HF 2337

2nd Engrossment - 87th Legislature (2011 - 2012) Posted on 03/20/2012 05:53pm

A bill for an act
relating to financing of state and local government; making changes to individual
income, corporate franchise, property, sales and use, mineral, liquor, aggregate
materials, local, and other taxes and tax-related provisions; changing and
providing income and franchise tax credits, exemptions, and deductions;
providing for taxation of foreign operating companies; providing a corporate tax
benefit transfer program; changing certain mining tax rates and allocation of tax
proceeds; changing property tax interest, credits, and exemptions, and providing
for use of a local levy; phasing out the state general levy; modifying the renter
property tax refund and providing a supplemental targeting refund; modifying
city aid payments; modifying tax increment financing district requirements;
authorizing, changing, and extending tax increment financing districts in certain
local governments; changing sales and use tax payment requirements and
changing and providing exemptions; modifying use of revenues and authorizing
extension of certain sales and lodging taxes for certain cities; changing liquor tax
reporting and credits; allocating funds to border city enterprise zones; authorizing
certain local governments to issue public debt; establishing a truth in taxation
task force; establishing a tax reform action committee; establishing a greater
Minnesota internship program; requiring reports; requiring a funds transfer
appropriating money; amending Minnesota Statutes 2010, sections 116J.8737,
subdivisions 5, 8, by adding a subdivision; 273.113; 275.025, subdivisions 1,
2, 4; 279.03, subdivisions 1a, 2; 289A.08, subdivision 3; 289A.20, subdivision
4; 290.01, subdivisions 19d, 29; 290.06, by adding subdivisions; 290.068,
subdivision 1; 290.17, subdivision 4; 290.21, subdivision 4; 290A.04,
subdivision 2a, by adding a subdivision; 290A.23, subdivision 1; 290B.07;
290B.08, subdivision 2; 297A.68, subdivision 5; 297A.70, subdivision 4, by
adding a subdivision; 297A.8155; 297G.04, subdivision 2; 298.018, subdivision
1; 298.28, subdivision 4; 298.75, by adding a subdivision; 469.169, by adding
a subdivision; 477A.011, subdivision 36; 477A.013, by adding a subdivision;
Minnesota Statutes 2011 Supplement, sections 116J.8737, subdivisions 1, 2;
290.01, subdivision 19c; 290A.03, subdivisions 11, 13; 290A.04, subdivision
4; 298.01, subdivision 3; 298.015, subdivision 1; 298.28, subdivision 2;
469.176, subdivisions 4c, 4m; 469.1763, subdivision 2; 477A.013, subdivision
9; Laws 1971, chapter 773, section 1, subdivision 2, as amended; Laws 1988,
chapter 645, section 3, as amended; Laws 1998, chapter 389, article 8, section
43, subdivision 3, as amended; Laws 2002, chapter 377, article 3, section 25,
as amended; Laws 2003, chapter 127, article 12, section 28; Laws 2005, First
Special Session chapter 3, article 5, section 37, subdivisions 2, 4; Laws 2008,
chapter 366, article 5, section 34, as amended; article 7, section 19, subdivision
3, as amended; Laws 2010, chapter 389, article 1, section 12; proposing coding
for new law in Minnesota Statutes, chapters 116J; 136A; repealing Minnesota
Statutes 2010, section 290.0921, subdivision 7; Minnesota Statutes 2011
Supplement, section 289A.60, subdivision 31; Laws 2009, chapter 88, article 4,
section 23, as amended.

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

ARTICLE 1

PROPERTY TAXES

Section 1.

Minnesota Statutes 2010, section 273.113, is amended to read:

273.113 TAX CREDIT FOR PROPERTY IN deleted text begin PROPOSED deleted text end BOVINE
TUBERCULOSIS deleted text begin MODIFIED ACCREDITED deleted text end new text begin MANAGEMENT new text end ZONE.

Subdivision 1.

Definitions.

For the purposes of this section, the following terms
have the meanings given to them:

(1) "bovine tuberculosis deleted text begin modified accredited deleted text end new text begin management new text end zone" means the deleted text begin modified
accredited deleted text end new text begin management new text end zone designated by the Board of Animal Health under section
35.244;

(2) "located within" means that the herd is kept in the area for at least a part of
calendar year 2006, 2007, or 2008; and

(3) "animal" means cattle, bison, goats, and farmed cervidae.

Subd. 2.

Eligibility; amount of credit.

Agricultural and rural vacant land classified
under section 273.13, subdivision 23, located within a bovine tuberculosis deleted text begin modified
accredited deleted text end new text begin management new text end zone is eligible for a property tax credit equal to deleted text begin the greater of: (1)
$5 per acre on the first 160 acres of the property where the herd had been located; or (2) an
amount equal to $5 per acre times five acres times the highest number of animals tested
on the property for bovine tuberculosis in a whole-herd test as reported by the Board of
Animal Health in 2006, 2007, or 2008 deleted text end new text begin the amount of credit received under this section for
taxes payable in 2011 new text end . The amount of the credit cannot exceed the property tax payable on
the property where the herd had been located, excluding any tax attributable to residential
structures. To deleted text begin begin to deleted text end qualify for the tax credit new text begin for taxes payable in 2012 new text end , the owner shall
file an application with the county by deleted text begin December 1 of the levy year deleted text end new text begin July 1, 2012 new text end . new text begin For
taxes payable in 2012, the credit shall be paid as a direct payment to the property owner,
issued by the county within 30 days of receipt of the application, provided that there are
no delinquent taxes on the property. new text end The credit must be given for each subsequent taxes
payable year until the credit terminates under subdivision 4. new text begin For taxes payable in 2013
and thereafter, new text end the assessor shall indicate the amount of the property tax reduction on the
property tax statement of each taxpayer receiving a credit under this section. new text begin For taxes
payable in 2013 and thereafter, new text end the credit paid pursuant to this section shall be deducted
from the tax due on the property as provided in section 273.1393.

Subd. 3.

Reimbursement for lost revenue.

The county auditor shall certify to the
commissioner of revenue, as part of the abstracts of tax lists required to be filed with the
commissioner under section 275.29, the amount of tax lost to the county from the property
tax credit under subdivision 2 new text begin , except that for taxes payable in 2012 only, the county shall
submit the credit amounts to the commissioner of revenue in a separate report, in a form
prescribed by the commissioner, prior to August 15, 2012 new text end . Any prior year adjustments
must also be certified in the abstracts of tax lists. The commissioner of revenue shall
review the certifications to determine their accuracy. The commissioner may make the
changes in the certification that are considered necessary or return a certification to the
county auditor for corrections. The commissioner shall reimburse each taxing district,
other than school districts, for the taxes lost. The payments must be made at the time
provided in section 473H.10 for payment to taxing jurisdictions in the same proportion
that the ad valorem tax is distributed new text begin , except that for taxes payable in 2012 the entire
reimbursement must be made to the county new text end . Reimbursements to school districts must be
made as provided in section 273.1392. The amount necessary to make the reimbursements
under this section is annually appropriated from the general fund to the commissioner of
revenue.

Subd. 4.

Termination of credit.

The credits provided under this section cease to
be available beginning with taxes payable in the year following the date when the Board
of Animal Health new text begin notifies the commissioner of revenue in writing that the board new text end has
deleted text begin certified that the state is free of deleted text end new text begin discontinued all required new text end bovine tuberculosis new text begin related
activities within the bovine tuberculosis management zone new text end .

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for taxes payable in 2012 and
thereafter.
new text end

Sec. 2.

Minnesota Statutes 2010, section 275.025, subdivision 1, is amended to read:

Subdivision 1.

Levy amount.

new text begin (a) new text end The state general levy is levied against
commercial-industrial property and seasonal residential recreational property, as defined
in this section.

new text begin (b) The state general levy base amount for commercial-industrial property is
$721,752,000. For taxes payable in 2013, the state general levy for commercial-industrial
property is equal to the base amount. For taxes payable in 2014 to taxes payable in 2024,
the levy is reduced each year from the previous year's levy amount by 8.33 percent of
the base amount. For taxes payable in 2025 and thereafter, the state general levy for
commercial-industrial property is $0.
new text end

new text begin (c) new text end The state general levy base amount new text begin for seasonal recreational property new text end is
deleted text begin $592,000,000 for taxes payable in 2002 deleted text end new text begin $40,871,000 new text end . For taxes payable in deleted text begin subsequent
years, the levy deleted text end new text begin 2013, the state general levy for seasonal-recreational property is equal
to the new text end base amount deleted text begin is increased each year by multiplying the levy base amount for
the prior year by the sum of one plus the rate of increase, if any, in the implicit price
deflator for government consumption expenditures and gross investment for state and
local governments prepared by the Bureau of Economic Analysts of the United States
Department of Commerce for the 12-month period ending March 31 of the year prior
to the year the taxes are payable deleted text end . new text begin For taxes payable in 2014 to taxes payable in 2024,
the levy is reduced each year from the previous year's levy amount by 8.33 percent of
the base amount. For taxes payable in 2025 and thereafter, the state general levy for
seasonal-recreational property is $0.
new text end

new text begin (d) new text end The tax under this section is not treated as a local tax rate under section 469.177
and is not the levy of a governmental unit under chapters 276A and 473F.

new text begin (e) new text end The commissioner shall increase or decrease the preliminary or final deleted text begin rate deleted text end new text begin rates new text end for
a year as necessary to account for errors and tax base changes that affected a preliminary
or final rate for either of the two preceding years. Adjustments are allowed to the extent
that the necessary information is available to the commissioner at the time the rates for a
year must be certified, and for the following reasons:

(1) an erroneous report of taxable value by a local official;

(2) an erroneous calculation by the commissioner; and

(3) an increase or decrease in taxable value for commercial-industrial or seasonal
residential recreational property reported on the abstracts of tax lists submitted under
section 275.29 that was not reported on the abstracts of assessment submitted under
section 270C.89 for the same year.

new text begin (f) new text end The commissioner may, but need not, make adjustments if the total difference in
the tax levied for the year would be less than $100,000.

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for taxes payable in 2013 and
thereafter.
new text end

Sec. 3.

Minnesota Statutes 2010, section 275.025, subdivision 2, is amended to read:

Subd. 2.

Commercial-industrial tax capacity.

For the purposes of this section,
"commercial-industrial tax capacity" means the tax capacity of all taxable property
classified as class 3 or class 5(1) under section 273.13, deleted text begin except for deleted text end new text begin excluding new text end electric
generation attached machinery under class 3 and property described in section 473.625 new text begin ,
and provided that property in the first tier of value as defined in section 273.13, subdivision
24, has a tax capacity for this purpose equal to 30 percent of its tax capacity under
section 273.13 new text end . County commercial-industrial tax capacity amounts are not adjusted
for the captured net tax capacity of a tax increment financing district under section
469.177, subdivision 2, the net tax capacity of transmission lines deducted from a local
government's total net tax capacity under section 273.425, or fiscal disparities contribution
and distribution net tax capacities under chapter 276A or 473F.

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for taxes payable in 2013 and
thereafter.
new text end

Sec. 4.

Minnesota Statutes 2010, section 275.025, subdivision 4, is amended to read:

Subd. 4.

deleted text begin Apportionment and deleted text end Levy of state general tax.

deleted text begin Ninety-five percent of deleted text end The
state general tax must be levied by applying a uniform rate to all commercial-industrial tax
capacity and deleted text begin five percent of the state general tax must be levied by applying deleted text end a uniform
rate to all seasonal residential recreational tax capacity. On or before October 1 each
year, the commissioner of revenue shall certify the preliminary state general levy rates to
each county auditor that must be used to prepare the notices of proposed property taxes
for taxes payable in the following year. By January 1 of each year, the commissioner
shall certify the final state general levy deleted text begin rate deleted text end new text begin rates new text end to each county auditor that shall be
used in spreading taxes.

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for taxes payable in 2013 and
thereafter.
new text end

Sec. 5.

Minnesota Statutes 2010, section 279.03, subdivision 1a, is amended to read:

Subd. 1a.

Rate after December 31, 1990.

(a) Except as provided in deleted text begin paragraph deleted text end new text begin
paragraphs new text end (b) new text begin and (c) new text end , interest on delinquent property taxes, penalties, and costs unpaid
on or after January 1, deleted text begin 1991, deleted text end new text begin 2013, shall be payable at the per annum rate determined in
section 270C.40, subdivision 5. If the rate so determined is less than four percent, the rate
of interest shall be four percent. The maximum per annum rate shall be seven percent if
the rate specified under section 270C.40, subdivision 5, exceeds seven percent. The rate is
subject to change on January 1 of each year.
new text end

new text begin (b) Except as provided in paragraph (c), interest on delinquent taxes, penalties, and
costs unpaid on or after January 1, 1991, and before January 1, 2013, new text end shall be payable at
the per annum rate determined in section 270C.40, subdivision 5. If the rate so determined
is less than ten percent, the rate of interest shall be ten percent. The maximum per annum
rate shall be 14 percent if the rate specified under section 270C.40, subdivision 5, exceeds
14 percent. The rate shall be subject to change on January 1 of each year.

deleted text begin (b) deleted text end new text begin (c) new text end If a person is the owner of one or more parcels of property on which taxes are
delinquent, and the delinquent taxes are more than 25 percent of the prior year's school
district levy, interest on the delinquent property taxes, penalties, and costs unpaid after
January 1, 1992, shall be payable at twice the rate determined under paragraph (a) for
the year.

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective the day following final enactment.
new text end

Sec. 6.

Minnesota Statutes 2010, section 279.03, subdivision 2, is amended to read:

Subd. 2.

Composite judgment.

Amounts included in composite judgments
authorized by section 279.37, subdivision 1, deleted text begin and deleted text end new text begin are subject to the following interest rates:
new text end

new text begin (a) Amounts new text end confessed on or after July 1, 1982, new text begin and before January 1, 1991, new text end are
subject to interest at the rate determined pursuant to section 549.09.

new text begin (b) new text end Amounts confessed deleted text begin under this authority deleted text end new text begin on or new text end after December 31, 1990, new text begin and
before January 1, 2013, new text end are subject to interest at the rate calculated under subdivision
1a new text begin , paragraph (b) new text end .

new text begin (c) Amounts confessed on or after January 1, 2013, are subject to interest at the rate
calculated under subdivision 1a, paragraph (a).
new text end

new text begin (d) new text end During each calendar year, interest shall accrue on the unpaid balance of the
composite judgment from the time it is confessed until it is paid. The rate of interest is
subject to change each year in the same manner deleted text begin that deleted text end new text begin as new text end section 549.09 or subdivision 1a,
whichever is applicable, for rate changes. Interest on the unpaid contract balance on
judgments confessed before July 1, 1982, is payable at the rate applicable to the judgment
at the time that it was confessed.

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective the day following final enactment.
new text end

Sec. 7.

Minnesota Statutes 2011 Supplement, section 290A.03, subdivision 11, is
amended to read:

Subd. 11.

Rent constituting property taxes.

"Rent constituting property taxes"
means deleted text begin 17 deleted text end new text begin 15 new text end percent of the gross rent actually paid in cash, or its equivalent, or the portion
of rent paid in lieu of property taxes, in any calendar year by a claimant for the right
of occupancy of the claimant's Minnesota homestead in the calendar year, and which
rent constitutes the basis, in the succeeding calendar year of a claim for relief under this
chapter by the claimant.

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for claims based on rent paid in
2011 and thereafter.
new text end

Sec. 8.

Minnesota Statutes 2011 Supplement, section 290A.03, subdivision 13, is
amended to read:

Subd. 13.

Property taxes payable.

"Property taxes payable" means the property tax
exclusive of special assessments, penalties, and interest payable on a claimant's homestead
after deductions made under sections 273.135, 273.1384, 273.1391, 273.42, subdivision 2,
and any other state paid property tax credits in any calendar year, and after any refund
claimed and allowable under section 290A.04, subdivision 2h, that is first payable in
the year that the property tax is payable. In the case of a claimant who makes ground
lease payments, "property taxes payable" includes the amount of the payments directly
attributable to the property taxes assessed against the parcel on which the house is located.
No apportionment or reduction of the "property taxes payable" shall be required for the
use of a portion of the claimant's homestead for a business purpose if the claimant does not
deduct any business depreciation expenses for the use of a portion of the homestead in the
determination of federal adjusted gross income. For homesteads which are manufactured
homes as defined in section 273.125, subdivision 8, and for homesteads which are park
trailers taxed as manufactured homes under section 168.012, subdivision 9, "property
taxes payable" shall also include deleted text begin 17 deleted text end new text begin 15 new text end percent of the gross rent paid in the preceding
year for the site on which the homestead is located. When a homestead is owned by
two or more persons as joint tenants or tenants in common, such tenants shall determine
between them which tenant may claim the property taxes payable on the homestead. If
they are unable to agree, the matter shall be referred to the commissioner of revenue
whose decision shall be final. Property taxes are considered payable in the year prescribed
by law for payment of the taxes.

In the case of a claim relating to "property taxes payable," the claimant must have
owned and occupied the homestead on January 2 of the year in which the tax is payable
and (i) the property must have been classified as homestead property pursuant to section
273.124, on or before December 15 of the assessment year to which the "property taxes
payable" relate; or (ii) the claimant must provide documentation from the local assessor
that application for homestead classification has been made on or before December 15
of the year in which the "property taxes payable" were payable and that the assessor has
approved the application.

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for claims based on rent paid in
2011 and thereafter.
new text end

Sec. 9.

Minnesota Statutes 2010, section 290A.04, subdivision 2a, is amended to read:

Subd. 2a.

Renters new text begin ; senior or disabled new text end .

A claimant whose rent constituting property
taxes exceeds the percentage of the household income stated below must pay an amount
equal to the percent of income shown for the appropriate household income level along
with the percent to be paid by the claimant of the remaining amount of rent constituting
property taxes. The state refund equals the amount of rent constituting property taxes that
remain, up to the maximum state refund amount shown below. new text begin This subdivision applies
only if the claimant or the claimant's spouse was disabled or attained the age of 65 on or
before December 31 of the year for which the rent was paid.
new text end

deleted text begin Household Income deleted text end	deleted text begin Percent of Income deleted text end	deleted text begin Percent Paid by Claimant deleted text end	deleted text begin Maximum State Refund deleted text end
deleted text begin $0 to 3,589 deleted text end	deleted text begin 1.0 percent deleted text end	deleted text begin 5 percent deleted text end	deleted text begin $ deleted text end	deleted text begin 1,190 deleted text end
deleted text begin 3,590 to 4,779 deleted text end	deleted text begin 1.0 percent deleted text end	deleted text begin 10 percent deleted text end	deleted text begin $ deleted text end	deleted text begin 1,190 deleted text end
deleted text begin 4,780 to 5,969 deleted text end	deleted text begin 1.1 percent deleted text end	deleted text begin 10 percent deleted text end	deleted text begin $ deleted text end	deleted text begin 1,190 deleted text end
deleted text begin 5,970 to 8,369 deleted text end	deleted text begin 1.2 percent deleted text end	deleted text begin 10 percent deleted text end	deleted text begin $ deleted text end	deleted text begin 1,190 deleted text end
deleted text begin 8,370 to 10,759 deleted text end	deleted text begin 1.3 percent deleted text end	deleted text begin 15 percent deleted text end	deleted text begin $ deleted text end	deleted text begin 1,190 deleted text end
deleted text begin 10,760 to 11,949 deleted text end	deleted text begin 1.4 percent deleted text end	deleted text begin 15 percent deleted text end	deleted text begin $ deleted text end	deleted text begin 1,190 deleted text end
deleted text begin 11,950 to 13,139 deleted text end	deleted text begin 1.4 percent deleted text end	deleted text begin 20 percent deleted text end	deleted text begin $ deleted text end	deleted text begin 1,190 deleted text end
deleted text begin 13,140 to 15,539 deleted text end	deleted text begin 1.5 percent deleted text end	deleted text begin 20 percent deleted text end	deleted text begin $ deleted text end	deleted text begin 1,190 deleted text end
deleted text begin 15,540 to 16,729 deleted text end	deleted text begin 1.6 percent deleted text end	deleted text begin 20 percent deleted text end	deleted text begin $ deleted text end	deleted text begin 1,190 deleted text end
deleted text begin 16,730 to 17,919 deleted text end	deleted text begin 1.7 percent deleted text end	deleted text begin 25 percent deleted text end	deleted text begin $ deleted text end	deleted text begin 1,190 deleted text end
deleted text begin 17,920 to 20,319 deleted text end	deleted text begin 1.8 percent deleted text end	deleted text begin 25 percent deleted text end	deleted text begin $ deleted text end	deleted text begin 1,190 deleted text end
deleted text begin 20,320 to 21,509 deleted text end	deleted text begin 1.9 percent deleted text end	deleted text begin 30 percent deleted text end	deleted text begin $ deleted text end	deleted text begin 1,190 deleted text end
deleted text begin 21,510 to 22,699 deleted text end	deleted text begin 2.0 percent deleted text end	deleted text begin 30 percent deleted text end	deleted text begin $ deleted text end	deleted text begin 1,190 deleted text end
deleted text begin 22,700 to 23,899 deleted text end	deleted text begin 2.2 percent deleted text end	deleted text begin 30 percent deleted text end	deleted text begin $ deleted text end	deleted text begin 1,190 deleted text end
deleted text begin 23,900 to 25,089 deleted text end	deleted text begin 2.4 percent deleted text end	deleted text begin 30 percent deleted text end	deleted text begin $ deleted text end	deleted text begin 1,190 deleted text end
deleted text begin 25,090 to 26,289 deleted text end	deleted text begin 2.6 percent deleted text end	deleted text begin 35 percent deleted text end	deleted text begin $ deleted text end	deleted text begin 1,190 deleted text end
deleted text begin 26,290 to 27,489 deleted text end	deleted text begin 2.7 percent deleted text end	deleted text begin 35 percent deleted text end	deleted text begin $ deleted text end	deleted text begin 1,190 deleted text end
deleted text begin 27,490 to 28,679 deleted text end	deleted text begin 2.8 percent deleted text end	deleted text begin 35 percent deleted text end	deleted text begin $ deleted text end	deleted text begin 1,190 deleted text end
deleted text begin 28,680 to 29,869 deleted text end	deleted text begin 2.9 percent deleted text end	deleted text begin 40 percent deleted text end	deleted text begin $ deleted text end	deleted text begin 1,190 deleted text end
deleted text begin 29,870 to 31,079 deleted text end	deleted text begin 3.0 percent deleted text end	deleted text begin 40 percent deleted text end	deleted text begin $ deleted text end	deleted text begin 1,190 deleted text end
deleted text begin 31,080 to 32,269 deleted text end	deleted text begin 3.1 percent deleted text end	deleted text begin 40 percent deleted text end	deleted text begin $ deleted text end	deleted text begin 1,190 deleted text end
deleted text begin 32,270 to 33,459 deleted text end	deleted text begin 3.2 percent deleted text end	deleted text begin 40 percent deleted text end	deleted text begin $ deleted text end	deleted text begin 1,190 deleted text end
deleted text begin 33,460 to 34,649 deleted text end	deleted text begin 3.3 percent deleted text end	deleted text begin 45 percent deleted text end	deleted text begin $ deleted text end	deleted text begin 1,080 deleted text end
deleted text begin 34,650 to 35,849 deleted text end	deleted text begin 3.4 percent deleted text end	deleted text begin 45 percent deleted text end	deleted text begin $ deleted text end	deleted text begin 960 deleted text end
deleted text begin 35,850 to 37,049 deleted text end	deleted text begin 3.5 percent deleted text end	deleted text begin 45 percent deleted text end	deleted text begin $ deleted text end	deleted text begin 830 deleted text end
deleted text begin 37,050 to 38,239 deleted text end	deleted text begin 3.5 percent deleted text end	deleted text begin 50 percent deleted text end	deleted text begin $ deleted text end	deleted text begin 720 deleted text end
deleted text begin 38,240 to 39,439 deleted text end	deleted text begin 3.5 percent deleted text end	deleted text begin 50 percent deleted text end	deleted text begin $ deleted text end	deleted text begin 600 deleted text end
deleted text begin 38,440 to 40,629 deleted text end	deleted text begin 3.5 percent deleted text end	deleted text begin 50 percent deleted text end	deleted text begin $ deleted text end	deleted text begin 360 deleted text end
deleted text begin 40,630 to 41,819 deleted text end	deleted text begin 3.5 percent deleted text end	deleted text begin 50 percent deleted text end	deleted text begin $ deleted text end	deleted text begin 120 deleted text end

new text begin Household Income new text end	new text begin Percent of Income new text end	new text begin Percent Paid by Claimant new text end	new text begin Maximum State Refund new text end
new text begin $0 to 4,689 new text end	new text begin 1.0 percent new text end	new text begin 5 percent new text end	new text begin $ new text end	new text begin 1,550 new text end
new text begin 4,690 to 6,239 new text end	new text begin 1.0 percent new text end	new text begin 10 percent new text end	new text begin $ new text end	new text begin 1,550 new text end
new text begin 6,240 to 7,799 new text end	new text begin 1.1 percent new text end	new text begin 10 percent new text end	new text begin $ new text end	new text begin 1,550 new text end
new text begin 7,800 to 10,929 new text end	new text begin 1.2 percent new text end	new text begin 10 percent new text end	new text begin $ new text end	new text begin 1,550 new text end
new text begin 10,930 to 14,049 new text end	new text begin 1.3 percent new text end	new text begin 15 percent new text end	new text begin $ new text end	new text begin 1,550 new text end
new text begin 14,050 to 15,609 new text end	new text begin 1.4 percent new text end	new text begin 15 percent new text end	new text begin $ new text end	new text begin 1,550 new text end
new text begin 15,610 to 17,159 new text end	new text begin 1.4 percent new text end	new text begin 20 percent new text end	new text begin $ new text end	new text begin 1,550 new text end
new text begin 17,160 to 20,289 new text end	new text begin 1.5 percent new text end	new text begin 20 percent new text end	new text begin $ new text end	new text begin 1,550 new text end
new text begin 20,290 to 21,849 new text end	new text begin 1.6 percent new text end	new text begin 20 percent new text end	new text begin $ new text end	new text begin 1,550 new text end
new text begin 21,850 to 23,399 new text end	new text begin 1.7 percent new text end	new text begin 25 percent new text end	new text begin $ new text end	new text begin 1,550 new text end
new text begin 23,400 to 26,539 new text end	new text begin 1.8 percent new text end	new text begin 25 percent new text end	new text begin $ new text end	new text begin 1,500 new text end
new text begin 26,540 to 28,089 new text end	new text begin 1.9 percent new text end	new text begin 30 percent new text end	new text begin $ new text end	new text begin 1,400 new text end
new text begin 28,090 to 29,649 new text end	new text begin 2.0 percent new text end	new text begin 30 percent new text end	new text begin $ new text end	new text begin 1,300 new text end
new text begin 29,650 to 31,209 new text end	new text begin 2.2 percent new text end	new text begin 30 percent new text end	new text begin $ new text end	new text begin 1,200 new text end
new text begin 31,210 to 32,769 new text end	new text begin 2.4 percent new text end	new text begin 30 percent new text end	new text begin $ new text end	new text begin 1,100 new text end
new text begin 32,770 to 34,329 new text end	new text begin 2.6 percent new text end	new text begin 35 percent new text end	new text begin $ new text end	new text begin 1,000 new text end
new text begin 34,330 to 35,899 new text end	new text begin 2.7 percent new text end	new text begin 35 percent new text end	new text begin $ new text end	new text begin 1,000 new text end
new text begin 35,900 to 37,449 new text end	new text begin 2.8 percent new text end	new text begin 35 percent new text end	new text begin $ new text end	new text begin 750 new text end
new text begin 37,450 to 39,009 new text end	new text begin 2.9 percent new text end	new text begin 40 percent new text end	new text begin $ new text end	new text begin 500 new text end
new text begin 39,010 to 39,999 new text end	new text begin 3.0 percent new text end	new text begin 40 percent new text end	new text begin $ new text end	new text begin 250 new text end

The payment made to a claimant is the amount of the state refund calculated under
this subdivision. No payment is allowed if the claimant's household income is deleted text begin $41,820 deleted text end new text begin
$40,000 new text end or more.

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for claims based on rent paid in
2011 and thereafter.
new text end

Sec. 10.

Minnesota Statutes 2010, section 290A.04, is amended by adding a
subdivision to read:

new text begin Subd. 2k. new text end

new text begin Renters; nonsenior nondisabled. new text end

new text begin A claimant whose rent constituting
property taxes exceeds the percentage of the household income stated below must pay
an amount equal to the percent of income shown for the appropriate household income
level along with the percent to be paid by the claimant of the remaining amount of rent
constituting property taxes. The state refund equals the amount of rent constituting
property taxes that remain, up to the maximum state refund amount shown below. This
subdivision applies only if the claimant or the claimant's spouse is not eligible for a refund
under subdivision 2a.
new text end

new text begin Household Income new text end	new text begin Percent of Income new text end	new text begin Percent Paid by Claimant new text end	new text begin Maximum State Refund new text end
new text begin $0 to 6,239 new text end	new text begin 1.0 percent new text end	new text begin 15 percent new text end	new text begin $ new text end	new text begin 1,000 new text end
new text begin 6,240 to 7,799 new text end	new text begin 1.1 percent new text end	new text begin 20 percent new text end	new text begin $ new text end	new text begin 1,000 new text end
new text begin 7,800 to 10,929 new text end	new text begin 1.2 percent new text end	new text begin 20 percent new text end	new text begin $ new text end	new text begin 900 new text end
new text begin 10,930 to 14,049 new text end	new text begin 1.3 percent new text end	new text begin 25 percent new text end	new text begin $ new text end	new text begin 800 new text end
new text begin 14,050 to 15,609 new text end	new text begin 1.4 percent new text end	new text begin 25 percent new text end	new text begin $ new text end	new text begin 800 new text end
new text begin 15,610 to 17,159 new text end	new text begin 1.4 percent new text end	new text begin 30 percent new text end	new text begin $ new text end	new text begin 600 new text end
new text begin 17,160 to 20,289 new text end	new text begin 1.5 percent new text end	new text begin 30 percent new text end	new text begin $ new text end	new text begin 600 new text end
new text begin 20,290 to 21,849 new text end	new text begin 1.6 percent new text end	new text begin 35 percent new text end	new text begin $ new text end	new text begin 400 new text end
new text begin 21,850 to 23,399 new text end	new text begin 1.7 percent new text end	new text begin 35 percent new text end	new text begin $ new text end	new text begin 400 new text end
new text begin 23,400 to 24,999 new text end	new text begin 1.8 percent new text end	new text begin 40 percent new text end	new text begin $ new text end	new text begin 200 new text end

new text begin The payment made to a claimant is the amount of the state refund calculated under
this subdivision. No payment is allowed if the claimant's household income is $25,000
or more.
new text end

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for claims based on rent paid in
2011 and thereafter.
new text end

Sec. 11.

Minnesota Statutes 2011 Supplement, section 290A.04, subdivision 4, is
amended to read:

Subd. 4.

Inflation adjustment.

(a) Beginning for property tax refunds payable in
calendar year 2002, the commissioner shall annually adjust the dollar amounts of the
income thresholds and the maximum refunds under deleted text begin subdivisions 2 and 2a deleted text end new text begin subdivision 2 new text end
for inflation. The commissioner shall make the inflation adjustments in accordance with
section 1(f) of the Internal Revenue Code, except that for purposes of this subdivision the
percentage increase shall be determined as provided in this subdivision.

(b) In adjusting the dollar amounts of the income thresholds and the maximum
refunds under subdivision 2 for inflation, the percentage increase shall be determined from
the year ending on June 30, 2011, to the year ending on June 30 of the year preceding that
in which the refund is payable.

deleted text begin (c) In adjusting the dollar amounts of the income thresholds and the maximum
refunds under subdivision 2a for inflation, the percentage increase shall be determined
from the year ending on June 30, 2000, to the year ending on June 30 of the year preceding
that in which the refund is payable.
deleted text end

deleted text begin (d) deleted text end new text begin (c) new text end The commissioner shall use the appropriate percentage increase to annually
adjust the income thresholds and maximum refunds under subdivisions 2 and 2a for
inflation without regard to whether or not the income tax brackets are adjusted for inflation
in that year. The commissioner shall round the thresholds and the maximum amounts,
as adjusted to the nearest $10 amount. If the amount ends in $5, the commissioner shall
round it up to the next $10 amount.

deleted text begin (e) deleted text end new text begin (d) new text end The commissioner shall annually announce the adjusted refund schedule at
the same time provided under section 290.06. The determination of the commissioner
under this subdivision is not a rule under the Administrative Procedure Act.

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for claims based on rent paid in
2012 and thereafter.
new text end

Sec. 12.

Minnesota Statutes 2010, section 290A.23, subdivision 1, is amended to read:

Subdivision 1.

Renters credit.

There is appropriated from the general fund in the
state treasury to the commissioner of revenue the amount necessary to make the payments
required under section 290A.04, deleted text begin subdivision 2a deleted text end new text begin subdivisions 2a and 2k new text end .

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for claims based on rent paid in
2011 and thereafter.
new text end

Sec. 13.

Minnesota Statutes 2010, section 290B.07, is amended to read:

290B.07 LIEN; DEFERRED PORTION.

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

new text begin (b) new text end The lien created under section 272.31 continues to secure payment by the
taxpayer, or by the taxpayer's successors or assigns, of the amount deferred, including
interest, with respect to all years for which amounts are deferred. The lien for deferred
taxes and interest has the same priority as any other lien under section 272.31, except that
liens, including mortgages, recorded or filed prior to the recording or filing of the notice
under section 290B.04, subdivision 2, have priority over the lien for deferred taxes and
interest. A seller's interest in a contract for deed, in which a qualifying homeowner is the
purchaser or an assignee of the purchaser, has priority over deferred taxes and interest
on deferred taxes, regardless of whether the contract for deed is recorded or filed. The
lien for deferred taxes and interest for future years has the same priority as the lien for
deferred taxes and interest for the first year, which is always higher in priority than any
mortgages or other liens filed, recorded, or created after the notice recorded or filed under
section 290B.04, subdivision 2. The county treasurer or auditor shall maintain records
of the deferred portion and shall list the amount of deferred taxes for the year and the
cumulative deferral and interest for all previous years as a lien against the property. In any
certification of unpaid taxes for a tax parcel, the county auditor shall clearly distinguish
between taxes payable in the current year, deferred taxes and interest, and delinquent
taxes. Payment of the deferred portion becomes due and owing at the time specified in
section 290B.08. Upon receipt of the payment, the commissioner shall issue a receipt for
it to the person making the payment upon request and shall notify the auditor of the county
in which the parcel is located, within ten days, identifying the parcel to which the payment
applies. Upon receipt by the commissioner of revenue of collected funds in the amount of
the deferral, the state's loan to the program participant is deemed paid in full.

deleted text begin (b) deleted text end new text begin (c) new text end If property for which taxes have been deferred under this chapter forfeits
under chapter 281 for nonpayment of a nondeferred property tax amount, or because
of nonpayment of amounts previously deferred following a termination under section
290B.08, the lien for the taxes deferred under this chapter, plus interest and costs, shall be
canceled by the county auditor as provided in section 282.07. However, notwithstanding
any other law to the contrary, any proceeds from a subsequent sale of the property under
chapter 282 or another law, must be used to first reimburse the county's forfeited tax sale
fund for any direct costs of selling the property or any costs directly related to preparing
the property for sale, and then to reimburse the state for the amount of the canceled
lien. Within 90 days of the receipt of any sale proceeds to which the state is entitled
under these provisions, the county auditor must pay those funds to the commissioner of
revenue by warrant for deposit in the general fund. No other deposit, use, distribution,
or release of gross sale proceeds or receipts may be made by the county until payments
sufficient to fully reimburse the state for the canceled lien amount have been transmitted
to the commissioner.

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective July 1, 2013.
new text end

Sec. 14.

Minnesota Statutes 2010, section 290B.08, subdivision 2, is amended to read:

Subd. 2.

Payment upon termination.

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

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective July 1, 2013.
new text end

Sec. 15.

Minnesota Statutes 2011 Supplement, section 298.01, subdivision 3, is
amended to read:

Subd. 3.

Occupation tax; other ores.

Every person engaged in the business of
mining, refining, or producing ores, metals, or minerals in this state, except iron ore or
taconite concentrates, shall pay an occupation tax to the state of Minnesota as provided
in this subdivision. For purposes of this subdivision, mining includes the application
of hydrometallurgical processes. The tax is determined in the same manner as the tax
imposed by section 290.02, except that sections 290.05, subdivision 1, clause (a), 290.17,
subdivision 4, and 290.191, subdivision 2, do not apply, and the occupation tax must be
computed by applying to taxable income the rate of deleted text begin 2.45 deleted text end new text begin 1.45 new text end percent. A person subject
to occupation tax under this section shall apportion its net income on the basis of the
percentage obtained by taking the sum of:

(1) 75 percent of the percentage which the sales made within this state in connection
with the trade or business during the tax period are of the total sales wherever made in
connection with the trade or business during the tax period;

(2) 12.5 percent of the percentage which the total tangible property used by the
taxpayer in this state in connection with the trade or business during the tax period is of
the total tangible property, wherever located, used by the taxpayer in connection with the
trade or business during the tax period; and

(3) 12.5 percent of the percentage which the taxpayer's total payrolls paid or incurred
in this state or paid in respect to labor performed in this state in connection with the trade
or business during the tax period are of the taxpayer's total payrolls paid or incurred in
connection with the trade or business during the tax period.

The tax is in addition to all other taxes.

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for taxable years beginning after
December 31, 2011.
new text end

Sec. 16.

Minnesota Statutes 2011 Supplement, section 298.015, subdivision 1, is
amended to read:

Subdivision 1.

Tax imposed.

A person engaged in the business of mining shall pay
to the state of Minnesota for distribution as provided in section 298.018 a net proceeds tax
equal to deleted text begin two deleted text end new text begin three new text end percent of the net proceeds from mining in Minnesota. The tax applies
to all ores, metals, and minerals mined, extracted, produced, or refined within the state of
Minnesota except for sand, silica sand, gravel, building stone, crushed rock, limestone,
granite, dimension granite, dimension stone, horticultural peat, clay, soil, iron ore, and
taconite concentrates. The tax is in addition to all other taxes provided for by law.

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for taxable years beginning after
December 31, 2011.
new text end

Sec. 17.

Minnesota Statutes 2010, section 298.018, subdivision 1, is amended to read:

Subdivision 1.

Within taconite assistance area.

The proceeds of the tax paid under
sections 298.015 to 298.017 on minerals and energy resources mined or extracted within
the taconite assistance area defined in section 273.1341, shall be allocated as follows:

(1) five percent to the city or town within which the minerals or energy resources
are mined or extracted new text begin or within which the concentrate was produced. If the mining and
concentration, or different steps in either process, are carried on in more than one taxing
district, the commissioner shall apportion equitably the proceeds among the cities and
towns upon the basis of attributing 50 percent of the proceeds of the tax to the operation of
mining or extraction, and the remainder to the concentrating plant and to the processes of
concentration, and with respect to each thereof giving due consideration to the relative
extent of the respective operations performed in each taxing district new text end ;

(2) ten percent to the taconite municipal aid account to be distributed as provided
in section 298.282;

(3) ten percent to the school district within which the minerals or energy resources
are mined or extracted new text begin or within which the concentrate was produced. If the mining
and concentration, or different steps in either process, are carried on in more than one
school district, distribution among the school districts must be based on the apportionment
formula prescribed in clause (1) new text end ;

(4) 20 percent to a group of school districts comprised of those school districts
wherein the mineral or energy resource was mined or extracted or in which there is a
qualifying municipality as defined by section 273.134, paragraph (b), in direct proportion
to school district indexes as follows: for each school district, its pupil units determined
under section 126C.05 for the prior school year shall be multiplied by the ratio of the
average adjusted net tax capacity per pupil unit for school districts receiving aid under
this clause as calculated pursuant to chapters 122A, 126C, and 127A for the school year
ending prior to distribution to the adjusted net tax capacity per pupil unit of the district.
Each district shall receive that portion of the distribution which its index bears to the sum
of the indices for all school districts that receive the distributions;

(5) 20 percent to the county within which the minerals or energy resources are
mined or extracted new text begin or within which the concentrate was produced. If the mining and
concentration, or different steps in either process, are carried on in more than one
county, the commissioner shall apportion equitably the proceeds among the counties
upon the basis of attributing 50 percent of the proceeds of the tax to the operation of
mining or extraction, and the remainder to the concentrating plant and to the processes of
concentration, and with respect to each thereof giving due consideration to the relative
extent of the respective operations performed in each county, provided that any county
receiving distributions under this clause shall pay one percent of its proceeds to the Range
Association of Municipalities and Schools new text end ;

(6) 20 percent to St. Louis County acting as the counties' fiscal agent to be
distributed as provided in sections 273.134 to 273.136;

(7) five percent to the Iron Range Resources and Rehabilitation Board for the
purposes of section 298.22;

(8) deleted text begin five deleted text end new text begin three new text end percent to the Douglas J. Johnson economic protection trust fund; and

(9) deleted text begin five deleted text end new text begin seven new text end percent to the taconite environmental protection fund.

The proceeds of the tax shall be distributed on July 15 each year.

Sec. 18.

Minnesota Statutes 2011 Supplement, section 298.28, subdivision 2, is
amended to read:

Subd. 2.

City or town where quarried or produced.

(a) 4.5 cents per gross ton of
merchantable iron ore concentrate, hereinafter referred to as "taxable ton," plus the amount
provided in paragraph (c), must be allocated to the city or town in the county in which
the lands from which taconite was mined or quarried were located or within which the
concentrate was produced. If the mining, quarrying, and concentration, or different steps
in either thereof are carried on in more than one taxing district, the commissioner shall
apportion equitably the proceeds of the part of the tax going to cities and towns among
such subdivisions upon the basis of attributing 50 percent of the proceeds of the tax to
the operation of mining or quarrying the taconite, and the remainder to the concentrating
plant and to the processes of concentration, and with respect to each thereof giving due
consideration to the relative extent of such operations performed in each such taxing
district. The commissioner's order making such apportionment shall be subject to review
by the Tax Court at the instance of any of the interested taxing districts, in the same
manner as other orders of the commissioner.

(b) deleted text begin Four deleted text end new text begin Nine new text end cents per taxable ton shall be allocated to cities and organized
townships affected by mining because their boundaries are within three miles of a taconite
mine pit that has been actively mined in at least one of the prior three years. If a city or
town is located near more than one mine meeting these criteria, the city or town is eligible
to receive aid calculated from only the mine producing the largest taxable tonnage. When
more than one municipality qualifies for aid based on one company's production, the aid
must be apportioned among the municipalities in proportion to their populations. deleted text begin Of the
amounts distributed under this paragraph to each municipality, one-half must be used for
infrastructure improvement projects, and one-half must be used for projects in which two
or more municipalities cooperate. Each municipality that receives a distribution under this
paragraph must report annually to the Iron Range Resources and Rehabilitation Board and
the commissioner of Iron Range resources and rehabilitation on the projects involving
cooperation with other municipalities.
deleted text end

(c) The amount that would have been computed for the current year under Minnesota
Statutes 2008, section 126C.21, subdivision 4, for a school district shall be distributed to
the cities and townships within the school district in the proportion that their taxable net
tax capacity within the school district bears to the taxable net tax capacity of the school
district for property taxes payable in the year prior to distribution.

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective beginning with the 2013 distribution.
new text end

Sec. 19.

Minnesota Statutes 2010, section 298.28, subdivision 4, is amended to read:

Subd. 4.

School districts.

(a) deleted text begin 23.15 deleted text end new text begin 26.15 new text end cents per taxable ton, plus the increase
provided in paragraph (d), less the amount that would have been computed under
Minnesota Statutes 2008, section 126C.21, subdivision 4, for the current year for that
district, must be allocated to qualifying school districts to be distributed, based upon the
certification of the commissioner of revenue, under paragraphs (b), (c), and (f).

(b)(i) 3.43 cents per taxable ton must be distributed to the school districts in which
the lands from which taconite was mined or quarried were located or within which the
concentrate was produced. The distribution must be based on the apportionment formula
prescribed in subdivision 2.

(ii) deleted text begin Four deleted text end new text begin Seven new text end cents per taxable ton from each taconite facility must be distributed
to each affected school district for deposit in a fund dedicated to building maintenance
and repairs, as follows:

(1) proceeds from Keewatin Taconite or its successor are distributed to Independent
School Districts Nos. 316, Coleraine, and 319, Nashwauk-Keewatin, or their successor
districts;

(2) proceeds from the Hibbing Taconite Company or its successor are distributed to
Independent School Districts Nos. 695, Chisholm, and 701, Hibbing, or their successor
districts;

(3) proceeds from the Mittal Steel Company and Minntac or their successors are
distributed to Independent School Districts Nos. 712, Mountain Iron-Buhl, 706, Virginia,
2711, Mesabi East, and 2154, Eveleth-Gilbert, or their successor districts;

(4) proceeds from the Northshore Mining Company or its successor are distributed new text begin : new text end

new text begin (i) three-sevenths each new text end to Independent School Districts Nos. 2142, St. Louis County,
and 381, Lake Superior, or their successor districts; and

new text begin (ii) one-seventh to Independent School District No. 696, Ely; and
new text end

(5) proceeds from United Taconite or its successor are distributed to Independent
School Districts Nos. 2142, St. Louis County, and 2154, Eveleth-Gilbert, or their
successor districts.

Revenues that are required to be distributed to more than one district shall be
apportioned according to the number of pupil units identified in section 126C.05,
subdivision 1, enrolled in the second previous year.

(c)(i) 15.72 cents per taxable ton, less any amount distributed under paragraph (e),
shall be distributed to a group of school districts comprised of those school districts which
qualify as a tax relief area under section 273.134, paragraph (b), or in which there is a
qualifying municipality as defined by section 273.134, paragraph (a), in direct proportion
to school district indexes as follows: for each school district, its pupil units determined
under section 126C.05 for the prior school year shall be multiplied by the ratio of the
average adjusted net tax capacity per pupil unit for school districts receiving aid under
this clause as calculated pursuant to chapters 122A, 126C, and 127A for the school year
ending prior to distribution to the adjusted net tax capacity per pupil unit of the district.
Each district shall receive that portion of the distribution which its index bears to the sum
of the indices for all school districts that receive the distributions.

(ii) Notwithstanding clause (i), each school district that receives a distribution
under sections 298.018; 298.23 to 298.28, exclusive of any amount received under this
clause; 298.34 to 298.39; 298.391 to 298.396; 298.405; or any law imposing a tax on
severed mineral values after reduction for any portion distributed to cities and towns
under section 126C.48, subdivision 8, paragraph (5), that is less than the amount of its
levy reduction under section 126C.48, subdivision 8, for the second year prior to the
year of the distribution shall receive a distribution equal to the difference; the amount
necessary to make this payment shall be derived from proportionate reductions in the
initial distribution to other school districts under clause (i). If there are insufficient tax
proceeds to make the distribution provided under this paragraph in any year, money must
be transferred from the taconite property tax relief account in subdivision 6, to the extent
of the shortfall in the distribution.

(d) Any school district described in paragraph (c) where a levy increase pursuant to
section 126C.17, subdivision 9, was authorized by referendum for taxes payable in 2001,
shall receive a distribution of 21.3 cents per ton. Each district shall receive $175 times the
pupil units identified in section 126C.05, subdivision 1, enrolled in the second previous
year or the 1983-1984 school year, whichever is greater, less the product of 1.8 percent
times the district's taxable net tax capacity in the second previous year.

If the total amount provided by paragraph (d) is insufficient to make the payments
herein required then the entitlement of $175 per pupil unit shall be reduced uniformly
so as not to exceed the funds available. Any amounts received by a qualifying school
district in any fiscal year pursuant to paragraph (d) shall not be applied to reduce general
education aid which the district receives pursuant to section 126C.13 or the permissible
levies of the district. Any amount remaining after the payments provided in this paragraph
shall be paid to the commissioner of Iron Range resources and rehabilitation who shall
deposit the same in the taconite environmental protection fund and the Douglas J. Johnson
economic protection trust fund as provided in subdivision 11.

Each district receiving money according to this paragraph shall reserve the lesser of
the amount received under this paragraph or $25 times the number of pupil units served
in the district. It may use the money for early childhood programs or for outcome-based
learning programs that enhance the academic quality of the district's curriculum. The
outcome-based learning programs must be approved by the commissioner of education.

(e) There shall be distributed to any school district the amount which the school
district was entitled to receive under section 298.32 in 1975.

(f) Four cents per taxable ton must be distributed to qualifying school districts
according to the distribution specified in paragraph (b), clause (ii), and two cents per
taxable ton must be distributed according to the distribution specified in paragraph
(c). These amounts are not subject to sections 126C.21, subdivision 4, and 126C.48,
subdivision 8.

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective beginning with the 2013 distribution.
new text end

Sec. 20.

Minnesota Statutes 2010, section 477A.011, subdivision 36, is amended to
read:

Subd. 36.

City aid base.

(a) Except as otherwise provided in this subdivision,
"city aid base" is zero.

(b) The city aid base for any city with a population less than 500 is increased by
$40,000 for aids payable in calendar year 1995 and thereafter, and the maximum amount
of total aid it may receive under section 477A.013, subdivision 9, paragraph (c), is also
increased by $40,000 for aids payable in calendar year 1995 only, provided that:

(i) the average total tax capacity rate for taxes payable in 1995 exceeds 200 percent;

(ii) the city portion of the tax capacity rate exceeds 100 percent; and

(iii) its city aid base is less than $60 per capita.

(c) The city aid base for a city is increased by $20,000 in 1998 and thereafter and
the maximum amount of total aid it may receive under section 477A.013, subdivision 9,
paragraph (c), is also increased by $20,000 in calendar year 1998 only, provided that:

(i) the city has a population in 1994 of 2,500 or more;

(ii) the city is located in a county, outside of the metropolitan area, which contains a
city of the first class;

(iii) the city's net tax capacity used in calculating its 1996 aid under section
477A.013 is less than $400 per capita; and

(iv) at least four percent of the total net tax capacity, for taxes payable in 1996, of
property located in the city is classified as railroad property.

(d) The city aid base for a city is increased by $200,000 in 1999 and thereafter and
the maximum amount of total aid it may receive under section 477A.013, subdivision 9,
paragraph (c), is also increased by $200,000 in calendar year 1999 only, provided that:

(i) the city was incorporated as a statutory city after December 1, 1993;

(ii) its city aid base does not exceed $5,600; and

(iii) the city had a population in 1996 of 5,000 or more.

(e) The city aid base for a city is increased by $150,000 for aids payable in 2000 and
thereafter, and the maximum amount of total aid it may receive under section 477A.013,
subdivision 9, paragraph (c), is also increased by $150,000 in calendar year 2000 only,
provided that:

(1) the city has a population that is greater than 1,000 and less than 2,500;

(2) its commercial and industrial percentage for aids payable in 1999 is greater
than 45 percent; and

(3) the total market value of all commercial and industrial property in the city
for assessment year 1999 is at least 15 percent less than the total market value of all
commercial and industrial property in the city for assessment year 1998.

(f) The city aid base for a city is increased by $200,000 in 2000 and thereafter, and
the maximum amount of total aid it may receive under section 477A.013, subdivision 9,
paragraph (c), is also increased by $200,000 in calendar year 2000 only, provided that:

(1) the city had a population in 1997 of 2,500 or more;

(2) the net tax capacity of the city used in calculating its 1999 aid under section
477A.013 is less than $650 per capita;

(3) the pre-1940 housing percentage of the city used in calculating 1999 aid under
section 477A.013 is greater than 12 percent;

(4) the 1999 local government aid of the city under section 477A.013 is less than
20 percent of the amount that the formula aid of the city would have been if the need
increase percentage was 100 percent; and

(5) the city aid base of the city used in calculating aid under section 477A.013
is less than $7 per capita.

(g) The city aid base for a city is increased by $102,000 in 2000 and thereafter, and
the maximum amount of total aid it may receive under section 477A.013, subdivision 9,
paragraph (c), is also increased by $102,000 in calendar year 2000 only, provided that:

(1) the city has a population in 1997 of 2,000 or more;

(2) the net tax capacity of the city used in calculating its 1999 aid under section
477A.013 is less than $455 per capita;

(3) the net levy of the city used in calculating 1999 aid under section 477A.013 is
greater than $195 per capita; and

(4) the 1999 local government aid of the city under section 477A.013 is less than
38 percent of the amount that the formula aid of the city would have been if the need
increase percentage was 100 percent.

(h) The city aid base for a city is increased by $32,000 in 2001 and thereafter, and
the maximum amount of total aid it may receive under section 477A.013, subdivision 9,
paragraph (c), is also increased by $32,000 in calendar year 2001 only, provided that:

(1) the city has a population in 1998 that is greater than 200 but less than 500;

(2) the city's revenue need used in calculating aids payable in 2000 was greater
than $200 per capita;

(3) the city net tax capacity for the city used in calculating aids available in 2000
was equal to or less than $200 per capita;

(4) the city aid base of the city used in calculating aid under section 477A.013
is less than $65 per capita; and

(5) the city's formula aid for aids payable in 2000 was greater than zero.

(i) The city aid base for a city is increased by $7,200 in 2001 and thereafter, and
the maximum amount of total aid it may receive under section 477A.013, subdivision 9,
paragraph (c), is also increased by $7,200 in calendar year 2001 only, provided that:

(1) the city had a population in 1998 that is greater than 200 but less than 500;

(2) the city's commercial industrial percentage used in calculating aids payable in
2000 was less than ten percent;

(3) more than 25 percent of the city's population was 60 years old or older according
to the 1990 census;

(4) the city aid base of the city used in calculating aid under section 477A.013
is less than $15 per capita; and

(5) the city's formula aid for aids payable in 2000 was greater than zero.

(j) The city aid base for a city is increased by $45,000 in 2001 and thereafter and
by an additional $50,000 in calendar years 2002 to 2011, and the maximum amount of
total aid it may receive under section 477A.013, subdivision 9, paragraph (c), is also
increased by $45,000 in calendar year 2001 only, and by $50,000 in calendar year 2002
only, provided that:

(1) the net tax capacity of the city used in calculating its 2000 aid under section
477A.013 is less than $810 per capita;

(2) the population of the city declined more than two percent between 1988 and 1998;

(3) the net levy of the city used in calculating 2000 aid under section 477A.013 is
greater than $240 per capita; and

(4) the city received less than $36 per capita in aid under section 477A.013,
subdivision 9, for aids payable in 2000.

(k) The city aid base for a city with a population of 10,000 or more which is located
outside of the seven-county metropolitan area is increased in 2002 and thereafter, and the
maximum amount of total aid it may receive under section 477A.013, subdivision 9,
paragraph (b) or (c), is also increased in calendar year 2002 only, by an amount equal to
the lesser of:

(1)(i) the total population of the city, as determined by the United States Bureau of
the Census, in the 2000 census, (ii) minus 5,000, (iii) times 60; or

(2) $2,500,000.

(l) The city aid base is increased by $50,000 in 2002 and thereafter, and the
maximum amount of total aid it may receive under section 477A.013, subdivision 9,
paragraph (c), is also increased by $50,000 in calendar year 2002 only, provided that:

(1) the city is located in the seven-county metropolitan area;

(2) its population in 2000 is between 10,000 and 20,000; and

(3) its commercial industrial percentage, as calculated for city aid payable in 2001,
was greater than 25 percent.

(m) The city aid base for a city is increased by $150,000 in calendar years 2002 to
2011 and by an additional $75,000 in calendar years 2009 to 2014 and the maximum
amount of total aid it may receive under section 477A.013, subdivision 9, paragraph (c), is
also increased by $150,000 in calendar year 2002 only and by $75,000 in calendar year
2009 only, provided that:

(1) the city had a population of at least 3,000 but no more than 4,000 in 1999;

(2) its home county is located within the seven-county metropolitan area;

(3) its pre-1940 housing percentage is less than 15 percent; and

(4) its city net tax capacity per capita for taxes payable in 2000 is less than $900
per capita.

(n) The city aid base for a city is increased by $200,000 beginning in calendar
year 2003 and the maximum amount of total aid it may receive under section 477A.013,
subdivision 9, paragraph (c), is also increased by $200,000 in calendar year 2003 only,
provided that the city qualified for an increase in homestead and agricultural credit aid
under Laws 1995, chapter 264, article 8, section 18.

(o) The city aid base for a city is increased by $200,000 in 2004 only and the
maximum amount of total aid it may receive under section 477A.013, subdivision 9, is
also increased by $200,000 in calendar year 2004 only, if the city is the site of a nuclear
dry cask storage facility.

(p) The city aid base for a city is increased by $10,000 in 2004 and thereafter and the
maximum total aid it may receive under section 477A.013, subdivision 9, is also increased
by $10,000 in calendar year 2004 only, if the city was included in a federal major disaster
designation issued on April 1, 1998, and its pre-1940 housing stock was decreased by
more than 40 percent between 1990 and 2000.

(q) The city aid base for a city is increased by $30,000 in 2009 and thereafter and the
maximum total aid it may receive under section 477A.013, subdivision 9, is also increased
by $25,000 in calendar year 2006 only if the city had a population in 2003 of at least 1,000
and has a state park for which the city provides rescue services and which comprised at
least 14 percent of the total geographic area included within the city boundaries in 2000.

(r) The city aid base for a city is increased by $80,000 in 2009 and thereafter and
the minimum and maximum amount of total aid it may receive under section 477A.013,
subdivision 9, is also increased by $80,000 in calendar year 2009 only, if:

(1) as of May 1, 2006, at least 25 percent of the tax capacity of the city is proposed
to be placed in trust status as tax-exempt Indian land;

(2) the placement of the land is being challenged administratively or in court; and

(3) due to the challenge, the land proposed to be placed in trust is still on the tax
rolls as of May 1, 2006.

(s) The city aid base for a city is increased by $100,000 in 2007 and thereafter and
the minimum and maximum total amount of aid it may receive under this section is also
increased in calendar year 2007 only, provided that:

(1) the city has a 2004 estimated population greater than 200 but less than 2,000;

(2) its city net tax capacity for aids payable in 2006 was less than $300 per capita;

(3) the ratio of its pay 2005 tax levy compared to its city net tax capacity for aids
payable in 2006 was greater than 110 percent; and

(4) it is located in a county where at least 15,000 acres of land are classified as
tax-exempt Indian reservations according to the 2004 abstract of tax-exempt property.

(t) The city aid base for a city is increased by $30,000 in 2009 only, and the
maximum total aid it may receive under section 477A.013, subdivision 9, is also increased
by $30,000 in calendar year 2009, only if the city had a population in 2005 of less than
3,000 and the city's boundaries as of 2007 were formed by the consolidation of two cities
and one township in 2002.

(u) The city aid base for a city is increased by $100,000 in 2009 and thereafter, and
the maximum total aid it may receive under section 477A.013, subdivision 9, is also
increased by $100,000 in calendar year 2009 only, if the city had a city net tax capacity for
aids payable in 2007 of less than $150 per capita and the city experienced flooding on
March 14, 2007, that resulted in evacuation of at least 40 homes.

(v) The city aid base for a city is increased by $100,000 in 2009 to 2013, and the
maximum total aid it may receive under section 477A.013, subdivision 9, is also increased
by $100,000 in calendar year 2009 only, if the city:

(1) is located outside of the Minneapolis-St. Paul standard metropolitan statistical
area;

(2) has a 2005 population greater than 7,000 but less than 8,000; and

(3) has a 2005 net tax capacity per capita of less than $500.

(w) The city aid base is increased by $25,000 in calendar years 2009 to 2013 and the
maximum amount of total aid it may receive under section 477A.013, subdivision 9, is
increased by $25,000 in calendar year 2009 only, provided that:

(1) the city is located in the seven-county metropolitan area;

(2) its population in 2006 is less than 200; and

(3) the percentage of its housing stock built before 1940, according to the 2000
United States Census, is greater than 40 percent.

(x) The city aid base is increased by $90,000 in calendar year 2009 only and the
minimum and maximum total amount of aid it may receive under section 477A.013,
subdivision 9, is also increased by $90,000 in calendar year 2009 only, provided that the
city is located in the seven-county metropolitan area, has a 2006 population between 5,000
and 7,000 and has a 1997 population of over 7,000.

(y) In calendar year 2010 only, the city aid base for a city is increased by $225,000 if
it was eligible for a $450,000 payment in calendar year 2008 under Minnesota Statutes
2006, section 477A.011, subdivision 36, paragraph (e), and the second half of the payment
under that paragraph in December 2008 was canceled due to the governor's unallotment.
The payment under this paragraph is not subject to any aid reductions under section
477A.0134 or any future unallotment of the city aid under section 16A.152.

deleted text begin (z) The city aid base and the maximum total aid the city may receive under section
477A.013, subdivision 9, is increased by $25,000 in calendar year 2010 only if:
deleted text end

deleted text begin (1) the city is a first class city in the seven-county metropolitan area with a
population below 300,000; and
deleted text end

deleted text begin (2) the city has made an equivalent grant to its local growers' association to
reimburse up to $1,000 each for membership fees and retail leases for members of the
association who farm in and around Dakota County and who incurred crop damage as a
result of the hail storm in that area on July 10, 2008.
deleted text end

deleted text begin The payment under this paragraph is not subject to any aid reductions under section
477A.0134 or any future unallotment of the city aid under section 16A.152.
deleted text end

deleted text begin (aa) The city aid base for a city is increased by $106,964 in 2011 only and the
minimum and maximum amount of total aid it may receive under section 477A.013,
subdivision 9, is also increased by $106,964 in calendar year 2011 only, if the city had a
population as defined in Minnesota Statutes, section 477A.011, subdivision 3, that was in
excess of 1,000 in 2007 and that was less than 1,000 in 2008.
deleted text end

new text begin (z) In calendar year 2013 only, the total aid the city may receive under section
477A.013 is increased by $12,000 if:
new text end

new text begin (1) the city's 2010 population is less than 100 and its population growth between
2000 and 2010 was more than 55 percent; and
new text end

new text begin (2) its commercial industrial percentage as defined in subdivision 32, based on
assessments for calendar year 2010, payable in 2011, is greater than 15 percent.
new text end

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for aids payable in calendar year
2013 and thereafter.
new text end

Sec. 21.

Minnesota Statutes 2011 Supplement, section 477A.013, subdivision 9,
is amended to read:

Subd. 9.

City aid distribution.

(a) In calendar year deleted text begin 2009 deleted text end new text begin 2013 new text end and thereafter, each
city shall receive an aid distribution equal to the sum of (1) the city formula aid under
subdivision 8, and (2) its city aid base.

(b) For aids payable in 2013 new text begin and 2014 new text end only, the total aid in the previous year for any
city shall mean the amount of aid it was certified to receive for aids payable in 2012 under
this section. For aids payable in deleted text begin 2014 deleted text end new text begin 2015 new text end and thereafter, the total aid in the previous
year for any city means the amount of aid it was certified to receive under this section in
the previous payable year.

(c) For aids payable in 2010 and thereafter, the total aid for any city shall not exceed
the sum of (1) ten percent of the city's net levy for the year prior to the aid distribution
plus (2) its total aid in the previous year. For aids payable in 2009 and thereafter, the total
aid for any city with a population of 2,500 or more may not be less than its total aid under
this section in the previous year minus the lesser of $10 multiplied by its population, or ten
percent of its net levy in the year prior to the aid distribution.

(d) For aids payable in 2010 and thereafter, the total aid for a city with a population
less than 2,500 must not be less than the amount it was certified to receive in the
previous year minus the lesser of $10 multiplied by its population, or five percent of its
2003 certified aid amount. For aids payable in 2009 only, the total aid for a city with a
population less than 2,500 must not be less than what it received under this section in the
previous year unless its total aid in calendar year 2008 was aid under section 477A.011,
subdivision 36, paragraph (s), in which case its minimum aid is zero.

(e) A city's aid loss under this section may not exceed $300,000 in any year in
which the total city aid appropriation under section 477A.03, subdivision 2a, is equal or
greater than the appropriation under that subdivision in the previous year, unless the
city has an adjustment in its city net tax capacity under the process described in section
469.174, subdivision 28.

(f) If a city's net tax capacity used in calculating aid under this section has decreased
in any year by more than 25 percent from its net tax capacity in the previous year due to
property becoming tax-exempt Indian land, the city's maximum allowed aid increase
under paragraph (c) shall be increased by an amount equal to (1) the city's tax rate in the
year of the aid calculation, multiplied by (2) the amount of its net tax capacity decrease
resulting from the property becoming tax exempt.

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for aids payable in calendar year
2013 and thereafter.
new text end

Sec. 22.

Minnesota Statutes 2010, section 477A.013, is amended by adding a
subdivision to read:

new text begin Subd. 12. new text end

new text begin Aid payments in 2013. new text end

new text begin (a) Notwithstanding aids calculated for 2013
under subdivision 9, for 2013, each city with a population of 5,000 or more shall receive
an aid distribution under this section equal to its aid distribution under this section in 2012.
new text end

new text begin (b) Notwithstanding aids calculated for 2013 under subdivision 9, each city with
a population under 5,000 shall receive an aid distribution under this section equal to
any additional city aid base authorized in calendar year 2013 under section 477A.011,
subdivision 36, paragraph (z), plus the greater of (1) its aid distribution under this section
in 2012 or (2) its amount that it is calculated to receive under subdivision 9.
new text end

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for aids payable in calendar year
2013.
new text end

Sec. 23.

Laws 1988, chapter 645, section 3, as amended by Laws 1999, chapter 243,
article 6, section 9, Laws 2000, chapter 490, article 6, section 15, and Laws 2008, chapter
154, article 2, section 30, is amended to read:

Sec. 3. TAX; PAYMENT OF EXPENSES.

(a) The tax levied by the hospital district under Minnesota Statutes, section 447.34,
must not be levied at a rate that exceeds the amount authorized to be levied under that
section. The proceeds of the tax may be used for all purposes of the hospital district,
except as provided in paragraph (b).

(b) 0.015 percent of taxable market value of the tax in paragraph (a) may be used
deleted text begin solely deleted text end new text begin by the Cook ambulance service and the Orr ambulance service new text end for the purpose of
deleted text begin capital expenditures as it relates to deleted text end new text begin :
new text end

new text begin (1) new text end ambulance acquisitions for the Cook ambulance service and the Orr ambulance
service deleted text begin and not deleted text end new text begin ;
new text end

new text begin (2) attached and portable equipment for use in and for the ambulances; and
new text end

new text begin (3) parts and replacement parts for maintenance and repair of the ambulances.
new text end

new text begin The money may not be used new text end for administrative new text begin , operation, new text end or salary expenses.

new text begin (c) new text end The part of the levy referred to in paragraph (b) must be administered by the
Cook Hospital and passed on new text begin in equal amounts new text end directly to the Cook area ambulance
service board and the city of Orr to be deleted text begin held in trust until funding for a new ambulance is
needed by either the Cook ambulance service or the Orr ambulance service deleted text end new text begin used for the
purposes in paragraph (b) new text end .

Sec. 24.

Laws 2010, chapter 389, article 1, section 12, the effective date, is amended to
read:

EFFECTIVE DATE.

This section is effective for assessment deleted text begin years deleted text end new text begin year new text end 2010 and
deleted text begin 2011, for taxes payable in 2011 and 2012 deleted text end new text begin thereafter new text end .

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for assessment year 2012 and
thereafter.
new text end

Sec. 25. new text begin ADDITIONAL AID PAYMENT IN 2012 FOR CERTAIN CITIES.
new text end

new text begin For calendar year 2012 only, a city shall receive a onetime payment of $12,000
if: (1) the city's 2010 population is less than 100 and its population growth between
2000 and 2010 was more than 55 percent; and (2) its commercial industrial percentage as
defined in Minnesota Statutes, section 477A.011, subdivision 32, based on assessments
for calendar year 2010, payable 2011, is greater than 15 percent. The aid paid under this
section shall be paid on the same schedule as aid paid under Minnesota Statutes, sections
477A.011 to 477A.03. The amount necessary to make the payment under this section shall
be appropriated from the general fund in fiscal year 2013.
new text end

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective the day following final enactment.
new text end

Sec. 26. new text begin SUPPLEMENTAL TARGETING REFUND FOR TAXES PAYABLE IN
2012 ONLY.
new text end

new text begin Subdivision 1. new text end

new text begin Determination of supplemental refund. new text end

new text begin (a) For property tax refund
claims under Minnesota Statutes, section 290A.04, subdivision 2h, based upon property
taxes payable in 2012, the state must pay a supplemental refund such that the combined
amount of the regular refund under Minnesota Statutes, section 290A.04, subdivision 2h,
and the supplemental refund is equal to 90 percent of the increase over the greater of (1) 12
percent of the payable 2011 property taxes, or (2) $100. The maximum combined refund
under Minnesota Statutes, section 290A.04, subdivision 2h, and this section is $1,000.
new text end

new text begin (b) The supplemental refund amount must be determined by the commissioner of
revenue based upon the information submitted with the claim for the regular refund and
must be combined with the regular refund for payment.
new text end

new text begin (c) Any supplemental refund paid under this section must be subtracted from
"property taxes payable" for the purposes of determining any refund amount under
Minnesota Statutes, section 290A.04, subdivision 2, based upon property taxes payable
in 2012.
new text end

new text begin (d) Any supplemental refund paid under this section must be subtracted from
"property taxes payable" for taxes payable in 2012 for the purposes of determining any
refund amount under Minnesota Statutes, section 290A.04, subdivision 2h, based upon
property taxes payable in 2013.
new text end

new text begin Subd. 2. new text end

new text begin Appropriation. new text end

new text begin The amount necessary to make the payments required
under this section is appropriated to the commissioner of revenue from the general fund
for fiscal years 2013 and 2014.
new text end

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for refund claims based on taxes
payable in 2012 only.
new text end

Sec. 27. new text begin ADMINISTRATION OF PROPERTY TAX REFUND CLAIMS; 2012.
new text end

new text begin In administering this act for claims for refunds submitted using 17 percent of gross
rent as rent constituting property taxes under prior law, the commissioner shall recalculate
and pay the refund amounts using 15 percent of gross rent, subject to the reduced
maximum income limits, maximum refunds, and increased co-payment percentages in
this bill. The commissioner shall notify the claimant that the recalculation was mandated
by action of the 2012 legislature.
new text end

Sec. 28. new text begin HOLDING OF PROPERTY FOR ECONOMIC DEVELOPMENT;
TEMPORARY EXTENSION.
new text end

new text begin (a) For purposes of Minnesota Statutes, section 272.02, subdivision 39, a political
subdivision's holding for resale for economic development of a property that is located in
a city with a population of more than 5,000 outside of the metropolitan area, as defined in
Minnesota Statutes, section 473.121, subdivision 2, for up to 11 years, is a public purpose.
new text end

new text begin (b) The authority under this section expires on December 31, 2015.
new text end

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective the day following final enactment.
new text end

Sec. 29. new text begin TRUTH IN TAXATION TASK FORCE.
new text end

new text begin Subdivision 1. new text end

new text begin Established; duties. new text end

new text begin (a) A task force is established to study and
make recommendations to the legislature on the design and content of the truth in taxation
statement required under Minnesota Statutes, section 275.065.
new text end

new text begin (b) The task force shall:
new text end

new text begin (1) identify issues that have arisen with differences among local governments' truth
in taxation mailings and statements;
new text end

new text begin (2) determine what executive or legislative direction is needed to provide a more
informative statement to property owners and provide policy makers easily comparable
information statewide;
new text end

new text begin (3) consider whether statements should be uniform statewide;
new text end

new text begin (4) consider whether statements should be able to be distributed electronically; and
new text end

new text begin (5) consider what is the most effective way to provide information to taxpayers
regarding levies made by special taxing districts.
new text end

new text begin Subd. 2. new text end

new text begin Membership; co-chairs. new text end

new text begin The task force members are:
new text end

new text begin (1) two members of the house of representatives Committee on Taxes, appointed
by the speaker of the house, one member of the majority caucus and one member of
the minority caucus;
new text end

new text begin (2) two members of the senate Committee on Taxes, appointed by the senate
Subcommittee on Committees of the Committee on Rules and Legislative Administration,
one member of the majority caucus and one member of the minority caucus;
new text end

new text begin (3) one member appointed by the League of Minnesota Cities;
new text end

new text begin (4) one member appointed by the Association of Minnesota Counties;
new text end

new text begin (5) one member appointed by the Minnesota Association of Townships;
new text end

new text begin (6) one member appointed by the Minnesota Association of Small Cities;
new text end

new text begin (7) one member appointed by the Minnesota Association of County Auditors,
Treasurers and Financial Officers;
new text end

new text begin (8) the chair of the property and local tax division of the house of representatives
Committee on Taxes and the chair of the senate Committee on Taxes, who shall serve as
co-chairs.
new text end

new text begin The appointments to the task force shall be made as soon as practicable after the
effective date of this section.
new text end

new text begin Subd. 3. new text end

new text begin Meetings. new text end

new text begin The legislative Open Meeting Law in Minnesota Statutes,
section 3.055, applies to the task force. A meeting may be conducted by any electronic
means that meets the criteria in Minnesota Statutes, section 3.055, subdivision 1a. Task
force meetings may be conducted following Mason's Manual of Legislative Procedure
unless the task force chooses otherwise.
new text end

new text begin Subd. 4. new text end

new text begin Compensation; expenses; administrative and technical assistance.
new text end

new text begin Members of the task force serve without compensation or reimbursement for expenses.
The committee staff of the Property and Local Tax Division of the house of representatives
Committee on Taxes and the senate Committee on Taxes shall provide administrative
assistance to the task force. Any administrative costs of the task force shall be shared
equally between the house of representatives and the senate. The commissioner of revenue
shall provide technical assistance to the task force.
new text end

new text begin Subd. 5. new text end

new text begin Report. new text end

new text begin The task force shall report to the legislative committees with
jurisdiction over property taxes, and submit the report as provided in Minnesota Statutes,
section 3.195. The report is due by December 15, 2012.
new text end

new text begin Subd. 6. new text end

new text begin Expiration. new text end

new text begin The task force expires June 30, 2013.
new text end

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective the day following final enactment.
new text end

Sec. 30. new text begin TAX EXEMPTION; NEW RESIDENTIAL CONSTRUCTION IN
FLOOD-DAMAGED CITIES.
new text end

new text begin Subdivision 1. new text end

new text begin Eligible area. new text end

new text begin (a) A residential structure may qualify for an
exemption under this section if it is:
new text end

new text begin (1) located in a city that is eligible to designate a development zone under Minnesota
Statutes, section 469.1731;
new text end

new text begin (2) located in a county designated as an emergency area under presidential
declaration FEMA-DR-1830, FEMA-DR-1900, or FEMA-DR-1982; and
new text end

new text begin (3) classified as class 1a, 1b, 2a, 4a, 4b, 4bb, or 4d under Minnesota Statutes,
section 273.13.
new text end

new text begin Subd. 2. new text end

new text begin Tax exemption; new residential structures. new text end

new text begin (a) The market value of
new residential structures is exempt from property taxation for two taxes payable years,
corresponding to the two assessment years after construction has begun, provided that (1)
no part of the structure was in existence prior to January 1, 2012, and (2) construction
of the structure is commenced prior to December 31, 2013. For the purposes of this
paragraph, construction is deemed to have been commenced if a proper building permit has
been issued and the mandatory footing or foundation inspection has been completed. The
exemption shall not apply to any special assessments that are levied against the property.
new text end

new text begin (b) For a property classified as either 1a, 1b, 2a, 4b, or 4bb, the exemption is limited
to $200,000 or the entire market value of the structure, whichever is less. For a property
classified as class 4a or 4d, the exemption is limited to $20,000 times the number of
residential units in the structure or the entire market value of the structure, whichever is
less.
new text end

new text begin (c) A city resolution to participate in the new residential structure exemption
program must be adopted prior to July 1, 2012, in order for the program to be in effect
within the city.
new text end

new text begin Subd. 3. new text end

new text begin Tax exemption; improvements to existing residential structures. new text end

new text begin (a)
The market value attributable to new improvements on existing properties classified as 1a,
1b, 2a, 4a, 4b, 4bb, or 4d shall be exempt from property taxation for two taxes payable
years, corresponding to the two assessment years after completion of the improvement,
provided that the improvement is made after January 1, 2012, and prior to December 31,
2013. An improvement is eligible for exemption under this subdivision if (1) a proper
building permit has been issued and the improvement has been inspected by city staff, and
(2) the improvement adds at least $10,000 to the value of the property. The exemption
shall not apply to any special assessments that have been levied against the property. For
class 2a property, only improvements to the house or garage are eligible for an exemption
under this subdivision.
new text end

new text begin (b) For a property classified as either 1a, 1b, 2a, 4b, or 4bb, the total exempted value
for all eligible improvements under this subdivision is limited to $200,000. For a property
classified as class 4a or 4d, the total value exempted for all eligible improvements under
this subdivision is limited to $20,000 times the number of residential units in the structure.
new text end

new text begin (c) A city resolution to participate in the residential property improvement
exemption program must be adopted prior to July 1, 2012, in order for the program to be
in effect within the city.
new text end

new text begin Subd. 4. new text end

new text begin Application. new text end

new text begin Application for an exemption authorized under this section
must be filed by January 2 of the year following the year in which (1) construction began,
in the case of property qualifying under subdivision 2, or (2) the improvement was
completed, in the case of property qualifying under subdivision 3. The application must
be filed with the assessor of the county or city in which the property is located on a form
prescribed by the commissioner of revenue.
new text end

new text begin Subd. 5. new text end

new text begin Report to commissioner. new text end

new text begin The total amount of market value exempted
under each program must be reported each year to the commissioner of revenue, on a form
prescribed by the commissioner.
new text end

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for taxes payable in 2014 to 2016.
new text end

ARTICLE 2

INCOME AND CORPORATE FRANCHISE TAXES

Section 1.

Minnesota Statutes 2011 Supplement, section 116J.8737, subdivision 1,
is amended to read:

Subdivision 1.

Definitions.

(a) For the purposes of this section, the following terms
have the meanings given.

(b) "Qualified small business" means a business that has been certified by the
commissioner under subdivision 2.

(c) "Qualified investor" means an investor who has been certified by the
commissioner under subdivision 3.

(d) "Qualified fund" means a pooled angel investment network fund that has been
certified by the commissioner under subdivision 4.

(e) "Qualified investment" means a cash investment in a qualified small business
of a minimum of:

(1) $10,000 in a calendar year by a qualified investor; or

(2) $30,000 in a calendar year by a qualified fund.

A qualified investment must be made in exchange for common stock, a partnership
or membership interest, preferred stock, debt with mandatory conversion to equity, or an
equivalent ownership interest as determined by the commissioner.

(f) "Family" means a family member within the meaning of the Internal Revenue
Code, section 267(c)(4).

(g) "Pass-through entity" means a corporation that for the applicable taxable year is
treated as an S corporation or a general partnership, limited partnership, limited liability
partnership, trust, or limited liability company and which for the applicable taxable year is
not taxed as a corporation under chapter 290.

(h) "Intern" means a student of an accredited institution of higher education, or a
former student who has graduated in the past six months from an accredited institution
of higher education, who is employed by a qualified small business in a nonpermanent
position for a duration of nine months or less that provides training and experience in the
primary business activity of the business.

new text begin (i) "Liquidation event" means a conversion of qualified investment for cash, cash
and other consideration, or any other form of equity or debt interest.
new text end

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for qualified small businesses
certified after June 30, 2012.
new text end

Sec. 2.

Minnesota Statutes 2011 Supplement, section 116J.8737, subdivision 2, is
amended to read:

Subd. 2.

Certification of qualified small businesses.

(a) Businesses may apply
to the commissioner for certification as a qualified small business for a calendar year.
The application must be in the form and be made under the procedures specified by the
commissioner, accompanied by an application fee of $150. Application fees are deposited
in the small business investment tax credit administration account in the special revenue
fund. The application for certification for 2010 must be made available on the department's
Web site by August 1, 2010. Applications for subsequent years' certification must be made
available on the department's Web site by November 1 of the preceding year.

(b) Within 30 days of receiving an application for certification under this subdivision,
the commissioner must either certify the business as satisfying the conditions required of a
qualified small business, request additional information from the business, or reject the
application for certification. If the commissioner requests additional information from the
business, the commissioner must either certify the business or reject the application within
30 days of receiving the additional information. If the commissioner neither certifies the
business nor rejects the application within 30 days of receiving the original application or
within 30 days of receiving the additional information requested, whichever is later, then
the application is deemed rejected, and the commissioner must refund the $150 application
fee. A business that applies for certification and is rejected may reapply.

(c) To receive certification, a business must satisfy all of the following conditions:

(1) the business has its headquarters in Minnesota;

(2) at least 51 percent of the business's employees are employed in Minnesota, and
51 percent of the business's total payroll is paid or incurred in the state;

(3) the business is engaged in, or is committed to engage in, innovation in Minnesota
in one of the following as its primary business activity:

(i) using proprietary technology to add value to a product, process, or service in a
qualified high-technology field;

(ii) researching or developing a proprietary product, process, or service in a qualified
high-technology field; or

(iii) researching, developing, or producing a new proprietary technology for use in
the fields of agriculture, tourism, forestry, mining, manufacturing, or transportation;

(4) other than the activities specifically listed in clause (3), the business is not
engaged in real estate development, insurance, banking, lending, lobbying, political
consulting, information technology consulting, wholesale or retail trade, leisure,
hospitality, transportation, construction, ethanol production from corn, or professional
services provided by attorneys, accountants, business consultants, physicians, or health
care consultants;

(5) the business has fewer than 25 employees;

(6) the business must pay its employees annual wages of at least 175 percent of the
federal poverty guideline for the year for a family of four and must pay its interns annual
wages of at least 175 percent of the federal minimum wage used for federally covered
employers, except that this requirement must be reduced proportionately for employees
and interns who work less than full-time, and does not apply to an executive, officer, or
member of the board of the business, or to any employee who owns, controls, or holds
power to vote more than 20 percent of the outstanding securities of the business;

(7) the business has not been in operation for more than ten years new text begin , except as provided
in clause (8) new text end ;

new text begin (8) the business has not been in operation for more than 20 years if the business is
engaged in the research, development, or production of medical devices or pharmaceuticals
for which U.S. Food and Drug Administration approval is required for use in the treatment
or diagnosis of a disease or condition;
new text end

deleted text begin (8) deleted text end new text begin (9) new text end the business has not previously received private equity investments of more
than $4,000,000; deleted text begin and
deleted text end

deleted text begin (9) deleted text end new text begin (10) new text end the business is not an entity disqualified under section 80A.50, paragraph
(b), clause (3) new text begin ; and
new text end

new text begin (11) the business has not issued securities that are traded on a public exchange new text end .

(d) In applying the limit under paragraph (c), clause (5), the employees in all
members of the unitary business, as defined in section 290.17, subdivision 4, must be
included.

(e) In order for a qualified investment in a business to be eligible for tax credits deleted text begin , deleted text end new text begin :
new text end

new text begin (1) new text end the business must have applied for and received certification for the calendar
year in which the investment was made prior to the date on which the qualified investment
was made deleted text begin . deleted text end new text begin ;
new text end

new text begin (2) the business must not have issued securities that are traded on a public exchange;
new text end

new text begin (3) the business must not issue securities that are traded on a public exchange within
180 days subsequent to the date on which the qualified investment was made; and
new text end

new text begin (4) the business must not have a liquidation event within 180 days subsequent to the
date on which the qualified investment was made.
new text end

(f) The commissioner must maintain a list of businesses certified under this
subdivision for the calendar year and make the list accessible to the public on the
department's Web site.

(g) For purposes of this subdivision, the following terms have the meanings given:

(1) "qualified high-technology field" includes aerospace, agricultural processing,
renewable energy, energy efficiency and conservation, environmental engineering, food
technology, cellulosic ethanol, information technology, materials science technology,
nanotechnology, telecommunications, biotechnology, medical device products,
pharmaceuticals, diagnostics, biologicals, chemistry, veterinary science, and similar
fields; and

(2) "proprietary technology" means the technical innovations that are unique and
legally owned or licensed by a business and includes, without limitation, those innovations
that are patented, patent pending, a subject of trade secrets, or copyrighted.

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for qualified small businesses
certified after June 30, 2012, except the amendments to paragraph (c), clause (7), and
paragraph (c), adding clause (8), are effective the day following final enactment.
new text end

Sec. 3.

Minnesota Statutes 2010, section 116J.8737, subdivision 5, is amended to read:

Subd. 5.

Credit allowed.

(a) A qualified investor or qualified fund is eligible for
a credit equal to 25 percent of the qualified investment in a qualified small business.
Investments made by a pass-through entity qualify for a credit only if the entity is a
qualified fund. The commissioner must not allocate more than $11,000,000 in credits to
qualified investors or qualified funds for taxable years beginning after December 31, 2009,
and before January 1, 2011, deleted text begin and deleted text end must not allocate more than $12,000,000 in credits per
year for taxable years beginning after December 31, 2010, and before January 1, deleted text begin 2015 deleted text end new text begin
2012, and must not allocate more than $17,000,000 in credits per year for taxable years
beginning after December 31, 2011, and before January 1, 2015 new text end . Any portion of a taxable
year's credits that is not allocated by the commissioner does not cancel and may be carried
forward to subsequent taxable years until all credits have been allocated.

(b) The commissioner may not allocate more than a total maximum amount in credits
for a taxable year to a qualified investor for the investor's cumulative qualified investments
as an individual qualified investor and as an investor in a qualified fund; for married
couples filing joint returns the maximum is $250,000, and for all other filers the maximum
is $125,000. The commissioner may not allocate more than a total of $1,000,000 in credits
over all taxable years for qualified investments in any one qualified small business.

(c) The commissioner may not allocate a credit to a qualified investor either as an
individual qualified investor or as an investor in a qualified fund if the investor receives
more than 50 percent of the investor's gross annual income from the qualified small
business in which the qualified investment is proposed. A member of the family of an
individual disqualified by this paragraph is not eligible for a credit under this section. For
a married couple filing a joint return, the limitations in this paragraph apply collectively
to the investor and spouse. For purposes of determining the ownership interest of an
investor under this paragraph, the rules under section 267(c) and 267(e) of the Internal
Revenue Code apply.

(d) Applications for tax credits for 2010 must be made available on the department's
Web site by September 1, 2010, and the department must begin accepting applications
by September 1, 2010. Applications for subsequent years must be made available by
November 1 of the preceding year.

(e) Qualified investors and qualified funds must apply to the commissioner for tax
credits. Tax credits must be allocated to qualified investors or qualified funds in the order
that the tax credit request applications are filed with the department. The commissioner
must approve or reject tax credit request applications within 15 days of receiving the
application. The investment specified in the application must be made within 60 days of
the allocation of the credits. If the investment is not made within 60 days, the credit
allocation is canceled and available for reallocation. A qualified investor or qualified fund
that fails to invest as specified in the application, within 60 days of allocation of the
credits, must notify the commissioner of the failure to invest within five business days of
the expiration of the 60-day investment period.

(f) All tax credit request applications filed with the department on the same day must
be treated as having been filed contemporaneously. If two or more qualified investors or
qualified funds file tax credit request applications on the same day, and the aggregate
amount of credit allocation claims exceeds the aggregate limit of credits under this section
or the lesser amount of credits that remain unallocated on that day, then the credits must
be allocated among the qualified investors or qualified funds who filed on that day on a
pro rata basis with respect to the amounts claimed. The pro rata allocation for any one
qualified investor or qualified fund is the product obtained by multiplying a fraction,
the numerator of which is the amount of the credit allocation claim filed on behalf of
a qualified investor and the denominator of which is the total of all credit allocation
claims filed on behalf of all applicants on that day, by the amount of credits that remain
unallocated on that day for the taxable year.

(g) A qualified investor or qualified fund, or a qualified small business acting on their
behalf, must notify the commissioner when an investment for which credits were allocated
has been made, and the taxable year in which the investment was made. A qualified fund
must also provide the commissioner with a statement indicating the amount invested by
each investor in the qualified fund based on each investor's share of the assets of the
qualified fund at the time of the qualified investment. After receiving notification that the
investment was made, the commissioner must issue credit certificates for the taxable year
in which the investment was made to the qualified investor or, for an investment made by
a qualified fund, to each qualified investor who is an investor in the fund. The certificate
must state that the credit is subject to revocation if the qualified investor or qualified
fund does not hold the investment in the qualified small business for at least three years,
consisting of the calendar year in which the investment was made and the two following
years. The three-year holding period does not apply if:

(1) the investment by the qualified investor or qualified fund becomes worthless
before the end of the three-year period;

(2) 80 percent or more of the assets of the qualified small business is sold before
the end of the three-year period;

(3) the qualified small business is sold before the end of the three-year period; or

(4) the qualified small business's common stock begins trading on a public exchange
before the end of the three-year period.

(h) The commissioner must notify the commissioner of revenue of credit certificates
issued under this section.

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for taxable years beginning after
December 31, 2011.
new text end

Sec. 4.

Minnesota Statutes 2010, section 116J.8737, is amended by adding a
subdivision to read:

new text begin Subd. 5a. new text end

new text begin Promotion of credit in greater Minnesota. new text end

new text begin (a) By July 1, 2012, the
commissioner shall develop a plan to increase awareness of and use of the credit for
investments in greater Minnesota businesses with a target goal that a minimum of 30
percent of the credit will be awarded for those investments during the second half
of calendar year 2013 and for each full calendar year thereafter. Beginning with the
legislative report due on March 15, 2013, under subdivision 9, the commissioner shall
report on its plan under this subdivision and the results achieved.
new text end

new text begin (b) If the target goal of 30 percent under paragraph (a) is not achieved for the
six-month period ending on December 31, 2013, the credit percentage under subdivision
5, paragraph (a), is increased to 40 percent for a qualified investment made after December
31, 2013, in a greater Minnesota business. This paragraph does not apply and the credit
percentage for all qualified investments is the rate provided under subdivision 5 for any
calendar year beginning after a calendar year for which the commissioner determines the
30 percent target has been satisfied. The commissioner shall timely post notification of
changes in the credit rate under this paragraph on the department's website.
new text end

new text begin (c) For purposes of this section, a "greater Minnesota business" means a qualified
small business with its headquarters and 51 percent or more of its employees employed
at Minnesota locations outside of the metropolitan area as defined in section 473.121,
subdivision 2.
new text end

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective the day following final enactment.
new text end

Sec. 5.

Minnesota Statutes 2010, section 116J.8737, subdivision 8, is amended to read:

Subd. 8.

Data privacy.

(a) Data contained in an application submitted to the
commissioner under subdivision 2, 3, or 4 are nonpublic data, or private data on
individuals, as defined in section 13.02, subdivision 9 or 12, except that the following
data items are public:

(1) the name new text begin , mailing address, telephone number, e-mail address, contact person's
name, and industry type new text end of a qualified small business upon approval of the application
and certification by the commissioner under subdivision 2;

(2) the name of a qualified investor upon approval of the application and certification
by the commissioner under subdivision 3;

(3) the name of a qualified fund upon approval of the application and certification
by the commissioner under subdivision 4;

(4) for credit certificates issued under subdivision 5, the amount of the credit
certificate issued, amount of the qualifying investment, the name of the qualifying investor
or qualifying fund that received the certificate, and the name of the qualifying small
business in which the qualifying investment was made;

(5) for credits revoked under subdivision 7, paragraph (a), the amount revoked and
the name of the qualified investor or qualified fund; and

(6) for credits revoked under subdivision 7, paragraphs (b) and (c), the amount
revoked and the name of the qualified small business.

(b) The following data, including data classified as nonpublic or private, must be
provided to the consultant for use in conducting the program evaluation under subdivision
10:

(1) the commissioner of employment and economic development shall provide data
contained in an application for certification received from a qualified small business,
qualified investor, or qualified fund, and any annual reporting information received on a
qualified small business, qualified investor, or qualified fund; and

(2) the commissioner of revenue shall provide data contained in any applicable tax
returns of a qualified small business, qualified investor, or qualified fund.

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for businesses requesting certification
starting on the day following final enactment.
new text end

Sec. 6.

new text begin [116J.8738] TECHNOLOGY CORPORATE FRANCHISE TAX
CERTIFICATE TRANSFER PROGRAM.
new text end

new text begin Subdivision 1. new text end

new text begin Program established. new text end

new text begin The commissioner shall establish a corporate
franchise tax benefit certificate transfer program to allow new or expanding biotechnology
companies in this state with unused net operating loss carryovers under section 290.095 to
surrender those tax benefits for use by other corporate franchise taxpayers in this state.
The tax benefits may be used on the corporate franchise tax returns to be filed by those
taxpayers in exchange for private financial assistance to be provided by the corporate
franchise taxpayer that is the recipient of the tax benefit certificate to assist in the funding
of costs incurred by the new or expanding biotechnology company.
new text end

new text begin Subd. 2. new text end

new text begin Definitions. new text end

new text begin (a) For purposes of this section, the following terms have the
meanings given, unless the context clearly requires otherwise.
new text end

new text begin (b) "Biotechnology" means the continually expanding body of fundamental
knowledge about the functioning of biological systems from the macro level to the
molecular and subatomic levels, as well as novel products, services, technologies, and
subtechnologies developed as a result of insights gained from research advances that add
to that body of fundamental knowledge.
new text end

new text begin (c) "Biotechnology company" means a corporation that:
new text end

new text begin (1) has its headquarters or base of operations and at least one-half of its full-time
employees in this state;
new text end

new text begin (2) owns, has filed for, or has a valid license to use protected, proprietary intellectual
property;
new text end

new text begin (3) is engaged in the research, development, production, or provision of
biotechnology for the purpose of developing or providing products or processes for
specific commercial or public purposes, including but not limited to, medical, medical
device, pharmaceutical, nutritional, and other health-related purposes, agricultural
purposes, and environmental purposes; and
new text end

new text begin (4) has received, at least, $2,500,000 of private investments, whether in the form of
equity or debt.
new text end

new text begin (d) "Full-time employee" means a person employed by a new or expanding
biotechnology company for consideration for at least 35 hours a week, or who renders
any other standard of service generally accepted by custom or practice as full-time
employment and whose wages are subject to withholding as provided in section 290.92,
or who is a partner of a new or expanding biotechnology company who works for the
partnership for at least 35 hours a week, or who renders any other standard of service
generally accepted by custom or practice as full-time employment, and whose distributive
share of income, gain, loss, or deduction, or whose guaranteed payments, or any
combination thereof, is subject to the payment of estimated taxes, as provided in section
289A.25. To qualify as a full-time employee, an employee must also receive from the
new or expanding biotechnology company group health benefits under a health plan as
defined under section 62A.011, subdivision 3, or under a self-insured employee welfare
benefit plan as defined in United States Code, title 29, section 1002. Full-time employee
excludes any person who works as an independent contractor or on a consulting basis for
the new or expanding biotechnology company.
new text end

new text begin (e) "Maximum annual credit limit" means the following amount of tax benefits for
the specified fiscal years:
new text end

new text begin (1) for fiscal year 2013, $10,000,000;
new text end

new text begin (2) for fiscal year 2014, $15,000,000;
new text end

new text begin (3) for fiscal years 2015 and 2016, $30,000,000; and
new text end

new text begin (4) for fiscal years 2017 and 2018, $60,000,000.
new text end

new text begin (f) "New or expanding" means a biotechnology company that:
new text end

new text begin (1) on June 30 of the year in which the corporation files an application for surrender
of unused but otherwise allowable tax benefits under this section and on the date of the
exchange of the corporate franchise tax benefit certificate, has fewer than 250 employees
in the United States and on the later of those dates, the business, whether as part of the
corporation or another entity, has not been in operation for more than ten years;
new text end

new text begin (2) on June 30 of the year in which the corporation files the application, has at least
one full-time employee working in this state if the company has been incorporated for less
than three years, has at least five full-time employees working in this state if the company
has been incorporated for more than three years but less than five years, and has at least
ten full-time employees working in this state if the company has been incorporated for
more than five years; and
new text end

new text begin (3) on the date of the exchange of the corporate franchise tax benefit certificate, the
corporation has the number of full-time employees in this state required by clause (2).
new text end

new text begin Subd. 3. new text end

new text begin Allocation of tax benefits; annual limit. new text end

new text begin (a) The commissioner, in
cooperation with the commissioner of revenue, shall review and approve applications
by new or expanding biotechnology companies in this state with unused but otherwise
allowable net operating loss carryovers under section 290.095, to surrender those tax
benefits in exchange for private financial assistance to be made by the corporate franchise
taxpayer that is the recipient of the corporate franchise tax benefit certificate in an amount
equal to at least 75 percent of the amount of the surrendered tax benefit. The amount of
the surrendered tax benefit is the amount of the net operating loss carryover apportioned
to Minnesota under the provisions of section 290.095, subdivision 3, paragraph (c),
and subsequently multiplied by the corporate franchise tax rate under section 290.06,
subdivision 1.
new text end

new text begin (b) The commissioner must approve the transfer of no more than the maximum
annual credit limit in each fiscal year. If the total amount of transferable tax benefits
requested to be surrendered by approved applicants exceeds the maximum annual credit
limit for a fiscal year, the commissioner, in cooperation with the commissioner of revenue,
must not approve the transfer of more than the maximum annual credit limit for that fiscal
year and shall allocate the transfer of tax benefits by approved corporations using the
following method:
new text end

new text begin (1) an eligible applicant with $250,000 or less of transferable tax benefits is
authorized to surrender the entire amount of its transferable tax benefits;
new text end

new text begin (2) an eligible applicant with more than $250,000 of transferable tax benefits is
authorized to surrender a minimum of $250,000 of its transferable tax benefits; and
new text end

new text begin (3) an eligible applicant with more than $250,000 of transferable tax benefits is
authorized to surrender additional transferable tax benefits determined by multiplying
the applicant's transferable tax benefits less the minimum transferable tax benefits that
corporation is authorized to surrender under clause (2) by a fraction, the numerator of
which is the total amount of transferable tax benefits that the commissioner is authorized
to approve less the total amount of transferable tax benefits approved under clauses (1)
and (2) and the denominator of which is the total amount of transferable tax benefits
requested to be surrendered by all eligible applicants less the total amount of transferable
tax benefits approved under clauses (1) and (2).
new text end

new text begin (c) If the total amount of transferable tax benefits that would be authorized using the
method under paragraph (b) exceeds the maximum annual credit limit for a fiscal year,
then the commissioner, in cooperation with the commissioner of revenue, shall limit the
total amount of tax benefits authorized to be transferred to the maximum annual credit
limit by applying the above method on an apportioned basis.
new text end

new text begin Subd. 4. new text end

new text begin Qualifying tax benefits and corporations. new text end

new text begin For purposes of this section,
transferable tax benefits include an eligible applicant's unused but otherwise allowable
carryover of net operating losses apportioned to Minnesota under the provisions of section
290.095, subdivision 3, paragraph (c), and subsequently multiplied by the corporate
franchise tax rate under section 290.06, subdivision 1. An eligible applicant's transferable
tax benefits are limited to net operating losses that the applicant requests to surrender in
its application to the authority and must not, in total, exceed the maximum amount of
tax benefits that the applicant is eligible to surrender. No application for a corporate
franchise tax benefit transfer certificate must be approved in which the new or expanding
biotechnology company:
new text end

new text begin (1) has demonstrated positive net operating income in any of the two previous full
years of ongoing operations as determined on its financial statements issued according to
generally accepted accounting standards endorsed by the Financial Accounting Standards
Board; or
new text end

new text begin (2) is directly or indirectly at least 50 percent owned or controlled by another
corporation that has demonstrated positive net operating income in any of the two previous
full years of ongoing operations as determined on its financial statements issued according
to generally accepted accounting standards endorsed by the Financial Accounting
Standards Board or is part of a consolidated group of affiliated corporations, as filed for
federal income tax purposes, that in the aggregate has demonstrated positive net operating
income in any of the two previous full years of ongoing operations as determined on
its combined financial statements issued according to generally accepted accounting
standards endorsed by the Financial Accounting Standards Board.
new text end

new text begin The maximum lifetime value of surrendered tax benefits that a corporation is permitted to
surrender under the program is $15,000,000.
new text end

new text begin Subd. 5. new text end

new text begin Recapture of tax benefits. new text end

new text begin The commissioner, in consultation with
the commissioner of revenue, shall develop a standard form agreement that each new
or expanding biotechnology company must enter into as a condition of qualifying to
surrender tax benefits under this section. The agreement must provide for the recapture of
all, or a portion of, the amount of a grant of a corporate franchise tax benefit certificate
from the new or expanding biotechnology company under this section if the taxpayer
fails to use the private financial assistance received for the surrender of tax benefits as
required by this section or fails to maintain a headquarters or a base of operation in this
state during the five years following receipt of the private financial assistance; except if
the failure to maintain a headquarters or a base of operation in this state is due to the
liquidation of the new or expanding biotechnology company, other than as a result of
a merger or acquisition of the company.
new text end

new text begin Subd. 6. new text end

new text begin Approval of acquisition of tax benefits; purposes; required agreement.
new text end

new text begin (a) The commissioner, in cooperation with the commissioner of revenue, shall review and
approve applications by taxpayers under the corporate franchise tax in chapter 290 to
acquire surrendered tax benefits approved under subdivision 3, which must be issued in
the form of corporate franchise tax benefit transfer certificates, in exchange for private
financial assistance to be made by the taxpayer in an amount equal to at least 75 percent of
the amount of the surrendered tax benefit of a biotechnology company. The commissioner
must not issue a corporate franchise tax benefit transfer certificate, unless the applicant
certifies that as of the date of the exchange of the corporate franchise tax benefit certificate
it is operating as a new or expanding biotechnology company and has no current intention
to cease operating as a new or expanding biotechnology company.
new text end

new text begin (b) The private financial assistance shall assist in funding expenses incurred in
connection with the operation of the new or expanding biotechnology company in this
state, including but not limited to the expenses of fixed assets, such as the construction
and acquisition and development of real estate, materials, start-up, tenant fit-out, working
capital, salaries, research and development expenditures, and any other expenses
determined by the commissioner to be necessary to carry out biotechnology company
operations in this state.
new text end

new text begin (c) The commissioner shall require a corporate franchise taxpayer that acquires
a corporate franchise tax benefit certificate to enter into a written agreement with the
new or expanding biotechnology company concerning the terms and conditions of the
private financial assistance made in exchange for the certificate. The written agreement
may contain terms concerning the maintenance by the new or expanding biotechnology
company of a headquarters or a base of operation in this state.
new text end

new text begin Subd. 7. new text end

new text begin Program evaluation. new text end

new text begin (a) No later than December 31, 2015, the
commissioner of revenue, after consultation with the commissioners of management and
budget and employment and economic development, shall contract with a qualified outside
entity or individual to evaluate the effects of the program on the Minnesota economy.
The contractor must not be associated with, employed by, or have contracts with the
entities involved in or associated with the biotechnology industry that benefits from the
program. The program evaluation must be completed by January 2017, and provided to
the chairs and ranking minority members of the legislative committees having jurisdiction
over taxes and economic development in the senate and the house of representatives, in
compliance with sections 3.195 and 3.197. The program evaluation must include, in
addition to any other matters the commissioner of revenue considers relevant to evaluating
the effectiveness of the credit, analysis of:
new text end

new text begin (1) the amount of economic activity, including the number of jobs and the wages of
those jobs, generated by emerging biotechnology companies that received investments
that qualified for the credit;
new text end

new text begin (2) the incremental change in Minnesota state and local taxes paid as a result of
the allowance of the credit; and
new text end

new text begin (3) the net benefit to the Minnesota economy of allowance of the credit relative to
alternative uses of the resources, such as increasing the research and development credit
or reducing the corporate franchise tax rate.
new text end

new text begin (b) To the extent necessary to complete the program evaluation, the consultant
or consultants may request from the commissioner of revenue tax return information
of taxpayers who surrender tax benefits under the program. To the extent necessary to
complete the program evaluation, the consultant or consultants may request from the
commissioner of employment and economic development applications for certification
and annual reports made by qualified small businesses, qualified investors, and qualified
funds. The consultant or consultants may not disclose or release any data received under
this section except as permitted for a government entity under chapter 13, and is subject to
the penalties and remedies provided in law for violation of that chapter.
new text end

new text begin Subd. 8. new text end

new text begin Sunset. new text end

new text begin This section expires effective following the allocation for fiscal
year 2018.
new text end

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective the day following final enactment
and applies to taxable years beginning after December 31, 2011.
new text end

Sec. 7.

Minnesota Statutes 2010, section 289A.08, subdivision 3, is amended to read:

Subd. 3.

Corporations.

(a) A corporation that is subject to the state's jurisdiction to
tax under section 290.014, subdivision 5, must file a return deleted text begin , except that a foreign operating
corporation as defined in section 290.01, subdivision 6b, is not required to file a return deleted text end .

(b) Members of a unitary business that are required to file a combined report on one
return must designate a member of the unitary business to be responsible for tax matters,
including the filing of returns, the payment of taxes, additions to tax, penalties, interest,
or any other payment, and for the receipt of refunds of taxes or interest paid in excess of
taxes lawfully due. The designated member must be a member of the unitary business that
is filing the single combined report and either:

(1) a corporation that is subject to the taxes imposed by chapter 290; or

(2) a corporation that is not subject to the taxes imposed by chapter 290:

(i) Such corporation consents by filing the return as a designated member under this
clause to remit taxes, penalties, interest, or additions to tax due from the members of the
unitary business subject to tax, and receive refunds or other payments on behalf of other
members of the unitary business. The member designated under this clause is a "taxpayer"
for the purposes of this chapter and chapter 270C, and is liable for any liability imposed
on the unitary business under this chapter and chapter 290.

(ii) If the state does not otherwise have the jurisdiction to tax the member designated
under this clause, consenting to be the designated member does not create the jurisdiction
to impose tax on the designated member, other than as described in item (i).

(iii) The member designated under this clause must apply for a business tax account
identification number.

(c) The commissioner shall adopt rules for the filing of one return on behalf of the
members of an affiliated group of corporations that are required to file a combined report.
All members of an affiliated group that are required to file a combined report must file one
return on behalf of the members of the group under rules adopted by the commissioner.

(d) If a corporation claims on a return that it has paid tax in excess of the amount of
taxes lawfully due, that corporation must include on that return information necessary for
payment of the tax in excess of the amount lawfully due by electronic means.

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for returns filed for taxable years
beginning after December 31, 2011.
new text end

Sec. 8.

Minnesota Statutes 2011 Supplement, section 290.01, subdivision 19c, is
amended to read:

Subd. 19c.

Corporations; additions to federal taxable income.

For corporations,
there shall be added to federal taxable income:

(1) the amount of any deduction taken for federal income tax purposes for income,
excise, or franchise taxes based on net income or related minimum taxes, including but not
limited to the tax imposed under section 290.0922, paid by the corporation to Minnesota,
another state, a political subdivision of another state, the District of Columbia, or any
foreign country or possession of the United States;

(2) interest not subject to federal tax upon obligations of: the United States, its
possessions, its agencies, or its instrumentalities; the state of Minnesota or any other
state, any of its political or governmental subdivisions, any of its municipalities, or any
of its governmental agencies or instrumentalities; the District of Columbia; or Indian
tribal governments;

(3) exempt-interest dividends received as defined in section 852(b)(5) of the Internal
Revenue Code;

(4) the amount of any net operating loss deduction taken for federal income tax
purposes under section 172 or 832(c)(10) of the Internal Revenue Code or operations loss
deduction under section 810 of the Internal Revenue Code;

(5) the amount of any special deductions taken for federal income tax purposes
under sections 241 to 247 and 965 of the Internal Revenue Code;

(6) losses from the business of mining, as defined in section 290.05, subdivision 1,
clause (a), that are not subject to Minnesota income tax;

(7) the amount of any capital losses deducted for federal income tax purposes under
sections 1211 and 1212 of the Internal Revenue Code;

(8) the exempt foreign trade income of a foreign sales corporation under sections
921(a) and 291 of the Internal Revenue Code;

(9) the amount of percentage depletion deducted under sections 611 through 614 and
291 of the Internal Revenue Code;

(10) for certified pollution control facilities placed in service in a taxable year
beginning before December 31, 1986, and for which amortization deductions were elected
under section 169 of the Internal Revenue Code of 1954, as amended through December
31, 1985, the amount of the amortization deduction allowed in computing federal taxable
income for those facilities;

deleted text begin (11) the amount of any deemed dividend from a foreign operating corporation
determined pursuant to section 290.17, subdivision 4, paragraph (g). The deemed dividend
shall be reduced by the amount of the addition to income required by clauses (20), (21),
(22), and (23);
deleted text end

deleted text begin (12) deleted text end new text begin (11) new text end the amount of a partner's pro rata share of net income which does not flow
through to the partner because the partnership elected to pay the tax on the income under
section 6242(a)(2) of the Internal Revenue Code;

deleted text begin (13) deleted text end new text begin (12) new text end the amount of net income excluded under section 114 of the Internal
Revenue Code;

deleted text begin (14) deleted text end new text begin (13) new text end any increase in subpart F income, as defined in section 952(a) of the
Internal Revenue Code, for the taxable year when subpart F income is calculated without
regard to the provisions of Division C, title III, section 303(b) of Public Law 110-343;

deleted text begin (15) deleted text end new text begin (14) new text end 80 percent of the depreciation deduction allowed under section
168(k)(1)(A) and (k)(4)(A) of the Internal Revenue Code. For purposes of this clause, if
the taxpayer has an activity that in the taxable year generates a deduction for depreciation
under section 168(k)(1)(A) and (k)(4)(A) and the activity generates a loss for the taxable
year that the taxpayer is not allowed to claim for the taxable year, "the depreciation
allowed under section 168(k)(1)(A) and (k)(4)(A)" for the taxable year is limited to excess
of the depreciation claimed by the activity under section 168(k)(1)(A) and (k)(4)(A)
over the amount of the loss from the activity that is not allowed in the taxable year. In
succeeding taxable years when the losses not allowed in the taxable year are allowed, the
depreciation under section 168(k)(1)(A) and (k)(4)(A) is allowed;

deleted text begin (16) deleted text end new text begin (15) new text end 80 percent of the amount by which the deduction allowed by section 179 of
the Internal Revenue Code exceeds the deduction allowable by section 179 of the Internal
Revenue Code of 1986, as amended through December 31, 2003;

deleted text begin (17) deleted text end new text begin (16) new text end to the extent deducted in computing federal taxable income, the amount of
the deduction allowable under section 199 of the Internal Revenue Code;

deleted text begin (18) deleted text end new text begin (17) new text end for taxable years beginning before January 1, 2013, the exclusion allowed
under section 139A of the Internal Revenue Code for federal subsidies for prescription
drug plans;

deleted text begin (19) deleted text end new text begin (18) new text end the amount of expenses disallowed under section 290.10, subdivision 2;

deleted text begin (20) an amount equal to the interest and intangible expenses, losses, and costs paid,
accrued, or incurred by any member of the taxpayer's unitary group to or for the benefit
of a corporation that is a member of the taxpayer's unitary business group that qualifies
as a foreign operating corporation. For purposes of this clause, intangible expenses and
costs include:
deleted text end

deleted text begin (i) expenses, losses, and costs for, or related to, the direct or indirect acquisition,
use, maintenance or management, ownership, sale, exchange, or any other disposition of
intangible property;
deleted text end

deleted text begin (ii) losses incurred, directly or indirectly, from factoring transactions or discounting
transactions;
deleted text end

deleted text begin (iii) royalty, patent, technical, and copyright fees;
deleted text end

deleted text begin (iv) licensing fees; and
deleted text end

deleted text begin (v) other similar expenses and costs.
deleted text end

deleted text begin For purposes of this clause, "intangible property" includes stocks, bonds, patents, patent
applications, trade names, trademarks, service marks, copyrights, mask works, trade
secrets, and similar types of intangible assets.
deleted text end

deleted text begin This clause does not apply to any item of interest or intangible expenses or costs paid,
accrued, or incurred, directly or indirectly, to a foreign operating corporation with respect
to such item of income to the extent that the income to the foreign operating corporation
is income from sources without the United States as defined in subtitle A, chapter 1,
subchapter N, part 1, of the Internal Revenue Code;
deleted text end

deleted text begin (21) except as already included in the taxpayer's taxable income pursuant to clause
(20), any interest income and income generated from intangible property received or
accrued by a foreign operating corporation that is a member of the taxpayer's unitary
group. For purposes of this clause, income generated from intangible property includes:
deleted text end

deleted text begin (i) income related to the direct or indirect acquisition, use, maintenance or
management, ownership, sale, exchange, or any other disposition of intangible property;
deleted text end

deleted text begin (ii) income from factoring transactions or discounting transactions;
deleted text end

deleted text begin (iii) royalty, patent, technical, and copyright fees;
deleted text end

deleted text begin (iv) licensing fees; and
deleted text end

deleted text begin (v) other similar income.
deleted text end

deleted text begin For purposes of this clause, "intangible property" includes stocks, bonds, patents, patent
applications, trade names, trademarks, service marks, copyrights, mask works, trade
secrets, and similar types of intangible assets.
deleted text end

deleted text begin This clause does not apply to any item of interest or intangible income received or accrued
by a foreign operating corporation with respect to such item of income to the extent that
the income is income from sources without the United States as defined in subtitle A,
chapter 1, subchapter N, part 1, of the Internal Revenue Code;
deleted text end

deleted text begin (22) the dividends attributable to the income of a foreign operating corporation that
is a member of the taxpayer's unitary group in an amount that is equal to the dividends
paid deduction of a real estate investment trust under section 561(a) of the Internal
Revenue Code for amounts paid or accrued by the real estate investment trust to the
foreign operating corporation;
deleted text end

deleted text begin (23) the income of a foreign operating corporation that is a member of the taxpayer's
unitary group in an amount that is equal to gains derived from the sale of real or personal
property located in the United States;
deleted text end

deleted text begin (24) deleted text end new text begin (19) new text end for taxable years beginning before January 1, 2010, the additional amount
allowed as a deduction for donation of computer technology and equipment under section
170(e)(6) of the Internal Revenue Code, to the extent deducted from taxable income; and

deleted text begin (25) deleted text end new text begin (20) new text end discharge of indebtedness income resulting from reacquisition of business
indebtedness and deferred under section 108(i) of the Internal Revenue Code.

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for taxable years beginning after
December 31, 2011.
new text end

Sec. 9.

Minnesota Statutes 2010, section 290.01, subdivision 19d, is amended to read:

Subd. 19d.

Corporations; modifications decreasing federal taxable income.

For
corporations, there shall be subtracted from federal taxable income after the increases
provided in subdivision 19c:

(1) the amount of foreign dividend gross-up added to gross income for federal
income tax purposes under section 78 of the Internal Revenue Code;

(2) the amount of salary expense not allowed for federal income tax purposes due to
claiming the work opportunity credit under section 51 of the Internal Revenue Code;

(3) any dividend (not including any distribution in liquidation) paid within the
taxable year by a national or state bank to the United States, or to any instrumentality of
the United States exempt from federal income taxes, on the preferred stock of the bank
owned by the United States or the instrumentality;

(4) amounts disallowed for intangible drilling costs due to differences between
this chapter and the Internal Revenue Code in taxable years beginning before January
1, 1987, as follows:

(i) to the extent the disallowed costs are represented by physical property, an amount
equal to the allowance for depreciation under Minnesota Statutes 1986, section 290.09,
subdivision 7, subject to the modifications contained in subdivision 19e; and

(ii) to the extent the disallowed costs are not represented by physical property, an
amount equal to the allowance for cost depletion under Minnesota Statutes 1986, section
290.09, subdivision 8;

(5) the deduction for capital losses pursuant to sections 1211 and 1212 of the
Internal Revenue Code, except that:

(i) for capital losses incurred in taxable years beginning after December 31, 1986,
capital loss carrybacks shall not be allowed;

(ii) for capital losses incurred in taxable years beginning after December 31, 1986,
a capital loss carryover to each of the 15 taxable years succeeding the loss year shall be
allowed;

(iii) for capital losses incurred in taxable years beginning before January 1, 1987, a
capital loss carryback to each of the three taxable years preceding the loss year, subject to
the provisions of Minnesota Statutes 1986, section 290.16, shall be allowed; and

(iv) for capital losses incurred in taxable years beginning before January 1, 1987,
a capital loss carryover to each of the five taxable years succeeding the loss year to the
extent such loss was not used in a prior taxable year and subject to the provisions of
Minnesota Statutes 1986, section 290.16, shall be allowed;

(6) an amount for interest and expenses relating to income not taxable for federal
income tax purposes, if (i) the income is taxable under this chapter and (ii) the interest and
expenses were disallowed as deductions under the provisions of section 171(a)(2), 265 or
291 of the Internal Revenue Code in computing federal taxable income;

(7) in the case of mines, oil and gas wells, other natural deposits, and timber for
which percentage depletion was disallowed pursuant to subdivision 19c, clause (9), a
reasonable allowance for depletion based on actual cost. In the case of leases the deduction
must be apportioned between the lessor and lessee in accordance with rules prescribed
by the commissioner. In the case of property held in trust, the allowable deduction must
be apportioned between the income beneficiaries and the trustee in accordance with the
pertinent provisions of the trust, or if there is no provision in the instrument, on the basis
of the trust's income allocable to each;

(8) for certified pollution control facilities placed in service in a taxable year
beginning before December 31, 1986, and for which amortization deductions were elected
under section 169 of the Internal Revenue Code of 1954, as amended through December
31, 1985, an amount equal to the allowance for depreciation under Minnesota Statutes
1986, section 290.09, subdivision 7;

(9) amounts included in federal taxable income that are due to refunds of income,
excise, or franchise taxes based on net income or related minimum taxes paid by the
corporation to Minnesota, another state, a political subdivision of another state, the
District of Columbia, or a foreign country or possession of the United States to the extent
that the taxes were added to federal taxable income under section 290.01, subdivision 19c,
clause (1), in a prior taxable year;

(10) 80 percent of royalties, fees, or other like income accrued or received from a
foreign operating corporation or a foreign corporation which is part of the same unitary
business as the receiving corporation, unless the income resulting from such payments or
accruals is income from sources within the United States as defined in subtitle A, chapter
1, subchapter N, part 1, of the Internal Revenue Code;

(11) income or gains from the business of mining as defined in section 290.05,
subdivision 1, clause (a), that are not subject to Minnesota franchise tax;

(12) the amount of disability access expenditures in the taxable year which are not
allowed to be deducted or capitalized under section 44(d)(7) of the Internal Revenue Code;

(13) the amount of qualified research expenses not allowed for federal income tax
purposes under section 280C(c) of the Internal Revenue Code, but only to the extent that
the amount exceeds the amount of the credit allowed under section 290.068;

(14) the amount of salary expenses not allowed for federal income tax purposes due
to claiming the Indian employment credit under section 45A(a) of the Internal Revenue
Code;

(15) for a corporation whose foreign sales corporation, as defined in section 922
of the Internal Revenue Code, constituted a foreign operating corporation during any
taxable year ending before January 1, 1995, and a return was filed by August 15, 1996,
claiming the deduction under section 290.21, subdivision 4, for income received from
the foreign operating corporation, an amount equal to 1.23 multiplied by the amount of
income excluded under section 114 of the Internal Revenue Code, provided the income is
not income of a foreign operating company;

(16) any decrease in subpart F income, as defined in section 952(a) of the Internal
Revenue Code, for the taxable year when subpart F income is calculated without regard to
the provisions of Division C, title III, section 303(b) of Public Law 110-343;

(17) in each of the five tax years immediately following the tax year in which an
addition is required under subdivision 19c, clause deleted text begin (15) deleted text end new text begin (14) new text end , an amount equal to one-fifth
of the delayed depreciation. For purposes of this clause, "delayed depreciation" means the
amount of the addition made by the taxpayer under subdivision 19c, clause deleted text begin (15) deleted text end new text begin (14) new text end . The
resulting delayed depreciation cannot be less than zero;

(18) in each of the five tax years immediately following the tax year in which an
addition is required under subdivision 19c, clause deleted text begin (16) deleted text end new text begin (15) new text end , an amount equal to one-fifth
of the amount of the addition; deleted text begin and
deleted text end

(19) to the extent included in federal taxable income, discharge of indebtedness
income resulting from reacquisition of business indebtedness included in federal taxable
income under section 108(i) of the Internal Revenue Code. This subtraction applies only
to the extent that the income was included in net income in a prior year as a result of the
addition under section 290.01, subdivision 19c, clause deleted text begin (25). deleted text end new text begin (20); and
new text end

new text begin (20) to the extent included in federal taxable income, amounts received in return for
surrendering tax benefits under section 116J.8738.
new text end

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for taxable years beginning after
December 31, 2011.
new text end

Sec. 10.

Minnesota Statutes 2010, section 290.01, subdivision 29, is amended to read:

Subd. 29.

Taxable income.

The term "taxable income" means:

(1) for individuals, estates, and trusts, the same as taxable net income;

(2) for corporations, the taxable net income less

(i) the net operating loss deduction under section 290.095 new text begin , excluding any amount
surrendered under section 116J.8738 new text end ;

(ii) the dividends received deduction under section 290.21, subdivision 4;

(iii) the exemption for operating in a job opportunity building zone under section
469.317;

(iv) the exemption for operating in a biotechnology and health sciences industry
zone under section 469.337; and

(v) the exemption for operating in an international economic development zone
under section 469.326.

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for taxable years beginning after
December 31, 2011.
new text end

Sec. 11.

Minnesota Statutes 2010, section 290.06, is amended by adding a subdivision
to read:

new text begin Subd. 36. new text end

new text begin Employment of qualified veteran tax credit. new text end

new text begin (a) A taxpayer is allowed a
credit against the tax imposed under this chapter for employment of one or more qualified
veterans.
new text end

new text begin (b) "Qualified veteran" has the meaning given in section 51 of the Internal Revenue
Code.
new text end

new text begin (c) The credit equals 150 percent of the credit allowed under section 51 of the Internal
Revenue Code without regard to the limitation to federal liability, but is limited to the
portion of the federal credit allowed for employment of qualified veterans in Minnesota.
new text end

new text begin (d) The credit under this subdivision is in effect without regard to whether or not the
credit allowed under section 51 of the Internal Revenue Code is allowed for wages paid
during the taxable year.
new text end

new text begin (e) If the amount of the credit determined under this section exceeds the liability for
tax under this chapter, the excess may be carried forward to each of the next ten taxable
years. The entire amount of the excess unused credit for the taxable year shall be carried
first to the earliest of the taxable years to which the credit may be carried, and then to each
successive year to which the credit may be carried. The amount of the unused credit which
may be added under this paragraph shall not exceed the taxpayer's liability for tax less the
credit under this section for the taxable year.
new text end

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for taxable years beginning after
December 31, 2011.
new text end

Sec. 12.

Minnesota Statutes 2010, section 290.06, is amended by adding a subdivision
to read:

new text begin Subd. 37. new text end

new text begin Credit; technology corporate franchise tax certificate transfer.
new text end

new text begin A taxpayer may take a credit against the tax imposed under subdivision 1 or section
290.0921 equal to the amount of the transferable tax benefits certified to the taxpayer for
the taxable year by the commissioner of employment and economic development under
section 116J.8738. This credit is allowed against the liability for tax of any member of the
unitary business that is included in the combined report of the taxpayer.
new text end

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for taxable years beginning after
December 31, 2011.
new text end

Sec. 13.

Minnesota Statutes 2010, section 290.06, is amended by adding a subdivision
to read:

new text begin Subd. 38. new text end

new text begin Property tax credit. new text end

new text begin (a) A credit is allowed against the taxes imposed
under subdivision 1 and section 290.0921 for the taxable year equal to the lesser of:
new text end

new text begin (1) ad valorem property tax paid on real property, located in this state and owned by
a legal entity that is part of the unitary business, as defined in section 290.17, subdivision
4, paid during the taxable year; or
new text end

new text begin (2) 7.84 percent of the Minnesota foreign operating corporation income of the
unitary business for the taxable year.
new text end

new text begin (b) For purposes of this subdivision, "foreign operating corporation income of the
unitary business" means the sum of the amounts of federal taxable income, as modified
by the provisions of paragraph (c), of all of the foreign operating corporations that are
part of the unitary business that is:
new text end

new text begin (1) derived from sources without the United States, as defined in subtitle A, chapter
1, subchapter N, part 1, of the Internal Revenue Code; and
new text end

new text begin (2) attributable to the active conduct of a trade or business in a foreign country.
new text end

new text begin (c) Foreign operating corporation income must be decreased by the following
amounts to the extent that they were reflected in the computation of the amount of federal
taxable income used in paragraph (b):
new text end

new text begin (1) an amount equal to the interest and intangible expenses, losses, and costs paid,
accrued, or incurred by any member of the taxpayer's unitary group to or for the benefit
of a foreign operating corporation that is a member of the unitary business group. For
purposes of this clause, intangible expenses and costs include:
new text end

new text begin (i) expenses, losses, and costs for, or related to, the direct or indirect acquisition,
use, maintenance or management, ownership, sale, exchange, or any other disposition of
intangible property;
new text end

new text begin (ii) losses incurred, directly or indirectly, from factoring transactions or discounting
transactions;
new text end

new text begin (iii) royalty, patent, technical, and copyright fees;
new text end

new text begin (iv) licensing fees; and
new text end

new text begin (v) other similar expenses and costs.
new text end

new text begin This clause does not apply to any item of interest or intangible expenses or costs paid,
accrued, or incurred, directly or indirectly, to a foreign operating corporation with respect
to such item of income to the extent that the income to the foreign operating corporation
is income from sources without the United States as defined in subtitle A, chapter 1,
subchapter N, part 1, of the Internal Revenue Code;
new text end

new text begin (2) except as already excluded in the taxpayer's taxable income under clause (1), any
interest income and income generated from intangible property received or accrued by a
foreign operating corporation that is a member of the unitary business group. For purposes
of this clause, income generated from intangible property includes:
new text end

new text begin (i) income related to the direct or indirect acquisition, use, maintenance or
management, ownership, sale, exchange, or any other disposition of intangible property;
new text end

new text begin (ii) income from factoring transactions or discounting transactions;
new text end

new text begin (iii) royalty, patent, technical, and copyright fees;
new text end

new text begin (iv) licensing fees; and
new text end

new text begin (v) other similar income.
new text end

new text begin For purposes of this clause, "intangible property" includes stocks, bonds, patents, patent
applications, trade names, trademarks, service marks, copyrights, mask works, trade
secrets, and similar types of intangible assets. This clause does not apply to any item
of interest or intangible income received or accrued by a foreign operating corporation
with respect to such item of income to the extent that the income is income from sources
without the United States as defined in subtitle A, chapter 1, subchapter N, part 1, of
the Internal Revenue Code; and
new text end

new text begin (3) the income of a foreign operating corporation that is a member of the taxpayer's
unitary group in an amount that is equal to gains derived from the sale of real or personal
property located in the United States.
new text end

new text begin (d) For purposes of this subdivision, "Minnesota foreign operating corporation
income of the unitary business" means foreign operating company income of the unitary
business multiplied by a percentage equal to the apportionment percentage for the taxable
year, determined under section 290.191, but computed using the factors of the entire
unitary business group and excluding from the numerator factors of entities that are not
taxable in this state.
new text end

new text begin (e) The unitary business may allocate the credit under this subdivision among the
legal entities that are members of its group, but the total amount of the credit under this
subdivision cannot the exceed the liability for tax for the taxable year under sections
290.06, subdivision 1, and 290.0921.
new text end

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for taxable years beginning after
December 31, 2011.
new text end

Sec. 14.

Minnesota Statutes 2010, section 290.068, subdivision 1, is amended to read:

Subdivision 1.

Credit allowed.

A corporation, partners in a partnership, or
shareholders in a corporation treated as an "S" corporation under section 290.9725 are
allowed a credit against the tax computed under this chapter for the taxable year equal to:

(a) ten percent of the first $2,000,000 of the excess (if any) of

(1) the qualified research expenses for the taxable year, over

(2) the base amount; and

(b) deleted text begin 2.5 deleted text end new text begin 4.5 new text end percent on all of such excess expenses over $2,000,000.

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for taxable years beginning after
December 31, 2011.
new text end

Sec. 15.

Minnesota Statutes 2010, section 290.17, subdivision 4, is amended to read:

Subd. 4.

Unitary business principle.

(a) If a trade or business conducted wholly
within this state or partly within and partly without this state is part of a unitary business,
the entire income of the unitary business is subject to apportionment pursuant to section
290.191. Notwithstanding subdivision 2, paragraph (c), none of the income of a unitary
business is considered to be derived from any particular source and none may be allocated
to a particular place except as provided by the applicable apportionment formula. The
provisions of this subdivision do not apply to business income subject to subdivision 5,
income of an insurance company, or income of an investment company determined under
section 290.36.

(b) The term "unitary business" means business activities or operations which
result in a flow of value between them. The term may be applied within a single legal
entity or between multiple entities and without regard to whether each entity is a sole
proprietorship, a corporation, a partnership or a trust.

(c) Unity is presumed whenever there is unity of ownership, operation, and use,
evidenced by centralized management or executive force, centralized purchasing,
advertising, accounting, or other controlled interaction, but the absence of these
centralized activities will not necessarily evidence a nonunitary business. Unity is also
presumed when business activities or operations are of mutual benefit, dependent upon or
contributory to one another, either individually or as a group.

(d) Where a business operation conducted in Minnesota is owned by a business
entity that carries on business activity outside the state different in kind from that
conducted within this state, and the other business is conducted entirely outside the state, it
is presumed that the two business operations are unitary in nature, interrelated, connected,
and interdependent unless it can be shown to the contrary.

(e) Unity of ownership is not deemed to exist when a corporation is involved unless
that corporation is a member of a group of two or more business entities and more than 50
percent of the voting stock of each member of the group is directly or indirectly owned
by a common owner or by common owners, either corporate or noncorporate, or by one
or more of the member corporations of the group. For this purpose, the term "voting
stock" shall include membership interests of mutual insurance holding companies formed
under section 66A.40.

(f) The net income and apportionment factors under section 290.191 or 290.20 of
foreign corporations and other foreign entities which are part of a unitary business shall
not be included in the net income or the apportionment factors of the unitary business.
A foreign corporation or other foreign entity which is required to file a return under this
chapter shall file on a separate return basis. deleted text begin The net income and apportionment factors
under section 290.191 or 290.20 of foreign operating corporations shall not be included in
the net income or the apportionment factors of the unitary business except as provided in
paragraph (g).
deleted text end

deleted text begin (g) The adjusted net income of a foreign operating corporation shall be deemed to
be paid as a dividend on the last day of its taxable year to each shareholder thereof, in
proportion to each shareholder's ownership, with which such corporation is engaged in
a unitary business. Such deemed dividend shall be treated as a dividend under section
290.21, subdivision 4.
deleted text end

deleted text begin Dividends actually paid by a foreign operating corporation to a corporate shareholder
which is a member of the same unitary business as the foreign operating corporation shall
be eliminated from the net income of the unitary business in preparing a combined report
for the unitary business. The adjusted net income of a foreign operating corporation
shall be its net income adjusted as follows:
deleted text end

deleted text begin (1) any taxes paid or accrued to a foreign country, the commonwealth of Puerto
Rico, or a United States possession or political subdivision of any of the foregoing shall
be a deduction; and
deleted text end

deleted text begin (2) the subtraction from federal taxable income for payments received from foreign
corporations or foreign operating corporations under section 290.01, subdivision 19d,
clause (10), shall not be allowed.
deleted text end

deleted text begin If a foreign operating corporation incurs a net loss, neither income nor deduction
from that corporation shall be included in determining the net income of the unitary
business.
deleted text end

deleted text begin (h) deleted text end new text begin (g) new text end For purposes of determining the net income of a unitary business and the
factors to be used in the apportionment of net income pursuant to section 290.191 or
290.20, there must be included only the income and apportionment factors of domestic
corporations or other domestic entities deleted text begin other than foreign operating corporations deleted text end that are
determined to be part of the unitary business pursuant to this subdivision, notwithstanding
that foreign corporations or other foreign entities might be included in the unitary business.

deleted text begin (i) deleted text end new text begin (h) new text end Deductions for expenses, interest, or taxes otherwise allowable under
this chapter that are connected with or allocable against dividends deleted text begin , deemed dividends
described in paragraph (g), deleted text end or royalties, fees, or other like income described in section
290.01, subdivision 19d, clause (10), shall not be disallowed.

deleted text begin (j) deleted text end new text begin (i) new text end Each corporation or other entity, except a sole proprietorship, that is part of
a unitary business must file combined reports as the commissioner determines. On the
reports, all intercompany transactions between entities included pursuant to paragraph
deleted text begin (h) deleted text end new text begin (g) new text end must be eliminated and the entire net income of the unitary business determined in
accordance with this subdivision is apportioned among the entities by using each entity's
Minnesota factors for apportionment purposes in the numerators of the apportionment
formula and the total factors for apportionment purposes of all entities included pursuant
to paragraph deleted text begin (h) deleted text end new text begin (g) new text end in the denominators of the apportionment formula.

deleted text begin (k) deleted text end new text begin (j) new text end If a corporation has been divested from a unitary business and is included in a
combined report for a fractional part of the common accounting period of the combined
report:

(1) its income includable in the combined report is its income incurred for that part
of the year determined by proration or separate accounting; and

(2) its sales, property, and payroll included in the apportionment formula must
be prorated or accounted for separately.

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for returns filed for taxable years
beginning after December 31, 2011.
new text end

Sec. 16.

Minnesota Statutes 2010, section 290.21, subdivision 4, is amended to read:

Subd. 4.

Dividends received from another corporation.

(a)(1) Eighty percent
of dividends received by a corporation during the taxable year from another corporation,
in which the recipient owns 20 percent or more of the stock, by vote and value, not
including stock described in section 1504(a)(4) of the Internal Revenue Code when the
corporate stock with respect to which dividends are paid does not constitute the stock in
trade of the taxpayer or would not be included in the inventory of the taxpayer, or does not
constitute property held by the taxpayer primarily for sale to customers in the ordinary
course of the taxpayer's trade or business, or when the trade or business of the taxpayer
does not consist principally of the holding of the stocks and the collection of the income
and gains therefrom; and

(2)(i) the remaining 20 percent of dividends if the dividends received are the stock in
an affiliated company transferred in an overall plan of reorganization and the dividend
is eliminated in consolidation under Treasury Department Regulation 1.1502-14(a), as
amended through December 31, 1989;

(ii) the remaining 20 percent of dividends if the dividends are received from a
corporation which is subject to tax under section 290.36 and which is a member of an
affiliated group of corporations as defined by the Internal Revenue Code and the dividend
is eliminated in consolidation under Treasury Department Regulation 1.1502-14(a), as
amended through December 31, 1989, or is deducted under an election under section
243(b) of the Internal Revenue Code; or

(iii) the remaining 20 percent of the dividends if the dividends are received from a
property and casualty insurer as defined under section 60A.60, subdivision 8, which is a
member of an affiliated group of corporations as defined by the Internal Revenue Code
and either: (A) the dividend is eliminated in consolidation under Treasury Regulation
1.1502-14(a), as amended through December 31, 1989; or (B) the dividend is deducted
under an election under section 243(b) of the Internal Revenue Code.

(b) Seventy percent of dividends received by a corporation during the taxable year
from another corporation in which the recipient owns less than 20 percent of the stock,
by vote or value, not including stock described in section 1504(a)(4) of the Internal
Revenue Code when the corporate stock with respect to which dividends are paid does not
constitute the stock in trade of the taxpayer, or does not constitute property held by the
taxpayer primarily for sale to customers in the ordinary course of the taxpayer's trade or
business, or when the trade or business of the taxpayer does not consist principally of the
holding of the stocks and the collection of income and gain therefrom.

(c) The dividend deduction provided in this subdivision shall be allowed only with
respect to dividends that are included in a corporation's Minnesota taxable net income
for the taxable year.

The dividend deduction provided in this subdivision does not apply to a dividend
from a corporation which, for the taxable year of the corporation in which the distribution
is made or for the next preceding taxable year of the corporation, is a corporation exempt
from tax under section 501 of the Internal Revenue Code.

new text begin The dividend deduction provided in this subdivision does not apply to a dividend
received from a real estate investment trust, as defined in section 856 of the Internal
Revenue Code.
new text end

The dividend deduction provided in this subdivision applies to the amount of
regulated investment company dividends only to the extent determined under section
854(b) of the Internal Revenue Code.

The dividend deduction provided in this subdivision shall not be allowed with
respect to any dividend for which a deduction is not allowed under the provisions of
section 246(c) of the Internal Revenue Code.

(d) If dividends received by a corporation that does not have nexus with Minnesota
under the provisions of Public Law 86-272 are included as income on the return of
an affiliated corporation permitted or required to file a combined report under section
290.17, subdivision 4, or 290.34, subdivision 2, then for purposes of this subdivision the
determination as to whether the trade or business of the corporation consists principally
of the holding of stocks and the collection of income and gains therefrom shall be made
with reference to the trade or business of the affiliated corporation having a nexus with
Minnesota.

(e) The deduction provided by this subdivision does not apply if the dividends are
paid by a FSC as defined in section 922 of the Internal Revenue Code.

(f) If one or more of the members of the unitary group whose income is included on
the combined report received a dividend, the deduction under this subdivision for each
member of the unitary business required to file a return under this chapter is the product
of: (1) 100 percent of the dividends received by members of the group; (2) the percentage
allowed pursuant to paragraph (a) or (b); and (3) the percentage of the taxpayer's business
income apportionable to this state for the taxable year under section 290.191 or 290.20.

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for taxable years beginning after
December 31, 2011.
new text end

Sec. 17. new text begin REPEALER.
new text end

new text begin Minnesota Statutes 2010, section 290.0921, subdivision 7, new text end new text begin is repealed.
new text end

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for returns filed for taxable years
beginning after December 31, 2011.
new text end

ARTICLE 3

SALES AND USE TAXES

Section 1.

Minnesota Statutes 2010, section 289A.20, subdivision 4, is amended to
read:

Subd. 4.

Sales and use tax.

(a) The taxes imposed by chapter 297A are due and
payable to the commissioner monthly on or before the 20th day of the month following
the month in which the taxable event occurred, or following another reporting period
as the commissioner prescribes or as allowed under section 289A.18, subdivision 4,
paragraph (f) or (g), except that deleted text begin :
deleted text end

deleted text begin (1) deleted text end use taxes due on an annual use tax return as provided under section 289A.11,
subdivision 1, are payable by April 15 following the close of the calendar year deleted text begin ; and deleted text end new text begin .
new text end

deleted text begin (2) except as provided in paragraph (f), for a vendor having a liability of $120,000
or more during a fiscal year ending June 30, 2009, and fiscal years thereafter, the taxes
imposed by chapter 297A, except as provided in paragraph (b), are due and payable to the
commissioner monthly in the following manner:
deleted text end

deleted text begin (i) On or before the 14th day of the month following the month in which the taxable
event occurred, the vendor must remit to the commissioner 90 percent of the estimated
liability for the month in which the taxable event occurred.
deleted text end

deleted text begin (ii) On or before the 20th day of the month in which the taxable event occurs, the
vendor must remit to the commissioner a prepayment for the month in which the taxable
event occurs equal to 67 percent of the liability for the previous month.
deleted text end

deleted text begin (iii) On or before the 20th day of the month following the month in which the taxable
event occurred, the vendor must pay any additional amount of tax not previously remitted
under either item (i) or (ii ) or, if the payment made under item (i) or (ii) was greater than
the vendor's liability for the month in which the taxable event occurred, the vendor may
take a credit against the next month's liability in a manner prescribed by the commissioner.
deleted text end

deleted text begin (iv) Once the vendor first pays under either item (i) or (ii), the vendor is required to
continue to make payments in the same manner, as long as the vendor continues having a
liability of $120,000 or more during the most recent fiscal year ending June 30.
deleted text end

deleted text begin (v) Notwithstanding items (i), (ii), and (iv), if a vendor fails to make the required
payment in the first month that the vendor is required to make a payment under either item
(i) or (ii), then the vendor is deemed to have elected to pay under item (ii) and must make
subsequent monthly payments in the manner provided in item (ii).
deleted text end

deleted text begin (vi) For vendors making an accelerated payment under item (ii), for the first month
that the vendor is required to make the accelerated payment, on the 20th of that month, the
vendor will pay 100 percent of the liability for the previous month and a prepayment for
the first month equal to 67 percent of the liability for the previous month.
deleted text end

(b) deleted text begin Notwithstanding paragraph (a), deleted text end A vendor having a liability of $120,000 or more
during a fiscal year ending June 30 must remit the June liability for the next year in the
following manner:

(1) Two business days before June 30 of the year, the vendor must remit 90 percent
of the estimated June liability to the commissioner.

(2) On or before August 20 of the year, the vendor must pay any additional amount
of tax not remitted in June.

(c) A vendor having a liability of:

(1) $10,000 or more, but less than $120,000 during a fiscal year ending June 30,
2009, and fiscal years thereafter, must remit by electronic means all liabilities on returns
due for periods beginning in the subsequent calendar year on or before the 20th day of
the month following the month in which the taxable event occurred, or on or before the
20th day of the month following the month in which the sale is reported under section
289A.18, subdivision 4; or

(2) $120,000 or more, during a fiscal year ending June 30, 2009, and fiscal years
thereafter, must remit by electronic means all liabilities in the manner provided in
paragraph (a) deleted text begin , clause (2), deleted text end on returns due for periods beginning in the subsequent calendar
year, except for 90 percent of the estimated June liability, which is due two business days
before June 30. The remaining amount of the June liability is due on August 20.

(d) Notwithstanding paragraph (b) or (c), a person prohibited by the person's
religious beliefs from paying electronically shall be allowed to remit the payment by mail.
The filer must notify the commissioner of revenue of the intent to pay by mail before
doing so on a form prescribed by the commissioner. No extra fee may be charged to a
person making payment by mail under this paragraph. The payment must be postmarked
at least two business days before the due date for making the payment in order to be
considered paid on a timely basis.

deleted text begin (e) Whenever the liability is $120,000 or more separately for: (1) the tax imposed
under chapter 297A; (2) a fee that is to be reported on the same return as and paid with the
chapter 297A taxes; or (3) any other tax that is to be reported on the same return as and
paid with the chapter 297A taxes, then the payment of all the liabilities on the return must
be accelerated as provided in this subdivision.
deleted text end

deleted text begin (f) At the start of the first calendar quarter at least 90 days after the cash flow
account established in section 16A.152, subdivision 1, and the budget reserve account
established in section 16A.152, subdivision 1a, reach the amounts listed in section
16A.152, subdivision 2, paragraph (a), the remittance of the accelerated payments required
under paragraph (a), clause (2), must be suspended. The commissioner of management
and budget shall notify the commissioner of revenue when the accounts have reached
the required amounts. Beginning with the suspension of paragraph (a), clause (2), for a
vendor with a liability of $120,000 or more during a fiscal year ending June 30, 2009,
and fiscal years thereafter, the taxes imposed by chapter 297A are due and payable to the
commissioner on the 20th day of the month following the month in which the taxable
event occurred. Payments of tax liabilities for taxable events occurring in June under
paragraph (b) are not changed.
deleted text end

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for taxes due and payable after
July 1, 2012.
new text end

Sec. 2.

Minnesota Statutes 2010, section 297A.68, subdivision 5, is amended to read:

Subd. 5.

Capital equipment.

(a) Capital equipment is exempt. new text begin Except as provided
in paragraph (e), new text end the tax must be imposed and collected as if the rate under section
297A.62, subdivision 1, applied, and then refunded in the manner provided in section
297A.75.

"Capital equipment" means machinery and equipment purchased or leased, and used
in this state by the purchaser or lessee primarily for manufacturing, fabricating, mining,
or refining tangible personal property to be sold ultimately at retail if the machinery and
equipment are essential to the integrated production process of manufacturing, fabricating,
mining, or refining. Capital equipment also includes machinery and equipment
used primarily to electronically transmit results retrieved by a customer of an online
computerized data retrieval system.

(b) Capital equipment includes, but is not limited to:

(1) machinery and equipment used to operate, control, or regulate the production
equipment;

(2) machinery and equipment used for research and development, design, quality
control, and testing activities;

(3) environmental control devices that are used to maintain conditions such as
temperature, humidity, light, or air pressure when those conditions are essential to and are
part of the production process;

(4) materials and supplies used to construct and install machinery or equipment;

(5) repair and replacement parts, including accessories, whether purchased as spare
parts, repair parts, or as upgrades or modifications to machinery or equipment;

(6) materials used for foundations that support machinery or equipment;

(7) materials used to construct and install special purpose buildings used in the
production process;

(8) ready-mixed concrete equipment in which the ready-mixed concrete is mixed
as part of the delivery process regardless if mounted on a chassis, repair parts for
ready-mixed concrete trucks, and leases of ready-mixed concrete trucks; and

(9) machinery or equipment used for research, development, design, or production
of computer software.

(c) Capital equipment does not include the following:

(1) motor vehicles taxed under chapter 297B;

(2) machinery or equipment used to receive or store raw materials;

(3) building materials, except for materials included in paragraph (b), clauses (6)
and (7);

(4) machinery or equipment used for nonproduction purposes, including, but not
limited to, the following: plant security, fire prevention, first aid, and hospital stations;
support operations or administration; pollution control; and plant cleaning, disposal of
scrap and waste, plant communications, space heating, cooling, lighting, or safety;

(5) farm machinery and aquaculture production equipment as defined by section
297A.61, subdivisions 12 and 13;

(6) machinery or equipment purchased and installed by a contractor as part of an
improvement to real property;

(7) machinery and equipment used by restaurants in the furnishing, preparing, or
serving of prepared foods as defined in section 297A.61, subdivision 31;

(8) machinery and equipment used to furnish the services listed in section 297A.61,
subdivision 3, paragraph (g), clause (6), items (i) to (vi) and (viii);

(9) machinery or equipment used in the transportation, transmission, or distribution
of petroleum, liquefied gas, natural gas, water, or steam, in, by, or through pipes, lines,
tanks, mains, or other means of transporting those products. This clause does not apply to
machinery or equipment used to blend petroleum or biodiesel fuel as defined in section
239.77; or

(10) any other item that is not essential to the integrated process of manufacturing,
fabricating, mining, or refining.

(d) For purposes of this subdivision:

(1) "Equipment" means independent devices or tools separate from machinery but
essential to an integrated production process, including computers and computer software,
used in operating, controlling, or regulating machinery and equipment; and any subunit or
assembly comprising a component of any machinery or accessory or attachment parts of
machinery, such as tools, dies, jigs, patterns, and molds.

(2) "Fabricating" means to make, build, create, produce, or assemble components or
property to work in a new or different manner.

(3) "Integrated production process" means a process or series of operations through
which tangible personal property is manufactured, fabricated, mined, or refined. For
purposes of this clause, (i) manufacturing begins with the removal of raw materials
from inventory and ends when the last process prior to loading for shipment has been
completed; (ii) fabricating begins with the removal from storage or inventory of the
property to be assembled, processed, altered, or modified and ends with the creation
or production of the new or changed product; (iii) mining begins with the removal of
overburden from the site of the ores, minerals, stone, peat deposit, or surface materials and
ends when the last process before stockpiling is completed; and (iv) refining begins with
the removal from inventory or storage of a natural resource and ends with the conversion
of the item to its completed form.

(4) "Machinery" means mechanical, electronic, or electrical devices, including
computers and computer software, that are purchased or constructed to be used for the
activities set forth in paragraph (a), beginning with the removal of raw materials from
inventory through completion of the product, including packaging of the product.

(5) "Machinery and equipment used for pollution control" means machinery and
equipment used solely to eliminate, prevent, or reduce pollution resulting from an activity
described in paragraph (a).

(6) "Manufacturing" means an operation or series of operations where raw materials
are changed in form, composition, or condition by machinery and equipment and which
results in the production of a new article of tangible personal property. For purposes of
this subdivision, "manufacturing" includes the generation of electricity or steam to be
sold at retail.

(7) "Mining" means the extraction of minerals, ores, stone, or peat.

(8) "Online data retrieval system" means a system whose cumulation of information
is equally available and accessible to all its customers.

(9) "Primarily" means machinery and equipment used 50 percent or more of the time
in an activity described in paragraph (a).

(10) "Refining" means the process of converting a natural resource to an intermediate
or finished product, including the treatment of water to be sold at retail.

(11) This subdivision does not apply to telecommunications equipment as
provided in subdivision 35, and does not apply to wire, cable, fiber, poles, or conduit
for telecommunications services.

new text begin (e) Materials exempt under this section may be purchased without imposing and
collecting the tax and applying for a refund under section 297A.75 if the purchaser is a
small business, as defined under section 645.445.
new text end

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for sales and purchases made after
June 30, 2012.
new text end

Sec. 3.

Minnesota Statutes 2010, section 297A.70, subdivision 4, is amended to read:

Subd. 4.

Sales to nonprofit groups.

(a) All sales, except those listed in paragraph
(b), to the following "nonprofit organizations" are exempt:

(1) a corporation, society, association, foundation, or institution organized and
operated exclusively for charitable, religious, or educational purposes if the item
purchased is used in the performance of charitable, religious, or educational functions; and

(2) any senior citizen group or association of groups that:

(i) in general limits membership to persons who are either age 55 or older, or
physically disabled;

(ii) is organized and operated exclusively for pleasure, recreation, and other
nonprofit purposes, not including housing, no part of the net earnings of which inures to
the benefit of any private shareholders; and

(iii) is an exempt organization under section 501(c) of the Internal Revenue Code.

For purposes of this subdivision, charitable purpose includes the maintenance of a
cemetery owned by a religious organization.

(b) This exemption does not apply to the following sales:

(1) building, construction, or reconstruction materials purchased by a contractor
or a subcontractor as a part of a lump-sum contract or similar type of contract with a
guaranteed maximum price covering both labor and materials for use in the construction,
alteration, or repair of a building or facility;

(2) construction materials purchased by tax-exempt entities or their contractors to
be used in constructing buildings or facilities that will not be used principally by the
tax-exempt entities; and

(3) lodging as defined under section 297A.61, subdivision 3, paragraph (g), clause
(2), and prepared food, candy, soft drinks, and alcoholic beverages as defined in section
297A.67, subdivision 2, except wine purchased by an established religious organization
for sacramental purposes new text begin or as allowed under subdivision 9a new text end ; and

(4) leasing of a motor vehicle as defined in section 297B.01, subdivision 11, except
as provided in paragraph (c).

(c) This exemption applies to the leasing of a motor vehicle as defined in section
297B.01, subdivision 11, only if the vehicle is:

(1) a truck, as defined in section 168.002, a bus, as defined in section 168.002, or a
passenger automobile, as defined in section 168.002, if the automobile is designed and
used for carrying more than nine persons including the driver; and

(2) intended to be used primarily to transport tangible personal property or
individuals, other than employees, to whom the organization provides service in
performing its charitable, religious, or educational purpose.

(d) A limited liability company also qualifies for exemption under this subdivision if
(1) it consists of a sole member that would qualify for the exemption, and (2) the items
purchased qualify for the exemption.

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for sales and purchases made after
June 30, 2012.
new text end

Sec. 4.

Minnesota Statutes 2010, section 297A.70, is amended by adding a subdivision
to read:

new text begin Subd. 9a. new text end

new text begin Established religious orders. new text end

new text begin Sales of lodging, prepared food, candy,
soft drinks, and alcoholic beverages at noncatered events between an established religious
order and an affiliated institution of higher education are exempt. For purposes of this
subdivision, an institution of higher education is "affiliated" with an established religious
order if members of the religious order are represented on the governing board of the
institution of higher education and the two organization share campus space and common
facilities.
new text end

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for sales and purchases made after
June 30, 2012.
new text end

Sec. 5.

Laws 1998, chapter 389, article 8, section 43, subdivision 3, as amended by
Laws 2005, First Special Session chapter 3, article 5, section 28, and Laws 2011, First
Special Session chapter 7, article 4, section 5, is amended to read:

Subd. 3.

Use of revenues.

(a) Revenues received from the taxes authorized by
subdivisions 1 and 2 must be used by the city to pay for the cost of collecting and
administering the taxes and to pay for the following projects:

(1) transportation infrastructure improvements including regional highway and
airport improvements;

(2) improvements to the civic center complex;

(3) a municipal water, sewer, and storm sewer project necessary to improve regional
ground water quality; and

(4) construction of a regional recreation and sports center and other higher education
facilities available for both community and student use.

(b) The total amount of capital expenditures or bonds for projects listed in paragraph
(a) that may be paid from the revenues raised from the taxes authorized in this section
may not exceed $111,500,000. The total amount of capital expenditures or bonds for the
project in clause (4) that may be paid from the revenues raised from the taxes authorized
in this section may not exceed $28,000,000.

(c) In addition to the projects authorized in paragraph (a) and not subject to the
amount stated in paragraph (b), the city of Rochester may, if approved by the voters at an
election under subdivision 5, paragraph (c), use the revenues received from the taxes and
bonds authorized in this section to pay the costs of or bonds for the following purposes:

(1) $17,000,000 for capital expenditures and bonds for the following Olmsted
County transportation infrastructure improvements:

(i) County State Aid Highway 34 reconstruction;

(ii) Trunk Highway 63 and County State Aid Highway 16 interchange;

(iii) phase II of the Trunk Highway 52 and County State Aid Highway 22
interchange;

(iv) widening of County State Aid Highway 22 West Circle Drive; and

(v) 60th Avenue Northwest corridor preservation;

(2) $30,000,000 for city transportation projects including:

(i) Trunk Highway 52 and 65th Street interchange;

(ii) NW transportation corridor acquisition;

(iii) Phase I of the Trunk Highway 52 and County State Aid Highway 22 interchange;

(iv) Trunk Highway 14 and Trunk Highway 63 intersection;

(v) Southeast transportation corridor acquisition;

(vi) Rochester International Airport expansion; and

(vii) a transit operations center bus facility;

(3) $14,000,000 for the University of Minnesota Rochester academic and
complementary facilities;

(4) $6,500,000 for the Rochester Community and Technical College/Winona State
University career technical education and science and math facilities;

(5) $6,000,000 for the Rochester Community and Technical College regional
recreation facilities at University Center Rochester;

(6) $20,000,000 for the Destination Medical Community Initiative;

(7) $8,000,000 for the regional public safety and 911 dispatch center facilities;

(8) $20,000,000 for a regional recreation/senior center;

(9) $10,000,000 for an economic development fund; and

(10) $8,000,000 for downtown infrastructure.

(d) No revenues from the taxes raised from the taxes authorized in subdivisions 1
and 2 may be used to fund transportation improvements related to a railroad bypass that
would divert traffic from the city of Rochester.

(e) The city shall use $5,000,000 of the money allocated to the purpose in paragraph
(c), clause (9), for grants to the cities of Byron, Chatfield, Dodge Center, Dover, Elgin,
Eyota, Kasson, Mantorville, Oronoco, Pine Island, Plainview, St. Charles, Stewartville,
Zumbrota, Spring Valley, West Concord, deleted text begin and deleted text end Hayfield new text begin , and any other city with a 2010
population of at least 1,000 that has a city boundary within 25 miles of the geographic
center of Rochester and is closer to Rochester than to any other city located wholly
outside of the seven-county metropolitan area with a population of 20,000 or more, new text end
for economic development projects that these communities would fund through their
economic development authority or housing and redevelopment authority.

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective the day following final enactment.
new text end

Sec. 6.

Laws 2002, chapter 377, article 3, section 25, as amended by Laws 2009,
chapter 88, article 4, section 19, and Laws 2010, chapter 389, article 5, section 3, is
amended to read:

Sec. 25. ROCHESTER LODGING TAX.

Subdivision 1.

Authorization.

Notwithstanding Minnesota Statutes, section
469.190 or 477A.016, or any other law, the city of Rochester may impose an additional
tax of one percent on the gross receipts from the furnishing for consideration of lodging at
a hotel, motel, rooming house, tourist court, or resort, other than the renting or leasing of it
for a continuous period of 30 days or more.

Subd. 1a.

Authorization.

Notwithstanding Minnesota Statutes, section 469.190
or 477A.016, or any other law, and in addition to the tax authorized by subdivision 1,
the city of Rochester may impose an additional tax of deleted text begin one deleted text end new text begin three new text end percent on the gross
receipts from the furnishing for consideration of lodging at a hotel, motel, rooming house,
tourist court, or resort, other than the renting or leasing of it for a continuous period of
30 days or more only upon the approval of the city governing body of a total financial
package for the project.

Subd. 2.

Disposition of proceeds.

(a) The gross proceeds from the tax imposed
under subdivision 1 must be used by the city to fund a local convention or tourism bureau
for the purpose of marketing and promoting the city as a tourist or convention center.

(b) The gross proceeds from the deleted text begin one deleted text end new text begin three new text end percent tax imposed under subdivision
1a shall be used to pay for (1) construction, renovation, improvement, and expansion of
the Mayo Civic Center and related skyway access, lighting, parking, or landscaping; and
(2) for payment of any principal, interest, or premium on bonds issued to finance the
construction, renovation, improvement, and expansion of the Mayo Civic Center Complex.

Subd. 2a.

Bonds.

The city of Rochester may issue, without an election, general
obligation bonds of the city, in one or more series, in the aggregate principal amount
not to exceed $43,500,000, to pay for capital and administrative costs for the design,
construction, renovation, improvement, and expansion of the Mayo Civic Center Complex,
and related skyway, access, lighting, parking, and landscaping. The city may pledge
the lodging tax authorized by subdivision 1a deleted text begin and the food and beverage tax authorized
under Laws 2009, chapter 88, article 4, section 23, deleted text end to the payment of the bonds. The debt
represented by the bonds is not included in computing any debt limitations applicable to
the city, and the levy of taxes required by Minnesota Statutes, section 475.61, to pay the
principal of and interest on the bonds is not subject to any levy limitation or included in
computing or applying any levy limitation applicable to the city.

Subd. 3.

Expiration of taxing authority.

The authority of the city to impose a
tax under subdivision 1a shall expire when the principal and interest on any bonds or
other obligations issued prior to December 31, deleted text begin 2014 deleted text end new text begin 2016 new text end , to finance the construction,
renovation, improvement, and expansion of the Mayo Civic Center Complex and related
skyway access, lighting, parking, or landscaping have been paid, including any bonds
issued to refund such bonds, or at an earlier time as the city shall, by ordinance, determine.
Any funds remaining after completion of the project and retirement or redemption of the
bonds shall be placed in the general fund of the city.

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective the day after the governing body of
the city of Rochester and its chief clerical officer comply with Minnesota Statutes, section
645.021, subdivisions 2 and 3.
new text end

Sec. 7.

Laws 2005, First Special Session chapter 3, article 5, section 37, subdivision 2,
is amended to read:

Subd. 2.

Use of revenues.

(a) Revenues received from the tax authorized by
subdivision 1 by the city of St. Cloud must be used for the cost of collecting and
administering the tax and to pay all or part of the capital or administrative costs of the
development, acquisition, construction, improvement, and securing and paying debt
service on bonds or other obligations issued to finance the following regional projects as
approved by the voters and specifically detailed in the referendum authorizing the tax new text begin or
extending the tax new text end :

(1) St. Cloud Regional Airport;

(2) regional transportation improvements;

(3) new text begin regional new text end community and aquatics centers new text begin and facilities new text end ;

(4) regional public libraries; and

(5) acquisition and improvement of regional park land and open space.

(b) Revenues received from the tax authorized by subdivision 1 by the cities of St.
Joseph, Waite Park, Sartell, Sauk Rapids, and St. Augusta must be used for the cost of
collecting and administering the tax and to pay all or part of the capital or administrative
costs of the development, acquisition, construction, improvement, and securing and paying
debt service on bonds or other obligations issued to fund the projects specifically approved
by the voters at the referendum authorizing the tax new text begin or extending the tax new text end . The portion of
revenues from the city going to fund the regional airport or regional library located in the
city of St. Cloud will be as required under the applicable joint powers agreement.

(c) The use of revenues received from the taxes authorized in subdivision 1 for
projects allowed under paragraphs (a) and (b) are limited to the amount authorized for
each project under the enabling referendum.

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for the city that approves them the
day after compliance by the governing body of each city with Minnesota Statutes, section
645.021, subdivision 3.
new text end

Sec. 8.

Laws 2005, First Special Session chapter 3, article 5, section 37, subdivision 4,
is amended to read:

Subd. 4.

Termination of tax.

The tax imposed in the cities of St. Joseph, St. Cloud,
St. Augusta, Sartell, Sauk Rapids, and Waite Park under subdivision 1 expires when the
city council determines that sufficient funds have been collected from the tax to retire or
redeem the bonds and obligations authorized under subdivision 2, paragraph (a), but no
later than December 31, 2018. new text begin Notwithstanding Minnesota Statutes, section 297A.99,
subdivision 3, paragraphs (a), (c), and (d), a city may extend the tax imposed under
subdivision 1 through December 31, 2038, if approved under the referendum authorizing
the tax under subdivision 1 or if approved by voters of the city at a general election held
no later than November 6, 2017.
new text end

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for the city that approves them the
day after compliance by the governing body of each city with Minnesota Statutes, section
645.021, subdivision 3.
new text end

Sec. 9.

Laws 2008, chapter 366, article 7, section 19, subdivision 3, as amended by
Laws 2011, First Special Session chapter 7, article 4, section 8, is amended to read:

Subd. 3.

Use of revenues.

Notwithstanding Minnesota Statutes, section 297A.99,
subdivision 3, paragraph (b), the proceeds of the tax imposed under this section shall be
used to pay for the costs of new text begin improvements to the Sportsman Park/Ballfields, Riverside
Park, Lions Park/Pavilion, Cedar South Park also known as Eldorado Park, and Spring
Street Park; improvements to and extension of the River County bike trail; new text end acquisition deleted text begin , deleted text end new text begin
and new text end construction deleted text begin , improvement, and development of regional parks, bicycle trails, park
land, open space, and deleted text end new text begin of a new text end pedestrian deleted text begin walkways, as described in the city improvement plan
adopted by the city council by resolution on December 12, 2006, and deleted text end new text begin walkway over
Interstate 94 and State Highway 24; and the acquisition of new text end land and new text begin construction of
new text end buildings for a community and recreation center. The total amount of revenues from the
taxes in subdivisions 1 and 2 that may be used to fund these projects is $12,000,000
plus any associated bond costs.

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective the day after compliance by the
governing body of the city of Clearwater with Minnesota Statutes, section 645.021,
subdivisions 2 and 3.
new text end

Sec. 10. new text begin REPEALER.
new text end

new text begin Minnesota Statutes 2011 Supplement, section 289A.60, subdivision 31, new text end new text begin and new text end new text begin Laws
2009, chapter 88, article 4, section 23, as amended by Laws 2010, chapter 389, article 5,
section 4, new text end new text begin are repealed.
new text end

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for taxes due and payable after
July 1, 2012.
new text end

ARTICLE 4

TAX INCREMENT FINANCING

Section 1.

Minnesota Statutes 2011 Supplement, section 469.176, subdivision 4c,
is amended to read:

Subd. 4c.

Economic development districts.

(a) Revenue derived from tax
increment from an economic development district may not be used to provide
improvements, loans, subsidies, grants, interest rate subsidies, or assistance in any form
to developments consisting of buildings and ancillary facilities, if more than 15 percent
of the buildings and facilities (determined on the basis of square footage) are used for a
purpose other than:

(1) the manufacturing or production of tangible personal property, including
processing resulting in the change in condition of the property;

(2) warehousing, storage, and distribution of tangible personal property, excluding
retail sales;

(3) research and development related to the activities listed in clause (1) or (2);

(4) telemarketing if that activity is the exclusive use of the property;

(5) tourism facilities;

(6) qualified border retail facilities; or

(7) space necessary for and related to the activities listed in clauses (1) to (6).

(b) Notwithstanding the provisions of this subdivision, revenues derived from tax
increment from an economic development district may be used to provide improvements,
loans, subsidies, grants, interest rate subsidies, or assistance in any form for up to 15,000
square feet of any separately owned commercial facility located within the municipal
jurisdiction of a small city, if the revenues derived from increments are spent only to
assist the facility directly or for administrative expenses, the assistance is necessary to
develop the facility, and all of the increments, except those for administrative expenses,
are spent only for activities within the district.

(c) A city is a small city for purposes of this subdivision if the city was a small city
in the year in which the request for certification was made and applies for the rest of
the duration of the district, regardless of whether the city qualifies or ceases to qualify
as a small city.

(d) Notwithstanding the requirements of paragraph (a) and the finding requirements
of section 469.174, subdivision 12, tax increments from an economic development district
may be used to provide improvements, loans, subsidies, grants, interest rate subsidies, or
assistance in any form to developments consisting of buildings and ancillary facilities, if
all the following conditions are met:

(1) the municipality finds that the project will create or retain jobs in this state,
including construction jobs, and that construction of the project would not have
commenced before deleted text begin July 1, 2012 deleted text end new text begin January 1, 2014 new text end , without the authority providing
assistance under the provisions of this paragraph;

(2) construction of the project begins no later than deleted text begin July 1, 2012 deleted text end new text begin January 1, 2014 new text end ;

(3) the request for certification of the district is made no later than deleted text begin June 30, 2012 deleted text end new text begin
December 31, 2013 new text end ; and

(4) for development of housing under this paragraph, the construction must begin
before January 1, 2012.

The provisions of this paragraph may not be used to assist housing that is developed
to qualify under section 469.1761, subdivision 2 or 3, or similar requirements of other law,
if construction of the project begins later than July 1, 2011.

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective the day following final enactment.
new text end

Sec. 2.

Minnesota Statutes 2011 Supplement, section 469.176, subdivision 4m, is
amended to read:

Subd. 4m.

Temporary authority to stimulate construction.

(a) Notwithstanding
the restrictions in any other subdivision of this section or any other law to the contrary,
except the requirement to pay bonds to which the increments are pledged and the
provisions of subdivisions 4g and 4h, the authority may spend tax increments for one or
more of the following purposes:

(1) to provide improvements, loans, interest rate subsidies, or assistance in any
form to private development consisting of the construction or substantial rehabilitation of
buildings and ancillary facilities, if doing so will create or retain jobs in this state, including
construction jobs, and that the construction commences before deleted text begin July 1, 2012 deleted text end new text begin January 1,
2014 new text end , and would not have commenced before that date without the assistance; or

(2) to make an equity or similar investment in a corporation, partnership, or limited
liability company that the authority determines is necessary to make construction of a
development that meets the requirements of clause (1) financially feasible.

(b) The authority may undertake actions under the authority of this subdivision only
after approval by the municipality of a written spending plan that specifically authorizes
the authority to take the actions. The municipality shall approve the spending plan only
after a public hearing after published notice in a newspaper of general circulation in
the municipality at least once, not less than ten days nor more than 30 days prior to the
date of the hearing.

(c) The authority to spend tax increments under this subdivision expires deleted text begin December
31, 2012 deleted text end new text begin June 30, 2014 new text end .

(d) For a development consisting of housing, the authority to spend tax increments
under this subdivision expires December 31, 2011, and construction must commence
before July 1, 2011, except the authority to spend tax increments on market rate housing
developments under this subdivision expires July 31, 2012, and construction must
commence before January 1, 2012.

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective the day following final enactment
and applies to all tax increment financing districts, regardless of when the request for
certification was made.
new text end

Sec. 3.

Minnesota Statutes 2011 Supplement, section 469.1763, subdivision 2, is
amended to read:

Subd. 2.

Expenditures outside district.

(a) For each tax increment financing
district, an amount equal to at least 75 percent of the total revenue derived from tax
increments paid by properties in the district must be expended on activities in the district
or to pay bonds, to the extent that the proceeds of the bonds were used to finance activities
in the district or to pay, or secure payment of, debt service on credit enhanced bonds.
For districts, other than redevelopment districts for which the request for certification
was made after June 30, 1995, the in-district percentage for purposes of the preceding
sentence is 80 percent. Not more than 25 percent of the total revenue derived from tax
increments paid by properties in the district may be expended, through a development fund
or otherwise, on activities outside of the district but within the defined geographic area of
the project except to pay, or secure payment of, debt service on credit enhanced bonds.
For districts, other than redevelopment districts for which the request for certification was
made after June 30, 1995, the pooling percentage for purposes of the preceding sentence is
20 percent. The revenue derived from tax increments for the district that are expended on
costs under section 469.176, subdivision 4h, paragraph (b), may be deducted first before
calculating the percentages that must be expended within and without the district.

(b) In the case of a housing district, a housing project, as defined in section 469.174,
subdivision 11, is an activity in the district.

(c) All administrative expenses are for activities outside of the district, except that
if the only expenses for activities outside of the district under this subdivision are for
the purposes described in paragraph (d), administrative expenses will be considered as
expenditures for activities in the district.

(d) The authority may elect, in the tax increment financing plan for the district,
to increase by up to ten percentage points the permitted amount of expenditures for
activities located outside the geographic area of the district under paragraph (a). As
permitted by section 469.176, subdivision 4k, the expenditures, including the permitted
expenditures under paragraph (a), need not be made within the geographic area of the
project. Expenditures that meet the requirements of this paragraph are legally permitted
expenditures of the district, notwithstanding section 469.176, subdivisions 4b, 4c, new text begin 4d, new text end and
4j. To qualify for the increase under this paragraph, the expenditures must:

(1) be used exclusively to assist housing that

new text begin (i) new text end meets the requirement for a qualified low-income building, as that term is used in
section 42 of the Internal Revenue Code; deleted text begin and
deleted text end

deleted text begin (2) deleted text end new text begin (ii) does new text end not exceed the qualified basis of the housing, as defined under section
42(c) of the Internal Revenue Code, less the amount of any credit allowed under section
42 of the Internal Revenue Code; and

deleted text begin (3) be deleted text end new text begin (iii) is new text end used to:

deleted text begin (i) deleted text end new text begin (A) new text end acquire and prepare the site of the housing;

deleted text begin (ii) deleted text end new text begin (B) new text end acquire, construct, or rehabilitate the housing; or

deleted text begin (iii) deleted text end new text begin (C) new text end make public improvements directly related to the housing; or

deleted text begin (4) deleted text end new text begin (2) new text end be used to develop housing:

(i) if the market value of the housing new text begin prior to demolition or rehabilitation new text end does
not exceed the lesser of:

(A) 150 percent of the average market value of single-family homes in that
municipality; or

(B) $200,000 for municipalities located in the metropolitan area, as defined in
section 473.121, or $125,000 for all other municipalities; and

(ii) if the expenditures are used to pay the cost of site acquisition, relocation,
demolition of existing structures, site preparation, new text begin rehabilitation, new text end and pollution abatement
on one or more parcels, if the parcel deleted text begin contains a residence containing deleted text end new text begin is occupied by new text end
one to four family dwelling units that has been vacant for six or more months and is in
foreclosure as defined in section 325N.10, subdivision 7, but without regard to whether the
residence is the owner's principal residence, and only after the redemption period stated
in the notice provided under section 580.06 has expired.

(e) For a district created within a biotechnology and health sciences industry zone
as defined in section 469.330, subdivision 6, or for an existing district located within
such a zone, tax increment derived from such a district may be expended outside of the
district but within the zone only for expenditures required for the construction of public
infrastructure necessary to support the activities of the zone, land acquisition, and other
redevelopment costs as defined in section 469.176, subdivision 4j. These expenditures are
considered as expenditures for activities within the district.

(f) The authority under paragraph (d), clause deleted text begin (4) deleted text end new text begin (2) new text end , expires on December 31, 2016.
Increments may continue to be expended under this authority after that date, if they are
used to pay bonds or binding contracts that would qualify under subdivision 3, paragraph
(a), if December 31, 2016, is considered to be the last date of the five-year period after
certification under that provision.

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for any district that is subject to the
provisions of Minnesota Statutes, section 469.1763, regardless of when the request for
certification was made.
new text end

Sec. 4.

Laws 2008, chapter 366, article 5, section 34, as amended by Laws 2009,
chapter 88, article 5, section 11, is amended to read:

Sec. 34. CITY OF OAKDALE; ORIGINAL TAX CAPACITY.

new text begin Subdivision 1. new text end

new text begin Original tax capacity election. new text end

(a) The provisions of this section
apply to redevelopment tax increment financing districts created by the Housing and
Redevelopment Authority in and for the city of Oakdale in the areas comprised of
the parcels with the following parcel identification numbers: (1) 3102921320053;
3102921320054; 3102921320055; 3102921320056; 3102921320057; 3102921320058;
3102921320062; 3102921320063; 3102921320059; 3102921320060; 3102921320061;
3102921330005; and 3102921330004; and (2) 2902921330001 and 2902921330005.

(b) For a district subject to this section, the Housing and Redevelopment Authority
may, when requesting certification of the original tax capacity of the district under
Minnesota Statutes, section 469.177, elect to have the original tax capacity of the district
be certified as the tax capacity of the land.

(c) The authority to request certification of a district under this section expires on
deleted text begin July 1, 2013 deleted text end new text begin December 31, 2015 new text end .

new text begin Subd. 2. new text end

new text begin Parcels deemed occupied. new text end

new text begin (a) Parcel numbers 3102921320054,
3102921320055, 3102921320056, 3102921320057, 3102921320061, and 3102921330004
are deemed to meet the requirements of Minnesota Statutes, section 469.174, subdivision
10, paragraph (d), notwithstanding any contrary provisions of that paragraph, if the
following conditions are met:
new text end

new text begin (1) a building located on any part of each of the specified parcels was demolished
after the authority adopted a resolution under Minnesota Statutes, section 469.174,
subdivision 10, paragraph (d), clause (3);
new text end

new text begin (2) the building was removed either by the authority, by a developer under a
development agreement with the authority, or by the owner of the property without
entering into a development agreement with the authority; and
new text end

new text begin (3) the request for certification of the parcel as part of a district is filed with the
county auditor by December 31, 2015.
new text end

new text begin (b) The provisions of subdivision 1 apply to allow an election by the authority
for the parcels deemed occupied under paragraph (a), notwithstanding the provisions
of Minnesota Statutes, sections 469.174, subdivision 10, paragraph (d), and 469.177,
subdivision 1, paragraph (f).
new text end

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective upon compliance by the governing
body of the city of Oakdale with the requirements of Minnesota Statutes, section 645.021,
subdivision 3.
new text end

Sec. 5. new text begin CITY OF APPLE VALLEY; TAX INCREMENT FINANCING
DISTRICT; SPECIAL RULES.
new text end

new text begin (a) If the city of Apple Valley elects upon the adoption of a tax increment financing
plan for a district, the rules under this section apply to one or more redevelopment
tax increment financing districts established by the city or the economic development
authority of the city. The area within which the redevelopment tax increment districts
may be created includes the following parcels and adjacent right-of-ways and shall be
referred to as the Mining Reclamation Project Area: parcel numbers 01-03500-25-010,
01-03500-03-011, 01-03500-02-010, 01-03600-28-011, 01-03600-25-010,
01-03500-52-011, 01-03500-78-011, 01-03500-77-014, 01-03500-75-010,
01-03400-05-050, 01-55900-00-020, 01-55900-00-010, 01-18250-01-010,
01-03500-01-010, 01-03500-01-020, 01-03500-52-012, 01-03500-78-012.
new text end

new text begin (b) Prior to or upon the adoption of the first tax increment plan qualifying for the
special rules under this subdivision, the city must find by resolution that parcels consisting
of at least 80 percent of the acreage of the project area, excluding street and railroad
rights-of-way, are characterized by one or more of the following conditions:
new text end

new text begin (1) peat or other soils with geotechnical deficiencies that impair development of
commercial buildings or infrastructure;
new text end

new text begin (2) soils or terrain that requires substantial filling in order to permit the development
of commercial buildings or infrastructure;
new text end

new text begin (3) landfills, dumps, or similar deposits of municipal or private waste;
new text end

new text begin (4) quarries or similar resource extraction sites;
new text end

new text begin (5) floodway; and
new text end

new text begin (6) substandard buildings, within the meaning of Minnesota Statutes, section
469.174, subdivision 10.
new text end

new text begin (c) For the purposes of paragraph (b), clauses (1) to (5), a parcel is characterized by
the relevant condition if at least 70 percent of the area of the parcel contains the relevant
condition. For the purposes of paragraph (b), clause (6), a parcel is characterized by
substandard buildings if substandard buildings occupy at least 30 percent of the area
of the parcel.
new text end

new text begin (d) The requirements for qualifying redevelopment tax increment districts under
Minnesota Statutes, section 469.174, subdivision 10, do not apply to the parcels located
within the Mining Reclamation Project Area, which are deemed eligible for inclusion
in a redevelopment tax increment district.
new text end

new text begin (e) The limitations on spending increments outside of the district under Minnesota
Statutes, section 469.1763, subdivision 2, do not apply, but increments may only be
expended on improvements or activities within the area defined in paragraph (a).
new text end

new text begin (f) The five-year rule under Minnesota Statutes, section 469.1763, subdivision 3, is
extended to ten years for districts in the Mining Reclamation Project Area.
new text end

new text begin (g) The authority to approve tax increment financing plans and to establish one or
more tax increment financing districts under this section expires on December 31, 2017.
new text end

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective upon approval by the governing body
of the city of Apple Valley and upon compliance by the city with Minnesota Statutes,
section 645.021, subdivision 3.
new text end

Sec. 6. new text begin CITY OF MAPLE GROVE; TAX INCREMENT FINANCING
DISTRICT.
new text end

new text begin Subdivision 1. new text end

new text begin Definitions. new text end

new text begin (a) For the purposes of this section, the following terms
have the meanings given to them.
new text end

new text begin (b) "City" means the city of Maple Grove.
new text end

new text begin (c) "Project area" means the area in the city commencing at a point 130 feet East and
120 feet North of the southwest corner of the Southeast Quarter of Section 23, Township
119, Range 22, Hennepin County, said point being on the easterly right-of-way line of
Hemlock Lane; thence northerly along said easterly right-of-way line of Hemlock Lane
a distance of 900 feet; thence easterly to the east line of Section 23, 1,030 feet North
from the southeast corner thereof; thence South 74 degrees East 1,285 feet; thence East
a distance of 1,000 feet; thence North 59 degrees West a distance of 650 feet; thence
northerly to a point on the northerly right-of-way line of 81st Avenue North, 650 feet
westerly measured at right angles, from the east line of the Northwest Quarter of Section
24; thence North 13 degrees West a distance of 795 feet; thence West to the west line of
the Southeast Quarter of the Northwest Quarter of Section 24; thence North 55 degrees
West to the south line of the Northwest Quarter of the Northwest Quarter of Section 24;
thence West along said south line to the east right-of-way line of Zachary Lane; thence
North along the east right-of-way line of Zachary Lane to the southwest corner of Lot 1,
Block 1, Metropolitan Industrial Park 5th Addition; thence East along the south line of
said Lot 1 to the northeast corner of Outlot A, Metropolitan Industrial Park 5th Addition;
thence South along the east line of said Outlot A and its southerly extension to the south
right-of-way line of County State-Aid Highway (CSAH) 109; thence easterly along the
south right-of-way line of CSAH 109 to the east line of the Northwest Quarter of the
Northeast Quarter of Section 24; thence South along said east line to the north line of the
South Half of the Northeast Quarter of Section 24; thence East along said north line to
the westerly right-of-way line of Jefferson Highway North; thence southerly along the
westerly right-of-way line of Jefferson Highway to the centerline of CSAH 130; thence
continuing South along the west right-of-way line of Pilgrim Lane North to the westerly
extension of the north line of Outlot A, Park North Fourth Addition; thence easterly
along the north line of Outlot A, Park North Fourth Addition to the northeast corner
of said Outlot A; thence southerly along the east line of said Outlot A to the southeast
corner of said Outlot A; thence easterly along the south line of Lot 1, Block 1, Park
North Fourth Addition to the westerly right-of-way line of State Highway 169; thence
southerly, southwesterly, westerly, and northwesterly along the westerly right-of-way
line of State Highway 169 and the northerly right-of-way line of Interstate 694 to its
intersection with the southerly extension of the easterly right-of-way line of Zachary Lane
North; thence northerly along the easterly right-of-way line of Zachary Lane North and
its northerly extension to the north right-of-way line of CSAH 130; thence westerly,
southerly, northerly, southwesterly, and northwesterly to the point of beginning and there
terminating, provided that the project area includes the rights-of-way for all present and
future highway interchanges abutting the area described in this paragraph.
new text end

new text begin (d) "Soil deficiency district" means a type of tax increment financing district
consisting of a portion of the project area in which the city finds by resolution that the
following conditions exist:
new text end

new text begin (1) unusual terrain or soil deficiencies that occurred over 80 percent of the acreage in
the district require substantial filling, grading, or other physical preparation for use; and
new text end

new text begin (2) the estimated cost of the physical preparation under clause (1), but excluding
costs directly related to roads as defined in Minnesota Statutes, section 160.01, and
local improvements as described in Minnesota Statutes, sections 429.021, subdivision 1,
clauses (1) to (7), (11), and (12), and 430.01, exceeds the fair market value of the land
before completion of the preparation.
new text end

new text begin Subd. 2. new text end

new text begin Special rules. new text end

new text begin (a) If the city elects, upon the adoption of the tax increment
financing plan for a district, the rules under this section apply to a redevelopment
district, renewal and renovation district, soil condition district, or soil deficiency district
established by the city or a development authority of the city in the project area.
new text end

new text begin (b) Prior to or upon the adoption of the first tax increment plan subject to the special
rules under this subdivision, the city must find by resolution that parcels consisting
of at least 80 percent of the acreage of the project area, excluding street and railroad
rights-of-way, are characterized by one or more of the following conditions:
new text end

new text begin (1) peat or other soils with geotechnical deficiencies that impair development of
commercial buildings or infrastructure;
new text end

new text begin (2) soils or terrain that requires substantial filling in order to permit the development
of commercial buildings or infrastructure;
new text end

new text begin (3) landfills, dumps, or similar deposits of municipal or private waste;
new text end

new text begin (4) quarries or similar resource extraction sites;
new text end

new text begin (5) floodway; and
new text end

new text begin (6) substandard buildings, within the meaning of Minnesota Statutes, section
469.174, subdivision 10.
new text end

new text begin (c) For the purposes of paragraph (b), clauses (1) to (5), a parcel is characterized by
the relevant condition if at least 70 percent of the area of the parcel contains the relevant
condition. For the purposes of paragraph (b), clause (6), a parcel is characterized by
substandard buildings if substandard buildings occupy at least 30 percent of the area
of the parcel.
new text end

new text begin (d) The five-year rule under Minnesota Statutes, section 469.1763, subdivision
3, is extended to ten years for any district, and Minnesota Statutes, section 469.1763,
subdivision 4, does not apply to any district.
new text end

new text begin (e) Notwithstanding any provision to the contrary in Minnesota Statutes, section
469.1763, subdivision 2, paragraph (a), not more than 80 percent of the total revenue
derived from tax increments paid by properties in any district, measured over the life of
the district, may be expended on activities outside the district but within the project area.
new text end

new text begin (f) For a soil deficiency district:
new text end

new text begin (1) increments may be collected through 20 years after the receipt by the authority of
the first increment from the district; and
new text end

new text begin (2) except as otherwise provided in this subdivision, increments may be used only to:
new text end

new text begin (i) acquire parcels on which the improvements described in item (ii) will occur;
new text end

new text begin (ii) pay for the cost of correcting the unusual terrain or soil deficiencies and the
additional cost of installing public improvements directly caused by the deficiencies; and
new text end

new text begin (iii) pay for the administrative expenses of the authority allocable to the district.
new text end

new text begin (g) Increments spent for any infrastructure costs, whether inside a district or outside
a district but within the project area, are deemed to satisfy the requirements of paragraph
(f) and Minnesota Statutes, section 469.176, subdivisions 4b and 4j.
new text end

new text begin (h) The authority to approve tax increment financing plans to establish tax increment
financing districts under this section expires December 31, 2022.
new text end

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective upon compliance with Minnesota
Statutes, section 645.021, subdivision 3.
new text end

Sec. 7. new text begin DAKOTA COUNTY COMMUNITY DEVELOPMENT AGENCY; TAX
INCREMENT FINANCING DISTRICT.
new text end

new text begin Subdivision 1. new text end

new text begin Authorization. new text end

new text begin Notwithstanding the provisions of any other law,
the Dakota County Community Development Agency may establish a redevelopment tax
increment financing district comprised of the properties that (1) were included in the
CDA 10 Robert and South Street district in the city of West St. Paul, and (2) were not
decertified before July 1, 2012. The district created under this section terminates no later
than December 31, 2017.
new text end

new text begin Subd. 2. new text end

new text begin Special rules. new text end

new text begin The requirements for qualifying a redevelopment district
under Minnesota Statutes, section 469.174, subdivision 10, do not apply to parcels located
within the district. Minnesota Statutes, section 469.176, subdivisions 4g, paragraph (c),
clause (1), item (ii), and 4j, do not apply to the district. The original tax capacity of the
district is $93,239.
new text end

new text begin Subd. 3. new text end

new text begin Authorized expenditures. new text end

new text begin Tax increment from the district may be
expended to pay for any eligible activities authorized by Minnesota Statutes, chapter
469, within the redevelopment area that includes the district. All such expenditures are
deemed to be activities within the district under Minnesota Statutes, section 469.1763,
subdivisions 2, 3, and 4.
new text end

new text begin Subd. 4. new text end

new text begin Adjusted net tax capacity. new text end

new text begin The captured tax capacity of the district must
be included in the adjusted net tax capacity of the city, county, and school district for the
purposes of determining local government aid, education aid, and county program aid.
The county auditor shall report to the commissioner of revenue the amount of the captured
tax capacity for the district at the time the assessment abstracts are filed.
new text end

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective upon compliance by the governing
body of the Dakota County Community Development Agency with the requirements of
Minnesota Statutes, section 645.021, subdivision 3.
new text end

Sec. 8. new text begin CITY OF BLOOMINGTON; TAX INCREMENT FINANCING
EXTENSION.
new text end

new text begin Notwithstanding the provisions of Minnesota Statutes, section 469.176, or any other
law to the contrary, the city of Bloomington and its port authority may extend the duration
limits of tax increment financing district no. 1-I, containing the Bloomington Central
Station property for a period through December 31, 2035.
new text end

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective upon compliance of the governing
body of the city of Bloomington with the requirements of Minnesota Statutes, sections
469.1782, subdivision 2, and 645.021, subdivision 3.
new text end

Sec. 9. new text begin CITY OF BLOOMINGTON; TAX INCREMENT FINANCING.
new text end

new text begin (a) Notwithstanding Minnesota Statutes, section 469.176, or Laws 1996, chapter
464, article 1, section 8, or any other law to the contrary, the city of Bloomington and its
port authority may extend the duration limits of tax increment financing district no. 1-G,
containing the former Met Center property, including Lindau Lane and that portion of tax
increment financing district no. 1-C north of the existing building line on Lot 1, Block 1,
Mall of America 7th Addition, exclusive of Lots 2 and 3, through December 31, 2028.
new text end

new text begin (b) Before approving an extension under paragraph (a) and before approving
any contract for development of the area or the issuance of bonds, either of which
require the expenditure of more than $5,000,000 of increments, the governing body
of the city of Bloomington must make the findings under Minnesota Statutes, section
469.175, subdivision 3, paragraph (b), clause (2), including providing the required
written documentation required by paragraph (d) of that subdivision, with regard to the
justification for approval of the extension, the contract, or issuance of bonds.
new text end

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective upon compliance of the governing
bodies of the city of Bloomington, Hennepin County, and Independent School District
No. 271, Bloomington, with the requirements of Minnesota Statutes, sections 469.1782,
subdivision 2, and 645.021, subdivision 3.
new text end

Sec. 10. new text begin CITY OF BROOKLYN PARK; TAX INCREMENT FINANCING;
SPECIAL RULES.
new text end

new text begin The requirement of Minnesota Statutes, section 469.1763, subdivision 3, that
activities must be undertaken within a five-year period from the date of certification of a tax
increment financing district, is considered to be met for Tax Increment Financing District
No. 23 in the city of Brooklyn Park if the activities were undertaken by July 1, 2014.
new text end

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective upon compliance by the governing
body of the city of Brooklyn Park with the requirements of Minnesota Statutes, section
645.021, subdivision 3.
new text end

ARTICLE 5

MISCELLANEOUS

Section 1.

new text begin [136A.129] GREATER MINNESOTA INTERNSHIP PROGRAM.
new text end

new text begin Subdivision 1. new text end

new text begin Definitions. new text end

new text begin (a) For the purposes of this section, the terms defined in
this subdivision have the meanings given them.
new text end

new text begin (b) "Eligible employer" means a taxpayer under section 290.01 with employees
located in greater Minnesota.
new text end

new text begin (c) "Eligible institution" means a Minnesota public postsecondary institution, or a
Minnesota private, nonprofit, baccalaureate degree granting college or university.
new text end

new text begin (d) "Eligible student" means a student enrolled in an eligible institution who is a
junior or senior in a degree program or has completed one-half of the credits necessary for
an associate degree or certification.
new text end

new text begin (e) "Greater Minnesota" means the area located outside of the metropolitan area, as
defined in section 473.121, subdivision 2.
new text end

new text begin (f) "Office" means the Office of Higher Education.
new text end

new text begin Subd. 2. new text end

new text begin Program established. new text end

new text begin The office, in cooperation with the Department of
Employment and Economic Development, shall administer a greater Minnesota internship
grant program for eligible employers who hire interns in greater Minnesota through
eligible institutions that provide academic credit. The purpose of the program is to
encourage Minnesota businesses to:
new text end

new text begin (1) employ and provide valuable experience to Minnesota students; and
new text end

new text begin (2) foster long-term relationships between the students and greater Minnesota
employers.
new text end

new text begin Subd. 3. new text end

new text begin Program components. new text end

new text begin (a) An intern must be an eligible student who
has been admitted to a major program that is closely related to the intern experience
as determined by the eligible institution.
new text end

new text begin (b) To participate in the program, an eligible institution must:
new text end

new text begin (1) enter into written agreements with eligible employers to provide paid internships
that are at least 12 weeks long and located in greater Minnesota;
new text end

new text begin (2) determine that the work experience of the internship is closely related to the
eligible student's course of study; and
new text end

new text begin (3) provide academic credit for the successful completion of the internship or
ensure that it fulfills requirements necessary to complete a vocational technical education
program.
new text end

new text begin (c) To participate in the program, an eligible employer must enter into a written
agreement with an eligible institution specifying that the intern:
new text end

new text begin (1) would not have been hired without the grant described in subdivision 4;
new text end

new text begin (2) did not work for the employer prior to entering the agreement;
new text end

new text begin (3) does not replace an existing employee;
new text end

new text begin (4) has not previously participated in the program;
new text end

new text begin (5) will be employed at a location in greater Minnesota;
new text end

new text begin (6) will be paid at least minimum wage for a minimum of 16 hours per week for at
least a 12-week period; and
new text end

new text begin (7) will be supervised and evaluated by the employer.
new text end

new text begin (d) Participating eligible institutions and eligible employers must report annually to
the office. The report must include at least the following:
new text end

new text begin (1) the number of interns hired;
new text end

new text begin (2) the number of hours and weeks worked by interns; and
new text end

new text begin (3) the compensation paid to interns.
new text end

new text begin (e) An internship with clinical experience currently required for completion of
an academic program does not qualify for the greater Minnesota internship program
under this section.
new text end

new text begin Subd. 4. new text end

new text begin Employer grants for internships; maximum limits. new text end

new text begin (a) A grant for an
eligible employee equals 40 percent of the compensation paid to each qualifying intern,
not to exceed $1,250. An employer may receive a grant for a maximum of five interns
in any fiscal year.
new text end

new text begin (b) The total amount of grants authorized under this section is limited to $1,250,000
per fiscal year less administrative expense as provided in law. The office shall allocate
grants to eligible institutions for participating employers and certify to the Department of
Employment and Economic Development the amount of the grant.
new text end

new text begin Subd. 5. new text end

new text begin Allocations to institutions. new text end

new text begin The office shall allocate employer grants
authorized in subdivision 4 to eligible institutions. The office shall determine relevant
criteria to allocate the grants, including the geographic distribution of grants to work
locations outside the metropolitan area. Any grant amount allocated to an institution but
not used may be reallocated to other eligible institutions. The office shall allocate a portion
of any administrative fee to participating eligible institutions for their administrative costs.
new text end

new text begin Subd. 6. new text end

new text begin Reports to the legislature. new text end

new text begin (a) By February 1, 2013, the office and the
Department of Employment and Economic Development shall report to the legislature on
the greater Minnesota internship program. The report must include at least the following:
new text end

new text begin (1) the number and dollar amount of grants allocated to employers;
new text end

new text begin (2) the number of interns employed under the program; and
new text end

new text begin (3) the cost of administering the program.
new text end

new text begin (b) By February 1, 2014, the office and the Department of Employment and
Economic Development shall report to the legislature with an analysis of the effectiveness
of the program in stimulating businesses to hire interns and in assisting participating
interns in finding permanent career positions. The report must include the number of
students who participated in the program who were subsequently employed full-time by
the employer.
new text end

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective July 1, 2012.
new text end

Sec. 2.

Minnesota Statutes 2010, section 297A.8155, is amended to read:

297A.8155 LIQUOR REPORTING REQUIREMENTS; PENALTY.

A person who sells liquor, as defined in section 295.75, subdivision 1, in Minnesota
to a retailer that sells liquor, shall file with the commissioner an annual informational
report, in the form and manner prescribed by the commissioner, indicating the name,
address, and Minnesota business identification number of each retailer, and the total
dollar amount of liquor sold to each retailer in the previous calendar year. The report
must be filed on or before March 31 following the close of the calendar year. A person
failing to file this report is subject to the penalty imposed under section 289A.60. new text begin A
person required to file a report under this section is not required to provide a copy of an
exemption certificate, as defined in section 297A.72, provided to the person by a retailer,
along with the annual informational report.
new text end

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for reports required to be filed
beginning in calendar year 2012 and thereafter.
new text end

Sec. 3.

Minnesota Statutes 2010, section 297G.04, subdivision 2, is amended to read:

Subd. 2.

Tax credit.

A qualified brewer producing fermented malt beverages
is entitled to a tax credit of $4.60 per barrel on 25,000 barrels sold in any fiscal year
beginning July 1, regardless of the alcohol content of the product. Qualified brewers may
take the credit on the 18th day of each month, but the total credit allowed may not exceed
in any fiscal year the lesser of:

(1) the liability for tax; or

(2) $115,000.

For purposes of this subdivision, a "qualified brewer" means a brewer, whether or
not located in this state, manufacturing less than deleted text begin 100,000 deleted text end new text begin 250,000 new text end barrels of fermented
malt beverages in the calendar year immediately preceding the calendar year for which
the credit under this subdivision is claimed. In determining the number of barrels, all
brands or labels of a brewer must be combined. All facilities for the manufacture of
fermented malt beverages owned or controlled by the same person, corporation, or other
entity must be treated as a single brewer.

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for determinations based on calendar
year 2011 production and thereafter.
new text end

Sec. 4.

Minnesota Statutes 2010, section 298.75, is amended by adding a subdivision
to read:

new text begin Subd. 12. new text end

new text begin Tax may be imposed; Otter Tail County. new text end

new text begin (a) If Otter Tail County
does not impose a tax under this section and approves imposition of the tax under this
subdivision, the city of Vergas in Otter Tail County may impose the aggregate materials
tax under this section.
new text end

new text begin (b) For purposes of exercising the powers contained in this section, the "city" is
deemed to be the "county."
new text end

new text begin (c) All provisions in this section apply to the city of Vergas, except that in lieu of the
tax proceeds under subdivision 7, all proceeds of the tax must be retained by the city.
new text end

new text begin (d) If Otter Tail County imposes an aggregate materials tax under this section, the
tax imposed by the city of Vergas under this subdivision is repealed on the effective
date of the Otter Tail County tax.
new text end

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective the day after the governing body of
the city of Vergas and its chief clerical officer comply with Minnesota Statutes, section
645.021, subdivisions 2 and 3.
new text end

Sec. 5.

Minnesota Statutes 2010, section 469.169, is amended by adding a subdivision
to read:

new text begin Subd. 19. new text end

new text begin Additional border city allocation; 2012. new text end

new text begin (a) In addition to tax
reductions authorized in subdivisions 7 to 18, the commissioner shall allocate $75,000
for tax reductions to border city enterprise zones in cities located on the western border
of the state. The commissioner shall make allocations to zones in cities on the western
border on a per capita basis. Allocations made under this subdivision may be used for
tax reductions as provided in section 469.171, or for other offsets of taxes imposed on
or remitted by businesses located in the enterprise zone, but only if the municipality
determines that the granting of the tax reduction or offset is necessary in order to retain a
business within or attract a business to the zone. The city alternatively may elect to use
any portion of the allocation provided in this paragraph for tax reductions under section
469.1732 or 469.1734.
new text end

new text begin (b) The commissioner shall allocate $75,000 for tax reductions under section
469.1732 or 469.1734 to cities with border city enterprise zones located on the western
border of the state. The commissioner shall allocate this amount among the cities on a per
capita basis. The city alternatively may elect to use any portion of the allocation provided
in this paragraph for tax reductions as provided in section 469.171.
new text end

Sec. 6.

Laws 1971, chapter 773, section 1, subdivision 2, as amended by Laws 1974,
chapter 351, section 5, Laws 1976, chapter 234, sections 1 and 7, Laws 1978, chapter 788,
section 1, Laws 1981, chapter 369, section 1, Laws 1983, chapter 302, section 1, Laws
1988, chapter 513, section 1, Laws 1992, chapter 511, article 9, section 23, Laws 1998,
chapter 389, article 3, section 27, and Laws 2002, chapter 390, section 23, is amended to
read:

Subd. 2. For each of the years deleted text begin 2003 to 2013 deleted text end new text begin 2012 to 2024 new text end , the city of St. Paul is
authorized to issue bonds in the aggregate principal amount of $20,000,000 for each year.

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective the day after final enactment.
new text end

Sec. 7.

Laws 2003, chapter 127, article 12, section 28, is amended to read:

Sec. 28. NURSING HOME BONDS AUTHORIZED.

new text begin (a) new text end Itasca County may issue bonds under Minnesota Statutes, sections 376.55 and
376.56, to finance the construction of a 35-bed nursing home facility to replace an existing
35-bed private facility located in the county. The bonds issued under this section deleted text begin must deleted text end new text begin
may new text end be payable solely from revenues deleted text begin and deleted text end new text begin or new text end may deleted text begin not deleted text end be general obligations of the county.

new text begin (b) Before issuing general obligation bonds under this section, the county must
publish a notice of its intention to issue the bonds and the date and time of a hearing to
obtain public comment on the matter. The notice must be published on the official website
of the county or in a newspaper of general circulation in the county. The notice must be
published at least 14, but not more than 28, days before the date of the hearing. The county
may issue the bonds only upon obtaining the approval of a majority of the voters voting on
the question of issuing the obligations, if a petition requesting a vote on the issuance is
signed by voters equal to five percent of the votes cast in the county in the last general
election and is filed with the county auditor within 30 days after the public hearing.
new text end

new text begin EFFECTIVE DATE; LOCAL APPROVAL. new text end

new text begin This section is effective the day after
the governing body of Itasca County and its chief clerical officer timely complete their
compliance with Minnesota Statutes, section 645.021, subdivisions 2 and 3.
new text end

Sec. 8. new text begin SPECIAL RECOVERY FUND; CANCELLATION.
new text end

new text begin $4,300,000 of the balance in the Revenue Department service and recovery special
revenue fund is transferred in fiscal year 2012 to the general fund.
new text end

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective the day following final enactment.
new text end

Sec. 9. new text begin LIQUOR REPORTING REQUIREMENTS.
new text end

new text begin A person who was required to submit an annual informational report under
Minnesota Statutes, section 297A.8155, to the commissioner of revenue during calendar
year 2010 or 2011 is not required to provide a copy of an exemption certificate or a
retailer's tax identification number along with the informational report.
new text end

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective the day following final enactment
and applies to reports required to be filed in calendar year 2010 or 2011.
new text end

Sec. 10. new text begin PURPOSE STATEMENTS; TAX EXPENDITURES.
new text end

new text begin Subdivision 1. new text end

new text begin Authority. new text end

new text begin This section is intended to fulfill the requirement under
Minnesota Statutes, section 3.192, that a bill creating, renewing, or continuing a tax
expenditure provide a purpose for the tax expenditure and a standard or goal against
which its effectiveness may be measured.
new text end

new text begin Subd. 2. new text end

new text begin Employment of qualified veterans tax credit. new text end

new text begin The provisions of article 2,
section 11, providing a tax credit for the employment of qualified veterans, are intended
to give an incentive to employers to hire returning veterans who would otherwise be
unemployed and to encourage their reintegration into the community. The standard against
which the effectiveness of the credit is to be measured is the additional number of veterans
who are hired as a result of the tax credit.
new text end

new text begin Subd. 3. new text end

new text begin Corporate franchise tax certificate transfer program. new text end

new text begin The provisions of
article 2, sections 6 and 12, providing for the transfer of tax benefits, are intended to create
new high paying and high quality jobs in Minnesota. The standard against which the
effectiveness of the transfer program is to be measured is the number of new high paying
and high quality jobs created in Minnesota as a result of the credit.
new text end

new text begin Subd. 4. new text end

new text begin Foreign operating corporation property tax credit. new text end

new text begin The provisions of
article 2, section 13, providing a corporate franchise tax credit for Minnesota foreign
operating corporations income, is intended to create and retain jobs in Minnesota. The
standard against which the effectiveness of the credit is to be measured is the number of
jobs provided by corporations claiming the credit.
new text end

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective the day following final enactment.
new text end

Sec. 11. new text begin TAX REFORM COMMISSION.
new text end

new text begin Subdivision 1. new text end

new text begin Findings. new text end

new text begin The legislature finds that Minnesota's state and local tax
system is flawed and not well adapted to the changing nature of the economy and the
demographics of the state and must be reformed so that it is:
new text end

new text begin (1) simple and transparent;
new text end

new text begin (2) beneficial for job creation;
new text end

new text begin (3) fair and equitable to all Minnesotans; and
new text end

new text begin (4) neutral and efficient.
new text end

new text begin Subd. 2. new text end

new text begin Commission established. new text end

new text begin A tax reform action commission is established
in the legislative branch to study the Minnesota tax and revenue system and to make
recommendations to the legislature.
new text end

new text begin Subd. 3. new text end

new text begin Membership. new text end

new text begin (a) The commission consists of 15 members, appointed
as follows:
new text end

new text begin (1) three members appointed by the governor, two from the executive branch and
one from private life;
new text end

new text begin (2) four members appointed by the majority leader of the senate, two members of the
senate and two from private life;
new text end

new text begin (3) two members appointed by the minority leader of the senate, one member of the
senate and one from private life;
new text end

new text begin (4) four members appointed by the speaker of the house, two members of the house
of representatives and two from private life; and
new text end

new text begin (5) two members appointed by the minority leader of the house of representatives,
one member of the house of representatives and one from private life.
new text end

new text begin (b) The appointing authority shall select members who are of recognized standing
and distinction and who possess demonstrated capacity to discharge the duties of the
commission. In making appointments, the appointing authorities shall attempt to appoint
some individuals to the commission who have special experience or knowledge in
taxation, economics, and accounting.
new text end

new text begin (c) The speaker of the house and majority leader of the senate shall each designate a
member of the commission as a chair of the commission. The co-chairs shall determine
the duties of the commission and supervise its staff.
new text end

new text begin (d) The appointing authorities shall appoint members of the commission no later
than 14 days after enactment of this section. Members serve for the life of the commission.
A vacancy in the commission membership does not affect the power of the remaining
members to execute the duties of the commission. A vacancy in commission membership
is filled in the same manner in which the original appointment was made.
new text end

new text begin (e) The commission shall hold its initial meeting no later than 60 days after
enactment of this section.
new text end

new text begin Subd. 4. new text end

new text begin Duties; report. new text end

new text begin (a) The commission shall study and evaluate the Minnesota
state and local tax and revenue system with a goal of making long-term improvements in
the system for the citizens of the state, given standard principles of good tax policy and
the background of expected demographic and economic changes in the state, nation, and
world. The commission must specifically address ways to make the Minnesota state tax
and revenue system more effective in encouraging business formation, retention, and
expansion in the state, as well as increasing general capital investment in the state. The
commission's recommendations must be done on a revenue neutral basis. The commission
shall examine:
new text end

new text begin (1) the mix of state revenues between tax revenues and fees and charges for services
used or benefits received;
new text end

new text begin (2) the implications of likely demographic and economic changes, affecting both (i)
the demands for state and local government services and (ii) taxes and other revenues; and
new text end

new text begin (3) the extent to which the existing tax system and the commission's proposal satisfy
the following basic tax policy principles:
new text end

new text begin (i) equity or fairness, including measures based on ability to pay, equal treatment of
equals, and payment for benefits received;
new text end

new text begin (ii) neutrality or efficiency, the extent to which the effects on private market
decisions are minimized;
new text end

new text begin (iii) revenue adequacy, the extent to which the revenues are stable and predictable
and grow with increases in income or economic activity;
new text end

new text begin (iv) competitiveness, the extent to which the state's attractiveness as a location for
investment, working, and living is increased;
new text end

new text begin (v) simplicity, the extent to which it is easy to understand;
new text end

new text begin (vi) ease of compliance and administration, the extent to which taxpayers can easily
comply and the government can easily administer it; and
new text end

new text begin (vii) visibility or accountability, the extent to which the taxes or other charges are
clear and apparent to their payers as a cost of government and that the government
officials imposing the tax are accountable, through election or otherwise, to the principal
payers of the tax.
new text end

new text begin (b) The commission shall report to the legislature no later than March 1, 2013.
The report must include:
new text end

new text begin (1) the results of the commission's evaluation of the present tax and revenue system
and its research on alternatives;
new text end

new text begin (2) recommendations for reform and improvement of the Minnesota state and
local tax and revenue system, on a revenue neutral basis, along with the rationale for
the proposed changes; and
new text end

new text begin (3) a draft bill implementing the commission's recommendation for introduction
in the 2014 legislative session.
new text end

new text begin Subd. 5. new text end

new text begin Per diem and expenses. new text end

new text begin Members of the commission may be compensated
and receive reimbursement for expenses, as provided for members of advisory councils
under Minnesota Statutes, section 15.059, subdivision 3. This subdivision does not apply
to members of the legislature or state employees.
new text end

new text begin Subd. 6. new text end

new text begin Staff. new text end

new text begin The commission may employ staff as it deems appropriate to carry
out its duties or use existing legislative and executive branch staff. All staff are in the
unclassified state service. Legislative staff and the Department of Revenue staff must
provide research, bill drafting, and other services to the commission upon its request. The
commission may contract with consultants for research and other services and enter other
contracts as it deems necessary or appropriate to carry out its duties. These contracts are
not subject to the requirements of Minnesota Statutes, chapter 16C.
new text end

new text begin Subd. 7. new text end

new text begin Appropriations. new text end

new text begin $25,000 is appropriated from the general fund to the
commission for fiscal years 2012 and 2013 to carry out the provisions of this section.
new text end

new text begin Subd. 8. new text end

new text begin Expiration. new text end

new text begin The commission terminates 30 days after transmitting its
report to the legislature under subdivision 4, paragraph (b).
new text end

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective the day after final enactment.
new text end

Sec. 12. new text begin WOODBURY; EXEMPTION FROM REFERENDUM.
new text end

new text begin (a) Notwithstanding the referendum requirement in Minnesota Statutes, section
475.58, subdivision 1, or any other provision of law, the city of Woodbury may issue and
sell obligations to pay for the cost of renovating, improving, expanding, and equipping the
Bielenberg Sports Center, along with costs of issuance of the obligations and capitalized
interest, if:
new text end

new text begin (1) the obligations are secured by a pledge of revenues from the facility; and
new text end

new text begin (2) the city finds, based on analysis provided by a professional experienced in
finance, that the facility's revenues and a property tax levy equal to the maximum annual
property tax levy used to pay the bonds previously issued to finance, in whole or in part,
the facility will in the aggregate be sufficient to pay the obligations without the imposition
of an additional property tax levy pledged to the obligations.
new text end

new text begin (b) Before issuing bonds under this section, the city must publish a notice of its
intention to issue the bonds and the date and time of a hearing to obtain public comment
on the matter. The notice must be published on the official website of the city or in a
newspaper of general circulation in the city. The notice must be published at least 14, but
not more than 28, days before the date of the hearing. The city may issue the bonds only
upon obtaining the approval of a majority of the voters voting on the question of issuing
the obligations, if a petition requesting a vote on the issuance is signed by voters equal to
five percent of the votes cast in the city in the last general election and is filed with the city
clerk within 30 days after the public hearing.
new text end

new text begin EFFECTIVE DATE; LOCAL APPROVAL. new text end

new text begin This section is effective the day after
the governing body of the city of Woodbury and its chief clerical officer timely complete
their compliance with Minnesota Statutes, section 645.021, subdivisions 2 and 3.
new text end

Sec. 13. new text begin APPROPRIATION; GREATER MINNESOTA INTERNSHIP
PROGRAM.
new text end

new text begin $1,250,000 is appropriated from the general fund to the commissioner of
employment and economic development for fiscal year 2013 for grants under Minnesota
Statutes, section 136A.129, for employers who hire interns. Up to five percent of
the appropriation is for an administrative fee for the Office of Higher Education and
participating eligible institutions. The amount of this appropriation is added to the base for
the Department of Employment and Economic Development beginning in fiscal year 2014
for the greater Minnesota internship program.
new text end

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective July 1, 2012.
new text end