HF 2498

1st Engrossment - 84th Legislature (2005 - 2006) Posted on 12/15/2009 12:00am

  1.1                          A bill for an act 
  1.2             relating to public finance; authorizing purchases of 
  1.3             certain guaranteed investment contracts; authorizing a 
  1.4             special levy; modifying a taconite fund provision; 
  1.5             modifying the authority of cities and counties to 
  1.6             finance purchases of computers and related items; 
  1.7             extending the term of certain notes; clarifying the 
  1.8             financing of conservation easements; extending sunsets 
  1.9             on establishment of special service districts and 
  1.10            housing improvement areas; authorizing municipalities 
  1.11            to improve streets and roads outside municipal 
  1.12            boundaries; providing for financing of certain 
  1.13            improvements; extending the maximum maturity of 
  1.14            certain bonds; revising time for certain notices of 
  1.15            issues; exempting obligations issued to pay judgments 
  1.16            from net debt limits; modifying limits on city capital 
  1.17            improvement bonds and enabling certain towns to issue 
  1.18            bonds under a capital improvement plan; authorizing 
  1.19            the issuance of certain revenue bonds; modifying 
  1.20            certain tax increment financing provisions; providing 
  1.21            a bidding exception; increasing reserve from public 
  1.22            facilities pool for certain purposes; providing for 
  1.23            payment of certain refunding bonds; abolishing the 
  1.24            housing bond credit enhancement program and providing 
  1.25            for debt service on the bonds; authorizing a tax 
  1.26            abatement extension; providing for an international 
  1.27            economic development zone; providing tax incentives; 
  1.28            requiring a report; appropriating money for certain 
  1.29            refunds; amending Minnesota Statutes 2004, sections 
  1.30            13.55, by adding a subdivision; 116J.556; 118A.05, 
  1.31            subdivision 5; 272.02, subdivision 64, by adding a 
  1.32            subdivision; 275.70, subdivision 5; 290.01, 
  1.33            subdivisions 19b, 29; 290.06, subdivision 2c, by 
  1.34            adding a subdivision; 290.067, subdivision 1; 
  1.35            290.0671, subdivision 1; 290.091, subdivision 2; 
  1.36            290.0921, subdivision 3; 290.0922, subdivisions 2, 3; 
  1.37            297A.68, by adding a subdivision; 298.223, subdivision 
  1.38            1; 343.11; 373.01, subdivision 3; 373.40, subdivision 
  1.39            1; 410.32; 412.301; 428A.101; 428A.21; 469.015, 
  1.40            subdivision 4; 469.034, subdivision 2; 469.158; 
  1.41            469.174, subdivisions 11, 25; 469.175, subdivisions 1, 
  1.42            4a, 5, 6; 469.176, subdivisions 2, 4d; 469.1761, 
  1.43            subdivisions 1, 3; 469.1763, subdivision 6; 469.177, 
  1.44            subdivision 1; 469.1771, subdivision 5; 469.178, 
  1.45            subdivision 1; 469.1813, subdivisions 1, 6; 473.197, 
  1.46            subdivision 4; 473.39, subdivision 1f, by adding a 
  2.1             subdivision; 474A.061, subdivision 2c; 474A.131, 
  2.2             subdivision 1; 475.51, subdivision 4; 475.52, 
  2.3             subdivisions 1, 3, 4; 475.521, subdivisions 1, 2, 3, 
  2.4             4; Laws 1996, chapter 412, article 5, section 24; Laws 
  2.5             2003, chapter 127, article 12, section 38; proposing 
  2.6             coding for new law in Minnesota Statutes, chapters 
  2.7             428A; 429; 452; 469; repealing Minnesota Statutes 
  2.8             2004, sections 469.176, subdivision 1a; 469.1766; 
  2.9             473.197, subdivisions 1, 2, 3, 5; Laws 1998, chapter 
  2.10            389, article 11, section 19, subdivision 3. 
  2.11  BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA: 
  2.12                             ARTICLE 1 
  2.13                           PUBLIC FINANCE 
  2.14     Section 1.  Minnesota Statutes 2004, section 13.55, is 
  2.15  amended by adding a subdivision to read: 
  2.16     Subd. 4.  [CITY OF ST. PAUL DATA.] (a) For purposes of this 
  2.17  subdivision, "nonprofit organization" means the nonprofit 
  2.18  organization with which the city of St. Paul contracts to market 
  2.19  and promote the city as a tourist or convention center. 
  2.20     (b) Data collected, received, created, or maintained by the 
  2.21  nonprofit organization in the course of preparing or submitting 
  2.22  any responses to requests for proposals or requests for bids 
  2.23  relating to events hosted, conducted, or sponsored by the 
  2.24  nonprofit organization is classified as nonpublic data under 
  2.25  section 13.02, subdivision 9; or private data under section 
  2.26  13.02, subdivision 12, until the time provided in subdivision 2, 
  2.27  paragraph (a) or (b), of this section.  The nonprofit 
  2.28  organization is a "civic center authority" for purposes of this 
  2.29  section. 
  2.30     Sec. 2.  Minnesota Statutes 2004, section 118A.05, 
  2.31  subdivision 5, is amended to read: 
  2.32     Subd. 5.  [GUARANTEED INVESTMENT CONTRACTS.] Agreements or 
  2.33  contracts for guaranteed investment contracts may be entered 
  2.34  into if they are issued or guaranteed by United States 
  2.35  commercial banks, domestic branches of foreign banks, United 
  2.36  States insurance companies, or their Canadian subsidiaries, or 
  2.37  the domestic affiliates of any of the foregoing.  The credit 
  2.38  quality of the issuer's or guarantor's short- and long-term 
  2.39  unsecured debt must be rated in one of the two highest 
  2.40  categories by a nationally recognized rating agency.  Should the 
  3.1   issuer's or guarantor's credit quality be downgraded below "A", 
  3.2   the government entity must have withdrawal rights. 
  3.3      Sec. 3.  Minnesota Statutes 2004, section 275.70, 
  3.4   subdivision 5, is amended to read: 
  3.5      Subd. 5.  [SPECIAL LEVIES.] "Special levies" means those 
  3.6   portions of ad valorem taxes levied by a local governmental unit 
  3.7   for the following purposes or in the following manner: 
  3.8      (1) to pay the costs of the principal and interest on 
  3.9   bonded indebtedness or to reimburse for the amount of liquor 
  3.10  store revenues used to pay the principal and interest due on 
  3.11  municipal liquor store bonds in the year preceding the year for 
  3.12  which the levy limit is calculated; 
  3.13     (2) to pay the costs of principal and interest on 
  3.14  certificates of indebtedness issued for any corporate purpose 
  3.15  except for the following: 
  3.16     (i) tax anticipation or aid anticipation certificates of 
  3.17  indebtedness; 
  3.18     (ii) certificates of indebtedness issued under sections 
  3.19  298.28 and 298.282; 
  3.20     (iii) certificates of indebtedness used to fund current 
  3.21  expenses or to pay the costs of extraordinary expenditures that 
  3.22  result from a public emergency; or 
  3.23     (iv) certificates of indebtedness used to fund an 
  3.24  insufficiency in tax receipts or an insufficiency in other 
  3.25  revenue sources; 
  3.26     (3) to provide for the bonded indebtedness portion of 
  3.27  payments made to another political subdivision of the state of 
  3.28  Minnesota; 
  3.29     (4) to fund payments made to the Minnesota State Armory 
  3.30  Building Commission under section 193.145, subdivision 2, to 
  3.31  retire the principal and interest on armory construction bonds; 
  3.32     (5) property taxes approved by voters which are levied 
  3.33  against the referendum market value as provided under section 
  3.34  275.61; 
  3.35     (6) to fund matching requirements needed to qualify for 
  3.36  federal or state grants or programs to the extent that either 
  4.1   (i) the matching requirement exceeds the matching requirement in 
  4.2   calendar year 2001, or (ii) it is a new matching requirement 
  4.3   that did not exist prior to 2002; 
  4.4      (7) to pay the expenses reasonably and necessarily incurred 
  4.5   in preparing for or repairing the effects of natural disaster 
  4.6   including the occurrence or threat of widespread or severe 
  4.7   damage, injury, or loss of life or property resulting from 
  4.8   natural causes, in accordance with standards formulated by the 
  4.9   Emergency Services Division of the state Department of Public 
  4.10  Safety, as allowed by the commissioner of revenue under section 
  4.11  275.74, subdivision 2; 
  4.12     (8) pay amounts required to correct an error in the levy 
  4.13  certified to the county auditor by a city or county in a levy 
  4.14  year, but only to the extent that when added to the preceding 
  4.15  year's levy it is not in excess of an applicable statutory, 
  4.16  special law or charter limitation, or the limitation imposed on 
  4.17  the governmental subdivision by sections 275.70 to 275.74 in the 
  4.18  preceding levy year; 
  4.19     (9) to pay an abatement under section 469.1815; 
  4.20     (10) to pay any costs attributable to increases in the 
  4.21  employer contribution rates under chapter 353 that are effective 
  4.22  after June 30, 2001; 
  4.23     (11) to pay the operating or maintenance costs of a county 
  4.24  jail as authorized in section 641.01 or 641.262, or of a 
  4.25  correctional facility as defined in section 241.021, subdivision 
  4.26  1, paragraph (f), to the extent that the county can demonstrate 
  4.27  to the commissioner of revenue that the amount has been included 
  4.28  in the county budget as a direct result of a rule, minimum 
  4.29  requirement, minimum standard, or directive of the Department of 
  4.30  Corrections, or to pay the operating or maintenance costs of a 
  4.31  regional jail as authorized in section 641.262.  For purposes of 
  4.32  this clause, a district court order is not a rule, minimum 
  4.33  requirement, minimum standard, or directive of the Department of 
  4.34  Corrections.  If the county utilizes this special levy, except 
  4.35  to pay operating or maintenance costs of a new regional jail 
  4.36  facility under sections 641.262 to 641.264 which will not 
  5.1   replace an existing jail facility, any amount levied by the 
  5.2   county in the previous levy year for the purposes specified 
  5.3   under this clause and included in the county's previous year's 
  5.4   levy limitation computed under section 275.71, shall be deducted 
  5.5   from the levy limit base under section 275.71, subdivision 2, 
  5.6   when determining the county's current year levy limitation.  The 
  5.7   county shall provide the necessary information to the 
  5.8   commissioner of revenue for making this determination; 
  5.9      (12) to pay for operation of a lake improvement district, 
  5.10  as authorized under section 103B.555.  If the county utilizes 
  5.11  this special levy, any amount levied by the county in the 
  5.12  previous levy year for the purposes specified under this clause 
  5.13  and included in the county's previous year's levy limitation 
  5.14  computed under section 275.71 shall be deducted from the levy 
  5.15  limit base under section 275.71, subdivision 2, when determining 
  5.16  the county's current year levy limitation.  The county shall 
  5.17  provide the necessary information to the commissioner of revenue 
  5.18  for making this determination; 
  5.19     (13) to repay a state or federal loan used to fund the 
  5.20  direct or indirect required spending by the local government due 
  5.21  to a state or federal transportation project or other state or 
  5.22  federal capital project.  This authority may only be used if the 
  5.23  project is not a local government initiative; 
  5.24     (14) to pay for court administration costs as required 
  5.25  under section 273.1398, subdivision 4b, less the (i) county's 
  5.26  share of transferred fines and fees collected by the district 
  5.27  courts in the county for calendar year 2001 and (ii) the aid 
  5.28  amount certified to be paid to the county in 2004 under section 
  5.29  273.1398, subdivision 4c; however, for taxes levied to pay for 
  5.30  these costs in the year in which the court financing is 
  5.31  transferred to the state, the amount under this clause is 
  5.32  limited to the amount of aid the county is certified to receive 
  5.33  under section 273.1398, subdivision 4a; and 
  5.34     (15) to fund a police or firefighters relief association as 
  5.35  required under section 69.77 to the extent that the required 
  5.36  amount exceeds the amount levied for this purpose in 2001; and 
  6.1      (16) for purposes of a storm sewer improvement district, 
  6.2   pursuant to section 444.20. 
  6.3      Sec. 4.  Minnesota Statutes 2004, section 298.223, 
  6.4   subdivision 1, is amended to read: 
  6.5      Subdivision 1.  [CREATION; PURPOSES.] A fund called the 
  6.6   taconite environmental protection fund is created for the 
  6.7   purpose of reclaiming, restoring and enhancing those areas of 
  6.8   northeast Minnesota located within the taconite assistance area 
  6.9   defined in section 273.1341, that are adversely affected by the 
  6.10  environmentally damaging operations involved in mining taconite 
  6.11  and iron ore and producing iron ore concentrate and for the 
  6.12  purpose of promoting the economic development of northeast 
  6.13  Minnesota.  The taconite environmental protection fund shall be 
  6.14  used for the following purposes: 
  6.15     (a) to initiate investigations into matters the Iron Range 
  6.16  Resources and Rehabilitation Board determines are in need of 
  6.17  study and which will determine the environmental problems 
  6.18  requiring remedial action; 
  6.19     (b) reclamation, restoration, or reforestation of minelands 
  6.20  not otherwise provided for by state law; 
  6.21     (c) local economic development projects including 
  6.22  construction of sewer and water systems, and other but only if 
  6.23  those projects are approved by the board, and public works, 
  6.24  including construction of sewer and water systems located within 
  6.25  the taconite assistance area defined in section 273.1341; 
  6.26     (d) monitoring of mineral industry related health problems 
  6.27  among mining employees. 
  6.28     [EFFECTIVE DATE.] This section is effective the day 
  6.29  following final enactment. 
  6.30     Sec. 5.  Minnesota Statutes 2004, section 343.11, is 
  6.31  amended to read: 
  6.32     343.11 [ACQUISITION OF PROPERTY, APPROPRIATIONS.] 
  6.33     Every county and district society for the prevention of 
  6.34  cruelty to animals may acquire, by purchase, gift, grant, or 
  6.35  devise, and hold, use, or convey, real estate and personal 
  6.36  property, and lease, mortgage, sell, or use the same in any 
  7.1   manner conducive to its interest, to the same extent as natural 
  7.2   persons.  The county board of any county, or the council of any 
  7.3   city, in which such societies exist, may, in its discretion, 
  7.4   appropriate for the maintenance and support of such societies in 
  7.5   the transaction of the work for which they are organized, any 
  7.6   sums of money not otherwise appropriated, not to exceed in any 
  7.7   one year the sum of $4,800 or the sum of 50 cents $1 per capita 
  7.8   based upon the county's or city's population as of the most 
  7.9   recent federal census, whichever is greater; provided, that no 
  7.10  part of the appropriation shall be expended for the payment of 
  7.11  the salary of any officer of the society. 
  7.12     [EFFECTIVE DATE.] This section is effective January 1, 2006.
  7.13     Sec. 6.  Minnesota Statutes 2004, section 373.01, 
  7.14  subdivision 3, is amended to read: 
  7.15     Subd. 3.  [CAPITAL NOTES.] (a) A county board may, by 
  7.16  resolution and without referendum, issue capital notes subject 
  7.17  to the county debt limit to purchase capital equipment useful 
  7.18  for county purposes that has an expected useful life at least 
  7.19  equal to the term of the notes.  The notes shall be payable in 
  7.20  not more than five ten years and shall be issued on terms and in 
  7.21  a manner the board determines.  A tax levy shall be made for 
  7.22  payment of the principal and interest on the notes, in 
  7.23  accordance with section 475.61, as in the case of bonds.  
  7.24     (b) For purposes of this subdivision, "capital equipment" 
  7.25  means: 
  7.26     (1) public safety, ambulance, road construction or 
  7.27  maintenance, and medical equipment,; and 
  7.28     (2) computer hardware and original operating system 
  7.29  software, whether bundled with machinery or equipment or 
  7.30  unbundled.  The authority to issue capital notes for original 
  7.31  operating systems software expires on July 1, 2005 2007. 
  7.32     Sec. 7.  Minnesota Statutes 2004, section 373.40, 
  7.33  subdivision 1, is amended to read: 
  7.34     Subdivision 1.  [DEFINITIONS.] For purposes of this 
  7.35  section, the following terms have the meanings given. 
  7.36     (a) "Bonds" means an obligation as defined under section 
  8.1   475.51. 
  8.2      (b) "Capital improvement" means acquisition or betterment 
  8.3   of public lands, development rights in the form of conservation 
  8.4   easements under chapter 84C, buildings, or other improvements 
  8.5   within the county for the purpose of a county courthouse, 
  8.6   administrative building, health or social service facility, 
  8.7   correctional facility, jail, law enforcement center, hospital, 
  8.8   morgue, library, park, qualified indoor ice arena, and roads and 
  8.9   bridges, and the acquisition of development rights in the form 
  8.10  of conservation easements under chapter 84C.  An improvement 
  8.11  must have an expected useful life of five years or more to 
  8.12  qualify.  "Capital improvement" does not include light rail 
  8.13  transit or any activity related to it or a recreation or sports 
  8.14  facility building (such as, but not limited to, a gymnasium, ice 
  8.15  arena, racquet sports facility, swimming pool, exercise room or 
  8.16  health spa), unless the building is part of an outdoor park 
  8.17  facility and is incidental to the primary purpose of outdoor 
  8.18  recreation. 
  8.19     (c) "Commissioner" means the commissioner of employment and 
  8.20  economic development. 
  8.21     (d) "Metropolitan county" means a county located in the 
  8.22  seven-county metropolitan area as defined in section 473.121 or 
  8.23  a county with a population of 90,000 or more. 
  8.24     (e) "Population" means the population established by the 
  8.25  most recent of the following (determined as of the date the 
  8.26  resolution authorizing the bonds was adopted): 
  8.27     (1) the federal decennial census, 
  8.28     (2) a special census conducted under contract by the United 
  8.29  States Bureau of the Census, or 
  8.30     (3) a population estimate made either by the Metropolitan 
  8.31  Council or by the state demographer under section 4A.02. 
  8.32     (f) "Qualified indoor ice arena" means a facility that 
  8.33  meets the requirements of section 373.43. 
  8.34     (g) "Tax capacity" means total taxable market value, but 
  8.35  does not include captured market value. 
  8.36     Sec. 8.  Minnesota Statutes 2004, section 410.32, is 
  9.1   amended to read: 
  9.2      410.32 [CITIES MAY ISSUE CAPITAL NOTES FOR CAPITAL 
  9.3   EQUIPMENT.] 
  9.4      (a) Notwithstanding any contrary provision of other law or 
  9.5   charter, a home rule charter city may, by resolution and without 
  9.6   public referendum, issue capital notes subject to the city debt 
  9.7   limit to purchase capital equipment. 
  9.8      (b) For purposes of this section, "capital equipment" means:
  9.9      (1) public safety equipment, ambulance and other medical 
  9.10  equipment, road construction and maintenance equipment, and 
  9.11  other capital equipment; and 
  9.12     (2) computer hardware and original operating system 
  9.13  software, provided whether bundled with machinery or equipment 
  9.14  or unbundled. 
  9.15     (c) The equipment or software has must have an expected 
  9.16  useful life at least as long as the term of the notes.  The 
  9.17  authority to issue capital notes for original operating system 
  9.18  software expires on July 1, 2005 2007. 
  9.19     (d) The notes shall be payable in not more than five ten 
  9.20  years and be issued on terms and in the manner the city 
  9.21  determines.  The total principal amount of the capital notes 
  9.22  issued in a fiscal year shall not exceed 0.03 percent of the 
  9.23  market value of taxable property in the city for that year.  
  9.24     (e) A tax levy shall be made for the payment of the 
  9.25  principal and interest on the notes, in accordance with section 
  9.26  475.61, as in the case of bonds.  
  9.27     (f) Notes issued under this section shall require an 
  9.28  affirmative vote of two-thirds of the governing body of the city.
  9.29     (g) Notwithstanding a contrary provision of other law or 
  9.30  charter, a home rule charter city may also issue capital notes 
  9.31  subject to its debt limit in the manner and subject to the 
  9.32  limitations applicable to statutory cities pursuant to section 
  9.33  412.301. 
  9.34     Sec. 9.  Minnesota Statutes 2004, section 412.301, is 
  9.35  amended to read: 
  9.36     412.301 [FINANCING PURCHASE OF CERTAIN EQUIPMENT.] 
 10.1      (a) The council may issue certificates of indebtedness or 
 10.2   capital notes subject to the city debt limits to 
 10.3   purchase capital equipment. 
 10.4      (b) For purposes of this section, "capital equipment" means:
 10.5      (1) public safety equipment, ambulance and other medical 
 10.6   equipment, road construction or and maintenance equipment, and 
 10.7   other capital equipment; and 
 10.8      (2) computer hardware and original operating system 
 10.9   software, provided whether bundled with machinery or equipment 
 10.10  or unbundled. 
 10.11     (c) The equipment or software has must have an expected 
 10.12  useful life at least as long as the terms of the certificates or 
 10.13  notes.  The authority to issue capital notes for original 
 10.14  operating system software expires on July 1, 2005 2007. 
 10.15     (d) Such certificates or notes shall be payable in not more 
 10.16  than five ten years and shall be issued on such terms and in 
 10.17  such manner as the council may determine.  
 10.18     (e) If the amount of the certificates or notes to be issued 
 10.19  to finance any such purchase exceeds 0.25 percent of the market 
 10.20  value of taxable property in the city, they shall not be issued 
 10.21  for at least ten days after publication in the official 
 10.22  newspaper of a council resolution determining to issue them; and 
 10.23  if before the end of that time, a petition asking for an 
 10.24  election on the proposition signed by voters equal to ten 
 10.25  percent of the number of voters at the last regular municipal 
 10.26  election is filed with the clerk, such certificates or notes 
 10.27  shall not be issued until the proposition of their issuance has 
 10.28  been approved by a majority of the votes cast on the question at 
 10.29  a regular or special election.  
 10.30     (f) A tax levy shall be made for the payment of the 
 10.31  principal and interest on such certificates or notes, in 
 10.32  accordance with section 475.61, as in the case of bonds.  
 10.33     Sec. 10.  Minnesota Statutes 2004, section 428A.101, is 
 10.34  amended to read: 
 10.35     428A.101 [DEADLINE FOR SPECIAL SERVICE DISTRICT UNDER 
 10.36  GENERAL LAW.] 
 11.1      The establishment of a new special service district after 
 11.2   June 30, 2005 2009, requires enactment of a special law 
 11.3   authorizing the establishment. 
 11.4      Sec. 11.  [428A.102] [NOTIFICATION.] 
 11.5      By the last day of the calendar year in which a special 
 11.6   service district is established or modified, the city shall file 
 11.7   a copy of the ordinance establishing or modifying the district 
 11.8   with the Office of State Auditor.  Cities establishing districts 
 11.9   before the effective date of this section must file a copy of 
 11.10  the ordinance by December 31, 2005. 
 11.11     Sec. 12.  Minnesota Statutes 2004, section 428A.21, is 
 11.12  amended to read: 
 11.13     428A.21 [SUNSET.] 
 11.14     No new housing improvement areas may be established under 
 11.15  sections 428A.11 to 428A.20 after June 30, 2005 2009.  After 
 11.16  June 30, 2005 2009, a city may establish a housing improvement 
 11.17  area, provided that it receives enabling legislation authorizing 
 11.18  the establishment of the area. 
 11.19     Sec. 13.  [428A.22] [NOTIFICATION.] 
 11.20     By the last day of the calendar year in which a housing 
 11.21  improvement district is established or modified, the city shall 
 11.22  file a copy of the ordinance establishing or modifying the 
 11.23  district with the Office of State Auditor.  Cities establishing 
 11.24  districts before the effective date of this section must file a 
 11.25  copy of the ordinance by December 31, 2005. 
 11.26     Sec. 14.  [429.052] [STREET OR ROAD IMPROVEMENTS OUTSIDE 
 11.27  MUNICIPAL BOUNDARIES.] 
 11.28     A municipality may construct street or road improvements 
 11.29  outside its jurisdiction with the consent of the affected 
 11.30  township, or if the property is located in unorganized 
 11.31  territory, the county.  When property is brought within the 
 11.32  corporate limits of the municipality, the municipality may 
 11.33  subsequently reimburse itself for all or any portion of the cost 
 11.34  of the improvement for which municipal funds have been expended, 
 11.35  by levying an assessment upon any property abutting on, but not 
 11.36  previously assessed for, the improvement.  No assessment may be 
 12.1   so levied unless the property to be assessed was given notice 
 12.2   and hearing of the improvements under section 429.031 at the 
 12.3   time the improvement was ordered and subsequently upon notice 
 12.4   and hearing as provided for the improvement initially made. 
 12.5      [EFFECTIVE DATE.] This section is effective for street and 
 12.6   road improvements first ordered after August 1, 2005. 
 12.7      Sec. 15.  [452.26] [UTILITY JOINT VENTURE.] 
 12.8      To provide reduced cost financing or to otherwise help in 
 12.9   carrying out its functions, a municipal gas agency created under 
 12.10  chapter 453A and any municipal utility authorized to provide gas 
 12.11  facilities or services may enter into a joint venture that was 
 12.12  incorporated before June 30, 2004, under section 452.25.  The 
 12.13  joint venture, and any municipal gas agency which is a member of 
 12.14  the joint venture, may provide gas utility service. 
 12.15     [EFFECTIVE DATE.] This section is effective the day 
 12.16  following final enactment. 
 12.17     Sec. 16.  Minnesota Statutes 2004, section 469.015, 
 12.18  subdivision 4, is amended to read: 
 12.19     Subd. 4.  [EXCEPTIONS.] (a) An authority need not require 
 12.20  competitive bidding in the following circumstances:  
 12.21     (1) in the case of a contract for the acquisition of a 
 12.22  low-rent housing project: 
 12.23     (i) for which financial assistance is provided by the 
 12.24  federal government; 
 12.25     (ii) which does not require any direct loan or grant of 
 12.26  money from the municipality as a condition of the federal 
 12.27  financial assistance; and 
 12.28     (iii) for which the contract provides for the construction 
 12.29  of the project upon land that is either owned by the authority 
 12.30  for redevelopment purposes or not owned by the authority at the 
 12.31  time of the contract but the contract provides for the 
 12.32  conveyance or lease to the authority of the project or 
 12.33  improvements upon completion of construction; 
 12.34     (2) with respect to a structured parking facility: 
 12.35     (i) constructed in conjunction with, and directly above or 
 12.36  below, a development; and 
 13.1      (ii) financed with the proceeds of tax increment or parking 
 13.2   ramp general obligation or revenue bonds; and 
 13.3      (3) until August 1, 2009, with respect to a facility built 
 13.4   for the purpose of facilitating the operation of public transit 
 13.5   or encouraging its use: 
 13.6      (i) constructed in conjunction with, and directly above or 
 13.7   below, a development; and 
 13.8      (ii) financed with the proceeds of parking ramp general 
 13.9   obligation or revenue bonds or with at least 60 percent of the 
 13.10  construction cost being financed with funding provided by the 
 13.11  federal government; and 
 13.12     (4) in the case of any building in which at least 75 
 13.13  percent of the usable square footage constitutes a housing 
 13.14  development project if: 
 13.15     (i) the project is financed with the proceeds of bonds 
 13.16  issued under section 469.034 or from nongovernmental sources; 
 13.17     (ii) the project is either located on land that is owned or 
 13.18  is being acquired by the authority only for development 
 13.19  purposes, or is not owned by the authority at the time the 
 13.20  contract is entered into but the contract provides for 
 13.21  conveyance or lease to the authority of the project or 
 13.22  improvements upon completion of construction; and 
 13.23     (iii) the authority finds and determines that elimination 
 13.24  of the public bidding requirements is necessary in order for the 
 13.25  housing development project to be economical and feasible. 
 13.26     (b) An authority need not require a performance bond for 
 13.27  the following projects: 
 13.28     (1) a contract described in paragraph (a), clause (1); 
 13.29     (2) a construction change order for a housing project in 
 13.30  which 30 percent of the construction has been completed; 
 13.31     (3) a construction contract for a single-family housing 
 13.32  project in which the authority acts as the general construction 
 13.33  contractor; or 
 13.34     (4) a services or materials contract for a housing project. 
 13.35     For purposes of this paragraph, "services or materials 
 13.36  contract" does not include construction contracts. 
 14.1      Sec. 17.  Minnesota Statutes 2004, section 469.034, 
 14.2   subdivision 2, is amended to read: 
 14.3      Subd. 2.  [GENERAL OBLIGATION REVENUE BONDS.] (a) An 
 14.4   authority may pledge the general obligation of the general 
 14.5   jurisdiction governmental unit as additional security for bonds 
 14.6   payable from income or revenues of the project or the 
 14.7   authority.  The authority must find that the pledged revenues 
 14.8   will equal or exceed 110 percent of the principal and interest 
 14.9   due on the bonds for each year.  The proceeds of the bonds must 
 14.10  be used for a qualified housing development project or 
 14.11  projects.  The obligations must be issued and sold in the manner 
 14.12  and following the procedures provided by chapter 475, except the 
 14.13  obligations are not subject to approval by the electors, and the 
 14.14  maturities may extend to not more than 30 35 years from the 
 14.15  estimated date of completion of the project for obligations sold 
 14.16  to finance housing for the elderly and 40 years for other 
 14.17  obligations issued under this subdivision.  The authority is the 
 14.18  municipality for purposes of chapter 475.  
 14.19     (b) The principal amount of the issue must be approved by 
 14.20  the governing body of the general jurisdiction governmental unit 
 14.21  whose general obligation is pledged.  Public hearings must be 
 14.22  held on issuance of the obligations by both the authority and 
 14.23  the general jurisdiction governmental unit.  The hearings must 
 14.24  be held at least 15 days, but not more than 120 days, before the 
 14.25  sale of the obligations. 
 14.26     (c) The maximum amount of general obligation bonds that may 
 14.27  be issued and outstanding under this section equals the greater 
 14.28  of (1) one-half of one percent of the taxable market value of 
 14.29  the general jurisdiction governmental unit whose general 
 14.30  obligation which includes a tax on property is pledged, or (2) 
 14.31  $3,000,000.  In the case of county or multicounty general 
 14.32  obligation bonds, the outstanding general obligation bonds of 
 14.33  all cities in the county or counties issued under this 
 14.34  subdivision must be added in calculating the limit under clause 
 14.35  (1). 
 14.36     (d) "General jurisdiction governmental unit" means the city 
 15.1   in which the housing development project is located.  In the 
 15.2   case of a county or multicounty authority, the county or 
 15.3   counties may act as the general jurisdiction governmental unit.  
 15.4   In the case of a multicounty authority, the pledge of the 
 15.5   general obligation is a pledge of a tax on the taxable property 
 15.6   in each of the counties. 
 15.7      (e) "Qualified housing development project" means a housing 
 15.8   development project providing housing either for the elderly or 
 15.9   for individuals and families with incomes not greater than 80 
 15.10  percent of the median family income as estimated by the United 
 15.11  States Department of Housing and Urban Development for the 
 15.12  standard metropolitan statistical area or the nonmetropolitan 
 15.13  county in which the project is located, and will.  The project 
 15.14  must be owned for the term of the bonds either by the 
 15.15  authority for the term of the bonds. or by a limited partnership 
 15.16  or other entity in which the authority or another entity under 
 15.17  the sole control of the authority is the sole general partner 
 15.18  and the partnership or other entity must receive (1) an 
 15.19  allocation from the Department of Finance or an entitlement 
 15.20  issuer of tax-exempt bonding authority for the project and a 
 15.21  preliminary determination by the Minnesota Housing Finance 
 15.22  Agency or the applicable suballocator of tax credits that the 
 15.23  project will qualify for four percent low-income housing tax 
 15.24  credits or (2) a reservation of nine percent low-income housing 
 15.25  tax credits from the Minnesota Housing Finance Agency or a 
 15.26  suballocator of tax credits for the project.  A qualified 
 15.27  housing development project may admit nonelderly individuals and 
 15.28  families with higher incomes if: 
 15.29     (1) three years have passed since initial occupancy; 
 15.30     (2) the authority finds the project is experiencing 
 15.31  unanticipated vacancies resulting in insufficient revenues, 
 15.32  because of changes in population or other unforeseen 
 15.33  circumstances that occurred after the initial finding of 
 15.34  adequate revenues; and 
 15.35     (3) the authority finds a tax levy or payment from general 
 15.36  assets of the general jurisdiction governmental unit will be 
 16.1   necessary to pay debt service on the bonds if higher income 
 16.2   individuals or families are not admitted. 
 16.3      Sec. 18.  Minnesota Statutes 2004, section 469.158, is 
 16.4   amended to read: 
 16.5      469.158 [MANNER OF ISSUANCE OF BONDS; INTEREST RATE.] 
 16.6      Bonds authorized under sections 469.152 to 469.165 must be 
 16.7   issued in accordance with the provisions of chapter 475 relating 
 16.8   to bonds payable from income of revenue producing conveniences, 
 16.9   except that public sale is not required, the provisions of 
 16.10  sections 475.62 and 475.63 do not apply, and the bonds may 
 16.11  mature at the time or times, in the amount or amounts, within 30 
 16.12  40 years from date of issue, and may be sold at a price equal to 
 16.13  the percentage of the par value thereof, plus accrued interest, 
 16.14  and bearing interest at the rate or rates agreed by the 
 16.15  contracting party, the purchaser, and the municipality or 
 16.16  redevelopment agency, notwithstanding any limitation of interest 
 16.17  rate or cost or of the amounts of annual maturities contained in 
 16.18  any other law.  Bonds issued to refund bonds previously issued 
 16.19  pursuant to sections 469.152 to 469.165 may be issued in amounts 
 16.20  determined by the municipality or redevelopment agency 
 16.21  notwithstanding the provisions of section 475.67, subdivision 3. 
 16.22     Sec. 19.  Minnesota Statutes 2004, section 469.1813, 
 16.23  subdivision 1, is amended to read: 
 16.24     Subdivision 1.  [AUTHORITY.] The governing body of a 
 16.25  political subdivision may grant an abatement of the taxes 
 16.26  imposed by the political subdivision on a parcel of property, or 
 16.27  defer the payments of the taxes and abate the interest and 
 16.28  penalty that otherwise would apply, if: 
 16.29     (a) it expects the benefits to the political subdivision of 
 16.30  the proposed abatement agreement to at least equal the costs to 
 16.31  the political subdivision of the proposed agreement or intends 
 16.32  the abatement to phase in a property tax increase, as provided 
 16.33  in clause (b)(7); and 
 16.34     (b) it finds that doing so is in the public interest 
 16.35  because it will: 
 16.36     (1) increase or preserve tax base; 
 17.1      (2) provide employment opportunities in the political 
 17.2   subdivision; 
 17.3      (3) provide or help acquire or construct public facilities; 
 17.4      (4) help redevelop or renew blighted areas; 
 17.5      (5) help provide access to services for residents of the 
 17.6   political subdivision; 
 17.7      (6) finance or provide public infrastructure; or 
 17.8      (7) phase in a property tax increase on the parcel 
 17.9   resulting from an increase of 50 percent or more in one year on 
 17.10  the estimated market value of the parcel, other than increase 
 17.11  attributable to improvement of the parcel; or 
 17.12     (8) finance historic or heritage preservation. 
 17.13     Sec. 20.  Minnesota Statutes 2004, section 469.1813, 
 17.14  subdivision 6, is amended to read: 
 17.15     Subd. 6.  [DURATION LIMIT.] (a) A political subdivision may 
 17.16  grant an abatement for a period no longer than ten 15 years, 
 17.17  except as provided under paragraph (b).  The subdivision may 
 17.18  specify in the abatement resolution a shorter duration.  If the 
 17.19  resolution does not specify a period of time, the abatement is 
 17.20  for eight years.  If an abatement has been granted to a parcel 
 17.21  of property and the period of the abatement has expired, the 
 17.22  political subdivision that granted the abatement may not grant 
 17.23  another abatement for eight years after the expiration of the 
 17.24  first abatement.  This prohibition does not apply to 
 17.25  improvements added after and not subject to the first abatement. 
 17.26     (b) A political subdivision proposing to abate taxes for a 
 17.27  parcel may request, in writing, that the other political 
 17.28  subdivisions in which the parcel is located grant an abatement 
 17.29  for the property.  If one of the other political subdivisions 
 17.30  declines, in writing, to grant an abatement or if 90 days pass 
 17.31  after receipt of the request to grant an abatement without a 
 17.32  written response from one of the political subdivisions, the 
 17.33  duration limit for an abatement for the parcel by the requesting 
 17.34  political subdivision and any other participating political 
 17.35  subdivision is increased to 15 20 years.  If the political 
 17.36  subdivision which declined to grant an abatement later grants an 
 18.1   abatement for the parcel, the 15-year 20-year duration limit is 
 18.2   reduced by one year for each year that the declining political 
 18.3   subdivision grants an abatement for the parcel during the period 
 18.4   of the abatement granted by the requesting political 
 18.5   subdivision.  The duration limit may not be reduced below the 
 18.6   limit under paragraph (a).  
 18.7      Sec. 21.  Minnesota Statutes 2004, section 473.197, 
 18.8   subdivision 4, is amended to read: 
 18.9      Subd. 4.  [DEBT RESERVE; LEVY.] To provide money to pay 
 18.10  debt service on bonds issued under the credit enhancement 
 18.11  program if pledged revenues are insufficient to pay debt service 
 18.12  in repealed subdivision 1 of Minnesota Statutes 2004, section 
 18.13  473.197, the council must maintain a debt reserve fund in the 
 18.14  manner and with the effect provided by section 118A.04 for 
 18.15  public funds until such a reserve is no longer pledged or 
 18.16  otherwise needed to pay debt service on such bonds.  To provide 
 18.17  funds for the debt reserve fund, the council may use up to 
 18.18  $3,000,000 of the proceeds of solid waste bonds issued by the 
 18.19  council under section 473.831 before its repeal.  To provide 
 18.20  additional funds for the debt reserve fund, the council may levy 
 18.21  a tax on all taxable property in the metropolitan area and must 
 18.22  levy the tax If sums in the debt reserve fund are insufficient 
 18.23  to cure any deficiency in the debt service fund established for 
 18.24  the bonds, the council must levy a tax on all taxable property 
 18.25  in the metropolitan area in the amount needed to cure the 
 18.26  deficiency.  The tax authorized by this section does not affect 
 18.27  the amount or rate of taxes that may be levied by the council 
 18.28  for other purposes and is not subject to limit as to rate or 
 18.29  amount. 
 18.30     Sec. 22.  Minnesota Statutes 2004, section 473.39, 
 18.31  subdivision 1f, is amended to read: 
 18.32     Subd. 1f.  [PROHIBITION OF CERTAIN OBLIGATIONS.] The 
 18.33  council may not issue obligations for construction of light rail 
 18.34  transit in outside of the Hiawatha corridor. 
 18.35     Sec. 23.  Minnesota Statutes 2004, section 473.39, is 
 18.36  amended by adding a subdivision to read: 
 19.1      Subd. 1k.  [OBLIGATIONS.] After July 1, 2005, in addition 
 19.2   to the authority in subdivisions 1a, 1b, 1c, 1d, 1e, 1g, 1h, 1i, 
 19.3   and 1j, the council may issue certificates of indebtedness, 
 19.4   bonds, or other obligations under this section in an amount not 
 19.5   exceeding $64,000,000 for capital expenditures as prescribed in 
 19.6   the council's regional transit master plan and transit capital 
 19.7   improvement program and for related costs, including the costs 
 19.8   of issuance and sale of the obligations. 
 19.9      Sec. 24.  Minnesota Statutes 2004, section 474A.061, 
 19.10  subdivision 2c, is amended to read: 
 19.11     Subd. 2c.  [PUBLIC FACILITIES POOL ALLOCATION.] From the 
 19.12  beginning of the calendar year and continuing for a period of 
 19.13  120 days, the commissioner shall reserve $3,000,000 $5,000,000 
 19.14  of the available bonding authority from the public facilities 
 19.15  pool for applications for public facilities projects to be 
 19.16  financed by the Western Lake Superior Sanitary District.  
 19.17  Commencing on the second Tuesday in January and continuing on 
 19.18  each Monday through the last Monday in July, the commissioner 
 19.19  shall allocate available bonding authority from the public 
 19.20  facilities pool to applications for eligible public facilities 
 19.21  projects received on or before the Monday of the preceding 
 19.22  week.  If there are two or more applications for public 
 19.23  facilities projects from the pool and there is insufficient 
 19.24  available bonding authority to provide allocations for all 
 19.25  projects in any one week, the available bonding authority shall 
 19.26  be awarded by lot unless otherwise agreed to by the respective 
 19.27  issuers. 
 19.28     Sec. 25.  Minnesota Statutes 2004, section 474A.131, 
 19.29  subdivision 1, is amended to read: 
 19.30     Subdivision 1.  [NOTICE OF ISSUE.] Each issuer that issues 
 19.31  bonds with an allocation received under this chapter shall 
 19.32  provide a notice of issue to the department on forms provided by 
 19.33  the department stating: 
 19.34     (1) the date of issuance of the bonds; 
 19.35     (2) the title of the issue; 
 19.36     (3) the principal amount of the bonds; 
 20.1      (4) the type of qualified bonds under federal tax law; 
 20.2      (5) the dollar amount of the bonds issued that were subject 
 20.3   to the annual volume cap; and 
 20.4      (6) for entitlement issuers, whether the allocation is from 
 20.5   current year entitlement authority or is from carryforward 
 20.6   authority. 
 20.7      For obligations that are issued as a part of a series of 
 20.8   obligations, a notice must be provided for each series.  A 
 20.9   penalty of one-half of the amount of the application deposit not 
 20.10  to exceed $5,000 shall apply to any issue of obligations for 
 20.11  which a notice of issue is not provided to the department within 
 20.12  five business days after issuance or before the last Monday 4:30 
 20.13  p.m. on the last business day in December, whichever occurs 
 20.14  first.  Within 30 days after receipt of a notice of issue the 
 20.15  department shall refund a portion of the application deposit 
 20.16  equal to one percent of the amount of the bonding authority 
 20.17  actually issued if a one percent application deposit was made, 
 20.18  or equal to two percent of the amount of the bonding authority 
 20.19  actually issued if a two percent application deposit was made, 
 20.20  less any penalty amount. 
 20.21     Sec. 26.  Minnesota Statutes 2004, section 475.51, 
 20.22  subdivision 4, is amended to read: 
 20.23     Subd. 4.  [NET DEBT.] "Net debt" means the amount remaining 
 20.24  after deducting from its gross debt the amount of current 
 20.25  revenues which are applicable within the current fiscal year to 
 20.26  the payment of any debt and the aggregate of the principal of 
 20.27  the following: 
 20.28     (1) Obligations issued for improvements which are payable 
 20.29  wholly or partly from the proceeds of special assessments levied 
 20.30  upon property specially benefited thereby, including those which 
 20.31  are general obligations of the municipality issuing them, if the 
 20.32  municipality is entitled to reimbursement in whole or in part 
 20.33  from the proceeds of the special assessments. 
 20.34     (2) Warrants or orders having no definite or fixed maturity.
 20.35     (3) Obligations payable wholly from the income from revenue 
 20.36  producing conveniences. 
 21.1      (4) Obligations issued to create or maintain a permanent 
 21.2   improvement revolving fund. 
 21.3      (5) Obligations issued for the acquisition, and betterment 
 21.4   of public waterworks systems, and public lighting, heating or 
 21.5   power systems, and of any combination thereof or for any other 
 21.6   public convenience from which a revenue is or may be derived. 
 21.7      (6) Debt service loans and capital loans made to a school 
 21.8   district under the provisions of sections 126C.68 and 126C.69. 
 21.9      (7) Amount of all money and the face value of all 
 21.10  securities held as a debt service fund for the extinguishment of 
 21.11  obligations other than those deductible under this subdivision. 
 21.12     (8) Obligations to repay loans made under section 216C.37.  
 21.13     (9) Obligations to repay loans made from money received 
 21.14  from litigation or settlement of alleged violations of federal 
 21.15  petroleum pricing regulations. 
 21.16     (10) Obligations issued to pay pension fund liabilities 
 21.17  under section 475.52, subdivision 6, or any charter authority. 
 21.18     (11) Obligations issued to pay judgments against the 
 21.19  municipality under section 475.52, subdivision 6, or any charter 
 21.20  authority. 
 21.21     (12) All other obligations which under the provisions of 
 21.22  law authorizing their issuance are not to be included in 
 21.23  computing the net debt of the municipality. 
 21.24     Sec. 27.  Minnesota Statutes 2004, section 475.52, 
 21.25  subdivision 1, is amended to read: 
 21.26     Subdivision 1.  [STATUTORY CITIES.] Any statutory city may 
 21.27  issue bonds or other obligations for the acquisition or 
 21.28  betterment of public buildings, means of garbage disposal, 
 21.29  hospitals, nursing homes, homes for the aged, schools, 
 21.30  libraries, museums, art galleries, parks, playgrounds, stadia, 
 21.31  sewers, sewage disposal plants, subways, streets, sidewalks, 
 21.32  warning systems; for any utility or other public convenience 
 21.33  from which a revenue is or may be derived; for a permanent 
 21.34  improvement revolving fund; for changing, controlling or 
 21.35  bridging streams and other waterways; for the acquisition and 
 21.36  betterment of bridges and roads within two miles of the 
 22.1   corporate limits; for the acquisition of development rights in 
 22.2   the form of conservation easements under chapter 84C; and for 
 22.3   acquisition of equipment for snow removal, street construction 
 22.4   and maintenance, or fire fighting.  Without limitation by the 
 22.5   foregoing the city may issue bonds to provide money for any 
 22.6   authorized corporate purpose except current expenses. 
 22.7      Sec. 28.  Minnesota Statutes 2004, section 475.52, 
 22.8   subdivision 3, is amended to read: 
 22.9      Subd. 3.  [COUNTIES.] Any county may issue bonds for the 
 22.10  acquisition or betterment of courthouses, county administrative 
 22.11  buildings, health or social service facilities, correctional 
 22.12  facilities, law enforcement centers, jails, morgues, libraries, 
 22.13  parks, and hospitals, for roads and bridges within the county or 
 22.14  bordering thereon and for road equipment and machinery and for 
 22.15  ambulances and related equipment; for the acquisition of 
 22.16  development rights in the form of conservation easements under 
 22.17  chapter 84C, and for capital equipment for the administration 
 22.18  and conduct of elections providing the equipment is uniform 
 22.19  countywide, except that the power of counties to issue bonds in 
 22.20  connection with a library shall not exist in Hennepin County. 
 22.21     Sec. 29.  Minnesota Statutes 2004, section 475.52, 
 22.22  subdivision 4, is amended to read: 
 22.23     Subd. 4.  [TOWNS.] Any town may issue bonds for the 
 22.24  acquisition and betterment of town halls, town roads and 
 22.25  bridges, nursing homes and homes for the aged, and for 
 22.26  acquisition of equipment for snow removal, road construction or 
 22.27  maintenance, and fire fighting; for the acquisition of 
 22.28  development rights in the form of conservation easements under 
 22.29  chapter 84C; and for the acquisition and betterment of any 
 22.30  buildings to house and maintain town equipment. 
 22.31     Sec. 30.  Minnesota Statutes 2004, section 475.521, 
 22.32  subdivision 1, is amended to read: 
 22.33     Subdivision 1.  [DEFINITIONS.] For purposes of this 
 22.34  section, the following terms have the meanings given. 
 22.35     (a) "Bonds" mean an obligation defined under section 475.51.
 22.36     (b) "Capital improvement" means acquisition or betterment 
 23.1   of public lands, buildings or other improvements for the purpose 
 23.2   of a city hall, town hall, library, public safety facility, and 
 23.3   public works facility.  An improvement must have an expected 
 23.4   useful life of five years or more to qualify.  Capital 
 23.5   improvement does not include light rail transit or any activity 
 23.6   related to it, or a park, library, road, bridge, administrative 
 23.7   building other than a city or town hall, or land for any of 
 23.8   those facilities. 
 23.9      (c) "City" "Municipality" means a home rule charter or 
 23.10  statutory city or a town described in section 368.01, 
 23.11  subdivision 1 or 1a. 
 23.12     Sec. 31.  Minnesota Statutes 2004, section 475.521, 
 23.13  subdivision 2, is amended to read: 
 23.14     Subd. 2.  [ELECTION REQUIREMENT.] (a) Bonds issued by a 
 23.15  city municipality to finance capital improvements under an 
 23.16  approved capital improvements plan are not subject to the 
 23.17  election requirements of section 475.58.  The bonds are subject 
 23.18  to the net debt limits under section 475.53.  The bonds must be 
 23.19  approved by an affirmative vote of three-fifths of the members 
 23.20  of a five-member city council governing body.  In the case of 
 23.21  a city council governing body having more or less than five 
 23.22  members, the bonds must be approved by a vote of at least 
 23.23  two-thirds of the city council members of the governing body. 
 23.24     (b) Before the issuance of bonds qualifying under this 
 23.25  section, the city municipality must publish a notice of its 
 23.26  intention to issue the bonds and the date and time of the 
 23.27  hearing to obtain public comment on the matter.  The notice must 
 23.28  be published in the official newspaper of the city municipality 
 23.29  or in a newspaper of general circulation in the city 
 23.30  municipality.  Additionally, the notice may be posted on the 
 23.31  official Web site, if any, of the city municipality.  The notice 
 23.32  must be published at least 14 but not more than 28 days before 
 23.33  the date of the hearing. 
 23.34     (c) A city municipality may issue the bonds only after 
 23.35  obtaining the approval of a majority of the voters voting on the 
 23.36  question of issuing the obligations, if a petition requesting a 
 24.1   vote on the issuance is signed by voters equal to five percent 
 24.2   of the votes cast in the city municipality in the last general 
 24.3   election and is filed with the city clerk within 30 days after 
 24.4   the public hearing.  The commissioner of revenue shall prepare a 
 24.5   suggested form of the question to be presented at the election. 
 24.6      Sec. 32.  Minnesota Statutes 2004, section 475.521, 
 24.7   subdivision 3, is amended to read: 
 24.8      Subd. 3.  [CAPITAL IMPROVEMENT PLAN.] (a) A city 
 24.9   municipality may adopt a capital improvement plan.  The plan 
 24.10  must cover at least a five-year period beginning with the date 
 24.11  of its adoption.  The plan must set forth the estimated 
 24.12  schedule, timing, and details of specific capital improvements 
 24.13  by year, together with the estimated cost, the need for the 
 24.14  improvement, and sources of revenue to pay for the improvement.  
 24.15  In preparing the capital improvement plan, the city council 
 24.16  governing body must consider for each project and for the 
 24.17  overall plan: 
 24.18     (1) the condition of the city's municipality's existing 
 24.19  infrastructure, including the projected need for repair or 
 24.20  replacement; 
 24.21     (2) the likely demand for the improvement; 
 24.22     (3) the estimated cost of the improvement; 
 24.23     (4) the available public resources; 
 24.24     (5) the level of overlapping debt in the city municipality; 
 24.25     (6) the relative benefits and costs of alternative uses of 
 24.26  the funds; 
 24.27     (7) operating costs of the proposed improvements; and 
 24.28     (8) alternatives for providing services most efficiently 
 24.29  through shared facilities with other cities municipalities or 
 24.30  local government units. 
 24.31     (b) The capital improvement plan and annual amendments to 
 24.32  it must be approved by the city council governing body after 
 24.33  public hearing. 
 24.34     Sec. 33.  Minnesota Statutes 2004, section 475.521, 
 24.35  subdivision 4, is amended to read: 
 24.36     Subd. 4.  [LIMITATIONS ON AMOUNT.] A city municipality may 
 25.1   not issue bonds under this section if the maximum amount of 
 25.2   principal and interest to become due in any year on all the 
 25.3   outstanding bonds issued under this section, including the bonds 
 25.4   to be issued, will equal or exceed 0.05367 0.16 percent of the 
 25.5   taxable market value of property in the county municipality.  
 25.6   Calculation of the limit must be made using the taxable market 
 25.7   value for the taxes payable year in which the obligations are 
 25.8   issued and sold.  In the case of a municipality with a 
 25.9   population of 2,500 or more, the bonds are subject to the net 
 25.10  debt limits under section 475.53.  In the case of a shared 
 25.11  facility in which more than one municipality participates, upon 
 25.12  compliance by each participating municipality with the 
 25.13  requirements of subdivision 2, the limitations in this 
 25.14  subdivision and the net debt represented by the bonds shall be 
 25.15  allocated to each participating municipality in proportion to 
 25.16  its required financial contribution to the financing of the 
 25.17  shared facility, as set forth in the joint powers agreement 
 25.18  relating to the shared facility.  This section does not limit 
 25.19  the authority to issue bonds under any other special or general 
 25.20  law. 
 25.21     Sec. 34.  Laws 1996, chapter 412, article 5, section 24, is 
 25.22  amended to read: 
 25.23     Sec. 24.  [BONDS PAID FROM TACONITE PRODUCTION TAX 
 25.24  REVENUES.] 
 25.25     Subdivision 1.  [REFUNDING BONDS.] The appropriation of 
 25.26  funds from the distribution of taconite production tax revenues 
 25.27  to the taconite environmental protection tax fund and the 
 25.28  northeast Minnesota economic protection fund made by Laws 1988, 
 25.29  chapter 718, article 7, sections 62 and 63, Laws 1989, chapter 
 25.30  329, article 5, section 20, Laws 1990, chapter 604, article 8, 
 25.31  section 13, Laws 1992, chapter 499, article 5, section 29, and 
 25.32  by sections 18 to 20 Laws 1996, chapter 412, article 5, sections 
 25.33  20 to 22, and Laws 2000, chapter 489, article 5, sections 24 to 
 25.34  26, shall continue to apply to bonds issued under Minnesota 
 25.35  Statutes, chapter 475, to refund bonds originally issued 
 25.36  pursuant to those chapters. 
 26.1      Subd. 2.  [LOCAL PAYMENTS.] School districts that are 
 26.2   required in Laws 1988, chapter 718, article 7, sections 62 and 
 26.3   63, Laws 1989, chapter 329, article 5, section 20, Laws 1990, 
 26.4   chapter 604, article 8, section 13, Laws 1992, chapter 499, 
 26.5   article 5, section 29, and by sections 18 to 20 Laws 1996, 
 26.6   chapter 412, article 5, sections 20 to 22, and Laws 2000, 
 26.7   chapter 489, article 5, sections 24 to 26, to impose levies to 
 26.8   pay debt service on the bonds issued under those provisions to 
 26.9   the extent the principal and interest on the bonds is not paid 
 26.10  by distributions from the taconite environmental protection fund 
 26.11  and the northeast Minnesota economic protection trust, may pay 
 26.12  their portion of the principal and interest from any funds 
 26.13  available to them.  To the extent a school district uses funds 
 26.14  other than the proceeds of a property tax levy to pay its share 
 26.15  of the principal and interest on the bonds, the requirement to 
 26.16  impose a property tax to pay the local share does not apply to 
 26.17  the school district. 
 26.18     Sec. 35.  Laws 2003, chapter 127, article 12, section 38, 
 26.19  is amended to read: 
 26.20     Sec. 38.  [MEMBERS MUST AUTHORITY TO LEVY TAXES FOR 
 26.21  AUTHORITY.] 
 26.22     (a) A member shall, at the request of the authority, levy a 
 26.23  tax in any year for the benefit of the authority.  The authority 
 26.24  is a special taxing district as defined in Minnesota Statutes, 
 26.25  section 275.066, clause (13), with the power to adopt and 
 26.26  certify a property tax levy to the county auditor.  The 
 26.27  authority may levy a tax in any year for the benefit of the 
 26.28  authority.  The tax is, for each member, is a pro rata portion 
 26.29  of the total amount of tax requested by the authority based on 
 26.30  the taxable market value within a the member's jurisdiction, but 
 26.31  in no event may the tax in any year exceed 0.01813 percent of 
 26.32  taxable market value.  For purposes of this section, "taxable 
 26.33  market value" has the meaning as given in Minnesota Statutes, 
 26.34  section 273.032. 
 26.35     (b) The treasurer of each member city or town shall, within 
 26.36  15 days after receiving the property tax settlements from the 
 27.1   county treasurer, pay to the treasurer of the authority the 
 27.2   amount collected for this purpose.  The money must be used by 
 27.3   the authority for the purposes provided by sections 35 to 41. 
 27.4      [EFFECTIVE DATE.] This section is effective for taxes 
 27.5   levied in 2005, payable in 2006, and thereafter. 
 27.6      Sec. 36.  [CITY OF BEMIDJI; DURATION EXTENSION FOR TAX 
 27.7   ABATEMENT.] 
 27.8      Notwithstanding the limitation in Minnesota Statutes, 
 27.9   section 469.1813, subdivision 6, the city of Bemidji may extend 
 27.10  the duration of the tax abatement given to support development 
 27.11  within the fairgrounds district of the city for an additional 
 27.12  four years beyond the duration permitted under that section. 
 27.13     Sec. 37.  [TOWN OF WHITE; OBLIGATIONS AUTHORIZED.] 
 27.14     Subdivision 1.  [OBLIGATIONS.] Notwithstanding any 
 27.15  provision of law or charter to the contrary, the town of White 
 27.16  may pledge its general obligation, as defined in Minnesota 
 27.17  Statutes, section 475.51, subdivision 10, to secure the 
 27.18  financing of local improvements as provided in this section. 
 27.19     Subd. 2.  [SPECIAL RULES.] (a) The obligations are subject 
 27.20  to the provisions of Minnesota Statutes, chapter 429, except as 
 27.21  provided in this subdivision. 
 27.22     (b) The obligations must be issued to finance: 
 27.23     (1) the cost of local improvements described in Minnesota 
 27.24  Statutes, section 429.021, located within the area referred to 
 27.25  in Laws 2003, chapter 119, section 2; 
 27.26     (2) any reserves required to market the obligation; and 
 27.27     (3) the costs of issuing the obligations. 
 27.28     (c) The obligations must be additionally secured by special 
 27.29  assessments levied or to be levied by the city of Biwabik within 
 27.30  the area referred to in paragraph (b). 
 27.31     (d) The pledge of special assessments by the city of 
 27.32  Biwabik for the payment of the obligations must be made by 
 27.33  written agreement by and between the town of White and the city 
 27.34  of Biwabik and must be filed with the county auditor. 
 27.35     (e) Notwithstanding Minnesota Statutes, section 475.58, no 
 27.36  election is required to approve the obligations. 
 28.1      (f) The obligations are not included in computing any debt 
 28.2   limitation applicable to the town of White or the city of 
 28.3   Biwabik, and the levy of taxes under Minnesota Statutes, section 
 28.4   475.61, to pay principal of and interest on the obligations is 
 28.5   not subject to any levy limitation. 
 28.6      [EFFECTIVE DATE.] This section is effective upon local 
 28.7   approval by the town of White and the city of Biwabik in 
 28.8   compliance with the requirements of Minnesota Statutes, section 
 28.9   645.021. 
 28.10     Sec. 38.  [SAUK RIVER WATERSHED DISTRICT.] 
 28.11     Notwithstanding Minnesota Statutes, section 103D.905, 
 28.12  subdivision 3, the Sauk River Watershed District may annually 
 28.13  levy an additional amount up to $100,000 for its general fund. 
 28.14     [EFFECTIVE DATE.] This section is effective, without local 
 28.15  approval, beginning with the taxes levied in 2005, payable in 
 28.16  2006. 
 28.17     Sec. 39.  [DEFINITIONS.] 
 28.18     Subdivision 1.  [APPLICATION.] For the purposes of sections 
 28.19  37 to 40, the terms defined in this section have the meanings 
 28.20  given them. 
 28.21     Subd. 2.  [CITY.] "City" means the city of St. Paul, its 
 28.22  mayor, city council, and any other board, authority, commission, 
 28.23  or officer authorized by law, charter, or ordinance to exercise 
 28.24  city powers of the nature referred to in sections 37 to 40. 
 28.25     Subd. 3.  [RIVERCENTRE COMPLEX.] "RiverCentre complex" 
 28.26  means collectively the auditorium, convention, conference and 
 28.27  education center, arena, and parking ramp facilities presently 
 28.28  and commonly known as the Roy Wilkins Auditorium, St. Paul 
 28.29  RiverCentre, Xcel Energy Center, and RiverCentre Parking Ramp, 
 28.30  including all property, real or personal, tangible or 
 28.31  intangible, located in the city, intended to be used as part of 
 28.32  the RiverCentre complex or additions to or extensions of it. 
 28.33     Sec. 40.  [ST. PAUL; CREATION OF NONPROFIT ORGANIZATION.] 
 28.34     Subdivision 1.  [AUTHORITY TO CREATE A NONPROFIT 
 28.35  ORGANIZATION.] As required under Minnesota Statutes, section 
 28.36  465.717, and notwithstanding any other law, city charter 
 29.1   provision, or ordinance to the contrary, the city of St. Paul 
 29.2   may participate in the creation of a nonprofit organization for 
 29.3   the purposes provided sections 37 to 40. 
 29.4      Subd. 2.  [GOVERNING BOARD; APPOINTMENT PROCESS.] (a) The 
 29.5   mayor of the city, subject to approval by the city council, 
 29.6   shall appoint a majority of the members of the governing board 
 29.7   of the nonprofit organization performing all or a part of the 
 29.8   activities necessary to carry out the purposes specified in 
 29.9   sections 37 to 40.  The mayor of the city may designate any 
 29.10  officer or employee of the city to serve as a member of the 
 29.11  governing board of any nonprofit organization. 
 29.12     (b) In addition to the appointments made by the mayor under 
 29.13  paragraph (a), the mayor of the city shall designate three 
 29.14  members of the city council to serve on the governing board of 
 29.15  the nonprofit organization. 
 29.16     (c) Notwithstanding any provision contained in the articles 
 29.17  of incorporation and bylaws of the nonprofit organization, any 
 29.18  member of the governing board appointed by the mayor may be 
 29.19  removed only by the mayor of the city for cause. 
 29.20     Subd. 3.  [PRESIDENT.] The governing board of the nonprofit 
 29.21  organization shall select, subject to the approval of the mayor 
 29.22  of the city, a president to serve as chief executive officer and 
 29.23  general manager of the nonprofit organization. 
 29.24     Subd. 4.  [CONFLICTS OF INTEREST.] The procedures in 
 29.25  Minnesota Statutes, section 317A.255, subdivision 1, paragraph 
 29.26  (b), relating to director conflicts of interest, are not 
 29.27  required if the contract or other transaction is between the 
 29.28  city and the nonprofit organization. 
 29.29     Sec. 41.  [RIVERCENTRE MANAGEMENT; OPERATIONS CONTRACT.] 
 29.30     Subdivision 1.  [AUTHORITY TO CONTRACT WITH NONPROFIT 
 29.31  ORGANIZATION.] The city may enter into an agreement with the 
 29.32  nonprofit organization created in section 38 to equip, maintain, 
 29.33  manage, and operate all or a portion of the RiverCentre complex 
 29.34  and to manage and operate a convention bureau to market and 
 29.35  promote the city as a tourist or convention center.  Except as 
 29.36  otherwise provided in sections 37 to 40, the nonprofit 
 30.1   organization may only contract and utilize and expend funds for 
 30.2   these purposes under the direction of its governing board, 
 30.3   subject to the accounting, financial reporting, and other 
 30.4   conditions that the city may prescribe in a contract made under 
 30.5   sections 37 to 40 between the city and the nonprofit 
 30.6   organization.  The nonprofit organization may use the services 
 30.7   of the office of the city attorney and the city's purchasing 
 30.8   department.  All activities performed to carry out these 
 30.9   purposes are deemed to be for a public purpose. 
 30.10     Subd. 2.  [BONDHOLDERS' RIGHTS AND RIVERCENTRE COMPLEX TAX 
 30.11  EXEMPTIONS PRESERVED.] (a) The city must protect the rights of 
 30.12  holders of bonds issued for the RiverCentre complex, including 
 30.13  preserving the tax-exempt status of the bonds. 
 30.14     (b) The use and operation of the RiverCentre complex by the 
 30.15  nonprofit organization with which the city contracts under 
 30.16  sections 37 to 40 is a use, lease, or occupancy for public, 
 30.17  governmental, and municipal purposes, and the complex is exempt 
 30.18  from taxation by the state or any political subdivision of the 
 30.19  state during such use, to the extent it would be exempt if the 
 30.20  complex was equipped, maintained, managed, and operated by the 
 30.21  city. 
 30.22     (c) Gross receipts of tickets and admissions to events at 
 30.23  the RiverCentre complex sponsored by the nonprofit organization 
 30.24  created in section 38 do not qualify for the sales tax exemption 
 30.25  under Minnesota Statutes, section 297A.70, subdivision 10. 
 30.26     Subd. 3.  [APPLICABLE GENERAL LAWS.] The following statutes 
 30.27  apply to the nonprofit organization with which the city 
 30.28  contracts under sections 37 to 40 the same as they apply to the 
 30.29  city: 
 30.30     (a) Minnesota Statutes, chapter 13D, the Minnesota Open 
 30.31  Meeting Law; and 
 30.32     (b) Minnesota Statutes, chapter 13, the Government Data 
 30.33  Practices Act. 
 30.34     Subd. 4.  [SUCCESSION.] The nonprofit organization with 
 30.35  which the city contracts under this act is the successor to all 
 30.36  powers, rights, assets, privileges, and interests held and 
 31.1   enjoyed by the RiverCentre authority on the effective date of 
 31.2   sections 37 to 40, and established by the provisions of Laws 
 31.3   1967, chapter 459, sections 1, 2, 4, and 8, subdivisions 2 and 
 31.4   3, clause (3), as amended; Laws 1982, chapter 523, article 25, 
 31.5   sections 4 and 5, as amended; Laws 1998, chapter 404, sections 
 31.6   81 and 82; and Minnesota Statutes, section 297A.98.  On the 
 31.7   effective date of the contract between the city and the 
 31.8   nonprofit organization authorized by sections 37 to 40, the 
 31.9   RiverCentre authority ceases to exist for only so long as the 
 31.10  contract is in effect, and all other laws or provisions 
 31.11  specifically relating to the RiverCentre authority and the 
 31.12  RiverCentre complex that are not otherwise referenced in 
 31.13  sections 37 to 40, do not apply to the nonprofit organization. 
 31.14     Sec. 42.  [LIABILITY.] 
 31.15     The nonprofit organization with which the city contracts 
 31.16  under sections 37 to 40 is a "municipality," and the officers, 
 31.17  directors, employees, and agents of the nonprofit organization 
 31.18  are "employees, officers, or agents," under Minnesota Statutes, 
 31.19  chapter 466, relating to tort liability.  The city must defend, 
 31.20  save harmless, and indemnify the nonprofit organization, 
 31.21  including the nonprofit's officers, directors, employees, and 
 31.22  agents, against any claim or demand arising out of the nonprofit 
 31.23  organization's performance under the contract. 
 31.24     Sec. 43.  [IRON RANGE RESOURCES AND REHABILITATION 
 31.25  COMMISSIONER; BONDS AUTHORIZED.] 
 31.26     Subdivision 1.  [ISSUANCE; PURPOSE.] Notwithstanding any 
 31.27  provision of Minnesota Statutes, chapter 298, to the contrary, 
 31.28  the commissioner of Iron Range resources and rehabilitation may 
 31.29  issue revenue bonds in a principal amount of $15,000,000 in one 
 31.30  or more series, and bonds to refund those bonds.  The proceeds 
 31.31  of the bonds must be used to make grants to school districts 
 31.32  located in the taconite tax relief area defined in Minnesota 
 31.33  Statutes, section 273.134, or the taconite assistance area 
 31.34  defined in Minnesota Statutes, section 273.1341, to be used by 
 31.35  the school districts to pay for health, safety, and maintenance 
 31.36  improvements but only if the school district has levied the 
 32.1   maximum amount allowable under law for those purposes. 
 32.2      Subd. 2.  [APPROPRIATION.] There is annually appropriated 
 32.3   from the distribution of taconite production tax revenues to the 
 32.4   taconite environmental protection fund pursuant to Minnesota 
 32.5   Statutes, section 298.28, subdivision 11, and to the Douglas J. 
 32.6   Johnson economic protection trust pursuant to Minnesota 
 32.7   Statutes, section 298.28, subdivisions 9 and 11, in equal 
 32.8   shares, an amount sufficient to pay when due the principal and 
 32.9   interest on the bonds issued pursuant to subdivision 1.  If the 
 32.10  annual distribution to the Douglas J. Johnson economic 
 32.11  protection trust is insufficient to pay its share after 
 32.12  fulfilling any obligations of the trust under Minnesota 
 32.13  Statutes, section 298.225 or 298.293, the deficiency is 
 32.14  appropriated from the taconite environmental protection fund.  
 32.15  The appropriation under this subdivision terminates upon payment 
 32.16  or maturity of the last of the bonds issued under this section. 
 32.17     Subd. 3.  [CREDIT ENHANCEMENT.] The bonds issued under this 
 32.18  section are "debt obligations" and the commissioner of Iron 
 32.19  Range resources and rehabilitation is a "district" for purposes 
 32.20  of Minnesota Statutes, section 126C.55, provided that advances 
 32.21  made under Minnesota Statutes, section 126C.55, subdivision 2, 
 32.22  are not subject to Minnesota Statutes, section 126C.55, 
 32.23  subdivisions 4 to 7.  
 32.24     [EFFECTIVE DATE.] This section is effective the day 
 32.25  following final enactment. 
 32.26     Sec. 44.  [APPLICATION.] 
 32.27     Sections 21, 22, 23, and 45 apply in the counties of Anoka, 
 32.28  Carver, Dakota, Hennepin, Ramsey, Scott, and Washington. 
 32.29     Sec. 45.  [REPEALER.] 
 32.30     Minnesota Statutes 2004, section 473.197, subdivisions 1, 
 32.31  2, 3, and 5, are repealed. 
 32.32     Sec. 46.  [EFFECTIVE DATE.] 
 32.33     (a) Sections 1 and 39 to 42 are effective the day after the 
 32.34  city council and the chief clerical officer of the city of St. 
 32.35  Paul have timely completed their compliance with Minnesota 
 32.36  Statutes, section 645.023, subdivisions 2 and 3. 
 33.1      (b) Except as otherwise provided, this article is effective 
 33.2   the day following final enactment. 
 33.3                              ARTICLE 2 
 33.4                       TAX INCREMENT FINANCING
 33.5      Section 1.  Minnesota Statutes 2004, section 116J.556, is 
 33.6   amended to read: 
 33.7      116J.556 [LOCAL MATCH REQUIREMENT.] 
 33.8      (a) In order to qualify for a grant under sections 116J.551 
 33.9   to 116J.557, the municipality must pay for at least one-quarter 
 33.10  of the project costs as a local match.  The municipality shall 
 33.11  pay an amount of the project costs equal to at least 12 percent 
 33.12  of the cleanup costs from the municipality's general fund, a 
 33.13  property tax levy for that purpose, or other unrestricted money 
 33.14  available to the municipality (excluding tax increments).  These 
 33.15  unrestricted moneys may be spent for project costs, other than 
 33.16  cleanup costs, and qualify for the local match payment equal to 
 33.17  12 percent of cleanup costs.  The rest of the local match may be 
 33.18  paid with tax increments, regional, state, or federal money 
 33.19  available for the redevelopment of brownfields or any other 
 33.20  money available to the municipality. 
 33.21     (b) If the development authority establishes a tax 
 33.22  increment financing district or hazardous substance subdistrict 
 33.23  on the site to pay for part of the local match requirement, the 
 33.24  district or subdistrict must be decertified when an amount of 
 33.25  tax increments equal to no more than three times the costs of 
 33.26  implementing the response action plan for the site and the 
 33.27  administrative costs for the district or subdistrict have been 
 33.28  received, after deducting the amount of the state grant. 
 33.29     [EFFECTIVE DATE.] This section is effective the day 
 33.30  following final enactment. 
 33.31     Sec. 2.  Minnesota Statutes 2004, section 272.02, 
 33.32  subdivision 64, is amended to read: 
 33.33     Subd. 64.  [JOB OPPORTUNITY BUILDING ZONE PROPERTY.] (a) 
 33.34  Improvements to real property, and personal property, classified 
 33.35  under section 273.13, subdivision 24, and located within a job 
 33.36  opportunity building zone, designated under section 469.314, are 
 34.1   exempt from ad valorem taxes levied under chapter 275. 
 34.2      (b) Improvements to real property, and tangible personal 
 34.3   property, of an agricultural production facility located within 
 34.4   an agricultural processing facility zone, designated under 
 34.5   section 469.314, is exempt from ad valorem taxes levied under 
 34.6   chapter 275. 
 34.7      (c) For property to qualify for exemption under paragraph 
 34.8   (a), the occupant must be a qualified business, as defined in 
 34.9   section 469.310. 
 34.10     (d) The exemption applies beginning for the first 
 34.11  assessment year after designation of the job opportunity 
 34.12  building zone by the commissioner of employment and economic 
 34.13  development.  The exemption applies to each assessment year that 
 34.14  begins during the duration of the job opportunity building zone 
 34.15  and to property occupied by July 1 of the assessment year by a 
 34.16  qualified business.  This exemption does not apply to: 
 34.17     (1) the levy under section 475.61 or similar levy 
 34.18  provisions under any other law to pay general obligation bonds; 
 34.19  or 
 34.20     (2) a levy under section 126C.17, if the levy was approved 
 34.21  by the voters before the designation of the job opportunity 
 34.22  building zone. 
 34.23     (e) This subdivision does not apply to a parcel of property 
 34.24  for any taxes payable year in which the parcel is contained in 
 34.25  both: 
 34.26     (1) an agricultural processing zone, designated under 
 34.27  section 469.314, subdivision 1, paragraph (b); and 
 34.28     (2) a tax increment financing district, if the request for 
 34.29  certification of the district was made before January 1, 2004. 
 34.30     [EFFECTIVE DATE.] This section is effective beginning for 
 34.31  taxes payable in 2006. 
 34.32     Sec. 3.  Minnesota Statutes 2004, section 469.174, 
 34.33  subdivision 11, is amended to read: 
 34.34     Subd. 11.  [HOUSING DISTRICT.] "Housing district" means a 
 34.35  type of tax increment financing district which consists of a 
 34.36  project, or a portion of a project, intended for occupancy, in 
 35.1   part, by persons or families of low and moderate income, as 
 35.2   defined in chapter 462A, Title II of the National Housing Act of 
 35.3   1934, the National Housing Act of 1959, the United States 
 35.4   Housing Act of 1937, as amended, Title V of the Housing Act of 
 35.5   1949, as amended, any other similar present or future federal, 
 35.6   state, or municipal legislation, or the regulations promulgated 
 35.7   under any of those acts.  A district does not qualify as a 
 35.8   housing district under this subdivision if the fair market value 
 35.9   of the improvements which are constructed in the district for 
 35.10  commercial uses or for uses other than low and moderate income 
 35.11  housing consists of more than 20 percent of the total fair 
 35.12  market value of the planned improvements in the development plan 
 35.13  or agreement.  The fair market value of the improvements may be 
 35.14  determined using the cost of construction, capitalized income, 
 35.15  or other appropriate method of estimating market value, and that 
 35.16  satisfies the requirements of section 469.1761.  Housing project 
 35.17  means a project, or a portion of a project, that meets all of 
 35.18  the qualifications of a housing district under this subdivision, 
 35.19  whether or not actually established as a housing district. 
 35.20     [EFFECTIVE DATE.] This section is effective for districts 
 35.21  for which the request for certification was filed with the 
 35.22  county auditor after October 5, 1989, except (1) the new 
 35.23  language is effective for requests for certification made after 
 35.24  June 30, 2005, and (2) the fair market value of the improvements 
 35.25  which are constructed for commercial uses in a district for 
 35.26  which the request for certification was filed with the county 
 35.27  auditor after October 5, 1989, and before July 1, 2005, may not 
 35.28  exceed more than 20 percent of total fair market value of the 
 35.29  planned improvements in the development plan or agreement. 
 35.30     Sec. 4.  Minnesota Statutes 2004, section 469.174, 
 35.31  subdivision 25, is amended to read: 
 35.32     Subd. 25.  [INCREMENT.] "Increment," "tax increment," "tax 
 35.33  increment revenues," "revenues derived from tax increment," and 
 35.34  other similar terms for a district include: 
 35.35     (1) taxes paid by the captured net tax capacity, but 
 35.36  excluding any excess taxes, as computed under section 469.177; 
 36.1      (2) the proceeds from the sale or lease of property, 
 36.2   tangible or intangible, to the extent the property was purchased 
 36.3   by the authority with tax increments; 
 36.4      (3) principal and interest received on loans or other 
 36.5   advances made by the authority with tax increments; and 
 36.6      (4) interest or other investment earnings on or from tax 
 36.7   increments; 
 36.8      (5) repayments or return of tax increments made to the 
 36.9   authority under agreements for districts for which the request 
 36.10  for certification was made after August 1, 1993; and 
 36.11     (6) the market value homestead credit paid to the authority 
 36.12  under section 273.1384. 
 36.13     [EFFECTIVE DATE.] This section is effective for tax 
 36.14  increment financing districts, regardless of when the request 
 36.15  for certification was made, including districts for which the 
 36.16  request for certification was made before August 1, 1979, 
 36.17  provided that the amendment to clause (2) applies only to the 
 36.18  extent that the underlying provisions of clause (2) apply to the 
 36.19  district and to the sale or lease under prior law.  This 
 36.20  effective date does not affect the application of clause (1), 
 36.21  (3), or (4). 
 36.22     Sec. 5.  Minnesota Statutes 2004, section 469.175, 
 36.23  subdivision 1, is amended to read: 
 36.24     Subdivision 1.  [TAX INCREMENT FINANCING PLAN.] A tax 
 36.25  increment financing plan shall contain:  
 36.26     (1) a statement of objectives of an authority for the 
 36.27  improvement of a project; 
 36.28     (2) a statement as to the development program for the 
 36.29  project, including the property within the project, if any, that 
 36.30  the authority intends to acquire, identified by parcel number, 
 36.31  identifiable property name, block, or other appropriate means 
 36.32  indicating the area in which the authority intends to acquire 
 36.33  properties; 
 36.34     (3) a list of any development activities that the plan 
 36.35  proposes to take place within the project, for which contracts 
 36.36  have been entered into at the time of the preparation of the 
 37.1   plan, including the names of the parties to the contract, the 
 37.2   activity governed by the contract, the cost stated in the 
 37.3   contract, and the expected date of completion of that activity; 
 37.4      (4) identification or description of the type of any other 
 37.5   specific development reasonably expected to take place within 
 37.6   the project, and the date when the development is likely to 
 37.7   occur; 
 37.8      (5) estimates of the following:  
 37.9      (i) cost of the project, including administrative expenses, 
 37.10  except that if part of the cost of the project is paid or 
 37.11  financed with increment from the tax increment financing 
 37.12  district, the tax increment financing plan for the district must 
 37.13  contain an estimate of the amount of the cost of the project, 
 37.14  including administrative expenses, that will be paid or financed 
 37.15  with tax increments from the district; 
 37.16     (ii) amount of bonded indebtedness to be incurred; 
 37.17     (iii) sources of revenue to finance or otherwise pay public 
 37.18  costs; 
 37.19     (iv) the most recent net tax capacity of taxable real 
 37.20  property within the tax increment financing district and within 
 37.21  any subdistrict; 
 37.22     (v) the estimated captured net tax capacity of the tax 
 37.23  increment financing district at completion; and 
 37.24     (vi) the duration of the tax increment financing district's 
 37.25  and any subdistrict's existence; 
 37.26     (6) statements of the authority's alternate estimates of 
 37.27  the impact of tax increment financing on the net tax capacities 
 37.28  of all taxing jurisdictions in which the tax increment financing 
 37.29  district is located in whole or in part.  For purposes of one 
 37.30  statement, the authority shall assume that the estimated 
 37.31  captured net tax capacity would be available to the taxing 
 37.32  jurisdictions without creation of the district, and for purposes 
 37.33  of the second statement, the authority shall assume that none of 
 37.34  the estimated captured net tax capacity would be available to 
 37.35  the taxing jurisdictions without creation of the district or 
 37.36  subdistrict; 
 38.1      (7) identification and description of studies and analyses 
 38.2   used to make the determination set forth in subdivision 3, 
 38.3   clause (2); and 
 38.4      (8) identification of all parcels to be included in the 
 38.5   district or any subdistrict. 
 38.6      [EFFECTIVE DATE.] This section is effective for tax 
 38.7   increment financing plans and amendments to tax increment 
 38.8   financing plans approved after June 30, 2005. 
 38.9      Sec. 6.  Minnesota Statutes 2004, section 469.175, 
 38.10  subdivision 4a, is amended to read: 
 38.11     Subd. 4a.  [FILING PLAN WITH STATE.] (a) The authority must 
 38.12  file a copy of the tax increment financing plan and amendments 
 38.13  to the plan with the commissioner of revenue and the state 
 38.14  auditor.  The authority must also file a copy of the development 
 38.15  plan or the project plan for the project area with the 
 38.16  commissioner of revenue.  The commissioner of revenue shall 
 38.17  provide a copy of a plan to the state auditor upon request and 
 38.18  the state auditor. 
 38.19     (b) Filing under this subdivision must be made within 60 
 38.20  days after the latest of: 
 38.21     (1) the filing of the request for certification of the 
 38.22  district; 
 38.23     (2) approval of the plan by the municipality; or 
 38.24     (3) adoption of the plan by the authority. 
 38.25     [EFFECTIVE DATE.] This section is effective for plans and 
 38.26  amendments approved after June 30, 2005.  
 38.27     Sec. 7.  Minnesota Statutes 2004, section 469.175, 
 38.28  subdivision 5, is amended to read: 
 38.29     Subd. 5.  [ANNUAL DISCLOSURE.] An annual statement showing 
 38.30  for each district the information required to be reported under 
 38.31  subdivision 6, paragraph (c), clauses (1), (2), (3), (11), 
 38.32  (12), (20), and (21) (18), and (19); the amounts of tax 
 38.33  increment received and expended in the reporting period; and any 
 38.34  additional information the authority deems necessary must be 
 38.35  published in a newspaper of general circulation in the 
 38.36  municipality that approved the tax increment financing plan.  
 39.1   The annual statement must inform readers that additional 
 39.2   information regarding each district may be obtained from the 
 39.3   authority, and must explain how the additional information may 
 39.4   be requested.  The authority must publish the annual statement 
 39.5   for a year no later than August 15 of the next year.  The 
 39.6   authority must identify the newspaper of general circulation in 
 39.7   the municipality to which the annual statement has been or will 
 39.8   be submitted for publication and provide a copy of the annual 
 39.9   statement to the county board, the county auditor, the school 
 39.10  board, the state auditor, and, if the authority is other than 
 39.11  the municipality, the governing body of the municipality on or 
 39.12  before August 1 of the year in which the statement must be 
 39.13  published.  
 39.14     The disclosure requirements imposed by this subdivision 
 39.15  apply to districts certified before, on, or after August 1, 1979.
 39.16     [EFFECTIVE DATE.] This section is effective for reports 
 39.17  required to be filed after December 31, 2005. 
 39.18     Sec. 8.  Minnesota Statutes 2004, section 469.175, 
 39.19  subdivision 6, is amended to read: 
 39.20     Subd. 6.  [ANNUAL FINANCIAL REPORTING.] (a) The state 
 39.21  auditor shall develop a uniform system of accounting and 
 39.22  financial reporting for tax increment financing districts.  The 
 39.23  system of accounting and financial reporting shall, as nearly as 
 39.24  possible: 
 39.25     (1) provide for full disclosure of the sources and uses of 
 39.26  public funds in the district; 
 39.27     (2) permit comparison and reconciliation with the affected 
 39.28  local government's accounts and financial reports; 
 39.29     (3) permit auditing of the funds expended on behalf of a 
 39.30  district, including a single district that is part of a 
 39.31  multidistrict project or that is funded in part or whole through 
 39.32  the use of a development account funded with tax increments from 
 39.33  other districts or with other public money; 
 39.34     (4) be consistent with generally accepted accounting 
 39.35  principles. 
 39.36     (b) The authority must annually submit to the state auditor 
 40.1   a financial report in compliance with paragraph (a).  Copies of 
 40.2   the report must also be provided to the county auditor and to 
 40.3   the governing body of the municipality, if the authority is not 
 40.4   the municipality.  To the extent necessary to permit compliance 
 40.5   with the requirement of financial reporting, the county and any 
 40.6   other appropriate local government unit or private entity must 
 40.7   provide the necessary records or information to the authority or 
 40.8   the state auditor as provided by the system of accounting and 
 40.9   financial reporting developed pursuant to paragraph (a).  The 
 40.10  authority must submit the annual report for a year on or before 
 40.11  August 1 of the next year. 
 40.12     (c) The annual financial report must also include the 
 40.13  following items: 
 40.14     (1) the original net tax capacity of the district and any 
 40.15  subdistrict under section 469.177, subdivision 1; 
 40.16     (2) the net tax capacity for the reporting period of the 
 40.17  district and any subdistrict; 
 40.18     (3) the captured net tax capacity of the district; 
 40.19     (4) any fiscal disparity deduction from the captured net 
 40.20  tax capacity under section 469.177, subdivision 3; 
 40.21     (5) the captured net tax capacity retained for tax 
 40.22  increment financing under section 469.177, subdivision 2, 
 40.23  paragraph (a), clause (1); 
 40.24     (6) any captured net tax capacity distributed among 
 40.25  affected taxing districts under section 469.177, subdivision 2, 
 40.26  paragraph (a), clause (2); 
 40.27     (7) the type of district; 
 40.28     (8) the date the municipality approved the tax increment 
 40.29  financing plan and the date of approval of any modification of 
 40.30  the tax increment financing plan, the approval of which requires 
 40.31  notice, discussion, a public hearing, and findings under 
 40.32  subdivision 4, paragraph (a); 
 40.33     (9) the date the authority first requested certification of 
 40.34  the original net tax capacity of the district and the date of 
 40.35  the request for certification regarding any parcel added to the 
 40.36  district; 
 41.1      (10) the date the county auditor first certified the 
 41.2   original net tax capacity of the district and the date of 
 41.3   certification of the original net tax capacity of any parcel 
 41.4   added to the district; 
 41.5      (11) the month and year in which the authority has received 
 41.6   or anticipates it will receive the first increment from the 
 41.7   district; 
 41.8      (12) the date the district must be decertified; 
 41.9      (13) for the reporting period and prior years of the 
 41.10  district, the actual amount received from, at least, the 
 41.11  following categories: 
 41.12     (i) tax increments paid by the captured net tax capacity 
 41.13  retained for tax increment financing under section 469.177, 
 41.14  subdivision 2, paragraph (a), clause (1), but excluding any 
 41.15  excess taxes; 
 41.16     (ii) tax increments that are interest or other investment 
 41.17  earnings on or from tax increments; 
 41.18     (iii) tax increments that are proceeds from the sale or 
 41.19  lease of property, tangible or intangible, purchased by the 
 41.20  authority with tax increments; 
 41.21     (iv) tax increments that are repayments of loans or other 
 41.22  advances made by the authority with tax increments; 
 41.23     (v) bond or loan proceeds; 
 41.24     (vi) special assessments; 
 41.25     (vii) grants; and 
 41.26     (viii) transfers from funds not exclusively associated with 
 41.27  the district; and 
 41.28     (ix) the market value homestead credit paid to the 
 41.29  authority under section 273.1384; 
 41.30     (14) for the reporting period and for the prior years of 
 41.31  the district, the actual amount expended for, at least, the 
 41.32  following categories: 
 41.33     (i) acquisition of land and buildings through condemnation 
 41.34  or purchase; 
 41.35     (ii) site improvements or preparation costs; 
 41.36     (iii) installation of public utilities, parking facilities, 
 42.1   streets, roads, sidewalks, or other similar public improvements; 
 42.2      (iv) administrative costs, including the allocated cost of 
 42.3   the authority; 
 42.4      (v) public park facilities, facilities for social, 
 42.5   recreational, or conference purposes, or other similar public 
 42.6   improvements; and 
 42.7      (vi) transfers to funds not exclusively associated with the 
 42.8   district; 
 42.9      (15) for properties sold to developers, the total cost of 
 42.10  the property to the authority and the price paid by the 
 42.11  developer; 
 42.12     (16) the amount of any payments and the value of any 
 42.13  in-kind benefits, such as physical improvements and the use of 
 42.14  building space, that are paid or financed with tax increments 
 42.15  and are provided to another governmental unit other than the 
 42.16  municipality during the reporting period; 
 42.17     (17) the amount of any payments for activities and 
 42.18  improvements located outside of the district that are paid for 
 42.19  or financed with tax increments; 
 42.20     (18) (16) the amount of payments of principal and interest 
 42.21  that are made during the reporting period on any nondefeased: 
 42.22     (i) general obligation tax increment financing bonds; 
 42.23     (ii) other tax increment financing bonds; and 
 42.24     (iii) notes and pay-as-you-go contracts; 
 42.25     (19) (17) the principal amount, at the end of the reporting 
 42.26  period, of any nondefeased: 
 42.27     (i) general obligation tax increment financing bonds; 
 42.28     (ii) other tax increment financing bonds; and 
 42.29     (iii) notes and pay-as-you-go contracts; 
 42.30     (20) (18) the amount of principal and interest payments 
 42.31  that are due for the current calendar year on any nondefeased: 
 42.32     (i) general obligation tax increment financing bonds; 
 42.33     (ii) other tax increment financing bonds; and 
 42.34     (iii) notes and pay-as-you-go contracts; 
 42.35     (21) (19) if the fiscal disparities contribution under 
 42.36  chapter 276A or 473F for the district is computed under section 
 43.1   469.177, subdivision 3, paragraph (a), the amount of increased 
 43.2   property taxes imposed on other properties in the municipality 
 43.3   that approved the tax increment financing plan as a result of 
 43.4   the fiscal disparities contribution; 
 43.5      (22) whether the tax increment financing plan or other 
 43.6   governing document permits increment revenues to be expended: 
 43.7      (i) to pay bonds, the proceeds of which were or may be 
 43.8   expended on activities outside of the district; 
 43.9      (ii) for deposit into a common bond fund from which money 
 43.10  may be expended on activities located outside of the district; 
 43.11  or 
 43.12     (iii) to otherwise finance activities located outside of 
 43.13  the tax increment financing district; 
 43.14     (23) (20) the estimate, if any, contained in the tax 
 43.15  increment financing plan of the amount of the cost of the 
 43.16  project, including administrative expenses, that will be paid or 
 43.17  financed with tax increment; and 
 43.18     (24) (21) any additional information the state auditor may 
 43.19  require. 
 43.20     (d) The commissioner of revenue shall prescribe the method 
 43.21  of calculating the increased property taxes under paragraph (c), 
 43.22  clause (21) (19), and the form of the statement disclosing this 
 43.23  information on the annual statement under subdivision 5. 
 43.24     (e) The reporting requirements imposed by this subdivision 
 43.25  apply to districts certified before, on, and after August 1, 
 43.26  1979. 
 43.27     [EFFECTIVE DATE.] This section is effective for reports 
 43.28  required to be filed after December 31, 2005. 
 43.29     Sec. 9.  Minnesota Statutes 2004, section 469.176, 
 43.30  subdivision 2, is amended to read: 
 43.31     Subd. 2.  [EXCESS INCREMENTS.] (a) The authority shall 
 43.32  annually determine the amount of excess increments for a 
 43.33  district, if any.  This determination must be based on the tax 
 43.34  increment financing plan in effect on December 31 of the year 
 43.35  and the increments and other revenues received as of December 31 
 43.36  of the year.  The authority must spend or return the excess 
 44.1   increments under paragraph (c) within nine months after the end 
 44.2   of the year. 
 44.3      (b) For purposes of this subdivision, "excess increments" 
 44.4   equals the excess of: 
 44.5      (1) total increments collected from the district since its 
 44.6   certification, reduced by any excess increments paid under 
 44.7   paragraph (c), clause (4), for a prior year, over 
 44.8      (2) the total costs authorized by the tax increment 
 44.9   financing plan to be paid with increments from the district, 
 44.10  reduced, but not below zero, by the sum of: 
 44.11     (i) the amounts of those authorized costs that have been 
 44.12  paid from sources other than tax increments from the district; 
 44.13     (ii) revenues, other than tax increments from the district, 
 44.14  that are dedicated for or otherwise required to be used to pay 
 44.15  those authorized costs and that the authority has received and 
 44.16  that are not included in item (i); and 
 44.17     (iii) the amount of principal and interest obligations due 
 44.18  on outstanding bonds after December 31 of the year and not 
 44.19  prepaid under paragraph (c) in a prior year; and 
 44.20     (iv) increased by the sum of the transfers of increments 
 44.21  made under section 469.1763, subdivision 6, to reduce deficits 
 44.22  in other districts made by December 31 of the year. 
 44.23     (c) The authority shall use excess increment only to do one 
 44.24  or more of the following:  
 44.25     (1) prepay any outstanding bonds; 
 44.26     (2) discharge the pledge of tax increment for any 
 44.27  outstanding bonds; 
 44.28     (3) pay into an escrow account dedicated to the payment of 
 44.29  any outstanding bonds; or 
 44.30     (4) return the excess amount to the county auditor who 
 44.31  shall distribute the excess amount to the city or town, county, 
 44.32  and school district in which the tax increment financing 
 44.33  district is located in direct proportion to their respective 
 44.34  local tax rates.  
 44.35     (d) For purposes of a district for which the request for 
 44.36  certification was made prior to August 1, 1979, excess 
 45.1   increments equal the amount of increments on hand on December 
 45.2   31, less the principal and interest obligations due on 
 45.3   outstanding bonds or advances, qualifying under subdivision 1c, 
 45.4   clauses (1), (2), and (5), after December 31 of the year and not 
 45.5   prepaid under paragraph (c). 
 45.6      (e) The county auditor must report to the commissioner of 
 45.7   education the amount of any excess tax increment distributed to 
 45.8   a school district within 30 days of the distribution. 
 45.9      (f) For purposes of this subdivision, "outstanding bonds" 
 45.10  means bonds which are secured by increments from the district. 
 45.11     [EFFECTIVE DATE.] This section is effective for districts, 
 45.12  regardless of when the request for certification was made, and 
 45.13  applies to calculations of excess increments beginning in 
 45.14  calendar year 2005. 
 45.15     Sec. 10.  Minnesota Statutes 2004, section 469.176, 
 45.16  subdivision 4d, is amended to read: 
 45.17     Subd. 4d.  [HOUSING DISTRICTS.] Revenue derived from tax 
 45.18  increment from a housing district must be used solely to finance 
 45.19  the cost of housing projects as defined in section sections 
 45.20  469.174, subdivision 11, and 469.1761.  The cost of public 
 45.21  improvements directly related to the housing projects and the 
 45.22  allocated administrative expenses of the authority may be 
 45.23  included in the cost of a housing project. 
 45.24     [EFFECTIVE DATE.] This section is effective for all 
 45.25  districts to which the provisions of Minnesota Statutes, section 
 45.26  469.1761, apply. 
 45.27     Sec. 11.  Minnesota Statutes 2004, section 469.1761, 
 45.28  subdivision 1, is amended to read: 
 45.29     Subdivision 1.  [REQUIREMENT IMPOSED.] (a) In order for a 
 45.30  tax increment financing district to qualify as a housing 
 45.31  district,: 
 45.32     (1) the income limitations provided in this section must be 
 45.33  satisfied; and 
 45.34     (2) no more than 20 percent of the square footage of 
 45.35  buildings that receive assistance from tax increments may 
 45.36  consist of commercial, retail, or other nonresidential uses.  
 46.1      (b) The requirements imposed by this section apply to 
 46.2   residential property receiving assistance financed with tax 
 46.3   increments, including interest reduction, land transfers at less 
 46.4   than the authority's cost of acquisition, utility service or 
 46.5   connections, roads, parking facilities, or other subsidies.  The 
 46.6   provisions of this section do not apply to districts located in 
 46.7   a targeted area as defined in section 462C.02, subdivision 9, 
 46.8   clause (e). 
 46.9      [EFFECTIVE DATE.] This section is effective for districts 
 46.10  for which the request for certification was made after June 30, 
 46.11  2005.  
 46.12     Sec. 12.  Minnesota Statutes 2004, section 469.1761, 
 46.13  subdivision 3, is amended to read: 
 46.14     Subd. 3.  [RENTAL PROPERTY.] For residential rental 
 46.15  property, the property must satisfy the income requirements for 
 46.16  a qualified residential rental project as defined in section 
 46.17  142(d) of the Internal Revenue Code.  A property also satisfies 
 46.18  the requirements of section 142(d) if 50 percent of the 
 46.19  residential units in the project are occupied by individuals 
 46.20  whose income is 80 percent or less of area median gross income.  
 46.21  The requirements of this subdivision apply for the duration of 
 46.22  the tax increment financing district. 
 46.23     [EFFECTIVE DATE.] This section is effective for districts 
 46.24  for which the request for certification was made after June 30, 
 46.25  2004.  
 46.26     Sec. 13.  Minnesota Statutes 2004, section 469.1763, 
 46.27  subdivision 6, is amended to read: 
 46.28     Subd. 6.  [POOLING PERMITTED FOR DEFICITS.] (a) This 
 46.29  subdivision applies only to districts for which the request for 
 46.30  certification was made before August 1, 2001, and without regard 
 46.31  to whether the request for certification was made prior to 
 46.32  August 1, 1979. 
 46.33     (b) The municipality for the district may transfer 
 46.34  available increments from another tax increment financing 
 46.35  district located in the municipality, if the transfer is 
 46.36  necessary to eliminate a deficit in the district to which the 
 47.1   increments are transferred.  A deficit in the district for 
 47.2   purposes of this subdivision means the lesser of the following 
 47.3   two amounts: 
 47.4      (1)(i) the amount due during the calendar year to pay 
 47.5   preexisting obligations of the district; minus 
 47.6      (ii) the total increments collected or to be collected from 
 47.7   properties located within the district that are available for 
 47.8   the calendar year including amounts collected in prior years 
 47.9   that are currently available; plus 
 47.10     (iii) total increments from properties located in other 
 47.11  districts in the municipality including amounts collected in 
 47.12  prior years that are available to be used to meet the district's 
 47.13  obligations under this section, excluding this subdivision, or 
 47.14  other provisions of law (but excluding a special tax under 
 47.15  section 469.1791 and the grant program under Laws 1997, chapter 
 47.16  231, article 1, section 19, or Laws 2001, First Special Session 
 47.17  chapter 5); or 
 47.18     (2) the reduction in increments collected from properties 
 47.19  located in the district for the calendar year as a result of the 
 47.20  changes in class rates in Laws 1997, chapter 231, article 1; 
 47.21  Laws 1998, chapter 389, article 2; and Laws 1999, chapter 243, 
 47.22  and Laws 2001, First Special Session chapter 5, or the 
 47.23  elimination of the general education tax levy under Laws 2001, 
 47.24  First Special Session chapter 5. 
 47.25     The authority may compute the deficit amount under clause 
 47.26  (1) only (without regard to the limit under clause (2)) if the 
 47.27  authority makes an irrevocable commitment, by resolution, to use 
 47.28  increments from the district to which increments are to be 
 47.29  transferred and any transferred increments are only used to pay 
 47.30  preexisting obligations and administrative expenses for the 
 47.31  district that are required to be paid under section 469.176, 
 47.32  subdivision 4h, paragraph (a). 
 47.33     (c) A preexisting obligation means: 
 47.34     (1) bonds issued and sold before August 1, 2001, or bonds 
 47.35  issued pursuant to a binding contract requiring the issuance of 
 47.36  bonds entered into before July 1, 2001, and bonds issued to 
 48.1   refund such bonds or to reimburse expenditures made in 
 48.2   conjunction with a signed contractual agreement entered into 
 48.3   before August 1, 2001, to the extent that the bonds are secured 
 48.4   by a pledge of increments from the tax increment financing 
 48.5   district; and 
 48.6      (2) binding contracts entered into before August 1, 2001, 
 48.7   to the extent that the contracts require payments secured by a 
 48.8   pledge of increments from the tax increment financing district. 
 48.9      (d) The municipality may require a development authority, 
 48.10  other than a seaway port authority, to transfer available 
 48.11  increments including amounts collected in prior years that are 
 48.12  currently available for any of its tax increment financing 
 48.13  districts in the municipality to make up an insufficiency in 
 48.14  another district in the municipality, regardless of whether the 
 48.15  district was established by the development authority or another 
 48.16  development authority.  This authority applies notwithstanding 
 48.17  any law to the contrary, but applies only to a development 
 48.18  authority that: 
 48.19     (1) was established by the municipality; or 
 48.20     (2) the governing body of which is appointed, in whole or 
 48.21  part, by the municipality or an officer of the municipality or 
 48.22  which consists, in whole or part, of members of the governing 
 48.23  body of the municipality.  The municipality may use this 
 48.24  authority only after it has first used all available increments 
 48.25  of the receiving development authority to eliminate the 
 48.26  insufficiency and exercised any permitted action under section 
 48.27  469.1792, subdivision 3, for preexisting districts of the 
 48.28  receiving development authority to eliminate the insufficiency. 
 48.29     (e) The authority under this subdivision to spend tax 
 48.30  increments outside of the area of the district from which the 
 48.31  tax increments were collected: 
 48.32     (1) is an exception to the restrictions under section 
 48.33  469.176, subdivision subdivisions 4b, 4c, 4d, 4e, 4i, and 4j; 
 48.34  the expenditure limits under section 469.176, subdivision 1c; 
 48.35  and the other provisions of this section,; and the percentage 
 48.36  restrictions under subdivision 2 must be calculated after 
 49.1   deducting increments spent under this subdivision from the total 
 49.2   increments for the district; and 
 49.3      (2) applies notwithstanding the provisions of the Tax 
 49.4   Increment Financing Act in effect for districts for which the 
 49.5   request for certification was made before June 30, 1982, or any 
 49.6   other law to the contrary. 
 49.7      (f) If a preexisting obligation requires the development 
 49.8   authority to pay an amount that is limited to the increment from 
 49.9   the district or a specific development within the district and 
 49.10  if the obligation requires paying a higher amount to the extent 
 49.11  that increments are available, the municipality may determine 
 49.12  that the amount due under the preexisting obligation equals the 
 49.13  higher amount and may authorize the transfer of increments under 
 49.14  this subdivision to pay up to the higher amount.  The existence 
 49.15  of a guarantee of obligations by the individual or entity that 
 49.16  would receive the payment under this paragraph is disregarded in 
 49.17  the determination of eligibility to pool under this 
 49.18  subdivision.  The authority to transfer increments under this 
 49.19  paragraph may only be used to the extent that the payment of all 
 49.20  other preexisting obligations in the municipality due during the 
 49.21  calendar year have been satisfied. 
 49.22     (g) For transfers of increments made in calendar year 2005 
 49.23  and later, the reduction in increments as a result of the 
 49.24  elimination of the general education tax levy for purposes of 
 49.25  paragraph (b), clause (2), for a taxes payable year equals the 
 49.26  general education tax rate for the school district under 
 49.27  Minnesota Statutes 2000, section 273.1382, subdivision 1, for 
 49.28  taxes payable in 2001, multiplied by the captured tax capacity 
 49.29  of the district for the current taxes payable year.  
 49.30     [EFFECTIVE DATE.] This section applies to transfers of 
 49.31  increments made after the effective date of the original 
 49.32  enactment of Minnesota Statutes, section 469.1763, subdivision 6.
 49.33     Sec. 14.  Minnesota Statutes 2004, section 469.177, 
 49.34  subdivision 1, is amended to read: 
 49.35     Subdivision 1.  [ORIGINAL NET TAX CAPACITY.] (a) Upon or 
 49.36  after adoption of a tax increment financing plan, the auditor of 
 50.1   any county in which the district is situated shall, upon request 
 50.2   of the authority, certify the original net tax capacity of the 
 50.3   tax increment financing district and that portion of the 
 50.4   district overlying any subdistrict as described in the tax 
 50.5   increment financing plan and shall certify in each year 
 50.6   thereafter the amount by which the original net tax capacity has 
 50.7   increased or decreased as a result of a change in tax exempt 
 50.8   status of property within the district and any subdistrict, 
 50.9   reduction or enlargement of the district or changes pursuant to 
 50.10  subdivision 4.  
 50.11     (b) If the classification under section 273.13 of property 
 50.12  located in a district changes to a classification that has a 
 50.13  different assessment ratio, the original net tax capacity of 
 50.14  that property must be redetermined at the time when its use is 
 50.15  changed as if the property had originally been classified in the 
 50.16  same class in which it is classified after its use is changed. 
 50.17     (c) The amount to be added to the original net tax capacity 
 50.18  of the district as a result of previously tax exempt real 
 50.19  property within the district becoming taxable equals the net tax 
 50.20  capacity of the real property as most recently assessed pursuant 
 50.21  to section 273.18 or, if that assessment was made more than one 
 50.22  year prior to the date of title transfer rendering the property 
 50.23  taxable, the net tax capacity assessed by the assessor at the 
 50.24  time of the transfer.  If improvements are made to tax exempt 
 50.25  property after certification of the district and before the 
 50.26  parcel becomes taxable, the assessor shall, at the request of 
 50.27  the authority, separately assess the estimated market value of 
 50.28  the improvements.  If the property becomes taxable, the county 
 50.29  auditor shall add to original net tax capacity, the net tax 
 50.30  capacity of the parcel, excluding the separately assessed 
 50.31  improvements.  If substantial taxable improvements were made to 
 50.32  a parcel after certification of the district and if the property 
 50.33  later becomes tax exempt, in whole or part, as a result of the 
 50.34  authority acquiring the property through foreclosure or exercise 
 50.35  of remedies under a lease or other revenue agreement or as a 
 50.36  result of tax forfeiture, the amount to be added to the original 
 51.1   net tax capacity of the district as a result of the property 
 51.2   again becoming taxable is the amount of the parcel's value that 
 51.3   was included in original net tax capacity when the parcel was 
 51.4   first certified.  The amount to be added to the original net tax 
 51.5   capacity of the district as a result of enlargements equals the 
 51.6   net tax capacity of the added real property as most recently 
 51.7   certified by the commissioner of revenue as of the date of 
 51.8   modification of the tax increment financing plan pursuant to 
 51.9   section 469.175, subdivision 4. 
 51.10     (d) If the net tax capacity of a property increases because 
 51.11  the property no longer qualifies under the Minnesota 
 51.12  Agricultural Property Tax Law, section 273.111; the Minnesota 
 51.13  Open Space Property Tax Law, section 273.112; or the 
 51.14  Metropolitan Agricultural Preserves Act, chapter 473H, or 
 51.15  because platted, unimproved property is improved or three years 
 51.16  pass market value is increased after approval of the plat under 
 51.17  section 273.11, subdivision 1 14, 14a, or 14b, the increase in 
 51.18  net tax capacity must be added to the original net tax capacity. 
 51.19     (e) The amount to be subtracted from the original net tax 
 51.20  capacity of the district as a result of previously taxable real 
 51.21  property within the district becoming tax exempt, or a reduction 
 51.22  in the geographic area of the district, shall be the amount of 
 51.23  original net tax capacity initially attributed to the property 
 51.24  becoming tax exempt or being removed from the district.  If the 
 51.25  net tax capacity of property located within the tax increment 
 51.26  financing district is reduced by reason of a court-ordered 
 51.27  abatement, stipulation agreement, voluntary abatement made by 
 51.28  the assessor or auditor or by order of the commissioner of 
 51.29  revenue, the reduction shall be applied to the original net tax 
 51.30  capacity of the district when the property upon which the 
 51.31  abatement is made has not been improved since the date of 
 51.32  certification of the district and to the captured net tax 
 51.33  capacity of the district in each year thereafter when the 
 51.34  abatement relates to improvements made after the date of 
 51.35  certification.  The county auditor may specify reasonable form 
 51.36  and content of the request for certification of the authority 
 52.1   and any modification thereof pursuant to section 469.175, 
 52.2   subdivision 4.  
 52.3      (f) If a parcel of property contained a substandard 
 52.4   building that was demolished or removed and if the authority 
 52.5   elects to treat the parcel as occupied by a substandard building 
 52.6   under section 469.174, subdivision 10, paragraph (b), the 
 52.7   auditor shall certify the original net tax capacity of the 
 52.8   parcel using the greater of (1) the current net tax capacity of 
 52.9   the parcel, or (2) the estimated market value of the parcel for 
 52.10  the year in which the building was demolished or removed, but 
 52.11  applying the class rates for the current year. 
 52.12     (g) For a redevelopment district qualifying under section 
 52.13  469.174, subdivision 10, paragraph (a), clause (4), as a 
 52.14  qualified disaster area, the auditor shall certify the value of 
 52.15  the land as the original tax capacity for any parcel in the 
 52.16  district that contains a building that suffered substantial 
 52.17  damage as a result of the disaster or emergency. 
 52.18     [EFFECTIVE DATE.] This section is effective for land 
 52.19  platted on or after August 1, 1991.  
 52.20     Sec. 15.  Minnesota Statutes 2004, section 469.1771, 
 52.21  subdivision 5, is amended to read: 
 52.22     Subd. 5.  [DISPOSITION OF PAYMENTS.] If the authority does 
 52.23  not have sufficient increments or other available money to make 
 52.24  a payment required by this section, the municipality that 
 52.25  approved the district must use any available money to make the 
 52.26  payment including the levying of property taxes.  Money received 
 52.27  by the county auditor under this section must be distributed as 
 52.28  excess increments under section 469.176, subdivision 2, 
 52.29  paragraph (a) (c), clause (4), except that if the county auditor 
 52.30  receives the payment after (1) 60 days from a municipality's 
 52.31  receipt of the state auditor's notification under subdivision 1, 
 52.32  paragraph (c), of noncompliance requiring the payment, or (2) 
 52.33  the commencement of an action by the county attorney to compel 
 52.34  the payment, then no distributions may be made to the 
 52.35  municipality that approved the tax increment financing district. 
 52.36     [EFFECTIVE DATE.] This section is effective at the same 
 53.1   time as the amendments to Minnesota Statutes, section 469.176, 
 53.2   subdivision 2, by Laws 2003, chapter 127, article 10, section 11.
 53.3      Sec. 16.  Minnesota Statutes 2004, section 469.178, 
 53.4   subdivision 1, is amended to read: 
 53.5      Subdivision 1.  [GENERALLY.] Notwithstanding any other law, 
 53.6   no bonds, payment for which tax increment is pledged, shall be 
 53.7   issued in connection with any project for which tax increment 
 53.8   financing has been undertaken except as authorized in this 
 53.9   section.  The proceeds from the bonds shall be used only in 
 53.10  accordance with section 469.176, subdivision subdivisions 4 to 
 53.11  4l, as if the proceeds were tax increment, except that a tax 
 53.12  increment financing plan need not be adopted for any project for 
 53.13  which tax increment financing has been undertaken prior to 
 53.14  August 1, 1979, pursuant to laws not requiring a tax increment 
 53.15  financing plan.  The bonds are not included for purposes of 
 53.16  computing the net debt of any municipality. 
 53.17     [EFFECTIVE DATE.] This section is effective for tax 
 53.18  increment financing districts for which the request for 
 53.19  certification was made after August 1, 1979.  
 53.20     Sec. 17.  [EXTENSION OF TIME TO EXPEND TAX INCREMENT.] 
 53.21     Notwithstanding any contrary provision of law or charter, 
 53.22  for tax increment financing district number 3, established on 
 53.23  December 19, 1994, by Brooklyn Center Resolution No. 94-273, 
 53.24  Minnesota Statutes, section 469.1763, subdivision 3, applies to 
 53.25  the district by permitting a period of 13 years for commencement 
 53.26  of activities within the district. 
 53.27     [EFFECTIVE DATE.] This section is effective upon approval 
 53.28  by the governing body of the city of Brooklyn Center and 
 53.29  compliance with Minnesota Statutes, section 645.021, subdivision 
 53.30  3. 
 53.31     Sec. 18.  [FAIRMONT; ABATEMENT AUTHORITY.] 
 53.32     The city of Fairmont, Martin County, and Independent School 
 53.33  District No. 2752, Fairmont Area Schools, may each grant an 
 53.34  abatement under Minnesota Statutes, sections 469.1812 to 
 53.35  469.1815, for property located in tax increment financing 
 53.36  district No. 20 in the city of Fairmont, notwithstanding any law 
 54.1   to the contrary.  The total amount of the abatement for each 
 54.2   political subdivision may not exceed the taxes paid by the 
 54.3   original tax capacity of the district for each year of its 
 54.4   existence.  Notwithstanding Minnesota Statutes, section 471.87, 
 54.5   or any other law governing conflicts of interest, a local 
 54.6   elected official may have a financial interest in and benefit 
 54.7   from the tax abatement authorized in this section if the 
 54.8   official discloses the interest and potential benefit on the 
 54.9   record, and abstains from voting on the matter. 
 54.10     [EFFECTIVE DATE.] This section is effective the day 
 54.11  following final enactment. 
 54.12     Sec. 19.  [WABASHA TAX INCREMENT FINANCING DISTRICT.] 
 54.13     Subdivision 1.  [DISTRICT EXTENSION.] The governing body of 
 54.14  the city of Wabasha may elect to compute the duration of its 
 54.15  redevelopment tax increment financing district number 3 without 
 54.16  regard to any increment received for taxes payable in 2001.  
 54.17     Subd. 2.  [FIVE-YEAR RULE.] The requirements of Minnesota 
 54.18  Statutes, section 469.1763, subdivision 3, that activities must 
 54.19  be undertaken within a five-year period from the date of 
 54.20  certification of a tax increment financing district must be 
 54.21  considered to be met for the city of Wabasha redevelopment tax 
 54.22  increment district number 3, if the activities are undertaken 
 54.23  within ten years from the date of certification of the district. 
 54.24     Subd. 3.  [NATIONAL EAGLE CENTER.] Notwithstanding the 
 54.25  provisions of Minnesota Statutes, section 469.176, subdivision 
 54.26  4l, or any other law, the city of Wabasha may spend the proceeds 
 54.27  of tax increment bonds issued prior to January 1, 2000, to pay 
 54.28  the costs of acquiring and constructing a National Eagle Center 
 54.29  in the city.  The city of Wabasha may also use tax increment 
 54.30  from its tax increment districts to pay the debt service on such 
 54.31  bonds, or any bonds issued to refund such bonds, subject to 
 54.32  legal restrictions on the pooling of tax increment.  These bonds 
 54.33  may not be treated as preexisting obligations under Minnesota 
 54.34  Statutes, section 469.1794. 
 54.35     Subd. 4.  [POOLING.] Except as otherwise specifically 
 54.36  provided in this section, all increments from district number 3 
 55.1   must be spent on activities within the district and 
 55.2   administrative expenses. 
 55.3      [EFFECTIVE DATE.] Subdivision 1 is effective upon 
 55.4   compliance with Minnesota Statutes, sections 469.1782, 
 55.5   subdivision 2, and 645.021.  Subdivisions 2 and 3 are effective 
 55.6   upon compliance by the governing body of the city of Wabasha 
 55.7   with Minnesota Statutes, section 645.021. 
 55.8      Sec. 20.  [CITY OF RICHFIELD; TAX INCREMENT FINANCING 
 55.9   DISTRICT.] 
 55.10     Subdivision 1.  [AUTHORIZATION.] The city of Richfield may 
 55.11  create a tax increment financing district consisting of an area 
 55.12  lying west of Trunk Highway 77 extending:  to 16th Avenue 
 55.13  between Crosstown Highway 62 and 66th Street; to 17th Avenue 
 55.14  between 66th and 69th Streets; and to 18th Avenue between 69th 
 55.15  and 72nd Streets.  The city or its housing and redevelopment 
 55.16  authority may be the authority for the purposes of Minnesota 
 55.17  Statutes, sections 469.174 to 469.179. 
 55.18     Subd. 2.  [DISTRICT IS REDEVELOPMENT DISTRICT.] The 
 55.19  redevelopment tax increment district created pursuant to 
 55.20  subdivision 1 is deemed to be a redevelopment district and is 
 55.21  subject to Minnesota Statutes, sections 469.174 to 469.179, 
 55.22  except that: 
 55.23     (1) expenditures for activities as defined in Minnesota 
 55.24  Statutes, section 469.1763, subdivision 1, paragraph (b), 
 55.25  anywhere in the district are deemed to be the costs of 
 55.26  correcting conditions that allow the designation of 
 55.27  redevelopment districts pursuant to Minnesota Statutes, section 
 55.28  469.174, subdivision 10; and 
 55.29     (2) the five-year rule under Minnesota Statutes, section 
 55.30  469.1763, subdivision 3, does not apply. 
 55.31     [EFFECTIVE DATE.] This section is effective upon local 
 55.32  approval by the city of Richfield in compliance with Minnesota 
 55.33  Statutes, section 645.021. 
 55.34     Sec. 21.  [CITY OF MOUNDS VIEW; TAX INCREMENT FINANCING 
 55.35  DISTRICT.] 
 55.36     Subdivision 1.  [ESTABLISHMENT.] (a) The city of Mounds 
 56.1   View may establish within the corporate boundaries of the city 
 56.2   one or more economic development tax increment financing 
 56.3   districts subject to the special rules under subdivision 2.  The 
 56.4   districts must be located on property that is exempt from 
 56.5   taxation for property taxes payable in 2005 and within the area 
 56.6   defined in paragraph (b). 
 56.7      (b) For purposes of this section, "area" is bounded by, and 
 56.8   including, on the north County Road J west of Coral Sea Street 
 56.9   and 82nd Lane NE east of Coral Sea Street, on the east Coral Sea 
 56.10  Street north of 82nd Lane NE and Interstate Highway 35W south of 
 56.11  82nd Lane NE, on the south and southwest U.S. Highway 10, and on 
 56.12  the west the western boundary of Outlot A, Sysco, according to 
 56.13  the recorded plat thereof, and situated in Ramsey County, 
 56.14  Minnesota. 
 56.15     Subd. 2.  [SPECIAL RULES.] (a) If the city elects upon the 
 56.16  adoption of the tax increment financing plan for the district, 
 56.17  the rules under this section apply to the district. 
 56.18     (b) The duration limit under Minnesota Statutes, section 
 56.19  469.176, subdivision 1b, clause (3), is extended to 25 years 
 56.20  after receipt of the first increment. 
 56.21     (c) The five-year rule under Minnesota Statutes, section 
 56.22  469.1763, subdivision 3, is extended to a ten-year period. 
 56.23     (d) The limitations on spending increment outside of the 
 56.24  district under Minnesota Statutes, section 469.1763, subdivision 
 56.25  2, and on spending increment for developments more than 15 
 56.26  percent of the square footage of which is used for purposes 
 56.27  other than those listed in Minnesota Statutes, section 469.176, 
 56.28  subdivision 4c, do not apply.  Except as provided in paragraph 
 56.29  (e), increments may only be expended within the area defined in 
 56.30  subdivision 1, paragraph (b), and related to development 
 56.31  occurring within the area defined in subdivision 1, paragraph 
 56.32  (b), whether or not included in a tax increment financing 
 56.33  district.  Increments may only be spent on one or more of the 
 56.34  following costs, improvements, or activities: 
 56.35     (1) acquisition and removal of existing billboards; 
 56.36     (2) acquisition of land and easements, if the parcel is 
 57.1   occupied by a building constructed before 1990; 
 57.2      (3) sanitary sewer, sewer, and water improvements; 
 57.3      (4) road improvements; 
 57.4      (5) parking, including structured parking; 
 57.5      (6) administrative expenses; 
 57.6      (7) wetland mitigation; 
 57.7      (8) soils correction; and 
 57.8      (9) environmental cleanup.  
 57.9      (e) Increments may be expended on costs, improvements, or 
 57.10  activities outside the area defined in subdivision 1, paragraph 
 57.11  (b), wherever located, whether or not included in a tax 
 57.12  increment financing district, for sanitary sewer, sewer, and 
 57.13  water improvements and improvements to Coral Sea Street, Airport 
 57.14  Road, 82nd Lane NE, County Road J, U.S. Highway 10, and 
 57.15  Interstate Highway 35W so long as the improvements are related 
 57.16  to development within the area defined in subdivision 1, 
 57.17  paragraph (b). 
 57.18     (f) The limitation on the ability to elect the method of 
 57.19  computation under Minnesota Statutes, section 469.177, 
 57.20  subdivision 3, for an economic development district does not 
 57.21  apply and the city or authority may elect the method of 
 57.22  computation under paragraph (a) or (b) of section 469.177, 
 57.23  subdivision 3. 
 57.24     Subd. 3.  [EXPIRATION.] The authority to approve tax 
 57.25  increment financing plans to establish a tax increment financing 
 57.26  district under this section expires on December 31, 2015. 
 57.27     [EFFECTIVE DATE.] This section is effective upon approval 
 57.28  by the governing body of the city of Mounds View and upon 
 57.29  compliance by the city with Minnesota Statutes, sections 
 57.30  469.1782, subdivision 2, and 645.021, subdivision 3. 
 57.31     Sec. 22.  [ST. PAUL; HOUSING AND REDEVELOPMENT AUTHORITY.] 
 57.32     Subdivision 1.  [HOUSING AND REDEVELOPMENT 
 57.33  SUBDISTRICTS.] For its tax increment financing districts 
 57.34  identified in subdivision 2, the Housing and Redevelopment 
 57.35  Authority of the city of St. Paul may establish subdistricts up 
 57.36  to the number set forth for each tax increment financing 
 58.1   district in subdivision 2.  The subdistricts shall be treated as 
 58.2   set forth in subdivision 3, notwithstanding the provisions of 
 58.3   any other law to the contrary. 
 58.4      Subd. 2.  [DIVISION INTO SUBDISTRICTS; AUTHORITY.] The tax 
 58.5   increment financing districts with the following Ramsey County 
 58.6   identification numbers may be divided into a number of 
 58.7   subdistricts not to exceed the number set forth as follows:  No. 
 58.8   224/233, six subdistricts; No. 225, six subdistricts; No. 228, 
 58.9   three subdistricts; and No. 234, two subdistricts. 
 58.10     Subd. 3.  [DESIGNATION OF PARCELS.] All parcels in a tax 
 58.11  increment financing district listed in subdivision 2 must be 
 58.12  assigned to a subdistrict.  Each subdistrict established 
 58.13  pursuant to this section shall consist of those parcels in the 
 58.14  tax increment financing district which are designated by the 
 58.15  commissioners of the Housing and Redevelopment Authority of the 
 58.16  city of St. Paul by resolution, which parcels need not be 
 58.17  contiguous.  For purposes of determining tax increments and the 
 58.18  parcels treated as paying tax increments, each subdistrict shall 
 58.19  be treated as a separate tax increment district. 
 58.20     [EFFECTIVE DATE.] This section is effective the day after 
 58.21  the governing body of the city of St. Paul and its chief 
 58.22  clerical officer comply with Minnesota Statutes, section 
 58.23  645.021, subdivisions 2 and 3. 
 58.24     Sec. 23.  [REPEALER.] 
 58.25     Minnesota Statutes 2004, sections 469.176, subdivision 1a; 
 58.26  and 469.1766; and Laws 1998, chapter 389, article 11, section 
 58.27  19, subdivision 3, are repealed.  
 58.28     [EFFECTIVE DATE.] The repeal of Minnesota Statutes, section 
 58.29  469.1766, is effective for districts for which the request for 
 58.30  certification was made after August 1, 1993.  The repeal of 
 58.31  Minnesota Statutes, section 469.176, subdivision 1a, is 
 58.32  effective the day following final enactment, provided that 
 58.33  Minnesota Statutes, section 469.176, subdivision 1a, is 
 58.34  satisfied for any district to which it applies, if bonds have 
 58.35  been issued, property acquired, or public improvements 
 58.36  constructed before the end of the three-year period, regardless 
 59.1   of whether the action was undertaken before or after 
 59.2   certification of the district.  The repeal of Laws 1998, chapter 
 59.3   389, article 11, section 19, subdivision 3, is effective upon 
 59.4   compliance by the city of Minneapolis with Minnesota Statutes, 
 59.5   section 645.021, subdivision 2. 
 59.6                              ARTICLE 3 
 59.7               INTERNATIONAL ECONOMIC DEVELOPMENT ZONE 
 59.8      Section 1.  Minnesota Statutes 2004, section 272.02, is 
 59.9   amended by adding a subdivision to read: 
 59.10     Subd. 68.  [INTERNATIONAL ECONOMIC DEVELOPMENT ZONE 
 59.11  PROPERTY.] (a) Improvements to real property, and personal 
 59.12  property, classified under section 273.13, subdivision 24, and 
 59.13  located within the international economic development zone 
 59.14  designated under section 469.322, are exempt from ad valorem 
 59.15  taxes levied under chapter 275, if the improvements are: 
 59.16     (1) part of a regional distribution center as defined in 
 59.17  section 469.321; or 
 59.18     (2) occupied by a qualified business as defined in section 
 59.19  469.321, that uses the improvements primarily in freight 
 59.20  forwarding operations. 
 59.21     (b) The exemption applies beginning for the first 
 59.22  assessment year after designation of the international economic 
 59.23  development zone.  The exemption applies to each assessment year 
 59.24  that begins during the duration of the international economic 
 59.25  development zone.  To be exempt under paragraph (a), clause (2), 
 59.26  the property must be occupied by July 1 of the assessment year 
 59.27  by a qualified business that has signed the business subsidy 
 59.28  agreement by July 1 of the assessment year. 
 59.29     [EFFECTIVE DATE.] This section is effective beginning for 
 59.30  property taxes payable in 2008. 
 59.31     Sec. 2.  Minnesota Statutes 2004, section 290.01, 
 59.32  subdivision 19b, is amended to read: 
 59.33     Subd. 19b.  [SUBTRACTIONS FROM FEDERAL TAXABLE INCOME.] For 
 59.34  individuals, estates, and trusts, there shall be subtracted from 
 59.35  federal taxable income: 
 59.36     (1) interest income on obligations of any authority, 
 60.1   commission, or instrumentality of the United States to the 
 60.2   extent includable in taxable income for federal income tax 
 60.3   purposes but exempt from state income tax under the laws of the 
 60.4   United States; 
 60.5      (2) if included in federal taxable income, the amount of 
 60.6   any overpayment of income tax to Minnesota or to any other 
 60.7   state, for any previous taxable year, whether the amount is 
 60.8   received as a refund or as a credit to another taxable year's 
 60.9   income tax liability; 
 60.10     (3) the amount paid to others, less the amount used to 
 60.11  claim the credit allowed under section 290.0674, not to exceed 
 60.12  $1,625 for each qualifying child in grades kindergarten to 6 and 
 60.13  $2,500 for each qualifying child in grades 7 to 12, for tuition, 
 60.14  textbooks, and transportation of each qualifying child in 
 60.15  attending an elementary or secondary school situated in 
 60.16  Minnesota, North Dakota, South Dakota, Iowa, or Wisconsin, 
 60.17  wherein a resident of this state may legally fulfill the state's 
 60.18  compulsory attendance laws, which is not operated for profit, 
 60.19  and which adheres to the provisions of the Civil Rights Act of 
 60.20  1964 and chapter 363A.  For the purposes of this clause, 
 60.21  "tuition" includes fees or tuition as defined in section 
 60.22  290.0674, subdivision 1, clause (1).  As used in this clause, 
 60.23  "textbooks" includes books and other instructional materials and 
 60.24  equipment purchased or leased for use in elementary and 
 60.25  secondary schools in teaching only those subjects legally and 
 60.26  commonly taught in public elementary and secondary schools in 
 60.27  this state.  Equipment expenses qualifying for deduction 
 60.28  includes expenses as defined and limited in section 290.0674, 
 60.29  subdivision 1, clause (3).  "Textbooks" does not include 
 60.30  instructional books and materials used in the teaching of 
 60.31  religious tenets, doctrines, or worship, the purpose of which is 
 60.32  to instill such tenets, doctrines, or worship, nor does it 
 60.33  include books or materials for, or transportation to, 
 60.34  extracurricular activities including sporting events, musical or 
 60.35  dramatic events, speech activities, driver's education, or 
 60.36  similar programs.  For purposes of the subtraction provided by 
 61.1   this clause, "qualifying child" has the meaning given in section 
 61.2   32(c)(3) of the Internal Revenue Code; 
 61.3      (4) income as provided under section 290.0802; 
 61.4      (5) to the extent included in federal adjusted gross 
 61.5   income, income realized on disposition of property exempt from 
 61.6   tax under section 290.491; 
 61.7      (6) to the extent included in federal taxable income, 
 61.8   postservice benefits for youth community service under section 
 61.9   124D.42 for volunteer service under United States Code, title 
 61.10  42, sections 12601 to 12604; 
 61.11     (7) to the extent not deducted in determining federal 
 61.12  taxable income by an individual who does not itemize deductions 
 61.13  for federal income tax purposes for the taxable year, an amount 
 61.14  equal to 50 percent of the excess of charitable contributions 
 61.15  allowable as a deduction for the taxable year under section 
 61.16  170(a) of the Internal Revenue Code over $500; 
 61.17     (8) for taxable years beginning before January 1, 2008, the 
 61.18  amount of the federal small ethanol producer credit allowed 
 61.19  under section 40(a)(3) of the Internal Revenue Code which is 
 61.20  included in gross income under section 87 of the Internal 
 61.21  Revenue Code; 
 61.22     (9) for individuals who are allowed a federal foreign tax 
 61.23  credit for taxes that do not qualify for a credit under section 
 61.24  290.06, subdivision 22, an amount equal to the carryover of 
 61.25  subnational foreign taxes for the taxable year, but not to 
 61.26  exceed the total subnational foreign taxes reported in claiming 
 61.27  the foreign tax credit.  For purposes of this clause, "federal 
 61.28  foreign tax credit" means the credit allowed under section 27 of 
 61.29  the Internal Revenue Code, and "carryover of subnational foreign 
 61.30  taxes" equals the carryover allowed under section 904(c) of the 
 61.31  Internal Revenue Code minus national level foreign taxes to the 
 61.32  extent they exceed the federal foreign tax credit; 
 61.33     (10) in each of the five tax years immediately following 
 61.34  the tax year in which an addition is required under subdivision 
 61.35  19a, clause (7), an amount equal to one-fifth of the delayed 
 61.36  depreciation.  For purposes of this clause, "delayed 
 62.1   depreciation" means the amount of the addition made by the 
 62.2   taxpayer under subdivision 19a, clause (7), minus the positive 
 62.3   value of any net operating loss under section 172 of the 
 62.4   Internal Revenue Code generated for the tax year of the 
 62.5   addition.  The resulting delayed depreciation cannot be less 
 62.6   than zero; and 
 62.7      (11) job opportunity building zone income as provided under 
 62.8   section 469.316; and 
 62.9      (12) international economic development zone income as 
 62.10  provided under section 469.325. 
 62.11     [EFFECTIVE DATE.] This section is effective for tax years 
 62.12  beginning after December 31, 2006. 
 62.13     Sec. 3.  Minnesota Statutes 2004, section 290.01, 
 62.14  subdivision 29, is amended to read: 
 62.15     Subd. 29.  [TAXABLE INCOME.] The term "taxable income" 
 62.16  means:  
 62.17     (1) for individuals, estates, and trusts, the same as 
 62.18  taxable net income; 
 62.19     (2) for corporations, the taxable net income less 
 62.20     (i) the net operating loss deduction under section 290.095; 
 62.21     (ii) the dividends received deduction under section 290.21, 
 62.22  subdivision 4; 
 62.23     (iii) the exemption for operating in a job opportunity 
 62.24  building zone under section 469.317; and 
 62.25     (iv) the exemption for operating in a biotechnology and 
 62.26  health sciences industry zone under section 469.337; and 
 62.27     (v) the exemption for operating in an international 
 62.28  economic development zone under section 469.326. 
 62.29     [EFFECTIVE DATE.] This section is effective for tax years 
 62.30  beginning after December 31, 2006. 
 62.31     Sec. 4.  Minnesota Statutes 2004, section 290.06, 
 62.32  subdivision 2c, is amended to read: 
 62.33     Subd. 2c.  [SCHEDULES OF RATES FOR INDIVIDUALS, ESTATES, 
 62.34  AND TRUSTS.] (a) The income taxes imposed by this chapter upon 
 62.35  married individuals filing joint returns and surviving spouses 
 62.36  as defined in section 2(a) of the Internal Revenue Code must be 
 63.1   computed by applying to their taxable net income the following 
 63.2   schedule of rates: 
 63.3      (1) On the first $25,680, 5.35 percent; 
 63.4      (2) On all over $25,680, but not over $102,030, 7.05 
 63.5   percent; 
 63.6      (3) On all over $102,030, 7.85 percent. 
 63.7      Married individuals filing separate returns, estates, and 
 63.8   trusts must compute their income tax by applying the above rates 
 63.9   to their taxable income, except that the income brackets will be 
 63.10  one-half of the above amounts.  
 63.11     (b) The income taxes imposed by this chapter upon unmarried 
 63.12  individuals must be computed by applying to taxable net income 
 63.13  the following schedule of rates: 
 63.14     (1) On the first $17,570, 5.35 percent; 
 63.15     (2) On all over $17,570, but not over $57,710, 7.05 
 63.16  percent; 
 63.17     (3) On all over $57,710, 7.85 percent. 
 63.18     (c) The income taxes imposed by this chapter upon unmarried 
 63.19  individuals qualifying as a head of household as defined in 
 63.20  section 2(b) of the Internal Revenue Code must be computed by 
 63.21  applying to taxable net income the following schedule of rates: 
 63.22     (1) On the first $21,630, 5.35 percent; 
 63.23     (2) On all over $21,630, but not over $86,910, 7.05 
 63.24  percent; 
 63.25     (3) On all over $86,910, 7.85 percent. 
 63.26     (d) In lieu of a tax computed according to the rates set 
 63.27  forth in this subdivision, the tax of any individual taxpayer 
 63.28  whose taxable net income for the taxable year is less than an 
 63.29  amount determined by the commissioner must be computed in 
 63.30  accordance with tables prepared and issued by the commissioner 
 63.31  of revenue based on income brackets of not more than $100.  The 
 63.32  amount of tax for each bracket shall be computed at the rates 
 63.33  set forth in this subdivision, provided that the commissioner 
 63.34  may disregard a fractional part of a dollar unless it amounts to 
 63.35  50 cents or more, in which case it may be increased to $1. 
 63.36     (e) An individual who is not a Minnesota resident for the 
 64.1   entire year must compute the individual's Minnesota income tax 
 64.2   as provided in this subdivision.  After the application of the 
 64.3   nonrefundable credits provided in this chapter, the tax 
 64.4   liability must then be multiplied by a fraction in which:  
 64.5      (1) the numerator is the individual's Minnesota source 
 64.6   federal adjusted gross income as defined in section 62 of the 
 64.7   Internal Revenue Code and increased by the additions required 
 64.8   under section 290.01, subdivision 19a, clauses (1), (5), and 
 64.9   (6), and reduced by the subtraction under section 290.01, 
 64.10  subdivision 19b, clause clauses (11) and (12), and the Minnesota 
 64.11  assignable portion of the subtraction for United States 
 64.12  government interest under section 290.01, subdivision 19b, 
 64.13  clause (1), after applying the allocation and assignability 
 64.14  provisions of section 290.081, clause (a), or 290.17; and 
 64.15     (2) the denominator is the individual's federal adjusted 
 64.16  gross income as defined in section 62 of the Internal Revenue 
 64.17  Code of 1986, increased by the amounts specified in section 
 64.18  290.01, subdivision 19a, clauses (1), (5), and (6), and reduced 
 64.19  by the amounts specified in section 290.01, subdivision 19b, 
 64.20  clauses (1) and, (11), and (12). 
 64.21     [EFFECTIVE DATE.] This section is effective for tax years 
 64.22  beginning after December 31, 2006. 
 64.23     Sec. 5.  Minnesota Statutes 2004, section 290.06, is 
 64.24  amended by adding a subdivision to read: 
 64.25     Subd. 32.  [INTERNATIONAL ECONOMIC DEVELOPMENT ZONE JOB 
 64.26  CREDIT.] A taxpayer that is a qualified business, as defined in 
 64.27  section 469.321, subdivision 6, is allowed a credit as 
 64.28  determined under section 469.327 against the tax imposed by this 
 64.29  chapter. 
 64.30     [EFFECTIVE DATE.] This section is effective the day 
 64.31  following final enactment. 
 64.32     Sec. 6.  Minnesota Statutes 2004, section 290.067, 
 64.33  subdivision 1, is amended to read: 
 64.34     Subdivision 1.  [AMOUNT OF CREDIT.] (a) A taxpayer may take 
 64.35  as a credit against the tax due from the taxpayer and a spouse, 
 64.36  if any, under this chapter an amount equal to the dependent care 
 65.1   credit for which the taxpayer is eligible pursuant to the 
 65.2   provisions of section 21 of the Internal Revenue Code subject to 
 65.3   the limitations provided in subdivision 2 except that in 
 65.4   determining whether the child qualified as a dependent, income 
 65.5   received as a Minnesota family investment program grant or 
 65.6   allowance to or on behalf of the child must not be taken into 
 65.7   account in determining whether the child received more than half 
 65.8   of the child's support from the taxpayer, and the provisions of 
 65.9   section 32(b)(1)(D) of the Internal Revenue Code do not apply. 
 65.10     (b) If a child who has not attained the age of six years at 
 65.11  the close of the taxable year is cared for at a licensed family 
 65.12  day care home operated by the child's parent, the taxpayer is 
 65.13  deemed to have paid employment-related expenses.  If the child 
 65.14  is 16 months old or younger at the close of the taxable year, 
 65.15  the amount of expenses deemed to have been paid equals the 
 65.16  maximum limit for one qualified individual under section 21(c) 
 65.17  and (d) of the Internal Revenue Code.  If the child is older 
 65.18  than 16 months of age but has not attained the age of six years 
 65.19  at the close of the taxable year, the amount of expenses deemed 
 65.20  to have been paid equals the amount the licensee would charge 
 65.21  for the care of a child of the same age for the same number of 
 65.22  hours of care.  
 65.23     (c) If a married couple: 
 65.24     (1) has a child who has not attained the age of one year at 
 65.25  the close of the taxable year; 
 65.26     (2) files a joint tax return for the taxable year; and 
 65.27     (3) does not participate in a dependent care assistance 
 65.28  program as defined in section 129 of the Internal Revenue Code, 
 65.29  in lieu of the actual employment related expenses paid for that 
 65.30  child under paragraph (a) or the deemed amount under paragraph 
 65.31  (b), the lesser of (i) the combined earned income of the couple 
 65.32  or (ii) the amount of the maximum limit for one qualified 
 65.33  individual under section 21(c) and (d) of the Internal Revenue 
 65.34  Code will be deemed to be the employment related expense paid 
 65.35  for that child.  The earned income limitation of section 21(d) 
 65.36  of the Internal Revenue Code shall not apply to this deemed 
 66.1   amount.  These deemed amounts apply regardless of whether any 
 66.2   employment-related expenses have been paid.  
 66.3      (d) If the taxpayer is not required and does not file a 
 66.4   federal individual income tax return for the tax year, no credit 
 66.5   is allowed for any amount paid to any person unless: 
 66.6      (1) the name, address, and taxpayer identification number 
 66.7   of the person are included on the return claiming the credit; or 
 66.8      (2) if the person is an organization described in section 
 66.9   501(c)(3) of the Internal Revenue Code and exempt from tax under 
 66.10  section 501(a) of the Internal Revenue Code, the name and 
 66.11  address of the person are included on the return claiming the 
 66.12  credit.  
 66.13  In the case of a failure to provide the information required 
 66.14  under the preceding sentence, the preceding sentence does not 
 66.15  apply if it is shown that the taxpayer exercised due diligence 
 66.16  in attempting to provide the information required. 
 66.17     In the case of a nonresident, part-year resident, or a 
 66.18  person who has earned income not subject to tax under this 
 66.19  chapter including earned income excluded pursuant to section 
 66.20  290.01, subdivision 19b, clause clauses (11) and (12), the 
 66.21  credit determined under section 21 of the Internal Revenue Code 
 66.22  must be allocated based on the ratio by which the earned income 
 66.23  of the claimant and the claimant's spouse from Minnesota sources 
 66.24  bears to the total earned income of the claimant and the 
 66.25  claimant's spouse. 
 66.26     [EFFECTIVE DATE.] This section is effective for tax years 
 66.27  beginning after December 31, 2006. 
 66.28     Sec. 7.  Minnesota Statutes 2004, section 290.0671, 
 66.29  subdivision 1, is amended to read: 
 66.30     Subdivision 1.  [CREDIT ALLOWED.] (a) An individual is 
 66.31  allowed a credit against the tax imposed by this chapter equal 
 66.32  to a percentage of earned income.  To receive a credit, a 
 66.33  taxpayer must be eligible for a credit under section 32 of the 
 66.34  Internal Revenue Code.  
 66.35     (b) For individuals with no qualifying children, the credit 
 66.36  equals 1.9125 percent of the first $4,620 of earned income.  The 
 67.1   credit is reduced by 1.9125 percent of earned income or modified 
 67.2   adjusted gross income, whichever is greater, in excess of 
 67.3   $5,770, but in no case is the credit less than zero. 
 67.4      (c) For individuals with one qualifying child, the credit 
 67.5   equals 8.5 percent of the first $6,920 of earned income and 8.5 
 67.6   percent of earned income over $12,080 but less than $13,450.  
 67.7   The credit is reduced by 5.73 percent of earned income or 
 67.8   modified adjusted gross income, whichever is greater, in excess 
 67.9   of $15,080, but in no case is the credit less than zero. 
 67.10     (d) For individuals with two or more qualifying children, 
 67.11  the credit equals ten percent of the first $9,720 of earned 
 67.12  income and 20 percent of earned income over $14,860 but less 
 67.13  than $16,800.  The credit is reduced by 10.3 percent of earned 
 67.14  income or modified adjusted gross income, whichever is greater, 
 67.15  in excess of $17,890, but in no case is the credit less than 
 67.16  zero. 
 67.17     (e) For a nonresident or part-year resident, the credit 
 67.18  must be allocated based on the percentage calculated under 
 67.19  section 290.06, subdivision 2c, paragraph (e). 
 67.20     (f) For a person who was a resident for the entire tax year 
 67.21  and has earned income not subject to tax under this chapter, 
 67.22  including income excluded under section 290.01, subdivision 19b, 
 67.23  clause (11) or (12), the credit must be allocated based on the 
 67.24  ratio of federal adjusted gross income reduced by the earned 
 67.25  income not subject to tax under this chapter over federal 
 67.26  adjusted gross income. 
 67.27     (g) For tax years beginning after December 31, 2001, and 
 67.28  before December 31, 2004, the $5,770 in paragraph (b), the 
 67.29  $15,080 in paragraph (c), and the $17,890 in paragraph (d), 
 67.30  after being adjusted for inflation under subdivision 7, are each 
 67.31  increased by $1,000 for married taxpayers filing joint returns. 
 67.32     (h) For tax years beginning after December 31, 2004, and 
 67.33  before December 31, 2007, the $5,770 in paragraph (b), the 
 67.34  $15,080 in paragraph (c), and the $17,890 in paragraph (d), 
 67.35  after being adjusted for inflation under subdivision 7, are each 
 67.36  increased by $2,000 for married taxpayers filing joint returns. 
 68.1      (i) For tax years beginning after December 31, 2007, and 
 68.2   before December 31, 2010, the $5,770 in paragraph (b), the 
 68.3   $15,080 in paragraph (c), and the $17,890 in paragraph (d), 
 68.4   after being adjusted for inflation under subdivision 7, are each 
 68.5   increased by $3,000 for married taxpayers filing joint returns.  
 68.6   For tax years beginning after December 31, 2008, the $3,000 is 
 68.7   adjusted annually for inflation under subdivision 7. 
 68.8      (j) The commissioner shall construct tables showing the 
 68.9   amount of the credit at various income levels and make them 
 68.10  available to taxpayers.  The tables shall follow the schedule 
 68.11  contained in this subdivision, except that the commissioner may 
 68.12  graduate the transition between income brackets. 
 68.13     [EFFECTIVE DATE.] This section is effective for tax years 
 68.14  beginning after December 31, 2006. 
 68.15     Sec. 8.  Minnesota Statutes 2004, section 290.091, 
 68.16  subdivision 2, is amended to read: 
 68.17     Subd. 2.  [DEFINITIONS.] For purposes of the tax imposed by 
 68.18  this section, the following terms have the meanings given: 
 68.19     (a) "Alternative minimum taxable income" means the sum of 
 68.20  the following for the taxable year: 
 68.21     (1) the taxpayer's federal alternative minimum taxable 
 68.22  income as defined in section 55(b)(2) of the Internal Revenue 
 68.23  Code; 
 68.24     (2) the taxpayer's itemized deductions allowed in computing 
 68.25  federal alternative minimum taxable income, but excluding: 
 68.26     (i) the charitable contribution deduction under section 170 
 68.27  of the Internal Revenue Code to the extent that the deduction 
 68.28  exceeds 1.0 percent of adjusted gross income, as defined in 
 68.29  section 62 of the Internal Revenue Code; 
 68.30     (ii) the medical expense deduction; 
 68.31     (iii) the casualty, theft, and disaster loss deduction; and 
 68.32     (iv) the impairment-related work expenses of a disabled 
 68.33  person; 
 68.34     (3) for depletion allowances computed under section 613A(c) 
 68.35  of the Internal Revenue Code, with respect to each property (as 
 68.36  defined in section 614 of the Internal Revenue Code), to the 
 69.1   extent not included in federal alternative minimum taxable 
 69.2   income, the excess of the deduction for depletion allowable 
 69.3   under section 611 of the Internal Revenue Code for the taxable 
 69.4   year over the adjusted basis of the property at the end of the 
 69.5   taxable year (determined without regard to the depletion 
 69.6   deduction for the taxable year); 
 69.7      (4) to the extent not included in federal alternative 
 69.8   minimum taxable income, the amount of the tax preference for 
 69.9   intangible drilling cost under section 57(a)(2) of the Internal 
 69.10  Revenue Code determined without regard to subparagraph (E); 
 69.11     (5) to the extent not included in federal alternative 
 69.12  minimum taxable income, the amount of interest income as 
 69.13  provided by section 290.01, subdivision 19a, clause (1); and 
 69.14     (6) the amount of addition required by section 290.01, 
 69.15  subdivision 19a, clause (7); 
 69.16     less the sum of the amounts determined under the following: 
 69.17     (1) interest income as defined in section 290.01, 
 69.18  subdivision 19b, clause (1); 
 69.19     (2) an overpayment of state income tax as provided by 
 69.20  section 290.01, subdivision 19b, clause (2), to the extent 
 69.21  included in federal alternative minimum taxable income; 
 69.22     (3) the amount of investment interest paid or accrued 
 69.23  within the taxable year on indebtedness to the extent that the 
 69.24  amount does not exceed net investment income, as defined in 
 69.25  section 163(d)(4) of the Internal Revenue Code.  Interest does 
 69.26  not include amounts deducted in computing federal adjusted gross 
 69.27  income; and 
 69.28     (4) amounts subtracted from federal taxable income as 
 69.29  provided by section 290.01, subdivision 19b, clauses (10) and, 
 69.30  (11), and (12). 
 69.31     In the case of an estate or trust, alternative minimum 
 69.32  taxable income must be computed as provided in section 59(c) of 
 69.33  the Internal Revenue Code. 
 69.34     (b) "Investment interest" means investment interest as 
 69.35  defined in section 163(d)(3) of the Internal Revenue Code. 
 69.36     (c) "Tentative minimum tax" equals 6.4 percent of 
 70.1   alternative minimum taxable income after subtracting the 
 70.2   exemption amount determined under subdivision 3. 
 70.3      (d) "Regular tax" means the tax that would be imposed under 
 70.4   this chapter (without regard to this section and section 
 70.5   290.032), reduced by the sum of the nonrefundable credits 
 70.6   allowed under this chapter.  
 70.7      (e) "Net minimum tax" means the minimum tax imposed by this 
 70.8   section. 
 70.9      [EFFECTIVE DATE.] This section is effective for tax years 
 70.10  beginning after December 31, 2006. 
 70.11     Sec. 9.  Minnesota Statutes 2004, section 290.0921, 
 70.12  subdivision 3, is amended to read: 
 70.13     Subd. 3.  [ALTERNATIVE MINIMUM TAXABLE INCOME.] 
 70.14  "Alternative minimum taxable income" is Minnesota net income as 
 70.15  defined in section 290.01, subdivision 19, and includes the 
 70.16  adjustments and tax preference items in sections 56, 57, 58, and 
 70.17  59(d), (e), (f), and (h) of the Internal Revenue Code.  If a 
 70.18  corporation files a separate company Minnesota tax return, the 
 70.19  minimum tax must be computed on a separate company basis.  If a 
 70.20  corporation is part of a tax group filing a unitary return, the 
 70.21  minimum tax must be computed on a unitary basis.  The following 
 70.22  adjustments must be made. 
 70.23     (1) For purposes of the depreciation adjustments under 
 70.24  section 56(a)(1) and 56(g)(4)(A) of the Internal Revenue Code, 
 70.25  the basis for depreciable property placed in service in a 
 70.26  taxable year beginning before January 1, 1990, is the adjusted 
 70.27  basis for federal income tax purposes, including any 
 70.28  modification made in a taxable year under section 290.01, 
 70.29  subdivision 19e, or Minnesota Statutes 1986, section 290.09, 
 70.30  subdivision 7, paragraph (c). 
 70.31     For taxable years beginning after December 31, 2000, the 
 70.32  amount of any remaining modification made under section 290.01, 
 70.33  subdivision 19e, or Minnesota Statutes 1986, section 290.09, 
 70.34  subdivision 7, paragraph (c), not previously deducted is a 
 70.35  depreciation allowance in the first taxable year after December 
 70.36  31, 2000. 
 71.1      (2) The portion of the depreciation deduction allowed for 
 71.2   federal income tax purposes under section 168(k) of the Internal 
 71.3   Revenue Code that is required as an addition under section 
 71.4   290.01, subdivision 19c, clause (16), is disallowed in 
 71.5   determining alternative minimum taxable income. 
 71.6      (3) The subtraction for depreciation allowed under section 
 71.7   290.01, subdivision 19d, clause (19), is allowed as a 
 71.8   depreciation deduction in determining alternative minimum 
 71.9   taxable income. 
 71.10     (4) The alternative tax net operating loss deduction under 
 71.11  sections 56(a)(4) and 56(d) of the Internal Revenue Code does 
 71.12  not apply. 
 71.13     (5) The special rule for certain dividends under section 
 71.14  56(g)(4)(C)(ii) of the Internal Revenue Code does not apply. 
 71.15     (6) The special rule for dividends from section 936 
 71.16  companies under section 56(g)(4)(C)(iii) does not apply. 
 71.17     (7) The tax preference for depletion under section 57(a)(1) 
 71.18  of the Internal Revenue Code does not apply. 
 71.19     (8) The tax preference for intangible drilling costs under 
 71.20  section 57(a)(2) of the Internal Revenue Code must be calculated 
 71.21  without regard to subparagraph (E) and the subtraction under 
 71.22  section 290.01, subdivision 19d, clause (4). 
 71.23     (9) The tax preference for tax exempt interest under 
 71.24  section 57(a)(5) of the Internal Revenue Code does not apply.  
 71.25     (10) The tax preference for charitable contributions of 
 71.26  appreciated property under section 57(a)(6) of the Internal 
 71.27  Revenue Code does not apply. 
 71.28     (11) For purposes of calculating the tax preference for 
 71.29  accelerated depreciation or amortization on certain property 
 71.30  placed in service before January 1, 1987, under section 57(a)(7) 
 71.31  of the Internal Revenue Code, the deduction allowable for the 
 71.32  taxable year is the deduction allowed under section 290.01, 
 71.33  subdivision 19e. 
 71.34     For taxable years beginning after December 31, 2000, the 
 71.35  amount of any remaining modification made under section 290.01, 
 71.36  subdivision 19e, not previously deducted is a depreciation or 
 72.1   amortization allowance in the first taxable year after December 
 72.2   31, 2004. 
 72.3      (12) For purposes of calculating the adjustment for 
 72.4   adjusted current earnings in section 56(g) of the Internal 
 72.5   Revenue Code, the term "alternative minimum taxable income" as 
 72.6   it is used in section 56(g) of the Internal Revenue Code, means 
 72.7   alternative minimum taxable income as defined in this 
 72.8   subdivision, determined without regard to the adjustment for 
 72.9   adjusted current earnings in section 56(g) of the Internal 
 72.10  Revenue Code. 
 72.11     (13) For purposes of determining the amount of adjusted 
 72.12  current earnings under section 56(g)(3) of the Internal Revenue 
 72.13  Code, no adjustment shall be made under section 56(g)(4) of the 
 72.14  Internal Revenue Code with respect to (i) the amount of foreign 
 72.15  dividend gross-up subtracted as provided in section 290.01, 
 72.16  subdivision 19d, clause (1), (ii) the amount of refunds of 
 72.17  income, excise, or franchise taxes subtracted as provided in 
 72.18  section 290.01, subdivision 19d, clause (10), or (iii) the 
 72.19  amount of royalties, fees or other like income subtracted as 
 72.20  provided in section 290.01, subdivision 19d, clause (11). 
 72.21     (14) Alternative minimum taxable income excludes the income 
 72.22  from operating in a job opportunity building zone as provided 
 72.23  under section 469.317. 
 72.24     (15) Alternative minimum taxable income excludes the income 
 72.25  from operating in a biotechnology and health sciences industry 
 72.26  zone as provided under section 469.337. 
 72.27     (16) Alternative minimum taxable income excludes the income 
 72.28  from operating in an international economic development zone as 
 72.29  provided under section 469.326. 
 72.30     Items of tax preference must not be reduced below zero as a 
 72.31  result of the modifications in this subdivision. 
 72.32     [EFFECTIVE DATE.] This section is effective for tax years 
 72.33  beginning after December 31, 2006. 
 72.34     Sec. 10.  Minnesota Statutes 2004, section 290.0922, 
 72.35  subdivision 2, is amended to read: 
 72.36     Subd. 2.  [EXEMPTIONS.] The following entities are exempt 
 73.1   from the tax imposed by this section: 
 73.2      (1) corporations exempt from tax under section 290.05; 
 73.3      (2) real estate investment trusts; 
 73.4      (3) regulated investment companies or a fund thereof; and 
 73.5      (4) entities having a valid election in effect under 
 73.6   section 860D(b) of the Internal Revenue Code; 
 73.7      (5) town and farmers' mutual insurance companies; 
 73.8      (6) cooperatives organized under chapter 308A that provide 
 73.9   housing exclusively to persons age 55 and over and are 
 73.10  classified as homesteads under section 273.124, subdivision 3; 
 73.11  and 
 73.12     (7) an entity, if for the taxable year all of its property 
 73.13  is located in a job opportunity building zone designated under 
 73.14  section 469.314 and all of its payroll is a job opportunity 
 73.15  building zone payroll under section 469.310; and 
 73.16     (8) an entity, if for the taxable year all of its property 
 73.17  is located in an international economic development zone 
 73.18  designated under section 469.322, and all of its payroll is 
 73.19  international economic development zone payroll under section 
 73.20  469.321. 
 73.21     Entities not specifically exempted by this subdivision are 
 73.22  subject to tax under this section, notwithstanding section 
 73.23  290.05.  
 73.24     [EFFECTIVE DATE.] This section is effective for tax years 
 73.25  beginning after December 31, 2006. 
 73.26     Sec. 11.  Minnesota Statutes 2004, section 290.0922, 
 73.27  subdivision 3, is amended to read: 
 73.28     Subd. 3.  [DEFINITIONS.] (a) "Minnesota sales or receipts" 
 73.29  means the total sales apportioned to Minnesota pursuant to 
 73.30  section 290.191, subdivision 5, the total receipts attributed to 
 73.31  Minnesota pursuant to section 290.191, subdivisions 6 to 8, 
 73.32  and/or the total sales or receipts apportioned or attributed to 
 73.33  Minnesota pursuant to any other apportionment formula applicable 
 73.34  to the taxpayer. 
 73.35     (b) "Minnesota property" means total Minnesota tangible 
 73.36  property as provided in section 290.191, subdivisions 9 to 11, 
 74.1   any other tangible property located in Minnesota, but does not 
 74.2   include property located in a job opportunity building zone 
 74.3   designated under section 469.314, or property of a qualified 
 74.4   business located in a biotechnology and health sciences industry 
 74.5   zone designated under section 469.334, or property of a 
 74.6   qualified business located in the international economic 
 74.7   development zone designated under section 469.322.  Intangible 
 74.8   property shall not be included in Minnesota property for 
 74.9   purposes of this section.  Taxpayers who do not utilize tangible 
 74.10  property to apportion income shall nevertheless include 
 74.11  Minnesota property for purposes of this section.  On a return 
 74.12  for a short taxable year, the amount of Minnesota property 
 74.13  owned, as determined under section 290.191, shall be included in 
 74.14  Minnesota property based on a fraction in which the numerator is 
 74.15  the number of days in the short taxable year and the denominator 
 74.16  is 365.  
 74.17     (c) "Minnesota payrolls" means total Minnesota payrolls as 
 74.18  provided in section 290.191, subdivision 12, but does not 
 74.19  include job opportunity building zone payrolls under section 
 74.20  469.310, subdivision 8, or biotechnology and health sciences 
 74.21  industry zone payroll payrolls under section 469.330, 
 74.22  subdivision 8, or international economic development zone 
 74.23  payrolls under section 469.321, subdivision 9.  Taxpayers who do 
 74.24  not utilize payrolls to apportion income shall nevertheless 
 74.25  include Minnesota payrolls for purposes of this section. 
 74.26     [EFFECTIVE DATE.] This section is effective for tax years 
 74.27  beginning after December 31, 2006. 
 74.28     Sec. 12.  Minnesota Statutes 2004, section 297A.68, is 
 74.29  amended by adding a subdivision to read: 
 74.30     Subd. 40.  [INTERNATIONAL ECONOMIC DEVELOPMENT ZONES.] (a) 
 74.31  Purchases of tangible personal property or taxable services by a 
 74.32  qualified business, as defined in section 469.321, are exempt if 
 74.33  the property or services are primarily used or consumed in the 
 74.34  international economic development zone designated under section 
 74.35  469.322. 
 74.36     (b) Purchase and use of construction materials, supplies, 
 75.1   and equipment incorporated into the construction of improvements 
 75.2   to real property in the international economic development zone 
 75.3   are exempt if the improvements after completion of construction 
 75.4   are to be used as a regional distribution center as defined in 
 75.5   section 469.321 or otherwise used in the conduct of freight 
 75.6   forwarding activities of a qualified business as defined in 
 75.7   section 469.321.  This exemption applies regardless of whether 
 75.8   the purchases are made by the business or a contractor. 
 75.9      (c) The exemptions under this subdivision apply to a local 
 75.10  sales and use tax, regardless of whether the local tax is 
 75.11  imposed on sales taxable under this chapter or in another law, 
 75.12  ordinance, or charter provision. 
 75.13     (d) The exemption in paragraph (a) applies to sales during 
 75.14  the duration of the zone and after June 30, 2007, if the 
 75.15  purchase was made and delivery received after the business signs 
 75.16  the business subsidy agreement required under chapter 469.  
 75.17     (e) The exemption in paragraph (b) applies to sales made 
 75.18  after the business signs the business subsidy agreement required 
 75.19  under chapter 469 and before the end of the duration of the 
 75.20  zone, if the purchase and delivery were made after June 30, 
 75.21  2006.  For purchases made before July 1, 2007, the tax must be 
 75.22  imposed and collected as if the rate under section 297A.62, 
 75.23  subdivision 1, applied, and then refunded in the manner provided 
 75.24  in section 297A.75.  
 75.25     [EFFECTIVE DATE.] This section is effective the day 
 75.26  following final enactment. 
 75.27     Sec. 13.  [469.321] [DEFINITIONS.] 
 75.28     Subdivision 1.  [SCOPE.] For purposes of sections 469.321 
 75.29  to 469.328, the following terms have the meanings given. 
 75.30     Subd. 2.  [FOREIGN TRADE ZONE.] "Foreign trade zone" means 
 75.31  a foreign trade zone designated pursuant to United States Code, 
 75.32  title 19, section 81a, for the right to use the powers provided 
 75.33  in United States Code, title 19, sections 81a to 81u, or a 
 75.34  subzone authorized by the foreign trade zone. 
 75.35     Subd. 3.  [FOREIGN TRADE ZONE AUTHORITY.] "Foreign trade 
 75.36  zone authority" means the Greater Metropolitan Foreign Trade 
 76.1   Zone Commission number 119, a joint powers authority created by 
 76.2   the county of Hennepin, the cities of Minneapolis and 
 76.3   Bloomington, and the Metropolitan Airports Commission, under the 
 76.4   authority of section 469.059, 469.101, or 471.59, which includes 
 76.5   any other political subdivisions that enter into the authority 
 76.6   after its creation. 
 76.7      Subd. 4.  [INTERNATIONAL ECONOMIC DEVELOPMENT ZONE OR 
 76.8   ZONE.] An "international economic development zone" or "zone" is 
 76.9   a zone so designated under section 469.322. 
 76.10     Subd. 5.  [PERSON.] "Person" includes an individual, 
 76.11  corporation, partnership, limited liability company, 
 76.12  association, or any other entity. 
 76.13     Subd. 6.  [QUALIFIED BUSINESS.] "Qualified business" means 
 76.14  a person who has signed a business subsidy agreement as required 
 76.15  under sections 116J.993 to 116J.995 and 469.323, subdivision 4, 
 76.16  carrying on a trade or business at a place of business located 
 76.17  within the international economic development zone that is: 
 76.18     (1)(i) engaged in the furtherance of international export 
 76.19  or import of goods as a freight forwarder; and (ii) certified by 
 76.20  the foreign trade zone authority as a trade or business that 
 76.21  furthers the purpose of developing international distribution 
 76.22  capacity and capability; or 
 76.23     (2) the owner or operator of a regional distribution center.
 76.24     Subd. 7.  [REGIONAL DISTRIBUTION CENTER.] A "regional 
 76.25  distribution center" is a distribution center developed within a 
 76.26  foreign trade zone.  The regional distribution center must have 
 76.27  as its primary purpose, the facilitation of the gathering of 
 76.28  freight for the purpose of centralizing the functions necessary 
 76.29  for the shipment of freight in international commerce, 
 76.30  including, but not limited to, security and customs functions. 
 76.31     Subd. 8.  [INTERNATIONAL ECONOMIC DEVELOPMENT ZONE 
 76.32  PERCENTAGE OR ZONE PERCENTAGE.] "International economic 
 76.33  development zone percentage" or "zone percentage" means the 
 76.34  following fraction reduced to a percentage: 
 76.35     (1) the numerator of the fraction is: 
 76.36     (i) the ratio of the taxpayer's property factor under 
 77.1   section 290.191 located in the zone for the taxable year which 
 77.2   is land, buildings, machinery and equipment, inventories, and 
 77.3   other tangible personal property that is a regional distribution 
 77.4   center or is used in the furtherance of the taxpayer's freight 
 77.5   forwarding operations over the property factor numerator 
 77.6   determined under section 290.191, plus 
 77.7      (ii) the ratio of the taxpayer's international economic 
 77.8   development zone payroll factor under subdivision 9 over the 
 77.9   payroll factor numerator determined under section 290.191; and 
 77.10     (2) the denominator of the fraction is two. 
 77.11     When calculating the zone percentage for a business that is 
 77.12  part of a unitary business as defined under section 290.17, 
 77.13  subdivision 4, the denominator of the payroll and property 
 77.14  factors is the Minnesota payroll and property of the unitary 
 77.15  business as reported on the combined report under section 
 77.16  290.17, subdivision 4, paragraph (j). 
 77.17     Subd. 9.  [INTERNATIONAL ECONOMIC DEVELOPMENT ZONE PAYROLL 
 77.18  FACTOR OR INTERNATIONAL ECONOMIC DEVELOPMENT ZONE PAYROLL.] 
 77.19  "International economic development zone payroll factor" or 
 77.20  "international economic development zone payroll" is that 
 77.21  portion of the payroll factor under section 290.191 used to 
 77.22  operate a regional distribution center, or used in the 
 77.23  furtherance of the taxpayer's freight forwarding operations that 
 77.24  represents: 
 77.25     (1) wages or salaries paid to an individual for services 
 77.26  performed in the international economic development zone; or 
 77.27     (2) wages or salaries paid to individuals working from 
 77.28  offices within the international economic development zone, if 
 77.29  their employment requires them to work outside the zone and the 
 77.30  work is incidental to the work performed by the individual 
 77.31  within the zone.  However, in no case does zone payroll include 
 77.32  wages paid for work performed outside the zone of an employee 
 77.33  who performs more than ten percent of total services for the 
 77.34  employer outside the zone. 
 77.35     Subd. 10.  [FREIGHT FORWARDER.] "Freight forwarder" is a 
 77.36  business that, for compensation, ensures that goods produced or 
 78.1   sold by another business move from point of origin to point of 
 78.2   destination. 
 78.3      [EFFECTIVE DATE.] This section is effective the day 
 78.4   following final enactment. 
 78.5      Sec. 14.  [469.3215] [APPLICATION FOR DESIGNATION.] 
 78.6      Subdivision 1.  [WHO MAY APPLY.] One or more local 
 78.7   government units, or a joint powers board under section 471.59, 
 78.8   acting on behalf of two or more units, may apply for designation 
 78.9   of an area as an international economic development zone.  All 
 78.10  or part of the area proposed for designation as a zone must be 
 78.11  located within the boundaries of each of the governmental 
 78.12  units.  A local government unit may not submit or have submitted 
 78.13  on its behalf more than one application for designation of an 
 78.14  international economic development zone. 
 78.15     Subd. 2.  [APPLICATION CONTENT.] (a) The application must 
 78.16  include: 
 78.17     (1) a resolution or ordinance adopted by each of the cities 
 78.18  or towns and the counties in which the zone is located, agreeing 
 78.19  to provide all of the local tax exemptions provided under 
 78.20  section 469.315; 
 78.21     (2) an agreement by the applicant to treat incentives 
 78.22  provided under the zone designation as business subsidies under 
 78.23  sections 116J.993 to 116J.995 and to comply with the 
 78.24  requirements of that law; and 
 78.25     (3) supporting evidence to allow the authority to evaluate 
 78.26  the application. 
 78.27     (b) Applications must be submitted to the authority no 
 78.28  later than December 31, 2005. 
 78.29     [EFFECTIVE DATE.] This section is effective the day 
 78.30  following final enactment. 
 78.31     Sec. 15.  [469.322] [DESIGNATION OF INTERNATIONAL ECONOMIC 
 78.32  DEVELOPMENT ZONE.] 
 78.33     (a) An area designated as a foreign trade zone may be 
 78.34  designated by the foreign trade zone authority as an 
 78.35  international economic development zone if within the zone a 
 78.36  regional distribution center is being developed pursuant to 
 79.1   section 469.323.  The zone must consist of contiguous area of 
 79.2   not less than 500 acres and not more than 1,000 acres.  The 
 79.3   designation authority under this section is limited to one zone. 
 79.4      (b) In making the designation, the foreign trade zone 
 79.5   authority, in consultation with the Minnesota Department of 
 79.6   Transportation, the Minnesota Department of Employment and 
 79.7   Economic Development, the Minnesota Department of Revenue, and 
 79.8   the Metropolitan Council, shall consider access to major 
 79.9   transportation routes, consistency with current state 
 79.10  transportation and air cargo planning, adequacy of the size of 
 79.11  the site, access to airport facilities, present and future 
 79.12  capacity at the designated airport, the capability to meet 
 79.13  integrated present and future air cargo, security, and 
 79.14  inspection services, and access to other infrastructure and 
 79.15  financial incentives to maximize the security, efficiency, and 
 79.16  volume of Minnesota's export shipments.  The border of the 
 79.17  international economic development zone must be no more than 60 
 79.18  miles distant or 90 minutes drive time from the border of the 
 79.19  Minneapolis-St. Paul International Airport.  
 79.20     (c) Prior to a final site designation, the foreign trade 
 79.21  zone authority, in consultation with the applicant, must conduct 
 79.22  a transportation impact study based on the regional model and 
 79.23  utilizing traffic forecasting and assignments.  The results must 
 79.24  be used to evaluate the effects of the proposed use on the 
 79.25  transportation system and identify any needed improvements.  If 
 79.26  the site is in the metropolitan area the study must also 
 79.27  evaluate the effect of the transportation impacts on the 
 79.28  Metropolitan Transportation System plan as well as the 
 79.29  comprehensive plans of the municipalities that would be 
 79.30  affected.  The cost of the study must be paid by the applicant. 
 79.31     (d) Final zone designation must be made by June 30, 2006. 
 79.32     (e) Duration of the zone is a 12-year period beginning on 
 79.33  January 1, 2007. 
 79.34     [EFFECTIVE DATE.] This section is effective the day 
 79.35  following final enactment. 
 79.36     Sec. 16.  [469.323] [FOREIGN TRADE ZONE AUTHORITY POWERS.] 
 80.1      Subdivision 1.  [DEVELOPMENT OF REGIONAL DISTRIBUTION 
 80.2   CENTER.] The foreign trade zone authority shall be responsible 
 80.3   for creating a development plan for the regional distribution 
 80.4   center.  The regional distribution center must be developed with 
 80.5   the purpose of expanding, on a regional basis, international 
 80.6   distribution capacity and capability.  The foreign trade zone 
 80.7   authority shall consult only with municipalities that have 
 80.8   indicated to the authority an interest in locating the 
 80.9   international economic development zone within their boundaries, 
 80.10  as well as interested businesses, potential financiers, and 
 80.11  appropriate state and federal agencies. 
 80.12     Subd. 2.  [BUSINESS PLAN.] Before designation of an 
 80.13  international economic development zone under section 469.322, 
 80.14  the governing body of the foreign trade zone authority shall 
 80.15  prepare a business plan.  The plan must establish performance 
 80.16  goals for the zone.  These goals must set out, at a minimum, the 
 80.17  amount of investment, the number of jobs, and the amount of 
 80.18  freight handled expected to be attained at the end of three-, 
 80.19  five-, and ten-year periods by the zone.  The plan also must 
 80.20  include an analysis of the economic feasibility of the regional 
 80.21  distribution center once it becomes operational and of the 
 80.22  operations of freight forwarders and other businesses that 
 80.23  choose to locate within the boundaries of the zone.  The 
 80.24  analysis must provide profitability models that: 
 80.25     (1) include the benefits of the incentives; 
 80.26     (2) estimate the amount of time needed to achieve 
 80.27  profitability; and 
 80.28     (3) analyze the length of time incentives will be necessary 
 80.29  to the economic viability of the regional distribution center. 
 80.30     If the governing body of the foreign trade authority 
 80.31  determines that the models do not establish the economic 
 80.32  feasibility of the project, the regional distribution center 
 80.33  does not meet the development requirements of this section and 
 80.34  section 469.322. 
 80.35     Subd. 3.  [PORT AUTHORITY POWERS.] The governing body of 
 80.36  the foreign trade zone authority may establish a port authority 
 81.1   that has the same powers as a port authority established under 
 81.2   section 469.049.  If the foreign trade zone authority 
 81.3   establishes a port authority, the governing body of the foreign 
 81.4   trade zone authority may exercise all powers granted to a city 
 81.5   by sections 469.048 to 469.068 or other law, except the power to 
 81.6   levy property taxes under section 469.053.  
 81.7      Subd. 4.  [BUSINESS SUBSIDY LAW.] Tax exemptions and job 
 81.8   credits provided under this section are business subsidies paid 
 81.9   by the affected local government for the purpose of sections 
 81.10  116J.871 and 116J.993 to 116J.995. 
 81.11     [EFFECTIVE DATE.] This section is effective the day 
 81.12  following final enactment. 
 81.13     Sec. 17.  [469.324] [TAX INCENTIVES IN INTERNATIONAL 
 81.14  ECONOMIC DEVELOPMENT ZONE.] 
 81.15     Subdivision 1.  [AVAILABILITY.] Qualified businesses that 
 81.16  operate in an international economic development zone, 
 81.17  individuals who invest in a regional distribution center or 
 81.18  qualified businesses that operate in an international economic 
 81.19  development zone, and property located in an international 
 81.20  economic development zone qualify for: 
 81.21     (1) exemption from individual income taxes as provided 
 81.22  under section 469.325; 
 81.23     (2) exemption from corporate franchise taxes as provided 
 81.24  under section 469.326; 
 81.25     (3) exemption from the state sales and use tax and any 
 81.26  local sales and use taxes on qualifying purchases as provided in 
 81.27  section 297A.68, subdivision 40; 
 81.28     (4) exemption from the property tax as provided in section 
 81.29  272.02, subdivision 68; and 
 81.30     (5) the jobs credit allowed under section 469.327. 
 81.31     Sec. 18.  [469.325] [INDIVIDUAL INCOME TAX EXEMPTION.] 
 81.32     Subdivision 1.  [APPLICATION.] An individual, estate, or 
 81.33  trust operating a trade or business in the international 
 81.34  economic development zone, and an individual making a qualifying 
 81.35  investment in a qualified business operating in the 
 81.36  international economic development zone, qualifies for the 
 82.1   exemptions from taxes imposed under chapter 290, as provided in 
 82.2   this section.  The exemptions provided under this section apply 
 82.3   only to the extent that the income otherwise would be taxable 
 82.4   under chapter 290.  Subtractions under this section from federal 
 82.5   taxable income, alternative minimum taxable income, or any other 
 82.6   base subject to tax are limited to the amount that otherwise 
 82.7   would be included in the tax base absent the exemption under 
 82.8   this section.  This section applies only to tax years beginning 
 82.9   during the duration of the zone.  
 82.10     Subd. 2.  [RENTS.] An individual, estate, or trust is 
 82.11  exempt from the taxes imposed under chapter 290 on net rents 
 82.12  derived from real or tangible personal property used by a 
 82.13  qualified business and located in the zone for the taxable year 
 82.14  in which the zone was designated an international economic 
 82.15  development zone.  If tangible personal property was used both 
 82.16  within and outside of the zone by the qualified business, the 
 82.17  exemption amount for the net rental income must be multiplied by 
 82.18  a fraction, the numerator of which is the number of days the 
 82.19  property was used in the zone and the denominator of which is 
 82.20  the total days the property is rented by a qualified business. 
 82.21     Subd. 3.  [BUSINESS INCOME.] An individual, estate, or 
 82.22  trust is exempt from the taxes imposed under chapter 290 on net 
 82.23  income from the operation of a qualified business in the 
 82.24  international economic development zone.  If the trade or 
 82.25  business is carried on within and outside of the zone and the 
 82.26  individual is not a resident of Minnesota, the exemption must be 
 82.27  apportioned based on the zone percentage for the taxable year.  
 82.28  If the trade or business is carried on within or outside of the 
 82.29  zone and the individual is a resident of Minnesota, the 
 82.30  exemption must be apportioned based on the zone percentage for 
 82.31  the taxable year, except the ratios under section 469.321, 
 82.32  subdivision 8, clause (1), items (i) and (ii), must use the 
 82.33  denominators of the property and payroll factors determined 
 82.34  under section 290.191.  No subtraction is allowed under this 
 82.35  section in excess of 20 percent of the sum of the international 
 82.36  economic development zone payroll and the adjusted basis of the 
 83.1   property at the time that the property is first used in the 
 83.2   international economic development zone by the business. 
 83.3      Subd. 4.  [CAPITAL GAINS.] (a) An individual, estate, or 
 83.4   trust is exempt from the taxes imposed under chapter 290 on: 
 83.5      (1) net gain derived on a sale or exchange of real property 
 83.6   located in the international economic development zone and used 
 83.7   by a qualified business.  If the property was held by the 
 83.8   individual, estate, or trust during a period when the zone was 
 83.9   not designated, the gain must be prorated based on the 
 83.10  percentage of time, measured in calendar days, that the real 
 83.11  property was held by the individual during the period the zone 
 83.12  designation was in effect to the total period of time the real 
 83.13  property was held by the individual; 
 83.14     (2) net gain derived on a sale or exchange of tangible 
 83.15  personal property used by a qualified business in the 
 83.16  international economic development zone.  If the property was 
 83.17  held by the individual, estate, or trust during a period when 
 83.18  the zone was not designated, the gain must be prorated based on 
 83.19  the percentage of time, measured in calendar days, that the 
 83.20  property was held by the individual during the period the zone 
 83.21  designation was in effect to the total period of time the 
 83.22  property was held by the individual, estate, or trust.  If the 
 83.23  tangible personal property was used outside of the zone during 
 83.24  the period of the zone's designation, the exemption must be 
 83.25  multiplied by a fraction, the numerator of which is the number 
 83.26  of days the property was used in the zone during the time of the 
 83.27  designation and the denominator of which is the total days the 
 83.28  property was held during the time of the designation; and 
 83.29     (3) net gain derived on a sale of an ownership interest in 
 83.30  a qualified business operating in the international economic 
 83.31  development zone, meeting the requirements of paragraph (b).  
 83.32  The exemption on the gain must be multiplied by the zone 
 83.33  percentage of the business for the taxable year prior to the 
 83.34  sale. 
 83.35     (b) A qualified business meets the requirements of 
 83.36  paragraph (a), clause (3), if it is a corporation, an S 
 84.1   corporation, or a partnership, and for the taxable year its 
 84.2   international economic development zone percentage exceeds 25 
 84.3   percent.  For purposes of paragraph (a), clause (3), the zone 
 84.4   percentage must be calculated by modifying the ratios under 
 84.5   section 469.321, subdivision 8, clause (1), items (i) and (ii), 
 84.6   to use the denominators of the property and payroll factors 
 84.7   determined under section 290.191.  Upon the request of an 
 84.8   individual, estate, or trust holding an ownership interest in 
 84.9   the entity, the entity must certify to the owner, in writing, 
 84.10  the international economic development zone percentage needed to 
 84.11  determine the exemption. 
 84.12     [EFFECTIVE DATE.] This section is effective for tax years 
 84.13  beginning after December 31, 2006. 
 84.14     Sec. 19.  [469.326] [CORPORATE FRANCHISE TAX EXEMPTION.] 
 84.15     (a) A qualified business is exempt from taxation under 
 84.16  section 290.02, the alternative minimum tax under section 
 84.17  290.0921, and the minimum fee under section 290.0922, on the 
 84.18  portion of its income attributable to operations within the 
 84.19  international economic development zone.  This exemption is 
 84.20  determined as follows: 
 84.21     (1) for purposes of the tax imposed under section 290.02, 
 84.22  by multiplying its taxable net income by its zone percentage and 
 84.23  subtracting the result in determining taxable income; 
 84.24     (2) for purposes of the alternative minimum tax under 
 84.25  section 290.0921, by multiplying its alternative minimum taxable 
 84.26  income by its zone percentage and reducing alternative minimum 
 84.27  taxable income by this amount; and 
 84.28     (3) for purposes of the minimum fee under section 290.0922, 
 84.29  by excluding property and payroll in the zone from the 
 84.30  computations of the fee or by exempting the entity under section 
 84.31  290.0922, subdivision 2, clause (8). 
 84.32     (b) No subtraction is allowed under this section in excess 
 84.33  of 20 percent of the sum of the corporation's international 
 84.34  economic development zone payroll and the adjusted basis of the 
 84.35  zone property at the time that the property is first used in the 
 84.36  international economic development zone by the corporation. 
 85.1      (c) This section applies only to tax years beginning during 
 85.2   the duration of the international economic development zone. 
 85.3      [EFFECTIVE DATE.] This section is effective for tax years 
 85.4   beginning after December 31, 2006. 
 85.5      Sec. 20.  [469.327] [JOBS CREDIT.] 
 85.6      Subdivision 1.  [CREDIT ALLOWED.] A qualified business is 
 85.7   allowed a credit against the taxes imposed under chapter 290.  
 85.8   The credit equals seven percent of the: 
 85.9      (1) lesser of: 
 85.10     (i) zone payroll for the taxable year, less the zone 
 85.11  payroll for the base year; or 
 85.12     (ii) total Minnesota payroll for the taxable year, less 
 85.13  total Minnesota payroll for the base year; minus 
 85.14     (2) $30,000 multiplied by the number of full-time 
 85.15  equivalent employees that the qualified business employs in the 
 85.16  international economic development zone for the taxable year, 
 85.17  minus the number of full-time equivalent employees the business 
 85.18  employed in the zone in the base year, but not less than zero. 
 85.19     Subd. 2.  [DEFINITIONS.] (a) For purposes of this section, 
 85.20  the following terms have the meanings given. 
 85.21     (b) "Base year" means the taxable year beginning during the 
 85.22  calendar year in which the zone designation was made under 
 85.23  section 469.322, paragraph (d). 
 85.24     (c) "Full-time equivalent employees" means the equivalent 
 85.25  of annualized expected hours of work equal to 2,080 hours. 
 85.26     (d) "Minnesota payroll" means the wages or salaries 
 85.27  attributed to Minnesota under section 290.191, subdivision 12, 
 85.28  for the qualified business or the unitary business of which the 
 85.29  qualified business is a part, whichever is greater. 
 85.30     (e) "Zone payroll" means wages or salaries used to 
 85.31  determine the zone payroll factor for the qualified business, 
 85.32  less the amount of compensation attributable to any employee 
 85.33  that exceeds $100,000. 
 85.34     Subd. 3.  [INFLATION ADJUSTMENT.] For taxable years 
 85.35  beginning after December 31, 2004, the dollar amounts in 
 85.36  subdivisions 1, clause (2); and 2, paragraph (e), are annually 
 86.1   adjusted for inflation.  The commissioner of revenue shall 
 86.2   adjust the amounts by the percentage determined under section 
 86.3   290.06, subdivision 2d, for the taxable year. 
 86.4      Subd. 4.  [REFUNDABLE.] If the amount of the credit exceeds 
 86.5   the liability for tax under chapter 290, the commissioner of 
 86.6   revenue shall refund the excess to the qualified business. 
 86.7      Subd. 5.  [APPROPRIATION.] An amount sufficient to pay the 
 86.8   refunds authorized by this section is appropriated to the 
 86.9   commissioner of revenue from the general fund. 
 86.10     [EFFECTIVE DATE.] This section is effective for tax years 
 86.11  beginning after December 31, 2006. 
 86.12     Sec. 21.  [469.328] [REPAYMENT OF TAX BENEFITS.] 
 86.13     Subdivision 1.  [REPAYMENT OBLIGATION.] A person must repay 
 86.14  the amount of the tax reduction received under section 469.324, 
 86.15  subdivision 1, clauses (1) to (5), or credit received under 
 86.16  section 469.327, during the two years immediately before it 
 86.17  ceased to operate in the zone as a qualified business, if the 
 86.18  person ceased to operate its facility located within the zone, 
 86.19  ceased to be in compliance with the terms of the business 
 86.20  subsidy agreement, or otherwise ceases to be or is not a 
 86.21  qualified business. 
 86.22     Subd. 2.  [DISPOSITION OF REPAYMENT.] The repayment must be 
 86.23  paid to the state to the extent it represents a state tax 
 86.24  reduction and to the county to the extent it represents a 
 86.25  property tax reduction.  Any amount repaid to the state must be 
 86.26  deposited in the general fund.  Any amount repaid to the county 
 86.27  for the property tax exemption must be distributed to the local 
 86.28  governments with authority to levy taxes in the zone in the same 
 86.29  manner provided for distribution of payment of delinquent 
 86.30  property taxes.  Any repayment of local sales or use taxes must 
 86.31  be repaid to the jurisdiction imposing the local sales or use 
 86.32  tax. 
 86.33     Subd. 3.  [REPAYMENT PROCEDURES.] (a) For the repayment of 
 86.34  taxes imposed under chapter 290 or 297A or local taxes collected 
 86.35  pursuant to section 297A.99, a person must file an amended 
 86.36  return with the commissioner of revenue and pay any taxes 
 87.1   required to be repaid within 30 days after ceasing to be a 
 87.2   qualified business.  The amount required to be repaid is 
 87.3   determined by calculating the tax for the period for which 
 87.4   repayment is required without regard to the tax reductions and 
 87.5   credits allowed under section 469.324. 
 87.6      (b) For the repayment of property taxes, the county auditor 
 87.7   shall prepare a tax statement for the person, applying the 
 87.8   applicable tax extension rates for each payable year and provide 
 87.9   a copy to the business.  The person must pay the taxes to the 
 87.10  county treasurer within 30 days after receipt of the tax 
 87.11  statement.  The taxpayer may appeal the valuation and 
 87.12  determination of the property tax to the tax court within 30 
 87.13  days after receipt of the tax statement. 
 87.14     (c) The provisions of chapters 270 and 289A relating to the 
 87.15  commissioner of revenue's authority to audit, assess, and 
 87.16  collect the tax and to hear appeals are applicable to the 
 87.17  repayment required under paragraphs (a) and (b).  The 
 87.18  commissioner may impose civil penalties as provided in chapter 
 87.19  289A, and the additional tax and penalties are subject to 
 87.20  interest at the rate provided in section 270.75, from 30 days 
 87.21  after ceasing to do business in the zone until the date the tax 
 87.22  is paid. 
 87.23     (d) If a property tax is not repaid under paragraph (c), 
 87.24  the county treasurer shall add the amount required to be repaid 
 87.25  to the property taxes assessed against the property for payment 
 87.26  in the year following the year in which the treasurer discovers 
 87.27  that the person ceased to operate in the international economic 
 87.28  development zone. 
 87.29     (e) For determining the tax required to be repaid, a tax 
 87.30  reduction is deemed to have been received on the date that the 
 87.31  tax would have been due if the person had not been entitled to 
 87.32  the tax reduction. 
 87.33     (f) The commissioner of revenue may assess the repayment of 
 87.34  taxes under paragraph (d) at any time within two years after the 
 87.35  person ceases to be a qualified business, or within any period 
 87.36  of limitations for the assessment of tax under section 289A.38, 
 88.1   whichever is later. 
 88.2      Subd. 4.  [WAIVER AUTHORITY.] The commissioner of revenue 
 88.3   may waive all or part of a repayment, if, in consultation with 
 88.4   the foreign trade zone authority and appropriate officials from 
 88.5   the state and local government units, including the commissioner 
 88.6   of employment and economic development, determines that 
 88.7   requiring repayment of the tax is not in the best interest of 
 88.8   the state or local government and the business ceased operating 
 88.9   as a result of circumstances beyond its control, including, but 
 88.10  not limited to: 
 88.11     (1) a natural disaster; 
 88.12     (2) unforeseen industry trends; or 
 88.13     (3) loss of a major supplier or customer. 
 88.14     [EFFECTIVE DATE.] This section is effective the day 
 88.15  following final enactment. 
 88.16     Sec. 22.  [469.329] [REPORTING REQUIREMENTS.] 
 88.17     An applicant receiving designation of an international 
 88.18  economic development zone under section 469.322 must annually 
 88.19  report to the commissioner of employment and economic 
 88.20  development on its progress in meeting the zone performance 
 88.21  goals under the business plan for the zone and the applicant's 
 88.22  compliance with the business subsidy law under sections 116J.993 
 88.23  to 116J.995. 
 88.24     [EFFECTIVE DATE.] This section is effective the day 
 88.25  following final enactment.