HF 2431

as introduced - 82nd Legislature (2001 - 2002) Posted on 12/15/2009 12:00am

  1.1                          A bill for an act 
  1.2             relating to taxation; providing that certain personal 
  1.3             property of an electric utility is exempt from 
  1.4             taxation; providing state aid payments to replace the 
  1.5             revenue lost by local governments; providing a state 
  1.6             guarantee for certain bonds; appropriating money; 
  1.7             amending Minnesota Statutes 2000, sections 272.02, 
  1.8             subdivision 9; 273.13, subdivision 24; and 475A.02, 
  1.9             subdivision 1; proposing coding for new law in 
  1.10            Minnesota Statutes, chapters 216B; 273; and 475A.  
  1.11  BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA: 
  1.12     Section 1.  [216B.071] [RATE ADJUSTMENT; REAL AND PERSONAL 
  1.13  PROPERTY EXEMPTION.] 
  1.14     Each electric utility, as defined in section 216B.38, 
  1.15  subdivision 5, that is subject to rate regulation by the public 
  1.16  utilities commission shall notify the commission of its 
  1.17  reduction in property tax obligation under section 2.  By 
  1.18  December 1 of the year before the property tax reduction is 
  1.19  effective, the commission shall issue an order reducing the 
  1.20  utility's rates by the full amount of the tax reduction.  The 
  1.21  rate reduction must apply to each customer class in the same 
  1.22  proportion as the utility's revenue requirements is reduced by 
  1.23  the tax, providing each customer class with an equal percentage 
  1.24  reduction in its rate.  The new rates must be effective as of 
  1.25  January 1 of the taxes payable year that the property tax 
  1.26  reduction is initially effective.  
  1.27     Sec. 2.  Minnesota Statutes 2000, section 272.02, 
  1.28  subdivision 9, is amended to read: 
  2.1      Subd. 9.  [PERSONAL PROPERTY; EXCEPTIONS.] Except for the 
  2.2   taxable personal property enumerated below, all personal 
  2.3   property and the property described in section 272.03, 
  2.4   subdivision 1, paragraphs (c) and (d), shall be exempt.  
  2.5      The following personal property shall be taxable:  
  2.6      (a) personal property which is part of an electric 
  2.7   generating, transmission, or distribution system or a pipeline 
  2.8   system transporting or distributing water, gas, crude oil, or 
  2.9   petroleum products or mains and pipes used in the distribution 
  2.10  of steam or hot or chilled water for heating or cooling 
  2.11  buildings and structures; 
  2.12     (b) railroad docks and wharves which are part of the 
  2.13  operating property of a railroad company as defined in section 
  2.14  270.80; 
  2.15     (c) personal property defined in section 272.03, 
  2.16  subdivision 2, clause (3); 
  2.17     (d) leasehold or other personal property interests which 
  2.18  are taxed pursuant to section 272.01, subdivision 2; 273.124, 
  2.19  subdivision 7; or 273.19, subdivision 1; or any other law 
  2.20  providing the property is taxable as if the lessee or user were 
  2.21  the fee owner; 
  2.22     (e) manufactured homes and sectional structures, including 
  2.23  storage sheds, decks, and similar removable improvements 
  2.24  constructed on the site of a manufactured home, sectional 
  2.25  structure, park trailer or travel trailer as provided in section 
  2.26  273.125, subdivision 8, paragraph (f); and 
  2.27     (f) flight property as defined in section 270.071.  
  2.28     [EFFECTIVE DATE.] This section is effective for taxes 
  2.29  levied in 2001, payable in 2002, and thereafter. 
  2.30     Sec. 3.  Minnesota Statutes 2000, section 273.13, 
  2.31  subdivision 24, is amended to read: 
  2.32     Subd. 24.  [CLASS 3.] (a) Commercial and industrial 
  2.33  property and utility real and personal property is class 3a.  
  2.34     (1) Except as otherwise provided, each parcel of 
  2.35  commercial, industrial, or utility real property has a class 
  2.36  rate of 2.4 percent of the first tier of market value, and 3.4 
  3.1   percent of the remaining market value.  In the case of 
  3.2   contiguous parcels of property owned by the same person or 
  3.3   entity, only the value equal to the first-tier value of the 
  3.4   contiguous parcels qualifies for the reduced class rate, except 
  3.5   that contiguous parcels owned by the same person or entity shall 
  3.6   be eligible for the first-tier value class rate on each separate 
  3.7   business operated by the owner of the property, provided the 
  3.8   business is housed in a separate structure.  For the purposes of 
  3.9   this subdivision, the first tier means the first $150,000 of 
  3.10  market value.  Real property owned in fee by a utility for 
  3.11  transmission line right-of-way shall be classified at the class 
  3.12  rate for the higher tier.  
  3.13     For purposes of this subdivision, parcels are considered to 
  3.14  be contiguous even if they are separated from each other by a 
  3.15  road, street, waterway, or other similar intervening type of 
  3.16  property.  Connections between parcels that consist of power 
  3.17  lines or pipelines do not cause the parcels to be contiguous.  
  3.18  Property owners who have contiguous parcels of property that 
  3.19  constitute separate businesses that may qualify for the 
  3.20  first-tier class rate shall notify the assessor by July 1, for 
  3.21  treatment beginning in the following taxes payable year.  
  3.22     (2) Personal property that is:  (i) part of an electric 
  3.23  generation, transmission, or distribution system; or (ii) part 
  3.24  of a pipeline system transporting or distributing water, gas, 
  3.25  crude oil, or petroleum products; and (iii) not described in 
  3.26  clause (3), has a class rate as provided under clause (1) for 
  3.27  the first tier of market value and the remaining market value.  
  3.28  In the case of multiple parcels in one county that are owned by 
  3.29  one person or entity, only one first tier amount is eligible for 
  3.30  the reduced rate.  
  3.31     (3) The entire market value of personal property that is:  
  3.32  (i) tools, implements, and machinery of an electric generation, 
  3.33  transmission, or distribution system; (ii) tools, implements, 
  3.34  and machinery of a pipeline system transporting or distributing 
  3.35  water, gas, crude oil, or petroleum products; or (iii) the mains 
  3.36  and pipes used in the distribution of steam or hot or chilled 
  4.1   water for heating or cooling buildings, has a class rate as 
  4.2   provided under clause (1) for the remaining market value in 
  4.3   excess of the first tier. 
  4.4      (b) Employment property defined in section 469.166, during 
  4.5   the period provided in section 469.170, shall constitute class 
  4.6   3b.  The class rates for class 3b property are determined under 
  4.7   paragraph (a). 
  4.8      (c)(1) Subject to the limitations of clause (2), structures 
  4.9   which are (i) located on property classified as class 3a, (ii) 
  4.10  constructed under an initial building permit issued after 
  4.11  January 2, 1996, (iii) located in a transit zone as defined 
  4.12  under section 473.3915, subdivision 3, (iv) located within the 
  4.13  boundaries of a school district, and (v) not primarily used for 
  4.14  retail or transient lodging purposes, shall have a class rate 
  4.15  equal to the lesser of 2.975 percent or the class rate of the 
  4.16  second tier of the commercial property rate under paragraph (a) 
  4.17  on any portion of the market value that does not qualify for the 
  4.18  first tier class rate under paragraph (a).  As used in item (v), 
  4.19  a structure is primarily used for retail or transient lodging 
  4.20  purposes if over 50 percent of its square footage is used for 
  4.21  those purposes.  A class rate equal to the lesser of 2.975 
  4.22  percent or the class rate of the second tier of the commercial 
  4.23  property class rate under paragraph (a) shall also apply to 
  4.24  improvements to existing structures that meet the requirements 
  4.25  of items (i) to (v) if the improvements are constructed under an 
  4.26  initial building permit issued after January 2, 1996, even if 
  4.27  the remainder of the structure was constructed prior to January 
  4.28  2, 1996.  For the purposes of this paragraph, a structure shall 
  4.29  be considered to be located in a transit zone if any portion of 
  4.30  the structure lies within the zone.  If any property once 
  4.31  eligible for treatment under this paragraph ceases to remain 
  4.32  eligible due to revisions in transit zone boundaries, the 
  4.33  property shall continue to receive treatment under this 
  4.34  paragraph for a period of three years. 
  4.35     (2) This clause applies to any structure qualifying for the 
  4.36  transit zone reduced class rate under clause (1) on January 2, 
  5.1   1999, or any structure meeting any of the qualification criteria 
  5.2   in item (i) and otherwise qualifying for the transit zone 
  5.3   reduced class rate under clause (1).  Such a structure continues 
  5.4   to receive the transit zone reduced class rate until the 
  5.5   occurrence of one of the events in item (ii).  Property 
  5.6   qualifying under item (i)(D), that is located outside of a city 
  5.7   of the first class, qualifies for the transit zone reduced class 
  5.8   rate as provided in that item.  Property qualifying under item 
  5.9   (i)(E) qualifies for the transit zone reduced class rate as 
  5.10  provided in that item. 
  5.11     (i) A structure qualifies for the rate in this clause if it 
  5.12  is: 
  5.13     (A) property for which a building permit was issued before 
  5.14  December 31, 1998; or 
  5.15     (B) property for which a building permit was issued before 
  5.16  June 30, 2001, if: 
  5.17     (I) at least 50 percent of the land on which the structure 
  5.18  is to be built has been acquired or is the subject of signed 
  5.19  purchase agreements or signed options as of March 15, 1998, by 
  5.20  the entity that proposes construction of the project or an 
  5.21  affiliate of the entity; 
  5.22     (II) signed agreements have been entered into with one 
  5.23  entity or with affiliated entities to lease for the account of 
  5.24  the entity or affiliated entities at least 50 percent of the 
  5.25  square footage of the structure or the owner of the structure 
  5.26  will occupy at least 50 percent of the square footage of the 
  5.27  structure; and 
  5.28     (III) one of the following requirements is met: 
  5.29     the project proposer has submitted the completed data 
  5.30  portions of an environmental assessment worksheet by December 
  5.31  31, 1998; or 
  5.32     a notice of determination of adequacy of an environmental 
  5.33  impact statement has been published by April 1, 1999; or 
  5.34     an alternative urban areawide review has been completed by 
  5.35  April 1, 1999; or 
  5.36     (C) property for which a building permit is issued before 
  6.1   July 30, 1999, if: 
  6.2      (I) at least 50 percent of the land on which the structure 
  6.3   is to be built has been acquired or is the subject of signed 
  6.4   purchase agreements as of March 31, 1998, by the entity that 
  6.5   proposes construction of the project or an affiliate of the 
  6.6   entity; 
  6.7      (II) a signed agreement has been entered into between the 
  6.8   building developer and a tenant to lease for its own account at 
  6.9   least 200,000 square feet of space in the building; 
  6.10     (III) a signed letter of intent is entered into by July 1, 
  6.11  1998, between the building developer and the tenant to lease the 
  6.12  space for its own account; and 
  6.13     (IV) the environmental review process required by state law 
  6.14  was commenced by December 31, 1998; 
  6.15     (D) property for which an irrevocable letter of credit with 
  6.16  a housing and redevelopment authority was signed before December 
  6.17  31, 1998.  The structure shall receive the transit zone reduced 
  6.18  class rate during construction and for the duration of time that 
  6.19  the original tenants remain in the building.  Any unoccupied net 
  6.20  leasable square footage that is not leased within 36 months 
  6.21  after the certificate of occupancy has been issued for the 
  6.22  building shall not be eligible to receive the reduced class 
  6.23  rate.  This reduced class rate applies only if a qualifying 
  6.24  entity continues to own the property; 
  6.25     (E) property, located in a city of the first class, and for 
  6.26  which the building permits for the excavation, the parking ramp, 
  6.27  and the office tower were issued prior to April 1, 1999, shall 
  6.28  receive the reduced class rate during construction and for the 
  6.29  first five assessment years immediately following its initial 
  6.30  occupancy provided that, when completed, at least 25 percent of 
  6.31  the net leasable square footage must be occupied by a qualifying 
  6.32  entity each year during this time period.  In order to receive 
  6.33  the reduced class rate on the structure in any subsequent 
  6.34  assessment years, at least 50 percent of the rentable square 
  6.35  footage must be occupied by a qualifying entity.  This reduced 
  6.36  class rate applies only if a qualifying entity continues to own 
  7.1   the property. 
  7.2      (ii) A structure specified by this clause, other than a 
  7.3   structure qualifying under clause (i)(D) or (E), shall continue 
  7.4   to receive the transit zone reduced class rate until the 
  7.5   occurrence of one of the following events: 
  7.6      (A) if the structure upon initial occupancy will be owner 
  7.7   occupied by the entity initially constructing the structure or 
  7.8   an affiliated entity, the structure receives the reduced class 
  7.9   rate until the structure ceases to be at least 50 percent 
  7.10  occupied by the entity or an affiliated entity, provided, if the 
  7.11  portion of the structure occupied by that entity or an affiliate 
  7.12  of the entity is less than 85 percent, the transit zone class 
  7.13  rate reduction for the portion of structure not so occupied 
  7.14  terminates upon the leasing of such space to any nonaffiliated 
  7.15  entity; or 
  7.16     (B) if the structure is leased by a single entity or 
  7.17  affiliated entity at the time of initial occupancy, the 
  7.18  structure shall receive the reduced class rate until the 
  7.19  structure ceases to be at least 50 percent occupied by the 
  7.20  entity or an affiliated entity, provided, if the portion of the 
  7.21  structure occupied by that entity or an affiliate of the entity 
  7.22  is less than 85 percent, the transit zone class rate reduction 
  7.23  for the portion of structure not so occupied shall terminate 
  7.24  upon the leasing of such space to any nonaffiliated entity; or 
  7.25     (C) if the structure meets the criteria in item (i)(C), the 
  7.26  structure shall receive the reduced class rate until the 
  7.27  expiration of the initial lease term of the applicable tenants. 
  7.28     Percentages occupied or leased shall be determined based 
  7.29  upon net leasable square footage in the structure.  The assessor 
  7.30  shall allocate the value of the structure in the same fashion as 
  7.31  provided in the general law for portions of any structure 
  7.32  receiving and not receiving the transit tax class reduction as a 
  7.33  result of this clause. 
  7.34     (3) For purposes of paragraph (c), "qualifying entity" 
  7.35  means the entity owning the property on September 1, 2000, or an 
  7.36  affiliate of an entity that owned the property on September 1, 
  8.1   2000. 
  8.2      [EFFECTIVE DATE.] This section is effective for taxes 
  8.3   levied in 2001, payable in 2002, and thereafter. 
  8.4      Sec. 4.  [273.167] [ELECTRIC UTILITY REPLACEMENT AID.] 
  8.5      Subdivision 1.  [QUALIFICATION.] If a county, home rule 
  8.6   charter or statutory city, special taxing district, or school 
  8.7   district imposed a levy for taxes payable in 2001 on property 
  8.8   consisting of tools, implements, and machinery of an electric 
  8.9   generation system that becomes exempt from taxation under 
  8.10  section 2, it must be reimbursed for the revenue lost due to 
  8.11  that exemption as provided in this section. 
  8.12     Subd. 2.  [PAYMENT.] The electric utility replacement aid 
  8.13  paid to qualifying local units of government in 2002 and 
  8.14  subsequent years is equal to the amount the local unit of 
  8.15  government received in payable 2001 taxes levied on the electric 
  8.16  generation system personal property.  Payments to a school 
  8.17  district under this section are made only for unequalized 
  8.18  levies.  If an electric generation system ceases operation in 
  8.19  2001 or thereafter, the electric utility replacement aid to that 
  8.20  local unit of government must be reduced in proportion to the 
  8.21  reduction in market value of the generation system personal 
  8.22  property.  Local units of government must apply to the 
  8.23  commissioner of revenue by December 1, 2001, to qualify for the 
  8.24  state's electric utility replacement aid. 
  8.25     Subd. 3.  [AID CALCULATION.] The commissioner of revenue 
  8.26  shall make the calculation required in this section and annually 
  8.27  pay electric utility replacement aid to the local governments on 
  8.28  July 20.  Aid payments to the school districts must be certified 
  8.29  to the commissioner of children, families, and learning and paid 
  8.30  under section 273.1392. 
  8.31     Subd. 4.  [APPROPRIATION.] There is annually appropriated 
  8.32  from the general fund to the commissioner of children, families, 
  8.33  and learning a sum sufficient to pay the aids provided under 
  8.34  this section for school districts, intermediate school 
  8.35  districts, or any group of school districts levying as a single 
  8.36  taxing entity.  There is annually appropriated from the general 
  9.1   fund to the commissioner of revenue a sum sufficient to pay the 
  9.2   aids provided under this section to counties, cities, towns, and 
  9.3   special taxing districts. 
  9.4      [EFFECTIVE DATE.] This section is effective for aid 
  9.5   payments in 2002 and thereafter. 
  9.6      Sec. 5.  Minnesota Statutes 2000, section 475A.02, 
  9.7   subdivision 1, is amended to read: 
  9.8      Subdivision 1.  [TERMS.] Except as provided in this section 
  9.9   the terms contained in sections 475A.01 to 475A.06 475A.07 shall 
  9.10  have the meanings given them by section 475.51.  
  9.11     Sec. 6.  [475A.07] [LOCAL BONDS; STATE GUARANTY.] 
  9.12     Subdivision 1.  [APPLICATION.] This section applies to 
  9.13  bonds of a municipality if the following conditions are met: 
  9.14     (1) for taxes payable in 2002, electric utility generation 
  9.15  personal property net tax capacity constitutes at least 20 
  9.16  percent of the total net tax capacity of the municipality; 
  9.17     (2) the bonds are general obligations to which the full 
  9.18  faith and credit of the municipality is pledged, including an 
  9.19  unlimited pledge to levy the amount of property taxes needed to 
  9.20  pay the obligations; and 
  9.21     (3) the bonds were outstanding on April 1, 2001, or were 
  9.22  issued to refund bonds that were outstanding on that date. 
  9.23     Subd. 2.  [STATE GUARANTY.] (a) The state guarantees the 
  9.24  payment of bonds subject to this section.  If a deficiency or a 
  9.25  default occurs with respect to a bond subject to this section, 
  9.26  the commissioner of finance shall pay any amount needed to 
  9.27  remedy and correct the deficiency or default.  This guaranty is 
  9.28  permanent and irrevocable. 
  9.29     (b) If a payment is made by the commissioner under 
  9.30  paragraph (a), the commissioner may recover the amount, plus any 
  9.31  additional costs incurred, including interest at the rate 
  9.32  specified in section 279.03, subdivision 1a, from the 
  9.33  municipality by: 
  9.34     (1) deducting the amount from state aid payments made to 
  9.35  the municipality; 
  9.36     (2) compelling the levy of property taxes by the 
 10.1   municipality, with the proceeds of the tax to be paid to the 
 10.2   commissioner of finance; 
 10.3      (3) bringing legal action to collect the amount; or 
 10.4      (4) any combination of the actions described in clauses (1) 
 10.5   to (3). 
 10.6      Subd. 3.  [APPROPRIATION.] An amount sufficient to provide 
 10.7   the funds needed to pay and administer the guaranty under this 
 10.8   section is annually appropriated from the general fund to the 
 10.9   commissioner of finance.