Skip to main content Skip to office menu Skip to footer
Capital IconMinnesota Legislature

HF 2268

1st Unofficial Engrossment - 85th Legislature (2007 - 2008) Posted on 12/15/2009 12:00am

KEY: stricken = removed, old language.
underscored = added, new language.
1.1A bill for an act
1.2relating to the financing and operation of state and local government; making
1.3policy, technical, administrative, enforcement, collection, refund, and other
1.4changes to income, franchise, property, sales and use, motor vehicle sales,
1.5cigarette and tobacco products, insurance premiums, aggregate removal,
1.6mortgage, deed, and production taxes, and other taxes and tax-related provisions;
1.7providing for aids to local governments; increasing maximum property tax
1.8refunds; requiring withholding; providing and modifying income tax credits;
1.9modifying taxation of certain compensation paid to nonresidents; modifying
1.10taxation of foreign operating corporations; modifying sales tax exemptions;
1.11modifying and authorizing local government taxes; prohibiting new local
1.12sales taxes; authorizing and modifying levies, property valuation procedures,
1.13homestead provisions, property tax classes, class rates, and tax bases; changing
1.14and providing property tax exemptions; changing JOBZ, border city allocation,
1.15tax increment financing, and economic development powers and incentives;
1.16changing provisions relating to fiscal disparities, budget forecasts, local impact
1.17notes, securities filing fees, state debt collection procedures, revenue recapture,
1.18sustainable forest incentives programs, and tax-forfeited lands; expanding
1.19the aggregate tax and distribution of the proceeds; changing distributions of
1.20production tax proceeds; providing for purchase of forest lands; providing for
1.21higher education grants in the taconite assistance area; providing terms and
1.22conditions related to the issuance of obligations and the financing of public
1.23improvements and services; extending the time for certain publications of
1.24notices; authorizing and validating trusts to pay certain public postemployment
1.25benefits; changing and imposing powers, duties, and requirements on certain
1.26local governments and authorities and state departments or agencies; authorizing
1.27local governments to provide certain development incentives; providing rules
1.28for operation of certain tax increment financing districts; establishing a task
1.29force on metrodome site redevelopment; requiring studies; authorizing release
1.30of certain data; transferring money to the budget reserve account; appropriating
1.31money; amending Minnesota Statutes 2006, sections 3.987, subdivision 1; 3.988,
1.32subdivision 3; 3.989, subdivisions 2, 3; 16A.103, subdivisions 1a, 1b, 2; 16A.152,
1.33subdivisions 1b, 2; 16D.04, subdivisions 1, 2; 16D.11, subdivisions 2, 7; 62I.06,
1.34subdivision 6; 71A.04, subdivision 1; 80A.28, subdivision 1, as amended;
1.3597A.061, subdivision 2; 118A.03, subdivision 3; 123B.61; 126C.41, subdivision
1.362; 127A.48, subdivision 2; 268.19, subdivision 1; 270.071, subdivision 7;
1.37270.072, subdivisions 2, 3, 6; 270.074, subdivision 3; 270.076, subdivision 1;
1.38270.41, subdivisions 1, 2, 3, 5, by adding a subdivision; 270.44; 270.45; 270.46;
1.39270.47; 270.48; 270.50; 270A.03, subdivisions 2, 5; 270A.10; 270B.15; 270C.03,
2.1subdivision 1; 270C.306; 270C.34, subdivision 1; 270C.446, subdivision 2;
2.2270C.56, subdivision 1; 270C.63, subdivision 9; 272.02, subdivision 64, by
2.3adding subdivisions; 272.115, subdivision 1; 273.05, by adding a subdivision;
2.4273.111, subdivisions 3, 6, by adding subdivisions; 273.117; 273.121; 273.123,
2.5subdivisions 2, 3, 7; 273.124, subdivisions 13, 14, by adding a subdivision;
2.6273.125, subdivision 8; 273.128, subdivision 1; 273.13, subdivisions 22, 23, 24,
2.725, 33, by adding a subdivision; 273.1398, subdivision 4; 273.33, subdivision 2;
2.8273.37, subdivision 2; 273.371, subdivision 1; 274.01, subdivision 1; 274.13,
2.9subdivision 1; 275.025, subdivision 3; 275.065, subdivisions 3, 5a, by adding
2.10a subdivision; 275.066; 275.067; 275.61, subdivision 1; 276.04, by adding a
2.11subdivision; 276A.01, subdivision 3; 276A.04; 277.01, subdivision 2; 278.05,
2.12subdivision 6; 279.01, subdivision 1; 279.37, subdivision 1a; 280.39; 287.22;
2.13287.2205; 289A.08, subdivisions 11, 13; 289A.09, subdivision 2; 289A.12,
2.14subdivisions 4, 14, by adding a subdivision; 289A.18, subdivision 1; 289A.40,
2.15subdivision 2; 289A.56, by adding a subdivision; 289A.60, subdivisions 8, 12,
2.1625, 27, by adding subdivisions; 290.01, subdivisions 6b, 19a, 19b, as amended,
2.1719c, 19d; 290.06, subdivision 33, by adding a subdivision; 290.067, subdivision
2.182b; 290.0671, subdivision 7; 290.0677, subdivision 1; 290.091, subdivision 3;
2.19290.0921, subdivision 3; 290.10; 290.17, subdivision 2; 290.191, subdivision
2.208; 290.34, by adding a subdivision; 290.92, by adding a subdivision; 290A.03,
2.21subdivision 7; 290A.04, subdivision 2; 290B.03, subdivision 2; 290C.02,
2.22subdivision 3; 290C.04; 290C.05; 290C.07; 290C.11; 291.215, subdivision 1;
2.23295.52, subdivisions 4, 4a; 295.54, subdivision 2; 297A.61, subdivisions 3, 4, 7,
2.2410, 24, by adding subdivisions; 297A.63, subdivision 1; 297A.665; 297A.668, by
2.25adding a subdivision; 297A.669, subdivisions 3, 13, 14, by adding subdivisions;
2.26297A.67, subdivisions 7, 8, 9; 297A.68, subdivisions 11, 16, 35; 297A.69,
2.27subdivision 2; 297A.70, subdivisions 7, 8, by adding a subdivision; 297A.71,
2.28subdivision 23; 297A.72; 297A.90, subdivision 2; 297A.99, subdivision 1;
2.29297B.03; 297B.035, subdivision 1; 297F.06, subdivision 4; 297F.21, subdivision
2.303; 297F.25, by adding a subdivision; 297I.06, subdivisions 1, 2; 297I.15, by
2.31adding a subdivision; 297I.20, subdivision 2; 297I.40, subdivision 5; 298.22, by
2.32adding a subdivision; 298.2214, subdivision 2; 298.227; 298.24, subdivision 1;
2.33298.25; 298.28, subdivisions 3, 4, 5, 6, 9a, by adding a subdivision; 298.292,
2.34subdivision 2; 298.296, subdivision 2; 298.2961, subdivisions 4, 5; 298.75,
2.35subdivisions 1, 3, 7, by adding a subdivision; 331A.05, subdivision 2; 360.031;
2.36365A.02; 365A.04; 365A.08; 365A.095; 373.01, subdivision 3; 373.40,
2.37subdivision 4; 375B.09; 383A.80, subdivision 4; 383A.81, subdivisions 1, 2;
2.38383B.117, subdivision 2; 383B.77, subdivisions 1, 2; 383B.80, subdivision 4;
2.39410.32; 412.301; 424A.10, subdivision 3; 435.193; 453A.02, subdivision 3;
2.40469.169, by adding a subdivision; 469.1734, subdivision 6; 469.174, subdivisions
2.4110, 10a; 469.175, subdivisions 1, 3; 469.176, subdivisions 1, 2, 4l, 7; 469.1761,
2.42subdivision 1; 469.1763, subdivision 2; 469.177, subdivision 1; 469.178,
2.43subdivision 7; 469.1791, subdivision 3; 469.312, by adding a subdivision;
2.44469.3201; 473.39, by adding subdivisions; 475.51, subdivision 4; 475.52,
2.45subdivision 6; 475.53, subdivision 1; 475.58, subdivisions 1, 3b; 477A.011,
2.46subdivision 36; 477A.0124, subdivision 5; 477A.013, subdivisions 1, 8, 9;
2.47477A.03; 477A.12, subdivision 1; 477A.14, subdivision 1; Laws 1973, chapter
2.48393, section 1, as amended; Laws 1980, chapter 511, section 1, subdivision 2, as
2.49amended; Laws 1987, chapter 168, section 2; Laws 1988, chapter 645, section
2.503, as amended; Laws 1989, chapter 211, section 8, subdivision 4, as amended;
2.51Laws 1993, chapter 375, article 9, section 45, subdivisions 2, as amended, 3,
2.52as amended, 4, as amended; Laws 1994, chapter 587, article 9, section 14,
2.53subdivisions 1, 2, 3; Laws 1995, chapter 264, article 5, sections 44, subdivision
2.544, as amended; 45, subdivision 1, as amended; Laws 1999, chapter 243, article 4,
2.55section 18, subdivisions 1, 3, 4; Laws 2003, chapter 128, article 1, section 172, as
2.56amended; Laws 2005, First Special Session chapter 3, article 5, section 39; article
2.5710, section 23; Laws 2006, chapter 236, article 1, section 21; Laws 2006, chapter
2.58259, article 11, section 3; proposing coding for new law in Minnesota Statutes,
3.1chapters 270; 270C; 273; 274; 290C; 295; 297A; 360; 383C; 383D; 383E;
3.2471; 475; repealing Minnesota Statutes 2006, sections 16A.1522; 126C.21,
3.3subdivision 4; 270.073; 270.41, subdivision 4; 270.43; 270.51; 270.52; 270.53;
3.4295.60; 297A.61, subdivision 20; 297A.668, subdivision 6; 297A.67, subdivision
3.522; Laws 1973, chapter 393, section 2; Laws 1994, chapter 587, article 9, section
3.68, subdivision 1, as amended; Laws 1998, chapter 389, article 11, section 18.
3.7BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA:

3.8ARTICLE 1
3.9AIDS TO LOCAL GOVERNMENTS AND PROPERTY TAX REFUNDS

3.10    Section 1. Minnesota Statutes 2006, section 290A.04, subdivision 2, is amended to
3.11read:
3.12    Subd. 2. Homeowners. A claimant whose property taxes payable are in excess
3.13of the percentage of the household income stated below shall pay an amount equal to
3.14the percent of income shown for the appropriate household income level along with the
3.15percent to be paid by the claimant of the remaining amount of property taxes payable.
3.16The state refund equals the amount of property taxes payable that remain, up to the state
3.17refund amount shown below.
3.18
3.19
Household Income
Percent of Income
Percent Paid by
Claimant
Maximum State
Refund
3.20
3.21
$0 to 1,189
1.0 percent
15 percent
$1,450
$1,810
3.22
3.23
1,190 to 2,379
1.1 percent
15 percent
$1,450
$1,810
3.24
3.25
2,380 to 3,589
1.2 percent
15 percent
$1,410
$1,760
3.26
3.27
3,590 to 4,789
1.3 percent
20 percent
$1,410
$1,760
3.28
3.29
4,790 to 5,979
1.4 percent
20 percent
$1,360
$1,700
3.30
3.31
5,980 to 8,369
1.5 percent
20 percent
$1,360
$1,700
3.32
3.33
8,370 to 9,559
1.6 percent
25 percent
$1,310
$1,570
3.34
3.35
9,560 to 10,759
1.7 percent
25 percent
$1,310
$1,570
3.36
3.37
10,760 to 11,949
1.8 percent
25 percent
$1,260
$1,530
3.38
3.39
11,950 to 13,139
1.9 percent
30 percent
$1,260
$1,530
3.40
3.41
13,140 to 14,349
2.0 percent
30 percent
$1,210
$1,450
3.42
3.43
14,350 to 16,739
2.1 percent
30 percent
$1,210
$1,450
4.1
4.2
16,740 to 17,929
2.2 percent
35 percent
$1,160
$1,390
4.3
4.4
17,930 to 19,119
2.3 percent
35 percent
$1,160
$1,390
4.5
4.6
19,120 to 20,319
2.4 percent
35 percent
$1,110
$1,330
4.7
4.8
20,320 to 25,099
2.5 percent
40 percent
$1,110
$1,330
4.9
4.10
25,100 to 28,679
2.6 percent
40 percent
$1,070
$1,280
4.11
4.12
28,680 to 35,849
2.7 percent
40 percent
$1,070
$1,280
4.13
4.14
35,850 to 41,819
2.8 percent
45 percent
$ 970
$1,160
4.15
4.16
41,820 to 47,799
3.0 percent
45 percent
$ 970
$1,160
4.17
4.18
47,800 to 53,779
3.2 percent
45 percent
$ 870
$1,040
4.19
4.20
53,780 to 59,749
3.5 percent
50 percent
$ 780
$940
4.21
4.22
59,750 to 65,729
4.0 percent
50 percent
$ 680
$820
4.23
4.24
65,730 to 69,319
4.0 percent
50 percent
$ 580
$700
4.25
4.26
69,320 to 71,719
4.0 percent
50 percent
$ 480
$580
4.27
4.28
71,720 to 74,619
4.0 percent
50 percent
$ 390
$470
4.29
4.30
74,620 to 77,519
4.0 percent
50 percent
$ 290
$350
4.31    The payment made to a claimant shall be the amount of the state refund calculated
4.32under this subdivision. No payment is allowed if the claimant's household income is
4.33$77,520 or more.
4.34EFFECTIVE DATE.This section is effective beginning with refunds based on
4.35property taxes payable in 2008.

4.36    Sec. 2. Minnesota Statutes 2006, section 477A.011, subdivision 36, is amended to read:
4.37    Subd. 36. City aid base. (a) Except as otherwise provided in this subdivision,
4.38"city aid base" is zero.
4.39    (b) The city aid base for any city with a population less than 500 is increased by
4.40$40,000 for aids payable in calendar year 1995 and thereafter, and the maximum amount
4.41of total aid it may receive under section 477A.013, subdivision 9, paragraph (c), is also
4.42increased by $40,000 for aids payable in calendar year 1995 only, provided that:
5.1    (i) the average total tax capacity rate for taxes payable in 1995 exceeds 200 percent;
5.2    (ii) the city portion of the tax capacity rate exceeds 100 percent; and
5.3    (iii) its city aid base is less than $60 per capita.
5.4    (c) The city aid base for a city is increased by $20,000 in 1998 and thereafter and
5.5the maximum amount of total aid it may receive under section 477A.013, subdivision 9,
5.6paragraph (c), is also increased by $20,000 in calendar year 1998 only, provided that:
5.7    (i) the city has a population in 1994 of 2,500 or more;
5.8    (ii) the city is located in a county, outside of the metropolitan area, which contains a
5.9city of the first class;
5.10    (iii) the city's net tax capacity used in calculating its 1996 aid under section
5.11477A.013 is less than $400 per capita; and
5.12    (iv) at least four percent of the total net tax capacity, for taxes payable in 1996, of
5.13property located in the city is classified as railroad property.
5.14    (d) The city aid base for a city is increased by $200,000 in 1999 and thereafter and
5.15the maximum amount of total aid it may receive under section 477A.013, subdivision 9,
5.16paragraph (c), is also increased by $200,000 in calendar year 1999 only, provided that:
5.17    (i) the city was incorporated as a statutory city after December 1, 1993;
5.18    (ii) its city aid base does not exceed $5,600; and
5.19    (iii) the city had a population in 1996 of 5,000 or more.
5.20    (e) The city aid base for a city is increased by $450,000 in 1999 to 2008 and the
5.21maximum amount of total aid it may receive under section 477A.013, subdivision 9,
5.22paragraph (c), is also increased by $450,000 in calendar year 1999 only, provided that:
5.23    (i) the city had a population in 1996 of at least 50,000;
5.24    (ii) its population had increased by at least 40 percent in the ten-year period ending
5.25in 1996; and
5.26    (iii) its city's net tax capacity for aids payable in 1998 is less than $700 per capita.
5.27    (f) The city aid base for a city is increased by $150,000 for aids payable in 2000 and
5.28thereafter, and the maximum amount of total aid it may receive under section 477A.013,
5.29subdivision 9
, paragraph (c), is also increased by $150,000 in calendar year 2000 only,
5.30provided that:
5.31    (1) the city has a population that is greater than 1,000 and less than 2,500;
5.32    (2) its commercial and industrial percentage for aids payable in 1999 is greater
5.33than 45 percent; and
5.34    (3) the total market value of all commercial and industrial property in the city
5.35for assessment year 1999 is at least 15 percent less than the total market value of all
5.36commercial and industrial property in the city for assessment year 1998.
6.1    (g) The city aid base for a city is increased by $200,000 in 2000 and thereafter, and
6.2the maximum amount of total aid it may receive under section 477A.013, subdivision 9,
6.3paragraph (c), is also increased by $200,000 in calendar year 2000 only, provided that:
6.4    (1) the city had a population in 1997 of 2,500 or more;
6.5    (2) the net tax capacity of the city used in calculating its 1999 aid under section
6.6477A.013 is less than $650 per capita;
6.7    (3) the pre-1940 housing percentage of the city used in calculating 1999 aid under
6.8section 477A.013 is greater than 12 percent;
6.9    (4) the 1999 local government aid of the city under section 477A.013 is less than
6.1020 percent of the amount that the formula aid of the city would have been if the need
6.11increase percentage was 100 percent; and
6.12    (5) the city aid base of the city used in calculating aid under section 477A.013
6.13is less than $7 per capita.
6.14    (h) The city aid base for a city is increased by $102,000 in 2000 and thereafter, and
6.15the maximum amount of total aid it may receive under section 477A.013, subdivision 9,
6.16paragraph (c), is also increased by $102,000 in calendar year 2000 only, provided that:
6.17    (1) the city has a population in 1997 of 2,000 or more;
6.18    (2) the net tax capacity of the city used in calculating its 1999 aid under section
6.19477A.013 is less than $455 per capita;
6.20    (3) the net levy of the city used in calculating 1999 aid under section 477A.013 is
6.21greater than $195 per capita; and
6.22    (4) the 1999 local government aid of the city under section 477A.013 is less than
6.2338 percent of the amount that the formula aid of the city would have been if the need
6.24increase percentage was 100 percent.
6.25    (i) The city aid base for a city is increased by $32,000 in 2001 and thereafter, and
6.26the maximum amount of total aid it may receive under section 477A.013, subdivision 9,
6.27paragraph (c), is also increased by $32,000 in calendar year 2001 only, provided that:
6.28    (1) the city has a population in 1998 that is greater than 200 but less than 500;
6.29    (2) the city's revenue need used in calculating aids payable in 2000 was greater
6.30than $200 per capita;
6.31    (3) the city net tax capacity for the city used in calculating aids available in 2000
6.32was equal to or less than $200 per capita;
6.33    (4) the city aid base of the city used in calculating aid under section 477A.013
6.34is less than $65 per capita; and
6.35    (5) the city's formula aid for aids payable in 2000 was greater than zero.
7.1    (j) The city aid base for a city is increased by $7,200 in 2001 and thereafter, and
7.2the maximum amount of total aid it may receive under section 477A.013, subdivision 9,
7.3paragraph (c), is also increased by $7,200 in calendar year 2001 only, provided that:
7.4    (1) the city had a population in 1998 that is greater than 200 but less than 500;
7.5    (2) the city's commercial industrial percentage used in calculating aids payable in
7.62000 was less than ten percent;
7.7    (3) more than 25 percent of the city's population was 60 years old or older according
7.8to the 1990 census;
7.9    (4) the city aid base of the city used in calculating aid under section 477A.013
7.10is less than $15 per capita; and
7.11    (5) the city's formula aid for aids payable in 2000 was greater than zero.
7.12    (k) The city aid base for a city is increased by $45,000 in 2001 and thereafter and
7.13by an additional $50,000 in calendar years 2002 to 2011, and the maximum amount of
7.14total aid it may receive under section 477A.013, subdivision 9, paragraph (c), is also
7.15increased by $45,000 in calendar year 2001 only, and by $50,000 in calendar year 2002
7.16only, provided that:
7.17    (1) the net tax capacity of the city used in calculating its 2000 aid under section
7.18477A.013 is less than $810 per capita;
7.19    (2) the population of the city declined more than two percent between 1988 and 1998;
7.20    (3) the net levy of the city used in calculating 2000 aid under section 477A.013 is
7.21greater than $240 per capita; and
7.22    (4) the city received less than $36 per capita in aid under section 477A.013,
7.23subdivision 9
, for aids payable in 2000.
7.24    (l) The city aid base for a city with a population of 10,000 or more which is located
7.25outside of the seven-county metropolitan area is increased in 2002 and thereafter, and the
7.26maximum amount of total aid it may receive under section 477A.013, subdivision 9,
7.27paragraph (b) or (c), is also increased in calendar year 2002 only, by an amount equal to
7.28the lesser of:
7.29    (1)(i) the total population of the city, as determined by the United States Bureau of
7.30the Census, in the 2000 census, (ii) minus 5,000, (iii) times 60; or
7.31    (2) $2,500,000.
7.32    (m) The city aid base is increased by $50,000 in 2002 and thereafter, and the
7.33maximum amount of total aid it may receive under section 477A.013, subdivision 9,
7.34paragraph (c), is also increased by $50,000 in calendar year 2002 only, provided that:
7.35    (1) the city is located in the seven-county metropolitan area;
7.36    (2) its population in 2000 is between 10,000 and 20,000; and
8.1    (3) its commercial industrial percentage, as calculated for city aid payable in 2001,
8.2was greater than 25 percent.
8.3    (n) The city aid base for a city is increased by $150,000 in calendar years 2002 to
8.42011 and by an additional $75,000 in calendar years 2008 to 2013 and the maximum
8.5amount of total aid it may receive under section 477A.013, subdivision 9, paragraph (c), is
8.6also increased by $150,000 in calendar year 2002 only and by $75,000 in calendar year
8.72008 only, provided that:
8.8    (1) the city had a population of at least 3,000 but no more than 4,000 in 1999;
8.9    (2) its home county is located within the seven-county metropolitan area;
8.10    (3) its pre-1940 housing percentage is less than 15 percent; and
8.11    (4) its city net tax capacity per capita for taxes payable in 2000 is less than $900
8.12per capita.
8.13    (o) The city aid base for a city is increased by $200,000 beginning in calendar
8.14year 2003 and the maximum amount of total aid it may receive under section 477A.013,
8.15subdivision 9
, paragraph (c), is also increased by $200,000 in calendar year 2003 only,
8.16provided that the city qualified for an increase in homestead and agricultural credit aid
8.17under Laws 1995, chapter 264, article 8, section 18.
8.18    (p) The city aid base for a city is increased by $200,000 in 2004 only and the
8.19maximum amount of total aid it may receive under section 477A.013, subdivision 9, is
8.20also increased by $200,000 in calendar year 2004 only, if the city is the site of a nuclear
8.21dry cask storage facility.
8.22    (q) The city aid base for a city is increased by $10,000 in 2004 and thereafter and the
8.23maximum total aid it may receive under section 477A.013, subdivision 9, is also increased
8.24by $10,000 in calendar year 2004 only, if the city was included in a federal major disaster
8.25designation issued on April 1, 1998, and its pre-1940 housing stock was decreased by
8.26more than 40 percent between 1990 and 2000.
8.27    (r) The city aid base for a city is increased by $25,000 $30,000 in 2006 only
8.282008 and thereafter and the maximum total aid it may receive under section 477A.013,
8.29subdivision 9
, is also increased by $25,000 $30,000 in calendar year 2006 only if the city
8.30had a population in 2003 of at least 1,000 and has a state park for which the city provides
8.31rescue services and which comprised at least 14 percent of the total geographic area
8.32included within the city boundaries in 2000.
8.33    (s) The city aid base for a city with a population less than 5,000 is increased in
8.342006 and thereafter and the minimum and maximum amount of total aid it may receive
8.35under this section is also increased in calendar year 2006 only by an amount equal to
8.36$6 multiplied by its population.
9.1    (t) The city aid base for a city is increased by $80,000 in 2007 only and thereafter and
9.2the minimum and maximum amount of total aid it may receive under section 477A.013,
9.3subdivision 9, is also increased by $80,000 in calendar year 2007 only, if:
9.4    (1) as of May 1, 2006, at least 25 percent of the tax capacity of the city is proposed
9.5to be placed in trust status as tax-exempt Indian land;
9.6    (2) the placement of the land is being challenged administratively or in court; and
9.7    (3) due to the challenge, the land proposed to be placed in trust is still on the tax
9.8rolls as of May 1, 2006.
9.9    (u) The city aid base for a city is increased by $100,000 in 2007 and thereafter and
9.10the minimum and maximum total amount of aid it may receive under this section is also
9.11increased in calendar year 2007 only, provided that:
9.12    (1) the city has a 2004 estimated population greater than 200 but less than 2,000;
9.13    (2) its city net tax capacity for aids payable in 2006 was less than $300 per capita;
9.14    (3) the ratio of its pay 2005 tax levy compared to its city net tax capacity for aids
9.15payable in 2006 was greater than 110 percent; and
9.16    (4) it is located in a county where at least 15,000 acres of land are classified as
9.17tax-exempt Indian reservations according to the 2004 abstract of tax-exempt property.
9.18    (v) The city aid base for a city is increased by $30,000 in 2008 only, and the
9.19maximum total aid it may receive under section 477A.013, subdivision 9, is also increased
9.20by $30,000 in calendar year 2008 only if the city had a population in 2005 of less than
9.213,000 and the city's boundaries as of 2007 were formed by the consolidation of two cities
9.22and one township in 2002.
9.23    (w) The city aid base for a city is increased by $100,000 in 2008 and thereafter, and
9.24the maximum total aid it may receive under section 477A.013, subdivision 9, is also
9.25increased by $100,000 in calendar year 2008 only if the city had a city net tax capacity for
9.26aids payable in 2007 of less than $150 per capita and the city experienced flooding on
9.27March 14, 2007, that resulted in evacuation of at least 40 homes.
9.28    (x) The city aid base for a city is increased by $200,000 in 2008 through 2012, and
9.29the maximum total aid it may receive under section 477A.013, subdivision 9, is also
9.30increased by $200,000 in calendar year 2008 only if the city:
9.31    (i) is located outside of the Minneapolis-St. Paul standard metropolitan statistical
9.32area;
9.33    (ii) has a 2005 population greater than 7,000 but less than 8,000; and
9.34    (iii) has a 2005 net tax capacity per capita of less than $500.
9.35EFFECTIVE DATE.This section is effective for sales and purchases made after
9.36June 30, 2007.

10.1    Sec. 3. Minnesota Statutes 2006, section 477A.0124, subdivision 5, is amended to read:
10.2    Subd. 5. County transition aid. (a) For 2005, a county is eligible for transition
10.3aid equal to the amount, if any, by which:
10.4    (1) the difference between:
10.5    (i) the aid the county received under subdivision 1 in 2004, divided by the total aid
10.6paid to all counties under subdivision 1, multiplied by $205,000,000; and
10.7    (ii) the amount of aid the county is certified to receive in 2005 under subdivisions
10.83 and 4;
10.9exceeds:
10.10    (2) three percent of the county's adjusted net tax capacity.
10.11A county's aid under this paragraph may not be less than zero.
10.12    (b) In 2006, a county is eligible to receive two-thirds of the transition aid it received
10.13in 2005.
10.14    (c) In 2007 and subsequent years, a county is eligible to receive one-third of the
10.15transition aid it received in 2005.
10.16    (d) No county shall receive aid under this subdivision after 2007. In 2008 only, a
10.17county with (1) a 2005 population greater than 10,000 and less than 29,000, and (2) an
10.18average Part I crimes per capita greater than 3.6 percent for aids payable in 2007 shall
10.19receive $250,000.

10.20    Sec. 4. Minnesota Statutes 2006, section 477A.013, subdivision 1, is amended to read:
10.21    Subdivision 1. Towns. In 2002, no In 2008 and subsequent years, each town is
10.22eligible for a distribution under this subdivision equal to 20 percent of the amount of
10.23homestead and agricultural credit aid reimbursement it received under Minnesota Statutes
10.242000, section 273.1398, in calendar year 2001.

10.25    Sec. 5. Minnesota Statutes 2006, section 477A.013, subdivision 8, is amended to read:
10.26    Subd. 8. City formula aid. In calendar year 2004 and subsequent years, the
10.27formula aid for a city is equal to the need increase percentage multiplied by the difference
10.28between (1) the city's revenue need multiplied by its population, and (2) the sum of the
10.29city's net tax capacity multiplied by the tax effort rate; the taconite aids under sections
10.30298.28 and 298.282 to any city except a city directly impacted by a taconite mine or plant,
10.31multiplied by the following percentages:
10.32    (i) zero percent for aids payable in 2004;
10.33    (ii) 25 percent for aids payable in 2005;
10.34    (iii) 50 percent for aids payable in 2006;
11.1    (iv) 75 percent for aids payable in 2007; and
11.2    (v) 100 percent for aids payable in 2008 and thereafter.
11.3    For purposes of this subdivision, "a city directly impacted by a taconite mine or
11.4plant" means: (1) Babbit, (2) Eveleth, (3) Hibbing, (4) Keewatin, (5) Mountain Iron, (6)
11.5Silver Bay, or (7) Virginia.
11.6No city may have a formula aid amount less than zero. The need increase percentage
11.7must be the same for all cities.
11.8    The applicable need increase percentage must be calculated by the Department of
11.9Revenue so that the total of the aid under subdivision 9 equals the total amount available
11.10for aid under section 477A.03 after the subtraction under section 477A.014, subdivisions
11.114 and 5
.
11.12EFFECTIVE DATE.This section is effective beginning with aids payable in 2008.

11.13    Sec. 6. Minnesota Statutes 2006, section 477A.013, subdivision 9, is amended to read:
11.14    Subd. 9. City aid distribution. (a) In calendar year 2002 and thereafter 2008, each
11.15city shall receive an aid distribution equal to the sum of (1) the city formula aid under
11.16subdivision 8, and (2) its city aid base, and (3) one-half of the difference between its total
11.17aid in the previous year under this section and its city aid base in the previous year. For aids
11.18payable in 2009 and thereafter, each city shall receive an aid distribution equal to the sum
11.19of (1) the city formula aid under subdivision 8, (2) its city aid base, and (3) its formula aid
11.20under subdivision 8 in the previous year, prior to any adjustments under this subdivision.
11.21    (b) For aids payable in 2008, the total aid for any city shall not exceed the sum of (1)
11.2230 percent of its net levy for the year prior to the aid distribution plus (2) its total aid in the
11.23previous year. For aids payable in 2005 2009 and thereafter, the total aid for any city shall
11.24not exceed the sum of (1) ten percent of the city's net levy for the year prior to the aid
11.25distribution plus (2) its total aid in the previous year. For aids payable in 2005 2008 and
11.26thereafter, the total aid for any city with a population of 2,500 or more may not decrease
11.27from be less than its total aid under this section in the previous year by an amount greater
11.28than minus the lesser of (1) $15 multiplied by its population, or (2) ten percent of its net
11.29levy in the year prior to the aid distribution.
11.30    (c) For aids payable in 2004 only, the total aid for a city with a population less than
11.312,500 may not be less than the amount it was certified to receive in 2003 minus the greater
11.32of (1) the reduction to this aid payment in 2003 under Laws 2003, First Special Session
11.33chapter 21, article 5, or (2) five percent of its 2003 aid amount. For aids payable in 2008
11.34only, the total aid for a city with a population less than 2,500 must not be less than the
12.1amount it would otherwise be certified to receive in 2008 if this act was not enacted. For
12.2aids payable in 2005 2008 and thereafter, the total aid for a city with a population less
12.3than 2,500 must not be less than the amount it was certified to receive in the previous year
12.4minus the lesser of (1) $15 multiplied by its population, or (2) five percent of its 2003
12.5certified aid amount.
12.6    (d) If a city's net tax capacity used in calculating aid under this section has decreased
12.7in any year by more than 25 percent from its net tax capacity in the previous year due to
12.8property becoming tax-exempt Indian land, the city's maximum allowed aid increase
12.9under paragraph (b) shall be increased by an amount equal to (1) the city's tax rate in the
12.10year of the aid calculation, multiplied by (2) the amount of its net tax capacity decrease
12.11resulting from the property becoming tax exempt.
12.12EFFECTIVE DATE.This section is effective for aids payable in 2008 and
12.13thereafter.

12.14    Sec. 7. Minnesota Statutes 2006, section 477A.03, is amended to read:
12.15477A.03 APPROPRIATION.
12.16    Subd. 2. Annual appropriation. A sum sufficient to discharge the duties imposed
12.17by sections 477A.011 to 477A.014 is annually appropriated from the general fund to the
12.18commissioner of revenue.
12.19    Subd. 2a. Cities. For aids payable in 2004, the total aids paid under section
12.20477A.013, subdivision 9, are limited to $429,000,000. For aids payable in 2005, the
12.21total aids paid under section 477A.013, subdivision 9, are limited to $437,052,000. For
12.22aids payable in 2006 2008 and thereafter, the total aids paid under section 477A.013,
12.23subdivision 9
, is limited to $485,052,000 $565,052,000.
12.24    Subd. 2b. Counties. (a) For aids payable in calendar year 2005 2008 and thereafter,
12.25the total aids paid to counties under section 477A.0124, subdivision 3, are limited to
12.26$100,500,000 $118,000,000. Each calendar year, $500,000 shall be retained by the
12.27commissioner of revenue to make reimbursements to the commissioner of finance
12.28for payments made under section 611.27. For calendar year 2004, the amount shall be
12.29in addition to the payments authorized under section 477A.0124, subdivision 1. For
12.30calendar year 2005 and subsequent years, The amount shall be deducted from the
12.31appropriation under this paragraph. The reimbursements shall be to defray the additional
12.32costs associated with court-ordered counsel under section 611.27. Any retained amounts
12.33not used for reimbursement in a year shall be included in the next distribution of county
13.1need aid that is certified to the county auditors for the purpose of property tax reduction
13.2for the next taxes payable year.
13.3    (b) For aids payable in 2005, the total aids under section 477A.0124, subdivision 4,
13.4are limited to $105,000,000. For aids payable in 2006 2008 and thereafter, the total aid
13.5under section 477A.0124, subdivision 4, is limited to $105,132,923 $122,632,923. The
13.6commissioner of finance shall bill the commissioner of revenue for the cost of preparation
13.7of local impact notes as required by section 3.987, not to exceed $207,000 in fiscal year
13.82004 and thereafter. The commissioner of education shall bill the commissioner of
13.9revenue for the cost of preparation of local impact notes for school districts as required by
13.10section 3.987, not to exceed $7,000 in fiscal year 2004 and thereafter. The commissioner
13.11of revenue shall deduct the amounts billed under this paragraph from the appropriation
13.12under this paragraph. The amounts deducted are appropriated to the commissioner of
13.13finance and the commissioner of education for the preparation of local impact notes.
13.14EFFECTIVE DATE.This section is effective for aids payable in calendar year
13.152008 and thereafter.

13.16    Sec. 8. Minnesota Statutes 2006, section 477A.12, subdivision 1, is amended to read:
13.17    Subdivision 1. Types of land; payments. (a) As an offset for expenses incurred
13.18by counties and towns in support of natural resources lands, the following amounts are
13.19annually appropriated to the commissioner of natural resources from the general fund for
13.20transfer to the commissioner of revenue. The commissioner of revenue shall pay the
13.21transferred funds to counties as required by sections 477A.11 to 477A.145. The amounts
13.22are:
13.23    (1) for acquired natural resources land, $3, as adjusted for inflation under section
13.24477A.145 , multiplied by the total number of acres of acquired natural resources land or,
13.25at the county's option three-fourths of one percent of the appraised value of all acquired
13.26natural resources land in the county, whichever is greater;
13.27    (2) 75 cents, as adjusted for inflation under section 477A.145, multiplied by the
13.28number of acres of county-administered other natural resources land;
13.29    (3) 75 cents $3, as adjusted for inflation under section 477A.145, multiplied by
13.30the total number of acres of land utilization project land that is located entirely within a
13.31wildlife management area as described in section 86A.05, subdivision 8; and 75 cents, as
13.32adjusted for inflation under section 477A.145, multiplied by the total number of acres of
13.33land utilization project land not located within a wildlife management area; and
14.1    (4) 37.5 cents, as adjusted for inflation under section 477A.145, multiplied by the
14.2number of acres of commissioner-administered other natural resources land located in
14.3each county as of July 1 of each year prior to the payment year.
14.4    (b) The amount determined under paragraph (a), clause (1), is payable for land
14.5that is acquired from a private owner and owned by the Department of Transportation
14.6for the purpose of replacing wetland losses caused by transportation projects, but only
14.7if the county contains more than 500 acres of such land at the time the certification is
14.8made under subdivision 2.
14.9EFFECTIVE DATE.This section is effective for payments in 2008 and thereafter.

14.10    Sec. 9. Minnesota Statutes 2006, section 477A.14, subdivision 1, is amended to read:
14.11    Subdivision 1. General distribution. Except as provided in subdivision 2 or in
14.12section 97A.061, subdivision 5, 40 percent of the total payment to the county shall be
14.13deposited in the county general revenue fund to be used to provide property tax levy
14.14reduction. The remainder shall be distributed by the county in the following priority:
14.15    (a) 37.5 cents, as adjusted for inflation under section 477A.145, for each acre
14.16of county-administered other natural resources land shall be deposited in a resource
14.17development fund to be created within the county treasury for use in resource
14.18development, forest management, game and fish habitat improvement, and recreational
14.19development and maintenance of county-administered other natural resources land. Any
14.20county receiving less than $5,000 annually for the resource development fund may elect to
14.21deposit that amount in the county general revenue fund;
14.22    (b) From the funds remaining, within 30 days of receipt of the payment to the county,
14.23the county treasurer shall pay each organized township 30 cents, as adjusted for inflation
14.24under section 477A.145, for each acre of acquired natural resources land, each acre of
14.25land utilization project land located entirely within a wildlife management area, and each
14.26acre of land described in section 477A.12, subdivision 1, paragraph (b), and 7.5 cents, as
14.27adjusted for inflation under section 477A.145, for each acre of other natural resources land
14.28and each acre of land utilization project land not located within a wildlife management
14.29area, located within its boundaries. Payments for natural resources lands not located in
14.30an organized township shall be deposited in the county general revenue fund. Payments
14.31to counties and townships pursuant to this paragraph shall be used to provide property
14.32tax levy reduction, except that of the payments for natural resources lands not located in
14.33an organized township, the county may allocate the amount determined to be necessary
14.34for maintenance of roads in unorganized townships. Provided that, if the total payment
14.35to the county pursuant to section 477A.12 is not sufficient to fully fund the distribution
15.1provided for in this clause, the amount available shall be distributed to each township and
15.2the county general revenue fund on a pro rata basis; and
15.3    (c) Any remaining funds shall be deposited in the county general revenue fund.
15.4Provided that, if the distribution to the county general revenue fund exceeds $35,000, the
15.5excess shall be used to provide property tax levy reduction.
15.6EFFECTIVE DATE.This section is effective for payments in 2008 and thereafter.

15.7    Sec. 10. Laws 2006, chapter 259, article 11, section 3, is amended to read:
15.8    Sec. 3. MAHNOMEN COUNTY; COUNTY, CITY, SCHOOL DISTRICT,
15.9PROPERTY TAX REIMBURSEMENT; 2006 ONLY.
15.10    Subdivision 1. Aid appropriation. $600,000 is appropriated annually from the
15.11general fund to the commissioner of revenue to be used to make payments to compensate
15.12for the loss of property tax revenue due to the placement of land located in the city of
15.13Mahnomen that was put in trust status by the United Stated Department of the Interior,
15.14Bureau of Indian Affairs, during calendar year 2006. The commissioner shall pay the
15.15county of Mahnomen, $450,000; the city of Mahnomen, $80,000; and Independent School
15.16District No. 432, Mahnomen, $70,000, provided that these payments shall be reduced
15.17in 2007 and any subsequent year by the amount, if any, of payments to that political
15.18subdivision made during the previous calendar year by the owner of the land that was
15.19placed in trust. The payments shall be made on July 20, of 2006, and each subsequent year.
15.20    Subd. 2. School district tax base adjustments. The Department of Revenue
15.21must reduce the referendum market value and the adjusted net tax capacity certified for
15.22assessment year 2005 used to calculate school levies for taxes payable in 2007 and
15.23subsequent years for Independent School District No. 432, Mahnomen, by the amounts of
15.24any values attributable to property that is no longer subject to property taxation because
15.25the land has been placed in trust in calendar year 2006 through action of the United States
15.26Department of Interior, Bureau of Indian Affairs. The Mahnomen County auditor must
15.27certify the reductions in value to the Department of Revenue in the form and manner
15.28specified by the Department of Revenue.

15.29    Sec. 11. MAHNOMEN COUNTY; CITY, COUNTY, AND SCHOOL DISTRICT
15.30TAX BASE ADJUSTMENTS.
15.31    (a) The commissioner of revenue must reduce the referendum market value and
15.32adjusted net tax capacity used to calculate school levies beginning with taxes payable in
15.332008 and subsequent years for Independent School District No. 432, Mahnomen, by the
15.34amounts attributable to the property that is pending placement into trust status by the
16.1United States Department of the Interior, Bureau of Indian Affairs. This adjustment shall
16.2be made for each assessment year that the property remains on the tax rolls.
16.3    (b) The commissioner of revenue must reduce the county and city net tax capacities
16.4used to calculate aids under sections 477A.011 to 477A.03, beginning with aids payable in
16.52008 for the county of Mahnomen and the city of Mahnomen, by the amounts attributable
16.6to property that is pending placement into trust status by the United States Department of
16.7the Interior, Bureau of Indian Affairs. This adjustment shall be made for each assessment
16.8year that the property remains on the tax rolls.
16.9EFFECTIVE DATE.This section is effective for aids and levies payable in 2008
16.10and thereafter.

16.11    Sec. 12. GRAND MARAIS FIRE AID.
16.12    $250,000 is appropriated in fiscal years 2008 and 2009 from the general fund to the
16.13commissioner of revenue to be paid to the city of Grand Marais for costs related to the
16.14Ham Lake fire of 2007.

16.15    Sec. 13. STATE AID TRANSITION RESERVE.
16.16    Subdivision 1. Reserve account. A state aid transition reserve account is established
16.17in the general fund to provide two additional years of transition funding for county
16.18program aid and local government aid.
16.19    Subd. 2. Transfer to account. On June 29, 2009, the commissioner of finance shall
16.20transfer $80,629,000 from the general fund to the state aid transition reserve account.
16.21    Subd. 3. Transfer to general fund. On July 1, 2009, the commissioner of finance
16.22shall transfer the balance in the state aid transition reserve account to the general fund.
16.23    Subd. 4. Expiration date. This section expires July 2, 2009.

16.24ARTICLE 2
16.25PROPERTY TAXES

16.26    Section 1. Minnesota Statutes 2006, section 97A.061, subdivision 2, is amended to
16.27read:
16.28    Subd. 2. Allocation. (a) Except as provided in subdivision 3, the county treasurer
16.29shall allocate the payment among the county, towns, and school districts on the same basis
16.30as if the payments were taxes on the land received in the year. Payment of a town's or a
16.31school district's allocation must be made by the county treasurer to the town or school
17.1district within 30 days of receipt of the payment to the county. The county's share of the
17.2payment shall be deposited in the county general revenue fund.
17.3    (b) The county treasurer of a county with a population over 39,000 but less than
17.442,000 in the 1950 federal census shall allocate the payment only among the towns and
17.5school districts on the same basis as if the payments were taxes on the lands received
17.6in the current year.
17.7    (c) If a town received a payment in calendar year 2006 or thereafter under this
17.8subdivision, and subsequently incorporated as a city, the city will continue to receive any
17.9future year's allocations that would have been made to the town had it not incorporated,
17.10provided that the payments will terminate if the governing body of the city passes an
17.11ordinance that prohibits hunting within the boundaries of the city.
17.12EFFECTIVE DATE.This section is effective for aid payments made in 2007
17.13and thereafter.

17.14    Sec. 2. Minnesota Statutes 2006, section 126C.41, subdivision 2, is amended to read:
17.15    Subd. 2. Retired employee health benefits. A district may levy an amount up to the
17.16amount the district is required by the collective bargaining agreement in effect on March
17.1730, 1992, to pay for health insurance or unreimbursed medical expenses for licensed
17.18and nonlicensed employees who have terminated services in the employing district and
17.19withdrawn from active teaching service or other active service, as applicable, before July 1,
17.201992, or in the case of a school district located within the taconite tax relief area defined in
17.21section 273.134, before July 1, 1998, if a sunset clause is in effect for the current collective
17.22bargaining agreement. The total amount of the levy each year may not exceed $600,000.

17.23    Sec. 3. Minnesota Statutes 2006, section 127A.48, subdivision 2, is amended to read:
17.24    Subd. 2. Methodology. In making its annual assessment/sales ratio studies, the
17.25Department of Revenue must use a methodology consistent with the most recent Standard
17.26on Assessment Ratio Studies published by the assessment standards committee of the
17.27International Association of Assessing Officers. The commissioner of revenue shall
17.28supplement this general methodology with specific procedures necessary for execution of
17.29the study in accordance with other Minnesota laws impacting the assessment/sales ratio
17.30study. The commissioner shall document these specific procedures in writing and shall
17.31publish the procedures in the State Register, but these procedures will not be considered
17.32"rules" pursuant to the Minnesota Administrative Procedure Act. When property is
17.33sold and the purchaser changes its use in a manner that would result in a change of
17.34classification of the property, the assessment sales ratio study under this subdivision must
18.1take into account that changed classification as soon as practicable. A change in status
18.2from homestead to nonhomestead or from nonhomestead to homestead is not a change
18.3under this subdivision. For purposes of this section, sections 270.12, subdivision 2,
18.4clause (8), and 278.05, subdivision 4, the commissioner of revenue shall exclude from
18.5the assessment/sales ratio study the sale of any nonagricultural property which does not
18.6contain an improvement, if (1) the statutory basis on which the property's taxable value
18.7as most recently assessed is less than market value as defined in section 273.11, or (2)
18.8the property has undergone significant physical change or a change of use since the most
18.9recent assessment.
18.10EFFECTIVE DATE.This section is effective the day following final enactment.

18.11    Sec. 4. Minnesota Statutes 2006, section 272.02, is amended by adding a subdivision
18.12to read:
18.13    Subd. 85. Modular homes used as models by dealers. (a) A modular home
18.14is exempt if it:
18.15    (1) is owned by a modular home dealer and is located on land owned or leased
18.16by that dealer;
18.17    (2) is a single-family model home;
18.18    (3) is not available for sale and is used exclusively as a model;
18.19    (4) is not permanently connected to any utilities except electricity; and
18.20    (5) is situated on a temporary foundation.
18.21    (b) The exemption under this subdivision is allowable for up to five assessment
18.22years after the date it becomes located on the property, provided that the modular home
18.23continues to meet all of the criteria under this subdivision each year. The owner of a
18.24modular model home must notify the county assessor within 60 days that it has been
18.25constructed or located on the property and must again notify the assessor if the modular
18.26home ceases to meet any of the criteria. If more than one modular home is constructed or
18.27situated on a property, the owner must notify the assessor within 60 days for each of the
18.28models placed on the property.
18.29    (c) For purposes of this subdivision, a "modular home" means a building or
18.30structural unit that has been in whole or substantial part manufactured or constructed at an
18.31off-site location to be wholly or partially assembled on-site as a single family dwelling.
18.32Construction of the modular home must comply with applicable standards adopted in
18.33Minnesota Rules authorized under Minnesota Statutes, chapter 16B. A modular home does
18.34not include a structure subject to the requirements of the National Manufactured Home
19.1Construction and Safety Standards Act of 1974 or prefabricated buildings, as defined in
19.2Minnesota Statutes, section 327.31, subdivision 6.
19.3EFFECTIVE DATE.This section is effective for assessment year 2007 and
19.4thereafter, for taxes payable in 2008 and thereafter. The five-year assessment time period
19.5begins with the 2007 assessment for a modular model home currently situated provided
19.6it meets all of the criteria and the county assessor is notified within 90 days of the day
19.7following final enactment.

19.8    Sec. 5. Minnesota Statutes 2006, section 272.02, is amended by adding a subdivision
19.9to read:
19.10    Subd. 86. Electric generation facility; personal property. (a) Notwithstanding
19.11subdivision 9, clause (a), attached machinery and other personal property which is part of
19.12a simple-cycle combustion-turbine electric generation facility that exceeds 150 megawatts
19.13of installed capacity and that meets the requirements of this subdivision is exempt. At
19.14the time of construction, the facility must:
19.15    (1) utilize natural gas as a primary fuel;
19.16    (2) be owned by an electric generation and transmission cooperative;
19.17    (3) be located within one mile of an existing 16-inch natural gas pipeline and a
19.1869-kilovolt and a 230-kilovolt high-voltage electric transmission line;
19.19    (4) be designed to provide peaking, emergency backup, or contingency services;
19.20    (5) have received a certificate of need under section 216B.243 demonstrating
19.21demand for its capacity; and
19.22    (6) have received by resolution the approval from the governing bodies of the county
19.23and the city in which the proposed facility is to be located for the exemption of personal
19.24property under this subdivision.
19.25    (b) Construction of the facility must be commenced after January 1, 2008, and
19.26before January 1, 2012. Property eligible for this exemption does not include electric
19.27transmission lines and interconnections or gas pipelines and interconnections appurtenant
19.28to the property or the facility.
19.29EFFECTIVE DATE.This section is effective for the 2007 assessment payable in
19.302008 and thereafter.

19.31    Sec. 6. Minnesota Statutes 2006, section 272.02, is amended by adding a subdivision
19.32to read:
20.1    Subd. 87. Apprenticeship training facilities. All or a portion of a property is
20.2exempt if: (1) the property is used exclusively for a state-approved apprenticeship program
20.3through the Department of Labor and Industry, (2) the property is owned and operated by
20.4a nonprofit corporation, and (3) the program participants receive no compensation.
20.5EFFECTIVE DATE.This section is effective for assessment year 2007 and
20.6thereafter, for taxes payable in 2008 and thereafter.

20.7    Sec. 7. Minnesota Statutes 2006, section 272.02, is amended by adding a subdivision
20.8to read:
20.9    Subd. 88. Monosloped roofs for feedlots and manure storage areas. A
20.10monosloped, single-pitched roof installed over a feedlot or manure storage area to prevent
20.11runoff is exempt.
20.12EFFECTIVE DATE.This section is effective for property taxes levied in 2007,
20.13payable in 2008, and thereafter.

20.14    Sec. 8. Minnesota Statutes 2006, section 272.115, subdivision 1, is amended to read:
20.15    Subdivision 1. Requirement. Except as otherwise provided in subdivision 5,
20.16whenever any real estate is sold for a consideration in excess of $1,000, whether by
20.17warranty deed, quitclaim deed, contract for deed or any other method of sale, the grantor,
20.18grantee or the legal agent of either shall file a certificate of value with the county
20.19auditor in the county in which the property is located when the deed or other document
20.20is presented for recording. Contract for deeds are subject to recording under section
20.21507.235, subdivision 1 . Value shall, in the case of any deed not a gift, be the amount of
20.22the full actual consideration thereof, paid or to be paid, including the amount of any lien
20.23or liens assumed. The items and value of personal property transferred with the real
20.24property must be listed and deducted from the sale price. The certificate of value shall
20.25include the classification to which the property belongs for the purpose of determining
20.26the fair market value of the property, and shall include any proposed change in use of the
20.27property known to the person filing the certificate that could change the classification
20.28of the property. The certificate shall include financing terms and conditions of the sale
20.29which are necessary to determine the actual, present value of the sale price for purposes
20.30of the sales ratio study. If the property is being acquired as part of a like-kind exchange
20.31under section 1031 of the Internal Revenue Code of 1986, as amended through December
20.3231, 2006, that must be indicated on the certificate. The commissioner of revenue shall
20.33promulgate administrative rules specifying the financing terms and conditions which must
21.1be included on the certificate. Pursuant to the authority of the commissioner of revenue in
21.2section 270C.306, the certificate of value must include the Social Security number or the
21.3federal employer identification number of the grantors and grantees. The identification
21.4numbers of the grantors and grantees are private data on individuals or nonpublic data
21.5as defined in section 13.02, subdivisions 9 and 12, but, notwithstanding that section, the
21.6private or nonpublic data may be disclosed to the commissioner of revenue for purposes of
21.7tax administration. The information required to be shown on the certificate of value is
21.8limited to the information required as of the date of the acknowledgment on the deed or
21.9other document to be recorded.
21.10EFFECTIVE DATE.This section is effective for certificates filed after June 30,
21.112007.

21.12    Sec. 9. Minnesota Statutes 2006, section 273.111, subdivision 6, is amended to read:
21.13    Subd. 6. Agricultural use. Real property qualifying under subdivision 3 shall be
21.14considered to be in agricultural use provided that annually:
21.15    (1) in at least one of the three calendar years preceding the assessment year;
21.16    at least 33-1/3 percent of the total family income of the owner is derived therefrom,
21.17or (i) the total production income including rental from the property is $300 plus $10
21.18per tillable acre no less than an amount equal to five percent of the per acre agricultural
21.19value determined under subdivision 16 for the county where the property is located for
21.20the previous assessment year, multiplied by the number of acres in the parcel subject to
21.21this section; or
21.22    (ii) the amount of total farm expenses shown on Schedule F of the property owner's
21.23federal income tax return exceeds 25 percent of the federal adjusted gross income of the
21.24owner for federal tax purposes; and
21.25    (2) it is devoted to the production for sale of agricultural products as defined in
21.26section 273.13, subdivision 23, paragraph (e).
21.27    In this subdivision, "total production income" means gross income as reported
21.28for federal income tax purposes on Schedule F for the calendar year ending in the year
21.29preceding the assessment year, plus rental income from the property.
21.30    Slough, wasteland, and woodland contiguous to or surrounded by land that is entitled
21.31to valuation and tax deferment under this section is considered to be in agricultural use if
21.32under the same ownership and management.
21.33EFFECTIVE DATE.This section is effective for taxes levied in 2008, payable in
21.342009 and thereafter, provided that property that qualified under Minnesota Statutes 2006,
22.1section 273.111, for the 2007 assessment shall not be disqualified in any of the assessment
22.2years 2008 to 2012 because of a failure to meet the requirements of this section.

22.3    Sec. 10. Minnesota Statutes 2006, section 273.111, is amended by adding a subdivision
22.4to read:
22.5    Subd. 16. Agricultural value determination. (a) In order to account for the
22.6presence of nonagricultural influences that may affect the sales of agricultural land, the
22.7commissioner of revenue shall develop a fair and uniform method of determining, for
22.8each county in the state, an agricultural value that is consistent with subdivision 4. The
22.9commissioner shall annually assign the resulting agricultural value to each county, and
22.10this value shall be used as the agricultural value for the county under this section.
22.11    (b) When property classified as agricultural is sold and the purchaser changes its use
22.12in a manner that would result in a change of classification of the property, and the sale
22.13price exceeds the agricultural value determined under paragraph (a), the assessor and
22.14the commissioner must review the sale along with other appropriate sales information
22.15to determine if there are nonagricultural influences on the value. If upon review it is
22.16determined that nonagricultural factors have affected the value, the resulting sales ratio
22.17shall be excluded from use in any study measuring agricultural value and applied to a
22.18study measuring market value.
22.19EFFECTIVE DATE.This section is effective for taxes levied in 2009, payable in
22.202010 and thereafter.

22.21    Sec. 11. Minnesota Statutes 2006, section 273.111, is amended by adding a subdivision
22.22to read:
22.23    Subd. 17. Implementation of program. This section must be applied to eligible
22.24properties by all county assessors, beginning no later than assessments for taxes levied
22.25in 2008, payable in 2009, and thereafter, unless the commissioner of revenue determines
22.26that a county is unable to comply with this requirement, in which case the county must
22.27implement it for the earliest assessment year determined by the commissioner to be
22.28feasible.

22.29    Sec. 12. Minnesota Statutes 2006, section 273.111, is amended by adding a subdivision
22.30to read:
22.31    Subd. 18. Applications; denied by county. For applications filed for the 2007 and
22.322008 assessment years, all applications for deferment of taxes and assessment under this
22.33section that have been denied by the county shall be forwarded to the commissioner of
23.1revenue by the county assessor within 30 days of denial. The assessor shall also provide
23.2the commissioner with a list of any property owners that requested an application and
23.3were denied, including names and addresses, and the reason for the denial. For the
23.4purpose of monitoring compliance with this section, the commissioner shall compile a
23.5report identifying all denied applications and requests for applications that were denied,
23.6the reason for the denial, and any commissioner action or recommendation. A report must
23.7be submitted to the chairs of the house and senate tax committees on or before February
23.81, 2008, and February 1, 2009, in compliance with Minnesota Statutes, sections 3.195
23.9and 3.197.
23.10EFFECTIVE DATE.This section is effective the day following final enactment.

23.11    Sec. 13. Minnesota Statutes 2006, section 273.123, subdivision 7, is amended to read:
23.12    Subd. 7. Local option; other property. The owner of homestead property
23.13not qualifying for an adjustment in valuation pursuant to subdivisions 1 to 5 or of
23.14nonhomestead property may receive a reduction in the amount of taxes payable on the
23.15property for the year in which the destruction occurs and in the following year if:
23.16    (a) 50 percent or more of the homestead dwelling or other structure, as established
23.17by the county assessor, is:
23.18    (1) unintentionally or accidentally destroyed, or
23.19    (2) destroyed by arson or vandalism, by someone other than the owner,
23.20and the homestead is uninhabitable or the other structure is not usable;
23.21    (b) the owner of the property makes written application to the county assessor as
23.22soon as practical after the damage has occurred; and
23.23    (c) the owner of the property makes written application to the county board.
23.24    The county board may grant a reduction in the amount of property tax which the
23.25owner must pay on the qualifying property in the year of destruction and in the following
23.26year. Any reduction in the amount of tax payable which is authorized by county board
23.27action shall be calculated based upon the number of months that the home is uninhabitable
23.28or the other structure is unusable. The amount of net tax due from the taxpayer shall be
23.29multiplied by a fraction, the numerator of which is the number of months the dwelling
23.30was occupied by that taxpayer, or the number of months the other structure was used by
23.31the taxpayer, and the denominator of which is 12. For purposes of this subdivision, if a
23.32structure is occupied or used for a fraction of a month, it is considered a month. "Net tax"
23.33is defined as the amount of tax after the subtraction of all of the state paid property tax
23.34credits. If application is made following payment of all property taxes due for the year of
24.1destruction, the amount of the reduction granted by the county board shall be refunded to
24.2the taxpayer by the county treasurer as soon as practical.
24.3    Any reductions or refunds approved by the county board shall not be subject to
24.4approval by the commissioner of revenue.
24.5    The county board may levy in the following year the amount of tax dollars lost to the
24.6county government as a result of the reductions granted pursuant to this subdivision.
24.7EFFECTIVE DATE.This section is effective for destruction that occurs in calendar
24.8year 2006 and thereafter.

24.9    Sec. 14. Minnesota Statutes 2006, section 273.124, subdivision 14, is amended to read:
24.10    Subd. 14. Agricultural homesteads; special provisions. (a) Real estate of less than
24.11ten acres that is the homestead of its owner must be classified as class 2a under section
24.12273.13, subdivision 23 , paragraph (a), if:
24.13    (1) the parcel on which the house is located is contiguous on at least two sides to (i)
24.14agricultural land, (ii) land owned or administered by the United States Fish and Wildlife
24.15Service, or (iii) land administered by the Department of Natural Resources on which in
24.16lieu taxes are paid under sections 477A.11 to 477A.14;
24.17    (2) its owner also owns a noncontiguous parcel of agricultural land that is at least
24.1820 acres;
24.19    (3) the noncontiguous land is located not farther than four townships or cities, or a
24.20combination of townships or cities from the homestead; and
24.21    (4) the agricultural use value of the noncontiguous land and farm buildings is equal
24.22to at least 50 percent of the market value of the house, garage, and one acre of land.
24.23    Homesteads initially classified as class 2a under the provisions of this paragraph shall
24.24remain classified as class 2a, irrespective of subsequent changes in the use of adjoining
24.25properties, as long as the homestead remains under the same ownership, the owner owns a
24.26noncontiguous parcel of agricultural land that is at least 20 acres, and the agricultural use
24.27value qualifies under clause (4). Homestead classification under this paragraph is limited
24.28to property that qualified under this paragraph for the 1998 assessment.
24.29    (b)(i) Agricultural property consisting of at least 40 acres shall be classified as the
24.30owner's homestead, to the same extent as other agricultural homestead property, if all
24.31of the following criteria are met:
24.32    (1) the property consists of at least 40 acres including undivided government lots
24.33and correctional 40's, or at least 20 acres if used exclusively and intensively for raising
24.34or cultivating agricultural products as defined under section 273.13, subdivision 23,
24.35paragraph (e);
25.1    (1) (2) the owner, the owner's spouse, the son or daughter of the owner or owner's
25.2spouse, or the grandson or granddaughter of the owner or the owner's spouse, is actively
25.3farming the agricultural property, either on the person's own behalf as an individual or
25.4on behalf of a partnership operating a family farm, family farm corporation, joint family
25.5farm venture, or limited liability company of which the person is a partner, shareholder, or
25.6member;
25.7    (2) (3) both the owner of the agricultural property and the person who is actively
25.8farming the agricultural property under clause (1) (2), are Minnesota residents;
25.9    (3) (4) neither the owner nor the spouse of the owner claims another agricultural
25.10homestead in Minnesota; and
25.11    (4) (5) neither the owner nor the person actively farming the property lives farther
25.12than four townships or cities, or a combination of four townships or cities, from the
25.13agricultural property, except that if the owner or the owner's spouse is required to live in
25.14employer-provided housing, the owner or owner's spouse, whichever is actively farming
25.15the agricultural property, may live more than four townships or cities, or combination of
25.16four townships or cities from the agricultural property.
25.17    The relationship under this paragraph may be either by blood or marriage.
25.18    (ii) Real property held by a trustee under a trust is eligible for agricultural homestead
25.19classification under this paragraph if the qualifications in clause (i) are met, except that
25.20"owner" means the grantor of the trust.
25.21    (iii) Property containing the residence of an owner who owns qualified property
25.22under clause (i) shall be classified as part of the owner's agricultural homestead, if that
25.23property is also used for noncommercial storage or drying of agricultural crops.
25.24    (c) Noncontiguous land shall be included as part of a homestead under section
25.25273.13, subdivision 23 , paragraph (a), only if the homestead is classified as class 2a
25.26and the detached land is located in the same township or city, or not farther than four
25.27townships or cities or combination thereof from the homestead. Any taxpayer of these
25.28noncontiguous lands must notify the county assessor that the noncontiguous land is part of
25.29the taxpayer's homestead, and, if the homestead is located in another county, the taxpayer
25.30must also notify the assessor of the other county.
25.31    (d) Agricultural land used for purposes of a homestead and actively farmed by a
25.32person holding a vested remainder interest in it must be classified as a homestead under
25.33section 273.13, subdivision 23, paragraph (a). If agricultural land is classified class 2a,
25.34any other dwellings on the land used for purposes of a homestead by persons holding
25.35vested remainder interests who are actively engaged in farming the property, and up to
26.1one acre of the land surrounding each homestead and reasonably necessary for the use of
26.2the dwelling as a home, must also be assessed class 2a.
26.3    (e) Agricultural land and buildings that were class 2a homestead property under
26.4section 273.13, subdivision 23, paragraph (a), for the 1997 assessment shall remain
26.5classified as agricultural homesteads for subsequent assessments if:
26.6    (1) the property owner abandoned the homestead dwelling located on the agricultural
26.7homestead as a result of the April 1997 floods;
26.8    (2) the property is located in the county of Polk, Clay, Kittson, Marshall, Norman,
26.9or Wilkin;
26.10    (3) the agricultural land and buildings remain under the same ownership for the
26.11current assessment year as existed for the 1997 assessment year and continue to be used
26.12for agricultural purposes;
26.13    (4) the dwelling occupied by the owner is located in Minnesota and is within 30
26.14miles of one of the parcels of agricultural land that is owned by the taxpayer; and
26.15    (5) the owner notifies the county assessor that the relocation was due to the 1997
26.16floods, and the owner furnishes the assessor any information deemed necessary by the
26.17assessor in verifying the change in dwelling. Further notifications to the assessor are not
26.18required if the property continues to meet all the requirements in this paragraph and any
26.19dwellings on the agricultural land remain uninhabited.
26.20    (f) Agricultural land and buildings that were class 2a homestead property under
26.21section 273.13, subdivision 23, paragraph (a), for the 1998 assessment shall remain
26.22classified agricultural homesteads for subsequent assessments if:
26.23    (1) the property owner abandoned the homestead dwelling located on the agricultural
26.24homestead as a result of damage caused by a March 29, 1998, tornado;
26.25    (2) the property is located in the county of Blue Earth, Brown, Cottonwood,
26.26LeSueur, Nicollet, Nobles, or Rice;
26.27    (3) the agricultural land and buildings remain under the same ownership for the
26.28current assessment year as existed for the 1998 assessment year;
26.29    (4) the dwelling occupied by the owner is located in this state and is within 50 miles
26.30of one of the parcels of agricultural land that is owned by the taxpayer; and
26.31    (5) the owner notifies the county assessor that the relocation was due to a March 29,
26.321998, tornado, and the owner furnishes the assessor any information deemed necessary by
26.33the assessor in verifying the change in homestead dwelling. For taxes payable in 1999, the
26.34owner must notify the assessor by December 1, 1998. Further notifications to the assessor
26.35are not required if the property continues to meet all the requirements in this paragraph
26.36and any dwellings on the agricultural land remain uninhabited.
27.1    (g) Agricultural property consisting of at least 40 acres of a family farm corporation,
27.2joint family farm venture, family farm limited liability company, or partnership operating
27.3a family farm as described under subdivision 8 shall be classified homestead, to the same
27.4extent as other agricultural homestead property, if all of the following criteria are met:
27.5    (1) the property consists of at least 40 acres including undivided government lots
27.6and correctional 40's, or at least 20 acres if used exclusively and intensively for raising
27.7or cultivating agricultural products as defined under section 273.13, subdivision 23,
27.8paragraph (e);
27.9    (1) (2) a shareholder, member, or partner of that entity is actively farming the
27.10agricultural property;
27.11    (2) (3) that shareholder, member, or partner who is actively farming the agricultural
27.12property is a Minnesota resident;
27.13    (3) (4) neither that shareholder, member, or partner, nor the spouse of that
27.14shareholder, member, or partner claims another agricultural homestead in Minnesota; and
27.15    (4) (5) that shareholder, member, or partner does not live farther than four townships
27.16or cities, or a combination of four townships or cities, from the agricultural property.
27.17    Homestead treatment applies under this paragraph for property leased to a family
27.18farm corporation, joint farm venture, limited liability company, or partnership operating a
27.19family farm if legal title to the property is in the name of an individual who is a member,
27.20shareholder, or partner in the entity.
27.21    (h) To be eligible for the special agricultural homestead under this subdivision, an
27.22initial full application must be submitted to the county assessor where the property is
27.23located. Owners and the persons who are actively farming the property shall be required
27.24to complete only a one-page abbreviated version of the application in each subsequent
27.25year provided that none of the following items have changed since the initial application:
27.26    (1) the day-to-day operation, administration, and financial risks remain the same;
27.27    (2) the owners and the persons actively farming the property continue to live within
27.28the four townships or city criteria and are Minnesota residents;
27.29    (3) the same operator of the agricultural property is listed with the Farm Service
27.30Agency;
27.31    (4) a Schedule F or equivalent income tax form was filed for the most recent year;
27.32    (5) the property's acreage is unchanged; and
27.33    (6) none of the property's acres have been enrolled in a federal or state farm program
27.34since the initial application.
27.35    The owners and any persons who are actively farming the property must include
27.36the appropriate Social Security numbers, and sign and date the application. If any of the
28.1specified information has changed since the full application was filed, the owner must
28.2notify the assessor, and must complete a new application to determine if the property
28.3continues to qualify for the special agricultural homestead. The commissioner of revenue
28.4shall prepare a standard reapplication form for use by the assessors.
28.5EFFECTIVE DATE.This section is effective for assessment year 2007, taxes
28.6payable in 2008 and thereafter.

28.7    Sec. 15. Minnesota Statutes 2006, section 273.124, is amended by adding a subdivision
28.8to read:
28.9    Subd. 22. Annual registration of certain relative homesteads. If the owner of
28.10property or the owner's relative who occupies property that is classified as a homestead
28.11under subdivision 1, paragraph (c), receives compensation for allowing occupancy of any
28.12part of that property for a period that exceeds 31 consecutive days during the calendar
28.13year, the recipient of the compensation must register the property with the city in which
28.14it is located no later than 60 days after the initial rental period began. This requirement
28.15applies to property located in a city that has a population over 25,000. Each city must
28.16maintain a file of these property registrations that is open to the public, and retain the
28.17registrations for one year after the date of filing.
28.18EFFECTIVE DATE.This section is effective July 1, 2007.

28.19    Sec. 16. Minnesota Statutes 2006, section 273.125, subdivision 8, is amended to read:
28.20    Subd. 8. Manufactured homes; sectional structures. (a) In this section,
28.21"manufactured home" means a structure transportable in one or more sections, which is
28.22built on a permanent chassis, and designed to be used as a dwelling with or without a
28.23permanent foundation when connected to the required utilities, and contains the plumbing,
28.24heating, air conditioning, and electrical systems in it. Manufactured home includes any
28.25accessory structure that is an addition or supplement to the manufactured home and, when
28.26installed, becomes a part of the manufactured home.
28.27    (b) Except as provided in paragraph (c), a manufactured home that meets each of the
28.28following criteria must be valued and assessed as an improvement to real property, the
28.29appropriate real property classification applies, and the valuation is subject to review and
28.30the taxes payable in the manner provided for real property:
28.31    (1) the owner of the unit holds title to the land on which it is situated;
28.32    (2) the unit is affixed to the land by a permanent foundation or is installed at its
28.33location in accordance with the Manufactured Home Building Code in sections 327.31
29.1to 327.34, and rules adopted under those sections, or is affixed to the land like other real
29.2property in the taxing district; and
29.3    (3) the unit is connected to public utilities, has a well and septic tank system, or is
29.4serviced by water and sewer facilities comparable to other real property in the taxing
29.5district.
29.6    (c) A manufactured home that meets each of the following criteria must be assessed
29.7at the rate provided by the appropriate real property classification but must be treated as
29.8personal property, and the valuation is subject to review and the taxes payable in the
29.9manner provided in this section:
29.10    (1) the owner of the unit is a lessee of the land under the terms of a lease, or the unit
29.11is located in a manufactured home park but is not the homestead of the park owner;
29.12    (2) the unit is affixed to the land by a permanent foundation or is installed at its
29.13location in accordance with the Manufactured Home Building Code contained in sections
29.14327.31 to 327.34, and the rules adopted under those sections, or is affixed to the land like
29.15other real property in the taxing district; and
29.16    (3) the unit is connected to public utilities, has a well and septic tank system, or is
29.17serviced by water and sewer facilities comparable to other real property in the taxing
29.18district.
29.19    (d) Sectional structures must be valued and assessed as an improvement to real
29.20property if the owner of the structure holds title to the land on which it is located or is a
29.21qualifying lessee of the land under section 273.19. In this paragraph "sectional structure"
29.22means a building or structural unit that has been in whole or substantial part manufactured
29.23or constructed at an off-site location to be wholly or partially assembled on-site alone or
29.24with other units and attached to a permanent foundation.
29.25    (e) The commissioner of revenue may adopt rules under the Administrative
29.26Procedure Act to establish additional criteria for the classification of manufactured homes
29.27and sectional structures under this subdivision.
29.28    (f) A storage shed, deck, or similar improvement constructed on property that is
29.29leased or rented as a site for a manufactured home, sectional structure, park trailer, or
29.30travel trailer is taxable as provided in this section. In the case of property that is leased or
29.31rented as a site for a travel trailer, a storage shed, deck, or similar improvement on the
29.32site that is considered personal property under this paragraph is taxable only if its total
29.33estimated market value is over $500 $1,000. The property is taxable as personal property
29.34to the lessee of the site if it is not owned by the owner of the site. The property is taxable
29.35as real estate if it is owned by the owner of the site. As a condition of permitting the owner
29.36of the manufactured home, sectional structure, park trailer, or travel trailer to construct
30.1improvements on the leased or rented site, the owner of the site must obtain the permanent
30.2home address of the lessee or user of the site. The site owner must provide the name
30.3and address to the assessor upon request.
30.4EFFECTIVE DATE.This section is effective for assessment year 2007 and
30.5thereafter, for taxes payable in 2008 and thereafter.

30.6    Sec. 17. Minnesota Statutes 2006, section 273.128, subdivision 1, is amended to read:
30.7    Subdivision 1. Requirement. Low-income rental property classified as class 4d
30.8under section 273.13, subdivision 25, is entitled to valuation under this section if at
30.9least 75 20 percent of the units in the rental housing property meet any of the following
30.10qualifications:
30.11    (1) the units are subject to a housing assistance payments contract under Section 8
30.12of the United States Housing Act of 1937, as amended;
30.13    (2) the units are rent-restricted and income-restricted units of a qualified low-income
30.14housing project receiving tax credits under section 42(g) of the Internal Revenue Code of
30.151986, as amended;
30.16    (3) the units are financed by the Rural Housing Service of the United States
30.17Department of Agriculture and receive payments under the rental assistance program
30.18pursuant to section 521(a) of the Housing Act of 1949, as amended; or
30.19    (4) the units are subject to rent and income restrictions under the terms of financial
30.20assistance provided to the rental housing property by the federal government or the
30.21state of Minnesota, or a local unit of government, as evidenced by a document recorded
30.22against the property.
30.23    The restrictions must require assisted units to be occupied by residents whose
30.24household income at the time of initial occupancy does not exceed 60 percent of the
30.25greater of area or state median income, adjusted for family size, as determined by the
30.26United States Department of Housing and Urban Development. The restriction must also
30.27require the rents for assisted units to not exceed 30 percent of 60 percent of the greater of
30.28area or state median income, adjusted for family size, as determined by the United States
30.29Department of Housing and Urban Development.
30.30EFFECTIVE DATE.This section is effective for property taxes levied in 2007,
30.31payable in 2008, and thereafter.

30.32    Sec. 18. Minnesota Statutes 2006, section 273.13, subdivision 22, is amended to read:
31.1    Subd. 22. Class 1. (a) Except as provided in subdivision 23 and in paragraphs (b)
31.2and (c), real estate which is residential and used for homestead purposes is class 1a. In the
31.3case of a duplex or triplex in which one of the units is used for homestead purposes, the
31.4entire property is deemed to be used for homestead purposes. The market value of class 1a
31.5property must be determined based upon the value of the house, garage, and land.
31.6    The first $500,000 of market value of class 1a property has a net class rate of
31.7one percent of its market value; and the market value of class 1a property that exceeds
31.8$500,000 has a class rate of 1.25 percent of its market value.
31.9    (b) Class 1b property includes homestead real estate or homestead manufactured
31.10homes used for the purposes of a homestead by
31.11    (1) any person who is blind as defined in section 256D.35, or the blind person and
31.12the blind person's spouse; or
31.13    (2) any person, hereinafter referred to as "veteran," who:
31.14    (i) served in the active military or naval service of the United States; and
31.15    (ii) is entitled to compensation under the laws and regulations of the United States
31.16for permanent and total service-connected disability due to the loss, or loss of use, by
31.17reason of amputation, ankylosis, progressive muscular dystrophies, or paralysis, of both
31.18lower extremities, such as to preclude motion without the aid of braces, crutches, canes, or
31.19a wheelchair; and
31.20    (iii) has acquired a special housing unit with special fixtures or movable facilities
31.21made necessary by the nature of the veteran's disability, or the surviving spouse of the
31.22deceased veteran for as long as the surviving spouse retains the special housing unit
31.23as a homestead; or
31.24    (3) any person who is permanently and totally disabled.
31.25    Property is classified and assessed under clause (3) only if the government agency or
31.26income-providing source certifies, upon the request of the homestead occupant, that the
31.27homestead occupant satisfies the disability requirements of this paragraph.
31.28    Property is classified and assessed pursuant to clause (1) only if the commissioner of
31.29revenue certifies to the assessor that the homestead occupant satisfies the requirements of
31.30this paragraph.
31.31    Permanently and totally disabled for the purpose of this subdivision means a
31.32condition which is permanent in nature and totally incapacitates the person from working
31.33at an occupation which brings the person an income. The first $32,000 $50,000 market
31.34value of class 1b property has a net class rate of .45 percent of its market value. The
31.35remaining market value of class 1b property has a class rate using the rates for class 1a or
31.36class 2a property, whichever is appropriate, of similar market value.
32.1    (c) Class 1c property is commercial use real and personal property that abuts
32.2a lakeshore line public water as defined in section 103G.005, subdivision 15, and is
32.3devoted to temporary and seasonal residential occupancy for recreational purposes but
32.4not devoted to commercial purposes for more than 250 days in the year preceding the
32.5year of assessment, and that includes a portion used as a homestead by the owner, which
32.6includes a dwelling occupied as a homestead by a shareholder of a corporation that owns
32.7the resort, a partner in a partnership that owns the resort, or a member of a limited liability
32.8company that owns the resort even if the title to the homestead is held by the corporation,
32.9partnership, or limited liability company. For purposes of this clause, property is devoted
32.10to a commercial purpose on a specific day if any portion of the property, excluding the
32.11portion used exclusively as a homestead, is used for residential occupancy and a fee is
32.12charged for residential occupancy. Class 1c property must contain three or more rental
32.13units. A "rental unit" is defined as a cabin, condominium, townhouse, sleeping room,
32.14or individual camping site equipped with water and electrical hookups for recreational
32.15vehicles. Class 1c property must provide recreational activities such as the rental of ice
32.16fishing houses, boats and motors, snowmobiles, downhill or cross-country ski equipment;
32.17provide marina services, launch services, or guide services; or sell bait and fishing tackle.
32.18Any unit in which the right to use the property is transferred to an individual or entity
32.19by deeded interest, or the sale of shares or stock, no longer qualifies for class 1c even
32.20though it may remain available for rent. A camping pad offered for rent by a property
32.21that otherwise qualifies for class 1c is also class 1c, regardless of the term of the rental
32.22agreement, as long as the use of the camping pad does not exceed 250 days. The portion of
32.23the property used as a homestead is class 1a property under paragraph (a). The remainder
32.24of the property is classified as follows: the first $500,000 $600,000 of market value is tier
32.25I, the next $1,700,000 of market value is tier II, and any remaining market value is tier
32.26III. The class rates for class 1c are: tier I, 0.55 0.50 percent; tier II, 1.0 percent; and tier
32.27III, 1.25 percent. If a class 1c resort property has any market value in tier III, the entire
32.28property must meet the requirements of subdivision 25, paragraph (d), clause (1), to
32.29qualify for class 1c treatment under this paragraph. Owners of real and personal property
32.30devoted to temporary and seasonal residential occupancy for recreation purposes in which
32.31all or a portion of the property was devoted to commercial purposes for not more than 250
32.32days in the year preceding the year of assessment desiring classification as class 1c, must
32.33submit a declaration to the assessor designating the cabins or units occupied for 250 days
32.34or less in the year preceding the year of assessment by January 15 of the assessment year.
32.35Those cabins or units and a proportionate share of the land on which they are located must
32.36be designated as class 1c as otherwise provided. The remainder of the cabins or units and
33.1a proportionate share of the land on which they are located must be designated as class
33.23a commercial. The owner of property desiring designation as class 1c property must
33.3provide guest registers or other records demonstrating that the units for which class 1c
33.4designation is sought were not occupied for more than 250 days in the year preceding the
33.5assessment if so requested. The portion of a property operated as a (1) restaurant, (2) bar,
33.6(3) gift shop, (4) conference center or meeting room, and (5) other nonresidential facility
33.7operated on a commercial basis not directly related to temporary and seasonal residential
33.8occupancy for recreation purposes does not qualify for class 1c.
33.9    (d) Class 1d property includes structures that meet all of the following criteria:
33.10    (1) the structure is located on property that is classified as agricultural property under
33.11section 273.13, subdivision 23;
33.12    (2) the structure is occupied exclusively by seasonal farm workers during the time
33.13when they work on that farm, and the occupants are not charged rent for the privilege of
33.14occupying the property, provided that use of the structure for storage of farm equipment
33.15and produce does not disqualify the property from classification under this paragraph;
33.16    (3) the structure meets all applicable health and safety requirements for the
33.17appropriate season; and
33.18    (4) the structure is not salable as residential property because it does not comply
33.19with local ordinances relating to location in relation to streets or roads.
33.20    The market value of class 1d property has the same class rates as class 1a property
33.21under paragraph (a).
33.22EFFECTIVE DATE.The portion of this section modifying the market value and
33.23class rate of the first tier of class 1c resorts and striking the language relating to class 1b
33.24veterans' homesteads is effective for taxes payable in 2008 and thereafter. The remaining
33.25portion of this section relating to class 1c resorts is effective for taxes payable in 2009
33.26and thereafter.

33.27    Sec. 19. Minnesota Statutes 2006, section 273.13, subdivision 23, is amended to read:
33.28    Subd. 23. Class 2. (a) Class 2a property is agricultural land including any
33.29improvements that is homesteaded. The market value of the house and garage and
33.30immediately surrounding one acre of land has the same class rates as class 1a property
33.31under subdivision 22. The value of the remaining land including improvements up to the
33.32first tier valuation limit of agricultural homestead property has a net class rate of 0.55 0.5
33.33percent of market value. The remaining property over the first tier has a class rate of one
33.34percent of market value. For purposes of this subdivision, the "first tier valuation limit of
34.1agricultural homestead property" and "first tier" means the limit certified under section
34.2273.11 , subdivision 23.
34.3    (b) Class 2b property is (1) unplatted real estate, rural in character and used
34.4exclusively for growing trees for timber, lumber, and wood and wood products; (2)
34.5real estate, that is not improved with a structure and is used exclusively for growing
34.6trees for timber, lumber, and wood and wood products, if the owner has participated
34.7or is participating in a cost-sharing program for afforestation, reforestation, or timber
34.8stand improvement on that particular property, administered or coordinated by the
34.9commissioner of natural resources; (3) and that consists of at least ten acres, including
34.10land used for growing trees for timber, lumber, and wood and wood products, but not
34.11including land used for agricultural purposes, provided that the presence of a minor,
34.12ancillary nonresidential structure does not disqualify property from classification under
34.13this clause, (2) real estate that is nonhomestead agricultural land; or (4) (3) a landing area
34.14or public access area of a privately owned public use airport. Class 2b property has a net
34.15class rate of one percent of market value, except that property described in clause (1)
34.16has a net class rate of .65 percent if it consists of no more than 1,920 acres and is being
34.17managed under a forest management plan that meets the requirements of chapter 290C,
34.18but is not enrolled in the sustainable forest resource management incentive program,
34.19provided that the owner of the property must apply to the assessor annually to receive the
34.20reduced class rate and provide the information required by the assessor to verify that
34.21the property qualifies for the reduced rate.
34.22    (c) Agricultural land as used in this section means contiguous acreage of ten acres or
34.23more, used during the preceding year for agricultural purposes. "Agricultural purposes" as
34.24used in this section means the raising or cultivation of agricultural products. "Agricultural
34.25purposes" also includes enrollment in the Reinvest in Minnesota program under sections
34.26103F.501 to 103F.535 or the federal Conservation Reserve Program as contained in Public
34.27Law 99-198 if the property was classified as agricultural (i) under this subdivision for
34.28the assessment year 2002 or (ii) in the year prior to its enrollment. Contiguous acreage
34.29on the same parcel, or contiguous acreage on an immediately adjacent parcel under the
34.30same ownership, may also qualify as agricultural land, but only if it is pasture, timber,
34.31waste, unusable wild land, or land included in state or federal farm programs. Agricultural
34.32classification for property shall be determined excluding the house, garage, and
34.33immediately surrounding one acre of land, and shall not be based upon the market value of
34.34any residential structures on the parcel or contiguous parcels under the same ownership.
35.1    (d) Real estate, excluding the house, garage, and immediately surrounding one acre
35.2of land, of less than ten acres which is exclusively and intensively used for raising or
35.3cultivating agricultural products, shall be considered as agricultural land.
35.4    Land shall be classified as agricultural even if all or a portion of the agricultural use
35.5of that property is the leasing to, or use by another person for agricultural purposes.
35.6    Classification under this subdivision is not determinative for qualifying under
35.7section 273.111.
35.8    The property classification under this section supersedes, for property tax purposes
35.9only, any locally administered agricultural policies or land use restrictions that define
35.10minimum or maximum farm acreage.
35.11    (e) The term "agricultural products" as used in this subdivision includes production
35.12for sale of:
35.13    (1) livestock, dairy animals, dairy products, poultry and poultry products, fur-bearing
35.14animals, horticultural and nursery stock, fruit of all kinds, vegetables, forage, grains,
35.15bees, and apiary products by the owner;
35.16    (2) fish bred for sale and consumption if the fish breeding occurs on land zoned
35.17for agricultural use;
35.18    (3) the commercial boarding of horses if the boarding is done in conjunction with
35.19raising or cultivating agricultural products as defined in clause (1);
35.20    (4) property which is owned and operated by nonprofit organizations used for
35.21equestrian activities, excluding racing;
35.22    (5) game birds and waterfowl bred and raised for use on a shooting preserve licensed
35.23under section 97A.115;
35.24    (6) insects primarily bred to be used as food for animals;
35.25    (7) trees, grown for sale as a crop, including short rotation woody crops, and not
35.26sold for timber, lumber, wood, or wood products; and
35.27    (8) maple syrup taken from trees grown by a person licensed by the Minnesota
35.28Department of Agriculture under chapter 28A as a food processor.
35.29    (f) If a parcel used for agricultural purposes is also used for commercial or industrial
35.30purposes, including but not limited to:
35.31    (1) wholesale and retail sales;
35.32    (2) processing of raw agricultural products or other goods;
35.33    (3) warehousing or storage of processed goods; and
35.34    (4) office facilities for the support of the activities enumerated in clauses (1), (2),
35.35and (3),
36.1the assessor shall classify the part of the parcel used for agricultural purposes as class
36.21b, 2a, or 2b, whichever is appropriate, and the remainder in the class appropriate to its
36.3use. The grading, sorting, and packaging of raw agricultural products for first sale is
36.4considered an agricultural purpose. A greenhouse or other building where horticultural
36.5or nursery products are grown that is also used for the conduct of retail sales must be
36.6classified as agricultural if it is primarily used for the growing of horticultural or nursery
36.7products from seed, cuttings, or roots and occasionally as a showroom for the retail sale of
36.8those products. Use of a greenhouse or building only for the display of already grown
36.9horticultural or nursery products does not qualify as an agricultural purpose.
36.10    The assessor shall determine and list separately on the records the market value of
36.11the homestead dwelling and the one acre of land on which that dwelling is located. If any
36.12farm buildings or structures are located on this homesteaded acre of land, their market
36.13value shall not be included in this separate determination.
36.14    (g) To qualify for classification under paragraph (b), clause (4), a privately owned
36.15public use airport must be licensed as a public airport under section 360.018. For purposes
36.16of paragraph (b), clause (4), "landing area" means that part of a privately owned public use
36.17airport properly cleared, regularly maintained, and made available to the public for use by
36.18aircraft and includes runways, taxiways, aprons, and sites upon which are situated landing
36.19or navigational aids. A landing area also includes land underlying both the primary surface
36.20and the approach surfaces that comply with all of the following:
36.21    (i) the land is properly cleared and regularly maintained for the primary purposes of
36.22the landing, taking off, and taxiing of aircraft; but that portion of the land that contains
36.23facilities for servicing, repair, or maintenance of aircraft is not included as a landing area;
36.24    (ii) the land is part of the airport property; and
36.25    (iii) the land is not used for commercial or residential purposes.
36.26The land contained in a landing area under paragraph (b), clause (4), must be described
36.27and certified by the commissioner of transportation. The certification is effective until
36.28it is modified, or until the airport or landing area no longer meets the requirements of
36.29paragraph (b), clause (4). For purposes of paragraph (b), clause (4), "public access area"
36.30means property used as an aircraft parking ramp, apron, or storage hangar, or an arrival
36.31and departure building in connection with the airport.
36.32EFFECTIVE DATE.This section is effective for taxes levied in 2007, payable
36.33in 2008, and thereafter.

36.34    Sec. 20. Minnesota Statutes 2006, section 273.13, subdivision 24, is amended to read:
37.1    Subd. 24. Class 3. (a) Commercial and industrial property and utility real and
37.2personal property is class 3a.
37.3    (1) Except as otherwise provided, each parcel of commercial, industrial, or utility
37.4real property has a class rate of 1.5 percent of the first tier of market value, and 2.0 percent
37.5of the remaining market value. In the case of contiguous parcels of property owned by the
37.6same person or entity, only the value equal to the first-tier value of the contiguous parcels
37.7qualifies for the reduced class rate, except that contiguous parcels owned by the same
37.8person or entity shall be eligible for the first-tier value class rate on each separate business
37.9operated by the owner of the property, provided the business is housed in a separate
37.10structure. For the purposes of this subdivision, the first tier means the first $150,000 of
37.11market value. Real property owned in fee by a utility for transmission line right-of-way
37.12shall be classified at the class rate for the higher tier.
37.13    For purposes of this subdivision, parcels are considered to be contiguous even if
37.14they are separated from each other by a road, street, waterway, or other similar intervening
37.15type of property. Connections between parcels that consist of power lines or pipelines do
37.16not cause the parcels to be contiguous. Property owners who have contiguous parcels of
37.17property that constitute separate businesses that may qualify for the first-tier class rate shall
37.18notify the assessor by July 1, for treatment beginning in the following taxes payable year.
37.19    (2) All Personal property that is: (i) part of an electric generation, transmission, or
37.20distribution system; or (ii), including tools, implements, and machinery, has a class rate
37.21of 2.5 percent for taxes levied in 2007, payable in 2008, and 3.0 percent for taxes levied
37.22in 2008, payable in 2009, and thereafter.
37.23    (3) Personal property that is either: (i) part of a pipeline system transporting
37.24or distributing water, gas, crude oil, or petroleum products; and (iii) not described in
37.25clause (3), and all, including tools, implements, and machinery, or (ii) part of an electric
37.26transmission or distribution system, including tools, implements, and machinery, has a
37.27class rate of 2.15 percent for taxes levied in 2007, payable in 2008, and 2.25 percent for
37.28taxes levied in 2008, payable in 2009, and thereafter.
37.29    (4) railroad operating property has a class rate as provided under clause (1) for
37.30the first tier of market value and the remaining market value. In the case of multiple
37.31parcels in one county that are owned by one person or entity, only one first tier amount
37.32is eligible for the reduced rate.
37.33    (3) The entire market value of personal property that is: (i) tools, implements, and
37.34machinery of an electric generation, transmission, or distribution system; (ii) tools,
37.35implements, and machinery of a pipeline system transporting or distributing water, gas,
37.36crude oil, or petroleum products; or (iii) the (5) Personal property consisting of mains
38.1and pipes used in the distribution of steam or hot or chilled water for heating or cooling
38.2buildings, has a class rate as provided under clause (1) for the remaining market value
38.3in excess of the first tier.
38.4    (b) Employment property defined in section 469.166, during the period provided
38.5in section 469.170, shall constitute class 3b. The class rates for class 3b property are
38.6determined under paragraph (a).
38.7EFFECTIVE DATE.This section is effective for taxes levied in 2007, payable
38.8in 2008, and thereafter.

38.9    Sec. 21. Minnesota Statutes 2006, section 273.13, subdivision 25, is amended to read:
38.10    Subd. 25. Class 4. (a) Class 4a is residential real estate containing four or more
38.11units and used or held for use by the owner or by the tenants or lessees of the owner
38.12as a residence for rental periods of 30 days or more, excluding property qualifying for
38.13class 4d. Class 4a also includes hospitals licensed under sections 144.50 to 144.56, other
38.14than hospitals exempt under section 272.02, and contiguous property used for hospital
38.15purposes, without regard to whether the property has been platted or subdivided. The
38.16market value of class 4a property has a class rate of 1.25 percent.
38.17    (b) Class 4b includes:
38.18    (1) residential real estate containing less than four units that does not qualify as class
38.194bb, other than seasonal residential recreational property;
38.20    (2) manufactured homes not classified under any other provision;
38.21    (3) a dwelling, garage, and surrounding one acre of property on a nonhomestead
38.22farm classified under subdivision 23, paragraph (b) containing two or three units; and
38.23    (4) unimproved property that is classified residential as determined under subdivision
38.2433.
38.25    The market value of class 4b property has a class rate of 1.25 percent.
38.26    (c) Class 4bb includes:
38.27    (1) nonhomestead residential real estate containing one unit, other than seasonal
38.28residential recreational property; and
38.29    (2) a single family dwelling, garage, and surrounding one acre of property on a
38.30nonhomestead farm classified under subdivision 23, paragraph (b).
38.31    Class 4bb property has the same class rates as class 1a property under subdivision 22.
38.32    Property that has been classified as seasonal residential recreational property at
38.33any time during which it has been owned by the current owner or spouse of the current
38.34owner does not qualify for class 4bb.
38.35    (d) Class 4c property includes:
39.1    (1) except as provided in subdivision 22, paragraph (c), or subdivision 23, paragraph
39.2(b), clause (1), real and personal property devoted to temporary and seasonal residential
39.3occupancy for recreation purposes, including real and personal property devoted to
39.4temporary and seasonal residential occupancy for recreation purposes and not devoted to
39.5commercial purposes for more than 250 days in the year preceding the year of assessment.
39.6For purposes of this clause, property is devoted to a commercial purpose on a specific
39.7day if any portion of the property is used for residential occupancy, and a fee is charged
39.8for residential occupancy. Class 4c property must contain three or more rental units. A
39.9"rental unit" is defined as a cabin, condominium, townhouse, sleeping room, or individual
39.10camping site equipped with water and electrical hookups for recreational vehicles. Class
39.114c property must provide recreational activities such as renting ice fishing houses, boats
39.12and motors, snowmobiles, downhill or cross-country ski equipment; provide marina
39.13services, launch services, or guide services; or sell bait and fishing tackle. A camping
39.14pad offered for rent by a property that otherwise qualifies for class 4c is also class 4c
39.15regardless of the term of the rental agreement, as long as the use of the camping pad
39.16does not exceed 250 days. In order for a property to be classified as class 4c, seasonal
39.17residential recreational for commercial purposes, at least 40 percent of the annual gross
39.18lodging receipts related to the property must be from business conducted during 90
39.19consecutive days and either (i) at least 60 percent of all paid bookings by lodging guests
39.20during the year must be for periods of at least two consecutive nights; or (ii) at least 20
39.21percent of the annual gross receipts must be from charges for rental of fish houses, boats
39.22and motors, snowmobiles, downhill or cross-country ski equipment, or charges for marina
39.23services, launch services, and guide services, or the sale of bait and fishing tackle. For
39.24purposes of this determination, a paid booking of five or more nights shall be counted as
39.25two bookings. Class 4c also includes commercial use real property used exclusively
39.26for recreational purposes in conjunction with class 4c property devoted to temporary
39.27and seasonal residential occupancy for recreational purposes, up to a total of two acres,
39.28provided the property is not devoted to commercial recreational use for more than 250
39.29days in the year preceding the year of assessment and is located within two miles of the
39.30class 4c property with which it is used. Owners of real and personal property devoted to
39.31temporary and seasonal residential occupancy for recreation purposes and all or a portion
39.32of which was devoted to commercial purposes for not more than 250 days in the year
39.33preceding the year of assessment desiring classification as class 1c or 4c, must submit a
39.34declaration to the assessor designating the cabins or units occupied for 250 days or less in
39.35the year preceding the year of assessment by January 15 of the assessment year. Those
39.36cabins or units and a proportionate share of the land on which they are located will must be
40.1designated class 1c or 4c as otherwise provided. The remainder of the cabins or units and
40.2a proportionate share of the land on which they are located will be designated as class 3a.
40.3The owner of property desiring designation as class 1c or 4c property must provide guest
40.4registers or other records demonstrating that the units for which class 1c or 4c designation
40.5is sought were not occupied for more than 250 days in the year preceding the assessment if
40.6so requested. The portion of a property operated as a (1) restaurant, (2) bar, (3) gift shop,
40.7(4) conference center or meeting room, and (4) (5) other nonresidential facility operated
40.8on a commercial basis not directly related to temporary and seasonal residential occupancy
40.9for recreation purposes shall does not qualify for class 1c or 4c;
40.10    (2) qualified property used as a golf course if:
40.11    (i) it is open to the public on a daily fee basis. It may charge membership fees or
40.12dues, but a membership fee may not be required in order to use the property for golfing,
40.13and its green fees for golfing must be comparable to green fees typically charged by
40.14municipal courses; and
40.15    (ii) it meets the requirements of section 273.112, subdivision 3, paragraph (d).
40.16    A structure used as a clubhouse, restaurant, or place of refreshment in conjunction
40.17with the golf course is classified as class 3a property;
40.18    (3) real property up to a maximum of one acre three acres of land owned and used
40.19by a nonprofit community service oriented organization; provided that and that is not used
40.20for residential purposes on either a temporary or permanent basis, qualifies for class 4c
40.21provided that it meets either of the following:
40.22    (i) the property is not used for a revenue-producing activity for more than six days
40.23in the calendar year preceding the year of assessment and the property is not used for
40.24residential purposes on either a temporary or permanent basis; or
40.25    (ii) the organization makes annual charitable contributions and donations at least
40.26equal to the property's previous year's property taxes and the property is allowed to be
40.27used for public and community meetings or events for no charge, as appropriate to the
40.28size of the facility.
40.29    For purposes of this clause,
40.30    (A) "charitable contributions and donations" has the same meaning as lawful
40.31gambling purposes under section 349.12, subdivision 25, excluding those purposes
40.32relating to the payment of taxes, assessments, fees, auditing costs, and utility payments;
40.33    (B) "property taxes" excludes the state general tax;
40.34    (C) a "nonprofit community service oriented organization" means any corporation,
40.35society, association, foundation, or institution organized and operated exclusively for
40.36charitable, religious, fraternal, civic, or educational purposes, and which is exempt from
41.1federal income taxation pursuant to section 501(c)(3), (10), or (19) of the Internal Revenue
41.2Code of 1986, as amended through December 31, 1990. For purposes of this clause,; and
41.3    (D) "revenue-producing activities" shall include but not be limited to property or that
41.4portion of the property that is used as an on-sale intoxicating liquor or 3.2 percent malt
41.5liquor establishment licensed under chapter 340A, a restaurant open to the public, bowling
41.6alley, a retail store, gambling conducted by organizations licensed under chapter 349, an
41.7insurance business, or office or other space leased or rented to a lessee who conducts a
41.8for-profit enterprise on the premises.
41.9Any portion of the property qualifying under item (i) which is used for revenue-producing
41.10activities for more than six days in the calendar year preceding the year of assessment
41.11shall be assessed as class 3a. The use of the property for social events open exclusively
41.12to members and their guests for periods of less than 24 hours, when an admission is
41.13not charged nor any revenues are received by the organization shall not be considered a
41.14revenue-producing activity;.
41.15    The organization shall maintain records of its charitable contributions and donations
41.16and of public meetings and events held on the property and make them available upon
41.17request any time to the assessor to ensure eligibility. An organization meeting the
41.18requirement under item (ii) must file an application by May 1 with the assessor for
41.19eligibility for the current year's assessment. The commissioner shall prescribe a uniform
41.20application form and instructions;
41.21    (4) postsecondary student housing of not more than one acre of land that is owned by
41.22a nonprofit corporation organized under chapter 317A and is used exclusively by a student
41.23cooperative, sorority, or fraternity for on-campus housing or housing located within two
41.24miles of the border of a college campus;
41.25    (5) manufactured home parks as defined in section 327.14, subdivision 3;
41.26    (6) real property that is actively and exclusively devoted to indoor fitness, health,
41.27social, recreational, and related uses, is owned and operated by a not-for-profit corporation,
41.28and is located within the metropolitan area as defined in section 473.121, subdivision 2;
41.29    (7) a leased or privately owned noncommercial aircraft storage hangar not exempt
41.30under section 272.01, subdivision 2, and the land on which it is located, provided that:
41.31    (i) the land is on an airport owned or operated by a city, town, county, Metropolitan
41.32Airports Commission, or group thereof; and
41.33    (ii) the land lease, or any ordinance or signed agreement restricting the use of the
41.34leased premise, prohibits commercial activity performed at the hangar.
42.1    If a hangar classified under this clause is sold after June 30, 2000, a bill of sale must
42.2be filed by the new owner with the assessor of the county where the property is located
42.3within 60 days of the sale;
42.4    (8) a privately owned noncommercial aircraft storage hangar not exempt under
42.5section 272.01, subdivision 2, and the land on which it is located, provided that:
42.6    (i) the land abuts a public airport; and
42.7    (ii) the owner of the aircraft storage hangar provides the assessor with a signed
42.8agreement restricting the use of the premises, prohibiting commercial use or activity
42.9performed at the hangar; and
42.10    (9) residential real estate, a portion of which is used by the owner for homestead
42.11purposes, and that is also a place of lodging, if all of the following criteria are met:
42.12    (i) rooms are provided for rent to transient guests that generally stay for periods
42.13of 14 or fewer days;
42.14    (ii) meals are provided to persons who rent rooms, the cost of which is incorporated
42.15in the basic room rate;
42.16    (iii) meals are not provided to the general public except for special events on fewer
42.17than seven days in the calendar year preceding the year of the assessment; and
42.18    (iv) the owner is the operator of the property.
42.19The market value subject to the 4c classification under this clause is limited to five rental
42.20units. Any rental units on the property in excess of five, must be valued and assessed as
42.21class 3a. The portion of the property used for purposes of a homestead by the owner must
42.22be classified as class 1a property under subdivision 22.
42.23    Class 4c property has a class rate of 1.5 percent of market value, except that (i) each
42.24parcel of seasonal residential recreational property not used for commercial purposes has
42.25the same class rates as class 4bb property, (ii) manufactured home parks assessed under
42.26clause (5) have the same class rate as class 4b property, (iii) commercial-use seasonal
42.27residential recreational property has a class rate of one percent for the first $500,000 of
42.28market value, and 1.25 percent for the remaining market value, (iv) the market value of
42.29property described in clause (4) has a class rate of one percent, (v) the market value of
42.30property described in clauses (2) and (6) has a class rate of 1.25 percent, and (vi) that
42.31portion of the market value of property in clause (9) qualifying for class 4c property
42.32has a class rate of 1.25 percent.
42.33    (e) Class 4d property is qualifying low-income rental housing certified to the assessor
42.34by the Housing Finance Agency under section 273.128, subdivision 3. If only a portion
42.35of the units in the building qualify as low-income rental housing units as certified under
42.36section 273.128, subdivision 3, only the proportion of qualifying units to the total number
43.1of units in the building qualify for class 4d. The remaining portion of the building shall be
43.2classified by the assessor based upon its use. Class 4d also includes the same proportion of
43.3land as the qualifying low-income rental housing units are to the total units in the building.
43.4For all properties qualifying as class 4d, the market value determined by the assessor must
43.5be based on the normal approach to value using normal unrestricted rents.
43.6    Class 4d property has a class rate of 0.75 percent.
43.7EFFECTIVE DATE.The portion of this section relating to class 4c resorts in
43.8paragraph (d), clause (1), is effective for assessment year 2008 and thereafter, for taxes
43.9payable in 2009 and thereafter. The portion of this section relating to nonprofit community
43.10service oriented organizations is effective for assessment year 2007 and thereafter, for
43.11taxes payable in 2008 and thereafter, except that the application date in paragraph (d),
43.12clause (3), item (ii), for the 2007 assessment is extended to September 1, 2007.

43.13    Sec. 22. Minnesota Statutes 2006, section 273.13, subdivision 33, is amended to read:
43.14    Subd. 33. Classification of unimproved property. (a) All real property that is not
43.15improved with a structure must be classified according to its current use.
43.16    (b) Except as provided in subdivision 23, paragraph (b), clause (1), real property that
43.17is not improved with a structure and for which there is no identifiable current use must be
43.18classified according to its highest and best use permitted under the local zoning ordinance.
43.19If the ordinance permits more than one use, the land must be classified according to the
43.20highest and best use permitted under the ordinance. If no such ordinance exists, the
43.21assessor shall consider the most likely potential use of the unimproved land based upon
43.22the use made of surrounding land or land in proximity to the unimproved land.
43.23EFFECTIVE DATE.This section is effective for assessment year 2007 and
43.24thereafter, for taxes payable in 2008 and thereafter.

43.25    Sec. 23. Minnesota Statutes 2006, section 273.13, is amended by adding a subdivision
43.26to read:
43.27    Subd. 34. Homestead of disabled veteran. (a) All or a portion of the market value
43.28of property qualifying for homestead classification under subdivision 22 or 23 is excluded
43.29in determining the property's taxable market value if it serves as the homestead of a
43.30military veteran, as defined in section 197.447, who has a service-connected disability of
43.3170 percent or more. To qualify for exclusion under this subdivision, the veteran must have
43.32been honorably discharged from the United States armed forces, as indicated by United
43.33States Government Form DD214 or other official military discharge papers, and must be
44.1certified by the United States Veterans Administration as having a service-connected
44.2disability.
44.3    (b)(1) For a disability rating of 70 percent or more, $150,000 of market value is
44.4excluded, except as provided in clause (2); and
44.5    (2) for a total (100 percent) and permanent disability, $300,000 of market value is
44.6excluded.
44.7    (c) If a disabled veteran qualifying for a valuation exclusion under paragraph (b),
44.8clause (2), predeceases the veteran's spouse, and if upon the death of the veteran the
44.9spouse holds the legal or beneficial title to the homestead and permanently resides there,
44.10the exclusion shall carry over to the benefit of the veteran's spouse until such time as the
44.11spouse sells, transfers, or otherwise disposes of the property.
44.12    (d) In the case of an agricultural homestead, only the portion of the property
44.13consisting of the house and garage and immediately surrounding one acre of land qualifies
44.14for the valuation exclusion under this subdivision.
44.15    (e) A property qualifying for a valuation exclusion under this subdivision is not
44.16eligible for the credit under section 273.1384, subdivision 1.
44.17    (f) To qualify for a valuation exclusion under this subdivision a property owner must
44.18apply to the assessor by July 1 of each assessment year, except that an annual reapplication
44.19is not required once a property has been accepted for a valuation exclusion under paragraph
44.20(b), clause (2), and the property continues to qualify until there is a change in ownership.
44.21EFFECTIVE DATE.This section is effective for assessment year 2007 and
44.22thereafter, for taxes payable in 2008 and thereafter.

44.23    Sec. 24. Minnesota Statutes 2006, section 275.025, subdivision 3, is amended to read:
44.24    Subd. 3. Seasonal residential recreational tax capacity. For the purposes of this
44.25section, "seasonal residential recreational tax capacity" means the tax capacity of tier III of
44.26class 1c under section 273.13, subdivision 22, and all class 4c(1) and 4c(3)(ii) property
44.27under section 273.13, subdivision 25, except that the first $76,000 of market value of each
44.28noncommercial class 4c(1) property has a tax capacity for this purpose equal to 40 percent
44.29of its tax capacity under section 273.13.
44.30EFFECTIVE DATE.This section is effective for taxes payable in 2008 and
44.31thereafter.

44.32    Sec. 25. Minnesota Statutes 2006, section 275.065, is amended by adding a subdivision
44.33to read:
45.1    Subd. 6c. Joint public hearing; nonmetropolitan county, cities, and school
45.2districts. (a) Notwithstanding any other provision of law, the county board may hold a
45.3joint hearing with the governing bodies of all taxing authorities located wholly or partially
45.4within the county that are required to hold a public hearing under this section, excluding
45.5special taxing districts. The primary purpose of the joint hearing is for taxpayer efficiency
45.6by allowing taxpayers to come to a single public hearing to discuss the budgets and
45.7proposed property tax levies of most taxing authorities that impact the taxes on their
45.8property.
45.9    (b) This subdivision applies only to counties located outside the metropolitan area
45.10as defined under section 473.121, subdivision 2. If a city or school district is located
45.11partially within the metropolitan area, that taxing jurisdiction may participate in its
45.12nonmetropolitan county's joint hearing, if it so chooses.
45.13    (c) Upon the adoption of a resolution by the county board to hold a joint public
45.14hearing, the county shall notify each city with a population over 500 and each school
45.15district located wholly or partially within the county of its intention to hold the joint
45.16hearing and ask each of the taxing authorities if it would like to participate. Participation
45.17is voluntary, and participation in the joint hearing is in lieu of the requirement for the
45.18governing body to hold a separate public hearing under subdivision 6. If a participating
45.19city or school district is located in more than one county, the hearing under this subdivision
45.20is in lieu of the requirement to hold a separate public hearing if 75 percent or more
45.21of that city or school district's previous year's net tax capacity is in the county where
45.22the hearing is held.
45.23    (d) The initial joint hearing must be held on the first Thursday in December. The
45.24county may hold an additional joint hearing on another date before December 20 if the
45.25majority of the participating taxing authorities want an additional hearing.
45.26    The county board shall obtain a meeting space to hold the joint hearing, preferably
45.27at a public building such as the courthouse, school, or community center. The location
45.28shall be as centrally located within the county as possible. The meeting shall generally be
45.29structured in the following general manner:
45.30    (1) 30 to 60 minutes must be devoted to discussion of the county's budget and levy;
45.31    (2) 30 to 60 minutes must be devoted to discussion of the city's budget and levy,
45.32with each city's discussion held in a separate room, preferably in the same building;
45.33    (3) 30 to 60 minutes must be devoted to discussion of the school district's levy,
45.34with each school district's discussion held in a separate room, preferably in the same
45.35building; and
46.1    (4) during the last 30 minutes the governing bodies must reassemble in a joint
46.2meeting to entertain any follow-up questions that have arisen from the separate discussions.
46.3    The county shall attempt to keep the total public hearing to within three hours.
46.4    (e) In lieu of the public advertisement requirement in subdivision 5a, the county shall
46.5have a single advertisement listing the county, each city with a population of over 500, and
46.6each school district participating in the joint public hearing listing. Any taxing authority
46.7participating under this subdivision is exempt from the separate public advertisement
46.8requirement under subdivision 5a. The cost of the joint hearing advertisement shall be
46.9apportioned in the same manner provided in subdivision 4. The notice must be published
46.10not less than two business days nor more than six business days before the hearing. The
46.11newspaper selected must be one of general interest and readership in the county, and not
46.12one of limited subject matter. The advertisement must appear in a newspaper that is
46.13published at least once per week. The advertisement must be in the following form:
46.14"NOTICE OF JOINT PUBLIC HEARING
46.15PROPOSED TOTAL PROPERTY TAXES
46.16FOR PARTICIPATING TAXING AUTHORITIES
46.17The property tax amounts below compare that portion of the current budget levied in
46.18property taxes in the county, cities, and school districts for (year) with the property
46.19taxes the county, cities, and school districts propose to collect in (year) for those taxing
46.20authorities participating in the joint public hearing.
46.21
46.22
Taxing Authority
(Year) Property
Taxes
Proposed (Year)
Property Taxes
Change (Year) -
(Year)
46.23
$.......
$.......
$.......
...%
46.24
$.......
$.......
$.......
...%
46.25
$.......
$.......
$.......
...%
46.26ATTEND THE JOINT PUBLIC HEARING
46.27All residents are invited to attend the joint public hearing of the county/cities/school
46.28districts to express your opinions on the proposed amount of (year) property taxes. The
46.29hearing will be held on:
46.30(Month/Day/Year/Time)
46.31(Location/Address)
46.32If the discussion cannot be completed, and another hearing is scheduled, a time and place
46.33for that hearing will be announced at this hearing. You are also invited to send your
46.34written comments to the county auditor. If the comments relate to the city or school
46.35district's levy, please identify that on the envelope so the county auditor can direct the
46.36correspondence to the right jurisdiction."
47.1    The formal adoption of the taxing authority's levy must not be made at the joint
47.2public hearing held under this subdivision. The formal adoption must be made at one of
47.3the regularly scheduled meetings of the taxing authority's governing body. However, the
47.4property tax levy amount that is subsequently adopted cannot exceed the amount shown to
47.5taxpayers at the joint public hearing.
47.6EFFECTIVE DATE.This section is effective for hearings held in 2007 and
47.7thereafter.

47.8    Sec. 26. Minnesota Statutes 2006, section 275.066, is amended to read:
47.9275.066 SPECIAL TAXING DISTRICTS; DEFINITION.
47.10    For the purposes of property taxation and property tax state aids, the term "special
47.11taxing districts" includes the following entities:
47.12    (1) watershed districts under chapter 103D;
47.13    (2) sanitary districts under sections 115.18 to 115.37;
47.14    (3) regional sanitary sewer districts under sections 115.61 to 115.67;
47.15    (4) regional public library districts under section 134.201;
47.16    (5) park districts under chapter 398;
47.17    (6) regional railroad authorities under chapter 398A;
47.18    (7) hospital districts under sections 447.31 to 447.38;
47.19    (8) St. Cloud Metropolitan Transit Commission under sections 458A.01 to 458A.15;
47.20    (9) Duluth Transit Authority under sections 458A.21 to 458A.37;
47.21    (10) regional development commissions under sections 462.381 to 462.398;
47.22    (11) housing and redevelopment authorities under sections 469.001 to 469.047;
47.23    (12) port authorities under sections 469.048 to 469.068;
47.24    (13) economic development authorities under sections 469.090 to 469.1081;
47.25    (14) Metropolitan Council under sections 473.123 to 473.549;
47.26    (15) Metropolitan Airports Commission under sections 473.601 to 473.680;
47.27    (16) Metropolitan Mosquito Control Commission under sections 473.701 to 473.716;
47.28    (17) Morrison County Rural Development Financing Authority under Laws 1982,
47.29chapter 437, section 1;
47.30    (18) Croft Historical Park District under Laws 1984, chapter 502, article 13, section
47.316;
47.32    (19) East Lake County Medical Clinic District under Laws 1989, chapter 211,
47.33sections 1 to 6;
48.1    (20) Floodwood Area Ambulance District under Laws 1993, chapter 375, article
48.25, section 39;
48.3    (21) Middle Mississippi River Watershed Management Organization under sections
48.4103B.211 and 103B.241;
48.5    (22) emergency medical services special taxing districts under section 144F.01;
48.6    (23) a county levying under the authority of section 103B.241, 103B.245, or
48.7103B.251 ;
48.8    (24) Southern St. Louis County Special Taxing District; Chris Jensen Nursing Home
48.9under Laws 2003, First Special Session chapter 21, article 4, section 12; and
48.10    (25) an airport authority created under section 360.0426; and
48.11    (26) any other political subdivision of the state of Minnesota, excluding counties,
48.12school districts, cities, and towns, that has the power to adopt and certify a property tax
48.13levy to the county auditor, as determined by the commissioner of revenue.
48.14EFFECTIVE DATE.This section is effective for taxes levied in 2007, payable
48.15in 2008, and thereafter.

48.16    Sec. 27. Minnesota Statutes 2006, section 278.05, subdivision 6, is amended to read:
48.17    Subd. 6. Dismissal of petition; exclusion of certain evidence. (a) In cases where
48.18the petitioner contests the valuation of income-producing property, information, including
48.19income and expense figures in the form of (1) year-end financial statements for the
48.20year prior to the assessment date, (2) year-end financial statements for the year of the
48.21assessment date, and (3) rent rolls on the assessment date including tenant name, lease start
48.22and end dates, option terms, base rent, square footage leased and vacant space, verified net
48.23rentable areas in the form of net rentable square footage of the building or buildings, and
48.24anticipated income and expenses in the form of proposed budgets for the year subsequent
48.25to the year of the assessment date, for income-producing property must be provided to
48.26the county assessor no later than 60 days after the applicable filing deadline contained
48.27in section 278.01, subdivision 1 or 4. Failure to provide the information required in this
48.28paragraph shall result in the dismissal of the petition, unless (1) the failure to provide it was
48.29due to the unavailability of the evidence at the time that the information was due, or (2)
48.30the petitioner was not aware of or informed of the requirement to provide the information.
48.31If the petitioner proves that the requirements under clause (2) are met, the petitioner has
48.32an additional 30 days to provide the information from the time the petitioner became
48.33aware of or was informed of the requirement to provide the information, otherwise the
48.34petition shall be dismissed.
49.1    (b) Provided that the information as contained in paragraph (a) is timely submitted to
49.2the county assessor, the county assessor shall furnish the petitioner at least five days before
49.3the hearing under this chapter with the property's appraisal, if any, which will be presented
49.4to the court at the hearing. The petitioner shall furnish to the county assessor at least five
49.5days before the hearing under this chapter with the property's appraisal, if any, which
49.6will be presented to the court at the hearing. An appraisal of the petitioner's property
49.7done by or for the county shall not be admissible as evidence if the county assessor does
49.8not comply with the provisions in this paragraph. The petition shall be dismissed if the
49.9petitioner does not comply with the provisions in this paragraph.
49.10EFFECTIVE DATE.This section is effective for petitions filed on or after July
49.111, 2007.

49.12    Sec. 28. Minnesota Statutes 2006, section 279.37, subdivision 1a, is amended to read:
49.13    Subd. 1a. Class 3a property. (a) The delinquent taxes upon a parcel of property
49.14which was classified class 3a, for the previous year's assessment and had a total market
49.15value of $200,000 $500,000 or less for that same assessment shall be eligible to be
49.16composed into a confession of judgment. Property qualifying under this subdivision
49.17shall be subject to the same provisions as provided in this section except as provided
49.18in paragraphs (b) to (d).
49.19    (b) Current year taxes and penalty due at the time the confession of judgment
49.20is entered must be paid.
49.21    (c) The down payment must include all special assessments due in the current tax
49.22year, all delinquent special assessments, and 20 percent of the ad valorem tax, penalties,
49.23and interest accrued against the parcel. The balance remaining is payable in four equal
49.24annual installments.
49.25    (d) The amounts entered in judgment bear interest at the rate provided in section
49.26279.03, subdivision 1a , commencing with the date the judgment is entered. The interest
49.27rate is subject to change each year on the unpaid balance in the manner provided in section
49.28279.03, subdivision 1a .
49.29EFFECTIVE DATE.This section is effective for confessions of judgment entered
49.30into July 1, 2007, and thereafter.

49.31    Sec. 29. Minnesota Statutes 2006, section 280.39, is amended to read:
49.32280.39 DELINQUENT TAXES MAY BE PAID IN INVERSE ORDER.
50.1    In any case where taxes for two or more years are delinquent against a parcel of land,
50.2such taxes for one or more entire years, if held by the state, may be paid in the inverse
50.3order to that in which the taxes were levied, with accrued penalties, interest, and costs
50.4upon the taxes so paid, without payment of the taxes for the first of such years; provided,
50.5that such payment shall not affect the lien of any unpaid taxes or tax judgment.
50.6EFFECTIVE DATE.This section is effective the day following final enactment.

50.7    Sec. 30. Minnesota Statutes 2006, section 289A.08, subdivision 13, is amended to read:
50.8    Subd. 13. Long and short forms; local use tax instructions; property tax refund
50.9information. (a) The commissioner shall provide a long form individual income tax
50.10return and may provide a short form individual income tax return. The returns shall be in
50.11a form that is consistent with the provisions of chapter 290, notwithstanding any other
50.12law to the contrary. The nongame wildlife checkoff provided in section 290.431 and the
50.13dependent care credit provided in section 290.067 must be included on the short form.
50.14    (b) The commissioner must provide information on local use taxes in the individual
50.15income tax instruction booklet. The commissioner must provide this information in the
50.16same section of the booklet that provides information on the state use tax.
50.17    (c) The commissioner must refer to the property tax refunds allowed under chapter
50.18290A on the front cover of the individual income tax instruction booklet, as well as
50.19information within the booklet on income eligibility for the homestead and renter refunds,
50.20and maximum refund amounts allowed in the current year.
50.21EFFECTIVE DATE.This section is effective the day following final enactment.

50.22    Sec. 31. Minnesota Statutes 2006, section 290C.07, is amended to read:
50.23290C.07 CALCULATION OF INCENTIVE PAYMENT.
50.24    An approved claimant under the sustainable forest incentive program is eligible to
50.25receive an annual payment. The payment shall equal the greater of:
50.26    (1) the difference between the property tax that would be paid on the land using the
50.27previous year's statewide average total township tax rate and the class rate for class 2b
50.28timberland under section 273.13, subdivision 23, paragraph (b), if the land were valued
50.29at (i) the average statewide timberland market value per acre calculated under section
50.30290C.06 , and (ii) the average statewide timberland current use value per acre calculated
50.31under section 290C.02, subdivision 5; or
50.32    (2) two-thirds of the property tax amount determined by using the previous year's
50.33statewide average total township tax rate, the estimated market value per acre as calculated
51.1in section 290C.06, and the class rate for 2b timberland under section 273.13, subdivision
51.223
, paragraph (b); or
51.3    (3) $1.50, provided that the payment shall be no less than $5 per acre for each acre
51.4enrolled in the sustainable forest incentive program.
51.5EFFECTIVE DATE.This section is effective for payments made after June 30,
51.62007.

51.7    Sec. 32. Minnesota Statutes 2006, section 360.031, is amended to read:
51.8360.031 DEFINITION OF MUNICIPALITY.
51.9    For the purposes of sections 360.031 to 360.045, inclusive (except section 360.042),
51.10only, "municipality" means any county, city, or town, or airport authority of this state.

51.11    Sec. 33. [360.0425] GENERAL POWERS OF AUTHORITY.
51.12    An airport authority created under section 360.0426 has all the powers granted a
51.13municipality under sections 360.032 to 360.046.

51.14    Sec. 34. [360.0426] CREATION OF AN AIRPORT AUTHORITY,
51.15DISSOLUTION.
51.16    Subdivision 1. Members; definition. A city together with another city, county,
51.17town, or an Indian tribe may create an airport authority. For purposes of this chapter,
51.18"airport authority" means a governmental entity created pursuant to this section for the
51.19purpose of acquiring, establishing, constructing, maintaining, improving, and operating
51.20airports and other air navigation facilities.
51.21    Subd. 2. Process to establish authority. A city that owns an airport by joint
51.22resolution together with other willing governmental units may create an airport authority
51.23that is authorized to exercise its functions upon passage of a joint resolution by each of
51.24their governing bodies, including a proposed date for the first meeting of the authority.
51.25    Subd. 3. Airport authority commission. The powers of the airport authority shall
51.26be vested in the airport authority commissioners. The commission shall consist of at
51.27least five commissioners. Each governmental unit that is a member of the authority shall
51.28be represented by at least one commissioner. If fewer than five governmental units are
51.29members of the authority, there must be two commissioners appointed from each member
51.30unit of government. The terms of each commissioner are three years, provided that the
51.31length of the initial appointments must be staggered so that the terms of approximately
51.32one-third of the commissioners expire each calendar year.
52.1    Subd. 4. Appointment of commissioners. The governmental body of each member
52.2governmental unit shall appoint a resident of that governmental unit to be a commissioner
52.3of the airport authority. Upon vacancy of a commissioner prior to the end of a normal term,
52.4the appropriate governmental body shall appoint a commissioner to fill the unexpired term.
52.5    Subd. 5. Compensation; meetings; officers. Commissioners shall receive no
52.6compensation for services, but are entitled to payment for necessary expenses, including
52.7travel expenses, incurred in the discharge of the commissioners' duties.
52.8    The commission shall establish a regular meeting schedule. A majority of the
52.9commissioners of the authority constitutes a quorum for purposes of conducting business
52.10of the authority. Action may be taken by the majority vote of not less than a majority of
52.11the commissioners present, providing there is a quorum.
52.12    The commission shall elect a chair, a vice-chair, a secretary, and a treasurer at its
52.13organizational meeting. The authority may hire an executive director, a legal advisor,
52.14technical experts, and other employees, permanent and temporary, as it may require.
52.15    Subd. 6. Process to increase size of authority. An airport authority may be
52.16increased in size by adding additional governmental entities if each of the additional
52.17entities and each of the governmental entities currently included in the existing authority
52.18adopt a resolution agreeing to the size increase.
52.19    Subd. 7. Process to decrease size of authority. An airport authority may be
52.20decreased in size if each of the governmental entities that are members of the authority
52.21and the current commissioners consent to change and make provisions for the retention
52.22or disposition of its assets and liabilities.
52.23    Subd. 8. Process to dissolve authority. An airport authority may be dissolved after
52.24payment of all debts and adoption of a joint resolution of the governing bodies of all of
52.25the participating units of government. Before dissolution, the property of the airport
52.26authority must be sold, transferred, or distributed as agreed to by the participating units
52.27of government. Any remaining funds must be distributed to the general funds of the
52.28participating units of government in proportion to their relative shares of the most recent
52.29levy under section 360.0427.

52.30    Sec. 35. [360.0427] TAX LEVY MAY BE CERTIFIED BY AN AIRPORT
52.31AUTHORITY.
52.32    In any year in which it imposes a property tax levy, an airport authority must certify
52.33to the auditor of any county that contains property within the boundaries of the airport
52.34authority a uniform tax rate to be levied on all taxable property within the boundaries
52.35of the airport authority.
53.1EFFECTIVE DATE.This section is effective for taxes levied in 2007, payable
53.2in 2008, and thereafter.

53.3    Sec. 36. Minnesota Statutes 2006, section 435.193, is amended to read:
53.4435.193 HARDSHIP ASSESSMENT DEFERRAL FOR SENIORS OR,
53.5DISABLED, OR MILITARY PERSONS.
53.6    (a) Notwithstanding the provisions of any law to the contrary, any county, statutory
53.7or home rule charter city, or town, making a special assessment may, at its discretion, defer
53.8the payment of that assessment for any homestead property:
53.9    (1) owned by a person 65 years of age or older or retired by virtue of a permanent
53.10and total disability for whom it would be a hardship to make the payments; or
53.11    (2) owned by a person who is a member of the Minnesota National Guard or other
53.12military reserves who is ordered into active military service, as defined in section 190.05,
53.13subdivision 5b or 5c, as stated in the person's military orders, for whom it would be a
53.14hardship to make the payments.
53.15    (b) Any county, statutory or home rule charter city, or town electing to defer
53.16special assessments shall adopt an ordinance or resolution establishing standards and
53.17guidelines for determining the existence of a hardship and for determining the existence of
53.18a disability, but nothing herein shall be construed to prohibit the determination of hardship
53.19on the basis of exceptional and unusual circumstances not covered by the standards and
53.20guidelines where the determination is made in a nondiscriminatory manner and does not
53.21give the applicant an unreasonable preference or advantage over other applicants.
53.22EFFECTIVE DATE.This section is effective the day following final enactment,
53.23and applies to any special assessment for which payment is due on or after that date.

53.24    Sec. 37. Laws 1973, chapter 393, section 1, as amended by Laws 1974, chapter 153,
53.25section 1, is amended to read:
53.26    Section 1. MINNEAPOLIS, CITY OF; STREET MAINTENANCE AND
53.27LIGHTING.
53.28    Notwithstanding the provisions of any statute or the charter of the city of
53.29Minneapolis to the contrary, the city council of said city may provide that all or part of the
53.30costs of construction, operation, and maintenance of streets and street lighting within the
53.31city may hereafter be paid from the general revenues of the city of Minneapolis; provided
53.32that the portion of the costs assessable against nongovernmental real property exempt from
53.33ad valorem taxation may be levied as a special assessment against the property.

54.1    Sec. 38. Laws 1988, chapter 645, section 3, as amended by Laws 1999, chapter 243,
54.2article 6, section 9, and Laws 2000, chapter 490, article 6, section 15, is amended to read:
54.3    Sec. 3. TAX; PAYMENT OF EXPENSES.
54.4    (a) The tax levied by the hospital district under Minnesota Statutes, section 447.34,
54.5must not be levied at a rate that exceeds 0.063 percent of taxable market value the amount
54.6authorized to be levied under that section. The proceeds of the tax may be used for all
54.7purposes of the hospital district, except as provided in paragraph (b).
54.8    (b) 0.048 percent of taxable market value of tax in paragraph (a) may be used only
54.9for acquisition, betterment, and maintenance of the district's hospital and nursing home
54.10facilities and equipment, and not for administrative or salary expenses.
54.11    (c) 0.015 percent of taxable market value of the tax in paragraph (a) may be used
54.12solely for the purpose of capital expenditures as it relates to ambulance acquisitions for
54.13the Cook ambulance service and the Orr ambulance service and not for administrative
54.14or salary expenses.
54.15    The part of the levy referred to in paragraph (c) (b) must be administered by the
54.16Cook Hospital and passed on directly to the Cook area ambulance service board and the
54.17city of Orr to be held in trust until funding for a new ambulance is needed by either the
54.18Cook ambulance service or the Orr ambulance service.
54.19EFFECTIVE DATE.This section is effective upon compliance with Minnesota
54.20Statutes, section 645.021, subdivision 3, by the governing body of the Cook-Orr Hospital
54.21District.

54.22    Sec. 39. Laws 1989, chapter 211, section 8, subdivision 4, as amended by Laws 2002,
54.23chapter 390, section 24, and Laws 2003, chapter 127, article 2, section 22, subdivision 4,
54.24is amended to read:
54.25    Subd. 4. Tax levy. The tax levied under Minnesota Statutes, section 447.34, shall
54.26not exceed $300,000 for taxes levied in 2002. For taxes levied in 2003 and subsequent
54.27years, the tax must not exceed the lesser of:
54.28    (1) the product of the hospital district's property tax levy limitation for the previous
54.29year determined under this subdivision, multiplied by 103 percent; or
54.30    (2) the product of the hospital district's property tax levy limitation for the previous
54.31year determined under this subdivision multiplied by the ratio of the most recent available
54.32annual medical care expenditure category of the revised Consumer Price Index, U.S.
54.33citywide average, for all urban consumers prepared by the United States Department of
54.34Labor to the same annual index for the previous year the amount authorized to be levied
54.35under that section.
55.1    The proceeds of the tax may be used for all purposes of the hospital district.
55.2EFFECTIVE DATE.This section is effective upon compliance with Minnesota
55.3Statutes, section 645.021, subdivision 3, by the governing body of the Cook County
55.4Hospital District.

55.5    Sec. 40. Laws 2006, chapter 236, article 1, section 21, is amended to read:
55.6    Sec. 21. EXCHANGE OF TAX-FORFEITED LAND; PRIVATE SALE;
55.7ITASCA COUNTY.
55.8    (a) For the purpose of a land exchange for use in connection with a proposed
55.9steel mill in Itasca County referenced in Laws 1999, chapter 240, article 1, section 8,
55.10subdivision 3, title examination and approval of the land described in paragraph (b)
55.11shall be undertaken as a condition of exchange of the land for class B land, and shall be
55.12governed by Minnesota Statutes, section 94.344, subdivisions 9 and 10, and the provisions
55.13of this section. Notwithstanding the evidence of title requirements in Minnesota Statutes,
55.14section 94.344, subdivisions 9 and 10, the county attorney shall examine one or more title
55.15reports or title insurance commitments prepared or underwritten by a title insurer licensed
55.16to conduct title insurance business in this state, regardless of whether abstracts were
55.17created or updated in the preparation of the title reports or commitments. The opinion of
55.18the county attorney, and approval by the attorney general, shall be based on those title
55.19reports or commitments.
55.20    (b) The land subject to this section is located in Itasca County and is described as:
55.21    (1) Sections 3, 4, 7, 10, 14, 15, 16, 17, 18, 20, 21, 22, 23, 26, 28, and 29, Township
55.2256 North, Range 22 West;
55.23    (2) Sections 3, 4, 9, 10, 13, and 14, Township 56 North, Range 23 West;
55.24    (3) Section 30, Township 57 North, Range 22 West; and
55.25    (4) Sections 25, 26, 34, 35, and 36, Township 57 North, Range 23 West.
55.26    (c) Riparian land given in exchange by Itasca County for the purpose of the steel
55.27mill referenced in paragraph (a), is exempt from the restrictions imposed by Minnesota
55.28Statutes, section 94.342, subdivision 3.
55.29    (d) Notwithstanding Minnesota Statutes, sections 92.45 and 282.018, subdivision 1,
55.30and the public sale provisions of Minnesota Statutes, chapter 282, Itasca County may sell,
55.31by private sale, any land received in exchange for the purpose of the steel mill referenced
55.32in paragraph (a), under the remaining provisions of Minnesota Statutes, chapter 282. The
55.33sale must be in a form approved by the attorney general.
55.34    (e) Notwithstanding Minnesota Statutes, section 284.28, subdivision 8, or any other
55.35law to the contrary, land acquired through an exchange under this section is exempt from
56.1payment of three percent of the sales price required to be collected by the county auditor
56.2at the time of sale for deposit in the state treasury.
56.3EFFECTIVE DATE.This section is effective the day following final enactment.

56.4    Sec. 41. FISCAL DISPARITIES STUDY.
56.5    The commissioner of revenue shall conduct a study of the metropolitan revenue
56.6distribution program contained in Minnesota Statutes, chapter 473F, commonly known
56.7as the fiscal disparities program. On or before February 1, 2009, the commissioner shall
56.8make a report to the chairs of the house of representatives and senate tax committees
56.9consisting of the findings of the study and any recommendations resulting from the study.
56.10    The study must consider to what extent the program is meeting the following goals,
56.11and what changes could be made to the program in the furtherance of meeting those goals:
56.12    (1) reducing the extent to which the property tax encourages development patterns
56.13that do not make cost-effective use of public infrastructure or impose other high public
56.14costs;
56.15    (2) ensuring that the benefits of economic growth of the region are shared throughout
56.16the region, especially for growth that results from state and/or regional decisions;
56.17    (3) improving the ability of each jurisdiction within the region to deliver services at
56.18a level commensurate with its tax effort;
56.19    (4) compensating jurisdictions containing properties that provide regional benefits
56.20for the costs those properties impose on their host jurisdictions in excess of their tax
56.21payments;
56.22    (5) promoting a fair distribution of property tax burdens across jurisdictions of
56.23the region; and
56.24    (6) reducing the economic losses that result from competition among communities
56.25for commercial-industrial tax base.
56.26EFFECTIVE DATE.This section is effective July 1, 2007.

56.27    Sec. 42. CITY OF BROOKLYN CENTER; PARTICIPATION IN CRIME-FREE
56.28MULTIHOUSING PROGRAM.
56.29    (a) In addition to the requirements of Minnesota Statutes, section 273.128, if
56.30property located in the city of Brooklyn Center qualifies under paragraph (b), the owners
56.31or managers must complete the three phases of the city's crime-free multihousing program
56.32and the qualifying property must be annually certified by the police as participating
56.33in the program. If a qualifying property is not certified within one year after it is first
57.1determined to be a qualifying property under paragraph (b), or does not annually maintain
57.2its certification in the program, the city shall notify the property owner that the qualifying
57.3property must comply with the requirements of this section to maintain its classification
57.4as class 4d property. If a qualifying property is not in compliance within one year after
57.5receiving the notice from the city, the city shall issue a second notice and require the
57.6owners to enter into a plan to achieve compliance within one year. If, upon expiration
57.7of the one-year time period, the qualifying property has not been certified by the police
57.8as completing the program, the city shall notify the commissioner of the Housing
57.9Finance Agency and the commissioner shall remove the property from the list of class 4d
57.10properties certified to the assessor under Minnesota Statutes, section 273.128, subdivision
57.113. Once removed from the list, the property is not eligible for class 4d classification until
57.12it complies with this section and its compliance has been certified to the Housing Finance
57.13Agency by the city. Certification to the Housing Finance Agency must be made by May
57.1415 to be effective for taxes payable in the following year.
57.15    (b) A property is a qualifying property for purposes of this section's requirements if
57.16it satisfies each of the following requirements:
57.17    (1) the city offers a crime-free multihousing program through its city police;
57.18    (2) over the preceding three-year period, the number of police calls to the property
57.19exceeded the city's average number of calls for multiunit rental properties for the period
57.20by at least 25 percent, adjusted for the number of rental units;
57.21    (3) the police department has requested, in writing, the owners or managers of the
57.22property to enroll in the crime-free multihousing program and the owners or managers
57.23refused or failed to enroll within 60 days after the request, or failed to complete phases
57.24one and three within 90 days and all three phases of the program within a one-year time
57.25period; and
57.26    (4) the governing body of the city, by resolution, determines the property is a
57.27qualifying property under clauses (1) to (3).
57.28    (c) Calls for police or emergency assistance in response to domestic abuse or
57.29medical assistance shall not be counted toward the number of calls in paragraph (b), clause
57.30(2). For purposes of this section, "domestic abuse" has the meaning given in Minnesota
57.31Statutes, section 518B.01, subdivision 2.
57.32    (d) Low-income qualifying rental housing property classified as class 4d property
57.33for taxes payable in 2007 must meet the requirements of this section by May 15, 2010.
57.34EFFECTIVE DATE; LOCAL APPROVAL.This section is effective the day after
57.35compliance by the governing body of the city of Brooklyn Center and its chief clerical
58.1officer with Minnesota Statutes, section 645.021, subdivisions 2 and 3, and applies to
58.2property taxes levied in 2007, payable in 2008, and thereafter.

58.3    Sec. 43. CLAIR A. NELSON MEMORIAL FOREST, LAKE COUNTY;
58.4TEMPORARY SUSPENSION OF APPORTIONMENT OF PROCEEDS FROM
58.5TAX-FORFEITED LANDS.
58.6    (a) Upon approval of an affected political subdivision within Lake County, the
58.7Lake County Board may suspend the apportionment of the balance of net proceeds from
58.8tax-forfeited lands within the affected political subdivision under Minnesota Statutes,
58.9section 282.08, clause (4), item (iii), and retain the net proceeds. The authority under this
58.10paragraph is available until Lake County suspends the apportionment of net proceeds
58.11subject to item (iii) in the amount of $2,200,000 plus any interest costs incurred by the
58.12county to purchase land described in this section. The money received by Lake County is
58.13to reimburse the county for the purchase in 2006 of 6,085 acres of forest land named the
58.14Clair A. Nelson Memorial Forest.
58.15    (b) Any revenue derived from acquired land that was reimbursed under paragraph
58.16(a) is subject to apportionment as provided in Minnesota Statutes, section 282.08.
58.17EFFECTIVE DATE.This section is effective retroactively from January 1, 2006.

58.18    Sec. 44. LAKEVIEW CEMETERY ASSOCIATION.
58.19    Subdivision 1. Authorized. Any two or more of the following cities and towns in
58.20Itasca County may enter into a joint powers agreement under Minnesota Statutes, section
58.21471.59, to establish the Lakeview Cemetery Association with the powers and duties of a
58.22cemetery association under Minnesota Statutes, chapter 306: the cities of Bovey, Calumet,
58.23Coleraine, Marble, and Taconite, and the towns of Greenway, Iron Range, Lawrence,
58.24and Trout Lake.
58.25    Subd. 2. Additions; withdrawals. (a) A city or town listed in subdivision 1 that
58.26does not join the association at the time of the initial agreement may join as provided in
58.27the joint powers agreement, or if the joint powers agreement does not provide for later
58.28additions, by providing the association a copy of the adopted resolution to join. If the
58.29joint powers agreement does not provide for adding members, a city or town that joins
58.30after the initial agreement is effective, may join prior to July 1 of the levy year, for taxes
58.31payable in the following year.
58.32    (b) A city or town may withdraw from the association as otherwise provided in the
58.33joint powers agreement, or providing to the association a copy of the adopted resolution of
58.34the city or town, prior to July 1 of the levy year for taxes payable in the following year.
59.1    Subd. 3. Operation; tax levy. The joint powers agreement for the association may
59.2provide for each participating city and town to levy a tax against all taxable properties
59.3located within the city or town. The maximum amount that may be levied by all
59.4participating cities and towns combined shall not exceed a total of $200,000 per year. If
59.5levied, the tax is in addition to all other taxes permitted to be levied on the property,
59.6including taxes permitted to be levied for cemetery purposes by a participating city or
59.7town. The levy under this section must be disregarded in the calculation of all other
59.8rate or per capita levy limitations imposed by law. One of the cities or towns within the
59.9association, chosen by the members of the association, shall certify a tax levy to the
59.10Itasca County auditor. When collected, the Itasca County auditor shall pay the Lakeview
59.11Cemetery Association directly.
59.12EFFECTIVE DATE.This section is effective for taxes levied in 2007, payable
59.13in 2008, and thereafter.

59.14    Sec. 45. TAX-FORFEITED LANDS LEASE; ITASCA COUNTY.
59.15    Notwithstanding Minnesota Statutes, section 282.04, or other law to the contrary,
59.16the Itasca County auditor may lease tax-forfeited land to Minnesota Steel for a period of
59.1720 years, for use as a tailings basin and buffer area. A lease entered under this section
59.18is renewable.
59.19EFFECTIVE DATE.This section is effective the day following final enactment.

59.20    Sec. 46. HAM LAKE FIRE; PROPERTY TAX REDUCTION; STATE
59.21REIMBURSEMENT.
59.22    Subdivision 1. Property tax reduction. The owner of property that was destroyed
59.23in the Ham Lake fire in 2007 may apply to the Cook County assessor to receive a reduction
59.24in the amount of taxes payable on the property for 2007 and 2008. The reduction provided
59.25under this section must be granted if 50 percent or more of the homestead dwelling or
59.26nonhomestead structure, as established by the county assessor, has been destroyed by the
59.27fire and related effects and the homestead is uninhabitable or the other structure is not
59.28useable. For property that meets the requirements of this section, the tax liabilities for the
59.29second half of property taxes due in October 2007 and for all property taxes due in 2008
59.30are reduced to zero. If application is made following payment of all property taxes due for
59.312007, the amount of the reduction shall be refunded to the taxpayer by the county treasurer
59.32as soon as practical. A reduction granted under this section is in lieu of a reduction under
59.33Minnesota Statutes, section 273.123.
60.1    Subd. 2. State reimbursement. The Cook County auditor shall calculate the tax
60.2on the property described in subdivision 1 based on the assessment made on January 2,
60.32007, paid in 2007 and 2008 after the reduction granted in subdivision 1. The difference
60.4between the tax determined on the January 2 tax capacity and the tax actually paid
60.5pursuant to this section shall be reimbursed to each taxing jurisdiction in which the
60.6damaged property is located. The amount shall be certified by the county auditor and
60.7reported to the commissioner of revenue. The commissioner shall make the payments to
60.8the taxing jurisdictions containing the property on the settlement dates in Minnesota
60.9Statutes, sections 276.11 and 276.111, for the second half of 2007 payments and for both
60.102008 payments in the same proportion that the ad valorem tax is distributed.
60.11    Subd. 3. Computation of credits. The amounts of the market value homestead
60.12credit provided in Minnesota Statutes, section 273.1384, shall be computed on the
60.13tax determined before the reduction under subdivision 1. For purposes of the property
60.14tax refund, property taxes payable, as defined in Minnesota Statutes, section 290A.03,
60.15subdivision 13, must be computed upon the tax determined under subdivision 1.
60.16    Subd. 4. Appropriation. $500,000 is appropriated from the general fund to the
60.17commissioner of revenue to make the payments required by this section. This amount
60.18does not cancel, but remains available until June 30, 2009.
60.19EFFECTIVE DATE.This section is effective the day following final enactment.

60.20    Sec. 47. REPEALER.
60.21(a) Laws 1973, chapter 393, section 2, is repealed.
60.22(b) Laws 1994, chapter 587, article 9, section 8, subdivision 1, as amended by Laws
60.232005, First Special Session chapter 3, article 1, section 36, is repealed, effective for the
60.24same levy year in which the association initially levies under section 44.

60.25ARTICLE 3
60.26CORPORATE FRANCHISE TAX

60.27    Section 1. Minnesota Statutes 2006, section 290.01, subdivision 6b, is amended to read:
60.28    Subd. 6b. Foreign operating corporation. The term "foreign operating
60.29corporation," when applied to a corporation, means a domestic corporation with the
60.30following characteristics:
60.31    (1) it is part of a unitary business at least one member of which is taxable in this state;
60.32    (2) it is not a foreign sales corporation under section 922 of the Internal Revenue
60.33Code, as amended through December 31, 1999, for the taxable year;
61.1    (3) either (i) the average of the percentages of its property and payrolls, including
61.2the pro rata share of its unitary partnerships' property and payrolls, assigned to locations
61.3outside the United States, where the United States includes the District of Columbia and
61.4excludes the commonwealth of Puerto Rico and possessions of the United States, as
61.5determined under section 290.191 or 290.20, is 80 percent or more; or (ii) it has in effect a
61.6valid election under section 936 of the Internal Revenue Code; or (ii) at least 80 percent of
61.7the gross income from all sources of the corporation in the tax year is and
61.8    (4) it has $1,000,000 of payroll and $2,000,000 of property, as determined under
61.9section 290.191 or 290.20, that are located outside the United States. If the domestic
61.10corporation does not have payroll as determined under section 290.191 or 290.20, but it
61.11or its partnerships have paid $1,000,000 for work, performed directly for the domestic
61.12corporation or the partnerships, outside the United States, then paragraph (3)(i) shall not
61.13require payrolls to be included in the average calculation derived from sources without
61.14the United States, as defined in subtitle A, chapter 1, subchapter N, part 1, of the Internal
61.15Revenue Code.
61.16EFFECTIVE DATE.This section is effective for taxable years beginning after
61.17December 31, 2006.

61.18    Sec. 2. Minnesota Statutes 2006, section 290.01, subdivision 19c, is amended to read:
61.19    Subd. 19c. Corporations; additions to federal taxable income. For corporations,
61.20there shall be added to federal taxable income:
61.21    (1) the amount of any deduction taken for federal income tax purposes for income,
61.22excise, or franchise taxes based on net income or related minimum taxes, including but not
61.23limited to the tax imposed under section 290.0922, paid by the corporation to Minnesota,
61.24another state, a political subdivision of another state, the District of Columbia, or any
61.25foreign country or possession of the United States;
61.26    (2) interest not subject to federal tax upon obligations of: the United States, its
61.27possessions, its agencies, or its instrumentalities; the state of Minnesota or any other
61.28state, any of its political or governmental subdivisions, any of its municipalities, or any
61.29of its governmental agencies or instrumentalities; the District of Columbia; or Indian
61.30tribal governments;
61.31    (3) exempt-interest dividends received as defined in section 852(b)(5) of the Internal
61.32Revenue Code;
61.33    (4) the amount of any net operating loss deduction taken for federal income tax
61.34purposes under section 172 or 832(c)(10) of the Internal Revenue Code or operations loss
61.35deduction under section 810 of the Internal Revenue Code;
62.1    (5) the amount of any special deductions taken for federal income tax purposes
62.2under sections 241 to 247 and 965 of the Internal Revenue Code;
62.3    (6) losses from the business of mining, as defined in section 290.05, subdivision 1,
62.4clause (a), that are not subject to Minnesota income tax;
62.5    (7) the amount of any capital losses deducted for federal income tax purposes under
62.6sections 1211 and 1212 of the Internal Revenue Code;
62.7    (8) the exempt foreign trade income of a foreign sales corporation under sections
62.8921(a) and 291 of the Internal Revenue Code;
62.9    (9) the amount of percentage depletion deducted under sections 611 through 614 and
62.10291 of the Internal Revenue Code;
62.11    (10) for certified pollution control facilities placed in service in a taxable year
62.12beginning before December 31, 1986, and for which amortization deductions were elected
62.13under section 169 of the Internal Revenue Code of 1954, as amended through December
62.1431, 1985, the amount of the amortization deduction allowed in computing federal taxable
62.15income for those facilities;
62.16    (11) the amount of any deemed dividend from a foreign operating corporation
62.17determined pursuant to section 290.17, subdivision 4, paragraph (g). The deemed dividend
62.18shall be reduced by the amount of the addition to income required by clauses (19), (20),
62.19(21), and (22);
62.20    (12) the amount of a partner's pro rata share of net income which does not flow
62.21through to the partner because the partnership elected to pay the tax on the income under
62.22section 6242(a)(2) of the Internal Revenue Code;
62.23    (13) the amount of net income excluded under section 114 of the Internal Revenue
62.24Code;
62.25    (14) any increase in subpart F income, as defined in section 952(a) of the Internal
62.26Revenue Code, for the taxable year when subpart F income is calculated without regard
62.27to the provisions of section 103 of Public Law 109-222;
62.28    (15) 80 percent of the depreciation deduction allowed under section 168(k)(1)(A)
62.29and (k)(4)(A) of the Internal Revenue Code. For purposes of this clause, if the taxpayer
62.30has an activity that in the taxable year generates a deduction for depreciation under
62.31section 168(k)(1)(A) and (k)(4)(A) and the activity generates a loss for the taxable year
62.32that the taxpayer is not allowed to claim for the taxable year, "the depreciation allowed
62.33under section 168(k)(1)(A) and (k)(4)(A)" for the taxable year is limited to excess of the
62.34depreciation claimed by the activity under section 168(k)(1)(A) and (k)(4)(A) over the
62.35amount of the loss from the activity that is not allowed in the taxable year. In succeeding
63.1taxable years when the losses not allowed in the taxable year are allowed, the depreciation
63.2under section 168(k)(1)(A) and (k)(4)(A) is allowed;
63.3    (16) 80 percent of the amount by which the deduction allowed by section 179 of the
63.4Internal Revenue Code exceeds the deduction allowable by section 179 of the Internal
63.5Revenue Code of 1986, as amended through December 31, 2003;
63.6    (17) to the extent deducted in computing federal taxable income, the amount of the
63.7deduction allowable under section 199 of the Internal Revenue Code; and
63.8    (18) the exclusion allowed under section 139A of the Internal Revenue Code for
63.9federal subsidies for prescription drug plans;
63.10    (19) an amount equal to the interest and intangible expenses, losses, and costs paid,
63.11accrued, or incurred by any member of the taxpayer's unitary group to or for the benefit
63.12of a corporation that is a member of the taxpayer's unitary business group that qualifies
63.13as a foreign operating corporation. For purposes of this clause, intangible expenses and
63.14costs include:
63.15    (i) expenses, losses, and costs for, or related to, the direct or indirect acquisition,
63.16use, maintenance or management, ownership, sale, exchange, or any other disposition of
63.17intangible property;
63.18    (ii) losses incurred, directly or indirectly, from factoring transactions or discounting
63.19transactions;
63.20    (iii) royalty, patent, technical, and copyright fees;
63.21    (iv) licensing fees; and
63.22    (v) other similar expenses and costs.
63.23For purposes of this clause, "intangible property" includes stocks, bonds, patents, patent
63.24applications, trade names, trademarks, service marks, copyrights, mask works, trade
63.25secrets, and similar types of intangible assets.
63.26This clause does not apply to any item of interest or intangible expenses or costs paid,
63.27accrued, or incurred, directly or indirectly, to a foreign operating corporation with respect
63.28to such item of income to the extent that the income to the foreign operating corporation
63.29is income from sources without the United States as defined in subtitle A, chapter 1,
63.30subchapter N, part 1, of the Internal Revenue Code;
63.31    (20) except as already included in the taxpayer's taxable income pursuant to clause
63.32(19), any interest income and income generated from intangible property received or
63.33accrued by a foreign operating corporation that is a member of the taxpayer's unitary
63.34group. For purposes of this clause, income generated from intangible property includes:
63.35    (i) income related to the direct or indirect acquisition, use, maintenance or
63.36management, ownership, sale, exchange, or any other disposition of intangible property;
64.1    (ii) income from factoring transactions or discounting transactions;
64.2    (iii) royalty, patent, technical, and copyright fees;
64.3    (iv) licensing fees; and
64.4    (v) other similar income.
64.5For purposes of this clause, "intangible property" includes stocks, bonds, patents, patent
64.6applications, trade names, trademarks, service marks, copyrights, mask works, trade
64.7secrets, and similar types of intangible assets.
64.8This clause does not apply to any item of interest or intangible income received or accrued
64.9by a foreign operating corporation with respect to such item of income to the extent that
64.10the income is income from sources without the United States as defined in subtitle A,
64.11chapter 1, subchapter N, part 1, of the Internal Revenue Code;
64.12    (21) the dividends attributable to the income of a foreign operating corporation that
64.13is a member of the taxpayer's unitary group in an amount that is equal to the dividends
64.14paid deduction of a real estate investment trust under section 561(a) of the Internal
64.15Revenue Code for amounts paid or accrued by the real estate investment trust to the
64.16foreign operating corporation; and
64.17    (22) the income of a foreign operating corporation that is a member of the taxpayer's
64.18unitary group in an amount that is equal to gains derived from the sale of real or personal
64.19property located in the United States.
64.20EFFECTIVE DATE.This section is effective for taxable years beginning after
64.21December 31, 2006.

64.22    Sec. 3. Minnesota Statutes 2006, section 290.01, subdivision 19d, is amended to read:
64.23    Subd. 19d. Corporations; modifications decreasing federal taxable income. For
64.24corporations, there shall be subtracted from federal taxable income after the increases
64.25provided in subdivision 19c:
64.26    (1) the amount of foreign dividend gross-up added to gross income for federal
64.27income tax purposes under section 78 of the Internal Revenue Code;
64.28    (2) the amount of salary expense not allowed for federal income tax purposes due to
64.29claiming the federal jobs credit under section 51 of the Internal Revenue Code;
64.30    (3) any dividend (not including any distribution in liquidation) paid within the
64.31taxable year by a national or state bank to the United States, or to any instrumentality of
64.32the United States exempt from federal income taxes, on the preferred stock of the bank
64.33owned by the United States or the instrumentality;
65.1    (4) amounts disallowed for intangible drilling costs due to differences between
65.2this chapter and the Internal Revenue Code in taxable years beginning before January
65.31, 1987, as follows:
65.4    (i) to the extent the disallowed costs are represented by physical property, an amount
65.5equal to the allowance for depreciation under Minnesota Statutes 1986, section 290.09,
65.6subdivision 7
, subject to the modifications contained in subdivision 19e; and
65.7    (ii) to the extent the disallowed costs are not represented by physical property, an
65.8amount equal to the allowance for cost depletion under Minnesota Statutes 1986, section
65.9290.09, subdivision 8 ;
65.10    (5) the deduction for capital losses pursuant to sections 1211 and 1212 of the
65.11Internal Revenue Code, except that:
65.12    (i) for capital losses incurred in taxable years beginning after December 31, 1986,
65.13capital loss carrybacks shall not be allowed;
65.14    (ii) for capital losses incurred in taxable years beginning after December 31, 1986,
65.15a capital loss carryover to each of the 15 taxable years succeeding the loss year shall be
65.16allowed;
65.17    (iii) for capital losses incurred in taxable years beginning before January 1, 1987, a
65.18capital loss carryback to each of the three taxable years preceding the loss year, subject to
65.19the provisions of Minnesota Statutes 1986, section 290.16, shall be allowed; and
65.20    (iv) for capital losses incurred in taxable years beginning before January 1, 1987,
65.21a capital loss carryover to each of the five taxable years succeeding the loss year to the
65.22extent such loss was not used in a prior taxable year and subject to the provisions of
65.23Minnesota Statutes 1986, section 290.16, shall be allowed;
65.24    (6) an amount for interest and expenses relating to income not taxable for federal
65.25income tax purposes, if (i) the income is taxable under this chapter and (ii) the interest and
65.26expenses were disallowed as deductions under the provisions of section 171(a)(2), 265 or
65.27291 of the Internal Revenue Code in computing federal taxable income;
65.28    (7) in the case of mines, oil and gas wells, other natural deposits, and timber for
65.29which percentage depletion was disallowed pursuant to subdivision 19c, clause (11), a
65.30reasonable allowance for depletion based on actual cost. In the case of leases the deduction
65.31must be apportioned between the lessor and lessee in accordance with rules prescribed
65.32by the commissioner. In the case of property held in trust, the allowable deduction must
65.33be apportioned between the income beneficiaries and the trustee in accordance with the
65.34pertinent provisions of the trust, or if there is no provision in the instrument, on the basis
65.35of the trust's income allocable to each;
66.1    (8) for certified pollution control facilities placed in service in a taxable year
66.2beginning before December 31, 1986, and for which amortization deductions were elected
66.3under section 169 of the Internal Revenue Code of 1954, as amended through December
66.431, 1985, an amount equal to the allowance for depreciation under Minnesota Statutes
66.51986, section 290.09, subdivision 7;
66.6    (9) amounts included in federal taxable income that are due to refunds of income,
66.7excise, or franchise taxes based on net income or related minimum taxes paid by the
66.8corporation to Minnesota, another state, a political subdivision of another state, the
66.9District of Columbia, or a foreign country or possession of the United States to the extent
66.10that the taxes were added to federal taxable income under section 290.01, subdivision 19c,
66.11clause (1), in a prior taxable year;
66.12    (10) 80 percent of royalties, fees, or other like income accrued or received from a
66.13foreign operating corporation or a foreign corporation which is part of the same unitary
66.14business as the receiving corporation, unless the income resulting from such payments or
66.15accruals is income from sources within the United States as defined in subtitle A, chapter
66.161, subchapter N, part 1, of the Internal Revenue Code;
66.17    (11) income or gains from the business of mining as defined in section 290.05,
66.18subdivision 1
, clause (a), that are not subject to Minnesota franchise tax;
66.19    (12) the amount of disability access expenditures in the taxable year which are not
66.20allowed to be deducted or capitalized under section 44(d)(7) of the Internal Revenue Code;
66.21    (13) the amount of qualified research expenses not allowed for federal income tax
66.22purposes under section 280C(c) of the Internal Revenue Code, but only to the extent that
66.23the amount exceeds the amount of the credit allowed under section 290.068;
66.24    (14) the amount of salary expenses not allowed for federal income tax purposes due
66.25to claiming the Indian employment credit under section 45A(a) of the Internal Revenue
66.26Code;
66.27    (15) the amount of any refund of environmental taxes paid under section 59A of the
66.28Internal Revenue Code;
66.29    (16) for taxable years beginning before January 1, 2008, the amount of the federal
66.30small ethanol producer credit allowed under section 40(a)(3) of the Internal Revenue Code
66.31which is included in gross income under section 87 of the Internal Revenue Code;
66.32    (17) for a corporation whose foreign sales corporation, as defined in section 922
66.33of the Internal Revenue Code, constituted a foreign operating corporation during any
66.34taxable year ending before January 1, 1995, and a return was filed by August 15, 1996,
66.35claiming the deduction under section 290.21, subdivision 4, for income received from
66.36the foreign operating corporation, an amount equal to 1.23 multiplied by the amount of
67.1income excluded under section 114 of the Internal Revenue Code, provided the income is
67.2not income of a foreign operating company;
67.3    (18) any decrease in subpart F income, as defined in section 952(a) of the Internal
67.4Revenue Code, for the taxable year when subpart F income is calculated without regard
67.5to the provisions of section 614 of Public Law 107-147;
67.6    (19) in each of the five tax years immediately following the tax year in which an
67.7addition is required under subdivision 19c, clause (15), an amount equal to one-fifth of
67.8the delayed depreciation. For purposes of this clause, "delayed depreciation" means the
67.9amount of the addition made by the taxpayer under subdivision 19c, clause (15). The
67.10resulting delayed depreciation cannot be less than zero; and
67.11    (20) in each of the five tax years immediately following the tax year in which an
67.12addition is required under subdivision 19c, clause (16), an amount equal to one-fifth of the
67.13amount of the addition.
67.14EFFECTIVE DATE.This section is effective for taxable years beginning after
67.15December 31, 2006.

67.16    Sec. 4. Minnesota Statutes 2006, section 290.0921, subdivision 3, is amended to read:
67.17    Subd. 3. Alternative minimum taxable income. "Alternative minimum taxable
67.18income" is Minnesota net income as defined in section 290.01, subdivision 19, and
67.19includes the adjustments and tax preference items in sections 56, 57, 58, and 59(d), (e),
67.20(f), and (h) of the Internal Revenue Code. If a corporation files a separate company
67.21Minnesota tax return, the minimum tax must be computed on a separate company basis.
67.22If a corporation is part of a tax group filing a unitary return, the minimum tax must be
67.23computed on a unitary basis. The following adjustments must be made.
67.24    (1) For purposes of the depreciation adjustments under section 56(a)(1) and
67.2556(g)(4)(A) of the Internal Revenue Code, the basis for depreciable property placed in
67.26service in a taxable year beginning before January 1, 1990, is the adjusted basis for federal
67.27income tax purposes, including any modification made in a taxable year under section
67.28290.01, subdivision 19e , or Minnesota Statutes 1986, section 290.09, subdivision 7,
67.29paragraph (c).
67.30    For taxable years beginning after December 31, 2000, the amount of any remaining
67.31modification made under section 290.01, subdivision 19e, or Minnesota Statutes 1986,
67.32section 290.09, subdivision 7, paragraph (c), not previously deducted is a depreciation
67.33allowance in the first taxable year after December 31, 2000.
67.34    (2) The portion of the depreciation deduction allowed for federal income tax
67.35purposes under section 168(k) of the Internal Revenue Code that is required as an addition
68.1under section 290.01, subdivision 19c, clause (16) (15), is disallowed in determining
68.2alternative minimum taxable income.
68.3    (3) The subtraction for depreciation allowed under section 290.01, subdivision 19d,
68.4clause (19), is allowed as a depreciation deduction in determining alternative minimum
68.5taxable income.
68.6    (4) The alternative tax net operating loss deduction under sections 56(a)(4) and 56(d)
68.7of the Internal Revenue Code does not apply.
68.8    (5) The special rule for certain dividends under section 56(g)(4)(C)(ii) of the Internal
68.9Revenue Code does not apply.
68.10    (6) The special rule for dividends from section 936 companies under section
68.1156(g)(4)(C)(iii) does not apply.
68.12    (7) The tax preference for depletion under section 57(a)(1) of the Internal Revenue
68.13Code does not apply.
68.14    (8) The tax preference for intangible drilling costs under section 57(a)(2) of the
68.15Internal Revenue Code must be calculated without regard to subparagraph (E) and the
68.16subtraction under section 290.01, subdivision 19d, clause (4).
68.17    (9) The tax preference for tax exempt interest under section 57(a)(5) of the Internal
68.18Revenue Code does not apply.
68.19    (10) The tax preference for charitable contributions of appreciated property under
68.20section 57(a)(6) of the Internal Revenue Code does not apply.
68.21    (11) For purposes of calculating the tax preference for accelerated depreciation or
68.22amortization on certain property placed in service before January 1, 1987, under section
68.2357(a)(7) of the Internal Revenue Code, the deduction allowable for the taxable year is the
68.24deduction allowed under section 290.01, subdivision 19e.
68.25    For taxable years beginning after December 31, 2000, the amount of any remaining
68.26modification made under section 290.01, subdivision 19e, not previously deducted is a
68.27depreciation or amortization allowance in the first taxable year after December 31, 2004.
68.28    (12) For purposes of calculating the adjustment for adjusted current earnings in
68.29section 56(g) of the Internal Revenue Code, the term "alternative minimum taxable
68.30income" as it is used in section 56(g) of the Internal Revenue Code, means alternative
68.31minimum taxable income as defined in this subdivision, determined without regard to the
68.32adjustment for adjusted current earnings in section 56(g) of the Internal Revenue Code.
68.33    (13) For purposes of determining the amount of adjusted current earnings under
68.34section 56(g)(3) of the Internal Revenue Code, no adjustment shall be made under section
68.3556(g)(4) of the Internal Revenue Code with respect to (i) the amount of foreign dividend
68.36gross-up subtracted as provided in section 290.01, subdivision 19d, clause (1), or (ii) the
69.1amount of refunds of income, excise, or franchise taxes subtracted as provided in section
69.2290.01, subdivision 19d , clause (10) (9), or (iii) the amount of royalties, fees or other like
69.3income subtracted as provided in section 290.01, subdivision 19d, clause (11) (10).
69.4    (14) Alternative minimum taxable income excludes the income from operating in a
69.5job opportunity building zone as provided under section 469.317.
69.6    (15) Alternative minimum taxable income excludes the income from operating in a
69.7biotechnology and health sciences industry zone as provided under section 469.337.
69.8    (16) Alternative minimum taxable income excludes the income from operating in an
69.9international economic development zone as provided under section 469.326.
69.10    Items of tax preference must not be reduced below zero as a result of the
69.11modifications in this subdivision.
69.12EFFECTIVE DATE.This section is effective for taxable years beginning after
69.13December 31, 2006.

69.14    Sec. 5. Minnesota Statutes 2006, section 290.34, is amended by adding a subdivision
69.15to read:
69.16    Subd. 3a. Transactions without economic substance. (a) When any person,
69.17directly or indirectly, engages in a transaction or series of transactions without economic
69.18substance to create a loss or to reduce taxable income or to increase credits allowed in
69.19determining Minnesota tax, the commissioner must determine the amount of a taxpayer's
69.20taxable income or tax so as to reflect what would have been the taxpayer's taxable income
69.21or tax but for the transaction or transactions without economic substance causing the
69.22reduction in taxable income or tax.
69.23    (b) A transaction has economic substance only if a taxpayer shows by clear and
69.24convincing evidence:
69.25    (1) the transaction changes in a meaningful way (apart from federal, state, local, and
69.26foreign tax effects) the taxpayer's economic position; and
69.27    (2) the taxpayer has a substantial nontax purpose for entering into a transaction and
69.28the transaction is a reasonable means of accomplishing the substantial nontax purpose.
69.29A transaction does not have a substantial nontax purpose if it does not have a potential
69.30for profit. A transaction has a substantial nontax purpose when the taxpayer reasonably
69.31expects that the pretax profit for the transaction is substantial in relation to the present
69.32value of the expected net tax benefits that would be allowed if the transaction were
69.33respected for tax purposes, and the reasonably expected pretax profit from the transaction
69.34exceeds the risk-free rate of return.
70.1    (c) It is the intent of the legislature that the provisions of this subdivision must not
70.2be construed as supplanting any existing Minnesota law.
70.3EFFECTIVE DATE.This section is effective for taxable years beginning after
70.4December 31, 2006.

70.5ARTICLE 4
70.6INDIVIDUAL INCOME TAXES

70.7    Section 1. Minnesota Statutes 2006, section 289A.12, subdivision 4, is amended to
70.8read:
70.9    Subd. 4. Returns by persons, corporations, cooperatives, governmental entities,
70.10or school districts. (a) The commissioner may by notice and demand require to the
70.11extent required by section 6041 of the Internal Revenue Code, a person, corporation,
70.12or cooperative, the state of Minnesota and its political subdivisions, and a city, county,
70.13and school district in Minnesota, making payments in the regular course of a trade or
70.14business during the taxable year to any person or corporation of $600 or more on account
70.15of rents or royalties, or of $10 or more on account of interest, or $10 or more on account
70.16of dividends or patronage dividends, or $600 or more on account of either wages, salaries,
70.17commissions, fees, prizes, awards, pensions, annuities, or any other fixed or determinable
70.18gains, profits or income, not otherwise reportable under section 289A.09, subdivision 2, or
70.19on account of earnings of $10 or more distributed to its members by savings associations
70.20or credit unions chartered under the laws of this state or the United States, (1) to file with
70.21the commissioner a return (except in cases where a valid agreement to participate in the
70.22combined federal and state information reporting system has been entered into, and the
70.23return is filed only with the commissioner of internal revenue under the applicable filing
70.24and informational reporting requirements of the Internal Revenue Code) with respect to
70.25the payments in excess of the amounts named, giving the names and addresses of the
70.26persons to whom the payments were made, the amounts paid to each, and (2) to make
70.27a return with respect to the total number of payments and total amount of payments,
70.28for each category of income named, which were in excess of the amounts named. This
70.29subdivision does not apply to the payment of interest or dividends to a person who was a
70.30nonresident of Minnesota for the entire year.
70.31    (b) For payments for which a return is covered by paragraph (a), regardless of
70.32whether the commissioner has required filing under paragraph (a), the payor must file a
70.33copy of the return with the commissioner if:
71.1    (i) the return is for a payment made to a Minnesota resident, to a recipient with a
71.2Minnesota address, or for activity occurring in the state of Minnesota; and
71.3    (ii) the payment is for wages, salaries, or other compensation for services provided.
71.4The commissioner may require this information to be filed in electronic or another form
71.5that the commissioner determines is appropriate, notwithstanding the provisions of
71.6paragraph (c).
71.7    (c) A person, corporation, or cooperative required to file returns under this
71.8subdivision must file the returns on magnetic media if magnetic media was used to satisfy
71.9the federal reporting requirement under section 6011(e) of the Internal Revenue Code,
71.10unless the person establishes to the satisfaction of the commissioner that compliance with
71.11this requirement would be an undue hardship.
71.12EFFECTIVE DATE.This section is effective for forms required to be filed by
71.13federal law after December 31, 2007.

71.14    Sec. 2. Minnesota Statutes 2006, section 290.01, subdivision 19a, is amended to read:
71.15    Subd. 19a. Additions to federal taxable income. For individuals, estates, and
71.16trusts, there shall be added to federal taxable income:
71.17    (1)(i) interest income on obligations of any state other than Minnesota or a political
71.18or governmental subdivision, municipality, or governmental agency or instrumentality
71.19of any state other than Minnesota exempt from federal income taxes under the Internal
71.20Revenue Code or any other federal statute; and
71.21    (ii) exempt-interest dividends as defined in section 852(b)(5) of the Internal Revenue
71.22Code, except the portion of the exempt-interest dividends derived from interest income
71.23on obligations of the state of Minnesota or its political or governmental subdivisions,
71.24municipalities, governmental agencies or instrumentalities, but only if the portion of the
71.25exempt-interest dividends from such Minnesota sources paid to all shareholders represents
71.2695 percent or more of the exempt-interest dividends that are paid by the regulated
71.27investment company as defined in section 851(a) of the Internal Revenue Code, or the
71.28fund of the regulated investment company as defined in section 851(g) of the Internal
71.29Revenue Code, making the payment; and
71.30    (iii) for the purposes of items (i) and (ii), interest on obligations of an Indian tribal
71.31government described in section 7871(c) of the Internal Revenue Code shall be treated as
71.32interest income on obligations of the state in which the tribe is located;
71.33    (2) the amount of income or sales and use taxes paid or accrued within the taxable
71.34year under this chapter and the amount of taxes based on net income paid or sales and use
71.35taxes paid to any other state or to any province or territory of Canada, to the extent allowed
72.1as a deduction under section 63(d) of the Internal Revenue Code, but the addition may not
72.2be more than the amount by which the itemized deductions as allowed under section 63(d)
72.3of the Internal Revenue Code exceeds the amount of the standard deduction as defined
72.4in section 63(c) of the Internal Revenue Code. For the purpose of this paragraph, the
72.5disallowance of itemized deductions under section 68 of the Internal Revenue Code of
72.61986, income or sales and use tax is the last itemized deduction disallowed;
72.7    (3) the capital gain amount of a lump sum distribution to which the special tax under
72.8section 1122(h)(3)(B)(ii) of the Tax Reform Act of 1986, Public Law 99-514, applies;
72.9    (4) the amount of income taxes paid or accrued within the taxable year under this
72.10chapter and taxes based on net income paid to any other state or any province or territory
72.11of Canada, to the extent allowed as a deduction in determining federal adjusted gross
72.12income. For the purpose of this paragraph, income taxes do not include the taxes imposed
72.13by sections 290.0922, subdivision 1, paragraph (b), 290.9727, 290.9728, and 290.9729;
72.14    (5) the amount of expense, interest, or taxes disallowed pursuant to section 290.10
72.15other than expenses or interest used in computing net interest income for the subtraction
72.16allowed under subdivision 19b, clause (1);
72.17    (6) the amount of a partner's pro rata share of net income which does not flow
72.18through to the partner because the partnership elected to pay the tax on the income under
72.19section 6242(a)(2) of the Internal Revenue Code;
72.20    (7) 80 percent of the depreciation deduction allowed under section 168(k) of the
72.21Internal Revenue Code. For purposes of this clause, if the taxpayer has an activity that
72.22in the taxable year generates a deduction for depreciation under section 168(k) and the
72.23activity generates a loss for the taxable year that the taxpayer is not allowed to claim for
72.24the taxable year, "the depreciation allowed under section 168(k)" for the taxable year is
72.25limited to excess of the depreciation claimed by the activity under section 168(k) over the
72.26amount of the loss from the activity that is not allowed in the taxable year. In succeeding
72.27taxable years when the losses not allowed in the taxable year are allowed, the depreciation
72.28under section 168(k) is allowed;
72.29    (8) 80 percent of the amount by which the deduction allowed by section 179 of the
72.30Internal Revenue Code exceeds the deduction allowable by section 179 of the Internal
72.31Revenue Code of 1986, as amended through December 31, 2003;
72.32    (9) to the extent deducted in computing federal taxable income, the amount of the
72.33deduction allowable under section 199 of the Internal Revenue Code; and
72.34    (10) the exclusion allowed under section 139A of the Internal Revenue Code for
72.35federal subsidies for prescription drug plans; and
72.36    (11) the amount of expenses disallowed under section 290.10, subdivision 2.
73.1EFFECTIVE DATE.This section is effective for taxable years beginning after
73.2December 31, 2006.

73.3    Sec. 3. Minnesota Statutes 2006, section 290.01, subdivision 19b, is amended to read:
73.4    Subd. 19b. Subtractions from federal taxable income. For individuals, estates,
73.5and trusts, there shall be subtracted from federal taxable income:
73.6    (1) net interest income on obligations of any authority, commission, or
73.7instrumentality of the United States to the extent includable in taxable income for federal
73.8income tax purposes but exempt from state income tax under the laws of the United States;
73.9    (2) if included in federal taxable income, the amount of any overpayment of income
73.10tax to Minnesota or to any other state, for any previous taxable year, whether the amount
73.11is received as a refund or as a credit to another taxable year's income tax liability;
73.12    (3) the amount paid to others, less the amount used to claim the credit allowed under
73.13section 290.0674, not to exceed $1,625 for each qualifying child in grades kindergarten
73.14to 6 and $2,500 for each qualifying child in grades 7 to 12, for tuition, textbooks, and
73.15transportation of each qualifying child in attending an elementary or secondary school
73.16situated in Minnesota, North Dakota, South Dakota, Iowa, or Wisconsin, wherein a
73.17resident of this state may legally fulfill the state's compulsory attendance laws, which
73.18is not operated for profit, and which adheres to the provisions of the Civil Rights Act
73.19of 1964 and chapter 363A. For the purposes of this clause, "tuition" includes fees or
73.20tuition as defined in section 290.0674, subdivision 1, clause (1). As used in this clause,
73.21"textbooks" includes books and other instructional materials and equipment purchased
73.22or leased for use in elementary and secondary schools in teaching only those subjects
73.23legally and commonly taught in public elementary and secondary schools in this state.
73.24Equipment expenses qualifying for deduction includes expenses as defined and limited in
73.25section 290.0674, subdivision 1, clause (3). "Textbooks" does not include instructional
73.26books and materials used in the teaching of religious tenets, doctrines, or worship, the
73.27purpose of which is to instill such tenets, doctrines, or worship, nor does it include books
73.28or materials for, or transportation to, extracurricular activities including sporting events,
73.29musical or dramatic events, speech activities, driver's education, or similar programs. For
73.30purposes of the subtraction provided by this clause, "qualifying child" has the meaning
73.31given in section 32(c)(3) of the Internal Revenue Code;
73.32    (4) income as provided under section 290.0802;
73.33    (5) to the extent included in federal adjusted gross income, income realized on
73.34disposition of property exempt from tax under section 290.491;
74.1    (6) to the extent not deducted in determining federal taxable income by an individual
74.2who does not itemize deductions for federal income tax purposes for the taxable year, an
74.3amount equal to 50 percent of the excess of charitable contributions over $500 allowable
74.4as a deduction for the taxable year under section 170(a) of the Internal Revenue Code and
74.5under the provisions of Public Law 109-1;
74.6    (7) for taxable years beginning before January 1, 2008, the amount of the federal
74.7small ethanol producer credit allowed under section 40(a)(3) of the Internal Revenue Code
74.8which is included in gross income under section 87 of the Internal Revenue Code;
74.9    (8) for individuals who are allowed a federal foreign tax credit for taxes that do not
74.10qualify for a credit under section 290.06, subdivision 22, an amount equal to the carryover
74.11of subnational foreign taxes for the taxable year, but not to exceed the total subnational
74.12foreign taxes reported in claiming the foreign tax credit. For purposes of this clause,
74.13"federal foreign tax credit" means the credit allowed under section 27 of the Internal
74.14Revenue Code, and "carryover of subnational foreign taxes" equals the carryover allowed
74.15under section 904(c) of the Internal Revenue Code minus national level foreign taxes to
74.16the extent they exceed the federal foreign tax credit;
74.17    (9) in each of the five tax years immediately following the tax year in which an
74.18addition is required under subdivision 19a, clause (7), or 19c, clause (15), in the case
74.19of a shareholder of a corporation that is an S corporation, an amount equal to one-fifth
74.20of the delayed depreciation. For purposes of this clause, "delayed depreciation" means
74.21the amount of the addition made by the taxpayer under subdivision 19a, clause (7), or
74.22subdivision 19c, clause (15), in the case of a shareholder of an S corporation, minus the
74.23positive value of any net operating loss under section 172 of the Internal Revenue Code
74.24generated for the tax year of the addition. The resulting delayed depreciation cannot be
74.25less than zero;
74.26    (10) job opportunity building zone income as provided under section 469.316;
74.27    (11) to the extent included in federal taxable income, the amount of compensation
74.28paid to members of the Minnesota National Guard or other reserve components of the
74.29United States military for active service performed in Minnesota, excluding compensation
74.30for services performed under the Active Guard Reserve (AGR) program. For purposes of
74.31this clause, "active service" means (i) state active service as defined in section 190.05,
74.32subdivision 5a
, clause (1); (ii) federally funded state active service as defined in section
74.33190.05, subdivision 5b ; or (iii) federal active service as defined in section 190.05,
74.34subdivision 5c
, but "active service" excludes services performed exclusively for purposes
74.35of basic combat training, advanced individual training, annual training, and periodic
75.1inactive duty training; special training periodically made available to reserve members;
75.2and service performed in accordance with section 190.08, subdivision 3;
75.3    (12) to the extent included in federal taxable income, the amount of compensation
75.4paid to Minnesota residents who are members of the armed forces of the United States or
75.5United Nations for active duty performed outside Minnesota under United States Code,
75.6title 10, section 101(d); United States Code, title 32, section 101(12); or the authority of
75.7the United Nations;
75.8    (13) an amount, not to exceed $10,000, equal to qualified expenses related to a
75.9qualified donor's donation, while living, of one or more of the qualified donor's organs
75.10to another person for human organ transplantation. For purposes of this clause, "organ"
75.11means all or part of an individual's liver, pancreas, kidney, intestine, lung, or bone marrow;
75.12"human organ transplantation" means the medical procedure by which transfer of a human
75.13organ is made from the body of one person to the body of another person; "qualified
75.14expenses" means unreimbursed expenses for both the individual and the qualified donor
75.15for (i) travel, (ii) lodging, and (iii) lost wages net of sick pay, except that such expenses
75.16may be subtracted under this clause only once; and "qualified donor" means the individual
75.17or the individual's dependent, as defined in section 152 of the Internal Revenue Code. An
75.18individual may claim the subtraction in this clause for each instance of organ donation for
75.19transplantation during the taxable year in which the qualified expenses occur;
75.20    (14) in each of the five tax years immediately following the tax year in which an
75.21addition is required under subdivision 19a, clause (8), or 19c, clause (16), in the case of a
75.22shareholder of a corporation that is an S corporation, an amount equal to one-fifth of the
75.23addition made by the taxpayer under subdivision 19a, clause (8), or 19c, clause (16), in the
75.24case of a shareholder of a corporation that is an S corporation, minus the positive value of
75.25any net operating loss under section 172 of the Internal Revenue Code generated for the
75.26tax year of the addition. If the net operating loss exceeds the addition for the tax year, a
75.27subtraction is not allowed under this clause;
75.28    (15) to the extent included in federal taxable income, compensation paid to a
75.29nonresident who is a service member as defined in United States Code, title 10, section
75.30101(a)(5), for military service as defined in the Service Member Civil Relief Act, Public
75.31Law 108-189, section 101(2); and
75.32    (16) international economic development zone income as provided under section
75.33469.325 .; and
75.34    (17) to the extent included in federal taxable income, the amount of national service
75.35educational awards received from the National Service Trust under United States Code,
76.1title 42, sections 12601 to 12604, for service in an approved AmeriCorps national service
76.2program.
76.3EFFECTIVE DATE.This section is effective retroactively for tax years beginning
76.4after December 31, 2004, except that clause (17) is effective for tax years beginning
76.5after December 31, 2006.

76.6    Sec. 4. Minnesota Statutes 2006, section 290.01, subdivision 19c, is amended to read:
76.7    Subd. 19c. Corporations; additions to federal taxable income. For corporations,
76.8there shall be added to federal taxable income:
76.9    (1) the amount of any deduction taken for federal income tax purposes for income,
76.10excise, or franchise taxes based on net income or related minimum taxes, including but not
76.11limited to the tax imposed under section 290.0922, paid by the corporation to Minnesota,
76.12another state, a political subdivision of another state, the District of Columbia, or any
76.13foreign country or possession of the United States;
76.14    (2) interest not subject to federal tax upon obligations of: the United States, its
76.15possessions, its agencies, or its instrumentalities; the state of Minnesota or any other
76.16state, any of its political or governmental subdivisions, any of its municipalities, or any
76.17of its governmental agencies or instrumentalities; the District of Columbia; or Indian
76.18tribal governments;
76.19    (3) exempt-interest dividends received as defined in section 852(b)(5) of the Internal
76.20Revenue Code;
76.21    (4) the amount of any net operating loss deduction taken for federal income tax
76.22purposes under section 172 or 832(c)(10) of the Internal Revenue Code or operations loss
76.23deduction under section 810 of the Internal Revenue Code;
76.24    (5) the amount of any special deductions taken for federal income tax purposes
76.25under sections 241 to 247 and 965 of the Internal Revenue Code;
76.26    (6) losses from the business of mining, as defined in section 290.05, subdivision 1,
76.27clause (a), that are not subject to Minnesota income tax;
76.28    (7) the amount of any capital losses deducted for federal income tax purposes under
76.29sections 1211 and 1212 of the Internal Revenue Code;
76.30    (8) the exempt foreign trade income of a foreign sales corporation under sections
76.31921(a) and 291 of the Internal Revenue Code;
76.32    (9) the amount of percentage depletion deducted under sections 611 through 614 and
76.33291 of the Internal Revenue Code;
76.34    (10) for certified pollution control facilities placed in service in a taxable year
76.35beginning before December 31, 1986, and for which amortization deductions were elected
77.1under section 169 of the Internal Revenue Code of 1954, as amended through December
77.231, 1985, the amount of the amortization deduction allowed in computing federal taxable
77.3income for those facilities;
77.4    (11) the amount of any deemed dividend from a foreign operating corporation
77.5determined pursuant to section 290.17, subdivision 4, paragraph (g);
77.6    (12) the amount of a partner's pro rata share of net income which does not flow
77.7through to the partner because the partnership elected to pay the tax on the income under
77.8section 6242(a)(2) of the Internal Revenue Code;
77.9    (13) the amount of net income excluded under section 114 of the Internal Revenue
77.10Code;
77.11    (14) any increase in subpart F income, as defined in section 952(a) of the Internal
77.12Revenue Code, for the taxable year when subpart F income is calculated without regard
77.13to the provisions of section 103 of Public Law 109-222;
77.14    (15) 80 percent of the depreciation deduction allowed under section 168(k)(1)(A)
77.15and (k)(4)(A) of the Internal Revenue Code. For purposes of this clause, if the taxpayer
77.16has an activity that in the taxable year generates a deduction for depreciation under
77.17section 168(k)(1)(A) and (k)(4)(A) and the activity generates a loss for the taxable year
77.18that the taxpayer is not allowed to claim for the taxable year, "the depreciation allowed
77.19under section 168(k)(1)(A) and (k)(4)(A)" for the taxable year is limited to excess of the
77.20depreciation claimed by the activity under section 168(k)(1)(A) and (k)(4)(A) over the
77.21amount of the loss from the activity that is not allowed in the taxable year. In succeeding
77.22taxable years when the losses not allowed in the taxable year are allowed, the depreciation
77.23under section 168(k)(1)(A) and (k)(4)(A) is allowed;
77.24    (16) 80 percent of the amount by which the deduction allowed by section 179 of the
77.25Internal Revenue Code exceeds the deduction allowable by section 179 of the Internal
77.26Revenue Code of 1986, as amended through December 31, 2003;
77.27    (17) to the extent deducted in computing federal taxable income, the amount of the
77.28deduction allowable under section 199 of the Internal Revenue Code; and
77.29    (18) the exclusion allowed under section 139A of the Internal Revenue Code for
77.30federal subsidies for prescription drug plans; and
77.31    (19) the amount of expenses disallowed under section 290.10, subdivision 2.
77.32EFFECTIVE DATE.This section is effective for taxable years beginning after
77.33December 31, 2006.

77.34    Sec. 5. Minnesota Statutes 2006, section 290.06, is amended by adding a subdivision
77.35to read:
78.1    Subd. 34. Investment tax credit. (a) A credit is allowed against the tax imposed by
78.2this chapter for a qualified taxpayer's investment in a qualified new business venture. The
78.3credit shall equal 25 percent of the taxpayer's investment made in the business, but shall
78.4not exceed the lesser of:
78.5    (1) the liability for tax under this chapter, including the applicable alternative
78.6minimum tax;
78.7    (2) $25,000 for an individual not part of a partnership; or
78.8    (3) $300,000 for a pass-through entity.
78.9    (b) For purposes of this subdivision, a qualified taxpayer means:
78.10    (1) an accredited investor within the meaning of Regulation D of the Securities and
78.11Exchange Commission, Code of Federal Regulations, title 17, section 230.501(a), whether
78.12part of a pass-through entity or not; and
78.13    (2) an accredited investor who does not own, control, or hold power to vote 20
78.14percent or more of the outstanding securities of the qualified business venture in which the
78.15eligible investment is proposed.
78.16    (c) Pass-through entities and individuals may apply to the commissioner of
78.17employment and economic development for certification as a qualifying pass-through
78.18entity or individual. The application must be in the form and made under the procedures
78.19specified by the commissioner of employment and economic development. The
78.20commissioner of employment and economic development may provide certificates
78.21entitling investors to tax credit under this subdivision, but must not issue a total amount of
78.22certificates of more than $2,000,000. In awarding certificates under this paragraph, the
78.23commissioner of employment and economic development shall award them to qualified
78.24applicants in the order in which the applications are received.
78.25    (d) Each pass-through entity must provide each investor a statement indicating the
78.26investor's share of the credit amount certified to the pass-through entity under paragraph
78.27(c) based on its share of the pass-through entity's assets. The credit shall not exceed
78.28$25,000 for each individual part of a pass-through entity.
78.29    (e) If the amount of the credit under this subdivision or any taxable year exceeds the
78.30limitation under paragraph (a), clause (1), the excess shall be a credit carryover to each
78.31of the ten succeeding years but shall not exceed $25,000 for an individual not part of a
78.32partnership and $300,000 for a pass-through entity. The entire amount of the excess
78.33unused credit must be carried first to the earliest of the taxable years to which the credit
78.34may be carried, and then to each successive year to which the credit may be carried. The
78.35amount of the unused credit that may be added under this paragraph may not exceed the
78.36taxpayer's liability for tax less the credit for the taxable year.
79.1    (f) Unless otherwise provided under the rules of the Department of Employment and
79.2Economic Development, a business is a qualified business venture for purposes of this
79.3subdivision only if the business satisfies all of the following conditions:
79.4    (1) the business has its headquarters in Minnesota;
79.5    (2) at least 51 percent of the business's employees are employed in Minnesota;
79.6    (3) the business is engaged in, or is committed to engage in:
79.7    (i) manufacturing, processing, or assembling biotechnology or medical device
79.8products, including biotechnology and device products for use in agriculture;
79.9    (ii) conducting research in and development of biotechnology or medical device
79.10products or services; or
79.11    (iii) developing a new biotechnology or medical device product or business process;
79.12    (4) the business is not engaged in real estate development, insurance, banking,
79.13lending, lobbying, political consulting, wholesale or retail trade, leisure, hospitality,
79.14transportation, construction, or professional services provided by attorneys, accountants,
79.15business consultants, physicians, or health care consultants;
79.16    (5) the business has less than 25 employees;
79.17    (6) the business has not been in operation for more than ten consecutive years;
79.18    (7) the business has not received more than $1,000,000 in investments that have
79.19qualified for and received tax credits under this section;
79.20    (8) the business has less than $1,000,000 in annual gross sales receipts;
79.21    (9) the business is not a subsidiary or an affiliate of a business that employs more
79.22than 100 employees or has gross sales receipts for the previous year of more than
79.23$1,000,000, computed by aggregating all of the employees and gross sales receipts of the
79.24business entities affiliated with the business; and
79.25    (10) the business has not received private equity investments of more than
79.26$2,000,000.
79.27EFFECTIVE DATE.This section is effective for taxable years beginning after
79.28December 31, 2007.

79.29    Sec. 6. Minnesota Statutes 2006, section 290.0677, subdivision 1, is amended to read:
79.30    Subdivision 1. Credit allowed. (a) An individual is allowed a credit against the tax
79.31due under this chapter equal to $59 for each month or portion thereof that the individual
79.32was in active military service in a designated area after September 11, 2001, and before
79.33January 1, 2007, while a Minnesota domiciliary.
80.1    (b) An individual is allowed a credit against the tax due under this chapter equal to
80.2$120 for each month or portion thereof that the individual was in active military service in
80.3a designated area after December 31, 2006, while a Minnesota domiciliary.
80.4    (c) For active service performed after September 11, 2001, and before December 31,
80.52006, the individual may claim the credit in the taxable year beginning after December 31,
80.62005, and before January 1, 2007.
80.7    (c) (d) For active service performed after December 31, 2006, the individual may
80.8claim the credit for the taxable year in which the active service was performed.
80.9    (d) (e) If a Minnesota domiciliary is killed while performing active military service
80.10in a designated area, the individual's surviving spouse or dependent child may take the
80.11credit in the taxable year of the death. If a Minnesota domiciliary was killed while
80.12performing active military service in a designated area between September 11, 2001, and
80.13December 31, 2006, the individual's surviving spouse or dependent child may claim this
80.14credit in the taxable year beginning after December 31, 2005, and before January 1, 2007
80.15an individual entitled to the credit died prior to January 1, 2006, the individual's estate or
80.16heirs at law, if the individual's probate estate has closed or the estate was not probated,
80.17may claim the credit.
80.18EFFECTIVE DATE.This section is effective for taxable years beginning after
80.19December 31, 2006, except that paragraph (e) is effective retroactively for tax years
80.20beginning after December 31, 2005.

80.21    Sec. 7. Minnesota Statutes 2006, section 290.091, subdivision 3, is amended to read:
80.22    Subd. 3. Exemption amount. (a) For purposes of computing the alternative
80.23minimum tax, the exemption amount is:
80.24    (1) for taxable years beginning before January 1, 2006, the exemption determined
80.25under section 55(d) of the Internal Revenue Code, as amended through December 31,
80.261992; and
80.27    (2), for taxable years beginning after December 31, 2005, $60,000 for married
80.28couples filing joint returns, $30,000 for married individuals filing separate returns, estates,
80.29and trusts, and $45,000 for unmarried individuals.
80.30    (b) The exemption amount determined under this subdivision is subject to the phase
80.31out under section 55(d)(3) of the Internal Revenue Code, except that alternative minimum
80.32taxable income as determined under this section must be substituted in the computation
80.33of the phase out, and the income threshold used in the phaseout must be adjusted for
80.34inflation as provided in paragraph (c).
81.1    (c) For taxable years beginning after December 31, 2006, the exemption amount
81.2under paragraph (a), clause (2), and the income threshold for the phaseout under paragraph
81.3(b) must be adjusted for inflation. The commissioner shall make the inflation adjustments
81.4in accordance with section 1(f) of the Internal Revenue Code except that for the purposes
81.5of this subdivision the percentage increase must be determined from the year starting
81.6September 1, 2005, and ending August 31, 2006, as the base year for adjusting for inflation
81.7for the tax year beginning after December 31, 2006. The commissioner shall adjust the
81.8exemption amount and phaseout threshold by the percentage determined pursuant to the
81.9provisions of section 1(f) of the Internal Revenue Code, except that in section 1(f)(3)(B)
81.10the word "2005" shall be substituted for the word "1992." For 2007, the commissioner
81.11shall then determine the percentage change from the 12 months ending on August 31,
81.122005, to the 12 months ending on August 31, 2006, and in each subsequent year, from the
81.1312 months ending on August 31, 2005, to the 12 months ending on August 31 of the year
81.14preceding the taxable year. The exemption amount and phaseout threshold as adjusted
81.15must be rounded to the nearest $10. If the amount ends in $5, it must be rounded up to the
81.16nearest $10 amount. The determination of the commissioner under this subdivision is not
81.17a rule under the Administrative Procedure Act.
81.18EFFECTIVE DATE.This section is effective for taxable years beginning after
81.19December 31, 2006.

81.20    Sec. 8. Minnesota Statutes 2006, section 290.10, is amended to read:
81.21290.10 NONDEDUCTIBLE ITEMS.
81.22     Subdivision 1. Expenses, interest, and taxes. Except as provided in section 290.17,
81.23subdivision 4
, paragraph (i), in computing the net income of a taxpayer no deduction
81.24shall in any case be allowed for expenses, interest and taxes connected with or allocable
81.25against the production or receipt of all income not included in the measure of the tax
81.26imposed by this chapter, except that for corporations engaged in the business of mining
81.27or producing iron ore, the mining of which is subject to the occupation tax imposed by
81.28section 298.01, subdivision 4, this shall not prevent the deduction of expenses and other
81.29items to the extent that the expenses and other items are allowable under this chapter and
81.30are not deductible, capitalizable, retainable in basis, or taken into account by allowance
81.31or otherwise in computing the occupation tax and do not exceed the amounts taken for
81.32federal income tax purposes for that year. Occupation taxes imposed under chapter 298,
81.33royalty taxes imposed under chapter 299, or depletion expenses may not be deducted
81.34under this clause subdivision.
82.1    Subd. 2. Fines, fees, and penalties. (a) Except as provided in this subdivision, no
82.2deduction from taxable income for a trade or business expense under section 162(a) of
82.3the Internal Revenue Code shall be allowed for any amount paid or incurred, whether by
82.4suit, agreement, or otherwise, to, or at the direction of, a government or entity described in
82.5paragraph (d) in relation to the violation of any law or the investigation or inquiry by such
82.6government or entity into the potential violation of any law.
82.7    (b) Exception for amounts constituting restitution or paid to come into compliance
82.8with the law. Paragraph (a) does not apply to any amount which:
82.9    (1) the taxpayer establishes:
82.10    (i) constitutes restitution, including remediation of property for damage or harm
82.11caused by or which may be caused by the violation of any law or the potential violation
82.12of any law; or
82.13    (ii) is paid to come into compliance with any law which was violated or involved in
82.14the investigation or inquiry; and
82.15    (2) is identified as restitution or as an amount paid to come into compliance with the
82.16law, as the case may be, in the court order or settlement agreement.
82.17    This paragraph does not apply to any amount paid or incurred as reimbursement to
82.18the government or entity for the costs of any investigation or litigation.
82.19    (c) Paragraph (a) does not apply to any amount paid or incurred by order of a court
82.20in a suit in which no government or entity described in paragraph (d) is a party.
82.21    (d) An entity is described in this paragraph if it is:
82.22    (1) a nongovernmental entity which exercises self-regulatory powers, including
82.23imposing sanctions, in connection with a qualified board or exchange, as defined in section
82.241256(g)(7) of the Internal Revenue Code, or;
82.25    (2) to the extent provided in regulations, a nongovernmental entity which exercises
82.26self-regulatory powers, including imposing sanctions, as part of performing an essential
82.27governmental function.
82.28    (e) Paragraph (a) does not apply to any amount paid or incurred as taxes due.
82.29EFFECTIVE DATE.This section is effective for taxable years beginning after
82.30December 31, 2006, and for fines, fees, and penalties assessed after the date of enactment.

82.31    Sec. 9. Minnesota Statutes 2006, section 290.17, subdivision 2, is amended to read:
82.32    Subd. 2. Income not derived from conduct of a trade or business. The income of
82.33a taxpayer subject to the allocation rules that is not derived from the conduct of a trade or
82.34business must be assigned in accordance with paragraphs (a) to (f):
83.1    (a)(1) Subject to paragraphs (a)(2), and (a)(3), and (a)(4), income from wages as
83.2defined in section 3401(a) and (f) of the Internal Revenue Code is assigned to this state if,
83.3and to the extent that, the work of the employee is performed within it; all other income
83.4from such sources is treated as income from sources without this state.
83.5    Severance pay shall be considered income from labor or personal or professional
83.6services.
83.7    (2) In the case of an individual who is a nonresident of Minnesota and who is an
83.8athlete or entertainer, income from compensation for labor or personal services performed
83.9within this state shall be determined in the following manner:
83.10    (i) The amount of income to be assigned to Minnesota for an individual who is a
83.11nonresident salaried athletic team employee shall be determined by using a fraction in
83.12which the denominator contains the total number of days in which the individual is under
83.13a duty to perform for the employer, and the numerator is the total number of those days
83.14spent in Minnesota. For purposes of this paragraph, off-season training activities, unless
83.15conducted at the team's facilities as part of a team imposed program, are not included in
83.16the total number of duty days. Bonuses earned as a result of play during the regular season
83.17or for participation in championship, play-off, or all-star games must be allocated under
83.18the formula. Signing bonuses are not subject to allocation under the formula if they are
83.19not conditional on playing any games for the team, are payable separately from any other
83.20compensation, and are nonrefundable; and
83.21    (ii) The amount of income to be assigned to Minnesota for an individual who is a
83.22nonresident, and who is an athlete or entertainer not listed in clause (i), for that person's
83.23athletic or entertainment performance in Minnesota shall be determined by assigning to
83.24this state all income from performances or athletic contests in this state.
83.25    (3) For purposes of this section, amounts received by a nonresident as "retirement
83.26income" as defined in section (b)(1) of the State Income Taxation of Pension Income
83.27Act, Public Law 104-95, are not considered income derived from carrying on a trade
83.28or business or from wages or other compensation for work an employee performed in
83.29Minnesota, and are not taxable under this chapter.
83.30    (4) Wages, otherwise assigned to this state under clause (1) and not qualifying under
83.31clause (3), are not taxable under this chapter if the following conditions are met:
83.32    (i) the recipient was not a resident of this state for any part of the taxable year in
83.33which the wages were received; and
83.34    (ii) the wages are for work performed while the recipient was a resident of this state.
83.35    (b) Income or gains from tangible property located in this state that is not employed
83.36in the business of the recipient of the income or gains must be assigned to this state.
84.1    (c) Income or gains from intangible personal property not employed in the business
84.2of the recipient of the income or gains must be assigned to this state if the recipient of the
84.3income or gains is a resident of this state or is a resident trust or estate.
84.4    Gain on the sale of a partnership interest is allocable to this state in the ratio of the
84.5original cost of partnership tangible property in this state to the original cost of partnership
84.6tangible property everywhere, determined at the time of the sale. If more than 50 percent
84.7of the value of the partnership's assets consists of intangibles, gain or loss from the sale
84.8of the partnership interest is allocated to this state in accordance with the sales factor of
84.9the partnership for its first full tax period immediately preceding the tax period of the
84.10partnership during which the partnership interest was sold.
84.11    Gain on the sale of goodwill or income from a covenant not to compete that is
84.12connected with a business operating all or partially in Minnesota is allocated to this state
84.13to the extent that the income from the business in the year preceding the year of sale was
84.14assignable to Minnesota under subdivision 3.
84.15    When an employer pays an employee for a covenant not to compete, the income
84.16allocated to this state is in the ratio of the employee's service in Minnesota in the calendar
84.17year preceding leaving the employment of the employer over the total services performed
84.18by the employee for the employer in that year.
84.19    (d) Income from winnings on a bet made by an individual while in Minnesota is
84.20assigned to this state. In this paragraph, "bet" has the meaning given in section 609.75,
84.21subdivision 2
, as limited by section 609.75, subdivision 3, clauses (1), (2), and (3).
84.22    (e) All items of gross income not covered in paragraphs (a) to (d) and not part of the
84.23taxpayer's income from a trade or business shall be assigned to the taxpayer's domicile.
84.24    (f) For the purposes of this section, working as an employee shall not be considered
84.25to be conducting a trade or business.
84.26EFFECTIVE DATE.This section is effective for taxable years beginning after
84.27December 31, 2006.

84.28    Sec. 10. Minnesota Statutes 2006, section 290.92, is amended by adding a subdivision
84.29to read:
84.30    Subd. 31. Payments to persons who are not employees. (a) For purposes of this
84.31subdivision, "contractor" means a person carrying on a trade or business described in
84.32industry code numbers 23 through 238990 of the North American Industry Classification
84.33System.
84.34    (b) A contractor or a third-party bulk filer acting on behalf of a contractor, who
84.35makes payments to an individual, carrying on a trade or business described in paragraph
85.1(a) as a sole proprietorship, must deduct and withhold two percent of the payment as
85.2Minnesota withholding tax when the amount the contractor paid to that individual during
85.3the calendar year exceeds $600.
85.4    (c) A payment subject to withholding under this subdivision must be treated as if
85.5the payment were a wage paid by an employer to an employee. The requirements in the
85.6definitions of "employee" and "employer" in subdivision 1 relating to geographic location
85.7apply in determining whether withholding tax applies under this subdivision, but without
85.8regard to whether the contractor or the individual otherwise satisfy the definition of an
85.9employer or an employee. Each recipient of a payment subject to withholding under this
85.10subdivision must furnish the contractor with a statement of the recipient's name, address,
85.11and Social Security account number.
85.12EFFECTIVE DATE.This section is effective for payments made after December
85.1331, 2007.

85.14    Sec. 11. AUDIT AND REPORT TO LEGISLATURE.
85.15    The commissioner must conduct a random sample audit of withholdings under
85.16Minnesota Statutes, section 290.92, subdivision 31, and returns associated with those
85.17withholdings. The commissioner must report on the findings of the audit to the committees
85.18of the senate and house of representatives with jurisdiction over taxes, in compliance with
85.19Minnesota Statutes, sections 3.195 and 3.197, no later than February 1, 2010. The report
85.20must also include information on the number and amount of payments received, and on
85.21the types of contractors making payments, grouped by specialty skills definitions provided
85.22in the North American Industry Classification System.

85.23ARTICLE 5
85.24SALES AND USE TAX

85.25    Section 1. Minnesota Statutes 2006, section 297A.668, is amended by adding a
85.26subdivision to read:
85.27    Subd. 8. Manufactured and modular housing. (a) Notwithstanding other
85.28subdivisions of this section, a sale of a manufactured or modular home shall be sourced to
85.29the site where the housing is first set up or installed.
85.30    (b) For purposes of this section, "manufactured home" has the meaning given
85.31in section 327.31, subdivision 6. For purposes of this section, "modular home" means
85.32a building or structural unit that has been substantially manufactured or constructed,
85.33in whole or in part, at an off-site location, with the final assembly occurring on-site
86.1alone or with other units and attached to a permanent foundation site and occupied
86.2as a single-family dwelling. Modular home construction must comply with applicable
86.3standards adopted in Minnesota Rules authorized under chapter 16B. A modular home
86.4does not include a structure subject to the requirements of the National Manufactured
86.5Home Construction and Safety Standards Act of 1974 or a manufactured home.
86.6EFFECTIVE DATE.This section is effective for sales and purchases made after
86.7June 30, 2007.

86.8    Sec. 2. Minnesota Statutes 2006, section 297A.70, subdivision 8, is amended to read:
86.9    Subd. 8. Regionwide public safety radio communication system; products and
86.10services. Products and services including, but not limited to, end user equipment used
86.11for construction, ownership, operation, maintenance, and enhancement of the backbone
86.12system of the regionwide public safety radio communication system established under
86.13sections 403.21 to 403.34 403.40, are exempt. For purposes of this subdivision, backbone
86.14system is defined in section 403.21, subdivision 9. This subdivision is effective for
86.15purchases, sales, storage, use, or consumption for use in the first and second phases of the
86.16system, as defined in section 403.21, subdivisions 3, 10, and 11, and that portion of the
86.17third phase of the system that is located in the southeast district of the State Patrol and
86.18the counties of Benton, Sherburne, Stearns, and Wright, and that portion of the system
86.19that is located in Itasca County.

86.20    Sec. 3. Minnesota Statutes 2006, section 297A.71, subdivision 23, is amended to read:
86.21    Subd. 23. Construction materials for qualified low-income housing projects. (a)
86.22Purchases of materials and supplies used or consumed in and equipment incorporated into
86.23the construction, improvement, or expansion of qualified low-income housing projects are
86.24exempt from the tax imposed under this chapter if the owner of the qualified low-income
86.25housing project is:
86.26    (1) the public housing agency or housing and redevelopment authority of a political
86.27subdivision;
86.28    (2) an entity exercising the powers of a housing and redevelopment authority within
86.29a political subdivision;
86.30    (3) a limited partnership in which the sole or managing general partner is an
86.31authority under clause (1) or an entity under clause (2) or (4);
86.32    (4) a nonprofit corporation subject to the provisions of chapter 317A, and qualifying
86.33under section 501(c)(3) or 501(c)(4) of the Internal Revenue Code of 1986, as amended; or
87.1    (5) an owner entity, as defined in Code of Federal Regulations, title 24, part 941.604,
87.2for a qualified low-income housing project described in paragraph (b), clause (5).
87.3    This exemption applies regardless of whether the purchases are made by the owner
87.4of the facility or a contractor.
87.5    (b) For purposes of this exemption, "qualified low-income housing project" means:
87.6    (1) a housing or mixed use project in which at least 20 percent of the residential units
87.7are qualifying low-income rental housing units as defined in section 273.126;
87.8    (2) a federally assisted low-income housing project financed by a mortgage insured
87.9or held by the United States Department of Housing and Urban Development under
87.10United States Code, title 12, section 1701s, 1715l(d)(3), 1715l(d)(4), or 1715z-1; United
87.11States Code, title 42, section 1437f; the Native American Housing Assistance and
87.12Self-Determination Act, United States Code, title 25, section 4101 et seq.; or any similar
87.13successor federal low-income housing program;
87.14    (3) a qualified low-income housing project as defined in United States Code, title
87.1526, section 42(g), meeting all of the requirements for a low-income housing credit under
87.16section 42 of the Internal Revenue Code regardless of whether the project actually applies
87.17for or receives a low-income housing credit;
87.18    (4) a project that will be operated in compliance with Internal Revenue Service
87.19revenue procedure 96-32; or
87.20    (5) a housing or mixed use project in which all or a portion of the residential units
87.21are subject to the requirements of section 5 of the United States Housing Act of 1937.
87.22    (c) For a project, a portion of which is not used for low-income housing units,
87.23the amount of purchases that are exempt under this subdivision must be determined by
87.24multiplying the total purchases, as specified in paragraph (a), by the ratio of:
87.25    (1) the total gross square footage of units subject to the income limits under section
87.26273.126 , the financing for the project, the federal low-income housing tax credit, revenue
87.27procedure 96-32, or section 5 of the United States Housing Act of 1937, as applicable
87.28to the project; and
87.29    (2) the total gross square footage of all units in the project.
87.30    (d) The tax must be imposed and collected as if the rate under section 297A.62,
87.31subdivision 1
, applied, and then refunded in the manner provided in section 297A.75.
87.32EFFECTIVE DATE.This section is effective for sales and purchases made after
87.33June 30, 2007.

87.34    Sec. 4. Minnesota Statutes 2006, section 297A.99, subdivision 1, is amended to read:
88.1    Subdivision 1. Authorization; scope. (a) A political subdivision of this state may
88.2impose a general sales tax if permitted by special law enacted prior to January 1, 2008, or
88.3if the political subdivision enacted and imposed the tax before the effective date of section
88.4477A.016 and its predecessor provision.
88.5    (b) This section governs the imposition of a general sales tax by the political
88.6subdivision. The provisions of this section preempt the provisions of any special law:
88.7    (1) enacted before June 2, 1997, or
88.8    (2) enacted on or after June 2, 1997, that does not explicitly exempt the special law
88.9provision from this section's rules by reference.
88.10    (c) This section does not apply to or preempt a sales tax on motor vehicles or a
88.11special excise tax on motor vehicles.
88.12    (d) From June 1, 2007, through December 31, 2010, a political subdivision must not
88.13advertise, promote, expend funds, or hold a referendum to support imposing a local option
88.14sales tax unless authorized by a special law enacted prior to June 1, 2007.
88.15EFFECTIVE DATE.This section is effective the day following final enactment.

88.16    Sec. 5. Minnesota Statutes 2006, section 297B.03, is amended to read:
88.17297B.03 EXEMPTIONS.
88.18    There is specifically exempted from the provisions of this chapter and from
88.19computation of the amount of tax imposed by it the following:
88.20    (1) purchase or use, including use under a lease purchase agreement or installment
88.21sales contract made pursuant to section 465.71, of any motor vehicle by the United States
88.22and its agencies and instrumentalities and by any person described in and subject to the
88.23conditions provided in section 297A.67, subdivision 11;
88.24    (2) purchase or use of any motor vehicle by any person who was a resident of
88.25another state or country at the time of the purchase and who subsequently becomes a
88.26resident of Minnesota, provided the purchase occurred more than 60 days prior to the date
88.27such person began residing in the state of Minnesota and the motor vehicle was registered
88.28in the person's name in the other state or country;
88.29    (3) purchase or use of any motor vehicle by any person making a valid election to be
88.30taxed under the provisions of section 297A.90;
88.31    (4) purchase or use of any motor vehicle previously registered in the state of
88.32Minnesota when such transfer constitutes a transfer within the meaning of section 118,
88.33331, 332, 336, 337, 338, 351, 355, 368, 721, 731, 1031, 1033, or 1563(a) of the Internal
88.34Revenue Code of 1986, as amended through December 31, 1999;
89.1    (5) purchase or use of any vehicle owned by a resident of another state and leased
89.2to a Minnesota-based private or for-hire carrier for regular use in the transportation of
89.3persons or property in interstate commerce provided the vehicle is titled in the state of
89.4the owner or secured party, and that state does not impose a sales tax or sales tax on
89.5motor vehicles used in interstate commerce;
89.6    (6) purchase or use of a motor vehicle by a private nonprofit or public educational
89.7institution for use as an instructional aid in automotive training programs operated by the
89.8institution. "Automotive training programs" includes motor vehicle body and mechanical
89.9repair courses but does not include driver education programs;
89.10    (7) purchase of a motor vehicle for use as an ambulance by an ambulance service
89.11licensed under section 144E.10;
89.12    (8) purchase of a motor vehicle by or for a public library, as defined in section
89.13134.001, subdivision 2 , as a bookmobile or library delivery vehicle;
89.14    (9) purchase of a ready-mixed concrete truck;
89.15    (10) purchase or use of a motor vehicle by a town for use exclusively for road
89.16maintenance, including snowplows and dump trucks, but not including automobiles,
89.17vans, or pickup trucks;
89.18    (11) purchase or use of a motor vehicle by a corporation, society, association,
89.19foundation, or institution organized and operated exclusively for charitable, religious,
89.20or educational purposes, except a public school, university, or library, but only if the
89.21vehicle is:
89.22    (i) a truck, as defined in section 168.011, a bus, as defined in section 168.011, or a
89.23passenger automobile, as defined in section 168.011, if the automobile is designed and
89.24used for carrying more than nine persons including the driver; and
89.25    (ii) intended to be used primarily to transport tangible personal property or
89.26individuals, other than employees, to whom the organization provides service in
89.27performing its charitable, religious, or educational purpose;
89.28    (12) purchase of a motor vehicle for use by a transit provider exclusively to provide
89.29transit service is exempt if the transit provider is either (i) receiving financial assistance or
89.30reimbursement under section 174.24 or 473.384, or (ii) operating under section 174.29,
89.31473.388 , or 473.405;
89.32    (13) purchase or use of a motor vehicle by a qualified business, as defined in section
89.33469.310 , located in a job opportunity building zone, if the motor vehicle is principally
89.34garaged in the job opportunity building zone and is primarily used as part of or in direct
89.35support of the person's operations carried on in the job opportunity building zone. The
89.36exemption under this clause applies to sales, if the purchase was made and delivery
90.1received during the duration of the job opportunity building zone. The exemption under
90.2this clause also applies to any local sales and use tax;
90.3    (14) purchase of a leased vehicle by the lessee who was a participant in a
90.4lease-to-own program from a charitable organization that is:
90.5    (i) described in section 501(c)(3) of the Internal Revenue Code; and
90.6    (ii) licensed as a motor vehicle lessor under section 168.27, subdivision 4.
90.7EFFECTIVE DATE.This section is effective for sales and purchases made after
90.8June 30, 2007.

90.9    Sec. 6. Laws 1980, chapter 511, section 1, subdivision 2, as amended by Laws 1991,
90.10chapter 291, article 8, section 22, and Laws 1998, chapter 389, article 8, section 25, and
90.11Laws 2003, First Special Session chapter 21, article 8, section 11, is amended to read:
90.12    Subd. 2. Notwithstanding Minnesota Statutes, Section 477A.016, or any other law,
90.13ordinance, or city charter provision to the contrary, the city of Duluth may, by ordinance,
90.14impose an additional sales tax of up to one and one-half two and one-quarter percent on
90.15sales transactions which are described in Minnesota Statutes 2000, Section 297A.01,
90.16Subdivision 3, Clause (c). When the city council determines that the taxes imposed
90.17under this subdivision and under Laws 1998, chapter 389, article 8, section 26, at a rate
90.18of one-half of one percent have produced revenue sufficient to pay (1) the debt service
90.19on bonds in a principal amount of $8,000,000 issued for capital improvements to the
90.20Duluth Entertainment and Convention Center, and (2) debt service on outstanding bonds
90.21originally issued in the principal amount of $4,970,000 to finance capital improvements
90.22to the Great Lakes Aquarium since the imposition of the taxes at the rate of one and
90.23one-half percent, the rate of the tax under this subdivision is reduced to by one-half of
90.24one percent. The imposition of this tax shall not be subject to voter referendum under
90.25either state law or city charter provisions. When the city council determines that the taxes
90.26imposed under this subdivision at a rate of three-quarters of one percent and other sources
90.27of revenue produce revenue sufficient to pay debt service on bonds in the principal amount
90.28of $37,931,000 plus issuance and discount costs, issued for capital improvements at the
90.29Duluth Entertainment and Convention Center, which include a new arena, the rate of tax
90.30under this subdivision must be reduced by three-quarters of one percent.
90.31EFFECTIVE DATE.This section is effective the day after the governing body of
90.32the city of Duluth and its chief clerical officer comply with Minnesota Statutes, section
90.33645.021, subdivisions 2 and 3.

91.1    Sec. 7. Laws 1987, chapter 168, section 2, is amended to read:
91.2    Sec. 2. LODGING TAX IN TOWNS.
91.3    Notwithstanding Minnesota Statutes, section 477A.016, or other law, the Cook
91.4county board may impose a tax of up to two percent on the gross receipts from the
91.5furnishing for consideration of lodging at a hotel, motel, rooming house, tourist court or
91.6resort, other than the renting or leasing of it for a continuous period of 30 days or more,
91.7located in the towns of Lutsen, Tofte, and Schroeder. The tax may be imposed in one or
91.8more of the towns. The tax may be imposed in a town only with the agreement of the
91.9town expressed by its voters at an annual or special meeting. The tax shall be collected
91.10by and its proceeds paid to the county. The proceeds of the tax shall be dedicated for the
91.11construction, debt service, and maintenance of a public recreational facility within the
91.12towns. The proceeds of the tax must be used to fund a new Cook County Event and
91.13Visitors Bureau.

91.14    Sec. 8. Laws 1993, chapter 375, article 9, section 45, subdivision 2, as amended by
91.15Laws 1997, chapter 231, article 7, section 36, is amended to read:
91.16    Subd. 2. Use of revenues. (a) Revenues received from taxes authorized by
91.17subdivision 1 shall be used by Cook county to pay the cost of collecting the tax and to pay
91.18all or a portion of the costs of expanding and improving the health care facility located
91.19in the county and known as North Shore hospital. Authorized costs include, but are not
91.20limited to, securing or paying debt service on bonds or other obligations issued to finance
91.21the expansion and improvement of North Shore hospital. The total capital expenditures
91.22payable from bond proceeds, excluding investment earnings on bond proceeds and tax
91.23revenues, shall not exceed $4,000,000.
91.24    (b) Additional revenues received from taxes authorized by subdivision 1 may be
91.25used by Cook county to pay all or a portion of the costs of betterment of North Shore
91.26care center and providing additional improvements to North Shore hospital. Authorized
91.27costs include, but are not limited to, securing or paying debt service on bonds or other
91.28obligations issued to finance the remodeling of North Shore care center and additional
91.29improvements to North Shore hospital. The total capital expenditures payable from bond
91.30proceeds, excluding investment earnings on bond proceeds and tax revenues, shall not
91.31exceed $2,200,000.
91.32    (c) If approved by the voters at a special election held before December 31, 2007,
91.33additional revenues received from taxes authorized by subdivision 1 may be used by Cook
91.34County to pay for the following projects:
92.1    (1) construction and improvements to community centers, museums, interpretive
92.2centers, associated trails, and recreation areas, including, but not limited to, improvements
92.3and additions to the skateboard park, hockey rink, ball fields, community center addition,
92.4county parking area, tennis courts, and all associated improvements;
92.5    (2) construction and improvement to the Grand Marais pool;
92.6    (3) construction and improvement to the Grand Marais Public Library; and
92.7    (4) debt service to retire bonds for improvements to the Superior National Golf
92.8Course.
92.9    Authorized expenses include, but are not limited to, paying construction expenses
92.10related to these improvements, and paying debt service on bonds or other obligations
92.11issued to finance acquisition and construction of these improvements.

92.12    Sec. 9. Laws 1993, chapter 375, article 9, section 45, subdivision 3, as amended by
92.13Laws 1997, chapter 231, article 7, section 37, is amended to read:
92.14    Subd. 3. Expiration of taxing authority and expenditure limitation. The
92.15authority granted by subdivision 1 to Cook county to impose a sales tax shall expire
92.16when the principal and interest on any bonds or obligations issued under subdivision 4,
92.17paragraph (a),to finance the expansion and improvement of North Shore hospital described
92.18in subdivision 2, paragraph (a),have been paid, or at an earlier time as the county shall, by
92.19resolution, determine when the county determines that the amount of revenues received is
92.20sufficient to pay for the principal and interest on any bonds or obligations issued to finance
92.21the projects in subdivision 2. Any funds remaining after completion of the improvements
92.22and retirement or redemption of the bonds may be placed in the general fund of the county.

92.23    Sec. 10. Laws 1993, chapter 375, article 9, section 45, subdivision 4, as amended by
92.24Laws 1997, chapter 231, article 7, section 38, is amended to read:
92.25    Subd. 4. Bonds. (a) Cook county may issue general obligation bonds in an amount
92.26not to exceed $4,000,000 for the expansion and improvement of North Shore hospital.
92.27    (b) Additionally, Cook county may issue general obligation bonds in an amount
92.28not to exceed $2,200,000 for the betterment of North Shore care center and additional
92.29improvements to North Shore hospital.
92.30    (c) The bonds may be issued without election under Minnesota Statutes, chapter
92.31475, on the question of issuance of the bonds or a property tax to pay them. The debt
92.32represented by the bonds shall not be included in computing any debt limitations applicable
92.33to Cook county, and the levy of taxes required by Minnesota Statutes, section 475.61, to
93.1pay principal of and interest on the bonds shall not be subject to any levy limitation or be
93.2included in computing or applying any levy limitation applicable to the county.
93.3    (d) Cook County may issue bonds under Minnesota Statutes, chapter 475, to pay
93.4capital and administrative expenses for the improvements authorized in subdivision 2,
93.5paragraph (c), in an amount that does not exceed $14,000,000. An election to approve the
93.6bonds under Minnesota Statutes, section 475.58, is not required. The issuance of bonds
93.7under this subdivision is not subject to Minnesota Statutes, sections 275.60 and 275.61.
93.8The debt represented by the bonds is not included in computing any debt limitation
93.9applicable to the county, and any levy of taxes under Minnesota Statutes, section 475.61,
93.10to pay principal and interest on the bonds is not subject to any levy limitation.

93.11    Sec. 11. Laws 1999, chapter 243, article 4, section 18, subdivision 1, is amended to
93.12read:
93.13    Subdivision 1. Sales and use tax. Notwithstanding Minnesota Statutes, section
93.14297A.48, subdivision 1a , 477A.016, or any other provision of law, ordinance, or city
93.15charter, if approved by the city voters at the first municipal general election held after the
93.16date of final enactment of this act or at a special election held November 2, 1999, the city
93.17of Proctor may impose by ordinance a sales and use tax of up to one-half of one percent
93.18for the purposes specified in subdivision 3. The provisions of Minnesota Statutes, section
93.19297A.48 297A.99 , govern the imposition, administration, collection, and enforcement of
93.20the tax authorized under this subdivision.

93.21    Sec. 12. Laws 1999, chapter 243, article 4, section 18, subdivision 3, is amended to
93.22read:
93.23    Subd. 3. Use of revenues. (a) Revenues received from taxes authorized by
93.24subdivisions 1 and 2 must be used by the city to pay the cost of collecting the taxes and to
93.25pay for construction and improvement of the following city facilities:
93.26    (1) streets; and
93.27    (2) constructing and equipping the Proctor community activity center.
93.28    Authorized expenses include, but are not limited to, acquiring property, paying
93.29construction and operating expenses related to the development of an authorized facility,
93.30and paying debt service on bonds or other obligations, including lease obligations, issued
93.31to finance the construction, expansion, or improvement of an authorized facility. The
93.32capital expenses for all projects authorized under this paragraph that may be paid with
93.33these taxes is limited to $3,600,000, plus an amount equal to the costs related to issuance
93.34of the bonds.
94.1    (b) Additional revenues received from taxes authorized by subdivision 1, may be
94.2used by the city to pay for the following capital improvement projects: public utilities,
94.3including water, sanitary sewer, storm sewer, and electric; bikeways and trails; and parks
94.4and recreation.
94.5EFFECTIVE DATE.This section is effective the day following final enactment,
94.6upon compliance by the city of Proctor with Minnesota Statutes, section 645.021,
94.7subdivision 3.

94.8    Sec. 13. Laws 1999, chapter 243, article 4, section 18, subdivision 4, is amended to
94.9read:
94.10    Subd. 4. Bonding authority. (a) The city may issue bonds under Minnesota
94.11Statutes, chapter 475, to finance the capital expenditure and improvement projects
94.12described in subdivision 3. An election to approve the bonds under Minnesota Statutes,
94.13section 475.58, is not required.
94.14    (b) The issuance of bonds under this subdivision is not subject to Minnesota Statutes,
94.15sections 275.60 and 279.61 275.61.
94.16    (c) The bonds are not included in computing any debt limitation applicable to the
94.17city, and the levy of taxes under Minnesota Statutes, section 475.61, to pay principal of
94.18and interest on the bonds is not subject to any levy limitation.
94.19    (d) For projects described in subdivision 3, paragraph (a), the aggregate principal
94.20amount of bonds, plus the aggregate of the taxes used directly to pay eligible capital
94.21expenditures and improvements, may not exceed $3,600,000, plus an amount equal to
94.22the costs related to issuance of the bonds, including interest on the bonds. For projects
94.23described in subdivision 3, paragraph (b), the aggregate principal amount of bonds may
94.24not exceed $7,200,000, plus an amount equal to the costs related to issuance of the bonds,
94.25including interest on the bonds.
94.26    (e) The sales and use and excise taxes authorized in this section may be pledged to
94.27and used for the payment of the bonds and any bonds issued to refund them only if the
94.28bonds and any refunding bonds are general obligations of the city.
94.29EFFECTIVE DATE.This section is effective the day following final enactment,
94.30upon compliance by the city of Proctor with Minnesota Statutes, section 645.021,
94.31subdivision 3.

94.32    Sec. 14. Laws 2005, First Special Session chapter 3, article 5, section 39, is amended
94.33to read:
95.1    Sec. 39. CITY OF BEMIDJI.
95.2    Subdivision 1. Sales and use tax authorized. Notwithstanding Minnesota Statutes,
95.3section 477A.016, or any other provision of law, ordinance, or city charter, pursuant to the
95.4approval of the city voters at the general election held on November 5, 2002, and at the
95.5general election held November 7, 2006, the city of Bemidji may impose by ordinance
95.6a sales and use tax of one-half of one percent for the purposes specified in subdivision
95.72. The provisions of Minnesota Statutes, section 297A.99, govern the imposition,
95.8administration, collection, and enforcement of the tax authorized under this subdivision.
95.9    Subd. 2. Use of revenues. Revenues received from the tax authorized by
95.10subdivision 1 must be used for the cost of collecting and administering the tax and to pay
95.11for the projects listed in this subdivision:
95.12    (1) To pay all or part of the capital or administrative costs of the acquisition,
95.13construction, and improvement of parks and trails within the city, as provided for in the
95.14city of Bemidji's parks, open space, and trail system plan, adopted by the Bemidji City
95.15Council on November 21, 2001. Authorized expenses include, but are not limited to,
95.16acquiring property, paying construction expenses related to the development of these
95.17facilities and improvements, and securing and paying debt service on bonds or other
95.18obligations issued to finance acquisition, construction, improvement, or development of
95.19parks and trails within the city of Bemidji.
95.20    (2) To pay all or part of the city's share of costs for acquisition, design, and
95.21construction of a regional event center, not to exceed $40,000,000 plus any associated
95.22bond costs. Authorized expenses include, but are not limited to, acquiring property,
95.23paying demolition and construction expenses, improving associated infrastructure, and
95.24purchasing furniture, fixtures, and equipment for the regional event center, and securing
95.25and paying debt service on bonds or other obligations issued to finance the regional event
95.26center project.
95.27    Subd. 3. Bonds. (a) Pursuant to the approval of the city voters at the general
95.28election held on November 5, 2002, the city of Bemidji may issue, without an additional
95.29election, general obligation bonds of the city in an amount not to exceed $9,826,000 to
95.30pay capital and administrative expenses for the acquisition, construction, improvement,
95.31and development of parks and trails as specified in subdivision 2. The debt represented by
95.32the bonds must not be included in computing any debt limitations applicable to the city,
95.33and the levy of taxes required by Minnesota Statutes, section 475.61, to pay the principal
95.34of any interest on the bonds must not be subject to any levy limitations or be included in
95.35computing or applying any levy limitation applicable to the city.
96.1    (b) Pursuant to the approval of the city voters at the general election held on
96.2November 7, 2006, the city of Bemidji may issue, without an additional election, general
96.3obligation bonds of the city in an amount not to exceed $40,000,000 to pay capital and
96.4administrative expenses for the acquisition, construction, improvement, and development
96.5of the regional event center specified in subdivision 2. The debt represented by the bonds
96.6must not be included in computing any debt limitations applicable to the city, and the levy
96.7of taxes required by Minnesota Statutes, section 475.61, to pay the principal of any interest
96.8on the bonds must not be subject to any levy limitations or be included in computing or
96.9applying any levy limitation applicable to the city.
96.10    Subd. 4. Termination of tax. The tax imposed under subdivision 1 expires
96.11when the Bemidji City Council determines that the amount described in subdivision 3,
96.12paragraph (a), has been received from the tax to finance the capital and administrative
96.13costs for acquisition, construction, improvement, and development of parks and trails and
96.14to repay or retire at maturity the principal, interest, and premium due on any bonds issued
96.15for the park and trail improvements under subdivision 3, paragraph (a), plus the earlier
96.16of (1) 30 years, or (2) when the city council first determines that the additional revenues
96.17received from the extension of the tax equals or exceeds the amount authorized to be spent
96.18for the regional event center under subdivision 2, clause (2). Any funds remaining after
96.19completion of the park and trail improvements authorized projects and retirement or
96.20redemption of the bonds may be placed in the general fund of the city. The tax imposed
96.21under subdivision 1 may expire at an earlier time if the city so determines by ordinance.
96.22EFFECTIVE DATE.This section is effective the day after compliance by the
96.23governing body of the city of Bemidji and its chief clerical officer with Minnesota
96.24Statutes, section 645.021, subdivisions 2 and 3.

96.25    Sec. 15. CITY OF CLEARWATER; TAXES AUTHORIZED.
96.26    Subdivision 1. Sales and use tax. Notwithstanding Minnesota Statutes, section
96.27477A.016, or any other provision of law, ordinance, or city charter, pursuant to the
96.28approval of the voters on November 7, 2006, the city of Clearwater may impose by
96.29ordinance a sales and use tax of up to one-half of one percent for the purposes specified in
96.30subdivision 2. Except as otherwise provided in this section, the provisions of Minnesota
96.31Statutes, section 297A.99, govern the imposition, administration, collection, and
96.32enforcement of the tax authorized under this subdivision.
96.33    Subd. 2. Excise tax authorized. Notwithstanding Minnesota Statutes, section
96.34477A.016, or any other provision of law, ordinance, or city charter, the city of Clearwater
96.35may impose by ordinance, for the purposes specified in subdivision 3, an excise tax of up
97.1to $20 per motor vehicle, as defined by ordinance, purchased or acquired from any person
97.2engaged within the city in the business of selling motor vehicles at retail.
97.3    Subd. 3. Use of revenues. The proceeds of the tax imposed under this section shall
97.4be used to pay for the costs of acquisition, construction, improvement, and development
97.5of a pedestrian bridge, and land and buildings for a community and recreation center.
97.6    Subd. 4. Bonding authority. The city of Clearwater may issue bonds in an amount
97.7not to exceed $12,000,000 under Minnesota Statutes, chapter 475, to finance the capital
97.8expenditures and improvements authorized by the referendum under subdivision 3. An
97.9election to approve the bonds under Minnesota Statutes, section 475.59, is not required.
97.10The issuance of bonds under this subdivision is not subject to Minnesota Statutes, section
97.11275.60 or 275.61. The debt represented by the bonds must not be included in computing
97.12any debt limitations applicable to the city, and the levy of taxes required by Minnesota
97.13Statutes, section 475.61, to pay the principal or any interest on the bonds must not be
97.14subject to any levy limitation.
97.15    Subd. 5. Termination of tax. The tax authorized under subdivision 1 terminates at
97.16the earlier of (1) 20 years after the date of initial imposition of the tax, or (2) when the
97.17city council determines that sufficient funds have been raised from the tax to finance the
97.18capital and administrative costs of the improvements described in subdivision 3, plus the
97.19additional amount needed to pay the costs related to issuance of bonds under subdivision
97.204, including interest on the bonds. Any funds remaining after completion of the projects
97.21specified in subdivision 3 and retirement or redemption of the bonds in subdivision 4 may
97.22be placed in the general fund of the city. The tax imposed under subdivision 1 may expire
97.23at an earlier time if the city so determines by ordinance.
97.24EFFECTIVE DATE.This section is effective the day after compliance by the
97.25governing body of the city of Clearwater with Minnesota Statutes, section 645.021,
97.26subdivisions 2 and 3.

97.27    Sec. 16. COOK COUNTY; LODGING AND ADMISSIONS TAXES.
97.28    Subdivision 1. Lodging tax. Notwithstanding Minnesota Statutes, section
97.29477A.016, or any other provision of law, ordinance, or city charter, the Board of
97.30Commissioners of Cook County may impose, by ordinance, a tax of up to one percent on
97.31the gross receipts subject to the lodging tax under Minnesota Statutes, section 469.190.
97.32This tax is in addition to any tax imposed under Minnesota Statutes, section 469.190, and
97.33the total tax imposed under that section and this provision must not exceed four percent.
97.34    Subd. 2. Admissions and recreation tax. Notwithstanding Minnesota Statutes,
97.35section 477A.016, or any other provision of law, ordinance, or city charter, the Board of
98.1Commissioners of Cook County may impose, by ordinance, a tax of up to three percent on
98.2admissions to entertainment and recreational facilities and rental of recreation equipment.
98.3    In its ordinance, the Board of Commissioners of Cook County may provide that
98.4entities exempt from the tax imposed under Minnesota Statutes, section 297A.70, are
98.5not required to collect the taxes in subdivisions 1 and 2. The Board of Commissioners
98.6of Cook County may also create lodging districts smaller than the county in which to
98.7impose the tax.
98.8    Subd. 3. Use of taxes. The taxes imposed in subdivisions 1 and 2 must be used
98.9to fund a new Cook County Event and Visitors Bureau as established by the Board of
98.10Commissioners of Cook County. The Board of Commissioners of Cook County must
98.11annually review the budget of the Cook County Event and Visitors Bureau.
98.12    Subd. 4. Termination of taxes. The taxes authorized under subdivisions 1 and 2
98.13terminate ten years after the date of initial imposition of the taxes.
98.14    Subd. 5. Cook County Event and Visitors Bureau. (a) The Cook County Event
98.15and Visitors Bureau shall be governed by a 14-member board of directors composed of:
98.16    (1) four directors to be appointed by the Grand Marais Area Tourism Association;
98.17    (2) two directors to be appointed by the Gunflint Trail Association;
98.18    (3) seven directors to be appointed by the Lutsen-Tofte Tourism Association; and
98.19    (4) one nonvoting member appointed by Grand Portage.
98.20    (b) The Cook County Event and Visitors Bureau may adjust its membership upon a
98.21vote of approval by at least nine members.
98.22EFFECTIVE DATE.This section is effective for sales and purchases after June
98.2330, 2007.

98.24    Sec. 17. CITY OF NORTH MANKATO; TAXES AUTHORIZED.
98.25    Subdivision 1. Sales and use tax authorized. Notwithstanding Minnesota Statutes,
98.26section 477A.016, or any other provision of law, ordinance, or city charter, pursuant to
98.27the approval of the voters on November 7, 2006, the city of North Mankato may impose
98.28by ordinance a sales and use tax of one-half of one percent for the purposes specified
98.29in subdivision 2. The provisions of Minnesota Statutes, section 297A.99, govern the
98.30imposition, administration, collection, and enforcement of the taxes authorized under
98.31this subdivision.
98.32    Subd. 2. Use of revenues. Revenues received from the tax authorized by
98.33subdivision 1 must be used to pay all or part of the capital costs of the following projects:
98.34    (1) the local share of the Trunk Highway 14/County State Aid Highway 41
98.35interchange project;
99.1    (2) development of regional parks and hiking and biking trails; and
99.2    (3) lake improvement projects.
99.3    The total amount of revenues from the tax in subdivision 1 that may be used to fund
99.4these projects is $4,500,000 plus any associated bond costs.
99.5    Subd. 3. Bonds. (a) The city of North Mankato, pursuant to the approval of the
99.6voters at the November 7, 2006, referendum authorizing the imposition of the taxes in
99.7this section, may issue bonds under Minnesota Statutes, chapter 475, to pay capital and
99.8administrative expenses for the projects described in subdivision 2, in an amount that
99.9does not exceed $4,500,000. A separate election to approve the bonds under Minnesota
99.10Statutes, section 475.58, is not required.
99.11    (b) The debt represented by the bonds is not included in computing any debt
99.12limitation applicable to the city, and any levy of taxes under Minnesota Statutes, section
99.13475.61, to pay principal and interest on the bonds is not subject to any levy limitation.
99.14    Subd. 4. Termination of taxes. The tax imposed under subdivision 1 expires
99.15when the city council determines that the amount of revenues received from the taxes
99.16to pay for the projects under subdivision 2, first equals or exceeds $4,000,000 plus the
99.17additional amount needed to pay the costs related to issuance of bonds under subdivision
99.183, including interest on the bonds. Any funds remaining after completion of the projects
99.19and retirement or redemption of the bonds shall be placed in a capital facilities and
99.20equipment replacement fund of the city. The tax imposed under subdivision 1 may expire
99.21at an earlier time if the city so determines by ordinance.
99.22EFFECTIVE DATE.This section is effective the day after compliance by the
99.23governing body of the city of North Mankato with Minnesota Statutes, section 645.021,
99.24subdivision 3.

99.25    Sec. 18. MINNETONKA WATER TREATMENT FACILITY.
99.26    Capital equipment used in or incorporated into the construction of a water treatment
99.27facility owned by the city of Minnetonka is exempt from sales tax regardless of whether
99.28purchased by the owner, contractor, subcontractor, or builder. The tax must be imposed
99.29and collected as if the rate under Minnesota Statutes, section 297A.62, subdivision 1,
99.30applied and then refunded to the city of Minnetonka in the manner provided in Minnesota
99.31Statutes, section 297A.75.
99.32EFFECTIVE DATE.This section is effective for sales and purchases made before
99.33December 31, 2006.

100.1ARTICLE 6
100.2ECONOMIC DEVELOPMENT

100.3    Section 1. Minnesota Statutes 2006, section 268.19, subdivision 1, is amended to read:
100.4    Subdivision 1. Use of data. (a) Except as otherwise provided by this section, data
100.5gathered from any person pursuant to the administration of the Minnesota Unemployment
100.6Insurance Law are private data on individuals or nonpublic data not on individuals as
100.7defined in section 13.02, subdivisions 9 and 12, and may not be disclosed except pursuant
100.8to a district court order or section 13.05. A subpoena shall not be considered a district
100.9court order. These data may be disseminated to and used by the following agencies
100.10without the consent of the subject of the data:
100.11    (1) state and federal agencies specifically authorized access to the data by state
100.12or federal law;
100.13    (2) any agency of any other state or any federal agency charged with the
100.14administration of an unemployment insurance program;
100.15    (3) any agency responsible for the maintenance of a system of public employment
100.16offices for the purpose of assisting individuals in obtaining employment;
100.17    (4) human rights agencies within Minnesota that have enforcement powers;
100.18    (5) the Department of Revenue only to the extent necessary for its duties under
100.19Minnesota laws;
100.20    (6) public and private agencies responsible for administering publicly financed
100.21assistance programs for the purpose of monitoring the eligibility of the program's
100.22recipients;
100.23    (7) the Department of Labor and Industry and the Division of Insurance Fraud
100.24Prevention in the Department of Commerce on an interchangeable basis with the
100.25department for uses consistent with the administration of their duties under Minnesota law;
100.26    (8) local and state welfare agencies for monitoring the eligibility of the data subject
100.27for assistance programs, or for any employment or training program administered by those
100.28agencies, whether alone, in combination with another welfare agency, or in conjunction
100.29with the department or to monitor and evaluate the statewide Minnesota family investment
100.30program by providing data on recipients and former recipients of food stamps or food
100.31support, cash assistance under chapter 256, 256D, 256J, or 256K, child care assistance
100.32under chapter 119B, or medical programs under chapter 256B, 256D, or 256L;
100.33    (9) local and state welfare agencies for the purpose of identifying employment,
100.34wages, and other information to assist in the collection of an overpayment debt in an
100.35assistance program;
101.1    (10) local, state, and federal law enforcement agencies for the sole purpose of
101.2ascertaining the last known address and employment location of a person who is the
101.3subject of a criminal investigation;
101.4    (11) the federal Immigration and Naturalization Service shall have access to data on
101.5specific individuals and specific employers provided the specific individual or specific
101.6employer is the subject of an investigation by that agency; and
101.7    (12) the Department of Health solely for the purposes of epidemiologic
101.8investigations.; and
101.9    (13) the state auditor to the extent necessary to conduct audits of job opportunity
101.10building zones as required under section 469.3201.
101.11    (b) Data on individuals and employers that are collected, maintained, or used by the
101.12department in an investigation pursuant to section 268.182 are confidential as to data on
101.13individuals and protected nonpublic data not on individuals as defined in section 13.02,
101.14subdivisions 3 and 13
, and must not be disclosed except pursuant to statute or district
101.15court order or to a party named in a criminal proceeding, administrative or judicial, for
101.16preparation of a defense.
101.17    (c) Data gathered by the department pursuant to the administration of the Minnesota
101.18unemployment insurance program must not be made the subject or the basis for any
101.19suit in any civil proceedings, administrative or judicial, unless the action is initiated by
101.20the department.
101.21EFFECTIVE DATE.This section is effective the day following final enactment.

101.22    Sec. 2. Minnesota Statutes 2006, section 270B.15, is amended to read:
101.23270B.15 DISCLOSURE TO LEGISLATIVE AUDITOR AND STATE
101.24AUDITOR.
101.25    (a) Returns and return information must be disclosed to the legislative auditor to the
101.26extent necessary for the legislative auditor to carry out sections 3.97 to 3.979.
101.27    (b) The commissioner must disclose return information, including the report
101.28required under section 289A.12, subdivision 15, to the state auditor to the extent necessary
101.29to conduct audits of job opportunity building zones as required under section 469.3201.
101.30EFFECTIVE DATE.This section is effective the day following final enactment.

101.31    Sec. 3. Minnesota Statutes 2006, section 272.02, subdivision 64, is amended to read:
101.32    Subd. 64. Job opportunity building zone property. (a) Improvements to real
101.33property, and personal property, classified under section 273.13, subdivision 24, and
102.1located within a job opportunity building zone, designated under section 469.314, are
102.2exempt from ad valorem taxes levied under chapter 275.
102.3    (b) Improvements to real property, and tangible personal property, of an agricultural
102.4production facility located within an agricultural processing facility zone, designated
102.5under section 469.314, is exempt from ad valorem taxes levied under chapter 275.
102.6    (c) For property to qualify for exemption under paragraph (a), the occupant must be
102.7a qualified business, as defined in section 469.310.
102.8    (d) The exemption applies beginning for the first assessment year after designation
102.9of the job opportunity building zone by the commissioner of employment and economic
102.10development. The exemption applies to each assessment year that begins during the
102.11duration of the job opportunity building zone. To be exempt, the property must be
102.12occupied by July 1 of the assessment year by a qualified business that has signed the
102.13business subsidy agreement and relocation agreement, if required, by July 1 of the
102.14assessment year. This exemption does not apply to:
102.15    (1) the levy under section 475.61 or similar levy provisions under any other law to
102.16pay general obligation bonds; or
102.17    (2) a levy under section 126C.17, if the levy was approved by the voters before the
102.18designation of the job opportunity building zone.
102.19EFFECTIVE DATE.This section is effective beginning for taxes payable in 2008.

102.20    Sec. 4. Minnesota Statutes 2006, section 272.02, is amended by adding a subdivision
102.21to read:
102.22    Subd. 85. Fergus Falls historical zone. (a) Property located in the area of the
102.23campus of the former state regional treatment center in the city of Fergus Falls, including
102.24the fire buildings and associated land that were acquired by the city prior to January 1,
102.252007, is exempt from ad valorem taxes levied under chapter 275.
102.26    (b) The exemption applies for 15 calendar years on the date specified by resolution,
102.27by the governing body of the city of Fergus Falls. For the final three assessment years
102.28of the duration limit, the exemption applies to the following percentages of estimated
102.29market value of the property:
102.30    (1) for the third to the last assessment year of the duration, 75 percent;
102.31    (2) for the second to the last assessment year of the duration, 50 percent; and
102.32    (3) for the last assessment year of the duration, 25 percent.
102.33EFFECTIVE DATE.This section is effective for property taxes levied in 2007,
102.34payable in 2008, and thereafter.

103.1    Sec. 5. Minnesota Statutes 2006, section 289A.12, is amended by adding a subdivision
103.2to read:
103.3    Subd. 15. Report of job opportunity zone benefits; penalty for failure to file
103.4report. (a) By October 15 of each year, every qualified business, as defined under section
103.5469.310, subdivision 11, must file with the commissioner, on a form prescribed by the
103.6commissioner, a report listing the tax benefits under section 469.315 received by the
103.7business for the previous year.
103.8    (b) The commissioner shall send notice to each business that fails to timely submit
103.9the report required under paragraph (a). The notice shall demand that the business submit
103.10the report within 60 days. Where good cause exists, the commissioner may extend
103.11the period for submitting the report as long as a request for extension is filed by the
103.12business before the expiration of the 60-day period. The commissioner shall notify the
103.13commissioner of the Department of Employment and Economic Development and the
103.14appropriate job opportunity subzone administrator whenever notice is sent to a business
103.15under this paragraph.
103.16    (c) A business that fails to submit the report as required under paragraph (b) is no
103.17longer a qualified business under section 469.310, subdivision 11, and is subject to the
103.18repayment provisions of section 469.319.
103.19EFFECTIVE DATE.This section is effective beginning with reports required to be
103.20filed October 15, 2008.

103.21    Sec. 6. Minnesota Statutes 2006, section 290.06, is amended by adding a subdivision
103.22to read:
103.23    Subd. 34. Tax-free renaissance zone; historic rehabilitation credit. (a) A
103.24taxpayer who incurs costs that are eligible for a credit under section 47 of the Internal
103.25Revenue Code for the rehabilitation of a property in the Fergus Falls historical zone, as
103.26defined under section 272.02, subdivision 85, is allowed a credit against the tax imposed
103.27under this chapter, including the taxes under sections 290.091 and 290.0922, equal to 100
103.28percent of the credit allowed for rehabilitation of a certified historic structure under section
103.2947(a)(2) of the Internal Revenue Code, but is limited to credits generated by rehabilitation
103.30of certified historic structures that are placed in service during the taxable year.
103.31    (b) If the amount of the credit under this subdivision exceeds the tax liability under
103.32this chapter for the year in which the cost is incurred, the amount that exceeds the tax
103.33liability may be carried back to any of the three preceding taxable years or carried forward
103.34to each of the ten taxable years succeeding the taxable year in which the expense was
103.35incurred. The entire amount of the credit must be carried to the earliest taxable year to
104.1which the amount may be carried. The unused portion of the credit must be carried to
104.2the following taxable year.
104.3EFFECTIVE DATE.This section is effective for taxable years beginning after
104.4December 31, 2007.

104.5    Sec. 7. Minnesota Statutes 2006, section 469.169, is amended by adding a subdivision
104.6to read:
104.7    Subd. 18. Additional border city allocations; 2007. (a) In addition to tax
104.8reductions authorized in subdivisions 7 to 17, the commissioner shall allocate $750,000
104.9for tax reductions to border city enterprise zones in cities located on the western border
104.10of the state. The commissioner shall make allocations to zones in cities on the western
104.11border on a per capita basis. Allocations made under this subdivision may be used for
104.12tax reductions as provided in section 469.171, or for other offsets of taxes imposed on
104.13or remitted by businesses located in the enterprise zone, but only if the municipality
104.14determines that the granting of the tax reduction or offset is necessary in order to retain a
104.15business within or attract a business to the zone. The city alternatively may elect to use
104.16any portion of the allocation provided in this paragraph for tax reductions under section
104.17469.1732 or 469.1734.
104.18    (b) The commissioner shall allocate $750,000 for tax reductions under section
104.19469.1732 or 469.1734 to cities with border city enterprise zones located on the western
104.20border of the state. The commissioner shall allocate this amount among the cities on a per
104.21capita basis. The city alternatively may elect to use any portion of the allocation provided
104.22in this paragraph for tax reductions as provided in section 469.171.
104.23EFFECTIVE DATE.This section is effective the day following final enactment.

104.24    Sec. 8. Minnesota Statutes 2006, section 469.174, subdivision 10, is amended to read:
104.25    Subd. 10. Redevelopment district. (a) "Redevelopment district" means a type of
104.26tax increment financing district consisting of a project, or portions of a project, within
104.27which the authority finds by resolution that one or more of the following conditions,
104.28reasonably distributed throughout the district, exists:
104.29    (1) parcels consisting of 70 percent of the area of the district are occupied by
104.30buildings, streets, utilities, paved or gravel parking lots, or other similar structures
104.31and more than 50 percent of the buildings, not including outbuildings, are structurally
104.32substandard to a degree requiring substantial renovation or clearance;
105.1    (2) the property consists of vacant, unused, underused, inappropriately used,
105.2or infrequently used railyards, rail storage facilities, or excessive or vacated railroad
105.3rights-of-way;
105.4    (3) tank facilities, or property whose immediately previous use was for tank
105.5facilities, as defined in section 115C.02, subdivision 15, if the tank facilities:
105.6    (i) have or had a capacity of more than 1,000,000 gallons;
105.7    (ii) are located adjacent to rail facilities; and
105.8    (iii) have been removed or are unused, underused, inappropriately used, or
105.9infrequently used; or
105.10    (4) a qualifying disaster area, as defined in subdivision 10b.
105.11    (b) For purposes of this subdivision, "structurally substandard" shall mean
105.12containing defects in structural elements or a combination of deficiencies in essential
105.13utilities and facilities, light and ventilation, fire protection including adequate egress,
105.14layout and condition of interior partitions, or similar factors, which defects or deficiencies
105.15are of sufficient total significance to justify substantial renovation or clearance.
105.16    (c) A building is not structurally substandard if it is in compliance with the building
105.17code applicable to new buildings or could be modified to satisfy the building code at
105.18a cost of less than 15 percent of the cost of constructing a new structure of the same
105.19square footage and type on the site. The municipality may find that a building is not
105.20disqualified as structurally substandard under the preceding sentence on the basis of
105.21reasonably available evidence, such as the size, type, and age of the building, the average
105.22cost of plumbing, electrical, or structural repairs, or other similar reliable evidence. The
105.23municipality may not make such a determination without an interior inspection of the
105.24property, but need not have an independent, expert appraisal prepared of the cost of repair
105.25and rehabilitation of the building. An interior inspection of the property is not required,
105.26if the municipality finds that (1) the municipality or authority is unable to gain access to
105.27the property after using its best efforts to obtain permission from the party that owns or
105.28controls the property; and (2) the evidence otherwise supports a reasonable conclusion that
105.29the building is structurally substandard. Items of evidence that support such a conclusion
105.30include recent fire or police inspections, on-site property tax appraisals or housing
105.31inspections, exterior evidence of deterioration, or other similar reliable evidence. Written
105.32documentation of the findings and reasons why an interior inspection was not conducted
105.33must be made and retained under section 469.175, subdivision 3, clause (1). Failure of a
105.34building to be disqualified under the provisions of this paragraph is a necessary, but not a
105.35sufficient, condition to determining that the building is substandard.
106.1    (d) A parcel is deemed to be occupied by a structurally substandard building
106.2for purposes of the finding under paragraph (a) or by the improvements described in
106.3paragraph (e) if all of the following conditions are met:
106.4    (1) the parcel was occupied by a substandard building or met the requirements
106.5of paragraph (e), as the case may be, within three years of the filing of the request for
106.6certification of the parcel as part of the district with the county auditor;
106.7    (2) the substandard building was or the improvements described in paragraph (e)
106.8were demolished or removed by the authority or the demolition or removal was financed
106.9by the authority or was done by a developer under a development agreement with the
106.10authority;
106.11    (3) the authority found by resolution before the demolition or removal that the
106.12parcel was occupied by a structurally substandard building or met the requirements of
106.13paragraph (e) and that after demolition and clearance the authority intended to include
106.14the parcel within a district; and
106.15    (4) upon filing the request for certification of the tax capacity of the parcel as part
106.16of a district, the authority notifies the county auditor that the original tax capacity of the
106.17parcel must be adjusted as provided by section 469.177, subdivision 1, paragraph (f).
106.18    (e) For purposes of this subdivision, a parcel is not occupied by buildings, streets,
106.19utilities, paved or gravel parking lots, or other similar structures unless 15 percent of the
106.20area of the parcel contains buildings, streets, utilities, paved or gravel parking lots, or
106.21other similar structures.
106.22    (f) For districts consisting of two or more noncontiguous areas, each area must
106.23qualify as a redevelopment district under paragraph (a) to be included in the district, and
106.24the entire area of the district must satisfy paragraph (a).
106.25EFFECTIVE DATE.This section is effective for requests for certification made
106.26after June 30, 2007.

106.27    Sec. 9. Minnesota Statutes 2006, section 469.174, subdivision 10a, is amended to read:
106.28    Subd. 10a. Renewal and renovation district. (a) "Renewal and renovation district"
106.29means a type of tax increment financing district consisting of a project, or portions of a
106.30project, within which the authority finds by resolution that:
106.31    (1)(i) parcels consisting of 70 percent of the area of the district are occupied by
106.32buildings, streets, utilities, paved or gravel parking lots, or other similar structures; (ii)
106.3320 percent of the buildings are structurally substandard; and (iii) 30 percent of the other
106.34buildings require substantial renovation or clearance to remove existing conditions such
106.35as: inadequate street layout, incompatible uses or land use relationships, overcrowding of
107.1buildings on the land, excessive dwelling unit density, obsolete buildings not suitable for
107.2improvement or conversion, or other identified hazards to the health, safety, and general
107.3well-being of the community; and
107.4    (2) the conditions described in clause (1) are reasonably distributed throughout the
107.5geographic area of the district.
107.6    (b) For purposes of determining whether a building is structurally substandard,
107.7whether parcels are occupied by buildings, streets, utilities, paved or gravel parking lots,
107.8or other similar structures, or whether noncontiguous areas qualify, the provisions of
107.9subdivision 10, paragraphs (c), (e), and (b) through (f) apply.
107.10EFFECTIVE DATE.This section is effective for requests for certification made
107.11after June 30, 2007.

107.12    Sec. 10. Minnesota Statutes 2006, section 469.175, subdivision 1, is amended to read:
107.13    Subdivision 1. Tax increment financing plan. (a) A tax increment financing plan
107.14shall contain:
107.15    (1) a statement of objectives of an authority for the improvement of a project;
107.16    (2) a statement as to the development program for the project, including the property
107.17within the project, if any, that the authority intends to acquire, identified by parcel number,
107.18identifiable property name, block, or other appropriate means indicating the area in which
107.19the authority intends to acquire properties;
107.20    (3) a list of any development activities that the plan proposes to take place within
107.21the project, for which contracts have been entered into at the time of the preparation of
107.22the plan, including the names of the parties to the contract, the activity governed by the
107.23contract, the cost stated in the contract, and the expected date of completion of that activity;
107.24    (4) identification or description of the type of any other specific development
107.25reasonably expected to take place within the project, and the date when the development is
107.26likely to occur;
107.27    (5) estimates of the following:
107.28    (i) cost of the project, including administrative expenses, except that if part of the
107.29cost of the project is paid or financed with increment from the tax increment financing
107.30district, the tax increment financing plan for the district must contain an estimate of the
107.31amount of the cost of the project, including administrative expenses, that will be paid or
107.32financed with tax increments from the district;
107.33    (ii) amount of bonded indebtedness to be incurred;
107.34    (iii) sources of revenue to finance or otherwise pay public costs;
108.1    (iv) the most recent net tax capacity of taxable real property within the tax increment
108.2financing district and within any subdistrict;
108.3    (v) the estimated captured net tax capacity of the tax increment financing district
108.4at completion; and
108.5    (vi) the duration of the tax increment financing district's and any subdistrict's
108.6existence;
108.7    (6) statements of the authority's alternate estimates of the impact of tax increment
108.8financing on the net tax capacities of all taxing jurisdictions in which the tax increment
108.9financing district is located in whole or in part. For purposes of one statement, the
108.10authority shall assume that the estimated captured net tax capacity would be available to
108.11the taxing jurisdictions without creation of the district, and for purposes of the second
108.12statement, the authority shall assume that none of the estimated captured net tax capacity
108.13would be available to the taxing jurisdictions without creation of the district or subdistrict;
108.14    (7) identification and description of studies and analyses used to make the
108.15determination set forth in subdivision 3, clause (2); and
108.16    (8) identification of all parcels to be included in the district or any subdistrict.
108.17    (b) The authority may specify in the tax increment financing plan the first year in
108.18which it elects to receive increment, up to four years following the year of approval of the
108.19district. This paragraph does not apply to an economic development district.
108.20EFFECTIVE DATE.This section is effective for districts for which the request for
108.21certification is made after June 30, 2007.

108.22    Sec. 11. Minnesota Statutes 2006, section 469.175, subdivision 3, is amended to read:
108.23    Subd. 3. Municipality approval. (a) A county auditor shall not certify the original
108.24net tax capacity of a tax increment financing district until the tax increment financing plan
108.25proposed for that district has been approved by the municipality in which the district
108.26is located. If an authority that proposes to establish a tax increment financing district
108.27and the municipality are not the same, the authority shall apply to the municipality in
108.28which the district is proposed to be located and shall obtain the approval of its tax
108.29increment financing plan by the municipality before the authority may use tax increment
108.30financing. The municipality shall approve the tax increment financing plan only after a
108.31public hearing thereon after published notice in a newspaper of general circulation in the
108.32municipality at least once not less than ten days nor more than 30 days prior to the date
108.33of the hearing. The published notice must include a map of the area of the district from
108.34which increments may be collected and, if the project area includes additional area, a map
108.35of the project area in which the increments may be expended. The hearing may be held
109.1before or after the approval or creation of the project or it may be held in conjunction with
109.2a hearing to approve the project.
109.3    (b) Before or at the time of approval of the tax increment financing plan, the
109.4municipality shall make the following findings, and shall set forth in writing the reasons
109.5and supporting facts for each determination:
109.6    (1) that the proposed tax increment financing district is a redevelopment district, a
109.7renewal or renovation district, a housing district, a soils condition district, or an economic
109.8development district; if the proposed district is a redevelopment district or a renewal or
109.9renovation district, the reasons and supporting facts for the determination that the district
109.10meets the criteria of section 469.174, subdivision 10, paragraph (a), clauses (1) and (2), or
109.11subdivision 10a, must be documented in writing and retained and made available to the
109.12public by the authority until the district has been terminated;
109.13    (2) that, in the opinion of the municipality:
109.14    (i) the proposed development or redevelopment would not reasonably be expected to
109.15occur solely through private investment within the reasonably foreseeable future; and
109.16    (ii) the increased market value of the site that could reasonably be expected to
109.17occur without the use of tax increment financing would be less than the increase in the
109.18market value estimated to result from the proposed development after subtracting the
109.19present value of the projected tax increments for the maximum duration of the district
109.20permitted by the plan. The requirements of this item do not apply if the district is a
109.21qualified housing district;
109.22    (3) that the tax increment financing plan conforms to the general plan for the
109.23development or redevelopment of the municipality as a whole;
109.24    (4) that the tax increment financing plan will afford maximum opportunity,
109.25consistent with the sound needs of the municipality as a whole, for the development or
109.26redevelopment of the project by private enterprise;
109.27    (5) that the municipality elects the method of tax increment computation set forth in
109.28section 469.177, subdivision 3, paragraph (b), if applicable.
109.29    (c) When the municipality and the authority are not the same, the municipality shall
109.30approve or disapprove the tax increment financing plan within 60 days of submission by
109.31the authority. When the municipality and the authority are not the same, the municipality
109.32may not amend or modify a tax increment financing plan except as proposed by the
109.33authority pursuant to subdivision 4. Once approved, the determination of the authority
109.34to undertake the project through the use of tax increment financing and the resolution of
109.35the governing body shall be conclusive of the findings therein and of the public need for
109.36the financing.
110.1    (d) For a district that is subject to the requirements of paragraph (b), clause (2),
110.2item (ii), the municipality's statement of reasons and supporting facts must include all of
110.3the following:
110.4    (1) an estimate of the amount by which the market value of the site will increase
110.5without the use of tax increment financing;
110.6    (2) an estimate of the increase in the market value that will result from the
110.7development or redevelopment to be assisted with tax increment financing; and
110.8    (3) the present value of the projected tax increments for the maximum duration of
110.9the district permitted by the tax increment financing plan.
110.10    (e) For purposes of this subdivision, "site" means the parcels on which the
110.11development or redevelopment to be assisted with tax increment financing will be located.
110.12EFFECTIVE DATE.This section is effective the day following final enactment
110.13and applies to all districts, regardless of when the request for certification was made.

110.14    Sec. 12. Minnesota Statutes 2006, section 469.176, subdivision 1, is amended to read:
110.15    Subdivision 1. Duration of tax increment financing districts. (a) Subject to the
110.16limitations contained in subdivisions 1a to 1f, any tax increment financing district as to
110.17which bonds are outstanding, payment for which the tax increment and other revenues
110.18have been pledged, shall remain in existence at least as long as the bonds continue to be
110.19outstanding. The municipality may, at the time of approval of the initial tax increment
110.20financing plan, provide for one or both of the following:
110.21    (1) a shorter maximum duration limit than specified in subdivisions 1a to 1f.;
110.22    (2) an election as provided under section 469.175, subdivision 1, paragraph (b).
110.23The specified limit applies in place of the otherwise applicable limit, unless the authority
110.24modifies the plan following the procedures under section 469.175, subdivision 4,
110.25paragraph (b).
110.26    (b) The tax increment pledged to the payment of the bonds and interest thereon may
110.27be discharged and the tax increment financing district may be terminated if sufficient funds
110.28have been irrevocably deposited in the debt service fund or other escrow account held in
110.29trust for all outstanding bonds to provide for the payment of the bonds at maturity or date
110.30of redemption and interest thereon to the maturity or redemption date.
110.31    (c) For bonds issued pursuant to section 469.178, subdivisions 2 and 3, the full
110.32faith and credit and any taxing powers of the municipality or authority are pledged to the
110.33payment of the bonds until the principal of and interest on the bonds has been paid in full.
111.1EFFECTIVE DATE.This section is effective for districts for which the request for
111.2certification is made after June 30, 2007.

111.3    Sec. 13. Minnesota Statutes 2006, section 469.176, subdivision 2, is amended to read:
111.4    Subd. 2. Excess increments. (a) The authority shall annually determine the amount
111.5of excess increments for a district, if any. This determination must be based on the tax
111.6increment financing plan in effect on December 31 of the year and the increments and
111.7other revenues received as of December 31 of the year. The authority must spend or return
111.8the excess increments under paragraph (c) within nine months after the end of the year.
111.9    (b) For purposes of this subdivision, "excess increments" equals the excess of:
111.10    (1) total increments collected from the district since its certification, reduced by any
111.11excess increments paid under paragraph (c), clause (4), for a prior year, over
111.12    (2) the total costs authorized by the tax increment financing plan to be paid with
111.13increments from the district, reduced, but not below zero, by the sum of:
111.14    (i) the amounts of those authorized costs that have been paid from sources other than
111.15tax increments from the district;
111.16    (ii) revenues, other than tax increments from the district, that are dedicated for or
111.17otherwise required to be used to pay those authorized costs and that the authority has
111.18received and that are not included in item (i);
111.19    (iii) the amount of principal and interest obligations due on outstanding bonds after
111.20December 31 of the year and not prepaid under paragraph (c) in a prior year; and
111.21    (iv) increased by the sum of the transfers of increments made under section 469.1763,
111.22subdivision 6
, to reduce deficits in other districts made by December 31 of the year.
111.23    (c) The authority shall use excess increment only to do one or more of the following:
111.24    (1) prepay any outstanding bonds;
111.25    (2) discharge the pledge of tax increment for any outstanding bonds;
111.26    (3) pay into an escrow account dedicated to the payment of any outstanding bonds; or
111.27    (4) return the excess amount to the county auditor who shall distribute the excess
111.28amount to the city or town, county, and school district in which the tax increment financing
111.29district is located in direct proportion to their respective local tax rates.
111.30    (d) For purposes of a district for which the request for certification was made prior to
111.31August 1, 1979, excess increments equal the amount of increments on hand on December
111.3231, less the principal and interest obligations due on outstanding bonds or advances,
111.33qualifying under subdivision 1c, clauses (1), (2), (4), and (5), after December 31 of the
111.34year and not prepaid under paragraph (c).
112.1    (e) The county auditor must report to the commissioner of education the amount of
112.2any excess tax increment distributed to a school district within 30 days of the distribution.
112.3    (f) For purposes of this subdivision, "outstanding bonds" means bonds which are
112.4secured by increments from the district.
112.5    (g) The state auditor may exempt an authority from reporting the amounts calculated
112.6under this subdivision for a calendar year, if the authority certifies to the auditor in
112.7its report that the total amount authorized by the tax increment plan to be paid with
112.8increments from the district exceeds the sum of the total increments collected for the
112.9district for all years by 20 percent.
112.10EFFECTIVE DATE.This section is effective the day following final enactment and
112.11applies to all districts regardless of when the request for certification was made, including
112.12districts for which the request for certification was made on or before August 1, 1979.

112.13    Sec. 14. Minnesota Statutes 2006, section 469.176, subdivision 7, is amended to read:
112.14    Subd. 7. Parcels not includable in districts. (a) The authority may request
112.15inclusion in a tax increment financing district and the county auditor may certify the
112.16original tax capacity of a parcel or a part of a parcel that qualified under the provisions of
112.17section 273.111 or 273.112 or chapter 473H for taxes payable in any of the five calendar
112.18years before the filing of the request for certification only for:
112.19    (1) a district in which 85 percent or more of the planned buildings and facilities
112.20(determined on the basis of square footage) are a qualified manufacturing facility or a
112.21qualified distribution facility or a combination of both; or
112.22    (2) a qualified housing district.
112.23    (b)(1) A distribution facility means buildings and other improvements to real
112.24property that are used to conduct activities in at least each of the following categories:
112.25    (i) to store or warehouse tangible personal property;
112.26    (ii) to take orders for shipment, mailing, or delivery;
112.27    (iii) to prepare personal property for shipment, mailing, or delivery; and
112.28    (iv) to ship, mail, or deliver property.
112.29    (2) A manufacturing facility includes space used for manufacturing or producing
112.30tangible personal property, including processing resulting in the change in condition of the
112.31property, and space necessary for and related to the manufacturing activities.
112.32    (3) To be a qualified facility, the owner or operator of a manufacturing or distribution
112.33facility must agree to pay and pay 90 percent or more of the employees of the facility at
112.34a rate equal to or greater than 160 percent of the federal minimum wage for individuals
112.35over the age of 20.
113.1EFFECTIVE DATE.This section is effective the day following final enactment
113.2and applies to all districts regardless of when the request for certification was made.

113.3    Sec. 15. Minnesota Statutes 2006, section 469.176, subdivision 4l, is amended to read:
113.4    Subd. 4l. Prohibited facilities. (a) No tax increment from any district may be
113.5used for:
113.6    (1) a commons area used as a public park; or
113.7    (2) a facility used for social, recreational, or conference purposes.
113.8    (b) This subdivision does not apply to a privately owned facility for conference
113.9purposes or a parking structure, whether it is public or privately owned or whether it is
113.10ancillary to a use listed in paragraph (a).
113.11EFFECTIVE DATE.This section confirms the original intent of the legislature
113.12in enacting Minnesota Statutes, section 469.176, subdivision 4l, and is effective the day
113.13following final enactment and applies to any expenditure subject to Minnesota Statutes,
113.14section 469.176, subdivision 4l.

113.15    Sec. 16. Minnesota Statutes 2006, section 469.1761, subdivision 1, is amended to read:
113.16    Subdivision 1. Requirement imposed. (a) In order for a tax increment financing
113.17district to qualify as a housing district:
113.18    (1) the income limitations provided in this section must be satisfied; and
113.19    (2) no more than 20 percent of the square footage of buildings that receive assistance
113.20from tax increments may consist of commercial, retail, or other nonresidential uses.
113.21    (b) The requirements imposed by this section apply to property receiving assistance
113.22financed with tax increments, including interest reduction, land transfers at less than the
113.23authority's cost of acquisition, utility service or connections, roads, parking facilities, or
113.24other subsidies. The provisions of this section do not apply to districts located in a targeted
113.25area as defined in section 462C.02, subdivision 9, clause (e).
113.26    (c) For purposes of the requirements of paragraph (a), the authority may elect to treat
113.27an addition to an existing structure as a separate building if:
113.28    (1) construction of the addition begins more than three years after construction of
113.29the existing structure was completed; and
113.30    (2) for an addition that does not meet the requirements of paragraph (a), clause (2), if
113.31it is treated as a separate building, the addition was not contemplated by the tax increment
113.32financing plan which includes the existing structure.
114.1EFFECTIVE DATE.This section is effective for expenditures of tax increment
114.2authorized and made after the day following final enactment, regardless of when the
114.3request for certification of the district was made.

114.4    Sec. 17. Minnesota Statutes 2006, section 469.1763, subdivision 2, is amended to read:
114.5    Subd. 2. Expenditures outside district. (a) For each tax increment financing
114.6district, an amount equal to at least 75 percent of the total revenue derived from tax
114.7increments paid by properties in the district must be expended on activities in the district
114.8or to pay bonds, to the extent that the proceeds of the bonds were used to finance activities
114.9in the district or to pay, or secure payment of, debt service on credit enhanced bonds.
114.10For districts, other than redevelopment districts for which the request for certification
114.11was made after June 30, 1995, the in-district percentage for purposes of the preceding
114.12sentence is 80 percent. Not more than 25 percent of the total revenue derived from tax
114.13increments paid by properties in the district may be expended, through a development fund
114.14or otherwise, on activities outside of the district but within the defined geographic area of
114.15the project except to pay, or secure payment of, debt service on credit enhanced bonds.
114.16For districts, other than redevelopment districts for which the request for certification was
114.17made after June 30, 1995, the pooling percentage for purposes of the preceding sentence is
114.1820 percent. The revenue derived from tax increments for the district that are expended on
114.19costs under section 469.176, subdivision 4h, paragraph (b), may be deducted first before
114.20calculating the percentages that must be expended within and without the district.
114.21    (b) In the case of a housing district, a housing project, as defined in section 469.174,
114.22subdivision 11
, is an activity in the district.
114.23    (c) All administrative expenses are for activities outside of the district, except that
114.24if the only expenses for activities outside of the district under this subdivision are for
114.25the purposes described in paragraph (d), administrative expenses will be considered as
114.26expenditures for activities in the district.
114.27    (d) The authority may elect, in the tax increment financing plan for the district,
114.28to increase by up to ten percentage points the permitted amount of expenditures for
114.29activities located outside the geographic area of the district under paragraph (a). As
114.30permitted by section 469.176, subdivision 4k, the expenditures, including the permitted
114.31expenditures under paragraph (a), need not be made within the geographic area of the
114.32project. Expenditures that meet the requirements of this paragraph are legally permitted
114.33expenditures of the district, notwithstanding section 469.176, subdivisions 4b, 4c, and 4j.
114.34To qualify for the increase under this paragraph, the expenditures must:
115.1    (1) be used exclusively to assist housing that meets the requirement for a qualified
115.2low-income building, as that term is used in section 42 of the Internal Revenue Code;
115.3    (2) not exceed the qualified basis of the housing, as defined under section 42(c) of
115.4the Internal Revenue Code, less the amount of any credit allowed under section 42 of
115.5the Internal Revenue Code; and
115.6    (3) be used to:
115.7    (i) acquire and prepare the site of the housing;
115.8    (ii) acquire, construct, or rehabilitate the housing; or
115.9    (iii) make public improvements directly related to the housing.
115.10    (e) For a district created within a biotechnology and health sciences industry zone
115.11as defined in section 469.330, subdivision 6, or for an existing district located within
115.12such a zone, tax increment derived from such a district may be expended outside of the
115.13district but within the zone only for expenditures required for the construction of public
115.14infrastructure necessary to support the activities of the zone, land acquisition, and other
115.15redevelopment costs as defined in section 469.176, subdivision 4j. Public infrastructure
115.16These expenditures are considered as expenditures for activities within the district.
115.17EFFECTIVE DATE.This section is effective for all districts located in bioscience
115.18zones, regardless of when the request for certification was made.

115.19    Sec. 18. Minnesota Statutes 2006, section 469.177, subdivision 1, is amended to read:
115.20    Subdivision 1. Original net tax capacity. (a) Upon or after adoption of a tax
115.21increment financing plan, the auditor of any county in which the district is situated shall,
115.22upon request of the authority, certify the original net tax capacity of the tax increment
115.23financing district and that portion of the district overlying any subdistrict as described in
115.24the tax increment financing plan and shall certify in each year thereafter the amount by
115.25which the original net tax capacity has increased or decreased as a result of a change in tax
115.26exempt status of property within the district and any subdistrict, reduction or enlargement
115.27of the district or changes pursuant to subdivision 4. The auditor shall certify the amount
115.28within 30 days after receipt of the request and sufficient information to identify the parcels
115.29included in the district. The certification relates to the taxes payable year as provided in
115.30subdivision 6.
115.31    (b) If the classification under section 273.13 of property located in a district changes
115.32to a classification that has a different assessment ratio, the original net tax capacity of that
115.33property must be redetermined at the time when its use is changed as if the property had
115.34originally been classified in the same class in which it is classified after its use is changed.
116.1    (c) The amount to be added to the original net tax capacity of the district as a result
116.2of previously tax exempt real property within the district becoming taxable equals the net
116.3tax capacity of the real property as most recently assessed pursuant to section 273.18 or, if
116.4that assessment was made more than one year prior to the date of title transfer rendering
116.5the property taxable, the net tax capacity assessed by the assessor at the time of the
116.6transfer. If improvements are made to tax exempt property after the municipality approves
116.7the district and before the parcel becomes taxable, the assessor shall, at the request of
116.8the authority, separately assess the estimated market value of the improvements. If the
116.9property becomes taxable, the county auditor shall add to original net tax capacity, the net
116.10tax capacity of the parcel, excluding the separately assessed improvements. If substantial
116.11taxable improvements were made to a parcel after certification of the district and if the
116.12property later becomes tax exempt, in whole or part, as a result of the authority acquiring
116.13the property through foreclosure or exercise of remedies under a lease or other revenue
116.14agreement or as a result of tax forfeiture, the amount to be added to the original net tax
116.15capacity of the district as a result of the property again becoming taxable is the amount
116.16of the parcel's value that was included in original net tax capacity when the parcel was
116.17first certified. The amount to be added to the original net tax capacity of the district as a
116.18result of enlargements equals the net tax capacity of the added real property as most
116.19recently certified by the commissioner of revenue as of the date of modification of the tax
116.20increment financing plan pursuant to section 469.175, subdivision 4.
116.21    (d) If the net tax capacity of a property increases because the property no longer
116.22qualifies under the Minnesota Agricultural Property Tax Law, section 273.111; the
116.23Minnesota Open Space Property Tax Law, section 273.112; or the Metropolitan
116.24Agricultural Preserves Act, chapter 473H, or because platted, unimproved property is
116.25improved or market value is increased after approval of the plat under section 273.11,
116.26subdivision 14
, 14a, or 14b, the increase in net tax capacity must be added to the original
116.27net tax capacity.
116.28    (e) The amount to be subtracted from the original net tax capacity of the district
116.29as a result of previously taxable real property within the district becoming tax exempt,
116.30or a reduction in the geographic area of the district, shall be the amount of original net
116.31tax capacity initially attributed to the property becoming tax exempt or being removed
116.32from the district. If the net tax capacity of property located within the tax increment
116.33financing district is reduced by reason of a court-ordered abatement, stipulation agreement,
116.34voluntary abatement made by the assessor or auditor or by order of the commissioner of
116.35revenue, the reduction shall be applied to the original net tax capacity of the district when
116.36the property upon which the abatement is made has not been improved since the date of
117.1certification of the district and to the captured net tax capacity of the district in each year
117.2thereafter when the abatement relates to improvements made after the date of certification.
117.3The county auditor may specify reasonable form and content of the request for certification
117.4of the authority and any modification thereof pursuant to section 469.175, subdivision 4.
117.5    (f) If a parcel of property contained a substandard building or improvements
117.6described in section 469.174, subdivision 10, paragraph (e), that was were demolished
117.7or removed and if the authority elects to treat the parcel as occupied by a substandard
117.8building under section 469.174, subdivision 10, paragraph (b), or by improvements under
117.9section 469.174, subdivision 10, paragraph (e), the auditor shall certify the original net
117.10tax capacity of the parcel using the greater of (1) the current net tax capacity of the
117.11parcel, or (2) the estimated market value of the parcel for the year in which the building
117.12was or other improvements were demolished or removed, but applying the class rates
117.13for the current year.
117.14    (g) For a redevelopment district qualifying under section 469.174, subdivision 10,
117.15paragraph (a), clause (4), as a qualified disaster area, the auditor shall certify the value of
117.16the land as the original tax capacity for any parcel in the district that contains a building
117.17that suffered substantial damage as a result of the disaster or emergency.
117.18EFFECTIVE DATE.This section is effective for requests for certification made
117.19after June 30, 2007.

117.20    Sec. 19. Minnesota Statutes 2006, section 469.178, subdivision 7, is amended to read:
117.21    Subd. 7. Interfund loans. The authority or municipality may advance or loan
117.22money to finance expenditures under section 469.176, subdivision 4, from its general
117.23fund or any other fund under which it has legal authority to do so. The loan or advance
117.24must be authorized, by resolution of the governing body or of the authority, whichever
117.25has jurisdiction over the fund from which the advance or loan is made, before money
117.26is transferred, advanced, or spent, whichever is earliest. The resolution may generally
117.27grant to the authority the power to make interfund loans under one or more tax increment
117.28financing plans or for one or more districts. The terms and conditions for repayment of the
117.29loan must be provided in writing and include, at a minimum, the principal amount, the
117.30interest rate, and maximum term. The maximum rate of interest permitted to be charged
117.31is limited to the greater of the rates specified under section 270C.40 or 549.09 as of the
117.32date the loan or advance is made, unless the written agreement states that the maximum
117.33interest rate will fluctuate as the interest rates specified under section 270C.40 or 549.09
117.34are from time to time adjusted.
118.1EFFECTIVE DATE.This section is effective the day following final enactment
118.2and applies to all districts subject to Minnesota Statutes, section 469.178, subdivision 7,
118.3regardless of when the request for certification was made.

118.4    Sec. 20. Minnesota Statutes 2006, section 469.1791, subdivision 3, is amended to read:
118.5    Subd. 3. Preconditions to establish district. (a) A city may establish a special
118.6taxing district within a tax increment financing district under this section only if the
118.7conditions under paragraphs (b) and (c) are met or if the city elects to exercise the
118.8authority under paragraph (d).
118.9    (b) The city has determined that:
118.10    (1) total tax increments from the district, including unspent increments from
118.11previous years and increments transferred under paragraph (c), will be insufficient to pay
118.12the amounts due in a year on preexisting obligations; and
118.13    (2) this insufficiency of increments resulted from the reduction in property tax class
118.14rates enacted in the 1997 and 1998 legislative sessions.
118.15    (c) The city has agreed to transfer any available increments from other tax increment
118.16financing districts in the city to pay the preexisting obligations of the district under section
118.17469.1763, subdivision 6 . This requirement does not apply to any available increments of a
118.18qualified housing district.
118.19    (d) If a tax increment financing district does not qualify under paragraphs (b) and
118.20(c), the governing body may elect to establish a special taxing district under this section.
118.21If the city elects to exercise this authority, increments from the tax increment financing
118.22district and the proceeds of the tax imposed under this section may only be used to pay
118.23preexisting obligations and reasonable administrative expenses of the authority for the tax
118.24increment financing district. The tax increment financing district must be decertified when
118.25all preexisting obligations have been paid.
118.26EFFECTIVE DATE.This section is effective the day following final enactment
118.27and applies to districts regardless of when the request for certification was made.

118.28    Sec. 21. Minnesota Statutes 2006, section 469.312, is amended by adding a subdivision
118.29to read:
118.30    Subd. 6. Restrictions on relocations. (a) If a business relocates or intends to
118.31relocate under a proposed project more than 25 full-time equivalent jobs from a location
118.32in Minnesota into a job opportunity building zone, the business must notify the local
118.33government unit, the commissioner of employment and economic development, and the
118.34city and the county governments from which the jobs are being or would be relocated.
119.1A city or county that objects to the relocation of jobs must file a copy of the resolution
119.2with the commissioner of employment and economic development and the local unit
119.3of government.
119.4    (b) If the governing body of the city or county from which the jobs are being
119.5relocated adopts a qualified resolution objecting to the relocation within 60 days after its
119.6receipt of the notice, the following rules apply until the requirements of paragraph (c) are
119.7satisfied:
119.8    (1) if the business has not entered into a business subsidy agreement, the local unit
119.9of government may not enter into a business subsidy agreement with the business; or
119.10    (2) if the local unit of government has entered into a business subsidy agreement
119.11with the business, the business ceases to be a qualified business, effective for the current
119.12taxable year, the current assessment year, and for taxable purchases made after the first
119.13day of the month beginning after the filing of the objecting resolution.
119.14    (c) To be a qualified resolution for purposes of this subdivision, the resolution must
119.15identify one or more sites in the city or county that could serve as an appropriate site for
119.16the facility proposed by the business. To satisfy this requirement a site must:
119.17    (1) be of adequate size;
119.18    (2) have appropriate transportation access, given the nature of the business;
119.19    (3) be served by adequate public infrastructure and public utilities or the
119.20governmental unit will provide reasonably necessary public infrastructure and public
119.21utilities for the project in a timely manner; and
119.22    (4) be under the ownership or control of either the governmental unit or the business
119.23or be available for sale.
119.24    (d) When each city and county that objected to the relocation rescinds its objection
119.25by resolution, the provisions of paragraph (b) no longer apply to the business.
119.26EFFECTIVE DATE.This section is effective the day following final enactment
119.27and applies to business subsidy agreements entered into after that date.

119.28    Sec. 22. Minnesota Statutes 2006, section 469.3201, is amended to read:
119.29469.3201 JOBZ EXPENDITURE LIMITATIONS; AUDITS STATE
119.30AUDITOR; AUDITS OF JOB OPPORTUNITY BUILDING ZONES AND
119.31BUSINESS SUBSIDY AGREEMENTS.
119.32    The Tax Increment Financing, Investment and Finance Division of the Office of the
119.33State Auditor must annually audit the creation and operation of all job opportunity building
119.34zones and business subsidy agreements entered into under Minnesota Statutes, sections
120.1469.310 to 469.320. To the extent necessary to perform this audit, the state auditor may
120.2request from the commissioner of revenue tax return information of taxpayers who are
120.3eligible to receive tax benefits authorized under section 469.315. To the extent necessary
120.4to perform this audit, the state auditor may request from the commissioner of employment
120.5and economic development wage detail report information required under section 268.044
120.6of taxpayers eligible to receive tax benefits authorized under section 469.315.
120.7EFFECTIVE DATE.This section is effective the day following final enactment.

120.8    Sec. 23. Laws 1994, chapter 587, article 9, section 14, subdivision 1, is amended to
120.9read:
120.10    Subdivision 1. Establishment. The city of Brooklyn Center may establish an
120.11a redevelopment tax increment financing district in which 15 percent of the revenues
120.12generated from tax increment in any year is deposited in the housing and environmental
120.13remediation development account of the authority and expended according to the tax
120.14increment financing plan.
120.15EFFECTIVE DATE.This section is effective the day following final enactment.

120.16    Sec. 24. Laws 1994, chapter 587, article 9, section 14, subdivision 2, is amended to
120.17read:
120.18    Subd. 2. Eligible activities. The authority must identify in the plan the housing
120.19activities that will be assisted by the housing and environmental remediation development
120.20account. Housing activities may include rehabilitation, acquisition, construction,
120.21demolition, and financing of new or existing single family or multifamily housing.
120.22Housing and environmental remediation activities listed in the plan need not be located
120.23within the district or project area but must be activities that meet the income requirements
120.24of a qualified housing district under Minnesota Statutes, section 273.1399 or 469.1761,
120.25subdivision 2
.
120.26EFFECTIVE DATE.This section is effective the day following final enactment.

120.27    Sec. 25. Laws 1994, chapter 587, article 9, section 14, subdivision 3, is amended to
120.28read:
120.29    Subd. 3. Housing account. Tax increment to be expended for housing and
120.30environmental remediation activities under this section must be segregated by the
120.31authority into a special account on its official books and records. The account may also
120.32receive funds from other public and private sources.
121.1EFFECTIVE DATE.This section is effective the day following final enactment.

121.2    Sec. 26. Laws 1995, chapter 264, article 5, section 44, subdivision 4, as amended by
121.3Laws 1996, chapter 471, article 7, section 21, and Laws 1997, chapter 231, article 10,
121.4section 12, is amended to read:
121.5    Subd. 4. Authority. For housing replacement projects in the city of Crystal,
121.6"authority" means the Crystal economic development authority. For housing replacement
121.7projects in the city of Fridley, "authority" means the housing and redevelopment authority
121.8in and for the city of Fridley or a successor in interest. For housing replacement
121.9projects in the city of Minneapolis, "authority" means the Minneapolis community
121.10development agency or its successors and assigns. For housing replacement projects
121.11in the city of St. Paul, "authority" means the St. Paul housing and redevelopment
121.12authority. For housing replacement projects in the city of Duluth, "authority" means the
121.13Duluth economic development authority. For housing replacement projects in the city of
121.14Richfield, "authority" is the authority as defined in Minnesota Statutes, section 469.174,
121.15subdivision 2
, that is designated by the governing body of the city of Richfield. For
121.16housing replacement projects in the city of Columbia Heights, "authority" is the authority
121.17as defined in Minnesota Statutes, section 469.174, subdivision 2, that is designated by the
121.18governing body of the city of Columbia Heights.
121.19EFFECTIVE DATE.This section is effective the day following final enactment
121.20and upon compliance by the governing body of the city of Minneapolis with Minnesota
121.21Statutes, section 645.021, subdivision 3.

121.22    Sec. 27. Laws 1995, chapter 264, article 5, section 45, subdivision 1, as amended by
121.23Laws 1996, chapter 471, article 7, section 22, and Laws 1997, chapter 231, article 10,
121.24section 13, and Laws 2002, chapter 377, article 7, section 6, is amended to read:
121.25    Subdivision 1. Creation of projects. (a) An authority may create a housing
121.26replacement project under sections 44 to 47, as provided in this section.
121.27    (b) For the cities of Crystal, Fridley, Richfield, and Columbia Heights, the authority
121.28may designate up to 50 parcels in the city to be included in a housing replacement
121.29district. No more than ten parcels may be included in year one of the district, with up
121.30to ten additional parcels added to the district in each of the following nine years. For
121.31the cities of Minneapolis, St. Paul, and Duluth, each authority may designate not more
121.32than 200 parcels in the city to be included in a housing replacement district over the life
121.33of the district. For the city of Minneapolis, the authority may designate not more than
121.34400 parcels in the city to be included in a housing replacement district over the life of
122.1the district. The only parcels that may be included in a district are (1) vacant sites, (2)
122.2parcels containing vacant houses, or (3) parcels containing houses that are structurally
122.3substandard, as defined in Minnesota Statutes, section 469.174, subdivision 10.
122.4    (c) The city in which the authority is located must pay at least 25 percent of the
122.5housing replacement project costs from its general fund, a property tax levy, or other
122.6unrestricted money, not including tax increments.
122.7    (d) The housing replacement district plan must have as its sole object the acquisition
122.8of parcels for the purpose of preparing the site to be sold for market rate housing. As
122.9used in this section, "market rate housing" means housing that has a market value that
122.10does not exceed 150 percent of the average market value of single-family housing in that
122.11municipality.
122.12EFFECTIVE DATE.This section is effective the day following final enactment
122.13and upon compliance by the governing body of the city of Minneapolis with Minnesota
122.14Statutes, section 645.021, subdivision 3.

122.15    Sec. 28. Laws 2005, First Special Session chapter 3, article 10, section 23, is amended
122.16to read:
122.17    Sec. 23. GRANTS TO QUALIFYING BUSINESSES.
122.18    $750,000 is appropriated in fiscal year 2006 from the general fund to the
122.19commissioner of employment and economic development to be distributed to the
122.20foreign trade zone authority to provide grants to qualified businesses as determined
122.21by the authority, subject to Minnesota Statutes, sections 116J.993 to 116J.995, to
122.22provide incentives for the businesses to locate their operations in an international
122.23economic development zone. Of this appropriation, up to $250,000 may be used by the
122.24commissioner for a study to determine the economic viability of business plans for
122.25international economic development zones. If the money is not distributed during fiscal
122.26year 2006, it remains available for distribution under this section during fiscal year 2007.
122.27EFFECTIVE DATE.This section is effective the day following final enactment.

122.28    Sec. 29. BURNSVILLE; NORTHWEST QUADRANT TAX INCREMENT
122.29FINANCING.
122.30    Subdivision 1. Definitions. (a) For the purposes of this section, the words and
122.31phrases defined have the meanings given them in this subdivision.
122.32    (b) "City" means the city of Burnsville.
123.1    (c) "Project area" means the area in the city bounded on the south, southeast, and
123.2southwest by the southerly right-of-way line of Minnesota Trunk Highway 13; on the east
123.3by the easterly right-of-way line of Interstate Highway I-35W; on the north and northwest
123.4by the Minnesota River; and on the west by the westerly corporate limits of the city,
123.5together with a single parcel to the east of said Interstate Highway I-35W described as
123.6the North 1370 feet of the West 1075 feet of the NW Quarter of Section 34 Township 27
123.7Range 24 in the city of Burnsville, Dakota County, except the North 50 feet thereof;
123.8provided that the project area includes the rights-of-way for all present and future highway
123.9interchanges abutting the area described in this paragraph.
123.10    (d) "Soil deficiency district" means a type of tax increment financing district
123.11consisting of a portion of the project area in which the city finds by resolution that the
123.12following conditions exist:
123.13    (1) unusual terrain or soil deficiencies for 80 percent of the acreage in the district
123.14require substantial filling, grading, or other physical preparation for use; and
123.15    (2) the estimated cost of the physical preparation under clause (1), but excluding
123.16costs directly related to roads as defined in Minnesota Statutes, section 160.01, and
123.17local improvements as described in Minnesota Statutes, sections 429.021, subdivision 1,
123.18clauses (1) to (7), (11), and (12), and 430.01, exceeds the fair market value of the land
123.19before completion of the preparation.
123.20    Subd. 2. Special rules. (a) If the city elects, upon the adoption of the tax increment
123.21financing plan for a district, the rules under this section apply to a redevelopment district,
123.22renewal and renovation district, soil condition district, or a soil deficiency district
123.23established by the city or a development authority of the city in the project area.
123.24    (b) Prior to or upon the adoption of the first tax increment plan subject to the special
123.25rules under this subdivision, the city must find by resolution that parcels consisting of at
123.26least 80 percent of the acreage of the project area (excluding street and railroad right of
123.27way) are characterized by one or more of the following conditions:
123.28    (1) peat or other soils with geotechnical deficiencies that impair development of
123.29residential or commercial buildings or infrastructure;
123.30    (2) soils or terrain that requires substantial filling in order to permit the development
123.31of commercial or residential buildings or infrastructure;
123.32    (3) landfills, dumps, or similar deposits of municipal or private waste;
123.33    (4) quarries or similar resource extraction sites;
123.34    (5) floodway; and
123.35    (6) substandard buildings within the meaning of Minnesota Statutes, section
123.36469.174, subdivision 10.
124.1    (c) For the purposes of paragraph (b), clauses (1) through (5), a parcel is deemed to
124.2be characterized by the relevant condition if at least 70 percent of the area of the parcel
124.3contains the relevant condition. For the purposes of paragraph (b), clause (6), a parcel is
124.4deemed to be characterized by substandard buildings if the buildings occupy at least 30
124.5percent of the area of the parcel.
124.6    (d) The five-year rule under Minnesota Statutes, section 469.1763, subdivision
124.73, is extended to ten years for any district, and section 469.1763, subdivision 4, does
124.8not apply to any district.
124.9    (e) Notwithstanding anything to the contrary in section 469.1763, subdivision 2,
124.10paragraph (a), not more than 80 percent of the total revenue derived from tax increments
124.11paid by properties in any district (measured over the life of the district) may be expended
124.12on activities outside the district but within the project area.
124.13    (f) For a soil deficiency district:
124.14    (1) increments may be collected through 20 years after the receipt by the authority of
124.15the first increment from the district; and
124.16    (2) except as otherwise provided in this subdivision, increments may be used only to:
124.17    (i) acquire parcels on which the improvements described in item (ii) will occur;
124.18    (ii) pay for the cost of correcting the unusual terrain or soil deficiencies and the
124.19additional cost of installing public improvements directly caused by the deficiencies; and
124.20    (iii) pay for the administrative expenses of the authority allocable to the district.
124.21    (g) Increments spent for any infrastructure costs, whether inside a district or outside
124.22a district but within the project area, are deemed to satisfy the requirements of paragraph
124.23(f) and Minnesota Statutes, section 469.176, subdivisions 4b and 4j.
124.24    (h) Increments from any district may not be used to pay the costs of landfill closure or
124.25public infrastructure located on the following parcels within the plat known as Burnsville
124.26Amphitheater: Lot 1, Block 1; Lots 1 and 2, Block 2; and Outlots A, B, C and D.
124.27    (i) The authority to approve tax increment financing plans to establish tax increment
124.28financing districts under this section expires on December 31, 2017.
124.29EFFECTIVE DATE.This section is effective upon compliance with Minnesota
124.30Statutes, section 645.021, subdivision 3.

124.31    Sec. 30. CITY OF EAGAN; TAX INCREMENT FINANCING DISTRICT.
124.32    Subdivision 1. Authorization; location. The city of Eagan may establish within
124.33the corporate boundaries of the city one or more economic development tax increment
124.34financing districts subject to the special rules under subdivision 2. The districts must be
125.1located within the "area" defined for purposes of this section as Section 13, Township
125.227, Range 23, Dakota County, Minnesota.
125.3    Subd. 2. Special rules. (a) If the city elects upon adoption of the tax increment
125.4financing plan for the district, the rules under this subdivision apply to the district.
125.5    (b) The limitations in Minnesota Statutes, section 469.176, subdivision 4c, on
125.6spending increment for developments more than 15 percent of the square footage of which
125.7is used for purposes other than those listed in that subdivision, do not apply.
125.8    (c) Increments may be expended on surface parking, sanitary sewer, storm sewer,
125.9water, and street improvements inside and outside the area whether or not included in a tax
125.10increment financing district, and without regard to any limitations in Minnesota Statutes,
125.11section 469.1763, subdivision 2, if the improvements are related to development within
125.12the area and on administrative expenses.
125.13    Subd. 3. Business subsidy agreement required. Prior to approval of a tax
125.14increment financing plan for a district authorized by this section, the city must enter
125.15a business subsidy agreement with the recipient or beneficiary of expenditures of the
125.16increments. The agreement must set minimum full-time employment goals, minimum
125.17compensation amounts of the employment positions, and minimum investment amounts
125.18for the project and must provide for repayment of all or part of the assistance, if the
125.19established goals are not met by the recipient or beneficiaries.
125.20    Subd. 4. Expiration of authority. The authority to approve tax increment financing
125.21plans to establish tax increment financing districts under this section expires on December
125.2231, 2008.
125.23EFFECTIVE DATE.This section is effective upon compliance by the city of
125.24Eagan with Minnesota Statutes, section 645.021.

125.25    Sec. 31. CITY OF EYOTA; TAX INCREMENT FINANCING DISTRICT.
125.26    Subdivision 1. Authorization. Notwithstanding the mileage limitation in Minnesota
125.27Statutes, section 469.174, subdivision 27, the city of Eyota is deemed to be a small city for
125.28the purposes of Minnesota Statutes, section 469.174 to 469.1799, as long as its population
125.29does not exceed the population limit in that section.
125.30    Subd. 2. Local approval. This section is effective for the city of Eyota upon
125.31approval of Eyota's governing body and compliance with Minnesota Statutes, section
125.32645.021, subdivisions 2 and 3.

125.33    Sec. 32. CITY OF FRIDLEY; TAX INCREMENT FINANCING DISTRICT;
125.34SPECIAL RULES.
126.1    (a) If the city elects upon the adoption of a tax increment financing plan for a district,
126.2the rules under this section apply to a redevelopment tax increment financing district
126.3established by the city of Fridley or the housing and redevelopment authority of the city.
126.4The redevelopment tax increment district includes the following parcels and adjacent
126.5railroad property and shall be referred to as the Northstar Transit Station District: parcel
126.6numbers 223024120010, 223024120009, 223024120017, 223024120016, 223024120018,
126.7223024120012, 223024120011, 223024120005, 223024120004, 223024120003,
126.8223024120013, 223024120008, 223024120007, 223024120006, 223024130005,
126.9223024130010, 223024130011, 223024130003, 153024440039, 153024440037,
126.10153024440041, 153024440042, 223024110013, 223024110016, 223024110017,
126.11223024140008, 223024130002, 223024420004, 223024410002, 223024410003,
126.12223024110008, 223024110007, 223024110019, 223024110018, 223024110003,
126.13223024140003, 223024140009, 223024140002, 223024140010, and 223024410007.
126.14    (b) The requirements for qualifying a redevelopment tax increment district under
126.15Minnesota Statutes, section 469.174, subdivision 10, do not apply to the parcels located
126.16within the Northstar Transit Station District, which are deemed eligible for inclusion
126.17in a redevelopment tax increment district.
126.18    (c) In addition to the costs permitted by Minnesota Statutes, section 469.176,
126.19subdivision 4j, eligible expenditures within the Northstar Transit Station District include
126.20those costs necessary to provide for the construction and land acquisition for a tunnel
126.21under the Burlington Northern Santa Fe railroad tracks.
126.22    (d) Notwithstanding the provisions of Minnesota Statutes, section 469.1763,
126.23subdivision 2, the city of Fridley may expend increments generated from its tax increment
126.24financing districts Nos. 11, 12, and 13 for costs permitted by paragraph (c) and Minnesota
126.25Statutes, section 469.176, subdivision 4j, outside the boundaries of tax increment financing
126.26districts Nos. 11, 12, and 13, but only within the Northstar Transit Station District.
126.27    (e) The five-year rule under Minnesota Statutes, section 469.1763, subdivision 3,
126.28does not apply to the Northstar Transit Station District or to tax increment financing
126.29districts Nos. 11, 12, and 13.
126.30    (f) The use of revenues for decertification under Minnesota Statutes, section
126.31469.1763, subdivision 4, does not apply to tax increment financing districts Nos. 11,
126.3212, and 13.
126.33EFFECTIVE DATE.This section is effective upon approval by the governing body
126.34of the city of Fridley and upon compliance by the city with Minnesota Statutes, section
126.35645.021, subdivision 3.

127.1    Sec. 33. CITY OF NEW BRIGHTON; TAX INCREMENT FINANCING;
127.2EXPENDITURES OUTSIDE DISTRICT.
127.3    Notwithstanding the provisions of Minnesota Statutes, section 469.1763, subdivision
127.42, the city of New Brighton may expend increments generated from its tax increment
127.5financing district No. 26 to facilitate eligible activities as permitted by Minnesota Statutes,
127.6section 469.176, subdivision 4e, outside the boundaries of tax increment financing district
127.7No. 26, but only within the area described in Laws 1998, chapter 389, article 11, section
127.824, subdivision 1, and commonly referred to as the Northwest Quadrant. Minnesota
127.9Statutes, section 469.1763, subdivisions 3 and 4, do not apply to expenditures permitted
127.10by this section.
127.11EFFECTIVE DATE.This section is effective upon approval by the governing
127.12body of the city of New Brighton and compliance by the city with Minnesota Statutes,
127.13section 645.021, subdivision 3.

127.14    Sec. 34. APPROPRIATION.
127.15    $200,000 in fiscal year 2008 and $200,000 in fiscal year 2009 are appropriated
127.16from the general fund to the commissioner of employment and economic development to
127.17provide a grant to the city of Fergus Falls to market and promote economic development
127.18of the site formerly used as a regional treatment facility.

127.19    Sec. 35. REPEALER.
127.20Laws 1998, chapter 389, article 11, section 18, is repealed.
127.21EFFECTIVE DATE.This section is effective upon compliance with Minnesota
127.22Statutes, section 645.021, subdivision 3, by the governing body of the city of Burnsville.
127.23The balance of tax increments derived from tax increment financing district No. 2-1 as
127.24of the effective date of this section must be returned to the county for distribution in
127.25accordance with Minnesota Statutes, section 469.176, subdivision 2.

127.26ARTICLE 7
127.27PUBLIC FINANCE

127.28    Section 1. Minnesota Statutes 2006, section 118A.03, subdivision 3, is amended to read:
127.29    Subd. 3. Amount. The total amount of the collateral computed at its market value
127.30shall be at least ten percent more than the amount on deposit plus accrued interest at
127.31the close of the financial institution's banking day, except that where the collateral is
127.32irrevocable standby letters of credit issued by Federal Home Loan Banks, the amount of
128.1collateral shall be at least equal to the amount on deposit plus accrued interest at the close
128.2of the financial institution's banking day. The financial institution may furnish both a
128.3surety bond and collateral aggregating the required amount.

128.4    Sec. 2. Minnesota Statutes 2006, section 123B.61, is amended to read:
128.5123B.61 PURCHASE OF CERTAIN EQUIPMENT.
128.6    The board of a district may issue general obligation certificates of indebtedness
128.7or capital notes subject to the district debt limits to: (a) purchase vehicles, computers,
128.8telephone systems, cable equipment, photocopy and office equipment, technological
128.9equipment for instruction, and other capital equipment having an expected useful life at
128.10least as long as the terms of the certificates or notes; (b) purchase computer hardware and
128.11software, without regard to its expected useful life, whether bundled with machinery or
128.12equipment or unbundled, together with application development services and training
128.13related to the use of the computer; and (c) prepay special assessments. The certificates or
128.14notes must be payable in not more than five ten years and must be issued on the terms
128.15and in the manner determined by the board, except that certificates or notes issued to
128.16prepay special assessments must be payable in not more than 20 years. The certificates
128.17or notes may be issued by resolution and without the requirement for an election. The
128.18certificates or notes are general obligation bonds for purposes of section 126C.55. A tax
128.19levy must be made for the payment of the principal and interest on the certificates or
128.20notes, in accordance with section 475.61, as in the case of bonds. The sum of the tax
128.21levies under this section and section 123B.62 for each year must not exceed the lesser
128.22of the amount of the district's total operating capital revenue or the sum of the district's
128.23levy in the general and community service funds excluding the adjustments under this
128.24section for the year preceding the year the initial debt service levies are certified. The
128.25district's general fund levy for each year must be reduced by the sum of (1) the amount
128.26of the tax levies for debt service certified for each year for payment of the principal and
128.27interest on the certificates or notes issued under this section as required by section 475.61,
128.28(2) the amount of the tax levies for debt service certified for each year for payment of the
128.29principal and interest on bonds issued under section 123B.62, and (3) any excess amount
128.30in the debt redemption fund used to retire bonds, certificates, or notes issued under this
128.31section or section 123B.62 after April 1, 1997, other than amounts used to pay capitalized
128.32interest. If the district's general fund levy is less than the amount of the reduction, the
128.33balance shall be deducted first from the district's community service fund levy, and next
128.34from the district's general fund or community service fund levies for the following year. A
128.35district using an excess amount in the debt redemption fund to retire the certificates or
129.1notes shall report the amount used for this purpose to the commissioner by July 15 of the
129.2following fiscal year. A district having an outstanding capital loan under section 126C.69
129.3or an outstanding debt service loan under section 126C.68 must not use an excess amount
129.4in the debt redemption fund to retire the certificates or notes.

129.5    Sec. 3. Minnesota Statutes 2006, section 275.61, subdivision 1, is amended to read:
129.6    Subdivision 1. Market value. (a) For local governmental subdivisions other than
129.7school districts, any levy, including the issuance of debt obligations payable in whole or in
129.8part from property taxes, required to be approved and approved by the voters at a general
129.9or special election for taxes payable in 1993 and thereafter, shall be levied against the
129.10referendum market value of all taxable property within the governmental subdivision, as
129.11defined in section 126C.01, subdivision 3. Any levy amount subject to the requirements of
129.12this section shall be certified separately to the county auditor under section 275.07.
129.13    (b) The ballot shall state the maximum amount of the increased levy as a percentage
129.14of market value and the amount that will be raised by the new referendum tax rate in the
129.15first year it is to be levied.
129.16    (c) This subdivision does not apply to tax levies for the payment of debt obligations
129.17that are approved by the voters after June 30, 2007.
129.18EFFECTIVE DATE.This section is effective the day following final enactment.

129.19    Sec. 4. Minnesota Statutes 2006, section 331A.05, subdivision 2, is amended to read:
129.20    Subd. 2. Time of notice. Unless otherwise specified by a particular statute law, or
129.21by order of a court, publication of a public notice shall be as follows:
129.22    (a) the notice shall be published once;
129.23    (b) if the notice is intended to inform the public about a future event, the last
129.24publication shall occur not more than 14 30 days and not less than seven days before
129.25the event;
129.26    (c) if the notice is intended to inform the public about a past action or event, the last
129.27publication shall occur not more than 45 days after occurrence of the action or event.

129.28    Sec. 5. Minnesota Statutes 2006, section 365A.02, is amended to read:
129.29365A.02 DEFINITION DEFINITIONS.
129.30    Subdivision 1. Subordinate service district. "Subordinate service district" means a
129.31defined area within the town in which one or more governmental services or additions to
129.32townwide special services are provided by the town specially for the area and financed
130.1from revenues from the area. The boundaries of a single subordinate service district
130.2may not embrace an entire town.
130.3    Subd. 2. Special services. "Special services" means one or more governmental
130.4services or additions to townwide services provided by the town specially for the area
130.5and financed from revenues from the area.

130.6    Sec. 6. Minnesota Statutes 2006, section 365A.04, is amended to read:
130.7365A.04 CREATION BY PETITION.
130.8    Subdivision 1. Petition. A petition signed by at least 50 percent of the property
130.9owners in the part of the town proposed for the subordinate service district may be
130.10submitted to the town board requesting the establishment of a subordinate service district
130.11to provide a service that the town is otherwise authorized by law to provide. The petition
130.12must include the territorial boundaries of the proposed district and specify the kinds of
130.13services to be provided within the district.
130.14    Subd. 1a. Creation by town board. The town board may establish a subordinate
130.15service district in a portion of the town by adoption of a resolution, subject to the
130.16requirements of subdivision 2.
130.17    Subd. 2. Public hearing. Upon receipt of the petition, and the verification of the
130.18signatures by the town clerk or prior to adoption of the resolution specified in subdivision
130.191a, the town board shall, within 30 days following verification or prior to adoption of the
130.20resolution specified in subdivision 1a, hold a public hearing on the question of whether or
130.21not the requested district shall be established. The notice of public hearing must specify
130.22the special services to be provided within the subordinate service district and must specify
130.23the territorial boundaries of the requested district. The notice of public hearing must be
130.24published once in a newspaper of general circulation in the town at least 14 days prior
130.25to the date of the public hearing.
130.26    Subd. 3. Approval; disapproval. Within 30 days after the public hearing, the
130.27town board by resolution shall approve or disapprove the establishment of the requested
130.28district. An approving resolution must specify the special services to be provided within
130.29the subordinate service district and must specify the territorial boundaries of the district.
130.30A resolution approving the establishment of the district may contain amendments or
130.31modifications of the district's boundaries or functions as set forth in the petition or the
130.32resolution specified in subdivision 1a.

130.33    Sec. 7. Minnesota Statutes 2006, section 365A.08, is amended to read:
130.34365A.08 FINANCING.
131.1    Subdivision 1. Budget. (a) Upon adoption of the next annual budget following
131.2the creation of a subordinate service district the town board shall include in the budget
131.3appropriate provisions for the operation of the district including either a property tax
131.4levied only on property of the users of the service within the boundaries of the district
131.5or a levy of a service charge against the users of the service within the district, or a
131.6combination of a property tax and a service charge on the users of the service.
131.7    (b) A tax or service charge or a combination of them may be imposed to finance a
131.8function or service in the district that the town ordinarily provides throughout the town
131.9only to the extent that there is an increase in the level of the function or service provided
131.10in the service district over that provided throughout the town. In that case, in addition
131.11to the townwide tax levy, an amount necessary to pay for the increase in the level of the
131.12function or service may be imposed in the district.
131.13    Subd. 2. Bonds. At any time after the requirements of section 356A.06 have been
131.14met and the subordinate service district created, the town board may issue obligations
131.15in an amount it deems necessary to defray in whole or in part the expense incurred
131.16and estimated to be incurred in making capital improvements necessary to operate the
131.17subordinate service district and provide the special services in the district, including every
131.18item of cost from inception to completion and all fees and expenses incurred in connection
131.19with the capital improvements or the financing. The obligations are payable primarily
131.20out of the proceeds of the taxes and service charges imposed under subdivision 1, net
131.21revenues as described in section 444.075, and special assessments under chapter 429. The
131.22town board may by resolution pledge the full faith credit and taxing power of the town
131.23to ensure payment of the principal and interest on the obligations if the proceeds of the
131.24taxes and service charges are insufficient to pay the principal and interest. Obligations
131.25must be issued in accordance with chapter 475, except that an election is not required, and
131.26the amount of the obligations is not included in determining the net indebtedness of the
131.27town under the provisions of any law limiting indebtedness.
131.28    Subd. 3. Covenants to secure obligations. In resolutions authorizing the issuance
131.29of general or special obligations and pledging taxes and service charges imposed under
131.30subdivision 1, net revenues, or special assessments to their payment, the town board
131.31may make covenants for the protection of holders of the obligations and taxpayers of the
131.32town as it deems necessary, including a covenant that the town will impose and collect
131.33charges of the nature authorized by this chapter at the time and in the amounts required to
131.34produce, together with any taxes or special assessments designated as a primary source
131.35of payment of the obligations, funds adequate to pay all principal and interest when due
132.1on the obligations, and to create and maintain reserves securing the payments as may be
132.2provided in the resolutions.

132.3    Sec. 8. Minnesota Statutes 2006, section 365A.095, is amended to read:
132.4365A.095 PETITION FOR REMOVAL OF DISTRICT; PROCEDURE.
132.5    Subdivision 1. Petition. A petition signed by at least 75 percent of the property
132.6owners in the territory of the subordinate service district requesting the removal of the
132.7district may be presented to the town board. Within 30 days after the town board receives
132.8the petition, the town clerk shall determine the validity of the signatures on the petition. If
132.9the requisite number of signatures are certified as valid, the town board must hold a public
132.10hearing on the petitioned matter. Within 30 days after the end of the hearing, the town
132.11board must decide whether to discontinue the subordinate service district, continue as it is,
132.12or take some other action with respect to it.
132.13    Subd. 2. Bonds. If obligations have been issued for the benefit of the subordinate
132.14service district, the rates, charges, and tax levies, if any, continue until the obligations and
132.15any obligations issued to refund them have been paid in full.

132.16    Sec. 9. Minnesota Statutes 2006, section 373.01, subdivision 3, is amended to read:
132.17    Subd. 3. Capital notes. (a) A county board may, by resolution and without
132.18referendum, issue capital notes subject to the county debt limit to purchase capital
132.19equipment useful for county purposes that has an expected useful life at least equal to the
132.20term of the notes. The notes shall be payable in not more than ten years and shall be
132.21issued on terms and in a manner the board determines. A tax levy shall be made for
132.22payment of the principal and interest on the notes, in accordance with section 475.61,
132.23as in the case of bonds.
132.24    (b) For purposes of this subdivision, "capital equipment" means:
132.25    (1) public safety, ambulance, road construction or maintenance, and medical
132.26equipment; and
132.27    (2) computer hardware and software, whether bundled with machinery or equipment
132.28or unbundled. The authority to issue capital notes for software expires on July 1, 2007.

132.29    Sec. 10. Minnesota Statutes 2006, section 373.40, subdivision 4, is amended to read:
132.30    Subd. 4. Limitations on amount. A county, other than Ramsey, may not issue
132.31bonds under this section if the maximum amount of principal and interest to become due in
132.32any year on all the outstanding bonds issued pursuant to this section (including the bonds
132.33to be issued) will equal or exceed 0.05367 0.12 percent of taxable market value of property
133.1in the county. Ramsey county may not issue bonds under this section if the maximum
133.2amount of principal and interest to become due in any year on all the outstanding bonds
133.3issued pursuant to this section (including the bonds to be issued) will equal or exceed
133.40.06455 percent of taxable market value of property in the county. Calculation of the
133.5limit must be made using the taxable market value for the taxes payable year in which
133.6the obligations are issued and sold. This section does not limit the authority to issue
133.7bonds under any other special or general law.
133.8EFFECTIVE DATE.This section is effective for bonds issued after June 30, 2007.

133.9    Sec. 11. Minnesota Statutes 2006, section 375B.09, is amended to read:
133.10375B.09 FINANCING.
133.11    Subdivision 1. Budget. (a) Upon adoption of the next annual budget following the
133.12creation of a subordinate service district the county board shall include in the budget
133.13appropriate provisions for the operation of the district including, as appropriate, either a
133.14property tax levied only on property within the boundaries of the district or a levy of a
133.15service charge against the users of the service within the district, or any combination of a
133.16property tax and a service charge.
133.17    (b) A tax or service charge or a combination thereof shall not be imposed to finance a
133.18function or service in the subordinate service district which the county generally provides
133.19throughout the county unless an increase in the level of the service is to be supplied in the
133.20subordinate service district in which case, in addition to the countywide tax levy, only an
133.21amount necessary to pay for the increased level of service may be imposed.
133.22    Subd. 2. Bonds. At any time after the requirements of section 375B.07 have been
133.23met and the subordinate service district created, the county board may issue obligations
133.24in an amount it deems necessary to defray in whole or in part the expense incurred
133.25and estimated to be incurred in making capital improvements necessary to operate the
133.26subordinate service district and provide the special services in the district, including every
133.27item of cost from inception to completion and all fees and expenses incurred in connection
133.28with the capital improvements or the financing. The obligations shall be payable primarily
133.29out of the proceeds of the taxes and service charges imposed pursuant to subdivision 1, net
133.30revenues as described in section 444.075, and special assessments under chapter 429. The
133.31county board may by resolution pledge the full faith credit and taxing power of the county
133.32to ensure payment of the principal and interest on the obligations if the proceeds of the
133.33taxes and service charges are insufficient to pay the principal and interest. Obligations
133.34must be issued in accordance with chapter 475, except that an election is not required, and
134.1the amount of the obligations is not included in determining the net indebtedness of the
134.2county under the provisions of any law limiting indebtedness.
134.3    Subd. 3. Covenants to secure obligations. In resolutions authorizing the issuance
134.4of general or special obligations and pledging taxes and service charges imposed under
134.5subdivision 1, net revenues, or special assessments to their payment, the county board
134.6may make covenants for the protection of holders of the obligations and taxpayers of the
134.7county as it deems necessary, including a covenant that the county will impose and collect
134.8charges of the nature authorized by this chapter at the time and in the amounts required to
134.9produce, together with any taxes or special assessments designated as a primary source
134.10of payment of the obligations, funds adequate to pay all principal and interest when due
134.11on the obligations and to create and maintain reserves securing the payments as may be
134.12provided in the resolutions.
134.13    Subd. 4. Continuance in the event of withdrawal. If obligations have been issued
134.14for the benefit of the subordinate service district, and the district is withdrawn or removed
134.15pursuant to either section 375B.10 or 375B.11, the rates, charges, and tax levies, if any, in
134.16the withdrawn or removed district must continue until the obligations and any obligations
134.17issued to refund them have been paid in full.

134.18    Sec. 12. Minnesota Statutes 2006, section 383B.117, subdivision 2, is amended to read:
134.19    Subd. 2. Equipment acquisition; capital notes. The board may, by resolution and
134.20without public referendum, issue capital notes within existing debt limits for the purpose
134.21of purchasing ambulance and other medical equipment, road construction or maintenance
134.22equipment, public safety equipment and other capital equipment having an expected
134.23useful life at least equal to the term of the notes issued. The notes shall be payable in
134.24not more than five ten years and shall be issued on terms and in a manner as the board
134.25determines. The total principal amount of the notes issued for any fiscal year shall not
134.26exceed one percent of the total annual budget for that year and shall be issued solely for
134.27the purchases authorized in this subdivision. A tax levy shall be made for the payment
134.28of the principal and interest on such notes as in the case of bonds. For purposes of this
134.29subdivision, "equipment" includes computer hardware and software, whether bundled with
134.30machinery or equipment or unbundled. For purposes of this subdivision, the term "medical
134.31equipment" includes computer hardware and software and other intellectual property for
134.32use in medical diagnosis, medical procedures, research, record keeping, billing, and other
134.33hospital applications, together with application development services and training related
134.34to the use of the computer hardware and software and other intellectual property, all
134.35without regard to their useful life. For purposes of determining the amount of capital notes
135.1which the county may issue in any year, the budget of the county and Hennepin Healthcare
135.2System, Inc. shall be combined and the notes issuable under this subdivision shall be in
135.3addition to obligations issuable under section 373.01, subdivision 3.

135.4    Sec. 13. Minnesota Statutes 2006, section 383B.77, subdivision 1, is amended to read:
135.5    Subdivision 1. Creation. The Hennepin County Housing and Redevelopment
135.6Authority is created in the county of Hennepin. It shall have all of the powers and duties
135.7of a housing and redevelopment authority under sections 469.001 to 469.047. For the
135.8purposes of applying the municipal housing and redevelopment act to Hennepin County,
135.9the county has all of the powers and duties of a city, the county board has all the powers
135.10and duties of a governing body, the chair of the county board has all of the powers and
135.11duties of a mayor, and, notwithstanding section 469.008, the area of operation includes the
135.12area within the territorial boundaries of the county.
135.13EFFECTIVE DATE.Because the population of Hennepin County is more than
135.141,000,000, under Minnesota Statutes, section 645.023, this section is effective without
135.15local approval.

135.16    Sec. 14. Minnesota Statutes 2006, section 383B.77, subdivision 2, is amended to read:
135.17    Subd. 2. Limitation. This section does not limit or restrict any existing housing
135.18and redevelopment authority or prevent a municipality from creating an authority. For
135.19purposes of this subdivision, "housing and redevelopment authority" includes any
135.20municipal department, agency, or authority of the city of Minneapolis which exercises the
135.21powers of a housing and redevelopment authority pursuant to section 469.003 or other
135.22law. The county authority shall notify a municipal authority by January 31 of each year
135.23as to the activities the county authority plans to participate in within the municipality.
135.24The municipal authority shall notify the county authority within 45 days of the date of
135.25the notice from the county authority, if the municipal authority does not consent to the
135.26activities of the county authority. The county authority shall not exercise its powers in a
135.27municipality where a housing and redevelopment authority was created under Minnesota
135.28Statutes 1969, chapter 462, before June 8, 1971, except as provided in this subdivision. If a
135.29city housing and redevelopment authority requests the county housing and redevelopment
135.30authority to exercise any power or perform any function of the municipal authority, the
135.31county authority may do so.
136.1EFFECTIVE DATE.Because the population of Hennepin County is more than
136.21,000,000, under Minnesota Statutes, section 645.023, this section is effective without
136.3local approval.

136.4    Sec. 15. Minnesota Statutes 2006, section 410.32, is amended to read:
136.5410.32 CITIES MAY ISSUE CAPITAL NOTES FOR CAPITAL EQUIPMENT.
136.6    (a) Notwithstanding any contrary provision of other law or charter, a home rule
136.7charter city may, by resolution and without public referendum, issue capital notes subject
136.8to the city debt limit to purchase capital equipment.
136.9    (b) For purposes of this section, "capital equipment" means:
136.10    (1) public safety equipment, ambulance and other medical equipment, road
136.11construction and maintenance equipment, and other capital equipment; and
136.12    (2) computer hardware and software, whether bundled with machinery or equipment
136.13or unbundled.
136.14    (c) The equipment or software must have an expected useful life at least as long as the
136.15term of the notes. The authority to issue capital notes for software expires on July 1, 2007.
136.16    (d) The notes shall be payable in not more than ten years and be issued on terms and
136.17in the manner the city determines. The total principal amount of the capital notes issued
136.18in a fiscal year shall not exceed 0.03 percent of the market value of taxable property
136.19in the city for that year.
136.20    (e) A tax levy shall be made for the payment of the principal and interest on the
136.21notes, in accordance with section 475.61, as in the case of bonds.
136.22    (f) Notes issued under this section shall require an affirmative vote of two-thirds of
136.23the governing body of the city.
136.24    (g) Notwithstanding a contrary provision of other law or charter, a home rule charter
136.25city may also issue capital notes subject to its debt limit in the manner and subject to the
136.26limitations applicable to statutory cities pursuant to section 412.301.

136.27    Sec. 16. Minnesota Statutes 2006, section 412.301, is amended to read:
136.28412.301 FINANCING PURCHASE OF CERTAIN EQUIPMENT.
136.29    (a) The council may issue certificates of indebtedness or capital notes subject to the
136.30city debt limits to purchase capital equipment.
136.31    (b) For purposes of this section, "capital equipment" means:
136.32    (1) public safety equipment, ambulance and other medical equipment, road
136.33construction and maintenance equipment, and other capital equipment; and
137.1    (2) computer hardware and software, whether bundled with machinery or equipment
137.2or unbundled.
137.3    (c) The equipment or software must have an expected useful life at least as long as
137.4the terms of the certificates or notes. The authority to issue capital notes for software
137.5expires on July 1, 2007.
137.6    (d) Such certificates or notes shall be payable in not more than ten years and shall be
137.7issued on such terms and in such manner as the council may determine.
137.8    (e) If the amount of the certificates or notes to be issued to finance any such purchase
137.9exceeds 0.25 percent of the market value of taxable property in the city, they shall not
137.10be issued for at least ten days after publication in the official newspaper of a council
137.11resolution determining to issue them; and if before the end of that time, a petition asking
137.12for an election on the proposition signed by voters equal to ten percent of the number of
137.13voters at the last regular municipal election is filed with the clerk, such certificates or notes
137.14shall not be issued until the proposition of their issuance has been approved by a majority
137.15of the votes cast on the question at a regular or special election.
137.16    (f) A tax levy shall be made for the payment of the principal and interest on such
137.17certificates or notes, in accordance with section 475.61, as in the case of bonds.

137.18    Sec. 17. Minnesota Statutes 2006, section 453A.02, subdivision 3, is amended to read:
137.19    Subd. 3. City. "City" means a city organized and existing under the laws of
137.20Minnesota or a city charter adopted pursuant thereto, and authorized by such laws or
137.21charter to engage in the local distribution and sale of gas, provided that any city so
137.22engaged on January 1, 1979 is authorized to continue such distribution and sale, and every
137.23city now or hereafter so authorized may exercise, either individually or as a member of a
137.24municipal gas agency, all of the powers granted in sections 453A.01 to 453A.12.
137.25    City also includes a city organized and existing under the laws of another state or
137.26a city charter adopted pursuant thereto which participates in a municipal gas agency
137.27with Minnesota cities.

137.28    Sec. 18. [471.6175] TRUST FOR POSTEMPLOYMENT BENEFITS.
137.29    Subdivision 1. Authorization; establishment. A political subdivision or other
137.30public entity that creates or has created an actuarial liability to pay postemployment
137.31benefits to employees or officers after their termination of service may establish a trust to
137.32pay those benefits. For purposes of this section, the term "postemployment benefits" means
137.33benefits giving rise to a liability under Statement No. 45 of the Governmental Accounting
138.1Standards Board and the term "trust" means a trust, a trust account, or a custodial account
138.2or contract authorized under section 401(f) of the Internal Revenue Code.
138.3    Subd. 2. Purpose of trust. The trust established under this section may only be
138.4used to pay postemployment benefits and may be either revocable or irrevocable.
138.5    Subd. 3. Trust administrator. The trust administrator of a trust established under
138.6this section shall be either:
138.7    (1) the Public Employees Retirement Association;
138.8    (2) a bank or banking association incorporated under the laws of the United States or
138.9of any state and authorized by the laws under which it is organized to exercise corporate
138.10trust powers; or
138.11    (3) an insurance company or agency qualified to do business in Minnesota which has
138.12at least five years' experience in investment products and services for group retirement
138.13benefits and which has a specialized department dedicated to services for retirement
138.14investment products.
138.15    A political subdivision or public entity may, in its discretion and in compliance
138.16with any applicable trust document, change trust administrators and transfer trust assets
138.17accordingly.
138.18    Subd. 4. Account maintenance. (a) A political subdivision or other public entity
138.19may establish a trust account to be held under the supervision of the trust administrator for
138.20the purposes of this section. A trust administrator shall establish a separate account for
138.21each participating political subdivision or public entity. The trust administrator may charge
138.22participating political subdivisions and public entities fees for reasonable administrative
138.23costs. The amount of any fees charged by the Public Employees Retirement Association is
138.24appropriated to the association from the account. A trust administrator may establish other
138.25reasonable terms and conditions for creation and maintenance of these accounts.
138.26    (b) The trust administrator must report to the political subdivision or other public
138.27entity on the investment returns of invested trust assets and on all investment fees or costs
138.28incurred by the trust. The annual rates of return, along with investment and administrative
138.29fees and costs for the trust, must be disclosed in the political subdivision's or public entity's
138.30annual financial audit in a manner prescribed by the state auditor.
138.31    (c) Effective for fiscal years beginning after December 31, 2009, the trust
138.32administrator must report electronically to the state auditor the portfolio and performance
138.33information specified in section 356.219, subdivision 3, in the manner prescribed by
138.34the state auditor.
138.35    Subd. 5. Investment. (a) The assets of a trust or trust account shall be invested and
138.36held as stipulated in paragraphs (b) to (e).
139.1    (b) The Public Employees Retirement Association must certify all money in the trust
139.2accounts for which it is trust administrator to the State Board of Investment for investment
139.3under section 11A.14, subject to the policies and procedures established by the State
139.4Board of Investment. Investment earnings must be credited to the trust account of the
139.5individual political subdivision or public entity.
139.6    (c) A trust administrator, other than the Public Employees Retirement Association,
139.7must ensure that all money in the trust accounts for which it is trust administrator is
139.8invested by a registered investment adviser, a bank investment trust department, or an
139.9insurance company or agency retirement investment department. Investment earnings
139.10must be credited to the trust account of the individual political subdivision or public entity.
139.11    (d) For trust assets invested by the State Board of Investment, the investment
139.12restrictions shall be the same as those generally applicable to the State Board of
139.13Investment. For trust assets invested by a trust administrator other than the Public
139.14Employees Retirement Association, the assets may only be invested in investments
139.15authorized under chapter 118A or section 356A.06, subdivision 7, in the manner specified
139.16in the applicable trust document.
139.17    (e) A political subdivision or public entity may provide investment direction to a
139.18trust administrator in compliance with any applicable trust document.
139.19    Subd. 6. Limit on deposit. A political subdivision or public entity may not
139.20deposit money in a trust or trust account created pursuant to this section if the total
139.21amount invested by that political subdivision or public entity would exceed the political
139.22subdivision's or public entity's actuarially determined liabilities for postemployment
139.23benefits due to officers and employees, as determined under the applicable standards of the
139.24Governmental Accounting Standards Board.
139.25    Subd. 7. Withdrawal of funds and termination of account. (a) For a revocable
139.26account, a political subdivision or public entity may withdraw some or all of its money
139.27or terminate the trust account. Money and accrued investment earnings withdrawn
139.28from a revocable account must be deposited in a fund separate and distinct from any
139.29other funds of the political subdivision or public entity. This money, with accrued
139.30investment earnings, must be used to pay legally enforceable postemployment benefits
139.31to former officers and employees, unless (i) there has been a change in state or federal
139.32law affecting that political subdivision's or public entity's liabilities for postemployment
139.33benefits, or (ii) there has been a change in the demographic composition of that political
139.34subdivision's or public entity's employees eligible for postemployment benefits, or (iii)
139.35there has been a change in the provisions or terms of the postemployment benefits in that
139.36political subdivision or public entity including, but not limited to, the portion of the costs
140.1eligible employees must pay to receive the benefits, or (iv) other factors exist that have
140.2a material effect on that political subdivision's or public entity's actuarially determined
140.3liabilities for postemployment benefits, in which event any amount in excess of 100
140.4percent of that political subdivision's or public entity's actuarially determined liabilities for
140.5postemployment benefits, as determined under standards of the Government Accounting
140.6Standards Board, may be withdrawn and used for any purpose.
140.7    (b) For an irrevocable account, a political subdivision or public entity may withdraw
140.8money only:
140.9    (1) as needed to pay postemployment benefits owed to former officers and employees
140.10of the political subdivision or public entity; or
140.11    (2) when all postemployment benefit liability owed to former officers or employees
140.12of the political subdivision or public entity has been satisfied or otherwise defeased.
140.13    (c) A political subdivision or public entity requesting withdrawal of money from
140.14an account created under this section must do so at a time and in the manner required by
140.15the executive director of the Public Employees Retirement Association or specified in an
140.16applicable trust document. The political subdivision or public entity that created the trust
140.17must ensure that withdrawals comply with the requirements of this section.
140.18    (d) The legislature may not divert funds in these trusts or trust accounts for use
140.19for another purpose.
140.20    Subd. 8. Status of irrevocable trust. (a) All money in an irrevocable trust or trust
140.21account created in this section is held in trust for the exclusive benefit of former officers
140.22and employees of the participating political subdivision or public entity, and is not subject
140.23to claims by creditors of the state, the participating political subdivision or public entity,
140.24the current or former officers and employees of the political subdivision or public entity,
140.25or the trust administrator.
140.26    (b) An irrevocable trust fund or trust account created in this section shall be deemed
140.27an arrangement equivalent to a trust for all legal purposes.
140.28EFFECTIVE DATE.This section is effective the day following final enactment,
140.29and is applicable immediately to all political subdivisions or public entities subject to
140.30Statement No. 45 of the Governmental Accounting Standards Board in 2007, to those
140.31political subdivisions or public entities whose trusts or trust accounts are validated
140.32by section 27, and to those political subdivisions or public entities that have begun
140.33consideration of measures to implement Statement No. 45 in 2007. This section is
140.34applicable on July 1, 2008, for all other political subdivisions or public entities.

141.1    Sec. 19. Minnesota Statutes 2006, section 473.39, is amended by adding a subdivision
141.2to read:
141.3    Subd. 1m. Obligations. After July 1, 2007, in addition to other authority in this
141.4section, the council may issue certificates of indebtedness, bonds, or other obligations
141.5under this section in an amount not exceeding $33,600,000 for capital expenditures as
141.6prescribed in the council's regional transit master plan and transit capital improvement
141.7program and for related costs, including the costs of issuance and sale of the obligations.
141.8APPLICATION AND EFFECTIVE DATE.This section applies in the counties of
141.9Anoka, Carver, Dakota, Hennepin, Ramsey, Scott, and Washington, and is effective the
141.10day following final enactment.

141.11    Sec. 20. Minnesota Statutes 2006, section 473.39, is amended by adding a subdivision
141.12to read:
141.13    Subd. 5. Anticipation of grants. In addition to other authority granted in this
141.14section, the council may exercise the authority granted to an issuing political subdivision
141.15by section 475.522.
141.16APPLICATION AND EFFECTIVE DATE.This section applies in the counties of
141.17Anoka, Carver, Dakota, Hennepin, Ramsey, Scott, and Washington, and is effective the
141.18day following final enactment.

141.19    Sec. 21. Minnesota Statutes 2006, section 475.51, subdivision 4, is amended to read:
141.20    Subd. 4. Net debt. "Net debt" means the amount remaining after deducting from its
141.21gross debt the amount of current revenues which are applicable within the current fiscal
141.22year to the payment of any debt and the aggregate of the principal of the following:
141.23    (1) Obligations issued for improvements which are payable wholly or partly from the
141.24proceeds of special assessments levied upon property specially benefited thereby, including
141.25those which are general obligations of the municipality issuing them, if the municipality is
141.26entitled to reimbursement in whole or in part from the proceeds of the special assessments.
141.27    (2) Warrants or orders having no definite or fixed maturity.
141.28    (3) Obligations payable wholly from the income from revenue producing
141.29conveniences.
141.30    (4) Obligations issued to create or maintain a permanent improvement revolving
141.31fund.
142.1    (5) Obligations issued for the acquisition, and betterment of public waterworks
142.2systems, and public lighting, heating or power systems, and of any combination thereof or
142.3for any other public convenience from which a revenue is or may be derived.
142.4    (6) Debt service loans and capital loans made to a school district under the provisions
142.5of sections 126C.68 and 126C.69.
142.6    (7) Amount of all money and the face value of all securities held as a debt service
142.7fund for the extinguishment of obligations other than those deductible under this
142.8subdivision.
142.9    (8) Obligations to repay loans made under section 216C.37.
142.10    (9) Obligations to repay loans made from money received from litigation or
142.11settlement of alleged violations of federal petroleum pricing regulations.
142.12    (10) Obligations issued to pay pension fund or other postemployment benefit
142.13liabilities under section 475.52, subdivision 6, or any charter authority.
142.14    (11) Obligations issued to pay judgments against the municipality under section
142.15475.52, subdivision 6 , or any charter authority.
142.16    (12) All other obligations which under the provisions of law authorizing their
142.17issuance are not to be included in computing the net debt of the municipality.
142.18EFFECTIVE DATE.This section is effective for obligations issued after June
142.1930, 2007.

142.20    Sec. 22. Minnesota Statutes 2006, section 475.52, subdivision 6, is amended to read:
142.21    Subd. 6. Certain purposes. Any municipality may issue bonds for paying
142.22judgments against it; for refunding outstanding bonds; for funding floating indebtedness;
142.23for funding actuarial liabilities to pay postemployment benefits to employees or officers
142.24after their termination of service; or for funding all or part of the municipality's current
142.25and future unfunded liability for a pension or retirement fund or plan referred to in
142.26section 356.20, subdivision 2, as those liabilities are most recently computed pursuant
142.27to sections 356.215 and 356.216. The board of trustees or directors of a pension fund or
142.28relief association referred to in section 69.77 or chapter 422A must consent and must
142.29be a party to any contract made under this section with respect to the fund held by it
142.30for the benefit of and in trust for its members. For purposes of this section, the term
142.31"postemployment benefits" means benefits giving rise to a liability under Statement No.
142.3245 of the Governmental Accounting Standards Board.

142.33    Sec. 23. [475.522] GRANT ANTICIPATION FINANCING OF
142.34TRANSPORTATION OR TRANSIT PROJECTS.
143.1    Subdivision 1. Definitions. For purposes of this section, the term "political
143.2subdivision" means a county or a statutory or home rule charter city, and the term
143.3"issuing political subdivision" means a political subdivision that issues obligations under
143.4subdivision 2.
143.5    Subd. 2. Authorization. An issuing political subdivision may enter into agreements
143.6with any other political subdivision of the state, within or without its jurisdiction, and any
143.7state agency, with respect to federal grants for transportation or transit projects to be
143.8received directly or indirectly by or on behalf of the political subdivision or agency,
143.9under an executed grant agreement with the relevant federal agency. The agreements
143.10may provide that the political subdivision or agency will pledge to the issuing political
143.11subdivision all or a specified portion of the federal grants received by or on behalf of the
143.12political subdivision or agency for a specified period of years, or until all obligations issued
143.13by the issuing political subdivision under subdivision 3 with respect to those federal grants
143.14have been paid or legally defeased. If the issuing political subdivision issues obligations
143.15under subdivision 3, the agreements must provide the method by which the proceeds of
143.16the obligations will be used to pay or reimburse the costs of the transportation or transit
143.17projects relating to the federal grants described in the executed federal grant agreement.
143.18    Subd. 3. Issuance of obligations. In anticipation of any federal grants for
143.19transportation or transit projects to be received directly or indirectly by any political
143.20subdivision or agency as specified in subdivision 1, or by an issuing political subdivision
143.21with respect to any transportation or transit projects within its jurisdiction, an issuing
143.22political subdivision may issue its obligations payable from the collections of those
143.23federal grants. The obligations may be issued in the principal amount the issuing political
143.24subdivision determines provided that the estimated collections of the federal grants under
143.25the relevant executed federal grant agreement in each year in which the obligations will
143.26be outstanding must be at least equal to:
143.27    (1) if the obligations are to be issued as revenue obligations, 150 percent of the
143.28maximum annual debt service on the obligations; or
143.29    (2) if the obligations are to be issued as general obligations, 110 percent of the
143.30maximum annual debt service on the obligations.
143.31    Except as otherwise provided in this section, the issuing political subdivision shall
143.32provide for the issuance, sale, and security of the obligations as provided in chapter 475,
143.33and has the same powers and duties as a municipality issuing bonds under that law, except
143.34that no election is required and the net debt limitations in chapter 475 do not apply to the
143.35obligations. The issuing political subdivision may determine to issue the obligations as
144.1revenue obligations, payable solely from the collections of the federal grants anticipated,
144.2or may pledge its full faith and credit to the payment of the obligations.
144.3    Subd. 4. Use of proceeds. The proceeds of the obligations must be used:
144.4    (1) to pay or reimburse the costs of the transportation or transit projects relating to
144.5the federal grants being anticipated;
144.6    (2) to pay the costs of issuance of the obligations, including credit enhancement;
144.7    (3) to pay interest on the obligations for a period not exceeding three years from
144.8their date of issue; and
144.9    (4) if the full faith and credit of the issuing political subdivision is not pledged to the
144.10payment of the obligations, to fund a debt service reserve fund for the obligations.

144.11    Sec. 24. Minnesota Statutes 2006, section 475.53, subdivision 1, is amended to read:
144.12    Subdivision 1. Generally. Except as otherwise provided in sections 475.51 to
144.13475.74 , no municipality, except a school district or a city of the first class, shall incur or
144.14be subject to a net debt in excess of two three percent of the market value of taxable
144.15property in the municipality.
144.16EFFECTIVE DATE.This section is effective for obligations issued after June
144.1730, 2007.

144.18    Sec. 25. Minnesota Statutes 2006, section 475.58, subdivision 1, is amended to read:
144.19    Subdivision 1. Approval by electors; exceptions. Obligations authorized by law or
144.20charter may be issued by any municipality upon obtaining the approval of a majority of
144.21the electors voting on the question of issuing the obligations, but an election shall not be
144.22required to authorize obligations issued:
144.23    (1) to pay any unpaid judgment against the municipality;
144.24    (2) for refunding obligations;
144.25    (3) for an improvement or improvement program, which obligation is payable wholly
144.26or partly from the proceeds of special assessments levied upon property specially benefited
144.27by the improvement or by an improvement within the improvement program, or from tax
144.28increments, as defined in section 469.174, subdivision 25, including obligations which are
144.29the general obligations of the municipality, if the municipality is entitled to reimbursement
144.30in whole or in part from the proceeds of such special assessments or tax increments and
144.31not less than 20 percent of the cost of the improvement or the improvement program is to
144.32be assessed against benefited property or is to be paid from the proceeds of federal grant
144.33funds or a combination thereof, or is estimated to be received from tax increments;
144.34    (4) payable wholly from the income of revenue producing conveniences;
145.1    (5) under the provisions of a home rule charter which permits the issuance of
145.2obligations of the municipality without election;
145.3    (6) under the provisions of a law which permits the issuance of obligations of a
145.4municipality without an election;
145.5    (7) to fund pension or retirement fund or postemployment benefit liabilities pursuant
145.6to section 475.52, subdivision 6;
145.7    (8) under a capital improvement plan under section 373.40; and
145.8    (9) under sections 469.1813 to 469.1815 (property tax abatement authority bonds), if
145.9the proceeds of the bonds are not used for a purpose prohibited under section 469.176,
145.10subdivision 4g
, paragraph (b).

145.11    Sec. 26. Minnesota Statutes 2006, section 475.58, subdivision 3b, is amended to read:
145.12    Subd. 3b. Street reconstruction. (a) A municipality may, without regard to
145.13the election requirement under subdivision 1, issue and sell obligations for street
145.14reconstruction, if the following conditions are met:
145.15    (1) the streets are reconstructed under a street reconstruction plan that describes the
145.16streets to be reconstructed street reconstruction to be financed, the estimated costs, and
145.17any planned reconstruction of other streets in the municipality over the next five years,
145.18and the plan and issuance of the obligations has been approved by a vote of all of the
145.19members of the governing body present at the meeting following a public hearing for
145.20which notice has been published in the official newspaper at least ten days but not more
145.21than 28 days prior to the hearing; and
145.22    (2) if a petition requesting a vote on the issuance is signed by voters equal to
145.23five percent of the votes cast in the last municipal general election and is filed with the
145.24municipal clerk within 30 days of the public hearing, the municipality may issue the bonds
145.25only after obtaining the approval of a majority of the voters voting on the question of
145.26the issuance of the obligations.
145.27    (b) Obligations issued under this subdivision are subject to the debt limit of the
145.28municipality and are not excluded from net debt under section 475.51, subdivision 4.
145.29    (c) For purposes of this subdivision, street reconstruction includes utility
145.30replacement and relocation and other activities incidental to the street reconstruction, turn
145.31lanes and other improvements having a substantial public safety function, realignments,
145.32other modifications to intersect with state and county roads, and the local share of state
145.33and county road projects.
145.34    (d) Except in the case of turn lanes, safety improvements, realignments, intersection
145.35modifications, and the local share of state and county road projects, street reconstruction
146.1does not include the portion of project cost allocable to widening a street or adding curbs
146.2and gutters where none previously existed.

146.3    Sec. 27. VALIDATION.
146.4    Any trust or trust account or other custodial account or contract authorized under
146.5section 401(f) of the Internal Revenue Code, created prior to June 6, 2006, to pay
146.6postemployment benefits to employees or officers after termination of service, is hereby
146.7validated, may continue in full force and effect, and shall have continuing authority
146.8to accept new funds; however, this section does not validate or correct defects in any
146.9previously created trust document. Any funds held by a validated trust or account
146.10under this section may be invested as provided in Minnesota Statutes, section 471.6175,
146.11subdivision 5. A validated trust or account shall have until January 1, 2008, to bring
146.12its trust documents and procedures into compliance with Minnesota Statutes, section
146.13471.6175.
146.14EFFECTIVE DATE.This section is effective the day following final enactment.

146.15    Sec. 28. TOWN OF CRANE LAKE, CERTIFICATES OF INDEBTEDNESS.
146.16    Notwithstanding Minnesota Statutes, section 366.095, or any other law to the
146.17contrary, the town board of the town of Crane Lake in St. Louis County may issue one
146.18or more certificates of indebtedness in a total amount not to exceed $225,000, which
146.19are not subject to the debt limits of the town. The proceeds of the certificates must be
146.20used to acquire property and pay other costs related to a land exchange with the United
146.21States Forest Service. The certificates shall be payable in not more than 30 years and be
146.22issued on the terms and in the manner as the board may determine. Minnesota Statutes,
146.23sections 475.54, subdivision 1, and 475.56, paragraph (c), do not apply to the certificates
146.24issued under this section. A tax levy shall be made to pay the principal and interest on the
146.25certificates as in the case of bonds.
146.26EFFECTIVE DATE.This section is effective the day after the governing body of
146.27the town of Crane Lake and its chief clerical officer timely complete their compliance with
146.28Minnesota Statutes, section 645.021, subdivisions 2 and 3.

146.29    Sec. 29. CITY OF WINSTED; BONDING AUTHORITY.
146.30    (a) The city of Winsted may issue general obligation bonds under Minnesota
146.31Statutes, chapter 475, to finance the acquisition and betterment of a facility consisting of
146.32a city hall, community center, and police station; park improvements, including trails
147.1and an amphitheater; related public improvements; and substantial landscaping for the
147.2improvements.
147.3    (b) The bonds may be issued as general obligations of the city without an election to
147.4approve the bonds under Minnesota Statutes, section 475.58.
147.5    (c) The bonds are not included in computing any debt limitation applicable to the
147.6city, including, but not limited to, the net debt limits under Minnesota Statutes, section
147.7475.53, and the levy of taxes under Minnesota Statutes, section 475.61, to pay principal of
147.8and interest on the bonds is not subject to any levy limitation.
147.9    (d) The aggregate principal amount of bonds used to pay costs of the acquisition and
147.10betterment of the facility consisting of a city hall, community center, and police station;
147.11park improvements, including trails and an amphitheater; related public improvements;
147.12and substantial landscaping for the improvements may not exceed $4,900,000, plus an
147.13amount equal to the costs related to issuance of the bonds and capitalized interest.
147.14EFFECTIVE DATE.This section is effective upon compliance by the governing
147.15body of the city of Winsted with Minnesota Statutes, section 645.021, subdivision 3.

147.16ARTICLE 8
147.17MINERALS

147.18    Section 1. Minnesota Statutes 2006, section 276A.01, subdivision 3, is amended to
147.19read:
147.20    Subd. 3. Commercial-industrial property. "Commercial-industrial property"
147.21means the following categories of property, as defined in section 273.13, excluding that
147.22portion of the property (i) that may, by law, constitute the tax base for a tax increment
147.23pledged pursuant to section 469.042 or 469.162 or sections 469.174 to 469.178,
147.24certification of which was requested prior to May 1, 1996, to the extent and while the tax
147.25increment is so pledged; or (ii) that is exempt from taxation under section 272.02:
147.26    (1) that portion of class 5 property consisting of unmined iron ore and low-grade
147.27iron-bearing formations as defined in section 273.14, tools, implements, and machinery,
147.28except the portion of high voltage transmission lines, the value of which is deducted from
147.29net tax capacity under section 273.425; and
147.30    (2) that portion of class 3 and class 5 property which is either used or zoned for use
147.31for any commercial or industrial purpose, including property that becomes taxable under
147.32section 7, except for such property which is, or, in the case of property under construction,
147.33will when completed be used exclusively for residential occupancy and the provision of
147.34services to residential occupants thereof. Property must be considered as used exclusively
148.1for residential occupancy only if each of not less than 80 percent of its occupied residential
148.2units is, or, in the case of property under construction, will when completed be occupied
148.3under an oral or written agreement for occupancy over a continuous period of not less
148.4than 30 days.
148.5    If the classification of property prescribed by section 273.13 is modified by
148.6legislative amendment, the references in this subdivision are to the successor class or
148.7classes of property, or portions thereof, that include the kinds of property designated
148.8in this subdivision.

148.9    Sec. 2. Minnesota Statutes 2006, section 276A.04, is amended to read:
148.10276A.04 INCREASE IN NET TAX CAPACITY.
148.11    By July 15 of 1997 and each subsequent year, the auditor of each county in the
148.12area shall determine the amount, if any, by which the net tax capacity determined in the
148.13preceding year pursuant to section 276A.03, of commercial-industrial property subject to
148.14taxation within each municipality in the county exceeds the net tax capacity in 1995 of
148.15commercial-industrial property subject to taxation within that municipality, including the
148.16total net tax capacity of property that becomes taxable under section 7. If a municipality is
148.17located in two or more counties within the area, the auditors of those counties shall certify
148.18the data required by section 276A.03 to the county auditor responsible for allocating
148.19the levies of that municipality between or among the affected counties. That county
148.20auditor shall determine the amount of the net excess, if any, for the municipality under
148.21this section, and certify that amount under section 276A.05. The increase in total net tax
148.22capacity determined by this section must be reduced by the amount of any decreases in
148.23the net tax capacity of commercial-industrial property resulting from any court decisions,
148.24court-related stipulation agreements, or abatements for a prior year, and only in the
148.25amount of such decreases made during the 12-month period ending on May 1 of the
148.26current assessment year, where the decreases, if originally reflected in the determination of
148.27a prior year's net tax capacity under section 276A.03, would have resulted in a smaller
148.28contribution from the municipality in that year. An adjustment for the decreases shall be
148.29made only if the municipality made a contribution in a prior year based on the higher net
148.30tax capacity of the commercial-industrial property.

148.31    Sec. 3. Minnesota Statutes 2006, section 298.22, is amended by adding a subdivision
148.32to read:
148.33    Subd. 5a. Forest trust. The commissioner, upon the affirmative vote of a majority
148.34of the members of the board, may purchase forest lands in the taconite assistance area
149.1defined in under section 273.1341 with funds specifically authorized for the purchase. The
149.2acquired forest lands must be held in trust for the benefit of the citizens of the taconite
149.3assistance area as the Iron Range Miners' Memorial Forest. The forest trust lands shall be
149.4managed and developed for recreation and economic development purposes. Proceeds
149.5derived from the management of the lands and from the sale of timber or removal of
149.6gravel or other minerals from these forest lands shall be deposited into an Iron Range
149.7Miners' Memorial Forest account that is established within the state financial accounts.
149.8Funds may be expended from the account upon approval of a majority of the members of
149.9the board to purchase, manage, administer, convey interests in, and improve the forest
149.10lands. By majority vote of the members of the board, money in the Iron Range Miners'
149.11Memorial Forest account may be transferred into the corpus of the Douglas J. Johnson
149.12economic protection trust fund established under sections 298.291 to 298.294. The
149.13property acquired under the authority granted by this subdivision and income derived from
149.14the property or the operation or management of the property are exempt from taxation
149.15by the state or its political subdivisions.

149.16    Sec. 4. Minnesota Statutes 2006, section 298.2214, subdivision 2, is amended to read:
149.17    Subd. 2. Iron Range Higher Education Committee; membership. The members
149.18of the committee shall consist of:
149.19    (1) one member appointed by the governor;
149.20    (2) one member appointed by the president of the University of Minnesota;
149.21    (3) two members appointed by the commissioner of the Iron Range resources and
149.22rehabilitation appointed by the chair; and
149.23    (4) the commissioner of Iron Range resources and rehabilitation; and
149.24    (5) the President of the Northeast Higher Education District.

149.25    Sec. 5. Minnesota Statutes 2006, section 298.227, is amended to read:
149.26298.227 TACONITE ECONOMIC DEVELOPMENT FUND.
149.27    Subdivision 1. Fund for producers. An amount equal to that distributed pursuant
149.28to each taconite producer's taxable production and qualifying sales under section 298.28,
149.29subdivision 9a
, shall be held by the Iron Range Resources and Rehabilitation Board in
149.30a separate taconite economic development fund for each taconite and direct reduced
149.31ore producer.
149.32    Subd. 2. Committee review. Money from the fund for each producer shall be
149.33released by the commissioner after review by a joint committee consisting of an equal
149.34number of representatives of the salaried employees and the nonsalaried production and
150.1maintenance employees of that producer. The District 11 director of the United States
150.2Steelworkers of America, on advice of each local employee president, shall select
150.3the employee members. In nonorganized operations, the employee committee shall be
150.4elected by the nonsalaried production and maintenance employees. The review must be
150.5completed no later than six months after the producer presents a proposal for expenditure
150.6of the funds to the committee.
150.7    Subd. 3. Release of funds. The funds held pursuant to this section may be
150.8released only for acquisition of equipment and facilities for the producer or for research
150.9and development in Minnesota on new mining, or taconite, iron, or steel production
150.10technology, but only if the producer provides a matching expenditure to be used for
150.11the same purpose of at least 50 percent of the distribution based on 14.7 cents per ton
150.12beginning with distributions in 2002 for distributions in 2007, 11.7 cents per ton for
150.13distributions in 2008, 8.7 cents per ton for distributions in 2009, 5.7 cents per ton for
150.14distributions in 2010, 2.7 cents per ton for distributions in 2011, and 1 cent per ton for
150.15distributions in 2012.
150.16    Subd. 4. Repayment required. If a producer uses money from the fund to procure
150.17haulage trucks, mobile equipment, or mining shovels, and the producer removes the piece
150.18of equipment from the taconite tax relief area defined in section 273.134 within ten years
150.19from the date of receipt of the money from the fund, a portion of the money granted
150.20from the fund must be repaid to the taconite economic development fund. The portion
150.21of the money to be repaid is 100 percent of the grant if the equipment is removed from
150.22the taconite tax relief area within 12 months after receipt of the money from the fund,
150.23declining by ten percent for each of the subsequent nine years during which the equipment
150.24remains within the taconite tax relief area.
150.25    Subd. 5. Sale of facility. If a taconite production facility is sold after operations at
150.26the facility had ceased, any money remaining in the fund for the former producer may be
150.27released to the purchaser of the facility on the terms otherwise applicable to the former
150.28producer under this section.
150.29    Subd. 6. Other distributions. If a producer fails to provide matching funds for
150.30a proposed expenditure within six months after the commissioner approves release of
150.31the funds, the funds are available for release to another producer in proportion to the
150.32distribution provided and under the conditions of this section. Any portion of the fund
150.33which is not released by the commissioner within two years of its deposit in the fund shall
150.34be divided between the taconite environmental protection fund created in section 298.223
150.35and the Douglas J. Johnson economic protection trust fund created in section 298.292 for
150.36placement in their respective special accounts. Two-thirds of the unreleased funds shall be
151.1distributed to the taconite environmental protection fund and one-third to the Douglas J.
151.2Johnson economic protection trust fund.
151.3EFFECTIVE DATE.This section is effective for distributions in 2008 and
151.4thereafter.

151.5    Sec. 6. Minnesota Statutes 2006, section 298.24, subdivision 1, is amended to read:
151.6    Subdivision 1. Imposed; calculation. (a) For concentrate produced in 2001, 2002,
151.7and 2003, there is imposed upon taconite and iron sulphides, and upon the mining and
151.8quarrying thereof, and upon the production of iron ore concentrate therefrom, and upon
151.9the concentrate so produced, a tax of $2.103 per gross ton of merchantable iron ore
151.10concentrate produced therefrom. For concentrates produced in 2005, the tax rate is the
151.11same rate imposed for concentrates produced in 2004.
151.12    (b) For concentrates produced in 2006 and subsequent years, the tax rate shall be
151.13equal to the preceding year's tax rate plus an amount equal to the preceding year's tax rate
151.14multiplied by the percentage increase in the implicit price deflator from the fourth quarter
151.15of the second preceding year to the fourth quarter of the preceding year. "Implicit price
151.16deflator" means the implicit price deflator for the gross domestic product prepared by the
151.17Bureau of Economic Analysis of the United States Department of Commerce.
151.18    (c) On concentrates produced in 1997 and thereafter, an additional tax is imposed
151.19equal to three cents per gross ton of merchantable iron ore concentrate for each one
151.20percent that the iron content of the product exceeds 72 percent, when dried at 212 degrees
151.21Fahrenheit.
151.22    (d) The tax shall be imposed on the average of the production for the current year
151.23and the previous two years. The rate of the tax imposed will be the current year's tax rate.
151.24This clause shall not apply in the case of the closing of a taconite facility if the property
151.25taxes on the facility would be higher if this clause and section 298.25 were not applicable.
151.26    (e) If the tax or any part of the tax imposed by this subdivision is held to be
151.27unconstitutional, a tax of $2.103 per gross ton of merchantable iron ore concentrate
151.28produced shall be imposed.
151.29    (f) Consistent with the intent of this subdivision to impose a tax based upon the
151.30weight of merchantable iron ore concentrate, the commissioner of revenue may indirectly
151.31determine the weight of merchantable iron ore concentrate included in fluxed pellets by
151.32subtracting the weight of the limestone, dolomite, or olivine derivatives or other basic
151.33flux additives included in the pellets from the weight of the pellets. For purposes of this
151.34paragraph, "fluxed pellets" are pellets produced in a process in which limestone, dolomite,
151.35olivine, or other basic flux additives are combined with merchantable iron ore concentrate.
152.1No subtraction from the weight of the pellets shall be allowed for binders, mineral and
152.2chemical additives other than basic flux additives, or moisture.
152.3    (g)(1) Notwithstanding any other provision of this subdivision, for the first two years
152.4of a plant's commercial production of direct reduced ore, no tax is imposed under this
152.5section. As used in this paragraph, "commercial production" is production of more than
152.650,000 tons of direct reduced ore in the current year or in any prior year, "noncommercial
152.7production" is production of 50,000 tons or less of direct reduced ore in any year, and
152.8"direct reduced ore" is ore that results in a product that has an iron content of at least 75
152.9percent. For the third year of a plant's commercial production of direct reduced ore, the
152.10rate to be applied to direct reduced ore is 25 percent of the rate otherwise determined
152.11under this subdivision. For the fourth commercial production year, the rate is 50 percent of
152.12the rate otherwise determined under this subdivision; for the fifth commercial production
152.13year, the rate is 75 percent of the rate otherwise determined under this subdivision; and for
152.14all subsequent commercial production years, the full rate is imposed.
152.15    (2) Subject to clause (1), production of direct reduced ore in this state is subject to
152.16the tax imposed by this section, but if that production is not produced by a producer
152.17of taconite or iron sulfides, the production of taconite or iron sulfides consumed in the
152.18production of direct reduced iron in this state is not subject to the tax imposed by this
152.19section on taconite or iron sulfides.
152.20    (3) Notwithstanding any other provision of this subdivision, no tax is imposed
152.21on direct reduced ore under this section during the facility's noncommercial production
152.22of direct reduced ore. The taconite or iron sulphides consumed in the noncommercial
152.23production of direct reduced ore is subject to the tax imposed by this section on taconite
152.24and iron sulphides. Three-year average production of direct reduced ore does not
152.25include production of direct reduced ore in any noncommercial year. Three-year average
152.26production for a direct reduced ore facility that has noncommercial production is the
152.27average of the commercial production of direct reduced ore for the current year and the
152.28previous two commercial years.
152.29    (4) This paragraph applies only to plants for which all environmental permits have
152.30been obtained and construction has begun before July 1, 2008.

152.31    Sec. 7. Minnesota Statutes 2006, section 298.25, is amended to read:
152.32298.25 TAXES ADDITIONAL TO OCCUPATION TAX; IN LIEU OF OTHER
152.33TAXES.
152.34    The taxes imposed under section 298.24 shall be in addition to the occupation tax
152.35imposed upon the business of mining and producing iron ore. Except as herein otherwise
153.1provided, such taxes shall be in lieu of all other taxes upon such taconite, iron sulphides,
153.2and direct reduced ore or the lands in which they are contained, or upon the mining or
153.3quarrying thereof, or the production of concentrate or direct reduced ore therefrom, or
153.4upon the concentrate or direct reduced ore produced, or upon the machinery, equipment,
153.5tools, supplies and buildings used in such mining, quarrying or production, or upon the
153.6lands occupied by, or used in connection with, such mining, quarrying or production
153.7facilities. If electric or steam power for the mining, transportation or concentration of
153.8such taconite, concentrates or direct reduced ore produced therefrom is generated in
153.9plants principally devoted to the generation of power for such purposes, the plants in
153.10which such power is generated and all machinery, equipment, tools, supplies, transmission
153.11and distribution lines used in the generation and distribution of such power, shall not be
153.12considered to be machinery, equipment, tools, supplies and buildings used in the mining,
153.13quarrying, or production of taconite, taconite concentrates or direct reduced ore within
153.14the meaning of this section, and shall be subject to general property taxation. If part
153.15of the power generated in such a plant is used for purposes other than the mining or
153.16concentration of taconite or direct reduced ore or the transportation or loading of taconite,
153.17the concentrates thereof or direct reduced ore, a proportionate share of the value of such
153.18generating facilities, equal to the proportion that the power used for such other purpose
153.19bears to the generating capacity of the plant, shall be subject to the general property tax
153.20in the same manner as other property; provided, power generated in such a plant and
153.21exchanged for an equivalent amount of power which is used for the mining, transportation,
153.22or concentration of such taconite, concentrates or direct reduced ore produced therefrom,
153.23shall be considered as used for such purposes within the meaning of this section. Nothing
153.24herein shall prevent the assessment and taxation of the surface of reserve land containing
153.25taconite and not occupied by such facilities or used in connection therewith at the value
153.26thereof without regard to the taconite or iron sulphides therein, nor the assessment and
153.27taxation of merchantable iron ore or other minerals, or iron-bearing materials other than
153.28taconite or iron sulphides in such lands in the manner provided by law, nor the assessment
153.29and taxation of facilities used in producing sulphur or sulphur products from iron sulphide
153.30concentrates, or in refining such sulphur products, under the general property tax laws.
153.31Nothing herein shall except from general taxation or from taxation as provided by other
153.32laws any property used for residential or townsite purposes, including utility services
153.33thereto. This section does not provide an exemption from general property taxation for ore
153.34docks even if located at the site of a taconite production facility.
153.35EFFECTIVE DATE.This section is effective for taxes levied in 2007, payable
153.36in 2008, and thereafter.

154.1    Sec. 8. Minnesota Statutes 2006, section 298.28, subdivision 3, is amended to read:
154.2    Subd. 3. Cities; towns. (a) 12.5 cents per taxable ton, less any amount distributed
154.3under subdivision 8, and paragraph (b), must be allocated to the taconite municipal aid
154.4account to be distributed as provided in section 298.282.
154.5    (b) An amount must be allocated to towns or cities that is annually certified by
154.6the county auditor of a county containing a taconite tax relief area as defined in section
154.7273.134, paragraph (b) , within which there is (1) an organized township if, as of January
154.82, 1982, more than 75 percent of the assessed valuation of the township consists of iron
154.9ore or (2) a city if, as of January 2, 1980, more than 75 percent of the assessed valuation
154.10of the city consists of iron ore.
154.11    (c) The amount allocated under paragraph (b) will be the portion of a township's or
154.12city's certified levy equal to the proportion of (1) the difference between 50 percent of
154.13January 2, 1982, assessed value in the case of a township and 50 percent of the January 2,
154.141980, assessed value in the case of a city and its current assessed value to (2) the sum of
154.15its current assessed value plus the difference determined in (1), provided that the amount
154.16distributed shall not exceed $55 per capita in the case of a township or $75 per capita in
154.17the case of a city. For purposes of this limitation, population will be determined according
154.18to the 1980 decennial census conducted by the United States Bureau of the Census. If the
154.19current assessed value of the township exceeds 50 percent of the township's January 2,
154.201982, assessed value, or if the current assessed value of the city exceeds 50 percent of the
154.21city's January 2, 1980, assessed value, this paragraph shall not apply. For purposes of this
154.22paragraph, "assessed value," when used in reference to years other than 1980 or 1982,
154.23means the appropriate net tax capacities multiplied by 10.2.
154.24    (d) In addition to other distributions under this subdivision, 3 cents per taxable ton
154.25must be allocated for distribution to towns that are entirely located within the taconite tax
154.26relief area defined in section 273.134, paragraph (b). The amount available under this
154.27paragraph will be distributed to eligible towns on a per capita basis.
154.28EFFECTIVE DATE.This section is effective for distributions in 2008 and
154.29thereafter.

154.30    Sec. 9. Minnesota Statutes 2006, section 298.28, subdivision 4, is amended to read:
154.31    Subd. 4. School districts. (a) 17.15 22.65 cents per taxable ton, plus the increase
154.32provided in paragraph (d) must be allocated to qualifying school districts to be distributed,
154.33based upon the certification of the commissioner of revenue, under paragraphs (b) and (c),
154.34except as otherwise provided in paragraph (f).
155.1    (b) (i) 3.43 cents per taxable ton must be distributed to the school districts in which
155.2the lands from which taconite was mined or quarried were located or within which the
155.3concentrate was produced. The distribution must be based on the apportionment formula
155.4prescribed in subdivision 2.
155.5    (ii) Three cents per taxable ton from each taconite facility must be distributed to
155.6each affected school district for deposit in a fund dedicated to building maintenance
155.7and repairs, as follows:
155.8    (1) proceeds from Keewatin Taconite or its successor are distributed to Independent
155.9School Districts Nos. 316, Coleraine, and 319, Nashwauk-Keewatin, or their successor
155.10districts;
155.11    (2) proceeds from the Hibbing Taconite Company or its successor are distributed to
155.12Independent School Districts Nos. 695, Chisholm, and 701, Hibbing, or their successor
155.13districts;
155.14    (3) proceeds from the Mittal Steel Company and Minntac or their successors are
155.15distributed to Independent School Districts Nos. 712, Mountain Iron-Buhl, 706, Virginia,
155.162711, Mesabi East, and 2154, Eveleth-Gilbert, or their successor districts;
155.17    (4) proceeds from the Northshore Mining Company or its successor are distributed
155.18to Independent School Districts Nos. 2142, St. Louis County, and 318, Lake Superior,
155.19or their successor districts; and
155.20    (5) proceeds from United Taconite or its successor are distributed to Independent
155.21School Districts Nos. 2142, St. Louis County, and 2154, Eveleth-Gilbert, or their
155.22successor districts.
155.23    (c)(i) 13.72 16.72 cents per taxable ton, less any amount distributed under paragraph
155.24(e), shall be distributed to a group of school districts comprised of those school districts
155.25which qualify as a tax relief area under section 273.134, paragraph (b), or in which there is
155.26a qualifying municipality as defined by section 273.134, paragraph (a), in direct proportion
155.27to school district indexes as follows: for each school district, its pupil units determined
155.28under section 126C.05 for the prior school year shall be multiplied by the ratio of the
155.29average adjusted net tax capacity per pupil unit for school districts receiving aid under
155.30this clause as calculated pursuant to chapters 122A, 126C, and 127A for the school year
155.31ending prior to distribution to the adjusted net tax capacity per pupil unit of the district.
155.32Each district shall receive that portion of the distribution which its index bears to the sum
155.33of the indices for all school districts that receive the distributions.
155.34    (ii) Notwithstanding clause (i), each school district that receives a distribution
155.35under sections 298.018; 298.23 to 298.28, exclusive of any amount received under this
155.36clause; 298.34 to 298.39; 298.391 to 298.396; 298.405; or any law imposing a tax on
156.1severed mineral values after reduction for any portion distributed to cities and towns under
156.2section 126C.48, subdivision 8, paragraph (5), that is less than the amount of its levy
156.3reduction under section 126C.48, subdivision 8, for the second year prior to the year of the
156.4distribution shall receive a distribution equal to the difference; the amount necessary to
156.5make this payment shall be derived from proportionate reductions in the initial distribution
156.6to other school districts under clause (i).
156.7    (d) Any school district described in paragraph (c) where a levy increase pursuant to
156.8section 126C.17, subdivision 9, was authorized by referendum for taxes payable in 2001,
156.9shall receive a distribution of 21.3 cents per ton. Each district shall receive $175 times the
156.10pupil units identified in section 126C.05, subdivision 1, enrolled in the second previous
156.11year or the 1983-1984 school year, whichever is greater, less the product of 1.8 percent
156.12times the district's taxable net tax capacity in the second previous year.
156.13    If the total amount provided by paragraph (d) is insufficient to make the payments
156.14herein required then the entitlement of $175 per pupil unit shall be reduced uniformly
156.15so as not to exceed the funds available. Any amounts received by a qualifying school
156.16district in any fiscal year pursuant to paragraph (d) shall not be applied to reduce general
156.17education aid which the district receives pursuant to section 126C.13 or the permissible
156.18levies of the district. Any amount remaining after the payments provided in this paragraph
156.19shall be paid to the commissioner of Iron Range resources and rehabilitation who shall
156.20deposit the same in the taconite environmental protection fund and the Douglas J. Johnson
156.21economic protection trust fund as provided in subdivision 11.
156.22    Each district receiving money according to this paragraph shall reserve the lesser of
156.23the amount received under this paragraph or $25 times the number of pupil units served
156.24in the district. It may use the money for early childhood programs or for outcome-based
156.25learning programs that enhance the academic quality of the district's curriculum. The
156.26outcome-based learning programs must be approved by the commissioner of education.
156.27    (e) There shall be distributed to any school district the amount which the school
156.28district was entitled to receive under section 298.32 in 1975.
156.29    (f) Effective for the distribution in 2003 only, five percent of the distributions to
156.30school districts under paragraphs (b), (c), and (e); subdivision 6, paragraph (c); subdivision
156.3111; and section 298.225, shall be distributed to the general fund. The remainder less any
156.32portion distributed to cities and towns under section 126C.48, subdivision 8, paragraph
156.33(5), shall be distributed to the Douglas J. Johnson economic protection trust fund created
156.34in section 298.292. Fifty percent of the amount distributed to the Douglas J. Johnson
156.35economic protection trust fund shall be made available for expenditure under section
156.36298.293 as governed by section 298.296. Effective in 2003 only, 100 percent of the
157.1distributions to school districts under section 477A.15 less any portion distributed to
157.2cities and towns under section 126C.48, subdivision 8, paragraph (5), shall be distributed
157.3to the general fund.
157.4EFFECTIVE DATE.This section is effective for distributions in 2008 and
157.5thereafter.

157.6    Sec. 10. Minnesota Statutes 2006, section 298.28, subdivision 5, is amended to read:
157.7    Subd. 5. Counties. (a) 26.05 cents per taxable ton is allocated to counties to be
157.8distributed, based upon certification by the commissioner of revenue, under paragraphs
157.9(b) to (d) (c).
157.10    (b) 20.525 15.525 cents per taxable ton shall be distributed to the county in which
157.11the taconite is mined or quarried or in which the concentrate is produced, less any
157.12amount which is to be distributed pursuant to paragraph (c). The apportionment formula
157.13prescribed in subdivision 2 is the basis for the distribution.
157.14    (c) If an electric power plant owned by and providing the primary source of power
157.15for a taxpayer mining and concentrating taconite is located in a county other than the
157.16county in which the mining and the concentrating processes are conducted, one cent per
157.17taxable ton of the tax distributed to the counties pursuant to paragraph (b) and imposed
157.18on and collected from such taxpayer shall be paid to the county in which the power plant
157.19is located.
157.20    (d) 5.525 10.525 cents per taxable ton shall be paid to the county from which the
157.21taconite was mined, quarried or concentrated to be deposited in the county road and
157.22bridge fund. If the mining, quarrying and concentrating, or separate steps in any of those
157.23processes are carried on in more than one county, the commissioner shall follow the
157.24apportionment formula prescribed in subdivision 2.
157.25EFFECTIVE DATE.This section is effective for distributions in 2008 and
157.26thereafter.

157.27    Sec. 11. Minnesota Statutes 2006, section 298.28, subdivision 6, is amended to read:
157.28    Subd. 6. Property tax relief. (a) In 2002 2008 and thereafter, 33.9 30.9 cents per
157.29taxable ton, less any amount required to be distributed under paragraphs (b) and (c), or
157.30section 298.2961, subdivision 5, must be allocated to St. Louis County acting as the
157.31counties' fiscal agent, to be distributed as provided in sections 273.134 to 273.136.
157.32    (b) If an electric power plant owned by and providing the primary source of power
157.33for a taxpayer mining and concentrating taconite is located in a county other than the
158.1county in which the mining and the concentrating processes are conducted, .1875 cent per
158.2taxable ton of the tax imposed and collected from such taxpayer shall be paid to the county.
158.3    (c) If an electric power plant owned by and providing the primary source of power
158.4for a taxpayer mining and concentrating taconite is located in a school district other than
158.5a school district in which the mining and concentrating processes are conducted, .4541
158.6cent per taxable ton of the tax imposed and collected from the taxpayer shall be paid to
158.7the school district.

158.8    Sec. 12. Minnesota Statutes 2006, section 298.28, subdivision 9a, is amended to read:
158.9    Subd. 9a. Taconite economic development fund. (a) 30.1 cents per ton for
158.10distributions in 2002 and thereafter For distributions in 2007 to 2012, the amount provided
158.11in this subdivision must be paid to the taconite economic development fund. The amount
158.12of the distributions is at the following amounts per ton:
158.13    (1) for distribution in 2007, 30.1 cents;
158.14    (2) for distribution in 2008, 25.1 cents;
158.15    (3) for distribution in 2009, 20.1 cents;
158.16    (4) for distribution in 2010, 15.1 cents;
158.17    (5) for distribution in 2011, 10.1 cents; and
158.18    (6) for distribution in 2012, 5.1 cents.
158.19    No distribution shall be made under this paragraph in 2004 or any subsequent year
158.20in which total industry production falls below 30 million tons. Distribution shall only be
158.21made to a taconite producer's fund under section 298.227 if the producer timely pays its
158.22tax under section 298.24 by the dates provided under section 298.27, or pursuant to the
158.23due dates provided by an administrative agreement with the commissioner.
158.24    (b) An amount equal to 50 percent of the tax under section 298.24 for concentrate
158.25sold in the form of pellet chips and fines not exceeding 5/16 inch in size and not including
158.26crushed pellets shall be paid to the taconite economic development fund. The amount
158.27paid shall not exceed $700,000 annually for all companies. If the initial amount to be
158.28paid to the fund exceeds this amount, each company's payment shall be prorated so the
158.29total does not exceed $700,000.
158.30    (c) No distributions will be made under this subdivision after 2012. Any amount
158.31remaining in this fund on January 1, 2013, shall be distributed, two-thirds to the
158.32environmental protection fund and one-third to the Douglas J. Johnson economic
158.33protection trust fund.

159.1    Sec. 13. Minnesota Statutes 2006, section 298.28, is amended by adding a subdivision
159.2to read:
159.3    Subd. 9d. Iron Range higher education account. Two cents per taxable ton must
159.4be allocated to the Iron Range Resources and Rehabilitation Board to be deposited in
159.5an Iron Range higher education account that is hereby created, to be used for higher
159.6education programs, including apprenticeship and training programs certified by the
159.7Minnesota Department of Labor and Industry, conducted at educational institutions and
159.8apprenticeship and training facilities located in the taconite assistance area defined in
159.9section 273.1341. The Iron Range Higher Education committee under section 298.2214
159.10and the Iron Range Resources and Rehabilitation Board must approve all expenditures
159.11from the account.
159.12EFFECTIVE DATE.This section is effective for production in 2008, distributions
159.13in 2009, and thereafter.

159.14    Sec. 14. Minnesota Statutes 2006, section 298.292, subdivision 2, is amended to read:
159.15    Subd. 2. Use of money. Money in the Douglas J. Johnson economic protection trust
159.16fund may be used for the following purposes:
159.17    (1) to provide loans, loan guarantees, interest buy-downs and other forms of
159.18participation with private sources of financing, but a loan to a private enterprise shall be
159.19for a principal amount not to exceed one-half of the cost of the project for which financing
159.20is sought, and the rate of interest on a loan to a private enterprise shall be no less than the
159.21lesser of eight percent or an interest rate three percentage points less than a full faith
159.22and credit obligation of the United States government of comparable maturity, at the
159.23time that the loan is approved;
159.24    (2) to fund reserve accounts established to secure the payment when due of the
159.25principal of and interest on bonds issued pursuant to section 298.2211;
159.26    (3) to pay in periodic payments or in a lump sum payment any or all of the interest
159.27on bonds issued pursuant to chapter 474 for the purpose of constructing, converting,
159.28or retrofitting heating facilities in connection with district heating systems or systems
159.29utilizing alternative energy sources; and
159.30    (4) to invest in a venture capital fund or enterprise that will provide capital to other
159.31entities that are engaging in, or that will engage in, projects or programs that have the
159.32purposes set forth in subdivision 1. No investments may be made in a venture capital fund
159.33or enterprise unless at least two other unrelated investors make investments of at least
159.34$500,000 in the venture capital fund or enterprise, and the investment by the Douglas
159.35J. Johnson economic protection trust fund may not exceed the amount of the largest
160.1investment by an unrelated investor in the venture capital fund or enterprise. For purposes
160.2of this subdivision, an "unrelated investor" is a person or entity that is not related to
160.3the entity in which the investment is made or to any individual who owns more than 40
160.4percent of the value of the entity, in any of the following relationships: spouse, parent,
160.5child, sibling, employee, or owner of an interest in the entity that exceeds ten percent of
160.6the value of all interests in it. For purposes of determining the limitations under this
160.7clause, the amount of investments made by an investor other than the Douglas J. Johnson
160.8economic protection trust fund is the sum of all investments made in the venture capital
160.9fund or enterprise during the period beginning one year before the date of the investment
160.10by the Douglas J. Johnson economic protection trust fund; and
160.11    (5) to purchase forest land in the taconite assistance area defined in section 273.1341
160.12to be held and managed as a public trust for the benefit of the area for the purposes
160.13authorized in section 298.22, subdivision 5a.
160.14    Money from the trust fund shall be expended only in or for the benefit of the taconite
160.15assistance area defined in section 273.1341.

160.16    Sec. 15. Minnesota Statutes 2006, section 298.296, subdivision 2, is amended to read:
160.17    Subd. 2. Expenditure of funds. (a) Before January 1, 2028, funds may be expended
160.18on projects and for administration of the trust fund only from the net interest, earnings,
160.19and dividends arising from the investment of the trust at any time, including net interest,
160.20earnings, and dividends that have arisen prior to July 13, 1982, plus $10,000,000 made
160.21available for use in fiscal year 1983, except that any amount required to be paid out of the
160.22trust fund to provide the property tax relief specified in Laws 1977, chapter 423, article
160.23X, section 4, and to make school bond payments and payments to recipients of taconite
160.24production tax proceeds pursuant to section 298.225, may be taken from the corpus of
160.25the trust.
160.26    (b) Additionally, upon recommendation by the board, up to $13,000,000 from the
160.27corpus of the trust may be made available for use as provided in subdivision 4, and up to
160.28$10,000,000 from the corpus of the trust may be made available for use as provided in
160.29section 298.2961.
160.30    (c) Additionally, an amount equal to 20 percent of the value of the corpus of the trust
160.31on May 18, 2002, not including the funds authorized in paragraph (b), plus the amounts
160.32made available under section 298.28, subdivision 4, and Laws 2002, chapter 377, article
160.338, section 17, may be expended on projects. Funds may be expended for projects under
160.34this paragraph only if the project:
161.1    (1) is for the purposes established under section 298.292, subdivision 1, clause
161.2(1) or (2); and
161.3    (2) is approved by the board upon an affirmative vote of at least ten of its members.
161.4No money made available under this paragraph or paragraph (d) can be used for
161.5administrative or operating expenses of the Iron Range Resources and Rehabilitation
161.6Board or expenses relating to any facilities owned or operated by the board on May 18,
161.72002.
161.8    (d) Upon recommendation by a unanimous vote of all members of the board,
161.9amounts in addition to those authorized under paragraphs (a), (b), and (c) may be
161.10expended on projects described in section 298.292, subdivision 1.
161.11    (e) Annual administrative costs, not including detailed engineering expenses for the
161.12projects, shall not exceed five percent of the net interest, dividends, and earnings arising
161.13from the trust in the preceding fiscal year.
161.14    (f) Principal and interest received in repayment of loans made pursuant to this
161.15section, and earnings on other investments made under section 298.292, subdivision 2,
161.16clause (4), shall be deposited in the state treasury and credited to the trust. These receipts
161.17are appropriated to the board for the purposes of sections 298.291 to 298.298.
161.18    (g) Additionally, notwithstanding section 298.293, upon affirmative vote of a
161.19majority of the members of the board, money from the corpus of the trust may be expanded
161.20to purchase forest lands within the taconite assistance area as provided in sections 298.22,
161.21subdivision 5a, and 298.292, subdivision 2, clause (5).

161.22    Sec. 16. Minnesota Statutes 2006, section 298.2961, subdivision 4, is amended to read:
161.23    Subd. 4. Grant and loan fund. (a) A fund is established to receive distributions
161.24under section 298.28, subdivision 9b, and to make grants or loans as provided in this
161.25subdivision. Any grant or loan made under this subdivision must be approved by
161.26a majority of the members of the Iron Range Resources and Rehabilitation Board,
161.27established under section 298.22.
161.28    (b) Distributions received in calendar year 2005 are allocated to the city of Virginia
161.29for improvements and repairs to the city's steam heating system.
161.30    (c) Distributions received in calendar year 2006 are allocated to a project of the
161.31public utilities commissions of the cities of Hibbing and Virginia to convert their electrical
161.32generating plants to the use of biomass products, such as wood.
161.33    (d) Distributions received in calendar year 2007 must be paid to the city of Tower to
161.34be used for the East Two Rivers project in or near the city of Tower.
162.1    (e) For distributions received in 2008, the first $2,000,000 of the 2008 distribution
162.2must be paid to St. Louis County for deposit in its county road and bridge fund to be used
162.3for relocation of St. Louis County Road 715, commonly referred to as Pike River Road.
162.4The remainder of the 2008 distribution and the full must be paid to St. Louis County for a
162.5grant to the City of Virginia for connecting sewer and water lines to the St. Louis County
162.6maintenance garage on Highway 135, further extending the lines to interconnect with the
162.7city of Gilbert's sewer and water lines. The total amount of the distributions in 2009 and
162.8subsequent years is allocated for projects under section 298.223, subdivision 1.
162.9EFFECTIVE DATE.This section is effective the day following final enactment.

162.10    Sec. 17. Minnesota Statutes 2006, section 298.2961, subdivision 5, is amended to read:
162.11    Subd. 5. Public works and local economic development fund. For distributions in
162.122007 only, a special fund is established to receive 38.4 cents per ton that otherwise would
162.13be allocated under section 298.28, subdivision 6. The following amounts are allocated to
162.14St. Louis County acting as the fiscal agent for the recipients for the specific purposes:
162.15    (1) 13.4 cents per ton for the Central Iron Range Sanitary Sewer District for
162.16construction of a combined wastewater facility and notwithstanding section 298.28,
162.17subdivision 11, paragraph (a), or any other law, interest accrued on this money while held
162.18by St. Louis County shall also be distributed to the recipient;
162.19    (2) six cents per ton to the city of Eveleth to redesign and design and construct
162.20improvements to renovate its water treatment facility;
162.21    (3) one cent per ton for the East Range Joint Powers Board to acquire land for and to
162.22design a central wastewater collection and treatment system;
162.23    (4) 0.5 cents per ton to the city of Hoyt Lakes to repair Leeds Road;
162.24    (5) 0.7 cents per ton to the city of Virginia to extend Eighth Street South;
162.25    (6) 0.7 cents per ton to the city of Mountain Iron to repair Hoover Road;
162.26    (7) 0.9 cents per ton to the city of Gilbert for alley repairs between Michigan and
162.27Indiana Avenues and for repayment of a loan to the Minnesota Department of Employment
162.28and Economic Development;
162.29    (8) 0.4 cents per ton to the city of Keewatin for a new city well;
162.30    (9) 0.3 cents per ton to the city of Grand Rapids for planning for a fire and hazardous
162.31materials center;
162.32    (10) 0.9 cents per ton to Aitkin County Growth for an economic development
162.33project for peat harvesting;
162.34    (11) 0.4 cents per ton to the city of Nashwauk to develop a comprehensive city plan;
163.1    (12) 0.4 cents per ton to the city of Taconite for development of a city comprehensive
163.2plan;
163.3    (13) 0.3 cents per ton to the city of Marble for water and sewer infrastructure;
163.4    (14) 0.8 cents per ton to Aitkin County for improvements to the Long Lake
163.5Environmental Learning Center;
163.6    (15) 0.3 cents per ton to the city of Coleraine for the Coleraine Technology Center;
163.7    (16) 0.5 cents per ton to the Economic Development Authority of the city of Grand
163.8Rapids for planning for the North Central Research and Technology Laboratory;
163.9    (17) 0.6 cents per ton to the city of Bovey for sewer and water extension;
163.10    (18) 0.3 cents per ton to the city of Calumet for infrastructure improvements; and
163.11    (19) ten cents per ton to an economic development authority in a city through which
163.12State Highway 1 passes, or a city in Independent School District No. 2142 that has an
163.13active mine, the commissioner of Iron Range Resources and Rehabilitation for deposit
163.14in a Highway 1 Corridor Account established by the commissioner, to be distributed by
163.15the commissioner to any of the cities of Babbitt, Cook, Ely, or Tower, for an economic
163.16development project projects approved by the Iron Range Resources and Rehabilitation
163.17Board; notwithstanding section 298.28, subdivision 11, paragraph (a), or any other law,
163.18interest accrued on this money while held by St. Louis County or the commissioner
163.19shall also be distributed to the recipient.

163.20    Sec. 18. Minnesota Statutes 2006, section 298.75, subdivision 1, is amended to read:
163.21    Subdivision 1. Definitions. Except as may otherwise be provided, the following
163.22words, when used in this section, shall have the meanings herein ascribed to them.
163.23    (1) (a) "Aggregate material" shall mean means:
163.24    (1) nonmetallic natural mineral aggregate including, but not limited to sand, silica
163.25sand, gravel, crushed rock, limestone, granite, and borrow, but only if the borrow is
163.26transported on a public road, street, or highway., provided that nonmetallic aggregate
163.27material shall does not include dimension stone and dimension granite; and
163.28    (2) taconite tailings, crushed rock, and architectural or dimension stone and
163.29dimension granite removed from a taconite mine or the site of a previously operated
163.30taconite mine.
163.31    Aggregate material must be measured or weighed after it has been extracted from
163.32the pit, quarry, or deposit.
163.33    (2) (b) "Person" shall mean means any individual, firm, partnership, corporation,
163.34organization, trustee, association, or other entity.
164.1    (3) (c) "Operator" shall mean means any person engaged in the business of removing
164.2aggregate material from the surface or subsurface of the soil, for the purpose of sale,
164.3either directly or indirectly, through the use of the aggregate material in a marketable
164.4product or service.
164.5    (4) (d) "Extraction site" shall mean means a pit, quarry, or deposit containing
164.6aggregate material and any contiguous property to the pit, quarry, or deposit which is used
164.7by the operator for stockpiling the aggregate material.
164.8    (5) (e) "Importer" shall mean means any person who buys aggregate material
164.9produced from a county not listed in paragraph (6) (f) or another state and causes the
164.10aggregate material to be imported into a county in this state which imposes a tax on
164.11aggregate material.
164.12    (6) (f) "County" shall mean means the counties of Pope, Stearns, Benton, Sherburne,
164.13Carver, Scott, Dakota, Le Sueur, Kittson, Marshall, Pennington, Red Lake, Polk, Norman,
164.14Mahnomen, Clay, Becker, Carlton, St. Louis, Rock, Murray, Wilkin, Big Stone, Sibley,
164.15Hennepin, Washington, Chisago, and Ramsey. County also means any other county whose
164.16board has voted after a public hearing to impose the tax under this section and has notified
164.17the commissioner of revenue of the imposition of the tax.
164.18    (7) (g) "Borrow" shall mean means granular borrow, consisting of durable particles
164.19of gravel and sand, crushed quarry or mine rock, crushed gravel or stone, or any
164.20combination thereof, the ratio of the portion passing the (#200) sieve divided by the
164.21portion passing the (1 inch) sieve may not exceed 20 percent by mass.

164.22    Sec. 19. Minnesota Statutes 2006, section 298.75, subdivision 3, is amended to read:
164.23    Subd. 3. Report and remittance. (a) By the 14th day following the last day of each
164.24calendar quarter, every operator or importer shall make and file with the county auditor of
164.25the county in which the aggregate material is removed or imported, a correct report under
164.26oath, in such form and containing such information as the auditor shall require relative to
164.27the quantity of aggregate material removed or imported during the preceding calendar
164.28quarter. The report shall be accompanied by a remittance of the amount of tax due.
164.29    (b) If any of the proceeds of the tax is to be apportioned as provided in subdivision
164.302, the operator or importer shall also include on the report any relevant information
164.31concerning the amount of aggregate material transported, the tax and the county of
164.32destination. The county auditor shall notify the county treasurer of the amount of such
164.33tax and the county to which it is due. The county treasurer shall remit the tax to the
164.34appropriate county within 30 days, except as provided in paragraph (c).
165.1    (c) The proceeds of the tax on aggregate material as defined in subdivision 1,
165.2paragraph (a), clause (2), must be remitted to the commissioner of iron range resources
165.3and rehabilitation to be deposited in the taconite area environmental protection fund under
165.4section 298.223, and used for the purposes of that fund.

165.5    Sec. 20. Minnesota Statutes 2006, section 298.75, subdivision 7, is amended to read:
165.6    Subd. 7. Proceeds of taxes. All money collected as taxes under this section on
165.7aggregate material as defined in subdivision 1, paragraph (a), clause (1), shall be deposited
165.8in the county treasury and credited as follows, for expenditure by the county board:
165.9    (a) Sixty percent to the county road and bridge fund for expenditure for the
165.10maintenance, construction and reconstruction of roads, highways and bridges;
165.11    (b) Thirty percent to the road and bridge fund of those towns as determined by the
165.12county board and to the general fund or other designated fund of those cities as determined
165.13by the county board, to be expended for maintenance, construction and reconstruction of
165.14roads, highways and bridges; and
165.15    (c) Ten percent to a special reserve fund which is hereby established, for expenditure
165.16for the restoration of abandoned pits, quarries, or deposits located upon public and tax
165.17forfeited lands within the county.
165.18    If there are no abandoned pits, quarries or deposits located upon public or tax
165.19forfeited lands within the county, this portion of the tax shall be deposited in the county
165.20road and bridge fund for expenditure for the maintenance, construction and reconstruction
165.21of roads, highways and bridges.

165.22    Sec. 21. Minnesota Statutes 2006, section 298.75, is amended by adding a subdivision
165.23to read:
165.24    Subd. 11. Tax may be imposed; Otter Tail County. (a) If Otter Tail County
165.25does not impose a tax under this section and approves imposition of the tax under this
165.26subdivision, the town of Scambler in Otter Tail County may impose the aggregate
165.27materials tax under this section.
165.28    (b) For purposes of exercising the powers contained in this section, the "town" is
165.29deemed to be the "county."
165.30    (c) All provisions in this section apply to the town of Scambler, except that all
165.31proceeds of the tax must be retained by the town and used for the purposes described in
165.32subdivision 7.
166.1    (d) If Otter Tail County imposes an aggregate materials tax under this section, the
166.2tax imposed by the town of Scambler under this subdivision is repealed on the effective
166.3date of the Otter Tail County tax.
166.4EFFECTIVE DATE.This section is effective the day after the governing body
166.5of the town of Scambler and its chief clerical officer comply with section 645.021,
166.6subdivisions 2 and 3.

166.7    Sec. 22. IRON RANGE RESOURCES AND REHABILITATION BOARD;
166.8APPROPRIATION; RETIRE BONDS.
166.9    Commencing with taxes payable in 2008 there is annually appropriated from
166.10the distribution of the taconite production tax revenues to the taconite environmental
166.11protection fund under Minnesota Statutes, section 298.28, subdivision 11, and to the
166.12Douglas J. Johnson economic protection trust fund under Minnesota Statutes, section
166.13298.28, subdivisions 9 and 11, in equal shares, an amount of $500,000 per year.
166.14    The revenue received under this section shall be used only to retire Mesabi East
166.15School District No. 2711 bonds in the amount of $9,000,000 issued September 1, 2006,
166.16and in the amount of $6,250,000 issued March 1, 2007. The payments shall continue for a
166.17period of ten years ending with taxes payable in 2017. Payments to the school district
166.18shall be made on March 1.
166.19EFFECTIVE DATE.This section is effective the day following final enactment.

166.20    Sec. 23. APPROPRIATIONS; DEPARTMENT OF EDUCATION.
166.21    Subdivision 1. Department of Education The sums indicated in this section are
166.22appropriated from the general fund to the Department of Education. These appropriations
166.23are added to any appropriations for the same purpose in 2007 S.F. No. 2095 for the fiscal
166.24years indicated.
166.25    Subd. 2. General education aid. For general education aid under Minnesota
166.26Statutes, section 126C.13, subdivision 4:
166.27
$
1,041,000
.....
2009
166.28    The 2009 appropriation includes $1,041,000 for fiscal year 2008 and $0 for fiscal
166.29year 2009.

166.30    Sec. 24. REPEALER.
166.31Minnesota Statutes 2006, section 126C.21, subdivision 4, is repealed.

167.1ARTICLE 9
167.2SPECIAL TAXES

167.3    Section 1. [295.90] HOCKEY HERITAGE SURCHARGE.
167.4    Subdivision 1. Imposition. A surcharge of ten cents is imposed on each ticket or
167.5admission to a professional men's hockey game held in the state.
167.6    Subd. 2. Collection, remittance. The surcharge imposed under this subdivision
167.7shall be collected by the professional men's hockey team or association sponsoring or
167.8holding the hockey game. The team or association shall annually report the surcharge on a
167.9form prescribed by the commissioner of revenue and remit the surcharge with the return to
167.10the commissioner of revenue by March 15 of the following calendar year.
167.11    Subd. 3. Administration. The commissioner of revenue shall have authority to
167.12administer, collect, enforce, refund, and audit the surcharge under this section. Interest
167.13on late payments or refunds of the surcharge shall be at the rates specified under section
167.14289A.55, and penalties for failure to file, pay, or underpay the surcharge shall be at the
167.15rates provided under section 289A.60, subdivision 1, paragraph (e), and subdivision 2.
167.16    Subd. 4. Deposit of revenues. The commissioner of revenue shall deposit all
167.17revenues, including penalty and interest, derived from the surcharge imposed in this
167.18section in the hockey surcharge account in the special revenue fund. The amount deposited
167.19under this section is appropriated to the Iron Range Resources and Rehabilitation Board
167.20for payment to the city of Eveleth to be used for the support of the Hockey Hall of Fame
167.21Museum provided that it continues to operate in the city. Payments under this section for
167.22the Hockey Hall of Fame Museum are in addition to and must not be used to supplant
167.23funding under section 298.28, subdivision 9c.

167.24    Sec. 2. Minnesota Statutes 2006, section 297F.21, subdivision 3, is amended to read:
167.25    Subd. 3. Inventory; judicial determination; appeal; disposition of seized
167.26property. (a) Within ten days after the seizure of any alleged contraband, the person
167.27making the seizure shall serve by certified mail an inventory of the property seized on the
167.28person from whom the seizure was made, if known, and on any person known or believed
167.29to have any right, title, interest, or lien in the property, at the last known address, and file
167.30a copy with the commissioner. The notice must include an explanation of the right to
167.31demand a judicial forfeiture determination.
167.32    (b) Within 60 days after the date of service of the inventory, which is the date of
167.33mailing, the person from whom the property was seized or any person claiming an interest
167.34in the property may file a demand for a judicial determination of the question as to whether
168.1the property was lawfully subject to seizure and forfeiture. The demand must be in the
168.2form of a civil complaint and must be filed with the court administrator in the county in
168.3which the seizure occurred, together with proof of service of a copy of the complaint
168.4on the commissioner of revenue, and the standard filing fee for civil actions unless the
168.5petitioner has the right to sue in forma pauperis under section 563.01. If the value of the
168.6seized property is $7,500 or less, the claimant may file an action in conciliation court for
168.7recovery of the property. If the value of the seized property is less than $500, the claimant
168.8does not have to pay the conciliation court filing fee.
168.9    (c) The complaint must be captioned in the name of the claimant as plaintiff and
168.10the seized property as defendant, and must state with specificity the grounds on which
168.11the claimant alleges the property was improperly seized and the plaintiff's interest in the
168.12property seized. No responsive pleading is required of the commissioner, and no court
168.13fees may be charged for the commissioner's appearance in the matter. The proceedings
168.14are governed by the Rules of Civil Procedure. Notwithstanding any law to the contrary,
168.15an action for the return of property seized under this section may not be maintained by
168.16or on behalf of any person who has been served with an inventory unless the person has
168.17complied with this subdivision. The court shall decide whether the alleged contraband is
168.18contraband, as defined in subdivision 1. The court shall hear the action without a jury and
168.19shall try and determine the issues of fact and law involved.
168.20    (d) When a judgment of forfeiture is entered, the commissioner may, unless the
168.21judgment is stayed pending an appeal, either the commissioner:
168.22    (1) deliver the forfeited cigarette packages or tobacco products to the commissioner
168.23of human services for use by patients in state institutions may authorize the forfeited
168.24property to be used for the purpose of enforcing a criminal provision of state or federal law;
168.25    (2) shall cause the property in clause (1) forfeited cigarette packages or tobacco
168.26products not used under clause (1) to be destroyed; or and products used under clause (1)
168.27to be destroyed upon the completion of use; and
168.28    (3) may cause the forfeited property, other than forfeited cigarette packages or
168.29tobacco products, to be sold at public auction as provided by law.
168.30The person making a sale, after deducting the expense of keeping the property, the fee
168.31for seizure, and the costs of the sale, shall pay all liens according to their priority, which
168.32are established as being bona fide and as existing without the lienor having any notice
168.33or knowledge that the property was being used or was intended to be used for or in
168.34connection with the violation. The balance of the proceeds must be paid 75 percent to the
168.35Department of Revenue for deposit as a supplement to its operating fund or similar fund
168.36for official use, and 25 percent to the county attorney or other prosecuting agency that
169.1handled the court proceeding, if there is one, for deposit as a supplement to its operating
169.2fund or similar fund for prosecutorial purposes. If there is no prosecuting authority
169.3involved in the forfeiture, the 25 percent of the proceeds otherwise designated for the
169.4prosecuting authority must be deposited into the general fund.
169.5    (e) If no demand for judicial determination is made, the property seized is considered
169.6forfeited to the state by operation of law and may be disposed of by the commissioner as
169.7provided in the case of a judgment of forfeiture.
169.8EFFECTIVE DATE.This section is effective for forfeitures after June 30, 2007.

169.9    Sec. 3. Minnesota Statutes 2006, section 297I.15, is amended by adding a subdivision
169.10to read:
169.11    Subd. 11. Premiums paid to certain foreign insurance companies. With respect
169.12to the state employees group insurance program established under sections 43A.23 to
169.1343A.31, premiums paid for life insurance and accidental death and dismemberment
169.14insurance for eligible employees and dependents, including premiums paid by employees
169.15or dependents for optional coverage, are exempt from the taxes imposed under this chapter
169.16to the extent the premiums are paid to a foreign insurance company domiciled in a state
169.17that exempts its state employee group life insurance program from premium taxes.
169.18EFFECTIVE DATE.This section is effective for premiums paid after December
169.1931, 2006.

169.20    Sec. 4. Minnesota Statutes 2006, section 383A.80, subdivision 4, is amended to read:
169.21    Subd. 4. Expiration. The authority to impose the tax under this section expires
169.22January 1, 2008 2013.

169.23    Sec. 5. Minnesota Statutes 2006, section 383A.81, subdivision 1, is amended to read:
169.24    Subdivision 1. Creation. An environmental response fund is created for the
169.25purposes specified in this section. The taxes imposed by section 383A.80 must be
169.26deposited in the fund. The board of county commissioners shall administer the fund either
169.27as a county board, or a housing and redevelopment authority, or a regional rail authority.

169.28    Sec. 6. Minnesota Statutes 2006, section 383A.81, subdivision 2, is amended to read:
169.29    Subd. 2. Uses of fund. The fund created in subdivision 1 must be used for the
169.30following purposes:
170.1    (1) acquisition through purchase or condemnation of lands or property which are
170.2polluted or contaminated with hazardous substances;
170.3    (2) paying the costs associated with indemnifying or holding harmless the
170.4entity taking title to lands or property from any liability arising out of the ownership,
170.5remediation, or use of the land or property;
170.6    (3) paying for the costs of remediating the acquired land or property; or
170.7    (4) paying the costs associated with remediating lands or property which are polluted
170.8or contaminated with hazardous substances; or
170.9    (5) paying for the costs associated with improving the property for economic
170.10development, recreational, housing, transportation or rail traffic.

170.11    Sec. 7. Minnesota Statutes 2006, section 383B.80, subdivision 4, is amended to read:
170.12    Subd. 4. Expiration. The authority to impose the tax under this section expires
170.13January 1, 2008 2013.

170.14    Sec. 8. [383C.798] COUNTY DEED AND MORTGAGE TAX.
170.15    Subdivision 1. Authority to impose; rate. (a) The governing body of St. Louis
170.16County may impose a mortgage registry and deed tax.
170.17    (b) The rate of the mortgage registry tax equals .0001 of the principal.
170.18    (c) The rate of the deed tax equals .0001 of the amount.
170.19    Subd. 2. General law provisions apply. The taxes under this section apply to
170.20the same base and must be imposed, collected, administered, and enforced in the same
170.21manner as provided under chapter 287 for the state mortgage registry and deed taxes.
170.22All the provisions of chapter 287 apply to these taxes, except the rate is as specified in
170.23subdivision 1, the term "St. Louis County" must be substituted for "the state," and the
170.24revenue must be deposited as provided in subdivision 3.
170.25    Subd. 3. Deposit of revenues. All revenues from the tax are for the use of the
170.26St. Louis County Board of Commissioners and must be deposited in the county's
170.27environmental response fund under section 383C.799.
170.28    Subd. 4. Expiration. The authority to impose the tax under this section expires
170.29January 1, 2013.

170.30    Sec. 9. [383C.799] ENVIRONMENTAL RESPONSE FUND.
170.31    Subdivision 1. Creation. An environmental response fund is created for the
170.32purposes specified in this section. The taxes imposed under section 383C.798 must be
171.1deposited in the fund. The Board of County Commissioners shall administer the fund
171.2either as a county board or a housing and redevelopment authority.
171.3    Subd. 2. Uses of fund. The fund created in subdivision 1 must be used for the
171.4following purposes:
171.5    (1) acquisition through purchase or condemnation of lands or property which are
171.6polluted or contaminated with hazardous substances;
171.7    (2) paying the costs associated with indemnifying or holding harmless the
171.8entity taking title to lands or property from any liability arising out of the ownership,
171.9remediation, or use of the land or property;
171.10    (3) paying for the costs of remediating the acquired land or property; or
171.11    (4) paying the costs associated with remediating lands or property which are polluted
171.12or contaminated with hazardous substances.
171.13    Subd. 3. Matching funds. In expending funds under this section, the county shall
171.14seek matching funds from contamination cleanup funds administered by the commissioner
171.15of the Department of Employment and Economic Development, the federal government,
171.16the private sector, and any other source.
171.17    Subd. 4. Bonds. The county may pledge the proceeds from the taxes imposed by
171.18section 383C.798 to bonds issued under this section and chapters 462, 469, and 475.
171.19    Subd. 5. Land sales. Land or property acquired under this section may be resold
171.20at fair market value. Proceeds from the sale of the land must be deposited in the
171.21environmental response fund.

171.22    Sec. 10. [383D.75] COUNTY DEED AND MORTGAGE TAX.
171.23    Subdivision 1. Authority to impose; rate. (a) The governing body of Dakota
171.24County may impose a mortgage registry and deed tax.
171.25    (b) The rate of the mortgage registry tax equals .0001 of the principal.
171.26    (c) The rate of the deed tax equals .0001 of the amount.
171.27    Subd. 2. General law provisions apply. The taxes under this section apply to
171.28the same base and must be imposed, collected, administered, and enforced in the same
171.29manner as provided under chapter 287 for the state mortgage registry and deed taxes.
171.30All the provisions of chapter 287 apply to these taxes, except the rate is as specified in
171.31subdivision 1, the term "Dakota County" must be substituted for "the state," and the
171.32revenue must be deposited as provided in subdivision 3.
171.33    Subd. 3. Deposit of revenues. All revenues from the tax are for the use of
171.34the Dakota County Board of Commissioners and must be deposited in the county's
171.35environmental response fund under section 383D.76.
172.1    Subd. 4. Expiration. The authority to impose the tax under this section expires
172.2January 1, 2013.

172.3    Sec. 11. [383D.76] ENVIRONMENTAL RESPONSE FUND.
172.4    Subdivision 1. Creation. An environmental response fund is created for the
172.5purposes specified in this section. The taxes imposed under section 383D.75 must be
172.6deposited in the fund. The Board of County Commissioners shall administer the fund
172.7either as a county board or a housing and redevelopment authority.
172.8    Subd. 2. Uses of fund. The fund created in subdivision 1 must be used for the
172.9following purposes:
172.10    (1) acquisition through purchase or condemnation of lands or property which are
172.11polluted or contaminated with hazardous substances;
172.12    (2) paying the costs associated with indemnifying or holding harmless the
172.13entity taking title to lands or property from any liability arising out of the ownership,
172.14remediation, or use of the land or property;
172.15    (3) paying for the costs of remediating the acquired land or property; or
172.16    (4) paying the costs associated with remediating lands or property which are polluted
172.17or contaminated with hazardous substances.
172.18    Subd. 3. Matching funds. In expending funds under this section, the county shall
172.19seek matching funds from contamination cleanup funds administered by the commissioner
172.20of the Department of Employment and Economic Development, the Metropolitan Council,
172.21the federal government, the private sector, and any other source.
172.22    Subd. 4. Bonds. The county may pledge the proceeds from the taxes imposed by
172.23section 383D.75 to bonds issued under this chapter and chapters 462, 469, and 475.
172.24    Subd. 5. Land sales. Land or property acquired under this section may be resold
172.25at fair market value. Proceeds from the sale of the land must be deposited in the
172.26environmental response fund.

172.27    Sec. 12. [383E.235] COUNTY DEED AND MORTGAGE TAX.
172.28    Subdivision 1. Authority to impose; rate. (a) The governing body of Anoka
172.29County may impose a mortgage registry and deed tax.
172.30    (b) The rate of the mortgage registry tax equals .0001 of the principal.
172.31    (c) The rate of the deed tax equals .0001 of the amount.
172.32    Subd. 2. General law provisions apply. The taxes under this section apply to
172.33the same base and must be imposed, collected, administered, and enforced in the same
172.34manner as provided under chapter 287 for the state mortgage registry and deed taxes.
173.1All the provisions of chapter 287 apply to these taxes, except the rate is as specified
173.2in subdivision 1, the term "Anoka County" must be substituted for "the state," and the
173.3revenue must be deposited as provided in subdivision 3.
173.4    Subd. 3. Deposit of revenues. All revenues from the tax are for the use of the Anoka
173.5County Board of Commissioners and must be deposited in the county's environmental
173.6response fund under section 383E.236.
173.7    Subd. 4. Expiration. The authority to impose the tax under this section expires
173.8January 1, 2013.

173.9    Sec. 13. [383E.236] ENVIRONMENTAL RESPONSE FUND.
173.10    Subdivision 1. Creation. An environmental response fund is created for the
173.11purposes specified in this section. The taxes imposed under section 383E.235 must be
173.12deposited in the fund. The Board of County Commissioners shall administer the fund
173.13either as a county board or a housing and redevelopment authority.
173.14    Subd. 2. Uses of fund. The fund created in subdivision 1 must be used for the
173.15following purposes:
173.16    (1) acquisition through purchase or condemnation of lands or property which are
173.17polluted or contaminated with hazardous substances;
173.18    (2) paying the costs associated with indemnifying or holding harmless the
173.19entity taking title to lands or property from any liability arising out of the ownership,
173.20remediation, or use of the land or property;
173.21    (3) paying for the costs of remediating the acquired land or property; or
173.22    (4) paying the costs associated with remediating lands or property which are polluted
173.23or contaminated with hazardous substances.
173.24    Subd. 3. Matching funds. In expending funds under this section, the county shall
173.25seek matching funds from contamination cleanup funds administered by the commissioner
173.26of the Department of Employment and Economic Development, the Metropolitan Council,
173.27the federal government, the private sector, and any other source.
173.28    Subd. 4. Bonds. The county may pledge the proceeds from the taxes imposed by
173.29section 383E.235 to bonds issued under this section and chapters 462, 469, and 475.
173.30    Subd. 5. Land sales. Land or property acquired under this section may be resold
173.31at fair market value. Proceeds from the sale of the land must be deposited in the
173.32environmental response fund.
173.33    Subd. 6. DOT assistance. The commissioner of transportation shall collaborate with
173.34the county and any affected municipality by providing technical assistance and support in
173.35cleaning up a contaminated site related to a trunk highway or railroad improvement.

174.1    Sec. 14. Laws 2003, chapter 128, article 1, section 172, as amended by Laws 2005,
174.2First Special Session chapter 1, article 4, section 118, is amended to read:
174.3    Sec. 172. TEMPORARY PETROFUND FEE EXEMPTION FOR
174.4MINNESOTA COMMERCIAL AIRLINES.
174.5    (a) A commercial airline providing regularly scheduled jet service and with its
174.6corporate headquarters in Minnesota is exempt from the fee established in Minnesota
174.7Statutes, section 115C.08, subdivision 3, until July 1, 2007 2009, provided the airline
174.8develops a plan approved by the commissioner of commerce demonstrating that the
174.9savings from this exemption will go towards minimizing job losses in Minnesota, and to
174.10support the airline's efforts to avoid filing for resolve federal bankruptcy protections
174.11proceedings.
174.12    (b) A commercial airline exempted from the fee is ineligible to receive
174.13reimbursement under Minnesota Statutes, chapter 115C, until July 1, 2007 2009. A
174.14commercial airline that has a release during the fee exemption period is ineligible to
174.15receive reimbursement under Minnesota Statutes, chapter 115C, for the costs incurred in
174.16response to that release.

174.17ARTICLE 10
174.18DEPARTMENT INCOME AND FRANCHISE TAXES

174.19    Section 1. Minnesota Statutes 2006, section 270A.03, subdivision 5, is amended to
174.20read:
174.21    Subd. 5. Debt. (a) "Debt" means a legal obligation of a natural person to pay a fixed
174.22and certain amount of money, which equals or exceeds $25 and which is due and payable
174.23to a claimant agency. The term includes criminal fines imposed under section 609.10 or
174.24609.125 , fines imposed for petty misdemeanors as defined in section 609.02, subdivision
174.254a
, and restitution. The term also includes the co-payment for the appointment of a district
174.26public defender imposed under section 611.17, paragraph (c). A debt may arise under a
174.27contractual or statutory obligation, a court order, or other legal obligation, but need not
174.28have been reduced to judgment.
174.29    A debt includes any legal obligation of a current recipient of assistance which is
174.30based on overpayment of an assistance grant where that payment is based on a client
174.31waiver or an administrative or judicial finding of an intentional program violation;
174.32or where the debt is owed to a program wherein the debtor is not a client at the time
174.33notification is provided to initiate recovery under this chapter and the debtor is not a
174.34current recipient of food support, transitional child care, or transitional medical assistance.
175.1    (b) A debt does not include any legal obligation to pay a claimant agency for medical
175.2care, including hospitalization if the income of the debtor at the time when the medical
175.3care was rendered does not exceed the following amount:
175.4    (1) for an unmarried debtor, an income of $8,800 or less;
175.5    (2) for a debtor with one dependent, an income of $11,270 or less;
175.6    (3) for a debtor with two dependents, an income of $13,330 or less;
175.7    (4) for a debtor with three dependents, an income of $15,120 or less;
175.8    (5) for a debtor with four dependents, an income of $15,950 or less; and
175.9    (6) for a debtor with five or more dependents, an income of $16,630 or less.
175.10    The income amounts in this subdivision shall be adjusted for inflation for debts
175.11incurred in calendar years 2001 and thereafter. The dollar amount of each income level
175.12that applied to debts incurred in the prior year shall be increased in the same manner
175.13as provided in section 1(f) of the Internal Revenue Code of 1986, as amended through
175.14December 31, 2000, except that for the purposes of this subdivision the percentage
175.15increase shall be determined from the year starting September 1, 1999, and ending August
175.1631, 2000, as the base year for adjusting for inflation for debts incurred after December
175.1731, 2000. (c) The commissioner shall adjust the income amounts in paragraph (b) by the
175.18percentage determined pursuant to the provisions of section 1(f) of the Internal Revenue
175.19Code, except that in section 1(f)(3)(B) the word "1999" shall be substituted for the word
175.20"1992." For 2001, the commissioner shall then determine the percent change from the 12
175.21months ending on August 31, 1999, to the 12 months ending on August 31, 2000, and in
175.22each subsequent year, from the 12 months ending on August 31, 1999, to the 12 months
175.23ending on August 31 of the year preceding the taxable year. The determination of the
175.24commissioner pursuant to this subdivision shall not be considered a "rule" and shall not
175.25be subject to the Administrative Procedure Act contained in chapter 14. The income
175.26amount as adjusted must be rounded to the nearest $10 amount. If the amount ends in
175.27$5, the amount is rounded up to the nearest $10 amount.
175.28    (d) Debt also includes an agreement to pay a MinnesotaCare premium, regardless of
175.29the dollar amount of the premium authorized under section 256L.15, subdivision 1a.
175.30EFFECTIVE DATE.This section is effective for debts incurred after December
175.3131, 2006.

175.32    Sec. 2. Minnesota Statutes 2006, section 289A.08, subdivision 11, is amended to read:
175.33    Subd. 11. Information included in income tax return. (a) The return must state:
176.1    (1) the name of the taxpayer, or taxpayers, if the return is a joint return, and the
176.2address of the taxpayer in the same name or names and same address as the taxpayer has
176.3used in making the taxpayer's income tax return to the United States, and must state;
176.4    (2) the date or dates of birth of the taxpayer or taxpayers;
176.5    (3) the Social Security number of the taxpayer, or taxpayers, if a Social Security
176.6number has been issued by the United States with respect to the taxpayers, and must
176.7state; and
176.8    (4) the amount of the taxable income of the taxpayer as it appears on the federal
176.9return for the taxable year to which the Minnesota state return applies.
176.10    (b) The taxpayer must attach to the taxpayer's Minnesota state income tax return
176.11a copy of the federal income tax return that the taxpayer has filed or is about to file for
176.12the period, unless the taxpayer is eligible to telefile the federal return and does file the
176.13Minnesota return by telefiling.
176.14EFFECTIVE DATE.This section is effective for tax years beginning after
176.15December 31, 2006.

176.16    Sec. 3. Minnesota Statutes 2006, section 289A.09, subdivision 2, is amended to read:
176.17    Subd. 2. Withholding statement to employee or payee and to commissioner. (a)
176.18A person required to deduct and withhold from an employee a tax under section 290.92,
176.19subdivision 2a
or 3, or 290.923, subdivision 2, or who would have been required to
176.20deduct and withhold a tax under section 290.92, subdivision 2a or 3, or persons required
176.21to withhold tax under section 290.923, subdivision 2, determined without regard to
176.22section 290.92, subdivision 19, if the employee or payee had claimed no more than one
176.23withholding exemption, or who paid wages or made payments not subject to withholding
176.24under section 290.92, subdivision 2a or 3, or 290.923, subdivision 2, to an employee or
176.25person receiving royalty payments in excess of $600, or who has entered into a voluntary
176.26withholding agreement with a payee under section 290.92, subdivision 20, must give
176.27every employee or person receiving royalty payments in respect to the remuneration paid
176.28by the person to the employee or person receiving royalty payments during the calendar
176.29year, on or before January 31 of the succeeding year, or, if employment is terminated
176.30before the close of the calendar year, within 30 days after the date of receipt of a written
176.31request from the employee if the 30-day period ends before January 31, a written statement
176.32showing the following:
176.33    (1) name of the person;
176.34    (2) the name of the employee or payee and the employee's or payee's Social Security
176.35account number;
177.1    (3) the total amount of wages as that term is defined in section 290.92, subdivision
177.21
, paragraph (1); the total amount of remuneration subject to withholding under section
177.3290.92, subdivision 20 ; the amount of sick pay as required under section 6051(f) of the
177.4Internal Revenue Code; and the amount of royalties subject to withholding under section
177.5290.923, subdivision 2 ; and
177.6    (4) the total amount deducted and withheld as tax under section 290.92, subdivision
177.72a
or 3, or 290.923, subdivision 2.
177.8    (b) The statement required to be furnished by this paragraph (a) with respect to any
177.9remuneration must be furnished at those times, must contain the information required, and
177.10must be in the form the commissioner prescribes.
177.11    (c) The commissioner may prescribe rules providing for reasonable extensions of
177.12time, not in excess of 30 days, to employers or payers required to give the statements to
177.13their employees or payees under this subdivision.
177.14    (d) A duplicate of any statement made under this subdivision and in accordance
177.15with rules prescribed by the commissioner, along with a reconciliation in the form the
177.16commissioner prescribes of the statements for the calendar year, including a reconciliation
177.17of the quarterly returns required to be filed under subdivision 1, must be filed with the
177.18commissioner on or before February 28 of the year after the payments were made.
177.19    (e) If an employer cancels the employer's Minnesota withholding account number
177.20required by section 290.92, subdivision 24, the information required by paragraph (d),
177.21must be filed with the commissioner within 30 days of the end of the quarter in which
177.22the employer cancels its account number.
177.23    (f) The employer must submit the statements required to be sent to the commissioner
177.24on magnetic media, if the magnetic media was in the same manner required to satisfy the
177.25federal reporting requirements of section 6011(e) of the Internal Revenue Code and the
177.26regulations issued under it. For wages paid in calendar year 2007, an employer must
177.27submit statements to the commissioner required by this section by electronic means if the
177.28employer is required to send more than 100 statements to the commissioner, even though
177.29the employer is not required to submit the returns federally by electronic means. For
177.30calendar year 2008, the 100 statements threshold is reduced to 50, and for calendar year
177.312009, the threshold is reduced to 25, and for 2010 and after, the threshold is reduced to ten.
177.32    (g) A "third-party bulk filer" as defined in section 290.92, subdivision 30, paragraph
177.33(a), clause (2), must submit the returns required by this subdivision and subdivision 1,
177.34paragraph (a), with the commissioner by electronic means.
177.35EFFECTIVE DATE.This section is effective for wages paid after December 31,
177.362006.

178.1    Sec. 4. Minnesota Statutes 2006, section 289A.12, subdivision 14, is amended to read:
178.2    Subd. 14. Regulated investment companies; reporting exempt-interest
178.3dividends. (a) A regulated investment company paying $10 or more in exempt-interest
178.4dividends to an individual who is a resident of Minnesota must make a return indicating
178.5the amount of the exempt-interest dividends, the name, address, and Social Security
178.6number of the recipient, and any other information that the commissioner specifies. The
178.7return must be provided to the shareholder no later than 30 days after the close of the
178.8taxable year. The return provided to the shareholder must include a clear statement, in the
178.9form prescribed by the commissioner, that the exempt-interest dividends must be included
178.10in the computation of Minnesota taxable income. The commissioner may by notice and
178.11demand require the regulated investment company is required in a manner prescribed by
178.12the commissioner to file a copy of the return with the commissioner.
178.13    (b) This subdivision applies to regulated investment companies required to register
178.14under chapter 80A.
178.15    (c) For purposes of this subdivision, the following definitions apply.
178.16    (1) "Exempt-interest dividends" mean exempt-interest dividends as defined in
178.17section 852(b)(5) of the Internal Revenue Code, but does not include the portion of
178.18exempt-interest dividends that are not required to be added to federal taxable income
178.19under section 290.01, subdivision 19a, clause (1)(ii).
178.20    (2) "Regulated investment company" means regulated investment company as
178.21defined in section 851(a) of the Internal Revenue Code or a fund of the regulated
178.22investment company as defined in section 851(g) of the Internal Revenue Code.
178.23EFFECTIVE DATE.This section is effective for tax years beginning after
178.24December 31, 2006.

178.25    Sec. 5. Minnesota Statutes 2006, section 289A.18, subdivision 1, is amended to read:
178.26    Subdivision 1. Individual income, fiduciary income, corporate franchise, and
178.27entertainment taxes; partnership and S corporation returns; information returns;
178.28mining company returns. The returns required to be made under sections 289A.08 and
178.29289A.12 must be filed at the following times:
178.30    (1) returns made on the basis of the calendar year must be filed on April 15 following
178.31the close of the calendar year, except that returns of corporations must be filed on March
178.3215 following the close of the calendar year;
178.33    (2) returns made on the basis of the fiscal year must be filed on the 15th day of the
178.34fourth month following the close of the fiscal year, except that returns of corporations
178.35must be filed on the 15th day of the third month following the close of the fiscal year;
179.1    (3) returns for a fractional part of a year must be filed on the 15th day of the fourth
179.2month following the end of the month in which falls the last day of the period for which
179.3the return is made, except that the returns of corporations must be filed on the 15th day of
179.4the third month following the end of the tax year of the unitary group in which falls the
179.5last day of the period for which the return is made;
179.6    (4) in the case of a final return of a decedent for a fractional part of a year, the return
179.7must be filed on the 15th day of the fourth month following the close of the 12-month
179.8period that began with the first day of that fractional part of a year;
179.9    (5) in the case of the return of a cooperative association, returns must be filed on or
179.10before the 15th day of the ninth month following the close of the taxable year;
179.11    (6) if a corporation has been divested from a unitary group and files a return for
179.12a fractional part of a year in which it was a member of a unitary business that files a
179.13combined report under section 290.34, subdivision 2, the divested corporation's return
179.14must be filed on the 15th day of the third month following the close of the common
179.15accounting period that includes the fractional year;
179.16    (7) returns of entertainment entities must be filed on April 15 following the close of
179.17the calendar year;
179.18    (8) returns required to be filed under section 289A.08, subdivision 4, must be filed
179.19on the 15th day of the fifth month following the close of the taxable year;
179.20    (9) returns of mining companies must be filed on May 1 following the close of the
179.21calendar year; and
179.22    (10) returns required to be filed with the commissioner under section 289A.12,
179.23subdivision 2
, or 4 to 10, or 14, must be filed within 30 days after being demanded by
179.24the commissioner.
179.25EFFECTIVE DATE.This section is effective for tax years beginning after
179.26December 31, 2006.

179.27    Sec. 6. Minnesota Statutes 2006, section 289A.60, subdivision 8, is amended to read:
179.28    Subd. 8. Penalty for Penalties; failure to file informational return; incorrect
179.29taxpayer identification number. (a) In the case of a failure to file an informational return
179.30required by section 289A.12 with the commissioner on the date prescribed (determined
179.31with regard to any extension of time for filing), the person failing to file the return shall pay
179.32a penalty of $50 for each failure or in the case of a partnership, S corporation, or fiduciary
179.33return, $50 for each partner, shareholder, or beneficiary; but the total amount imposed on
179.34the delinquent person for all failures during any calendar year must not exceed $25,000. If
180.1a failure to file a return is due to intentional disregard of the filing requirement, then the
180.2penalty imposed under the preceding sentence must not be less than an amount equal to:
180.3    (1) in the case of a return not described in clause (2) or (3), ten percent of the
180.4aggregate amount of the items required to be reported;
180.5    (2) in the case of a return required to be filed under section 289A.12, subdivision 5,
180.6five percent of the gross proceeds required to be reported; and
180.7    (3) in the case of a return required to be filed under section 289A.12, subdivision 9,
180.8relating to direct sales, $100 for each failure; however, the total amount imposed on the
180.9delinquent person for intentional failures during a calendar year must not exceed $50,000.
180.10The penalty must be collected in the same manner as a delinquent income tax.
180.11    (b) If a partnership or S corporation files a partnership or S corporation return with
180.12an incorrect tax identification number used for a partner or shareholder after being notified
180.13by the commissioner that the identification number is incorrect, the partnership or S
180.14corporation must pay a penalty of $50 for each such incorrect number.
180.15EFFECTIVE DATE.This section is effective for returns filed after December
180.1631, 2007.

180.17    Sec. 7. Minnesota Statutes 2006, section 289A.60, subdivision 12, is amended to read:
180.18    Subd. 12. Penalties relating to property tax refunds. (a) If it is determined that a
180.19property tax refund claim is excessive and was negligently prepared, a claimant is liable
180.20for a penalty of ten percent of the corrected claim must be disallowed claim. If the claim
180.21has been paid, the amount disallowed must be recovered by assessment and collection.
180.22    (b) An owner who without reasonable cause fails to give a certificate of rent
180.23constituting property tax to a renter, as required by section 290A.19, paragraph (a), is
180.24liable to the commissioner for a penalty of $100 for each failure.
180.25    (c) If the owner or managing agent knowingly gives rent certificates that report total
180.26rent constituting property taxes in excess of the amount of actual rent constituting property
180.27taxes paid on the rented part of a property, the owner or managing agent is liable for a
180.28penalty equal to the greater of (1) $100 or (2) 50 percent of the excess that is reported. An
180.29overstatement of rent constituting property taxes is presumed to be knowingly made if it
180.30exceeds by ten percent or more the actual rent constituting property taxes.
180.31EFFECTIVE DATE.This section is effective for property tax refund claims filed
180.32on or after July 1, 2007.

180.33    Sec. 8. Minnesota Statutes 2006, section 289A.60, subdivision 27, is amended to read:
181.1    Subd. 27. Reportable transaction understatement. (a) If a taxpayer has a
181.2reportable transaction understatement for any taxable year, an amount equal to 20 percent
181.3of the amount of the reportable transaction understatement must be added to the tax.
181.4    (b)(1) For purposes of this subdivision, "reportable transaction understatement"
181.5means the product of:
181.6    (i) the amount of the increase, if any, in taxable income that results from a difference
181.7between the proper tax treatment of an item to which this section applies and the taxpayer's
181.8treatment of that item as shown on the taxpayer's tax return; and
181.9    (ii) the highest rate of tax imposed on the taxpayer under section 290.06 determined
181.10without regard to the understatement.
181.11    (2) For purposes of clause (1)(i), any reduction of the excess of deductions allowed
181.12for the taxable year over gross income for that year, and any reduction in the amount of
181.13capital losses which would, without regard to section 1211 of the Internal Revenue Code,
181.14be allowed for that year, must be treated as an increase in taxable income.
181.15    (c) This subdivision applies to any item that is attributable to:
181.16    (1) any listed transaction under section 289A.121; and
181.17    (2) any reportable transaction, other than a listed transaction, if a significant purpose
181.18of that transaction is the avoidance or evasion of federal income tax liability.
181.19    (d) Paragraph (a) applies by substituting "30 percent" for "20 percent" with respect
181.20to the portion of any reportable transaction understatement with respect to which the
181.21disclosure requirements of section 289A.121, subdivision 5, and section 6664(d)(2)(A)
181.22of the Internal Revenue Code are not met.
181.23    (e)(1) No penalty applies under this subdivision with respect to any portion of a
181.24reportable transaction understatement if the taxpayer shows that there was reasonable
181.25cause for the portion and that the taxpayer acted in good faith with respect to the portion.
181.26This paragraph applies only if:
181.27    (i) the relevant facts affecting the tax treatment of the item are adequately disclosed
181.28as required under section 289A.121;
181.29    (ii) there is or was substantial authority for the treatment; and
181.30    (iii) the taxpayer reasonably believed that the treatment was more likely than not
181.31the proper treatment.
181.32    (2) A taxpayer who did not adequately disclose under section 289A.121 meets
181.33the requirements of clause (1)(i), if the commissioner abates the penalty imposed by
181.34subdivision 26, paragraph (d), under section 270C.34 subdivision 26, paragraph (g).
181.35    (3) For purposes of clause (1)(iii), a taxpayer is treated as having a reasonable belief
181.36with respect to the tax treatment of an item only if the belief:
182.1    (i) is based on the facts and law that exist when the return of tax which includes the
182.2tax treatment is filed; and
182.3    (ii) relates solely to the taxpayer's chances of success on the merits of the treatment
182.4and does not take into account the possibility that a return will not be audited, the
182.5treatment will not be raised on audit, or the treatment will be resolved through settlement
182.6if it is raised.
182.7    (4) An opinion of a tax advisor may not be relied upon to establish the reasonable
182.8belief of a taxpayer if:
182.9    (i) the tax advisor:
182.10    (A) is a material advisor, as defined in section 289A.121, and participates in the
182.11organization, management, promotion, or sale of the transaction or is related (within the
182.12meaning of section 267(b) or 707(b)(1) of the Internal Revenue Code) to any person
182.13who so participates;
182.14    (B) is compensated directly or indirectly by a material advisor with respect to the
182.15transaction;
182.16    (C) has a fee arrangement with respect to the transaction which is contingent on all
182.17or part of the intended tax benefits from the transaction being sustained; or
182.18    (D) has a disqualifying financial interest with respect to the transaction, as
182.19determined under United States Treasury regulations prescribed to implement the
182.20provisions of section 6664(d)(3)(B)(ii)(IV) of the Internal Revenue Code; or
182.21    (ii) the opinion:
182.22    (A) is based on unreasonable factual or legal assumptions, including assumptions
182.23as to future events;
182.24    (B) unreasonably relies on representations, statements, findings, or agreements of
182.25the taxpayer or any other person;
182.26    (C) does not identify and consider all relevant facts; or
182.27    (D) fails to meet any other requirement as the Secretary of the Treasury may
182.28prescribe under federal law.
182.29    (f) The penalty imposed by this subdivision applies in lieu of the penalty imposed
182.30under subdivision 4.
182.31EFFECTIVE DATE.This section is effective the day following final enactment.

182.32    Sec. 9. Minnesota Statutes 2006, section 289A.60, is amended by adding a subdivision
182.33to read:
182.34    Subd. 28. Preparer identification number. Any Minnesota individual income tax
182.35return or claim for refund prepared by a "tax refund or return preparer" as defined in
183.1subdivision 13, paragraph (f), shall bear the identification number the preparer is required
183.2to use federally under section 6109(a)(4) of the Internal Revenue Code. A tax refund
183.3or return preparer who prepares a Minnesota individual income tax return or claim for
183.4refund and fails to include the required number on the return or claim is subject to a
183.5penalty of $50 for each failure.
183.6EFFECTIVE DATE.This section is effective for returns prepared for tax years
183.7beginning after December 31, 2006.

183.8    Sec. 10. Minnesota Statutes 2006, section 290.01, subdivision 19b, as amended by
183.9Laws 2007, chapter 1, section 2, is amended to read:
183.10    Subd. 19b. Subtractions from federal taxable income. For individuals, estates,
183.11and trusts, there shall be subtracted from federal taxable income:
183.12    (1) net interest income on obligations of any authority, commission, or
183.13instrumentality of the United States to the extent includable in taxable income for federal
183.14income tax purposes but exempt from state income tax under the laws of the United States;
183.15    (2) if included in federal taxable income, the amount of any overpayment of income
183.16tax to Minnesota or to any other state, for any previous taxable year, whether the amount
183.17is received as a refund or as a credit to another taxable year's income tax liability;
183.18    (3) the amount paid to others, less the amount used to claim the credit allowed under
183.19section 290.0674, not to exceed $1,625 for each qualifying child in grades kindergarten
183.20to 6 and $2,500 for each qualifying child in grades 7 to 12, for tuition, textbooks, and
183.21transportation of each qualifying child in attending an elementary or secondary school
183.22situated in Minnesota, North Dakota, South Dakota, Iowa, or Wisconsin, wherein a
183.23resident of this state may legally fulfill the state's compulsory attendance laws, which
183.24is not operated for profit, and which adheres to the provisions of the Civil Rights Act
183.25of 1964 and chapter 363A. For the purposes of this clause, "tuition" includes fees or
183.26tuition as defined in section 290.0674, subdivision 1, clause (1). As used in this clause,
183.27"textbooks" includes books and other instructional materials and equipment purchased
183.28or leased for use in elementary and secondary schools in teaching only those subjects
183.29legally and commonly taught in public elementary and secondary schools in this state.
183.30Equipment expenses qualifying for deduction includes expenses as defined and limited in
183.31section 290.0674, subdivision 1, clause (3). "Textbooks" does not include instructional
183.32books and materials used in the teaching of religious tenets, doctrines, or worship, the
183.33purpose of which is to instill such tenets, doctrines, or worship, nor does it include books
183.34or materials for, or transportation to, extracurricular activities including sporting events,
183.35musical or dramatic events, speech activities, driver's education, or similar programs. For
184.1purposes of the subtraction provided by this clause, "qualifying child" has the meaning
184.2given in section 32(c)(3) of the Internal Revenue Code;
184.3    (4) income as provided under section 290.0802;
184.4    (5) to the extent included in federal adjusted gross income, income realized on
184.5disposition of property exempt from tax under section 290.491;
184.6    (6) to the extent not deducted in determining federal taxable income by an individual
184.7who does not itemize deductions for federal income tax purposes for the taxable year, an
184.8amount equal to 50 percent of the excess of charitable contributions over $500 allowable
184.9as a deduction for the taxable year under section 170(a) of the Internal Revenue Code and
184.10under the provisions of Public Law 109-1;
184.11    (7) for taxable years beginning before January 1, 2008, the amount of the federal
184.12small ethanol producer credit allowed under section 40(a)(3) of the Internal Revenue Code
184.13which is included in gross income under section 87 of the Internal Revenue Code;
184.14    (8) for individuals who are allowed a federal foreign tax credit for taxes that do not
184.15qualify for a credit under section 290.06, subdivision 22, an amount equal to the carryover
184.16of subnational foreign taxes for the taxable year, but not to exceed the total subnational
184.17foreign taxes reported in claiming the foreign tax credit. For purposes of this clause,
184.18"federal foreign tax credit" means the credit allowed under section 27 of the Internal
184.19Revenue Code, and "carryover of subnational foreign taxes" equals the carryover allowed
184.20under section 904(c) of the Internal Revenue Code minus national level foreign taxes to
184.21the extent they exceed the federal foreign tax credit;
184.22    (9) in each of the five tax years immediately following the tax year in which an
184.23addition is required under subdivision 19a, clause (7), or 19c, clause (15) (14), in the case
184.24of a shareholder of a corporation that is an S corporation, an amount equal to one-fifth
184.25of the delayed depreciation. For purposes of this clause, "delayed depreciation" means
184.26the amount of the addition made by the taxpayer under subdivision 19a, clause (7), or
184.27subdivision 19c, clause (15) (14), in the case of a shareholder of an S corporation, minus
184.28the positive value of any net operating loss under section 172 of the Internal Revenue
184.29Code generated for the tax year of the addition. The resulting delayed depreciation
184.30cannot be less than zero;
184.31    (10) job opportunity building zone income as provided under section 469.316;
184.32    (11) to the extent included in federal taxable income, the amount of compensation
184.33paid to members of the Minnesota National Guard or other reserve components of the
184.34United States military for active service performed in Minnesota, excluding compensation
184.35for services performed under the Active Guard Reserve (AGR) program. For purposes of
184.36this clause, "active service" means (i) state active service as defined in section 190.05,
185.1subdivision 5a
, clause (1); (ii) federally funded state active service as defined in section
185.2190.05, subdivision 5b ; or (iii) federal active service as defined in section 190.05,
185.3subdivision 5c
, but "active service" excludes services performed exclusively for purposes
185.4of basic combat training, advanced individual training, annual training, and periodic
185.5inactive duty training; special training periodically made available to reserve members;
185.6and service performed in accordance with section 190.08, subdivision 3;
185.7    (12) to the extent included in federal taxable income, the amount of compensation
185.8paid to Minnesota residents who are members of the armed forces of the United States or
185.9United Nations for active duty performed outside Minnesota;
185.10    (13) an amount, not to exceed $10,000, equal to qualified expenses related to a
185.11qualified donor's donation, while living, of one or more of the qualified donor's organs
185.12to another person for human organ transplantation. For purposes of this clause, "organ"
185.13means all or part of an individual's liver, pancreas, kidney, intestine, lung, or bone marrow;
185.14"human organ transplantation" means the medical procedure by which transfer of a human
185.15organ is made from the body of one person to the body of another person; "qualified
185.16expenses" means unreimbursed expenses for both the individual and the qualified donor
185.17for (i) travel, (ii) lodging, and (iii) lost wages net of sick pay, except that such expenses
185.18may be subtracted under this clause only once; and "qualified donor" means the individual
185.19or the individual's dependent, as defined in section 152 of the Internal Revenue Code. An
185.20individual may claim the subtraction in this clause for each instance of organ donation for
185.21transplantation during the taxable year in which the qualified expenses occur;
185.22    (14) in each of the five tax years immediately following the tax year in which an
185.23addition is required under subdivision 19a, clause (8), or 19c, clause (16) (15), in the case
185.24of a shareholder of a corporation that is an S corporation, an amount equal to one-fifth
185.25of the addition made by the taxpayer under subdivision 19a, clause (8), or 19c, clause
185.26(16) (15), in the case of a shareholder of a corporation that is an S corporation, minus the
185.27positive value of any net operating loss under section 172 of the Internal Revenue Code
185.28generated for the tax year of the addition. If the net operating loss exceeds the addition for
185.29the tax year, a subtraction is not allowed under this clause;
185.30    (15) to the extent included in federal taxable income, compensation paid to a
185.31nonresident who is a service member as defined in United States Code, title 10, section
185.32101(a)(5), for military service as defined in the Service Member Civil Relief Act, Public
185.33Law 108-189, section 101(2); and
185.34    (16) international economic development zone income as provided under section
185.35469.325 .
186.1EFFECTIVE DATE.This section is effective retroactively for taxable years
186.2beginning after December 31, 2004.

186.3    Sec. 11. Minnesota Statutes 2006, section 290.01, subdivision 19c, is amended to read:
186.4    Subd. 19c. Corporations; additions to federal taxable income. For corporations,
186.5there shall be added to federal taxable income:
186.6    (1) the amount of any deduction taken for federal income tax purposes for income,
186.7excise, or franchise taxes based on net income or related minimum taxes, including but not
186.8limited to the tax imposed under section 290.0922, paid by the corporation to Minnesota,
186.9another state, a political subdivision of another state, the District of Columbia, or any
186.10foreign country or possession of the United States;
186.11    (2) interest not subject to federal tax upon obligations of: the United States, its
186.12possessions, its agencies, or its instrumentalities; the state of Minnesota or any other
186.13state, any of its political or governmental subdivisions, any of its municipalities, or any
186.14of its governmental agencies or instrumentalities; the District of Columbia; or Indian
186.15tribal governments;
186.16    (3) exempt-interest dividends received as defined in section 852(b)(5) of the Internal
186.17Revenue Code;
186.18    (4) the amount of any net operating loss deduction taken for federal income tax
186.19purposes under section 172 or 832(c)(10) of the Internal Revenue Code or operations loss
186.20deduction under section 810 of the Internal Revenue Code;
186.21    (5) the amount of any special deductions taken for federal income tax purposes
186.22under sections 241 to 247 and 965 of the Internal Revenue Code;
186.23    (6) losses from the business of mining, as defined in section 290.05, subdivision 1,
186.24clause (a), that are not subject to Minnesota income tax;
186.25    (7) the amount of any capital losses deducted for federal income tax purposes under
186.26sections 1211 and 1212 of the Internal Revenue Code;
186.27    (8) the exempt foreign trade income of a foreign sales corporation under sections
186.28921(a) and 291 of the Internal Revenue Code;
186.29    (9) the amount of percentage depletion deducted under sections 611 through 614 and
186.30291 of the Internal Revenue Code;
186.31    (10) for certified pollution control facilities placed in service in a taxable year
186.32beginning before December 31, 1986, and for which amortization deductions were elected
186.33under section 169 of the Internal Revenue Code of 1954, as amended through December
186.3431, 1985, the amount of the amortization deduction allowed in computing federal taxable
186.35income for those facilities;
187.1    (11) the amount of any deemed dividend from a foreign operating corporation
187.2determined pursuant to section 290.17, subdivision 4, paragraph (g);
187.3    (12) (11) the amount of a partner's pro rata share of net income which does not flow
187.4through to the partner because the partnership elected to pay the tax on the income under
187.5section 6242(a)(2) of the Internal Revenue Code;
187.6    (13) (12) the amount of net income excluded under section 114 of the Internal
187.7Revenue Code;
187.8    (14) (13) any increase in subpart F income, as defined in section 952(a) of the
187.9Internal Revenue Code, for the taxable year when subpart F income is calculated without
187.10regard to the provisions of section 103 of Public Law 109-222;
187.11    (15) (14) 80 percent of the depreciation deduction allowed under section
187.12168(k)(1)(A) and (k)(4)(A) of the Internal Revenue Code. For purposes of this clause, if
187.13the taxpayer has an activity that in the taxable year generates a deduction for depreciation
187.14under section 168(k)(1)(A) and (k)(4)(A) and the activity generates a loss for the taxable
187.15year that the taxpayer is not allowed to claim for the taxable year, "the depreciation
187.16allowed under section 168(k)(1)(A) and (k)(4)(A)" for the taxable year is limited to excess
187.17of the depreciation claimed by the activity under section 168(k)(1)(A) and (k)(4)(A)
187.18over the amount of the loss from the activity that is not allowed in the taxable year. In
187.19succeeding taxable years when the losses not allowed in the taxable year are allowed, the
187.20depreciation under section 168(k)(1)(A) and (k)(4)(A) is allowed;
187.21    (16) (15) 80 percent of the amount by which the deduction allowed by section 179 of
187.22the Internal Revenue Code exceeds the deduction allowable by section 179 of the Internal
187.23Revenue Code of 1986, as amended through December 31, 2003;
187.24    (17) (16) to the extent deducted in computing federal taxable income, the amount of
187.25the deduction allowable under section 199 of the Internal Revenue Code; and
187.26    (18) (17) the exclusion allowed under section 139A of the Internal Revenue Code
187.27for federal subsidies for prescription drug plans.
187.28EFFECTIVE DATE.This section is effective for tax years beginning after
187.29December 31, 2006.

187.30    Sec. 12. Minnesota Statutes 2006, section 290.01, subdivision 19d, is amended to read:
187.31    Subd. 19d. Corporations; modifications decreasing federal taxable income. For
187.32corporations, there shall be subtracted from federal taxable income after the increases
187.33provided in subdivision 19c:
187.34    (1) the amount of foreign dividend gross-up added to gross income for federal
187.35income tax purposes under section 78 of the Internal Revenue Code;
188.1    (2) the amount of salary expense not allowed for federal income tax purposes due
188.2to claiming the federal jobs work opportunity credit under section 51 of the Internal
188.3Revenue Code;
188.4    (3) any dividend (not including any distribution in liquidation) paid within the
188.5taxable year by a national or state bank to the United States, or to any instrumentality of
188.6the United States exempt from federal income taxes, on the preferred stock of the bank
188.7owned by the United States or the instrumentality;
188.8    (4) amounts disallowed for intangible drilling costs due to differences between
188.9this chapter and the Internal Revenue Code in taxable years beginning before January
188.101, 1987, as follows:
188.11    (i) to the extent the disallowed costs are represented by physical property, an amount
188.12equal to the allowance for depreciation under Minnesota Statutes 1986, section 290.09,
188.13subdivision 7
, subject to the modifications contained in subdivision 19e; and
188.14    (ii) to the extent the disallowed costs are not represented by physical property, an
188.15amount equal to the allowance for cost depletion under Minnesota Statutes 1986, section
188.16290.09, subdivision 8 ;
188.17    (5) the deduction for capital losses pursuant to sections 1211 and 1212 of the
188.18Internal Revenue Code, except that:
188.19    (i) for capital losses incurred in taxable years beginning after December 31, 1986,
188.20capital loss carrybacks shall not be allowed;
188.21    (ii) for capital losses incurred in taxable years beginning after December 31, 1986,
188.22a capital loss carryover to each of the 15 taxable years succeeding the loss year shall be
188.23allowed;
188.24    (iii) for capital losses incurred in taxable years beginning before January 1, 1987, a
188.25capital loss carryback to each of the three taxable years preceding the loss year, subject to
188.26the provisions of Minnesota Statutes 1986, section 290.16, shall be allowed; and
188.27    (iv) for capital losses incurred in taxable years beginning before January 1, 1987,
188.28a capital loss carryover to each of the five taxable years succeeding the loss year to the
188.29extent such loss was not used in a prior taxable year and subject to the provisions of
188.30Minnesota Statutes 1986, section 290.16, shall be allowed;
188.31    (6) an amount for interest and expenses relating to income not taxable for federal
188.32income tax purposes, if (i) the income is taxable under this chapter and (ii) the interest and
188.33expenses were disallowed as deductions under the provisions of section 171(a)(2), 265 or
188.34291 of the Internal Revenue Code in computing federal taxable income;
188.35    (7) in the case of mines, oil and gas wells, other natural deposits, and timber for
188.36which percentage depletion was disallowed pursuant to subdivision 19c, clause (11) (9), a
189.1reasonable allowance for depletion based on actual cost. In the case of leases the deduction
189.2must be apportioned between the lessor and lessee in accordance with rules prescribed
189.3by the commissioner. In the case of property held in trust, the allowable deduction must
189.4be apportioned between the income beneficiaries and the trustee in accordance with the
189.5pertinent provisions of the trust, or if there is no provision in the instrument, on the basis
189.6of the trust's income allocable to each;
189.7    (8) for certified pollution control facilities placed in service in a taxable year
189.8beginning before December 31, 1986, and for which amortization deductions were elected
189.9under section 169 of the Internal Revenue Code of 1954, as amended through December
189.1031, 1985, an amount equal to the allowance for depreciation under Minnesota Statutes
189.111986, section 290.09, subdivision 7;
189.12    (9) amounts included in federal taxable income that are due to refunds of income,
189.13excise, or franchise taxes based on net income or related minimum taxes paid by the
189.14corporation to Minnesota, another state, a political subdivision of another state, the
189.15District of Columbia, or a foreign country or possession of the United States to the extent
189.16that the taxes were added to federal taxable income under section 290.01, subdivision 19c,
189.17clause (1), in a prior taxable year;
189.18    (10) (9) 80 percent of royalties, fees, or other like income accrued or received from a
189.19foreign operating corporation or a foreign corporation which is part of the same unitary
189.20business as the receiving corporation;
189.21    (11) (10) income or gains from the business of mining as defined in section 290.05,
189.22subdivision 1
, clause (a), that are not subject to Minnesota franchise tax;
189.23    (12) (11) the amount of disability access expenditures in the taxable year which are
189.24not allowed to be deducted or capitalized under section 44(d)(7) of the Internal Revenue
189.25Code;
189.26    (13) (12) the amount of qualified research expenses not allowed for federal income
189.27tax purposes under section 280C(c) of the Internal Revenue Code, but only to the extent
189.28that the amount exceeds the amount of the credit allowed under section 290.068;
189.29    (14) (13) the amount of salary expenses not allowed for federal income tax purposes
189.30due to claiming the Indian employment credit under section 45A(a) of the Internal
189.31Revenue Code;
189.32    (15) the amount of any refund of environmental taxes paid under section 59A of the
189.33Internal Revenue Code;
189.34    (16) (14) for taxable years beginning before January 1, 2008, the amount of the
189.35federal small ethanol producer credit allowed under section 40(a)(3) of the Internal
190.1Revenue Code which is included in gross income under section 87 of the Internal Revenue
190.2Code;
190.3    (17) (15) for a corporation whose foreign sales corporation, as defined in section
190.4922 of the Internal Revenue Code, constituted a foreign operating corporation during any
190.5taxable year ending before January 1, 1995, and a return was filed by August 15, 1996,
190.6claiming the deduction under section 290.21, subdivision 4, for income received from
190.7the foreign operating corporation, an amount equal to 1.23 multiplied by the amount of
190.8income excluded under section 114 of the Internal Revenue Code, provided the income is
190.9not income of a foreign operating company;
190.10    (18) (16) any decrease in subpart F income, as defined in section 952(a) of the
190.11Internal Revenue Code, for the taxable year when subpart F income is calculated without
190.12regard to the provisions of section 614 103 of Public Law 107-147 109-222;
190.13    (19) (17) in each of the five tax years immediately following the tax year in which an
190.14addition is required under subdivision 19c, clause (15) (14), an amount equal to one-fifth
190.15of the delayed depreciation. For purposes of this clause, "delayed depreciation" means the
190.16amount of the addition made by the taxpayer under subdivision 19c, clause (15) (14). The
190.17resulting delayed depreciation cannot be less than zero; and
190.18    (20) (18) in each of the five tax years immediately following the tax year in which an
190.19addition is required under subdivision 19c, clause (16) (15), an amount equal to one-fifth
190.20of the amount of the addition.
190.21EFFECTIVE DATE.The amendment to clause (2) is effective the day following
190.22final enactment. The rest of this section is effective for taxable years beginning after
190.23December 31, 2006.

190.24    Sec. 13. Minnesota Statutes 2006, section 290.06, subdivision 33, is amended to read:
190.25    Subd. 33. Bovine testing credit. (a) An owner of cattle in Minnesota may take a
190.26credit against the tax due under this chapter for an amount equal to one-half the expenses
190.27incurred during the taxable year to conduct tuberculosis testing on those cattle.
190.28    (b) If the amount of credit which the taxpayer is eligible to receive under this
190.29subdivision exceeds the taxpayer's tax liability under this chapter, the commissioner of
190.30revenue shall refund the excess to the taxpayer.
190.31    (c) The amount necessary to pay claims for the refund provided in this subdivision is
190.32appropriated from the general fund to the commissioner of revenue.
190.33    (d) Expenses incurred in a calendar year in which tuberculosis testing of cattle in
190.34Minnesota is not federally required are not allowed in claiming the credit under paragraph
190.35(a).
191.1EFFECTIVE DATE.This section is effective for tax years beginning after
191.2December 31, 2007.

191.3    Sec. 14. Minnesota Statutes 2006, section 290.067, subdivision 2b, is amended to read:
191.4    Subd. 2b. Inflation adjustment. The commissioner shall adjust the dollar amount
191.5of the income threshold at which the maximum credit begins to be reduced under
191.6subdivision 2 must be adjusted for inflation. The commissioner shall make the inflation
191.7adjustments in accordance with section 1(f) of the Internal Revenue Code except that for
191.8the purposes of this subdivision the percentage increase must be determined from the year
191.9starting September 1, 1999, and ending August 31, 2000, as the base year for adjusting
191.10for inflation for the tax year beginning after December 31, 2000. The determination of
191.11the commissioner under this subdivision is not a rule under the Administrative Procedure
191.12Act. by the percentage determined pursuant to the provisions of section 1(f) of the Internal
191.13Revenue Code, except that in section 1(f)(3)(B) the word "1999" shall be substituted for
191.14the word "1992." For 2001, the commissioner shall then determine the percent change
191.15from the 12 months ending on August 31, 1999, to the 12 months ending on August 31,
191.162000, and in each subsequent year, from the 12 months ending on August 31, 1999, to the
191.1712 months ending on August 31 of the year preceding the taxable year. The determination
191.18of the commissioner pursuant to this subdivision must not be considered a "rule" and is
191.19not subject to the Administrative Procedure Act contained in chapter 14. The threshold
191.20amount as adjusted must be rounded to the nearest $10 amount. If the amount ends in
191.21$5, the amount is rounded up to the nearest $10 amount.
191.22EFFECTIVE DATE.This section is effective for tax years beginning after
191.23December 31, 2006.

191.24    Sec. 15. Minnesota Statutes 2006, section 290.0671, subdivision 7, is amended to read:
191.25    Subd. 7. Inflation adjustment. The earned income amounts used to calculate the
191.26credit and the income thresholds at which the maximum credit begins to be reduced in
191.27subdivision 1 must be adjusted for inflation. The commissioner shall make the inflation
191.28adjustments in accordance with section 1(f) of the Internal Revenue Code except that for
191.29the purposes of this subdivision the percentage increase shall be determined from the year
191.30starting September 1, 1999, and ending August 31, 2000, as the base year for adjusting for
191.31inflation for the tax year beginning after December 31, 2000. adjust by the percentage
191.32determined pursuant to the provisions of section 1(f) of the Internal Revenue Code, except
191.33that in section 1(f)(3)(B) the word "1999" shall be substituted for the word "1992." For
191.342001, the commissioner shall then determine the percent change from the 12 months
192.1ending on August 31, 1999, to the 12 months ending on August 31, 2000, and in each
192.2subsequent year, from the 12 months ending on August 31, 1999, to the 12 months ending
192.3on August 31 of the year preceding the taxable year. The earned income thresholds as
192.4adjusted for inflation must be rounded to the nearest $10 amount. If the amount ends
192.5in $5, the amount is rounded up to the nearest $10 amount. The determination of the
192.6commissioner under this subdivision is not a rule under the Administrative Procedure Act.
192.7EFFECTIVE DATE.This section is effective for tax years beginning after
192.8December 31, 2006.

192.9    Sec. 16. Minnesota Statutes 2006, section 290.091, subdivision 3, is amended to read:
192.10    Subd. 3. Exemption amount. (a) For purposes of computing the alternative
192.11minimum tax, the exemption amount is:
192.12    (1) for taxable years beginning before January 1, 2006, the exemption determined
192.13under section 55(d) of the Internal Revenue Code, as amended through December 31,
192.141992; and
192.15    (2), for taxable years beginning after December 31, 2005, $60,000 for married
192.16couples filing joint returns, $30,000 for married individuals filing separate returns, estates,
192.17and trusts, and $45,000 for unmarried individuals.
192.18    (b) The exemption amount determined under this subdivision is subject to the phase
192.19out under section 55(d)(3) of the Internal Revenue Code, except that alternative minimum
192.20taxable income as determined under this section must be substituted in the computation of
192.21the phase out.
192.22    (c) For taxable years beginning after December 31, 2006, the exemption amount
192.23under paragraph (a), clause (2), must be adjusted for inflation. The commissioner shall
192.24make the inflation adjustments in accordance with section 1(f) of the Internal Revenue
192.25Code except that for the purposes of this subdivision the percentage increase must be
192.26determined from the year starting September 1, 2005, and ending August 31, 2006, as the
192.27base year for adjusting for inflation for the tax year beginning after December 31, 2006.
192.28The commissioner shall adjust the exemption amount by the percentage determined
192.29pursuant to the provisions of section 1(f) of the Internal Revenue Code, except that in
192.30section 1(f)(3)(B) the word "2005" shall be substituted for the word "1992." For 2007,
192.31the commissioner shall then determine the percent change from the 12 months ending on
192.32August 31, 2005, to the 12 months ending on August 31, 2006, and in each subsequent
192.33year, from the 12 months ending on August 31, 2005, to the 12 months ending on August
192.3431 of the year preceding the taxable year. The exemption amount as adjusted must be
192.35rounded to the nearest $10. If the amount ends in $5, it must be rounded up to the nearest
193.1$10 amount. The determination of the commissioner under this subdivision is not a rule
193.2under the Administrative Procedure Act.
193.3EFFECTIVE DATE.This section is effective for tax years beginning after
193.4December 31, 2006.

193.5    Sec. 17. Minnesota Statutes 2006, section 290.0921, subdivision 3, is amended to read:
193.6    Subd. 3. Alternative minimum taxable income. "Alternative minimum taxable
193.7income" is Minnesota net income as defined in section 290.01, subdivision 19, and
193.8includes the adjustments and tax preference items in sections 56, 57, 58, and 59(d), (e),
193.9(f), and (h) of the Internal Revenue Code. If a corporation files a separate company
193.10Minnesota tax return, the minimum tax must be computed on a separate company basis.
193.11If a corporation is part of a tax group filing a unitary return, the minimum tax must be
193.12computed on a unitary basis. The following adjustments must be made.
193.13    (1) For purposes of the depreciation adjustments under section 56(a)(1) and
193.1456(g)(4)(A) of the Internal Revenue Code, the basis for depreciable property placed in
193.15service in a taxable year beginning before January 1, 1990, is the adjusted basis for federal
193.16income tax purposes, including any modification made in a taxable year under section
193.17290.01, subdivision 19e , or Minnesota Statutes 1986, section 290.09, subdivision 7,
193.18paragraph (c).
193.19    For taxable years beginning after December 31, 2000, the amount of any remaining
193.20modification made under section 290.01, subdivision 19e, or Minnesota Statutes 1986,
193.21section 290.09, subdivision 7, paragraph (c), not previously deducted is a depreciation
193.22allowance in the first taxable year after December 31, 2000.
193.23    (2) The portion of the depreciation deduction allowed for federal income tax
193.24purposes under section 168(k) of the Internal Revenue Code that is required as an addition
193.25under section 290.01, subdivision 19c, clause (16) (14), is disallowed in determining
193.26alternative minimum taxable income.
193.27    (3) The subtraction for depreciation allowed under section 290.01, subdivision
193.2819d
, clause (19) (17), is allowed as a depreciation deduction in determining alternative
193.29minimum taxable income.
193.30    (4) The alternative tax net operating loss deduction under sections 56(a)(4) and 56(d)
193.31of the Internal Revenue Code does not apply.
193.32    (5) The special rule for certain dividends under section 56(g)(4)(C)(ii) of the Internal
193.33Revenue Code does not apply.
193.34    (6) The special rule for dividends from section 936 companies under section
193.3556(g)(4)(C)(iii) does not apply.
194.1    (7) The tax preference for depletion under section 57(a)(1) of the Internal Revenue
194.2Code does not apply.
194.3    (8) The tax preference for intangible drilling costs under section 57(a)(2) of the
194.4Internal Revenue Code must be calculated without regard to subparagraph (E) and the
194.5subtraction under section 290.01, subdivision 19d, clause (4).
194.6    (9) The tax preference for tax exempt interest under section 57(a)(5) of the Internal
194.7Revenue Code does not apply.
194.8    (10) The tax preference for charitable contributions of appreciated property under
194.9section 57(a)(6) of the Internal Revenue Code does not apply.
194.10    (11) For purposes of calculating the tax preference for accelerated depreciation or
194.11amortization on certain property placed in service before January 1, 1987, under section
194.1257(a)(7) of the Internal Revenue Code, the deduction allowable for the taxable year is the
194.13deduction allowed under section 290.01, subdivision 19e.
194.14    For taxable years beginning after December 31, 2000, the amount of any remaining
194.15modification made under section 290.01, subdivision 19e, not previously deducted is a
194.16depreciation or amortization allowance in the first taxable year after December 31, 2004.
194.17    (12) For purposes of calculating the adjustment for adjusted current earnings in
194.18section 56(g) of the Internal Revenue Code, the term "alternative minimum taxable
194.19income" as it is used in section 56(g) of the Internal Revenue Code, means alternative
194.20minimum taxable income as defined in this subdivision, determined without regard to the
194.21adjustment for adjusted current earnings in section 56(g) of the Internal Revenue Code.
194.22    (13) For purposes of determining the amount of adjusted current earnings under
194.23section 56(g)(3) of the Internal Revenue Code, no adjustment shall be made under section
194.2456(g)(4) of the Internal Revenue Code with respect to (i) the amount of foreign dividend
194.25gross-up subtracted as provided in section 290.01, subdivision 19d