 342.11 Sec. 29. [LIMITATIONS.] 342.12 Subdivision 1. [DURATION.] Tax increment generated by the 342.13 district must cease to be paid to the authority after 20 years 342.14 from the receipt by the authority of the first tax increment 342.15 from the district. 342.16 Subd. 2. [USE.] (a) All tax increment received by the 342.17 authority from the district must be used in accordance with the 342.18 housing transition district plan. 342.19 (b) Tax increment may be used to pay the costs of: 342.20 (1) acquiring title to or an ownership interest in any 342.21 property within the district; 342.22 (2) relocating owners of or tenants in any property within 342.23 the district; 342.24 (3) demolishing all or a part of any structures or other 342.25 improvements within the district; 342.26 (4) site preparation, soil correction, and infrastructure 342.27 improvements within the district; 342.28 (5) rehabilitating or constructing any housing structures 342.29 or other improvements within the district; 342.30 (6) constructing public improvements associated with 342.31 development within the district; 342.32 (7) making loans or grants to public or private entities in 342.33 order to facilitate development within the district; and 342.34 (8) administering the creation and operation of the 342.35 district or the implementation of the consent decree, including 342.36 reimbursement for costs previously incurred or advanced and not 343.1 reimbursed. 343.2 (c) The authority may pay the costs authorized by this 343.3 subdivision, directly, through the issuance and sale of 343.4 obligations pursuant to Minnesota Statutes, section 469.178, by 343.5 means of loans or grants to the current or future owners of 343.6 property within the district, or through the exercise of any 343.7 authority contained in Minnesota Statutes, sections 469.001 to 343.8 469.047. 343.9 (d) Minnesota Statutes, section 469.176, subdivision 4g, 343.10 applies to the district. Minnesota Statutes, section 469.176, 343.11 subdivision 3, applies to the district, except "15" is 343.12 substituted for "ten" in paragraph (a) of subdivision 3. 343.13 Sec. 30. [APPLICABILITY OF OTHER LAWS.] 343.14 Minnesota Statutes, sections 469.174 to 469.179, apply to 343.15 the housing transition district or tax increment generated 343.16 pursuant to sections 27 to 29 only to the extent specified in 343.17 sections 27 to 29. The housing transition district does not 343.18 have a longer duration than permitted by general law for 343.19 purposes of Minnesota Statutes, section 469.1782. 343.20 Sec. 31. [REPEALER.] 343.21 Minnesota Statutes, section 469.176, subdivision 1a and 5, 343.22 are repealed. 343.23 Sec. 32. [EFFECTIVE DATE.] 343.24 Sections 1, 2, 4, 5, 6, 9, 11, 14, 15, and 17 and section 343.25 31's repeal of Minnesota Statutes, section 469.176, subdivision 343.26 1a, are effective for districts for which the requests for 343.27 certification are made after June 1, 1997. 343.28 Section 3 and section 31's repeal of Minnesota Statutes, 343.29 section 469.176, subdivision 5, are effective for districts for 343.30 which the request for certification was made after July 31, 343.31 1979, and section 3 is intended to confirm the intent of the 343.32 original law, except that the provisions of clauses (2) and (3) 343.33 apply only to proceeds from sales and leases of properties 343.34 purchased by the authority after June 1, 1997, and repayments of 343.35 advances and loans that were made after June 1, 1997. 343.36 Sections 7 and 12 are effective for spending of tax 344.1 increments finally approved after June 1, 1997. 344.2 Section 8 is effective for agreements entered into after 344.3 June 1, 1997. 344.4 Section 10 is effective for tax increment financing 344.5 districts that are decertified after June 1, 1997. 344.6 Section 13 is effective for tax increment financing 344.7 districts for which the request for certification was made after 344.8 October 4, 1989, and is intended to confirm the intent of the 344.9 original law. 344.10 Section 16 is effective for districts for which the 344.11 requests for certifications are made after August 1, 1997. 344.12 Sections 25 and 26 are effective on the day the chief 344.13 clerical officer of the city of Columbia Heights complies with 344.14 Minnesota Statutes, sections 645.021, subdivision 3. 344.15 Sections 27 to 30 are effective on the day following final 344.16 enactment and upon compliance by the governing body with 344.17 Minnesota Statutes, section 645.021, subdivision 3. 344.18 ARTICLE 14 344.19 INTERGOVERNMENTAL RELATIONS 344.20 Section 1. [3.986] [DEFINITIONS.] 344.21 Subdivision 1. [SCOPE.] The terms used in sections 3.986 344.22 to 3.989 have the meanings given them in this section. 344.23 Subd. 2. [COSTS MANDATED BY THE STATE.] (a) "Costs 344.24 mandated by the state" means increased costs that a political 344.25 subdivision is required to incur as a result of a law enacted or 344.26 an executive order issued after June 30, 1997: 344.27 (1) a law that mandates a new program or an increased level 344.28 of service of an existing program; 344.29 (2) an executive order that mandates a new program; 344.30 (3) an executive order that implements or interprets a 344.31 state law and, by its implementation or interpretation, 344.32 increases program levels above the levels required before July 344.33 1, 1997; 344.34 (4) a law or executive order that implements or interprets 344.35 federal law and, by its implementation or interpretation, 344.36 increases program or service levels above the levels required by 345.1 the federal law; 345.2 (5) a law or executive order that implements or interprets 345.3 a statute or amendment adopted or enacted pursuant to the 345.4 approval of a statewide ballot measure by the voters and, by its 345.5 implementation or interpretation, increases program or service 345.6 levels above the levels required by the ballot measure; 345.7 (6) a law or executive order that removes an option 345.8 previously available to political subdivisions and thus 345.9 increases program or service levels or prohibits a specific 345.10 activity and so forces political subdivisions to use a more 345.11 costly alternative to provide a mandated program or service; 345.12 (7) a law or executive order that requires that an existing 345.13 program or service be provided in a shorter time period and thus 345.14 increases the cost of the program or service; 345.15 (8) a law or executive order that adds new requirements to 345.16 an existing optional program or service and thus increases the 345.17 cost of the program or service because the political 345.18 subdivisions have no reasonable alternative other than to 345.19 continue the optional program; 345.20 (9) a law or executive order that creates new revenue 345.21 losses by new property or sales and use tax exemptions; 345.22 (10) a law or executive order that requires costs 345.23 previously incurred at local option that have subsequently been 345.24 mandated by the state; or 345.25 (11) a law enacted or an executive order that requires 345.26 payment of a new fee or increases the amount of an existing fee. 345.27 (b) When state law or executive actions are intended to 345.28 achieve compliance with federal law or court orders, state 345.29 mandates are determined as follows: 345.30 (1) if the federal law or court order is discretionary, the 345.31 state law or executive action is a state mandate; 345.32 (2) if the state law or executive action exceeds what is 345.33 required by the federal law or court order, only the provisions 345.34 of the state action that exceed the federal requirements are a 345.35 state mandate; and 345.36 (3) if the state statutory or executive action does not 346.1 exceed what is required by the federal statute or regulation or 346.2 court order, the state action is not a state mandate. 346.3 (c) Costs mandated by the state include the costs of a rule 346.4 issued after June 30, 1997, that: 346.5 (1) mandates a new responsibility; and 346.6 (2) implements or interprets a state statute, and by doing 346.7 so increases program levels above the levels required before 346.8 June 30, 1997. 346.9 Subd. 3. [EXECUTIVE ORDER.] "Executive order" means an 346.10 order, plan, requirement, or rule issued by the governor, an 346.11 official serving at the pleasure of the governor, or an agency, 346.12 department, board, or commission of state government. Executive 346.13 order does not include an order, plan, requirement, or rule 346.14 issued by a regional water quality control board. 346.15 Subd. 4. [MANDATE.] A "mandate" is a requirement imposed 346.16 upon a political subdivision in a law by a state agency or by 346.17 judicial authority that, if not complied with, results in (1) 346.18 civil liability, (2) criminal penalty, or (3) administrative 346.19 sanctions such as reduction or loss of funding. 346.20 Subd. 5. [POLITICAL SUBDIVISION.] A "political 346.21 subdivision" is a county, home rule charter or statutory city, 346.22 town, or other taxing district or municipal corporation except a 346.23 school district. 346.24 Subd. 6. [REQUIRING AN INCREASED LEVEL OF 346.25 SERVICE.] "Requiring an increased level of service" includes 346.26 requiring that an existing service be provided in a shorter time. 346.27 Subd. 7. [RULE.] "Rule" means a rule, order, or standard 346.28 of general application adopted by a state agency to implement, 346.29 interpret, or make specific the law it enforces or administers 346.30 or to govern its procedure. Rule includes an amendment to a 346.31 rule. Rule does not include a rule that relates only to the 346.32 internal management of a state agency. 346.33 Subd. 8. [SAVINGS.] "Savings" includes budget reductions 346.34 and the freeing of staff or resources to be reassigned to a 346.35 political subdivision's other areas of concern. 346.36 Sec. 2. [3.987] [FISCAL NOTES FOR STATE-MANDATED ACTIONS.] 347.1 Subdivision 1. [STATE AND LOCAL MANDATES OFFICE.] When the 347.2 state proposes to mandate that a political subdivision take an 347.3 action, and when reasonable compliance with that action would 347.4 force the political subdivision to incur costs mandated by the 347.5 state, a fiscal note must be prepared as provided in section 347.6 3.98, subdivision 2, and made available to the public upon 347.7 request. If the action is among the exceptions listed in 347.8 section 3.988, a fiscal note need not be prepared. 347.9 An office of state and local mandates in the department of 347.10 finance is created. The commissioner shall make a reasonable 347.11 and timely determination of the estimated and actual financial 347.12 effects on each political subdivision of each program mandated 347.13 by law including each rulemaking proposed by an administrative 347.14 agency. The commissioner of finance may require the 347.15 commissioner of the appropriate administrative agency of the 347.16 state to supply in a timely manner any information determined by 347.17 the division to be necessary to determine local financial 347.18 effects. The commissioner shall convey the requested 347.19 information to the commissioner of finance with a signed 347.20 statement to the effect that the information is accurate and 347.21 complete to the best of the commissioner's ability. 347.22 The commissioner, when requested, shall update the 347.23 determination of financial effects based on either actual cost 347.24 figures or improved estimates or both. 347.25 Subd. 2. [MANDATE EXPLANATIONS.] Any bill introduced in 347.26 the legislature after June 30, 1997, that seeks to impose 347.27 program or financial mandates on political subdivisions must 347.28 include an attachment that gives appropriate responses to the 347.29 following guidelines. It must state and list: 347.30 (1) the policy goals that are sought to be attained, the 347.31 performance standards that are to be imposed, and an explanation 347.32 why the goals and standards will best be served by requiring 347.33 compliance by political subdivisions; 347.34 (2) performance standards that will allow political 347.35 subdivisions flexibility and innovation of method in achieving 347.36 these goals; 348.1 (3) the reasons for each prescribed standard and the 348.2 process by which each standard governs inputs such as staffing 348.3 and other administrative aspects of the program; 348.4 (4) the sources of additional revenue, in addition to 348.5 existing funding for similar programs, that are directly linked 348.6 to imposition of the mandates that will provide adequate and 348.7 stable funding for their requirements; 348.8 (5) what input has been obtained to ensure that the 348.9 implementing agencies have the capacity to carry out the 348.10 delegated responsibilities; and 348.11 (6) the reasons why less intrusive measures such as 348.12 financial incentives or voluntary compliance would not yield the 348.13 equity, efficiency, or desired level of statewide uniformity in 348.14 the proposed program. 348.15 Subd. 3. [LOCAL INVOLVEMENT; LAWS.] Any bill introduced in 348.16 the legislature after June 30, 1997, that seeks to impose a 348.17 program or financial mandate on political subdivisions must 348.18 include as an attachment a description of the efforts put forth, 348.19 if any, to involve political subdivisions in the creation or 348.20 development of the proposed mandate. 348.21 Subd. 4. [NO MANDATE RESTRICTION.] Except as specifically 348.22 provided, nothing in sections 3.986 to 3.989 and 14.431 348.23 restricts or eliminates the authority of the state to create or 348.24 impose programs by law upon political subdivisions. 348.25 Sec. 3. [3.988] [EXCEPTIONS TO FISCAL NOTES.] 348.26 Subdivision 1. [COSTS RESULTING FROM INFLATION.] A fiscal 348.27 note need not be prepared for increases in the cost of providing 348.28 an existing service if the increases result directly from 348.29 inflation. "Resulting directly from inflation" means 348.30 attributable to maintaining an existing level of service rather 348.31 than increasing the level of service. A cost-of-living increase 348.32 in welfare benefits is an example of a cost resulting directly 348.33 from inflation. 348.34 Subd. 2. [COSTS NOT THE RESULT OF A NEW PROGRAM OR 348.35 INCREASED SERVICE.] A fiscal note need not be prepared for 348.36 increased local costs that do not result from a new program or 349.1 an increased level of service. 349.2 Subd. 3. [MISCELLANEOUS EXCEPTIONS.] A fiscal note or an 349.3 attachment as provided in section 3.987, subdivision 2, need not 349.4 be prepared for the cost of a mandated action if the law, 349.5 including a rulemaking, containing the mandate: 349.6 (1) accommodates a specific local request; 349.7 (2) results in no new local government duties; 349.8 (3) leads to revenue losses from exemptions to taxes; 349.9 (4) provided only clarifying or conforming, nonsubstantive 349.10 charges on local government; 349.11 (5) imposes additional net local costs that are minor (less 349.12 than $200 for any single local government if the mandate does 349.13 not apply statewide or less than $3,000,000 if the mandate is 349.14 statewide) and do not cause a financial burden on local 349.15 government; 349.16 (6) is a law or executive order enacted before July 1, 349.17 1997, or a rule initially implementing a law enacted before July 349.18 1, 1997; 349.19 (7) implements something other than a law or executive 349.20 order, such as a federal, court, or voter-approved mandate; 349.21 (8) defines a new crime or redefines an existing crime or 349.22 infraction; 349.23 (9) results in savings that equal or exceed costs; 349.24 (10) requires the holding of elections; 349.25 (11) ensures due process or equal protection; 349.26 (12) provides for the notification and conduct of public 349.27 meetings; 349.28 (13) establishes the procedures for administrative and 349.29 judicial review of actions taken by political subdivisions; 349.30 (14) protects the public from malfeasance, misfeasance, or 349.31 nonfeasance by officials of political subdivisions; 349.32 (15) relates directly to financial administration, 349.33 including the levy, assessment, and collection of taxes; 349.34 (16) relates directly to the preparation and submission of 349.35 financial audits necessary to the administration of state laws; 349.36 or 350.1 (17) requires uniform standards to apply to public and 350.2 private institutions without differentiation. 350.3 Sec. 4. [3.989] [REIMBURSEMENT TO LOCAL POLITICAL 350.4 SUBDIVISIONS FOR COSTS OF STATE MANDATES.] 350.5 Subdivision 1. [DEFINITIONS.] In this section: 350.6 (1) "Class A state mandates" means those laws under which 350.7 the state mandates to political subdivisions, their 350.8 participation, the organizational structure of the program, and 350.9 the procedural regulations under which the law must be 350.10 administered; and 350.11 (2) "Class B state mandates" means those mandates that 350.12 allow the political subdivisions to opt for administration of a 350.13 law with program elements mandated beforehand and with an 350.14 assured revenue level from the state of 90 percent of full 350.15 program and administrative costs. 350.16 Subd. 2. [REPORT.] The commissioner of finance shall 350.17 prepare by September 1, 1998, and by September 1 of each year 350.18 thereafter, a report by political subdivisions of the costs of 350.19 class A state mandates established after June 30, 1997. 350.20 The commissioner shall annually include the statewide total 350.21 of the statement of costs of class A mandates as a notation in 350.22 the state budget for the next fiscal year. 350.23 Subd. 3. [CERTAIN POLITICAL SUBDIVISIONS; REPORT.] The 350.24 political subdivisions that have opted to administer class B 350.25 state mandates shall report to the commissioner of finance by 350.26 September 1, 1998, and by September 1 of each year thereafter, 350.27 identifying each instance when revenue for a class B state 350.28 mandate has fallen below 85 percent of the total cost of the 350.29 program and the political subdivision intends to cease 350.30 administration of the program. 350.31 The commissioner shall forward a copy of the report to the 350.32 chairs of the appropriate funding committees of the senate and 350.33 the house for proposed inclusion of the shortfall as a line item 350.34 appropriation in the state budget for the next fiscal year. 350.35 The political subdivision may exercise its option to cease 350.36 administration only if the legislature has failed to include the 351.1 shortfall as an appropriation in the state budget for the next 351.2 fiscal year. 351.3 Subd. 4. [EXEMPTIONS.] Laws and executive orders 351.4 enumerated in section 3.988 are exempted from this section. 351.5 Sec. 5. [14.431] [PERIODIC REVIEW OF ADMINISTRATIVE 351.6 RULES.] 351.7 Subdivision 1. [DEFINITIONS.] The terms defined in section 351.8 3.986, subdivision 1, apply to this section. 351.9 Subd. 2. [SIGNIFICANT FINANCIAL IMPACT.] The commissioner 351.10 of finance shall review, every five years, rules adopted after 351.11 June 30, 1997, that have significant financial impact upon 351.12 political subdivisions. In this section, "significant financial 351.13 impact" means requiring local political subdivisions to expand 351.14 existing services, employ additional personnel, or increase 351.15 local expenditures. The commissioner shall determine the costs 351.16 and benefits of each rulemaking and submit a report to the 351.17 legislative coordinating commission with its opinion, if any, 351.18 for the continuation, modification, or elimination of the rules 351.19 in the rulemaking. 351.20 Sec. 6. Minnesota Statutes 1996, section 273.1398, is 351.21 amended by adding a subdivision to read: 351.22 Subd. 9. [DEDUCTION FROM AID PAYMENTS.] (a) The 351.23 commissioner of finance shall bill the commissioner of revenue 351.24 for the cost of preparation of fiscal notes as required by 351.25 section 3.897 only to the extent to which those costs exceed 351.26 those costs incurred in fiscal year 1997 and for any other new 351.27 costs attributable to the operation of the state and local 351.28 mandates office required by section 3.897, not to exceed $50,000 351.29 per year. 351.30 (b) The commissioner of revenue shall reduce the aid 351.31 amounts determined under subdivision 2 for counties, cities, and 351.32 towns by whatever uniform percentage is necessary to recover the 351.33 costs billed in paragraph (a). 351.34 (c) The amount billed under paragraph (a) is appropriated 351.35 to the commissioner of finance for the preparation of fiscal 351.36 notes under section 3.897. 352.1 Sec. 7. Minnesota Statutes 1996, section 477A.05, is 352.2 amended to read: 352.3 477A.05 [LOCAL PERFORMANCE AID.] 352.4 Subdivision 1. [QUALIFICATION.] By May15, 1996, and March352.53125 of each yearthereafter, the commissioner shall send a 352.6 local performance aid qualification form to each county and city 352.7 in the state. Jurisdictions that are eligible to receive the 352.8 aid must return the completed form by June 30 in order to 352.9 receive aid in the following calendar year. For each 352.10 determinator specified in subdivision 2, the form shall have a 352.11 space for the jurisdiction to indicate that it has satisfied the 352.12 conditions of the determinator. For counties, the form must be 352.13 signed by the chair of the county board. For cities, the form 352.14 must be signed by the mayor, if the city has a mayor, anda352.15memberthe chair of the city council. Applications may be filed 352.16 jointly by jurisdictions planning to spend the aid jointly. 352.17 Subd. 2. [ELIGIBILITY DETERMINATOR.] For calendar year 352.1819971998 and subsequent calendar years, a jurisdiction is 352.19 eligible to receive local performance aid if the jurisdiction 352.20 affirms thatit(1) the aid will result in a reduction in 352.21 property taxes at least equal to the amount of aid received, and 352.22 (2) the jurisdiction will spend the aid on programs for which it 352.23 has developed a system of performance measuresfor the services352.24provided by the jurisdiction,and that these measuresarewill 352.25 allow for the measurement of continuous improvement and will be 352.26 regularly compiled and presented to the county board or the city 352.27 council at least once a year. The jurisdiction must identify 352.28 the program or programs that are to be funded with the aid. A 352.29 jurisdiction isalsoeligible for aidunder this determinatorif 352.30 it affirms that it is in the process of developing and 352.31 implementing a system of performance measures for the program or 352.32 programs for which the aid is being sought; however,eligibility352.33based upon being in the process of development may not be used352.34for more than two consecutive yearsaid amounts under this 352.35 section may not be spent on the program or programs until the 352.36 performance measurement system has been instituted, unless the 353.1 aid is being used to establish the performance measurement 353.2 system. 353.3 Subd. 3. [DETERMINATION OF AID AMOUNT.] (a) The 353.4 commissioner shall sum the populations of all jurisdictions that 353.5 have met theconditionconditions specified in subdivision 2. 353.6 The commissioner shall determine a per capita aid amount by 353.7 dividing the aggregate aid available under subdivision 5 by the 353.8 sum of the populations for all qualifying jurisdictions, 353.9 separately for counties and cities. Each jurisdiction shall 353.10 then be eligible for aid equal to the jurisdictions's population 353.11 times the per capita aid amount. For purposes of this 353.12 subdivision, population means the most recent population 353.13 established under section 477A.011, subdivision 3, in the year 353.14 in which the aid is determined. 353.15 (b) If the program qualifying for aid is either (1) a 353.16 collaborative program involving two or more jurisdictions, at 353.17 least one of which is a county, (2) a program that is efficient, 353.18 meaning that future total costs for providing the service will 353.19 be reduced as a result of the program, or (3) a program that is 353.20 innovative, in that it restructures the relationship between the 353.21 governments responsible for providing the services or 353.22 substantively changes the method for providing services, the 353.23 jurisdiction's population will be increased by a factor of 1.5 353.24 for the purposes of this subdivision. A school district is 353.25 considered to be a jurisdiction for the purposes of qualifying 353.26 as a collaborative program under clause (1). If the program is 353.27 both collaborative and efficient, or both collaborative and 353.28 innovative, the jurisdiction's population will be increased by a 353.29 factor of two for the purposes of this subdivision. The 353.30 jurisdiction shall indicate on its application whether it 353.31 qualifies for treatment under this paragraph. 353.32 Subd. 4. [NOTIFICATION AND PAYMENT.] Jurisdictions shall 353.33 be notified of their aid under this section at the same time as 353.34 the notification for aid under section 477A.014, subdivision 1. 353.35 Payments of aid under this section shall be made on the dates 353.36 prescribed in section 477A.015. 354.1 Subd. 5. [APPROPRIATION.] (a) For payments to counties 354.2 under this section, there is annually appropriated from the 354.3 general fund to the commissioner of revenue an amount equal to 354.4 the sum of $558,625 plus the amount by which county aids were 354.5 reduced under Laws 1996, chapter 471, article 3, section 49, 354.6 adjusted for inflation as provided under section 477A.03, 354.7 subdivision 3. For payments to cities under this section, there 354.8 is annually appropriated from the general fund to the 354.9 commissioner of revenue an amount equal to the sum of $441,735 354.10 plus the amount by which city aids were reduced under Laws 1996, 354.11 chapter 471, article 3, section 49, adjusted for inflation as 354.12 provided under section 477A.03, subdivision 3. 354.13 (b) For aids payable in 1998 and 1999 under this section, 354.14 an additional amount of $2,790,000 for counties and $2,210,000 354.15 for cities is appropriated from the general fund to the 354.16 commissioner of revenue. 354.17 Sec. 8. [REPEALER.] 354.18 Minnesota Statutes 1996, section 3.982, is repealed. 354.19 Sec. 9. [EFFECTIVE DATE.] 354.20 Section 7 is effective beginning with aids payable in 1998. 354.21 ARTICLE 15 354.22 FISCAL DISPARITIES 354.23 Section 1. Minnesota Statutes 1996, section 276A.04, is 354.24 amended to read: 354.25 276A.04 [INCREASE IN NET TAX CAPACITY.] 354.26 ByJulyAugust 15 of 1997 and each subsequent year, the 354.27 auditor of each county in the area shall determine the amount, 354.28 if any, by which the net tax capacity determinedin the354.29preceding yearpursuant to section 276A.03, of 354.30 commercial-industrial property subject to taxation within each 354.31 municipality in the county exceeds the net tax capacity in 1995 354.32 of commercial-industrial property subject to taxation within 354.33 that municipality. If a municipality is located in two or more 354.34 counties within the area, the auditors of those counties shall 354.35 certify the data required by section 276A.03 to the county 354.36 auditor responsible for allocating the levies of that 355.1 municipality between or among the affected counties. That 355.2 county auditor shall determine the amount of the net excess, if 355.3 any, for the municipality under this section, and certify that 355.4 amount under section 276A.05. The increase in total net tax 355.5 capacity determined by this section must be reduced by the 355.6 amount of any decreases in the net tax capacity of 355.7 commercial-industrial property resulting from any court 355.8 decisions, court-related stipulation agreements, or abatements 355.9 for a prior year, and only in the amount of such decreases made 355.10 during the 12-month period ending on May 1 of the current 355.11 assessment year, where the decreases, if originally reflected in 355.12 the determination of a prior year's net tax capacity under 355.13 section 276A.03, would have resulted in a smaller contribution 355.14 from the municipality in that year. An adjustment for the 355.15 decreases shall be made only if the municipality made a 355.16 contribution in a prior year based on the higher net tax 355.17 capacity of the commercial-industrial property. 355.18 Sec. 2. Minnesota Statutes 1996, section 276A.05, 355.19 subdivision 1, is amended to read: 355.20 Subdivision 1. [AREAWIDE NET TAX CAPACITY.] Each county 355.21 auditor shall certify the determinations under sections 276A.03 355.22 and 276A.04 to the administrative auditor on or before August1355.23 15 of each year. The administrative auditor shall determine an 355.24 amount equal to 40 percent of the sum of the amounts certified 355.25 pursuant to section 276A.04. The resulting amount shall be 355.26 known as the "areawide net tax capacity for ........(year)." 355.27 Sec. 3. Minnesota Statutes 1996, section 276A.05, 355.28 subdivision 5, is amended to read: 355.29 Subd. 5. [CERTIFICATION.] The product of the procedure 355.30 prescribed by subdivision 4 shall be known as the "areawide net 355.31 tax capacity for ......(year) attributable to 355.32 ..........(municipality)." The administrative auditor shall 355.33 certify the product to the auditor of the county in which the 355.34 municipality is located on or beforeAugustSeptember 15. 355.35 Sec. 4. Minnesota Statutes 1996, section 276A.06, 355.36 subdivision 2, is amended to read: 356.1 Subd. 2. [DEFINITION.] The net tax capacity of a 356.2 governmental unit is its net tax capacity as determined in 356.3 accordance with other provisions of law including section 356.4 469.177, subdivision 3, subject to the following adjustments: 356.5 (a) There must be subtracted from its net tax capacity, in 356.6 each municipality in which the governmental unit exercises ad 356.7 valorem taxing jurisdiction, an amount that bears the same 356.8 proportion to 40 percent of the amount certified in that year 356.9 pursuant to sections 276A.04 and 276A.05 for the municipality as 356.10 the totalpreceding year'snet tax capacity of 356.11 commercial-industrial property which is subject to the taxing 356.12 jurisdiction of the governmental unit within the municipality, 356.13 determined without regard to section 469.177, subdivision 3, 356.14 bears to the totalpreceding year'snet tax capacity of 356.15 commercial-industrial property within the municipality, 356.16 determined without regard to section 469.177, subdivision 3. 356.17 (b) There must be added to its net tax capacity, in each 356.18 municipality in which the governmental unit exercises ad valorem 356.19 taxing jurisdiction, an amount which bears the same proportion 356.20 to the areawide net tax capacity for the year attributable to 356.21 that municipality as the totalpreceding year'snet tax capacity 356.22 of residential property which is subject to the taxing 356.23 jurisdiction of the governmental unit within the municipality 356.24 bears to the totalpreceding year'snet tax capacity of 356.25 residential property of the municipality. 356.26 Sec. 5. Minnesota Statutes 1996, section 276A.06, 356.27 subdivision 3, is amended to read: 356.28 Subd. 3. [APPORTIONMENT OF LEVY.] The county auditor shall 356.29 apportion the levy of each governmental unit in the county in 356.30 the manner prescribed by this subdivision. The auditor shall: 356.31 (a)by August 20 of 1997 and each subsequent year,356.32 determine the areawide portion of the levy for each governmental 356.33 unit by multiplying the local tax rate of the governmental unit 356.34 for theprecedingcurrent levy year times the distribution value 356.35 set forth in subdivision 2, clause (b); and 356.36 (b)by September 5 of 1997 and each subsequent year,357.1 determine the local portion of the current year's levy by 357.2 subtracting the resulting amount from clause (a) from the 357.3 governmental unit's current year's levy. 357.4 Sec. 6. Minnesota Statutes 1996, section 276A.06, 357.5 subdivision 5, is amended to read: 357.6 Subd. 5. [AREAWIDE TAX RATE.] (a) On or beforeAugust 25357.7 February 5 of1997 andeachsubsequentyear, the county auditor 357.8 shall certify to the administrative auditor that portion of the 357.9 levy of each governmental unit determined pursuant to 357.10 subdivision 3, clause (a). The administrative auditor shall 357.11 then determine the areawide tax rate sufficient to yield an 357.12 amount equal to the sum of the levies from the areawide net tax 357.13 capacity. 357.14 (b) On or beforeSeptember 1February 10 of each year, the 357.15 administrative auditor shall certify the areawide tax rate to 357.16 each of the county auditors. 357.17 For the purposes of the notice required under section 357.18 275.065, the deadline for the certification under paragraph (a) 357.19 is October 10, and the deadline for certification under 357.20 paragraph (b) is October 15. 357.21 For any governmental unit for which the county auditor has 357.22 not yet determined the local tax rate by January 31, the county 357.23 auditor shall determine the areawide portion of the levy based 357.24 on an estimated tax rate. In the following year, the 357.25 distribution levy of the unit must be adjusted to correct for 357.26 the difference between the distribution levy actually received 357.27 and the distribution levy that would have been received if the 357.28 actual tax rate had been used. 357.29 Sec. 7. Minnesota Statutes 1996, section 473F.06, is 357.30 amended to read: 357.31 473F.06 [INCREASE IN NET TAX CAPACITY.] 357.32 On or beforeJulyAugust 15 of each year, the auditor of 357.33 each county in the area shall determine the amount, if any, by 357.34 which the net tax capacity determinedin the preceding year357.35 under section 473F.05, of commercial-industrial property subject 357.36 to taxation within each municipality in the auditor's county 358.1 exceeds the net tax capacity in 1971 of commercial-industrial 358.2 property subject to taxation within that municipality. If a 358.3 municipality is located in two or more counties within the area, 358.4 the auditors of those counties shall certify the data required 358.5 by section 473F.05 to the county auditor who is responsible 358.6 under other provisions of law for allocating the levies of that 358.7 municipality between or among the affected counties. That 358.8 county auditor shall determine the amount of the net excess, if 358.9 any, for the municipality under this section, and certify that 358.10 amount under section 473F.07. Notwithstanding any other 358.11 provision of sections 473F.01 to 473F.13 to the contrary, in the 358.12 case of a municipality which is designated on July 24, 1971, as 358.13 a redevelopment area under section 401(a)(4) of the Public Works 358.14 and Economic Development Act of 1965, Public Law Number 89-136, 358.15 the increase in its net tax capacity of commercial-industrial 358.16 property for purposes of this section shall be determined in 358.17 each year by using as a base the net tax capacity of 358.18 commercial-industrial property in that municipality in the 1989 358.19 assessment year, rather than the net tax capacity of such 358.20 property in 1971. The increase in total net tax capacity 358.21 determined by this section shall be reduced by the amount of any 358.22 decreases in net tax capacity of commercial-industrial property 358.23 resulting from any court decisions, court related stipulation 358.24 agreements, or abatements for a prior year, and only in the 358.25 amount of such decreases made during the 12-month period ending 358.26 on May 1 of the current assessment year, where such decreases, 358.27 if originally reflected in the determination of a prior year's 358.28 net tax capacity under section 473F.05, would have resulted in a 358.29 smaller contribution from the municipality in that year. An 358.30 adjustment for such decreases shall be made only if the 358.31 municipality made a contribution in a prior year based on the 358.32 higher net tax capacity of the commercial-industrial property. 358.33 Sec. 8. Minnesota Statutes 1996, section 473F.07, 358.34 subdivision 1, is amended to read: 358.35 Subdivision 1. [AREAWIDE NET TAX CAPACITY.] Each county 358.36 auditor shall certify the determinations under sections 473F.05 359.1 and 473F.06 to the administrative auditor on or before August1359.2 15 of each year. 359.3 The administrative auditor shall determine an amount equal 359.4 to 40 percent of the sum of the amounts certified under section 359.5 473F.06. The resulting amount shall be known as the "areawide 359.6 net tax capacity for ........(year)." 359.7 Sec. 9. Minnesota Statutes 1996, section 473F.07, 359.8 subdivision 5, is amended to read: 359.9 Subd. 5. [CERTIFICATION TO COUNTY AUDITOR.] The result of 359.10 the procedure prescribed by subdivision 4 shall be known as the 359.11 "areawide net tax capacity for ........(year) attributable to 359.12 ..................(municipality)." The administrative auditor 359.13 shall certify such product to the auditor of the county in which 359.14 the municipality is located on or beforeAugustSeptember 15. 359.15 Sec. 10. Minnesota Statutes 1996, section 473F.08, 359.16 subdivision 2, is amended to read: 359.17 Subd. 2. [COMPUTATION OF NET TAX CAPACITY.] The net tax 359.18 capacity of a governmental unit is its net tax capacity, as 359.19 determined in accordance with other provisions of law including 359.20 section 469.177, subdivision 3, subject to the following 359.21 adjustments: 359.22 (a) There shall be subtracted from its net tax capacity, in 359.23 each municipality in which the governmental unit exercises ad 359.24 valorem taxing jurisdiction, an amount which bears the same 359.25 proportion to 40 percent of the amount certified in that year 359.26 under sections 473F.06 and 473F.07 for the municipality as the 359.27 totalpreceding year'snet tax capacity of commercial-industrial 359.28 property which is subject to the taxing jurisdiction of the 359.29 governmental unit within the municipality, determined without 359.30 regard to section 469.177, subdivision 3, bears to the total 359.31preceding year'snet tax capacity of commercial-industrial 359.32 property within the municipality, determined without regard to 359.33 section 469.177, subdivision 3; 359.34 (b) There shall be added to its net tax capacity, in each 359.35 municipality in which the governmental unit exercises ad valorem 359.36 taxing jurisdiction, an amount which bears the same proportion 360.1 to the areawide net tax capacity for the year attributable to 360.2 that municipality as the totalpreceding year'snet tax capacity 360.3 of residential property which is subject to the taxing 360.4 jurisdiction of the governmental unit within the municipality 360.5 bears to the totalpreceding year'snet tax capacity of 360.6 residential property of the municipality. 360.7 Sec. 11. Minnesota Statutes 1996, section 473F.08, 360.8 subdivision 3, is amended to read: 360.9 Subd. 3. [APPORTIONMENT OF LEVY.] The county auditor shall 360.10 apportion the levy of each governmental unit in the auditor's 360.11 county in the manner prescribed by this subdivision. The 360.12 auditor shall: 360.13 (a)by August 20,determine the areawide portion of the 360.14 levy for each governmental unit by multiplying the local tax 360.15 rate of the governmental unit for theprecedingcurrent levy 360.16 year times the distribution value set forth in subdivision 2, 360.17 clause (b); and 360.18 (b)by September 5,determine the local portion of the 360.19 current year's levy by subtracting the resulting amount from 360.20 clause (a) from the governmental unit's current year's levy. 360.21 Sec. 12. Minnesota Statutes 1996, section 473F.08, 360.22 subdivision 5, is amended to read: 360.23 Subd. 5. [AREAWIDE TAX RATE.] (a) On or beforeAugust 25360.24 February 5 of each year, the county auditor shall certify to the 360.25 administrative auditor that portion of the levy of each 360.26 governmental unit determined under subdivisions 3, clause (a), 360.27 3a, and 3b. The administrative auditor shall then determine the 360.28 areawide tax rate sufficient to yield an amount equal to the sum 360.29 of such levies from the areawide net tax capacity. 360.30 (b) On or beforeSeptember 1February 10 of each year, the 360.31 administrative auditor shall certify the areawide tax rate to 360.32 each of the county auditors. 360.33 For the purposes of the notice required under section 360.34 275.065, the deadline for the certification under paragraph (a) 360.35 is October 10, and the deadline for certification under 360.36 paragraph (b) is October 15. 361.1 For any governmental unit for which the county auditor has 361.2 not yet determined the local tax rate by January 31, the county 361.3 auditor shall determine the areawide portion of the levy based 361.4 on an estimated tax rate. In the following year, the 361.5 distribution levy of the unit must be adjusted to correct for 361.6 the difference between the distribution levy actually received 361.7 and the distribution levy that would have been received if the 361.8 actual tax rate had been used. 361.9 Sec. 13. [REPEALER.] 361.10 Minnesota Statutes 1996, sections 276A.06, subdivision 9; 361.11 and 473F.08, subdivision 8a, are repealed. 361.12 Sec. 14. [EFFECTIVE DATE.] 361.13 Sections 1 to 13 are effective for taxes payable in 1999 361.14 and subsequent years. 361.15 ARTICLE 16 361.16 REGIONAL DEVELOPMENT COMMISSIONS 361.17 Section 1. Minnesota Statutes 1996, section 462.381, is 361.18 amended to read: 361.19 462.381 [TITLE.] 361.20 Sections 462.381 to 462.398 may be cited as the "regional 361.21 development actof 1969." 361.22 Sec. 2. Minnesota Statutes 1996, section 462.383, is 361.23 amended to read: 361.24 462.383 [PURPOSE: GOVERNMENT COOPERATION AND 361.25 COORDINATION.] 361.26 Subdivision 1. [LEGISLATIVE FINDINGS.] The legislature 361.27 finds that problems of growth and development in urban and rural 361.28 regions of the state so transcend the boundary lines of local 361.29 government units that no single unit can plan for their solution 361.30 without affecting other units in the region;that various361.31multicounty planning activities conducted under various laws of361.32the United States are presently being conducted in an361.33uncoordinated mannerthat coordination of multijurisdictional 361.34 activities is essential to the development and implementation of 361.35 effective policies and programs; that intergovernmental 361.36 cooperationon a regional basisis an effective means of pooling 362.1 the resources of local government to approach common problems; 362.2 and that the assistance of the state is needed to make the most 362.3 effective use of local, state, federal, and private programs in 362.4 serving the citizens of such urban and rural regions. 362.5 Subd. 2. [BY CREATING REGIONAL COMMISSION.] It is the 362.6 purpose of sections 462.381 to 462.398 tofacilitate362.7intergovernmental cooperation and to insure the orderly and362.8harmonious coordination of state, federal, and local362.9comprehensive planning and development programs for the solution362.10of economic, social, physical, and governmental problems of the362.11state and its citizens by providing for the creation of regional362.12development commissionsauthorize the establishment of regional 362.13 development commissions to work with and on behalf of local 362.14 units of government to develop plans or implement programs to 362.15 address economic, social, physical, and governmental concerns of 362.16 each region of the state. The commissions may assist with, 362.17 develop, or implement plans or programs for individual local 362.18 units of government. 362.19 Sec. 3. Minnesota Statutes 1996, section 462.384, 362.20 subdivision 5, is amended to read: 362.21 Subd. 5. [DEVELOPMENT REGION, REGION.] "Development 362.22 region" or "region" means a geographic region composed of a 362.23 grouping of countiesembodied in an executive order of the362.24governor orasotherwiseestablished by sections 462.381 to 362.25 462.398. 362.26 Sec. 4. Minnesota Statutes 1996, section 462.385, is 362.27 amended to read: 362.28 462.385 [DESIGNATION OF REGIONS; REGIONAL BOUNDARIES; 362.29 MODIFICATION.] 362.30 Subdivision 1. [BY GOVERNOR'S ORDER; HEARINGS.] 362.31 Development regions for the state shallbe those regions so362.32designated by the governor by executive order. The order shall362.33provide for public hearings within each proposed region after362.34which any county may request assignment to a region other than362.35that proposed by the order. If a request for reassignment is362.36unacceptable to the commissioner, the county shall remain in the363.1originally designated region until the next session of the363.2legislature for its review and final assignment.consist of the 363.3 following counties: 363.4 Region 1: Kittson, Roseau, Marshall, Pennington, Red Lake, 363.5 Polk, and Norman. 363.6 Region 2: Lake of the Woods, Beltrami, Mahnomen, 363.7 Clearwater, and Hubbard. 363.8 Region 3: Koochiching, Itasca, St. Louis, Lake, Cook, 363.9 Aitkin, and Carlton. 363.10 Region 4: Clay, Becker, Wilkin, Otter Tail, Grant, 363.11 Douglas, Traverse, Stevens, and Pope. 363.12 Region 5: Cass, Wadena, Crow Wing, Todd, and Morrison. 363.13 Region 6E: Kandiyohi, Meeker, Renville, and McLeod. 363.14 Region 6W: Big Stone, Swift, Chippewa, Lac Qui Parle, and 363.15 Yellow Medicine. 363.16 Region 7E: Mille Lacs, Kanabec, Pine, Isanti, and Chisago. 363.17 Region 7W: Stearns, Benton, Sherburne, and Wright. 363.18 Region 8: Lincoln, Lyon, Redwood, Pipestone, Murray, 363.19 Cottonwood, Rock, Nobles, and Jackson. 363.20 Region 9: Sibley, Nicollet, LeSueur, Brown, Blue Earth, 363.21 Waseca, Watonwan, Martin, and Faribault. 363.22 Region 10: Rice, Goodhue, Wabasha, Steele, Dodge, Olmsted, 363.23 Winona, Freeborn, Mower, Fillmore, and Houston. 363.24 Region 11: Anoka, Hennepin, Ramsey, Washington, Carver, 363.25 Scott, and Dakota. 363.26Subd. 2. [EXISTING DEVELOPMENT DISTRICT BOUNDARIES.] The363.27boundaries of any economic development district established363.28under Section 403 of the United States Public Works and Economic363.29Development Act of 1965 shall not be modified without the363.30approval of an affected county and the development district.363.31 Subd. 3. [ONGOING BOUNDARY STUDIES; CHANGES.]The363.32commissioner shall conduct continuous studies and analysis of363.33the boundaries of regions and shall make recommendations for363.34their modification where necessary.Modification of regional 363.35 boundaries may be initiated by a county, a commission, or by the363.36commissioner and will be accomplished in accordance with this364.1section as in the case of initial designationrequesting 364.2 assignment to a region other than that within which it is 364.3 designated. If a request for reassignment is unacceptable to 364.4 the commission whose boundaries would be modified, the county 364.5 requesting reassignment shall remain in the originally 364.6 designated region until the legislature determines the final 364.7 assignment. 364.8 Sec. 5. Minnesota Statutes 1996, section 462.386, 364.9 subdivision 1, is amended to read: 364.10 Subdivision 1. [EXCEPTION, WORKING AGREEMENTS.] All 364.11 coordination, planning, and development regions assisted or 364.12 created by the state of Minnesota or pursuant to federal 364.13 legislation shall conform to the regionsdesignated by the364.14executive orderexcept where, after review and approval by the 364.15commissionergovernor or designee, nonconformance is clearly 364.16 justified. Thecommissionergovernor or designee shall develop 364.17 working agreements with state and federal departments and 364.18 agencies to insure conformance with this subdivision. 364.19 Sec. 6. Minnesota Statutes 1996, section 462.387, is 364.20 amended to read: 364.21 462.387 [REGIONAL DEVELOPMENT COMMISSIONS; ESTABLISHMENT.] 364.22 Subdivision 1. [PETITION.] Any combination of counties or 364.23 municipalities representing a majority of the population of the 364.24 region for which a commission is proposed may petition the 364.25commissionergovernor or designee by formal resolution setting 364.26 forth its desire to establish, and the need for, the 364.27 establishment of a regional development commission. For 364.28 purposes of this section the population of a county does not 364.29 include the population of a municipality within the county. 364.30 Subd. 1a. [OPERATING COMMISSION.] Regional development 364.31 commissions shall be those organizations operating pursuant to 364.32 sections 462.381 to 462.398 which were formed by formal 364.33 resolution of local units of government and those which may 364.34 petition by formal resolution to establish a regional 364.35 development commission. 364.36 Subd. 3. [ESTABLISHMENT.] Upon receipt of a petition as 365.1 provided in subdivision 1 a regional development commission 365.2 shall be established by thecommissionergovernor or designee 365.3 andthe notification ofall local government units within the 365.4 region for which the commission is proposed shall be notified. 365.5 The notification shall be made within 60 days of 365.6 thecommissioner'sgovernor's receipt of a petition under 365.7 subdivision 1. 365.8 Subd. 4. [SELECTION OF MEMBERSHIP.] Thecommissioner365.9 governor or designee shall call together each of the membership 365.10 classifications except citizen groups, defined in section 365.11 462.388, within 60 days of the establishment of a regional 365.12 development commission for the purpose of selecting the 365.13 commission membership. 365.14 Subd. 5. [NAME OF COMMISSION.] The name of the 365.15 organization shall be determined by formal resolution of the 365.16 commission. 365.17 Sec. 7. Minnesota Statutes 1996, section 462.388, is 365.18 amended to read: 365.19 462.388 [COMMISSION MEMBERSHIP.] 365.20 Subdivision 1. [REPRESENTATION OF VARIOUS MEMBERS.] A 365.21 commission shall consist of the following members: 365.22 (1) one member from each county board of every county in 365.23 the development region; 365.24 (2) one additional county board member from each county of 365.25 over 100,000 population; 365.26 (3) the town clerk, town treasurer, or one member of a town 365.27 board of supervisors from each county containing organized 365.28 towns; 365.29 (4) one additional member selected by the county board of 365.30 any county containing no townships; 365.31 (5) one mayor or council member from a municipality of 365.32 under 10,000 population from each county, selected by the mayors 365.33 of all such municipalities in the county; 365.34 (6) one mayor or council member from each municipality of 365.35 over 10,000 in each county; 365.36 (7) two school board members elected by a majority of the 366.1 chairs of school boards in the development region; 366.2 (8) one member from each council of governments; 366.3 (9) one member appointed by each native American tribal 366.4 council located in each region; and 366.5 (10) citizens representing public interests within the 366.6 region including members of minority groups to be selected after 366.7 adoption of the bylaws of the commission; and366.8(10) the chair, who shall be selected by the commission. 366.9 Subd. 2. [TERMS, SELECTION METHOD.] The terms of office 366.10 and method of selection of membersother than the chairshall be 366.11 provided in the bylaws of the commissionwhich shall not be366.12inconsistent with the provisions of subdivision 1. The 366.13 commission shall adopt rules setting forth its procedures. 366.14 Subd. 5. [PER DIEM; BOARD MEMBERS.] Members of the 366.15 regional commission may receive a per diem of not over$35$50, 366.16 the amount to be determined by the commission, and shall be 366.17 reimbursed for their reasonable expenses as determined by the 366.18 commission. The commissionshallmay provide for the election 366.19 of a board of directors, who need not be commission members,and 366.20 provide, at its discretion, for a per diem of not over$35$50 a 366.21 day for meetings of the board and expenses. A member of the 366.22 board of directors who is a member of the commission shall 366.23 receive only the per diem payable to board members when meetings 366.24 of the board of directors and the commission are held on the 366.25 same day. 366.26 Sec. 8. Minnesota Statutes 1996, section 462.389, 366.27 subdivision 1, is amended to read: 366.28 Subdivision 1. [CHAIR.] The chair of the commission shall 366.29 have been a resident of the region for at least one year and 366.30 shall be a person experienced in the field of government 366.31 affairs. The chair shall preside at the meetings of the 366.32 commission and board of directors, appoint all employees366.33thereof, subject to the approval of the commission,and be 366.34 responsible for carrying out all policy decisions of the 366.35 commission. The chair's expense allowances shall be fixed by 366.36 the commission. The term of the first chair shall be one year, 367.1 and the chair shall serve until a successor is selected and 367.2 qualifies. At the expiration of the term of the first chair, 367.3 the chair shall be elected from the membership of the commission 367.4 according to procedures established in its bylaws. 367.5 Sec. 9. Minnesota Statutes 1996, section 462.389, 367.6 subdivision 3, is amended to read: 367.7 Subd. 3. [EXECUTIVE DIRECTOR.]Upon the recommendation of367.8the chair,The commission may appoint an executive director to 367.9 serve as the chief administrative officer. The director may be 367.10 chosen from among the citizens of the nation at large, and shall 367.11 be selected on the basis of training and experience in the field 367.12 of government affairs. 367.13 Sec. 10. Minnesota Statutes 1996, section 462.389, 367.14 subdivision 4, is amended to read: 367.15 Subd. 4. [EMPLOYEES.] The commission mayprepare, in367.16consultation with the state commissioner of employee relations,367.17and mayadopt ameritpersonnel system for its officers and 367.18 employees including terms and conditions for the employment, the 367.19 fixing of compensation, their classification, benefits, and the 367.20 filing of performance and fidelity bonds, and such policies of 367.21 insurance as it may deem advisable, the premiums for which, 367.22 however, shall be paid for by the commission. Officers and 367.23 employees are public employees within the meaning of chapter 367.24 353. The commission shall make the employer's contributions to 367.25 pension funds of its employees. 367.26 Sec. 11. Minnesota Statutes 1996, section 462.39, 367.27 subdivision 2, is amended to read: 367.28 Subd. 2. [FEDERALREGIONAL PROGRAMS.] The commission is 367.29theauthorizedagencyto receivestate and federal grantspublic 367.30 and private funds forregionalpurposesfrom the following367.31programs:367.32(1) Section 403 of the Public Works and Economic367.33Development Act of 1965 (economic development districts);367.34(2) Section 701 of the Housing Act of 1954, as amended367.35(multicounty comprehensive planning);367.36(3) Omnibus Crime Control Act of 1968;368.1and for the following to the extent feasible as determined368.2by the governor:368.3(a) Economic Opportunity Act of 1964;368.4(b) Comprehensive Health Planning Act of 1965;368.5(c) Federal regional manpower planning programs;368.6(d) Resource, conservation, and development districts; or368.7(e) Any state and federal programs providing funds368.8forincluding, but not limited to program administration, 368.9 multicounty planning, coordination, and development 368.10purposes.The director shall, where consistent with state and368.11federal statutes and regulations, review applications for all368.12state and federal regional planning and development grants to a368.13commission.368.14 Sec. 12. Minnesota Statutes 1996, section 462.39, 368.15 subdivision 3, is amended to read: 368.16 Subd. 3. [PLANNING.] The commissionshallmay prepare and 368.17adoptsubmit for adoption, after appropriate study and such 368.18 public hearings as may be necessary,acomprehensivedevelopment368.19planplans for local units of government, individually or 368.20 collectively, within the region.The plan shallPlans may 368.21 consist ofa compilation ofpolicy statements, goals, standards, 368.22 programs, and maps prescribing guides foranorderlyand368.23economicdevelopment, public and private, of the region. The368.24comprehensive development planwithin the jurisdiction subject 368.25 to the plan. The plans shall recognize and incorporate planning 368.26 principles which encompass physical, social, or economic needs 368.27 of the region, and those future developments which will have an368.28impact on the entire region including but not limited to such368.29matters as land use, parks and open space land needs, access to368.30direct sunlight for solar energy systems, the necessity for and368.31location of airports, highways, transit facilities, public368.32hospitals, libraries, schools, public and private, housing, and368.33other public buildings. In preparingthedevelopmentplanplans 368.34 the commission shall use to the maximum extent feasible the 368.35 resources studies and data available from other planning 368.36 agencies within the region, including counties, municipalities, 369.1 special districts, and subregional planning agencies, and it 369.2 shall utilize the resources ofthe directorstate agencies to 369.3 the same purpose.No development plan or portion thereof for369.4the region shall be adopted by the commission until it has been369.5submitted to the director for review and comment and a period of369.660 days has elapsed after such submission. When a development369.7plan has been adopted, the commission shall distribute it to all369.8local government units within the region.369.9 Sec. 13. Minnesota Statutes 1996, section 462.391, is 369.10 amended by adding a subdivision to read: 369.11 Subd. 1a. [REVIEW OF LOCAL PLANS.] The commission may 369.12 review and provide comments and recommendations on local plans 369.13 or development proposals which in the judgment of the commission 369.14 have a substantial effect on regional development. Local units 369.15 of government may request that a regional commission review, 369.16 comment, and provide advisory recommendations on local plans or 369.17 development proposals. 369.18 Sec. 14. Minnesota Statutes 1996, section 462.391, is 369.19 amended by adding a subdivision to read: 369.20 Subd. 2a. [STAFF SERVICES.] To avoid duplication of staff 369.21 for various regional bodies assisted by federal or state 369.22 government, the commission may provide basic administrative, 369.23 research, and planning services for all regional planning and 369.24 development bodies. The commissions may contract to obtain or 369.25 perform services with state agencies, for-profit or nonprofit 369.26 entities, subdistricts organized as the result of federal or 369.27 state programs, councils of governments organized under section 369.28 471.59, or any other law, and with local governments. 369.29 Sec. 15. Minnesota Statutes 1996, section 462.391, is 369.30 amended by adding a subdivision to read: 369.31 Subd. 3a. [DATA AND INFORMATION.] The commission may be 369.32 designated as a regional data center providing data collection, 369.33 storage, analysis, and dissemination to be used by it and other 369.34 governmental and private users, and may accept gifts or grants 369.35 to provide this service. 369.36 Sec. 16. Minnesota Statutes 1996, section 462.391, 370.1 subdivision 5, is amended to read: 370.2 Subd. 5. [URBAN AND RURALRESEARCH.] Where studies have 370.3 not been otherwise authorized by law the commission may study 370.4 the feasibility of programsrelatingincluding, but not limited 370.5 to, water, land use, economic development,minority problems370.6 housing, demographics, cultural issues, governmentalproblems370.7 issues, humanandservices, natural resources, 370.8 communication, technology, transportation, and other subjects of 370.9 concern to the citizens of the region, may institute 370.10 demonstration projects in connection therewith, and may enter 370.11 into contracts or accept gifts or grants for such purposes as 370.12 otherwise authorized in sections 462.381 to 462.398. 370.13 Sec. 17. Minnesota Statutes 1996, section 462.391, is 370.14 amended by adding a subdivision to read: 370.15 Subd. 11. [PROGRAM OPERATION.] Upon approval of the 370.16 appropriate authority from local, state, and federal government 370.17 units, commissions may be regarded as general purpose units of 370.18 government to receive funds and operate programs on a regional 370.19 or subregional basis to provide economies of scale or to enhance 370.20 program efficiency. 370.21 Sec. 18. Minnesota Statutes 1996, section 462.391, is 370.22 amended by adding a subdivision to read: 370.23 Subd. 12. [PROPERTY OWNERSHIP.] A commission may buy, 370.24 lease, acquire, own, hold, improve, and use real or personal 370.25 property or an interest in property, wherever located in the 370.26 state for purposes of housing the administrative office of the 370.27 regional commission. 370.28 Sec. 19. Minnesota Statutes 1996, section 462.391, is 370.29 amended by adding a subdivision to read: 370.30 Subd. 13. [PROPERTY DISPOSITION.] A commission may sell, 370.31 convey, mortgage, create a security interest in, lease, 370.32 exchange, transfer, or dispose of all or part of its real or 370.33 personal property or an interest in property, wherever located 370.34 in the state. 370.35 Sec. 20. Minnesota Statutes 1996, section 462.393, is 370.36 amended to read: 371.1 462.393 [ANNUAL REPORT TO UNITS, PUBLIC, GOVERNOR, 371.2 LEGISLATURE.] 371.3 Subdivision 1. [CONTENTS.] On or beforeAugustSeptember 1 371.4 of each year, the commission shall prepare a report for the 371.5 governmental units, the public within the region, the 371.6 legislature and the governor. The report shall include: 371.7 (1) A statement of the commission's receipts and 371.8 expenditures by category since the preceding report; 371.9 (2) A detailed budget for the year in which the report is 371.10 filed and a tentative budget for the following year including an 371.11 outline of its program for such period; 371.12 (3) A description of anycomprehensiveplan adopted in 371.13 whole or in part for the region; 371.14 (4) Summaries of any studies and the recommendations 371.15 resulting therefrom made for the region; 371.16 (5) Alisting of all applications for federal grants or371.17loans made by governmental units within the region together with371.18the action taken by the commission in relation theretosummary 371.19 of significant accomplishments; 371.20 (6) A listing of plans of local governmental units 371.21 submitted to the region, and actions taken in relationship 371.22 thereto; 371.23 (7) Recommendations of the commission regarding federal and 371.24 state programs, cooperation, funding, and legislative needs; and 371.25 (8) A summary of any audit report made during the previous 371.26 yearby the state auditorrelative to the commission. 371.27 Subd. 2. [ASSESSMENT EVERY 5 YEARS.] In19812001 and 371.28 every five years thereafter the commission shall review its 371.29 activities and issue a report assessing its performance in 371.30 fulfilling the purposes of the regional development actof371.311969. The report shallstateaddress whether the existence of 371.32 the commission is in the public welfare and interest.The371.33report shall be included in the report required by subdivision 1.371.34 Sec. 21. Minnesota Statutes 1996, section 462.394, is 371.35 amended to read: 371.36 462.394 [CITIZEN PARTICIPATION AND ADVISORY COMMITTEES.] 372.1 The commission may appoint advisory committees of 372.2 interested and affected citizens to assist in the review of 372.3 plans, programs, and other matters referred for review by the 372.4 commission. Whenever a special advisory committee is required 372.5 by any federal or state regional program the commissionchair372.6 shall, as far as practical, appoint such committees as advisory 372.7 groups to the commission. Members of the advisory committees 372.8 shall serve without compensation but shall be reimbursed for 372.9 their reasonable expenses as determined by the commission. 372.10 Sec. 22. Minnesota Statutes 1996, section 462.396, is 372.11 amended to read: 372.12 462.396 [GRANTS; LEVIES; BUDGET; ACCOUNTS; AUDITS; BIDS;372.13DEPOSITSFINANCIAL.] 372.14 Subdivision 1. [GRANTMAKING, TAX LEVY.] Thedirector372.15 governor and the legislature shall determine the amount of state 372.16 assistance and designate an agency to make grants to any 372.17 commission created under sections 462.381 to 462.398 from 372.18 appropriations made available for those purposes, provided a372.19work program is submitted acceptable to the director. Any 372.20 regional commission may levy a tax on all taxable property in 372.21 the region to provide money for the purposes of sections 462.381 372.22 to 462.398. 372.23 Subd. 2. [BUDGET; HEARING; LEVY LIMITS.] On or before 372.24 August 20 each year, the commission shall submit its proposed 372.25 budget for the ensuing calendar year showing anticipated 372.26 receipts, disbursements, and ad valorem tax levy with a written 372.27 notice of the time and place of the public hearing on the 372.28 proposed budget to each county auditor and municipal clerk 372.29 within the region and those town clerks who in advance have 372.30 requested a copy of the budget and notice of public hearing. On 372.31 or before September 15 each year, the commission shall adopt, 372.32 after a public hearing held not later than September 15, a 372.33 budget covering its anticipated receipts and disbursements for 372.34 the ensuing year and shall decide upon the total amount 372.35 necessary to be raised from ad valorem tax levies to meet its 372.36 budget. After adoption of the budget and no later than 373.1 September 15, the secretary of the commission shall certify to 373.2 the auditor of each county within the region the county share of 373.3 the tax, which shall be an amount bearing the same proportion to 373.4 the total levy agreed on by the commission as the net tax 373.5 capacity of the county bears to the net tax capacity of the 373.6 region. For taxes levied in1990 and thereafter1997 and 373.7 thereafter, the maximumamountsamount oflevieslevy made for 373.8 the purposes of sections 462.381 to 462.398are the following373.9amounts, less the sum of regional planning grants from the373.10commissioner to that region: for Region 1, $180,337; for Region373.112, $150,000; for Region 3, $353,110; for Region 5, $195,865; for373.12Region 6E, $197,177; for Region 6W, $150,000; for Region 7E,373.13$158,653; for Region 8, $206,107; for Region 9, $343,572is 103 373.14 percent of the amount of the previous year's levy, except that 373.15 for any year in which the legislature imposes a percentage 373.16 increase limit on general purpose local government levies that 373.17 is less than three percent, the same levy limit shall apply to 373.18 each commission. The auditor of each county in the region shall 373.19 add the amount of any levy made by the commission within the 373.20 limits imposed by this subdivision to other tax levies of the 373.21 county for collection by the county treasurer with other taxes. 373.22 When collected the county treasurer shall make settlement of the 373.23 taxes with the commission in the same manner as other taxes are 373.24 distributed to political subdivisions. 373.25 Subd. 3. [GIFTS, GRANTS, LOANS.] The commission is a 373.26 special purpose unit of government which may accept gifts, apply 373.27 for and use grants or loans of money or other property from the 373.28 United States, the state, or any person, local or governmental 373.29 body for any commission purpose and may enter into agreements 373.30 required in connection therewith and may hold, use, and dispose 373.31 of such moneys or property in accordance with the terms of the 373.32 gift, grant, loan, agreement, or contract relating thereto. 373.33 For purposes of receipt of state or federal funds for 373.34 community and economic development, regional commissions shall 373.35 be considered general purpose units of government. 373.36 Subd. 4. [ACCOUNTING; CHECKS; ANNUAL AUDIT.] The 374.1 commission shall keep an accurate account of its receipts and 374.2 disbursement. Disbursements of funds of the commission shall be 374.3 made by check signed by the chair or vice-chair or secretary of 374.4 the commission and countersigned by the executive director or an 374.5 authorized deputy thereof after such auditing and approval of 374.6 the expenditure as may be provided by rules of the commission. 374.7 The state auditorshallmay audit the books and accounts of the 374.8 commission once each year, or as often as funds and personnel of 374.9 the state auditor permit. The commission shall pay to the state 374.10 the total cost and expenses of such examination, including the 374.11 salaries paid to the auditors while actually engaged in making 374.12 such examination. The general fund shall be credited with all 374.13 collections made for any such examination. In lieu of an annual 374.14 audit by the state auditor, the commissionmayshall contract 374.15 with a certified public accountant for the annual audit of the 374.16 books and accounts of the commission. If a certified public 374.17 accountant performs the audit, the commission shall send a copy 374.18 of the audit to the state auditor. 374.19 Subd. 5. [BID LAW.] Every contract of the commission for 374.20 the purchase of merchandise, materials, or supplies shall be let 374.21 in accordance with the provisions of section 471.345. 374.22 Subd. 6. [DEPOSITORIES.] The commission shall from time to 374.23 time designate one or more national or state banks, or trust 374.24 companies authorized to do a banking business, as official 374.25 depositories for money of the commission, and thereupon shall 374.26 require the treasurer to deposit all or part of such money in 374.27 such bank or banks. Such designation shall be in writing and 374.28 set forth all the terms and conditions upon which the deposits 374.29 are made, and shall be signed by the chair and secretary, and 374.30 made a part of the minutes of the commission. Any bank or trust 374.31 company so designated shall qualify as a depository by 374.32 furnishing a corporate surety bond or collateral as required by 374.33 chapter 118, and shall thereafter, as long as money of the 374.34 commission is on deposit therein, maintain such bond or 374.35 collateral and shall be required to secure any deposit, insofar 374.36 as it is insured under federal law, as provided in section 375.1 118A.03. 375.2 Sec. 23. Minnesota Statutes 1996, section 462.398, is 375.3 amended to read: 375.4 462.398 [TERMINATION OF COMMISSION.] 375.5 Subdivision 1. [PETITION; POPULATION.] Any combination of 375.6 counties or municipalities representing a majority of the 375.7 population of the region for which a commission exists may 375.8 petition the director by formal resolution stating that the 375.9 existence of the commission is no longer in the public welfare 375.10 and interest and is not needed to accomplish the purposes of the 375.11 regional development actof 1969. For purposes of this section 375.12 the population of a county does not include the population of a 375.13 municipality within the county. Any formal resolution adopted 375.14 by the governing body of a county or municipality for the 375.15 termination of a commission shall be effective for a period of 375.16 one year for the purpose of determining the requisite population 375.17 of the region needed to petition thedirectorgovernor. 375.18 Subd. 2. [HEARINGS; RECOMMENDATION, TERMINATION DATE.] 375.19 Within 35 days of thereceiptfiling of the petition, the 375.20directorgovernor or designee shall fix a time and place within 375.21 the region for a hearing. The director shall give notice of the 375.22 hearing by publication once each week for two successive weeks 375.23 before the date of the hearing in a legal newspaper in each of 375.24 the counties which the commission represents. The hearing shall 375.25 be conducted by members of the commission. If the commission 375.26 determines that the existence of the commission is no longer in 375.27 the public welfare and interest and that it is not needed to 375.28 accomplish the purposes of the regional development actof 1969, 375.29 the commission shall recommend to thedirectorgovernor or 375.30 designee that thedirectorgovernor or designee terminate the 375.31 commission. Within 60 days after receipt of the recommendation, 375.32 the director shall terminate the commission by giving notice of 375.33 the termination to all government units within the region for 375.34 which the commission was established. Unless otherwise provided 375.35 by this subdivision, the hearing shall be in accordance with 375.36 sections 14.001 to 14.69. 376.1 Subd. 3. [30 MONTHS BETWEEN PETITIONS.] The 376.2directorgovernor or designee shall not accept a petition for 376.3 termination more than once in 30 months for each regional 376.4 development commission. 376.5 Sec. 24. [REPEALER.] 376.6 Minnesota Statutes 1996, sections 462.384, subdivision 7; 376.7 462.385, subdivision 2; 462.389, subdivision 5; 462.391, 376.8 subdivisions 1, 2, 3, 4, 6, 7, 8, and 9; and 462.392, are 376.9 repealed. 376.10 ARTICLE 17 376.11 SCORE AND THE SOLID WASTE 376.12 GENERATOR ASSESSMENT 376.13 Section 1. Minnesota Statutes 1996, section 116.07, 376.14 subdivision 10, is amended to read: 376.15 Subd. 10. [SOLID WASTE GENERATOR ASSESSMENTS.] (a) For the 376.16 purposes of this subdivision: 376.17 (1) "assessed waste" means mixed municipal solid waste as 376.18 defined in section 115A.03, subdivision 21, infectious waste as 376.19 defined in section 116.76, subdivision 12, pathological waste as 376.20 defined in section 116.76, subdivision 14, industrial waste as 376.21 defined in section 115A.03, subdivision 13a, and construction 376.22 debris as defined in section 115A.03, subdivision 7; provided 376.23 that all types of assessed waste listed in this clause do not 376.24 include: 376.25 (i) materials that are separated for recycling by the 376.26 generator and that are collected separately from other waste and 376.27 delivered to a waste facility for the purpose of recycling and 376.28 recycled; 376.29 (ii) materials that are separated for recycling by the 376.30 generator, collected and delivered to a waste facility that 376.31 recycles at least 85 percent of its waste, and are collected 376.32 with mixed municipal solid waste that is segregated in leakproof 376.33 bags, provided that the mixed municipal solid waste does not 376.34 exceed five percent of the total weight of the materials 376.35 delivered to the facility and is ultimately delivered to a 376.36 facility designated under sections 115A.80 to 115A.893; and 377.1 (iii) waste generated outside of Minnesota; 377.2 (2) "noncompacted cubic yard" means a loose cubic yard of 377.3 assessed waste; 377.4 (3) "nonresidential customer" means: 377.5 (i) an owner or operator of a business, including a home 377.6 operated business, industry, church, nursing home, nonprofit 377.7 organization, school, or any other commercial or institutional 377.8 enterprise; 377.9 (ii) an owner of a building or site containing multiple 377.10 residences, including a townhome or manufactured home park, 377.11 where no resident has separate trash pickup, and no resident is 377.12 separatelyassessed for such servicebilled by the person that 377.13 collects assessed waste; and 377.14 (iii) any other generator of assessed waste that is not a 377.15 residential customer as defined in clause (6); 377.16 (4) "periodic waste collection" means each time a waste 377.17 container is emptied by the person that collects the assessed 377.18 waste; 377.19 (5) "person that collects assessed waste" means each person 377.20 that is required to pay sales tax on solid waste collection 377.21 services under section 297A.45, or would pay sales tax under 377.22 that section if the assessed waste was mixed municipal solid 377.23 waste; and 377.24 (6) "residential customer" means: 377.25 (i) a detached single family residence that generates only 377.26 household mixed municipal solid waste; and 377.27 (ii) a person residing in a building or at a site 377.28 containing multiple residences, including a townhome or a 377.29 manufactured home park, where each resident either (A) is 377.30 separatelyassessed for waste collectionbilled by the person 377.31 that collects assessed waste; or (B) has separate waste 377.32 collection for each resident, even if the resident pays to the 377.33 owner or an association a monthly maintenance fee which includes 377.34 the expense of waste collection, and the owner or association 377.35 pays the waste collector for waste collection in one lump sum; 377.36 or (C) in the case of a manufactured home park provides separate 378.1 waste collection for each resident. 378.2 (b) A residential customer and a nonresidential customer 378.3 shall pay the solid waste generator assessment imposed under 378.4 this subdivision to the person that collects the assessed waste 378.5 from the customer. 378.6 (c) A person that collects assessed waste shall collect and 378.7 remit to the commissioner of revenue a solid waste generator 378.8 assessment from each of the person's customers as provided in 378.9 paragraphs(c) and(d) and (e). A waste management facility 378.10 that accepts assessed waste shall collect and remit to the 378.11 commissioner of revenue the solid waste assessment as provided 378.12 in paragraph(e)(f). 378.13(c)(d) Except as provided in paragraph(f)(g), the amount 378.14 of the assessment for each residential customer is $2 per year. 378.15 Each person that collects assessed waste shall collect the 378.16 assessment annually from each residential customer that is 378.17 receiving mixed municipal solid waste collection service on July 378.18 1 of each year and shall remit the amount actually collected 378.19 along with the person's first remittance of the sales tax on 378.20 solid waste collection services, described in section 297A.45, 378.21 made after October 1 of each year. For buildings or sites that 378.22 contain multiple residences that are not separately billed for 378.23 collection services, the personwhothat collects assessed waste 378.24 shall collect the assessment for all the residences from the 378.25 person who is billed for the collection service. Any amount of 378.26 the assessment that is received by the person that collects 378.27 assessed waste after October 1 of each year must be remitted 378.28 along with the person's next remittance of sales tax after 378.29 receipt of the assessment. 378.30(d)(e)(1) Except as provided in clause (2), the amount of 378.31 the assessment for each nonresidential customer is 60 cents per 378.32 noncompacted cubic yard of periodic waste collection capacity 378.33 purchased by the customer, based on the size of the container 378.34 for the assessed waste. For a residential customer that 378.35 generates assessed waste that is not mixed municipal solid 378.36 waste, the amount of the assessment is 60 cents per noncompacted 379.1 cubic yard of collection capacity purchased for the waste that 379.2 is not mixed municipal solid waste, based on the size of the 379.3 container for the waste. If the capacity purchased is for 379.4 compacted cubic yards of mixed municipal solid waste, the 379.5 noncompacted capacity purchased is based on the compaction ratio 379.6 of 3:1. The commissioner of revenue, after consultation with 379.7 the commissioner of the pollution control agency, shall 379.8 determine, and may publish by notice, compaction rates for other 379.9 types of waste where they exist and conversion schedules for 379.10 waste that is managed by measurements other than cubic yards. 379.11 Each person that collects assessed waste shall collect the 379.12 assessment from each nonresidential customer as part of each 379.13 statement for payment of waste collection charges and shall 379.14 remit the amount actually collected along with the next 379.15 remittance of sales tax after receipt of the assessment. 379.16 (2) The assessment for nonresidential customers for the 379.17 mixed municipal solid waste that is collected with 379.18 source-separated recyclable materials as described in paragraph 379.19 (a), clause (1), item (ii), is three-tenths of a cent per 379.20 gallon. The customer must pay by purchasing specific collection 379.21 bags or stickers that include the cost of the collection service 379.22 and assessment. 379.23(e)(f) A personwhothat transports assessed waste 379.24 generated by that person or by another person without 379.25 compensation shall pay an assessment of 60 cents per 379.26 noncompacted cubic yard or the equivalent to the operator of the 379.27 waste management facility to which the waste is delivered. The 379.28 operator shall remit the assessments actually collected under 379.29 this paragraph to the commissioner of revenue. This subdivision 379.30 does not apply to a person who transports industrial waste 379.31 generated by that person to a facility owned and operated by 379.32 that person. 379.33(f)(g) The amount of the assessment for each residential 379.34 customer that is subject to a mixed municipal solid waste 379.35 collection service for which the customer pays, based on the 379.36 volume of waste collected, by purchasing specific collection 380.1 bags or stickers from the waste collector, municipality, or 380.2 other vendor is either: 380.3 (1) determined by a method developed by the waste collector 380.4 or municipality and approved by the commissioner of revenue, 380.5 which yields the equivalent of approximately a $2 annual 380.6 assessment per household; or 380.7 (2) three cents per each 35 gallon unit or less. If the 380.8 per unit fee method under this clause is used, it is the 380.9 responsibility of the waste collector or the municipality who is 380.10 selling the bags or stickers to remit the amount of the 380.11 assessment to the department of revenue, according to a payment 380.12 schedule provided by the commissioner of revenue. The 380.13 collection service and assessment under this clause shall be 380.14 included in the price of the bag or sticker. 380.15(g)(h) The commissioner of revenue shall redesign sales 380.16 tax forms for persons that collect assessed waste to accommodate 380.17 payment of the assessment. The amounts remitted under this 380.18 subdivision must be deposited in the state treasury and credited 380.19 to the solid waste fund established in section 115B.42. 380.20(h)(i) For persons that collect assessed waste and 380.21 operators of waste management facilities who are required to 380.22 collect the solid waste generator assessments under this 380.23 subdivision, and persons who are required to remit the 380.24 assessment under paragraph(f)(g), and who do not collect and 380.25 remit the sales tax on solid waste collection services under 380.26 section 297A.45, the commissioner of revenue shall determine 380.27 when and in what manner the persons and operators must remit the 380.28 assessment amounts actually collected. 380.29(i)(j) For the purposes of this subdivision, the 380.30 requirement to "collect" the solid waste generator assessment 380.31 under paragraph(b)(c) means that the person to whom the 380.32 requirement applies shall: 380.33(i) include(1) separately and accurately state the amount 380.34 of the assessment in the appropriate statement of charges for 380.35 waste collection and waste management services and in any action 380.36 to enforce payment on delinquent accounts; 381.1(ii)(2) accurately account for and remit assessments 381.2 received; 381.3(iii)(3) indicate to generators that payment of the 381.4 assessment by the waste generator is required by law and inform 381.5 generators, using information supplied by the commissioner of 381.6 the agency, of the purposes for which revenue from the 381.7 assessment will be spent; and 381.8(iv)(4) cooperate fully with the commissioner of revenue 381.9 to identify generators of assessed waste who fail to remit 381.10 payment of the assessment. 381.11(j)(k) The audit, assessment, penalty, interest, 381.12 enforcement, collection remedies, appeal rights, and 381.13 administrative provisions applicable to taxes imposed under 381.14 chapter 297A apply to the assessmentsimposed under this381.15subdivisionrequired to be paid under paragraphs (b) and (f). 381.16 (l) A person that collects assessed waste and fails to 381.17 comply with the provisions of paragraph (c), is liable for an 381.18 amount equal to the solid waste generator assessment that was 381.19 either: 381.20 (1) received by the person but not timely remitted to the 381.21 commissioner of revenue; or 381.22 (2) not received by the person and the person failed to 381.23 separately and accurately state the amount of the assessment in 381.24 the appropriate statement of charges for waste collection and 381.25 waste management services and in any action to enforce payment 381.26 on delinquent accounts. The audit, assessment, penalty, 381.27 interest, enforcement, collection remedies, appeal rights, and 381.28 administrative provisions applicable to taxes imposed under 381.29 chapter 297A apply to the liability imposed under this 381.30 paragraph. A person who is liable under this paragraph is not 381.31 prohibited from recovering from that person's customer the 381.32 amount of the liability paid to the commissioner of revenue that 381.33 is equal to the solid waste generator assessment owed by the 381.34 customer. 381.35(k)(m) If less than $25,000,000 is projected to be 381.36 available for new encumbrances in any fiscal year after fiscal 382.1 year 1996 from all existing dedicated revenue sources for 382.2 landfill cleanup and reimbursement costs under sections 115B.39 382.3 to 115B.46, by April 1 before the next fiscal year in which the 382.4 shortfall is projected the commissioner of the agency shall 382.5 certify to the commissioner of revenue the amount of the 382.6 shortfall. To provide for the shortfall, the commissioner of 382.7 revenue shall increase the assessment under paragraphs(d)382.8and(e) and (f) by an amount sufficient to generate revenue 382.9 equal to the amount of the shortfall effective the following 382.10 July 1 and shall provide notice of the increased assessment by 382.11 May 1 following certification to persons who are required to 382.12 collect and remit the solid waste generator assessments under 382.13 this subdivision. 382.14 Sec. 2. Minnesota Statutes 1996, section 297A.45, is 382.15 amended to read: 382.16 297A.45 [MIXED MUNICIPAL SOLID WASTE MANAGEMENT SERVICES.] 382.17 Subdivision 1. [DEFINITIONS.]The definitions in sections382.18115A.03 and 297A.01 apply to this section.(a) When used in this 382.19 section, the following terms shall have the meanings given to 382.20 them in this subdivision, unless specifically stated otherwise. 382.21 For terms not defined in this section, the definitions contained 382.22 in chapter 115A.03 are incorporated into this chapter. 382.23 (b) "Mixed municipal solid waste" means mixed municipal 382.24 solid waste as defined in section 115A.03, subdivision 21. 382.25 (c) "Mixed municipal solid waste management services" means 382.26 collection, including a central canister system, transportation, 382.27 processing, and disposal of mixed municipal solid waste. 382.28 (d) "Waste management service provider" means the person 382.29 that bills for mixed municipal solid waste management service; 382.30 or if the service is not billed, the person who provides the 382.31 waste management service, or that person's lawful designee, and 382.32 includes, but is not limited to, waste haulers, waste management 382.33 facilities, utility services, and political subdivisions. 382.34 (e) "Sales price" means total consideration valued in money 382.35 for mixed municipal solid waste management services, excluding 382.36 separately stated charges for exemptions listed under 383.1 subdivision 3. 383.2 (f) "Self-hauler" means a person that transports mixed 383.3 municipal solid waste generated by that person or by another 383.4 person without compensation. 383.5 Subd. 2. [APPLICATION.]The tax imposed by section 297A.02383.6applies to all public and private mixed municipal solid waste383.7management services.383.8Notwithstanding section 297A.25, subdivision 11, a383.9political subdivision that purchases waste management services383.10on behalf of its citizens shall pay the taxes.383.11If a political subdivision provides a waste management383.12service to its residents at a cost in excess of the total direct383.13charge to the residents for the service, the political383.14subdivision shall pay the taxes based on its cost of providing383.15the service in excess of the direct charges.383.16A person who transports mixed municipal solid waste383.17generated by that person or by another person without383.18compensation shall pay the taxes at the waste facility based on383.19the disposal charge or tipping fee.383.20A person who segregates mixed municipal waste from383.21recyclable materials as described in subdivision 3, paragraph383.22(a), clause (2), shall pay the taxes by purchasing specific383.23collection bags or stickers. The collection service and taxes383.24must be included in the price of the bag or sticker.(a) The 383.25 tax imposed by this section applies to all public and private 383.26 mixed municipal solid waste management services. 383.27 (b) The tax, based on market price, is imposed upon the 383.28 political subdivision in those cases where the waste management 383.29 service provider provides waste management services (1) without 383.30 charge, (2) with a service charge or fee under section 400.08, 383.31 (3) billed on the property tax statement, or (4) any combination 383.32 of clauses (1) to (3). The commissioners of revenue and the 383.33 pollution control agency shall determine market price. In 383.34 establishing market price, the commissioner of the pollution 383.35 control agency may consult with the director of the office of 383.36 environmental assistance. 384.1 (c) A self-hauler of mixed municipal solid waste shall pay 384.2 the tax to the operator of the waste management facility to 384.3 which the waste is delivered, at the rate imposed under 384.4 subdivision 5. 384.5 Subd. 3. [EXEMPTIONS.] (a)The cost of a service or the384.6portion of a service to collect and manage recyclable materials384.7is exempt from the tax imposed in section 297A.02Charges to 384.8 collect and manage recyclable materials are exempt if: 384.9 (1) the recyclable materials are separated from mixed 384.10 municipal solid waste by the waste generator, collected 384.11 separately from other waste, and recycled; or 384.12 (2) the recyclable materials are separated from mixed 384.13 municipal solid waste by the generator, collected and delivered 384.14 to a waste facility that recycles at least 85 percent of its 384.15 waste, and are collected with mixed municipal solid waste that 384.16 is segregated in leakproof bags, provided that the mixed 384.17 municipal solid waste does not exceed five percent of the total 384.18 weight of the materials delivered to the facility and is 384.19 ultimately delivered to a facility designated under sections 384.20 115A.80 to 115A.893. 384.21 (b) The amount of a surcharge or fee imposed under section 384.22 115A.919, 115A.921, 115A.923, or 473.843 is exempt from the tax 384.23 imposed in section 297A.02. 384.24 (c) Waste from a recycling facility that separates or 384.25 processes recyclable materials and that reduces the volume of 384.26 the waste by at least 85 percent is exempt from the tax imposed 384.27 in section 297A.02. To qualify for the exemption under this 384.28 paragraph, the waste exempted must be managed separately from 384.29 other solid waste. 384.30 (d)The following costs are exempt from the tax imposed in384.31section 297A.02:384.32(1) costs of providing educational materials and other384.33information to residents;384.34(2) costs of managing solid waste other than mixed384.35municipal solid waste, including household hazardous waste; and384.36(3) costs of court litigation and associated damages.385.1(e) The cost of a waste management service is exempt from385.2the tax imposed in section 297A.02 to the extent that the cost385.3was previously subject to the tax.385.4(f)Through December 31, 2002, the gross receipts from the 385.5 sales of source-separated compostable waste management services 385.6 are exempt from the tax imposed in section 297A.02 if the waste 385.7 is delivered to a facility exempted as described in this 385.8 paragraph. To initially qualify for an exemption, a facility 385.9 must apply for an exemption in its application for a new or 385.10 amended solid waste permit to the pollution control agency. The 385.11 first time a facility applies to the agency, it must certify in 385.12 its application that it will comply with the criteria in clauses 385.13 (1) to (5), and the commissioner of the agency shall so certify 385.14 to the commissioner of revenue who must grant the exemption. 385.15 For each subsequent calendar year, by October 1 of the preceding 385.16 year, the facility must apply to the agency for certification to 385.17 renew its exemption for the following year. The application 385.18 must be filed according to the procedures and contain the 385.19 information required by the agency. The commissioner of revenue 385.20 shall grant the exemption if the commissioner of the agency 385.21 finds and certifies to the commissioner of revenue that based on 385.22 an evaluation of the composition of incoming waste and residuals 385.23 and the quality and use of the product: 385.24 (1) generators separate materials at the source; 385.25 (2) the separation is performed in a manner appropriate to 385.26 the technology specific to the facility that: 385.27 (i) maximizes the quality of the product; 385.28 (ii) minimizes the toxicity and quantity of residuals; and 385.29 (iii) provides an opportunity for significant improvement 385.30 in the environmental efficiency of the operation; 385.31 (3) the operator of the facility educates generators, in 385.32 coordination with each county using the facility, about 385.33 separating the waste to maximize the quality of the waste stream 385.34 for the technology specific to the facility; 385.35 (4) process residuals do not exceed 15 percent of the 385.36 weight of the total material delivered to the facility; and 386.1 (5) the final product is accepted for use. 386.2 Subd. 4. [CITYLOCAL SALES TAX MAY NOT BE IMPOSED.] 386.3 Notwithstanding any other law or charter provision to the 386.4 contrary, ahome rule charter or statutory citypolitical 386.5 subdivision that imposes a general sales taxmayshall not 386.6 impose the sales tax on solid waste management services that are 386.7 subject to the tax under this section. 386.8 Subd. 5. [RATE.] Except as provided in subdivision 2, 386.9 paragraph (b), the tax imposed by section 297A.02 applies to the 386.10 sales price of waste management services billed by a waste 386.11 management service provider. 386.12 Subd. 6. [SEPARATE ACCOUNTINGSALES PRICE OF BAGS, 386.13 STICKERS, OR OTHER INDICIA.]The commissioner shall account for386.14revenue collected from public and private mixed municipal solid386.15waste management services under this section separately from386.16other tax revenue collected under this chapter.(a) When the 386.17 sales price of a bag, sticker, or other indicia includes mixed 386.18 municipal solid waste management services, the tax on the bag, 386.19 sticker, and other indicia, sold by vendors on behalf of a 386.20 political subdivision or waste hauler, shall be collected when 386.21 the bag, sticker, or other indicia are sold to the vendor by the 386.22 political subdivision or waste hauler, and shall be taxed at the 386.23 rate imposed under subdivision 5. 386.24 (b) The solid waste management services and tax under this 386.25 section shall be included in the price of the bag, sticker, or 386.26 other indicia. 386.27 Subd. 7. [BILLING.] The amount of the tax imposed under 386.28 this section shall be itemized separately on the generator's 386.29 bill. 386.30 Subd. 8. [PENALTY.] A penalty is imposed on any person or 386.31 political subdivision that fails to separately report the amount 386.32 of tax due under this chapter. The specified penalties are ten 386.33 percent 386.34 Subd. 9. [SEPARATE ACCOUNTING.] The commissioner shall 386.35 account for revenue collected from public and private mixed 386.36 municipal solid waste management services under this section 387.1 separately from other tax revenue collected under this chapter. 387.2 Sec. 3. [MORATORIUM.] 387.3 The commissioner of revenue shall not initiate or continue 387.4 any action to collect any underpayment from political 387.5 subdivisions, or to reimburse any overpayment to any political 387.6 subdivisions, of use taxes on solid waste management services 387.7 under Minnesota Statutes, section 297A.45, for the period from 387.8 January 1, 1990, through December 31, 1996. 387.9 Sec. 4. [REPEALER.] 387.10 Minnesota Statutes 1996, section 297A.01, subdivision 21, 387.11 is repealed. 387.12 Sec. 5. [EFFECTIVE DATE.] 387.13 Section 1 is effective for services provided after December 387.14 31, 1996. 387.15 Sections 2 and 4 are effective for services provided 387.16 beginning October 1, 1997. 387.17 ARTICLE 18 387.18 SENIOR CITIZENS PROPERTY TAX DEFERRAL 387.19 Section 1. Minnesota Statutes 1996, section 270B.12, is 387.20 amended by adding a subdivision to read: 387.21 Subd. 12. [PROPERTY TAX DEFERRAL.] The commissioner may 387.22 disclose to a county auditor and treasurer, and to their 387.23 designated agents or employees, the annual deferral amounts and 387.24 the cumulative deferral and interest as determined by the 387.25 commissioner under chapter 290B for each parcel of homestead 387.26 property in the county that is enrolled in the senior citizen 387.27 property tax deferral program under chapter 290B. 387.28 Sec. 2. Minnesota Statutes 1996, section 275.065, 387.29 subdivision 3, is amended to read: 387.30 Subd. 3. [NOTICE OF PROPOSED PROPERTY TAXES.] (a) The 387.31 county auditor shall prepare and the county treasurer shall 387.32 deliver after November 10 and on or before November 24 each 387.33 year, by first class mail to each taxpayer at the address listed 387.34 on the county's current year's assessment roll, a notice of 387.35 proposed property taxes and, in the case of a town, final 387.36 property taxes. 388.1 (b) The commissioner of revenue shall prescribe the form of 388.2 the notice. 388.3 (c) The notice must inform taxpayers that it contains the 388.4 amount of property taxes each taxing authority other than a town 388.5 proposes to collect for taxes payable the following year and, 388.6 for a town, the amount of its final levy. It must clearly state 388.7 that each taxing authority, including regional library districts 388.8 established under section 134.201, and including the 388.9 metropolitan taxing districts as defined in paragraph (i), but 388.10 excluding all other special taxing districts and towns, will 388.11 hold a public meeting to receive public testimony on the 388.12 proposed budget and proposed or final property tax levy, or, in 388.13 case of a school district, on the current budget and proposed 388.14 property tax levy. It must clearly state the time and place of 388.15 each taxing authority's meeting and an address where comments 388.16 will be received by mail. 388.17 (d) The notice must state for each parcel: 388.18 (1) the market value of the property as determined under 388.19 section 273.11, and used for computing property taxes payable in 388.20 the following year and for taxes payable in the current year; 388.21 and, in the case of residential property, whether the property 388.22 is classified as homestead or nonhomestead. The notice must 388.23 clearly inform taxpayers of the years to which the market values 388.24 apply and that the values are final values; 388.25 (2) by county, city or town, school district excess 388.26 referenda levy, remaining school district levy, regional library 388.27 district, if in existence, the total of the metropolitan special 388.28 taxing districts as defined in paragraph (i) and the sum of the 388.29 remaining special taxing districts, and as a total of the taxing 388.30 authorities, including all special taxing districts, the 388.31 proposed or, for a town, final net tax on the property for taxes 388.32 payable the following year and the actual tax for taxes payable 388.33 the current year. If a school district has certified under 388.34 section 124A.03, subdivision 2, that a referendum will be held 388.35 in the school district at the November general election, the 388.36 county auditor must note next to the school district's proposed 389.1 amount that a referendum is pending and that, if approved by the 389.2 voters, the tax amount may be higher than shown on the notice. 389.3 For the purposes of this subdivision, "school district excess 389.4 referenda levy" means school district taxes for operating 389.5 purposes approved at referendums, including those taxes based on 389.6 net tax capacity as well as those based on market value. 389.7 "School district excess referenda levy" does not include school 389.8 district taxes for capital expenditures approved at referendums 389.9 or school district taxes to pay for the debt service on bonds 389.10 approved at referenda. In the case of the city of Minneapolis, 389.11 the levy for the Minneapolis library board and the levy for 389.12 Minneapolis park and recreation shall be listed separately from 389.13 the remaining amount of the city's levy. In the case of a 389.14 parcel where tax increment or the fiscal disparities areawide 389.15 tax under chapter 276A or 473F applies, the proposed tax levy on 389.16 the captured value or the proposed tax levy on the tax capacity 389.17 subject to the areawide tax must each be stated separately and 389.18 not included in the sum of the special taxing districts; and 389.19 (3) the increase or decrease in the amounts in clause (2) 389.20 from taxes payable in the current year to proposed or, for a 389.21 town, final taxes payable the following year, expressed as a 389.22 dollar amount and as a percentage. 389.23 For purposes of this section, the amount of the tax on 389.24 homesteads qualifying under the senior citizens' property tax 389.25 deferral program under chapter 290B is the total amount of 389.26 property tax before subtraction of the deferred property tax 389.27 amount. 389.28 (e) The notice must clearly state that the proposed or 389.29 final taxes do not include the following: 389.30 (1) special assessments; 389.31 (2) levies approved by the voters after the date the 389.32 proposed taxes are certified, including bond referenda, school 389.33 district levy referenda, and levy limit increase referenda; 389.34 (3) amounts necessary to pay cleanup or other costs due to 389.35 a natural disaster occurring after the date the proposed taxes 389.36 are certified; 390.1 (4) amounts necessary to pay tort judgments against the 390.2 taxing authority that become final after the date the proposed 390.3 taxes are certified; and 390.4 (5) the contamination tax imposed on properties which 390.5 received market value reductions for contamination. 390.6 (f) Except as provided in subdivision 7, failure of the 390.7 county auditor to prepare or the county treasurer to deliver the 390.8 notice as required in this section does not invalidate the 390.9 proposed or final tax levy or the taxes payable pursuant to the 390.10 tax levy. 390.11 (g) If the notice the taxpayer receives under this section 390.12 lists the property as nonhomestead and the homeowner provides 390.13 satisfactory documentation to the county assessor that the 390.14 property is owned and used as the owner's homestead, the 390.15 assessor shall reclassify the property to homestead for taxes 390.16 payable in the following year. 390.17 (h) In the case of class 4 residential property used as a 390.18 residence for lease or rental periods of 30 days or more, the 390.19 taxpayer must either: 390.20 (1) mail or deliver a copy of the notice of proposed 390.21 property taxes to each tenant, renter, or lessee; or 390.22 (2) post a copy of the notice in a conspicuous place on the 390.23 premises of the property. 390.24 The notice must be mailed or posted by the taxpayer by 390.25 November 27 or within three days of receipt of the notice, 390.26 whichever is later. A taxpayer may notify the county treasurer 390.27 of the address of the taxpayer, agent, caretaker, or manager of 390.28 the premises to which the notice must be mailed in order to 390.29 fulfill the requirements of this paragraph. 390.30 (i) For purposes of this subdivision, subdivisions 5a and 390.31 6, "metropolitan special taxing districts" means the following 390.32 taxing districts in the seven-county metropolitan area that levy 390.33 a property tax for any of the specified purposes listed below: 390.34 (1) metropolitan council under section 473.132, 473.167, 390.35 473.249, 473.325, 473.446, 473.521, 473.547, or 473.834; 390.36 (2) metropolitan airports commission under section 473.667, 391.1 473.671, or 473.672; and 391.2 (3) metropolitan mosquito control commission under section 391.3 473.711. 391.4 For purposes of this section, any levies made by the 391.5 regional rail authorities in the county of Anoka, Carver, 391.6 Dakota, Hennepin, Ramsey, Scott, or Washington under chapter 391.7 398A shall be included with the appropriate county's levy and 391.8 shall be discussed at that county's public hearing. 391.9 (j) For taxes levied in 1996, payable in 1997 only, in the 391.10 case of a statutory or home rule charter city or town that 391.11 exercises the local levy option provided in section 473.388, 391.12 subdivision 7, the notice of its proposed taxes may include a 391.13 statement of the amount by which its proposed tax increase for 391.14 taxes payable in 1997 is attributable to its exercise of that 391.15 option, together with a statement that the levy of the 391.16 metropolitan council was decreased by a similar amount because 391.17 of the exercise of that option. 391.18 Sec. 3. Minnesota Statutes 1996, section 276.04, 391.19 subdivision 2, is amended to read: 391.20 Subd. 2. [CONTENTS OF TAX STATEMENTS.] (a) The treasurer 391.21 shall provide for the printing of the tax statements. The 391.22 commissioner of revenue shall prescribe the form of the property 391.23 tax statement and its contents. The statement must contain a 391.24 tabulated statement of the dollar amount due to each taxing 391.25 authority from the parcel of real property for which a 391.26 particular tax statement is prepared. The dollar amounts due 391.27 the county, township or municipality, the total of the 391.28 metropolitan special taxing districts as defined in section 391.29 275.065, subdivision 3, paragraph (i), school district excess 391.30 referenda levy, remaining school district levy, and the total of 391.31 other voter approved referenda levies based on market value 391.32 under section 275.61 must be separately stated. The amounts due 391.33 all other special taxing districts, if any, may be aggregated. 391.34 The amount of the tax on homesteads qualifying under the senior 391.35 citizens' property tax deferral program under chapter 290B is 391.36 the total amount of property tax before subtraction of the 392.1 deferred property tax amount. For the purposes of this 392.2 subdivision, "school district excess referenda levy" means 392.3 school district taxes for operating purposes approved at 392.4 referenda, including those taxes based on net tax capacity as 392.5 well as those based on market value. "School district excess 392.6 referenda levy" does not include school district taxes for 392.7 capital expenditures approved at referendums or school district 392.8 taxes to pay for the debt service on bonds approved at 392.9 referenda. The amount of the tax on contamination value imposed 392.10 under sections 270.91 to 270.98, if any, must also be separately 392.11 stated. The dollar amounts, including the dollar amount of any 392.12 special assessments, may be rounded to the nearest even whole 392.13 dollar. For purposes of this section whole odd-numbered dollars 392.14 may be adjusted to the next higher even-numbered dollar. The 392.15 amount of market value excluded under section 273.11, 392.16 subdivision 16, if any, must also be listed on the tax 392.17 statement. The statement shall include the following sentence, 392.18 printed in upper case letters in boldface print: "THE STATE OF 392.19 MINNESOTA DOES NOT RECEIVE ANY PROPERTY TAX REVENUES. THE STATE 392.20 OF MINNESOTA REDUCES YOUR PROPERTY TAX BY PAYING CREDITS AND 392.21 REIMBURSEMENTS TO LOCAL UNITS OF GOVERNMENT." 392.22 (b) The property tax statements for manufactured homes and 392.23 sectional structures taxed as personal property shall contain 392.24 the same information that is required on the tax statements for 392.25 real property. 392.26 (c) Real and personal property tax statements must contain 392.27 the following information in the order given in this paragraph. 392.28 The information must contain the current year tax information in 392.29 the right column with the corresponding information for the 392.30 previous year in a column on the left: 392.31 (1) the property's estimated market value under section 392.32 273.11, subdivision 1; 392.33 (2) the property's taxable market value after reductions 392.34 under section 273.11, subdivisions 1a and 16; 392.35 (3) the property's gross tax, calculated by multiplying the 392.36 property's gross tax capacity times the total local tax rate and 393.1 adding to the result the sum of the aids enumerated in clause 393.2 (4); 393.3 (4) a total of the following aids: 393.4 (i) education aids payable under chapters 124 and 124A; 393.5 (ii) local government aids for cities, towns, and counties 393.6 under chapter 477A; and 393.7 (iii) disparity reduction aid under section 273.1398; 393.8 (5) for homestead residential and agricultural properties, 393.9 the homestead and agricultural credit aid apportioned to the 393.10 property. This amount is obtained by multiplying the total 393.11 local tax rate by the difference between the property's gross 393.12 and net tax capacities under section 273.13. This amount must 393.13 be separately stated and identified as "homestead and 393.14 agricultural credit." For purposes of comparison with the 393.15 previous year's amount for the statement for taxes payable in 393.16 1990, the statement must show the homestead credit for taxes 393.17 payable in 1989 under section 273.13, and the agricultural 393.18 credit under section 273.132 for taxes payable in 1989; 393.19 (6) any credits received under sections 273.119; 273.123; 393.20 273.135; 273.1391; 273.1398, subdivision 4; 469.171; and 393.21 473H.10, except that the amount of credit received under section 393.22 273.135 must be separately stated and identified as "taconite 393.23 tax relief";and393.24 (7) any deferred property tax amount under the senior 393.25 citizens' property tax deferral program under chapter 290B, as 393.26 well as the total deferred amount plus accrued interest; and 393.27 (8) the net tax payable in the manner required in paragraph 393.28 (a). 393.29 (d) If the county uses envelopes for mailing property tax 393.30 statements and if the county agrees, a taxing district may 393.31 include a notice with the property tax statement notifying 393.32 taxpayers when the taxing district will begin its budget 393.33 deliberations for the current year, and encouraging taxpayers to 393.34 attend the hearings. If the county allows notices to be 393.35 included in the envelope containing the property tax statement, 393.36 and if more than one taxing district relative to a given 394.1 property decides to include a notice with the tax statement, the 394.2 county treasurer or auditor must coordinate the process and may 394.3 combine the information on a single announcement. 394.4 The commissioner of revenue shall certify to the county 394.5 auditor the actual or estimated aids enumerated in clauses (3) 394.6 and (4) that local governments will receive in the following 394.7 year. In the case of a county containing a city of the first 394.8 class, for taxes levied in 1991, and for all counties for taxes 394.9 levied in 1992 and thereafter, the commissioner must certify 394.10 this amount by September 1. 394.11 Sec. 4. [290B.01] [PURPOSE.] 394.12 Minnesota's system of ad valorem property taxation does not 394.13 adequately recognize the unique financial circumstances of 394.14 homestead property owned and occupied by low-income senior 394.15 citizens. It is therefore declared to be in the public interest 394.16 of this state to stabilize tax burdens on homestead property 394.17 owned by qualifying low-income senior citizens through a 394.18 deferral of certain property taxes. 394.19 Sec. 5. [290B.02] [CITATION.] 394.20 This program shall be named the "senior citizens' property 394.21 tax deferral program." 394.22 Sec. 6. [290B.03] [DEFERRAL OF PROPERTY TAXES.] 394.23 Subdivision 1. [PROGRAM QUALIFICATIONS.] The 394.24 qualifications for the senior citizens' property tax deferral 394.25 program are as follows: 394.26 (1) the property must be owned and occupied as a homestead 394.27 by a person 65 years of age or older. In the case of a married 394.28 couple, both of the spouses must be at least 65 years old at the 394.29 time the first property tax deferral is granted, regardless of 394.30 whether the property is titled in the name of one spouse or both 394.31 spouses, or titled in another way that permits the property to 394.32 have homestead status; 394.33 (2) the total household income of the qualifying 394.34 homeowners, as defined in section 290A.03, subdivision 5, for 394.35 the calendar year preceding the year of the initial application 394.36 may not exceed $30,000; 395.1 (3) the homestead must have been owned and occupied as the 395.2 homestead of at least one of the qualifying homeowners for at 395.3 least 15 years prior to the year the initial application is 395.4 filed; 395.5 (4) there are no delinquent property taxes, penalties, or 395.6 interest on the homesteaded property; 395.7 (5) there are no delinquent special assessments on the 395.8 homesteaded property; 395.9 (6) there are no state or federal tax liens or judgment 395.10 liens on the homesteaded property; 395.11 (7) there are no mortgages or other liens on the property 395.12 that secure future advances, except for those subject to credit 395.13 limits that result in compliance with clause (8); and 395.14 (8) the total unpaid balances of debts secured by mortgages 395.15 and other liens on the property, including unpaid special 395.16 assessments, but not including property taxes payable during the 395.17 year, does not exceed 30 percent of the assessor's estimated 395.18 market value for the year. 395.19 Subd. 2. [QUALIFYING HOMESTEAD; DEFINED.] Qualifying 395.20 homestead property is defined as the dwelling occupied as the 395.21 homeowner's principal residence and so much of the land 395.22 surrounding it, not exceeding one acre, as is reasonably 395.23 necessary for use of the dwelling as a home and any other 395.24 property used for purposes of a homestead as defined in section 395.25 273.13, subdivisions 22 and 23. The homestead may be part of a 395.26 multidwelling building and the land on which it is built. 395.27 Sec. 7. [290B.04] [APPLICATION FOR DEFERRAL.] 395.28 Subdivision 1. [INITIAL APPLICATION.] A taxpayer meeting 395.29 the program qualifications under section 290B.03 may apply to 395.30 the commissioner of revenue for the deferral of taxes. 395.31 Applications are due on or before July 1 for deferral of any of 395.32 the following year's property taxes. A taxpayer may apply in 395.33 the year in which the taxpayer becomes 65 years old, provided 395.34 that no deferral of property taxes will be made until the 395.35 calendar year after the taxpayer becomes 65 years old. The 395.36 application, which shall be prescribed by the commissioner of 396.1 revenue, shall include the following items and any other 396.2 information which the commissioner deems necessary: 396.3 (1) the name, address, and social security number of the 396.4 owner or owners; 396.5 (2) a copy of the property tax statement for the current 396.6 payable year for the homesteaded property; 396.7 (3) the initial year of ownership and occupancy as a 396.8 homestead; 396.9 (4) the owner's household income for the previous calendar 396.10 year; and 396.11 (5) information on any mortgage loans or other amounts 396.12 secured by mortgages or other liens against the property, for 396.13 which purpose the commissioner may require the applicant to 396.14 provide a copy of the mortgage note, the mortgage, or a 396.15 statement of the balance owing on the mortgage loan provided by 396.16 the mortgage holder. The commissioner may require the 396.17 appropriate documents in connection with obtaining and 396.18 confirming information on unpaid amounts secured by other liens. 396.19 The application must state that program participation is 396.20 voluntary. The application must also state that the deferred 396.21 amount depends directly on the applicant's household income, and 396.22 that program participation includes authorization for the 396.23 deferred amount for each year and the cumulative deferral and 396.24 interest to appear on each year's property tax statement as 396.25 public data. 396.26 Subd. 2. [APPROVAL; RECORDING.] The commissioner shall 396.27 approve all initial applications that qualify under this chapter 396.28 and shall notify qualifying homeowners on or before December 1. 396.29 The commissioner may investigate the facts or require 396.30 confirmation in regard to an application. The commissioner 396.31 shall record or file a notice of qualification for deferral, 396.32 including the names of the qualifying homeowners and a legal 396.33 description of the property, in the office of the county 396.34 recorder, or registrar of titles, whichever is applicable, in 396.35 the county where the qualifying property is located. The notice 396.36 must state that it serves as a notice of lien and that it 397.1 includes deferrals under this section for future years. The 397.2 homeowner shall pay the recording or filing fees. 397.3 Subd. 3. [ANNUAL CERTIFICATION BY TAXPAYER.] Annually on 397.4 or before July 1, a taxpayer whose initial application has been 397.5 approved under subdivision 2, shall complete the certification 397.6 form and return it to the commissioner of revenue. The 397.7 certification must state whether or not the taxpayer wishes to 397.8 have property taxes deferred for the following year provided the 397.9 taxes exceed the maximum property tax amount under section 397.10 290B.05. If the taxpayer does wish to have property taxes 397.11 deferred, the certification must state the homeowner's total 397.12 household income for the previous calendar year and any other 397.13 information which the commissioner deems necessary. 397.14 Sec. 8. [290B.05] [MAXIMUM PROPERTY TAX AMOUNT AND 397.15 DEFERRED PROPERTY TAX AMOUNT.] 397.16 Subdivision 1. [DETERMINATION BY COMMISSIONER.] The 397.17 commissioner shall annually determine the qualifying homeowner's 397.18 "maximum property tax amount" and "maximum allowable deferral." 397.19 The maximum property tax amount calculated for taxes payable in 397.20 the following year is equal to five percent of the homeowner's 397.21 total household income for the previous calendar year. No tax 397.22 may be deferred for any homeowner whose total household income 397.23 for the previous year exceeds $30,000. No tax shall be deferred 397.24 in any year in which the homeowner does not meet the program 397.25 qualifications in section 290B.03. The maximum allowable total 397.26 deferral is equal to 75 percent of the assessor's estimated 397.27 market value for the year, less (1) the balance of any mortgage 397.28 loans and other amounts secured by liens against the property at 397.29 the time of application, including any unpaid special 397.30 assessments but not including property taxes payable during the 397.31 year; and (2) any outstanding deferral and interest. 397.32 Subd. 2. [CERTIFICATION BY COMMISSIONER.] On or before 397.33 December 1, the commissioner shall certify to the county auditor 397.34 of the county in which the qualifying homestead is located (1) 397.35 the maximum property tax amount; (2) the maximum allowable 397.36 deferral for the year; and (3) the cumulative deferral and 398.1 interest for all years preceding the next taxes payable year. 398.2 Subd. 3. [CALCULATION OF DEFERRED PROPERTY TAX AMOUNT.] 398.3 When final property tax amounts for the following year have been 398.4 determined, the county auditor shall calculate the "deferred 398.5 property tax amount." The deferred property tax amount is equal 398.6 to the lesser of (1) the maximum allowable deferral for the 398.7 year; or (2) the difference between the total amount of property 398.8 taxes levied upon the qualifying homestead by all taxing 398.9 jurisdictions and the maximum property tax amount. Any special 398.10 assessments levied by any local unit of government must not be 398.11 included in the total tax used to calculate the deferred tax 398.12 amount. No deferral of the current year's property taxes is 398.13 allowed if there are any delinquent property taxes or delinquent 398.14 special assessments for any previous year. Any tax attributable 398.15 to new improvements made to the property after the initial 398.16 application has been approved under section 290B.04, subdivision 398.17 2, must be excluded when determining any subsequent deferred 398.18 property tax amount. The county auditor shall annually, on or 398.19 before April 15, certify to the commissioner of revenue the 398.20 property tax deferral amounts determined under this subdivision 398.21 by property and by owner. 398.22 Subd. 4. [LIMITATION ON TOTAL AMOUNT OF DEFERRED TAXES.] 398.23 On or before September 1 of each year, the commissioner shall 398.24 request, and each county or city assessor shall provide, the 398.25 current year's estimated market value of each property on the 398.26 list supplied by the commissioner that may be eligible for 398.27 deferral under this section for taxes payable in the following 398.28 year. The total amount of deferred taxes and interest on a 398.29 property, when added to (1) the balance owing on any mortgages 398.30 on the property at the time of initial application; and (2) 398.31 other amounts secured by liens on the property at the time of 398.32 the initial application, may not exceed 75 percent of the 398.33 assessor's current estimated market value of the property. 398.34 Sec. 9. [290B.06] [PROPERTY TAX REFUNDS.] 398.35 For purposes of qualifying for the regular property tax 398.36 refund or the special refund for homeowners under chapter 290A, 399.1 the qualifying tax is the full amount of taxes, including the 399.2 deferred portion of the tax. In any year in which a program 399.3 participant chooses to have property taxes deferred under this 399.4 section, any regular or special property tax refund awarded 399.5 based upon those property taxes must be taken first as a 399.6 deduction from the amount of the deferred tax for that year, and 399.7 second as a deduction against any outstanding deferral from 399.8 previous years, rather than as a cash payment to the homeowner. 399.9 The commissioner shall cancel any current year's deferral or 399.10 previous years' deferral and interest that is offset by the 399.11 property tax refunds. If the total of the regular and the 399.12 special property tax refund amounts exceeds the sum of the 399.13 deferred tax for the current year and cumulative deferred tax 399.14 and interest for previous years, the commissioner shall then 399.15 remit the excess amount to the homeowner. On or before the date 399.16 on which the commissioner issues property tax refunds, the 399.17 commissioner shall notify program participants of any reduction 399.18 in the deferred amount for the current and previous years 399.19 resulting from property tax refunds. 399.20 Sec. 10. [290B.07] [LIEN; DEFERRED PORTION.] 399.21 Payment by the state to the county treasurer of taxes 399.22 deferred under this section is deemed a loan from the state to 399.23 the program participant. The commissioner must compute the 399.24 interest as provided in section 270.75, subdivision 5, but not 399.25 to exceed five percent, and maintain records of the total 399.26 deferred amount and interest for each participant. Interest 399.27 shall accrue beginning September 1 of the payable year for which 399.28 the taxes are deferred. The lien created under section 272.31 399.29 continues to secure payment by the taxpayer, or by the 399.30 taxpayer's successors or assigns, of the amount deferred, 399.31 including interest, with respect to all years for which amounts 399.32 are deferred. The lien for deferred taxes and interest has the 399.33 same priority as any other lien under section 272.31, except 399.34 that liens, including mortgages, recorded or filed prior to the 399.35 recording or filing of the notice under section 290B.04, 399.36 subdivision 2, have priority over the lien for deferred taxes 400.1 and interest. A seller's interest in a contract for deed, in 400.2 which a qualifying homeowner is the purchaser or an assignee of 400.3 the purchaser, has priority over deferred taxes and interest on 400.4 deferred taxes, regardless of whether the contract for deed is 400.5 recorded or filed. The lien for deferred taxes and interest for 400.6 future years has the same priority as the lien for deferred 400.7 taxes and interest for the first year, which is always higher in 400.8 priority than any mortgages or other liens filed, recorded, or 400.9 created after the notice recorded or filed under section 400.10 290B.04, subdivision 2. The county treasurer or auditor shall 400.11 maintain records of the deferred portion and shall list the 400.12 amount of deferred taxes for the year and the cumulative 400.13 deferral and interest for all previous years as a lien against 400.14 the property on the property tax statement. In any 400.15 certification of unpaid taxes for a tax parcel, the county 400.16 auditor shall clearly distinguish between taxes payable in the 400.17 current year, deferred taxes and interest, and delinquent 400.18 taxes. Payment of the deferred portion becomes due and owing at 400.19 the time specified in section 290B.08. Upon receipt of the 400.20 payment, the commissioner shall issue a receipt for it to the 400.21 person making the payment upon request and shall notify the 400.22 auditor of the county in which the parcel is located, within ten 400.23 days, identifying the parcel to which the payment applies. Upon 400.24 receipt by the commissioner of revenue of collected funds in the 400.25 amount of the deferral, the state's loan to the program 400.26 participant is deemed paid in full. 400.27 Sec. 11. [290B.08] [TERMINATION OF DEFERRAL; PAYMENT OF 400.28 DEFERRED TAXES.] 400.29 Subdivision 1. [TERMINATION.] (a) The deferral of taxes 400.30 granted under this chapter terminates when one of the following 400.31 occurs: 400.32 (1) the property is sold or transferred; 400.33 (2) the death of the qualifying homeowner(s); 400.34 (3) the homeowner notifies the commissioner in writing that 400.35 the homeowner desires to discontinue the deferral; or 400.36 (4) the property no longer qualifies as a homestead. 401.1 (b) A property is not terminated from the program because 401.2 no deferred property tax amount is determined on the homestead 401.3 for any given year after the homestead's initial enrollment into 401.4 the program. 401.5 Subd. 2. [PAYMENT UPON TERMINATION.] Upon the termination 401.6 of the deferral under subdivision 1, the amount of deferred 401.7 taxes and interest plus the recording or filing fees under both 401.8 section 290B.04, subdivision 2, and this subdivision becomes due 401.9 and payable to the commissioner within 90 days of termination of 401.10 the deferral. No additional interest is due on the deferral if 401.11 timely paid. On receipt of payment, the commissioner shall 401.12 within ten days notify the auditor of the county in which the 401.13 parcel is located, identifying the parcel to which the payment 401.14 applies and shall remit the recording or filing fees under 401.15 section 290B.04, subdivision 2, and this subdivision to the 401.16 auditor. A notice of termination of deferral, containing the 401.17 legal description and the recording or filing data for the 401.18 notice of qualification for deferral under section 290B.04, 401.19 subdivision 2, shall be prepared and recorded or filed by the 401.20 county auditor in the same office in which the notice of 401.21 qualification for deferral under section 290B.04, subdivision 2, 401.22 was recorded or filed, and the county auditor shall mail a copy 401.23 of the notice of termination to the property owner. The 401.24 property owner shall pay the recording or filing fees. Upon 401.25 recording or filing of the notice of termination of deferral, 401.26 the notice of qualification for deferral under section 290B.04, 401.27 subdivision 2, and the lien created by it are discharged. If 401.28 the deferral is not timely paid, the penalty, interest, lien, 401.29 forfeiture, and other rules for the collection of ad valorem 401.30 property taxes apply. 401.31 Sec. 12. [290B.09] [STATE REIMBURSEMENT.] 401.32 Subdivision 1. [DETERMINATION; PAYMENT.] The commissioner 401.33 of revenue shall determine the deferred amount of property tax 401.34 in each county, basing determinations on a review of abstracts 401.35 of tax lists submitted by the county auditors under section 401.36 275.29. The commissioner may make changes in the abstracts of 402.1 tax lists as deemed necessary. The commissioner of revenue, 402.2 after such review, shall pay the deferred amount of property tax 402.3 to each county treasurer on or before August 31. 402.4 At least once each year, the commissioner shall report to 402.5 the county auditor the total cumulative amount of deferred taxes 402.6 and interest that constitute a lien against the property. 402.7 The county treasurer shall distribute as part of the 402.8 October settlement the funds received as if they had been 402.9 collected as a part of the property tax. 402.10 Subd. 2. [APPROPRIATION.] An amount sufficient to pay the 402.11 total amount of property tax determined under subdivision 1 is 402.12 annually appropriated from the general fund to the commissioner 402.13 of revenue. 402.14 Sec. 13. [DEPARTMENT OF REVENUE APPROPRIATION.] 402.15 There is appropriated to the commissioner of revenue, 402.16 $33,000 for fiscal year 1998, and $34,000 for fiscal year 1999, 402.17 for the purposes of administering the provisions of this article. 402.18 Sec. 14. [EFFECTIVE DATE.] 402.19 Sections 1 to 12 are effective the day following final 402.20 enactment for deferral of property taxes payable in 1998, and 402.21 thereafter. 402.22 ARTICLE 19 402.23 MISCELLANEOUS 402.24 Section 1. Minnesota Statutes 1996, section 6.76, is 402.25 amended to read: 402.26 6.76 [LOCAL GOVERNMENTAL EXPENDITURES FOR LOBBYISTS.] 402.27 On or before January 31, 1990, andof each yearthereafter, 402.28 all counties, cities, school districts, metropolitan agencies, 402.29 regional railroad authorities, and the metropolitan council 402.30 shall report to the state auditor, on forms prescribed by the 402.31 auditor, their estimated expenditures paid for the previous 402.32 calendar year to a lobbyist as defined in section 10A.01, 402.33 subdivision 11, and to any staff person not registered as a 402.34 lobbyist, over 25 percent of whose time is spent during the 402.35 legislative session on legislative matters, and for lobbying 402.36 purposes to an association that retains or employs a lobbyist as 403.1 defined in section 10A.01, subdivision 11. 403.2 Sec. 2. Minnesota Statutes 1996, section 115A.554, is 403.3 amended to read: 403.4 115A.554 [AUTHORITY OF SANITARY DISTRICTS.] 403.5 A sanitary district has the authorities and duties of 403.6 counties within the district's boundary for purposes of sections 403.7 115A.0716; 115A.46, subdivisions 4 and 5; 115A.48; 115A.551; 403.8 115A.552; 115A.553; 115A.919; 115A.929; 115A.93; 115A.96, 403.9 subdivision 6; 115A.961; 116.072; 375.18, subdivision 14; 403.10 400.08, except subdivision 4, paragraph (b); 400.16; and 400.161. 403.11 Sec. 3. Minnesota Statutes 1996, section 117.155, is 403.12 amended to read: 403.13 117.155 [PAYMENTS; PARTIAL PAYMENT PENDING APPEAL.] 403.14 Except as otherwise provided herein payment of damages 403.15 awarded may be made or tendered at any time after the filing of 403.16 the report; and the duty of the petitioner to pay the amount of 403.17 any award or final judgment upon appeal shall, for all purposes, 403.18 be held and construed to be full and just compensation to the 403.19 respective owners or the persons interested in the lands. If 403.20 either the petitioner or any respondent appeals from an award, 403.21 the respondent or respondents, if there is more than one, except 403.22 encumbrancers having an interest in the award which has been 403.23 appealed, may demand of the petitioner a partial payment of the 403.24 award pending the final determination thereof, and it shall be 403.25 the duty of the petitioner to comply with such demand and to 403.26 promptly pay the amount demanded but not in excess of an amount 403.27 equal to three-fourths of the award of damages for the parcel 403.28 which has been appealed, less any payments made by petitioner 403.29 pursuant to section 117.042; provided, however, that the 403.30 petitioner may by motion after due notice to all interested 403.31 parties request, and the court may order, reduction in the 403.32 amount of the partial payment for cause shown. If an appeal is 403.33 taken from an award the petitioner may, but it cannot be 403.34 compelled to, pay the entire amount of the award pending the 403.35 final determination thereof. If any respondent or respondents 403.36 having an interest in the award refuses to accept such payment 404.1 the petitioner may pay the amount thereof to the court 404.2 administrator of district court to be paid out under direction 404.3 of the court. A partial or full payment as herein provided 404.4 shall not draw interest from the condemner from the date of 404.5 payment or deposit, and upon final determination of any appeal 404.6 the total award of damages shall be reduced by the amount of the 404.7 partial or full payment. If any partial or full payment exceeds 404.8 the amount of the award of compensation as finally determined, 404.9the petitioner shall have a claim against the respondents404.10receiving such payment for the amount thereof, to be recoverable404.11in the same manner as in any civil actionupon petitioner's 404.12 motion, final judgment must be entered in the condemnation 404.13 action in favor of the petitioner in the amount of the balance 404.14 owed to the petitioner and is recoverable within the original 404.15 condemnation action. 404.16 Sec. 4. Minnesota Statutes 1996, section 121.15, is 404.17 amended by adding a subdivision to read: 404.18 Subd. 1a. [PROJECT.] The construction, remodeling, or 404.19 improvement of a building or site of an educational facility at 404.20 an estimated cost exceeding $100,000 is a project under section 404.21 177.42, subdivision 2. 404.22 Sec. 5. Minnesota Statutes 1996, section 161.45, is 404.23 amended by adding a subdivision to read: 404.24 Subd. 3. [UTILITY INTERESTS WHEN REAL PROPERTY 404.25 CONVEYED.] In proceedings to vacate, transfer, turn back, or 404.26 otherwise convey an interest in real property owned or 404.27 controlled by the department, when the property is owned in fee 404.28 by the state, the commissioner may specify that the conveyance 404.29 of the department's interest does not affect a prior, existing 404.30 utility easement in the property or use of the property granted 404.31 to a utility under permit issued by the department. In 404.32 addition, the commissioner may convey interests in real 404.33 property, including an easement, subject to the right of a 404.34 utility to enter upon the right-of-way to maintain, repair, 404.35 replace, reconstruct, improve, remove, or otherwise attend to 404.36 its equipment. Where the utility had no preexisting easement 405.1 over the real property, this subdivision does not prohibit a 405.2 political subdivision, government agency, or private entity from 405.3 negotiating or contracting with a utility with regard to the 405.4 utility's easement or other interest in the property, but the 405.5 utility shall continue to hold the interest in the property and 405.6 the right of reasonable entry unless and until the utility 405.7 agrees in writing to relinquish its interests. 405.8 Sec. 6. Minnesota Statutes 1996, section 216B.16, is 405.9 amended by adding a subdivision to read: 405.10 Subd. 16. [WIND AND BIOMASS MANDATES.] Upon the petition 405.11 of a public utility, the commission shall approve or disapprove 405.12 power purchase contracts or investments entered into or made by 405.13 the utility to satisfy the wind and biomass mandates contained 405.14 in sections 216B.2423 and 216B.2424. The contract expenses 405.15 incurred and investments made by a public utility with the 405.16 approval of the commission shall be fully recognized for the 405.17 entire term of the contract or investment period without 405.18 reduction and shall be included by the commission in its 405.19 determination of just and reasonable rates. The commission 405.20 shall permit a public utility to file rate schedules providing 405.21 for recovery of the costs of the wind and biomass mandates. 405.22 Sec. 7. [270.0683] [REVENUE ESTIMATES OF LEGISLATIVE 405.23 PROPOSALS.] 405.24 Subdivision 1. [DUTY TO PREPARE.] The commissioner of 405.25 revenue shall prepare estimates of the effect of a bill or other 405.26 proposal to change Minnesota tax law on state or local tax 405.27 collections and state aid payments: 405.28 (1) for bills being heard in a legislative committee with 405.29 jurisdiction over bills relating to taxation; 405.30 (2) in response to a request from the chair of a 405.31 legislative committee with jurisdiction over bills relating to 405.32 taxation; 405.33 (3) in response to a request, approved by a majority of a 405.34 legislative committee with jurisdiction over bills relating to 405.35 taxation; and 405.36 (4) to the extent possible, in response to a request from a 406.1 member of the legislature. 406.2 Subd. 2. [METHODOLOGY.] Given the limitations of time and 406.3 available resources, the commissioner shall use the best 406.4 available data and methods to estimate, as accurately as 406.5 possible, the actual effect of proposed changes on tax 406.6 collections or payment of refunds. To the extent practicable, 406.7 in preparing the estimates the commissioner must specifically 406.8 take into account actual and likely levels of compliance with 406.9 both present and proposed tax law, including the effect of 406.10 ongoing or planned compliance efforts by the commissioner. The 406.11 estimates must include a description of the methods and data 406.12 used to prepare the estimate. 406.13 Subd. 3. [EDUCATION AIDS EXCLUDED.] This section does not 406.14 require the commissioner to estimate the effect of changes in 406.15 state education aids. 406.16 Sec. 8. Minnesota Statutes 1996, section 270.60, is 406.17 amended by adding a subdivision to read: 406.18 Subd. 4. [PAYMENTS TO COUNTIES.] (a) The commissioner 406.19 shall pay to a county in which an Indian gaming casino is 406.20 located ten percent of the state share of all taxes generated 406.21 from activities on reservations and collected under a tax 406.22 agreement under this section with the tribal government for the 406.23 reservation located in the county. If the tribe has casinos 406.24 located in more than one county, the payment must be divided 406.25 equally among the counties in which the casinos are located. 406.26 (b) If a tribe agrees in writing with a county in which an 406.27 Indian gaming casino is located to make cash payments to the 406.28 county, the commissioner shall pay an additional amount to the 406.29 county equal to the tribal payment. The total amount paid under 406.30 this paragraph and paragraph (a) must not exceed 15 percent of 406.31 the state share of the tax generated under the agreement for a 406.32 year. A county that has entered into a written agreement with a 406.33 tribe shall provide to the commissioner a copy of the agreement 406.34 plus proof of payments made by the tribe under the agreement. 406.35 The commissioner shall not make any additional payments under 406.36 this paragraph unless the required documents are received by the 407.1 commissioner by January 31 of the year following the year the 407.2 payments are made by the tribe. 407.3 (c) The commissioner shall make the payments required under 407.4 this subdivision by February 28 of the year following the year 407.5 the taxes are collected. 407.6 (d) The amounts necessary to make the payments authorized 407.7 by this subdivision are appropriated from the general fund to 407.8 the commissioner. 407.9 Sec. 9. Minnesota Statutes 1996, section 271.19, is 407.10 amended to read: 407.11 271.19 [COSTS AND DISBURSEMENTS.] 407.12 Upon the determination of any appeal under this chapter 407.13 before the tax court, or of any review hereunder by the supreme 407.14 court, the costs and disbursements shall be taxed and allowed in 407.15 favor of the prevailing party and against the losing party as in 407.16 civil actions or, if there has been an offer of judgment or 407.17 settlement by a party prior to ten days before the court hears 407.18 the appeal, pursuant to Minnesota Rules of Civil Procedure, rule 407.19 68. In any case where a person liable for a tax or other 407.20 obligation has lost an appeal or review instituted by the 407.21 person, and the tax court or court shall determine that the 407.22 person instituted the same merely for the purposes of delay, or 407.23 that the taxpayer's position in the proceedings is frivolous, 407.24 additional costs, commensurate with the expense incurred and 407.25 services performed by the agencies of the state in connection 407.26 with the appeal, but not exceeding $5,000 in any case, may be 407.27 allowed against the taxpayer, in the discretion of the tax court 407.28 or court. Costs and disbursements allowed against any such 407.29 person shall be added to the tax or other obligation determined 407.30 to be due, and shall be payable therewith. To the extent 407.31 described in section 15.471, where an award of costs and 407.32 attorney fees is authorized under section 15.472, the costs and 407.33 fees shall be allowed against the state, including expenses 407.34 incurred by the taxpayer to administratively protest or appeal 407.35 to the department of revenue the order, decision, or report of 407.36 the commissioner that is the subject of the tax court 408.1 proceedings. Costs and disbursements allowed against the state 408.2 or other public agencies shall be paid out of funds received 408.3 from taxes or other obligations of the kind involved in the 408.4 proceeding, or other funds of the agency concerned appropriated 408.5 and available therefor. Witnesses in proceedings under this 408.6 chapter shall receive like fees as in the district court, to be 408.7 paid in the first instance by the parties by whom the witnesses 408.8 were called, and to be taxed and allowed as herein provided. 408.9 Sec. 10. Minnesota Statutes 1996, section 278.07, is 408.10 amended to read: 408.11 278.07 [JUDGMENT; AMOUNT; COSTS.] 408.12 Judgment shall be for the amount of the taxes for the year 408.13 as the court shall determine the same, less the amount paid 408.14 thereon, if any. If the tax is sustained in the full amount 408.15 levied or increased, costs and disbursements may, in the 408.16 discretion of the court, be taxed and allowed as in delinquent 408.17 tax proceedings and shall be included in the judgment. If the 408.18 tax so determinedshall be less thanis decreased from the 408.19 amountthereof asoriginally levied, the court may, in its 408.20 discretion, award disbursements to the petitioner, which shall 408.21 be taxed and allowed and be deducted from the amount of the 408.22 taxes as determined unless there has been a previous offer of 408.23 reduced taxes that was rejected by the petitioner, in which case 408.24 the award of costs and disbursements is governed by Minnesota 408.25 Rules of Civil Procedure, rule 68. If there be no judgment for 408.26 taxes, a judgment may be entered determining the right of the 408.27 parties and for the costs and disbursements as taxed and allowed. 408.28 Sec. 11. Minnesota Statutes 1996, section 287.22, is 408.29 amended to read: 408.30 287.22 [EXCEPTIONS.] 408.31 The tax imposed by section 287.21 shall not apply to: 408.32 A. Any executory contract for the sale of land under which 408.33 the vendee is entitled to or does take possession thereof, or 408.34 any assignment or cancellation thereof. 408.35 B. Any mortgage or any assignment, extension, partial 408.36 release, or satisfaction thereof. 409.1 C. Any will. 409.2 D. Any plat. 409.3 E. Any lease. 409.4 F. Any deed, instrument, or writing in which the United 409.5 States or any agency or instrumentality thereof is the grantor, 409.6 assignor, transferor, conveyor, grantee or assignee. 409.7 G. Deeds for cemetery lots. 409.8 H. Deeds of distribution by personal representatives. 409.9 I. Deeds to or from coowners partitioning undivided 409.10 interests in the same piece of property. 409.11 J. Any deed or other instrument of conveyance issued 409.12 pursuant to a land exchange under section 92.121 and related 409.13 laws. 409.14 K. A referee's or sheriff's certificate of sale in a 409.15 mortgage or lien foreclosure sale. 409.16 L. A referee's or sheriff's certificate of redemption from 409.17 a mortgage or lien foreclosure sale issued to the redeeming 409.18 mortgagor or lienee. 409.19 M. A decree of marriage dissolution, as defined in section 409.20 287.01, subdivision 4, or any deed or other instrument between 409.21 the parties to the dissolution made pursuant to the terms of the 409.22 decree. 409.23 Sec. 12. Minnesota Statutes 1996, section 295.50, 409.24 subdivision 6, is amended to read: 409.25 Subd. 6. [HOME HEALTH CARE SERVICES.] "Home health care 409.26 services" are services: 409.27 (1) defined under the state medical assistance program as 409.28 home health agency services provided by a home health agency, 409.29 personal care services and supervision of personal care 409.30 services, private duty nursing services, and waivered 409.31 services or services by home care providers required to be 409.32 licensed under chapter 144A; and 409.33 (2) provided at a recipient's residence, if the recipient 409.34 does not live in a hospital, nursing facility, as defined in 409.35 section 62A.46, subdivision 3, or intermediate care facility for 409.36 persons with mental retardation as defined in section 256B.055, 410.1 subdivision 12, paragraph (d). 410.2 Home health care services include medical supplies only 410.3 when used in providing home health care services. 410.4 Sec. 13. Minnesota Statutes 1996, section 295.58, is 410.5 amended to read: 410.6 295.58 [DEPOSIT OF REVENUES AND PAYMENT OF REFUNDS.] 410.7 (a) The commissioner shall deposit all revenues, including 410.8 penalties and interest, derived from the taxes imposed by 410.9 sections 295.50 to 295.57and from the insurance premiums tax on410.10health maintenance organizations, community integrated service410.11networks, integrated service networks, and nonprofit health410.12service plan corporationsin the health care access fund in the 410.13 state treasury. Refunds of overpayments must be paid from the 410.14 health care access fund in the state treasury. There is 410.15 annually appropriated from the health care access fund to the 410.16 commissioner of revenue the amount necessary to make any refunds 410.17 required under section 295.54. 410.18 (b) The revenues, including penalties and interest, derived 410.19 from the tax on insurance premiums imposed by section 60A.15 on 410.20 health maintenance organizations, community integrated service 410.21 networks, integrated service networks, and nonprofit health 410.22 service plan corporations must be deposited in the general fund 410.23 and are annually appropriated to the Minnesota comprehensive 410.24 health association to offset assessments made to subsidize the 410.25 costs of the Minnesota comprehensive insurance plan established 410.26 under chapter 62E. 410.27 Sec. 14. Minnesota Statutes 1996, section 298.75, 410.28 subdivision 1, is amended to read: 410.29 Subdivision 1. [DEFINITIONS.] Except as may otherwise be 410.30 provided, the following words, when used in this section, shall 410.31 have the meanings herein ascribed to them. 410.32 (1) "Aggregate material" shall mean nonmetallic natural 410.33 mineral aggregate including, but not limited to sand, silica 410.34 sand, gravel, building stone, crushed rock, limestone, and 410.35 granite. Aggregate material shall not include dimension stone 410.36 and dimension granite. Aggregate material must be measured or 411.1 weighed after it has been extracted from the pit, quarry, or 411.2 deposit. 411.3 (2) "Person" shall mean any individual, firm, partnership, 411.4 corporation, organization, trustee, association, or other entity. 411.5 (3) "Operator" shall mean any person engaged in the 411.6 business of removing aggregate material from the surface or 411.7 subsurface of the soil, for the purpose of sale, either directly 411.8 or indirectly, through the use of the aggregate material in a 411.9 marketable product or service. 411.10 (4) "Extraction site" shall mean a pit, quarry, or deposit 411.11 containing aggregate material and any contiguous property to the 411.12 pit, quarry, or deposit which is used by the operator for 411.13 stockpiling the aggregate material. 411.14 (5) "Importer" shall mean any person who buys aggregate 411.15 material produced from a county not listed in paragraph (6) or 411.16 another state and causes the aggregate material to be imported 411.17 into a county in this state which imposes a tax on aggregate 411.18 material. 411.19 (6) "County" shall mean the counties of Pope, Stearns, 411.20 Benton, Sherburne, Carver, Scott, Dakota, Le Sueur, Kittson, 411.21 Marshall, Pennington, Red Lake, Polk, Norman, Mahnomen, Clay, 411.22 Becker, Carlton, St. Louis, Rock, Murray, Wilkin, Big Stone, 411.23 Sibley, Hennepin, Washington, Chisago, and Ramsey. 411.24 Sec. 15. Minnesota Statutes 1996, section 298.75, 411.25 subdivision 4, is amended to read: 411.26 Subd. 4. If the county auditor has not received the report 411.27 by the 15th day after the last day of each calendar quarter from 411.28 the operator or importer as required by subdivision 3 or has 411.29 received an erroneous report, the county auditor shall estimate 411.30 the amount of tax due and notify the operator or importer by 411.31 registered mail of the amount of tax so estimated within the 411.32 next 14 days. An operator or importer may, within 30 days from 411.33 the date of mailing the notice, and upon payment of the amount 411.34 of tax determined to be due, file in the office of the county 411.35 auditor a written statement of objections to the amount of taxes 411.36 determined to be due. The statement of objections shall be 412.1 deemed to be a petition within the meaning of chapter 278, and 412.2 shall be governed by sections 278.02 to 278.13. 412.3 Sec. 16. Minnesota Statutes 1996, section 298.75, is 412.4 amended by adding a subdivision to read: 412.5 Subd. 8. The county auditor or its duly authorized agent 412.6 may examine records, including computer records, maintained by 412.7 an importer or operator. The term "record" includes, but is not 412.8 limited to, all accounts of an importer or operator. The county 412.9 auditor must have access at all reasonable times to inspect and 412.10 copy all business records related to an importer's or operator's 412.11 collection, transportation, and disposal of aggregate to the 412.12 extent necessary to ensure that all aggregate material 412.13 production taxes required to be paid have been remitted to the 412.14 county. The records must be maintained by the importer or 412.15 operator for no less than six years. 412.16 Sec. 17. Minnesota Statutes 1996, section 298.28, 412.17 subdivision 9a, is amended to read: 412.18 Subd. 9a. [TACONITE ECONOMIC DEVELOPMENT FUND.] (a) 15.4 412.19 cents per ton for distributions in 1996, 1998, and 1999 and 20.4 412.20 cents per ton for distributions in 1997, 1998, and 1999shall be 412.21 paid to the taconite economic development fund. No distribution 412.22 shall be made under this paragraph in any year in which total 412.23 industry production falls below 30 million tons. 412.24 (b) An amount equal to 50 percent of the tax under section 412.25 298.24 for concentrate sold in the form of pellet chips and 412.26 fines not exceeding 5/16 inch in size and not including crushed 412.27 pellets shall be paid to the taconite economic development 412.28 fund. The amount paid shall not exceed $700,000 annually for 412.29 all companies. If the initial amount to be paid to the fund 412.30 exceeds this amount, each company's payment shall be prorated so 412.31 the total does not exceed $700,000. 412.32 Sec. 18. Minnesota Statutes 1996, section 298.28, is 412.33 amended by adding a subdivision to read: 412.34 Subd. 9b. [TACONITE ENVIRONMENTAL FUND.] Five cents per 412.35 ton for distributions in 1998 and 1999 shall be paid to the 412.36 taconite environmental fund for use under section 298.2961. No 413.1 distribution may be made under this paragraph in any year in 413.2 which total industry production falls below 30,000,000 tons. 413.3 Sec. 19. Minnesota Statutes 1996, section 298.2961, 413.4 subdivision 1, is amended to read: 413.5 Subdivision 1. [APPROPRIATION.] (a) $10,000,000 is 413.6 appropriated from the northeast Minnesota economic protection 413.7 trust fund to a special account in the taconite area 413.8 environmental protection fund for grants or loans to producers 413.9 on a project-by-project basis as provided in this section. 413.10 (b) The proceeds of the tax designated under section 413.11 298.28, subdivision 9b, are appropriated for grants and loans to 413.12 producers on a project-by-project basis as provided in this 413.13 section. 413.14 Sec. 20. Minnesota Statutes 1996, section 325D.33, 413.15 subdivision 3, is amended to read: 413.16 Subd. 3. [REBATES OR CONCESSIONS.] It is unlawful for a 413.17 wholesaler to offer a rebate in price, to give a rebate in 413.18 price, to offer a concession of any kind, or to give a 413.19 concession of any kind in connection with the sale of 413.20 cigarettes. For purposes of this chapter, the term "discount" 413.21 is included in the definition of a rebate. For purposes of this 413.22 subdivision, the term "wholesaler" does not include a 413.23 manufacturer or manufacturer's representative. Payments or 413.24 other compensation for using the manufacturer's displays or 413.25 advertising materials are not rebates, discounts, or concessions 413.26 for purposes of this chapter. 413.27 Sec. 21. Minnesota Statutes 1996, section 373.40, 413.28 subdivision 7, is amended to read: 413.29 Subd. 7. [REPEALER.] This section is repealed effective 413.30 for bonds issued after July 1,19982003, but continues to apply 413.31 to bonds issued before that date. 413.32 Sec. 22. [383A.80] [RAMSEY COUNTY DEED AND MORTGAGE TAX.] 413.33 Subdivision 1. [AUTHORITY TO IMPOSE; RATE.] (a) The 413.34 governing body of Ramsey county may impose a mortgage registry 413.35 and deed tax. 413.36 (b) The rate of the mortgage registry tax equals one cent 414.1 for each $100 or fraction of the principal. 414.2 (c) The rate of the deed tax equals five cents for each 414.3 $500 or fraction of the amount. 414.4 Subd. 2. [GENERAL LAW PROVISIONS APPLY.] The taxes under 414.5 this section apply to the same base and must be imposed, 414.6 collected, administered, and enforced in the same manner as 414.7 provided under chapter 287 for the state mortgage registry and 414.8 deed taxes. All the provisions of chapter 287 apply to these 414.9 taxes, except the rate is as specified in subdivision 1, the 414.10 term "Ramsey county" must be substituted for "the state," and 414.11 the revenue must be deposited as provided in subdivision 3. 414.12 Subd. 3. [DEPOSIT OF REVENUES.] All revenues from the tax 414.13 are for the use of the Ramsey county board of commissioners and 414.14 must be deposited in the county's environmental response fund 414.15 under section 383B.81. 414.16 Subd. 4. [EXPIRATION.] The authority to impose the tax 414.17 under this section expires January 1, 2003. 414.18 Sec. 23. [383A.81] [ENVIRONMENTAL RESPONSE FUND.] 414.19 Subdivision 1. [CREATION.] An environmental response fund 414.20 is created for the purposes specified in this section. The 414.21 taxes imposed by section 383B.80 must be deposited in the fund. 414.22 The board of county commissioners shall administer the fund 414.23 either as a county board, a housing and redevelopment authority, 414.24 or a regional rail authority. 414.25 Subd. 2. [USES OF FUND.] The fund created in subdivision 1 414.26 must be used for the following purposes: 414.27 (1) acquisition through purchase or condemnation of lands 414.28 or property which are polluted or contaminated with hazardous 414.29 substances; 414.30 (2) paying the costs associated with indemnifying or 414.31 holding harmless the entity taking title to lands or property 414.32 from any liability arising out of the ownership, remediation, or 414.33 use of the land or property; 414.34 (3) paying for the costs of remediating the acquired land 414.35 or property; 414.36 (4) paying the costs associated with remediating lands or 415.1 property which are polluted or contaminated with hazardous 415.2 substances; or 415.3 (5) paying for the costs associated with improving the 415.4 property for economic development, recreational, housing, 415.5 transportation or rail traffic. 415.6 Subd. 3. [MATCHING FUNDS.] In expending funds under this 415.7 section, the county shall seek matching funds from contamination 415.8 clean up funds administered by the commissioner of the 415.9 department of trade and economic development, the metropolitan 415.10 council, the federal government, the private sector, and any 415.11 other source. 415.12 Subd. 4. [BONDS.] The county may pledge the proceeds from 415.13 the taxes imposed by section 383B.80 to bonds issued under this 415.14 chapter and chapters 398A, 462, 469, and 475. 415.15 Subd. 5. [PRIORITIES.] The first priority for the use of 415.16 the environmental response fund created in this section is to 415.17 clean up the site located in the city of St. Paul known as the 415.18 Dale Street Shops and Maxson Steel site or other sites at or 415.19 near rail lines that are blighted and the clean up of which will 415.20 lead to living wage jobs, and to improve the land for economic 415.21 development. 415.22 Subd. 6. [LAND SALES.] Land or property acquired under 415.23 this section may be resold at fair market value. Proceeds from 415.24 the sale of the land must be deposited in the environmental 415.25 response fund. 415.26 Subd. 7. [DOT ASSISTANCE.] The commissioner of 415.27 transportation shall collaborate with the county and any 415.28 affected municipality by providing technical assistance and 415.29 support in cleaning up a contaminated site. 415.30 Sec. 24. [383B.80] [HENNEPIN COUNTY DEED AND MORTGAGE TAX.] 415.31 Subdivision 1. [AUTHORITY TO IMPOSE; RATE.] (a) The 415.32 governing body of Hennepin county may impose a mortgage registry 415.33 and deed tax. 415.34 (b) The rate of the mortgage registry tax equals one cent 415.35 for each $100 or fraction of the principal. 415.36 (c) The rate of the deed tax equals five cents for each 416.1 $500 or fraction of the amount. 416.2 Subd. 2. [GENERAL LAW PROVISIONS APPLY.] The taxes under 416.3 this section apply to the same base and must be imposed, 416.4 collected, administered, and enforced in the same manner as 416.5 provided under Minnesota Statutes, chapter 287 for the state 416.6 mortgage registry and deed taxes. All the provisions of chapter 416.7 287 apply to these taxes, except the rate is as specified in 416.8 subdivision 1, the term "Hennepin county" must be substituted 416.9 for the "state," and the revenue must be deposited as provided 416.10 in subdivision 3. 416.11 Subd. 3. [DEPOSIT OF REVENUES.] All revenues from the tax 416.12 are for the use of the Hennepin county board of commissioners 416.13 and must be deposited in the county's environmental response 416.14 fund under section 383B.81. 416.15 Subd. 4. [EXPIRATION.] The authority to impose the tax 416.16 under this section expires January 1, 2003. 416.17 Sec. 25. [383B.81] [ENVIRONMENTAL RESPONSE FUND.] 416.18 Subdivision 1. [CREATION.] An environmental response fund 416.19 is created for the purposes specified in this section. The 416.20 taxes imposed by section 383B.80 must be deposited in the fund. 416.21 The board of county commissioners shall administer the fund 416.22 either as a county board, a housing and redevelopment authority, 416.23 or a regional rail authority. 416.24 Subd. 2. [USES OF FUND.] The fund created in subdivision 1 416.25 must be used for the following purposes: 416.26 (1) acquisition through purchase or condemnation of lands 416.27 or property which are polluted or contaminated with hazardous 416.28 substances; 416.29 (2) paying the costs associated with indemnifying or 416.30 holding harmless the entity taking title to lands or property 416.31 from any liability arising out of the ownership, remediation, or 416.32 use of the land or property; 416.33 (3) paying for the costs of remediating the acquired land 416.34 or property; 416.35 (4) paying the costs associated with remediating lands or 416.36 property which are polluted or contaminated with hazardous 417.1 substances; or 417.2 (5) paying for the costs associated with improving the 417.3 property for economic development, recreational, housing, 417.4 transportation or rail traffic. 417.5 Subd. 3. [MATCHING FUNDS.] In expending funds under this 417.6 section the county shall seek matching funds from contamination 417.7 cleanup funds administered by the commissioners of the 417.8 department of trade and economic development, the metropolitan 417.9 council, the federal government, the private sector and any 417.10 other source. 417.11 Subd. 4. [BONDS.] The county may pledge the proceeds from 417.12 the taxes imposed by section 383B.80 to bonds issued under this 417.13 chapter and chapters 398A, 462, 469, and 475. 417.14 Subd. 5. [PRIORITIES.] The first priority for the use of 417.15 the the environmental response fund created in this section is 417.16 to clean up the site located in the city of St. Louis Park known 417.17 as NL Industries/Tarce Corporation/Golden Auto, EPA I.D. No. 417.18 MND097891634 and to provide adequate right-of-way for a portion 417.19 of the rail line to replace the 29th street line in the city of 417.20 Minneapolis, including making rail improvements, changing the 417.21 curve of the railroad track and eliminating a switching 417.22 facility, and improving the land for economic development. 417.23 Subd. 6. [LAND SALES.] Land or property acquired under 417.24 this section may be resold at fair market value. Proceeds from 417.25 the sale of the land must be deposited in the environmental 417.26 response fund. 417.27 Subd. 7. [DOT ASSISTANCE.] The commissioner of 417.28 transportation shall collaborate with the county and any 417.29 affected municipality by providing technical assistance and 417.30 support in facilitating the railroad improvement and cleaning up 417.31 a contaminated site. 417.32 Sec. 26. Minnesota Statutes 1996, section 398A.04, 417.33 subdivision 1, is amended to read: 417.34 Subdivision 1. [GENERAL.] An authority may exercise all 417.35 the powers necessary or desirable to implement the powers 417.36 specifically granted in this section, and in exercising the 418.1 powers is deemed to be performing an essential governmental 418.2 function and exercising a part of the sovereign power of the 418.3 state, and is a local government unit and political subdivision 418.4 of the state. Without limiting the generality of the foregoing, 418.5 the authority may: 418.6 (a) Sue and be sued, have a seal, which may but need not be 418.7 affixed to documents as directed by the board, make and perform 418.8 contracts, and have perpetual succession; 418.9 (b) Acquire real and personal property within or outside 418.10 its taxing jurisdiction, by purchase, gift, devise, 418.11 condemnation, conditional sale, lease, lease purchase, or 418.12 otherwise; or for purposes, including the facilitation of an 418.13 economic development project pursuant to section 469.091 or 418.14 469.175, subdivision 7, that also improve rail service; and 418.15 (c) Hold, manage, control, sell, convey, lease, mortgage, 418.16 or otherwise dispose of real or personal property. 418.17 Sec. 27. [458D.111] [COLLECTION OF SOLID WASTE MANAGEMENT 418.18 SERVICE CHARGES.] 418.19 Subdivision 1. [AUTHORITY.] The board shall have the 418.20 powers of a county as specified in section 400.08. 418.21 Subd. 2. [METHOD OF COLLECTING CERTAIN SERVICE 418.22 CHARGES.] The board shall determine the method of collecting 418.23 service charges in a service area by resolution. 418.24 Subd. 3. [SERVICE CHARGES ON REAL ESTATE INCLUDING EXEMPT 418.25 PROPERTY.] In addition to any methods provided in section 418.26 400.08, the board may assess and collect service charges as 418.27 follows. On or before October 15 of each year, the board shall 418.28 certify to each county auditor an itemized list of solid waste 418.29 management service charges and a description of parcels of lands 418.30 against which the charges arise. It shall be the duty of the 418.31 county auditors to include the charges upon the tax rolls of the 418.32 county for the taxes due and payable for the following year. 418.33 The solid waste management service charge shall be enforced and 418.34 collected in the manner provided for the enforcement and 418.35 collection of real property taxes. The service charges shall be 418.36 subject to the same penalties, interest, and other conditions 419.1 provided for the collection of property taxes. The board shall 419.2 reimburse each county auditor for the costs of collection of the 419.3 service charge. 419.4 Sec. 28. [PUBLIC SAFETY TRAINING FACILITY.] 419.5 Subdivision 1. [JOINT POWERS AGREEMENT; BONDS.] Each of 419.6 the cities of Bloomington, Chanhassen, Eden Prairie, Edina, 419.7 Minnetonka, and Richfield may issue general obligation bonds of 419.8 the city in an amount not to exceed $1,000,000 for its share of 419.9 the cost of the acquisition, construction, and equipping of a 419.10 public safety training facility to be jointly operated by a 419.11 joint powers association consisting of two or more municipal or 419.12 public corporations of which that city is a member. The 419.13 issuance of the bonds is subject to Minnesota Statutes, chapter 419.14 475, except that no election shall be required except as 419.15 provided in subdivision 2. 419.16 Subd. 2. [REVERSE REFERENDUM.] Before the adoption by the 419.17 governing body of a city of any resolution authorizing the 419.18 issuance of any bonds authorized by subdivision 1, the city 419.19 shall publish a notice in the official newspaper of the city 419.20 stating that the governing body of the city intends to consider 419.21 the authorization of the issuance of the bonds, stating the 419.22 amount, purpose, and, in general, the security and source of 419.23 payment for the bonds. The resolution authorizing the issuance 419.24 of the bonds shall not be adopted by the governing body of the 419.25 city for at least 15 days after publication of the notice of 419.26 intention. If within 15 days after publication of the notice of 419.27 intention a petition asking for an election on the proposition 419.28 that the city issue the bonds signed by the voters equal to at 419.29 least ten percent of the registered voters in the city is filed 419.30 with the clerk, no bonds may be issued by the city unless 419.31 approved by a majority of the voters of the city voting on the 419.32 question of the issuance at a regular or special election. 419.33 Subd. 3. [EFFECTIVE DATE; LOCAL APPROVAL.] This section is 419.34 effective with respect to any of the cities of Bloomington, 419.35 Chanhassen, Eden Prairie, Edina, Minnetonka, and Richfield the 419.36 day after compliance by that city with Minnesota Statutes, 420.1 section 645.021, subdivision 3. 420.2 Sec. 29. [ST. LOUIS COUNTY TOWNS.] 420.3 If the St. Louis county board does not approve section 14, 420.4 as provided in section 33, each of the following towns in St. 420.5 Louis county may impose the aggregate materials tax under 420.6 Minnesota Statutes, section 298.75: the towns of Alden, 420.7 Brevator, Canosia, Duluth, Fredenberg, Gnesen, Grand Lake, 420.8 Industrial, Lakewood, Midway, Normanna, North Star, Rice Lake, 420.9 and Solway. 420.10 For purposes of exercising the powers contained in 420.11 Minnesota Statutes, section 298.75, the "town" is deemed to be 420.12 the "county." 420.13 In those towns located in St. Louis County that impose the 420.14 tax under Minnesota Statutes, section 298.75, all provisions in 420.15 that section shall apply to those towns, except that in lieu of 420.16 the distribution of the tax proceeds under subdivision 7, all 420.17 proceeds from this tax shall be retained by each of the towns 420.18 that impose the tax. 420.19 Sec. 30. [DEED TAX.] 420.20 The commissioner of revenue may not enforce a deed tax 420.21 assessment in the case of new residential construction if, at or 420.22 before the time the first residential owners of the improvement 420.23 take possession, the deed tax has been paid on the consideration 420.24 paid for the improvement. 420.25 Sec. 31. [APPROPRIATION FOR REIMBURSEMENT INCREASES.] 420.26 Subdivision 1. [APPROPRIATION.] $5,000,000 is appropriated 420.27 for fiscal year 1998 from the general fund to the commissioner 420.28 of human services for reimbursement increases as provided in 420.29 subdivision 2. This amount is available until June 30, 1999. 420.30 Subd. 2. [REIMBURSEMENT INCREASES.] Effective for services 420.31 rendered on or after July 1, 1997, the commissioner shall use 420.32 the amount appropriated under subdivision 1 to increase 420.33 reimbursement rates for home- and community-based waiver 420.34 services for persons with mental retardation or related 420.35 conditions under Minnesota Statutes, section 256B.501; home- and 420.36 community-based waiver services for the elderly under Minnesota 421.1 Statutes, section 256B.0915; community alternatives for disabled 421.2 individuals waiver services under Minnesota Statutes, section 421.3 256B.49; community alternative care waiver services under 421.4 Minnesota Statutes, section 256B.49; traumatic brain injury 421.5 waiver services under Minnesota Statutes, section 256B.49; 421.6 nursing services and home health services under Minnesota 421.7 Statutes, section 256B.0625, subdivision 6a; personal care 421.8 services and nursing supervision of personal care services under 421.9 Minnesota Statutes, section 256B.0625, subdivision 19a; private 421.10 duty nursing services under Minnesota Statutes, section 421.11 256B.0625, subdivision 7; day training and habilitation services 421.12 for adults with mental retardation or related conditions under 421.13 Minnesota Statutes, sections 252.40 to 252.47; physical therapy 421.14 services under Minnesota Statutes, sections 256B.0625, 421.15 subdivision 8, and 256D.03, subdivision 4; occupational therapy 421.16 services under Minnesota Statutes, sections 256B.0625, 421.17 subdivision 8a, and 256D.03, subdivision 4; speech-language 421.18 therapy services under Minnesota Statutes, section 256D.03, 421.19 subdivision 4, and Minnesota Rules, part 9505.0390; respiratory 421.20 therapy services under Minnesota Statutes, section 256D.03, 421.21 subdivision 4, and Minnesota Rules, part 9505.0295; dental 421.22 services under Minnesota Statutes, sections 256B.0625, 421.23 subdivision 9, and 256D.03, subdivision 4; alternative care 421.24 services under Minnesota Statutes, section 256B.0913; and 421.25 semi-independent living services under Minnesota Statutes, 421.26 section 252.275. 421.27 Sec. 32. [APPROPRIATION; PAYMENT OF CLAIMS.] 421.28 $16,600,000 is appropriated in fiscal year 1998 from the 421.29 general fund to the commissioner of revenue to pay claims filed 421.30 under the Cambridge Bank Judgment. 421.31 Sec. 33. [APPROPRIATION; ADMINISTRATION OF ACT.] 421.32 Subdivision 1. [PROPERTY TAX CREDIT.] $235,000 is 421.33 appropriated from the general fund for fiscal year 1998 to the 421.34 commissioner of revenue to pay the costs of administering the 421.35 1997 property tax credit provided in article 1, section 14. 421.36 Subd. 2. [OTHER COSTS.] $416,000 is appropriated from the 422.1 general fund for fiscal years 1998 and 1999 to the commissioner 422.2 of revenue to pay the other costs of administering the 422.3 provisions of this act. 422.4 Sec. 34. [EFFECTIVE DATE.] 422.5 Section 11 is effective for decrees of marriage 422.6 dissolution, deeds, or other instruments executed and delivered 422.7 after July 1, 1997. 422.8 Section 13 is effective for revenues attributable to taxes 422.9 due after June 30, 1997. 422.10 Section 14 is effective for Pope county the day after 422.11 compliance by Pope county with the requirements of Minnesota 422.12 Statutes, section 645.021, subdivision 3. 422.13 Section 14 is effective for Carlton county the day after 422.14 compliance by Carlton county with the requirements of Minnesota 422.15 Statutes, section 645.021, subdivision 3. 422.16 Section 14 is effective for St. Louis county the day after 422.17 compliance by St. Louis county with the requirements of 422.18 Minnesota Statutes, section 645.021, subdivision 3. 422.19 Section 21 is effective the day following final enactment. 422.20 Section 30 is effective for assessments made on or after 422.21 the effective date of Laws 1996, chapter 471, article 2, section 422.22 32.