HF 2498

as introduced - 84th Legislature (2005 - 2006) Posted on 12/15/2009 12:00am

A bill for an act
relating to public finance; authorizing purchases of
certain guaranteed investment contracts; authorizing a
special levy; modifying the authority of cities and
counties to finance purchases of computers and related
items; extending the term of certain notes; clarifying
the financing of conservation easements; extending
sunsets on establishment of special service districts
and housing improvement areas; providing for financing
of certain improvements; extending the maximum
maturity of certain bonds; revising time for certain
notices of issues; exempting obligations issued to pay
judgments from net debt limits; modifying the
authority to finance street reconstruction; modifying
limits on city capital improvement bonds and enabling
certain towns to issue bonds under a capital
improvement plan; modifying certain tax increment
financing provisions; providing a bidding exception;
increasing reserve from public facilities pool for
certain purposes; providing for payment of certain
refunding bonds; abolishing the housing bond credit
enhancement program and providing for debt service on
the bonds; authorizing a tax abatement extension;
providing for an international economic development
zone; providing tax incentives; requiring a report;
appropriating money for certain refunds; amending
Minnesota Statutes 2004, sections 13.55, by adding a
subdivision; 116J.556; 118A.05, subdivision 5; 272.02,
by adding a subdivision; 275.70, subdivision 5;
290.01, subdivisions 19b, 29; 290.06, subdivision 2c,
by adding a subdivision; 290.067, subdivision 1;
290.0671, subdivision 1; 290.091, subdivision 2;
290.0921, subdivision 3; 290.0922, subdivisions 2, 3;
297A.68, by adding a subdivision; 343.11; 373.01,
subdivision 3; 373.40, subdivision 1; 410.32; 412.301;
428A.101; 428A.21; 469.015, subdivision 4; 469.034,
subdivision 2; 469.158; 469.174, subdivisions 11, 25;
469.175, subdivisions 1, 4a, 6; 469.176, subdivisions
2, 4d; 469.1761, subdivisions 1, 3; 469.1763,
subdivision 6; 469.177, subdivision 1; 469.1771,
subdivision 5; 469.178, subdivision 1; 469.1813,
subdivisions 1, 6; 473.197, subdivision 4; 473.39,
subdivision 1f, by adding a subdivision; 474A.061,
subdivision 2c; 474A.131, subdivision 1; 475.51,
subdivision 4; 475.52, subdivisions 1, 3, 4; 475.521,
subdivisions 1, 2, 3, 4; Laws 1996, chapter 412,
article 5, section 24; Laws 2003, chapter 127, article
12, section 38; proposing coding for new law in
Minnesota Statutes, chapters 428A; 452; 469; repealing
Minnesota Statutes 2004, sections 469.176, subdivision
1; 469.1766; 473.197, subdivisions 1, 2, 3, 5; Laws
1998, chapter 389, article 11, section 19, subdivision
3.

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

ARTICLE 1

PUBLIC FINANCE

Section 1.

Minnesota Statutes 2004, section 13.55, is
amended by adding a subdivision to read:

new text begin Subd. 4. new text end

new text begin City of st. paul data. new text end

new text begin (a) For purposes of this
subdivision, "nonprofit organization" means the nonprofit
organization with which the city of St. Paul contracts to market
and promote the city as a tourist or convention center.
new text end

new text begin (b) Data collected, received, created, or maintained by the
nonprofit organization in the course of preparing or submitting
any responses to requests for proposals or requests for bids
relating to events hosted, conducted, or sponsored by the
nonprofit organization is classified as nonpublic data under
section 13.02, subdivision 9; or private data under section
13.02, subdivision 12, until the time provided in subdivision 2,
paragraph (a) or (b), of this section. The nonprofit
organization is a "civic center authority" for purposes of this
section.
new text end

Sec. 2.

Minnesota Statutes 2004, section 118A.05,
subdivision 5, is amended to read:

Subd. 5.

Guaranteed investment contracts.

Agreements or
contracts for guaranteed investment contracts may be entered
into if they are issued or guaranteed by United States
commercial banks, domestic branches of foreign banks, United
States insurance companies, or their Canadian subsidiaries new text begin , or
the domestic affiliates of any of the foregoing new text end . The credit
quality of the issuer's or guarantor's short- and long-term
unsecured debt must be rated in one of the two highest
categories by a nationally recognized rating agency. Should the
issuer's or guarantor's credit quality be downgraded below "A",
the government entity must have withdrawal rights.

Sec. 3.

Minnesota Statutes 2004, section 275.70,
subdivision 5, is amended to read:

Subd. 5.

Special levies.

"Special levies" means those
portions of ad valorem taxes levied by a local governmental unit
for the following purposes or in the following manner:

(1) to pay the costs of the principal and interest on
bonded indebtedness or to reimburse for the amount of liquor
store revenues used to pay the principal and interest due on
municipal liquor store bonds in the year preceding the year for
which the levy limit is calculated;

(2) to pay the costs of principal and interest on
certificates of indebtedness issued for any corporate purpose
except for the following:

(i) tax anticipation or aid anticipation certificates of
indebtedness;

(ii) certificates of indebtedness issued under sections
298.28 and 298.282;

(iii) certificates of indebtedness used to fund current
expenses or to pay the costs of extraordinary expenditures that
result from a public emergency; or

(iv) certificates of indebtedness used to fund an
insufficiency in tax receipts or an insufficiency in other
revenue sources;

(3) to provide for the bonded indebtedness portion of
payments made to another political subdivision of the state of
Minnesota;

(4) to fund payments made to the Minnesota State Armory
Building Commission under section 193.145, subdivision 2, to
retire the principal and interest on armory construction bonds;

(5) property taxes approved by voters which are levied
against the referendum market value as provided under section
275.61;

(6) to fund matching requirements needed to qualify for
federal or state grants or programs to the extent that either
(i) the matching requirement exceeds the matching requirement in
calendar year 2001, or (ii) it is a new matching requirement
that did not exist prior to 2002;

(7) to pay the expenses reasonably and necessarily incurred
in preparing for or repairing the effects of natural disaster
including the occurrence or threat of widespread or severe
damage, injury, or loss of life or property resulting from
natural causes, in accordance with standards formulated by the
Emergency Services Division of the state Department of Public
Safety, as allowed by the commissioner of revenue under section
275.74, subdivision 2;

(8) pay amounts required to correct an error in the levy
certified to the county auditor by a city or county in a levy
year, but only to the extent that when added to the preceding
year's levy it is not in excess of an applicable statutory,
special law or charter limitation, or the limitation imposed on
the governmental subdivision by sections 275.70 to 275.74 in the
preceding levy year;

(9) to pay an abatement under section 469.1815;

(10) to pay any costs attributable to increases in the
employer contribution rates under chapter 353 that are effective
after June 30, 2001;

(11) to pay the operating or maintenance costs of a county
jail as authorized in section 641.01 or 641.262, or of a
correctional facility as defined in section 241.021, subdivision
1, paragraph (f), to the extent that the county can demonstrate
to the commissioner of revenue that the amount has been included
in the county budget as a direct result of a rule, minimum
requirement, minimum standard, or directive of the Department of
Corrections, or to pay the operating or maintenance costs of a
regional jail as authorized in section 641.262. For purposes of
this clause, a district court order is not a rule, minimum
requirement, minimum standard, or directive of the Department of
Corrections. If the county utilizes this special levy, except
to pay operating or maintenance costs of a new regional jail
facility under sections 641.262 to 641.264 which will not
replace an existing jail facility, any amount levied by the
county in the previous levy year for the purposes specified
under this clause and included in the county's previous year's
levy limitation computed under section 275.71, shall be deducted
from the levy limit base under section 275.71, subdivision 2,
when determining the county's current year levy limitation. The
county shall provide the necessary information to the
commissioner of revenue for making this determination;

(12) to pay for operation of a lake improvement district,
as authorized under section 103B.555. If the county utilizes
this special levy, any amount levied by the county in the
previous levy year for the purposes specified under this clause
and included in the county's previous year's levy limitation
computed under section 275.71 shall be deducted from the levy
limit base under section 275.71, subdivision 2, when determining
the county's current year levy limitation. The county shall
provide the necessary information to the commissioner of revenue
for making this determination;

(13) to repay a state or federal loan used to fund the
direct or indirect required spending by the local government due
to a state or federal transportation project or other state or
federal capital project. This authority may only be used if the
project is not a local government initiative;

(14) to pay for court administration costs as required
under section 273.1398, subdivision 4b, less the (i) county's
share of transferred fines and fees collected by the district
courts in the county for calendar year 2001 and (ii) the aid
amount certified to be paid to the county in 2004 under section
273.1398, subdivision 4c; however, for taxes levied to pay for
these costs in the year in which the court financing is
transferred to the state, the amount under this clause is
limited to the amount of aid the county is certified to receive
under section 273.1398, subdivision 4a; deleted text begin and
deleted text end

(15) to fund a police or firefighters relief association as
required under section 69.77 to the extent that the required
amount exceeds the amount levied for this purpose in 2001 new text begin ; and
new text end

new text begin (16) for purposes of a storm sewer improvement district,
pursuant to section 444.20 new text end .

Sec. 4.

Minnesota Statutes 2004, section 343.11, is
amended to read:

343.11 ACQUISITION OF PROPERTY, APPROPRIATIONS.

Every county and district society for the prevention of
cruelty to animals may acquire, by purchase, gift, grant, or
devise, and hold, use, or convey, real estate and personal
property, and lease, mortgage, sell, or use the same in any
manner conducive to its interest, to the same extent as natural
persons. The county board of any county, or the council of any
city, in which such societies exist, may, in its discretion,
appropriate for the maintenance and support of such societies in
the transaction of the work for which they are organized, any
sums of money not otherwise appropriated, not to exceed in any
one year the sum of $4,800 or the sum of deleted text begin 50 cents deleted text end new text begin $1 new text end per capita
based upon the county's or city's population as of the most
recent federal census, whichever is greater; provided, that no
part of the appropriation shall be expended for the payment of
the salary of any officer of the society.

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective January 1, 2006.
new text end

Sec. 5.

Minnesota Statutes 2004, section 373.01,
subdivision 3, is amended to read:

Subd. 3.

Capital notes.

new text begin (a) new text end A county board may, by
resolution and without referendum, issue capital notes subject
to the county debt limit to purchase capital equipment useful
for county purposes that has an expected useful life at least
equal to the term of the notes. The notes shall be payable in
not more than deleted text begin five deleted text end new text begin ten new text end years and shall be issued on terms and in
a manner the board determines. A tax levy shall be made for
payment of the principal and interest on the notes, in
accordance with section 475.61, as in the case of bonds.

new text begin (b) new text end For purposes of this subdivision, "capital equipment"
means new text begin :
new text end

new text begin (1) new text end public safety, ambulance, road construction or
maintenance, and medical equipment deleted text begin , deleted text end new text begin ; new text end and

new text begin (2) new text end computer hardware and deleted text begin original operating system
deleted text end software new text begin , whether bundled with machinery or equipment or
unbundled new text end . deleted text begin The authority to issue capital notes for original
operating systems software expires on July 1, 2005.
deleted text end

Sec. 6.

Minnesota Statutes 2004, section 373.40,
subdivision 1, is amended to read:

Subdivision 1.

Definitions.

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

(a) "Bonds" means an obligation as defined under section
475.51.

(b) "Capital improvement" means acquisition or betterment
of public lands, deleted text begin development rights in the form of conservation
easements under chapter 84C, deleted text end buildings, or other improvements
within the county for the purpose of a county courthouse,
administrative building, health or social service facility,
correctional facility, jail, law enforcement center, hospital,
morgue, library, park, qualified indoor ice arena, deleted text begin and deleted text end roads and
bridges new text begin , and the acquisition of development rights in the form
of conservation easements under chapter 84C new text end . An improvement
must have an expected useful life of five years or more to
qualify. "Capital improvement" does not include light rail
transit or any activity related to it or a recreation or sports
facility building (such as, but not limited to, a gymnasium, ice
arena, racquet sports facility, swimming pool, exercise room or
health spa), unless the building is part of an outdoor park
facility and is incidental to the primary purpose of outdoor
recreation.

(c) "Commissioner" means the commissioner of employment and
economic development.

(d) "Metropolitan county" means a county located in the
seven-county metropolitan area as defined in section 473.121 or
a county with a population of 90,000 or more.

(e) "Population" means the population established by the
most recent of the following (determined as of the date the
resolution authorizing the bonds was adopted):

(1) the federal decennial census,

(2) a special census conducted under contract by the United
States Bureau of the Census, or

(3) a population estimate made either by the Metropolitan
Council or by the state demographer under section 4A.02.

(f) "Qualified indoor ice arena" means a facility that
meets the requirements of section 373.43.

(g) "Tax capacity" means total taxable market value, but
does not include captured market value.

Sec. 7.

Minnesota Statutes 2004, section 410.32, is
amended to read:

410.32 CITIES MAY ISSUE CAPITAL NOTES FOR CAPITAL
EQUIPMENT.

new text begin (a) new text end Notwithstanding any contrary provision of other law or
charter, a home rule charter city may, by resolution and without
public referendum, issue capital notes subject to the city debt
limit to purchase new text begin capital equipment.
new text end

new text begin (b) For purposes of this section, "capital equipment" means:
new text end

new text begin (1) new text end public safety equipment, ambulance and other medical
equipment, road construction and maintenance equipment, and
other capital equipment new text begin ; new text end and

new text begin (2) new text end computer hardware and deleted text begin original operating system
deleted text end software, deleted text begin provided deleted text end new text begin whether bundled with machinery or equipment
or unbundled.
new text end

new text begin (c) new text end The equipment or software deleted text begin has deleted text end new text begin must have new text end an expected
useful life at least as long as the term of the notes. deleted text begin The
authority to issue capital notes for original operating system
software expires on July 1, 2005.
deleted text end

new text begin (d) new text end The notes shall be payable in not more than deleted text begin five deleted text end new text begin ten
new text end years and be issued on terms and in the manner the city
determines. The total principal amount of the capital notes
issued in a fiscal year shall not exceed 0.03 percent of the
market value of taxable property in the city for that year.

new text begin (e) new text end A tax levy shall be made for the payment of the
principal and interest on the notes, in accordance with section
475.61, as in the case of bonds.

new text begin (f) new text end Notes issued under this section shall require an
affirmative vote of two-thirds of the governing body of the city.

new text begin (g) new text end Notwithstanding a contrary provision of other law or
charter, a home rule charter city may also issue capital notes
subject to its debt limit in the manner and subject to the
limitations applicable to statutory cities pursuant to section
412.301.

Sec. 8.

Minnesota Statutes 2004, section 412.301, is
amended to read:

412.301 FINANCING PURCHASE OF CERTAIN EQUIPMENT.

new text begin (a) new text end The council may issue certificates of indebtedness or
capital notes subject to the city debt limits to
purchase new text begin capital equipment.
new text end

new text begin (b) For purposes of this section, "capital equipment" means:
new text end

new text begin (1) new text end public safety equipment, ambulance new text begin and other medical
new text end equipment, road construction deleted text begin or deleted text end new text begin and new text end maintenance equipment, and
other capital equipment new text begin ; new text end and

new text begin (2) new text end computer hardware and deleted text begin original operating system
deleted text end software, deleted text begin provided deleted text end new text begin whether bundled with machinery or equipment
or unbundled.
new text end

new text begin (c) new text end The equipment or software deleted text begin has deleted text end new text begin must have new text end an expected
useful life at least as long as the terms of the certificates or
notes. deleted text begin The authority to issue capital notes for original
operating system software expires on July 1, 2005.
deleted text end

new text begin (d) new text end Such certificates or notes shall be payable in not more
than deleted text begin five deleted text end new text begin ten new text end years and shall be issued on such terms and in
such manner as the council may determine.

new text begin (e) new text end If the amount of the certificates or notes to be issued
to finance any such purchase exceeds 0.25 percent of the market
value of taxable property in the city, they shall not be issued
for at least ten days after publication in the official
newspaper of a council resolution determining to issue them; and
if before the end of that time, a petition asking for an
election on the proposition signed by voters equal to ten
percent of the number of voters at the last regular municipal
election is filed with the clerk, such certificates or notes
shall not be issued until the proposition of their issuance has
been approved by a majority of the votes cast on the question at
a regular or special election.

new text begin (f) new text end A tax levy shall be made for the payment of the
principal and interest on such certificates or notes, in
accordance with section 475.61, as in the case of bonds.

Sec. 9.

Minnesota Statutes 2004, section 428A.101, is
amended to read:

428A.101 DEADLINE FOR SPECIAL SERVICE DISTRICT UNDER
GENERAL LAW.

The establishment of a new special service district after
June 30, deleted text begin 2005 deleted text end new text begin 2009 new text end , requires enactment of a special law
authorizing the establishment.

Sec. 10.

new text begin [428A.102] NOTIFICATION.
new text end

new text begin By the last day of the calendar year in which a special
service district is established, the city shall file a copy of
the ordinance establishing the district with the Office of State
Auditor. Cities establishing districts before the effective
date of this section must file a copy of the ordinance by
December 31, 2005.
new text end

Sec. 11.

Minnesota Statutes 2004, section 428A.21, is
amended to read:

428A.21 SUNSET.

No new housing improvement areas may be established under
sections 428A.11 to 428A.20 after June 30, deleted text begin 2005 deleted text end new text begin 2009 new text end . After
June 30, deleted text begin 2005 deleted text end new text begin 2009 new text end , a city may establish a housing improvement
area, provided that it receives enabling legislation authorizing
the establishment of the area.

Sec. 12.

new text begin [428A.22] NOTIFICATION.
new text end

new text begin By the last day of the calendar year in which a housing
improvement district is established, the city shall file a copy
of the ordinance establishing the district with the Office of
State Auditor. Cities establishing districts before the
effective date of this section must file a copy of the ordinance
by December 31, 2005.
new text end

Sec. 13.

new text begin [452.26] UTILITY JOINT VENTURE.
new text end

new text begin To provide reduced cost financing or to otherwise help in
carrying out its functions, a municipal gas agency created under
chapter 453A and any municipal utility authorized to provide gas
facilities or services may enter into a joint venture that was
incorporated before June 30, 2004, under section 452.25. The
joint venture, and any municipal gas agency which is a member of
the joint venture, may provide gas utility service.
new text end

new text begin EFFECTIVE DATE. new text end

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

Sec. 14.

Minnesota Statutes 2004, section 469.015,
subdivision 4, is amended to read:

Subd. 4.

Exceptions.

(a) An authority need not require
competitive bidding in the following circumstances:

(1) in the case of a contract for the acquisition of a
low-rent housing project:

(i) for which financial assistance is provided by the
federal government;

(ii) which does not require any direct loan or grant of
money from the municipality as a condition of the federal
financial assistance; and

(iii) for which the contract provides for the construction
of the project upon land that is either owned by the authority
for redevelopment purposes or not owned by the authority at the
time of the contract but the contract provides for the
conveyance or lease to the authority of the project or
improvements upon completion of construction;

(2) with respect to a structured parking facility:

(i) constructed in conjunction with, and directly above or
below, a development; and

(ii) financed with the proceeds of tax increment or parking
ramp general obligation or revenue bonds; deleted text begin and
deleted text end

(3) new text begin until August 1, 2009, with respect to a facility built
for the purpose of facilitating the operation of public transit
or encouraging its use:
new text end

new text begin (i) constructed in conjunction with, and directly above or
below, a development; and
new text end

new text begin (ii) financed with the proceeds of parking ramp general
obligation or revenue bonds or with at least 60 percent of the
construction cost being financed with funding provided by the
federal government; and
new text end

new text begin (4) new text end in the case of any building in which at least 75
percent of the usable square footage constitutes a housing
development project if:

(i) the project is financed with the proceeds of bonds
issued under section 469.034 or from nongovernmental sources;

(ii) the project is either located on land that is owned or
is being acquired by the authority only for development
purposes, or is not owned by the authority at the time the
contract is entered into but the contract provides for
conveyance or lease to the authority of the project or
improvements upon completion of construction; and

(iii) the authority finds and determines that elimination
of the public bidding requirements is necessary in order for the
housing development project to be economical and feasible.

(b) An authority need not require a performance bond for
the following projects:

(1) a contract described in paragraph (a), clause (1);

(2) a construction change order for a housing project in
which 30 percent of the construction has been completed;

(3) a construction contract for a single-family housing
project in which the authority acts as the general construction
contractor; or

(4) a services or materials contract for a housing project.

For purposes of this paragraph, "services or materials
contract" does not include construction contracts.

Sec. 15.

Minnesota Statutes 2004, section 469.034,
subdivision 2, is amended to read:

Subd. 2.

General obligation revenue bonds.

(a) An
authority may pledge the general obligation of the general
jurisdiction governmental unit as additional security for bonds
payable from income or revenues of the project or the
authority. The authority must find that the pledged revenues
will equal or exceed 110 percent of the principal and interest
due on the bonds for each year. The proceeds of the bonds must
be used for a qualified housing development project or
projects. The obligations must be issued and sold in the manner
and following the procedures provided by chapter 475, except the
obligations are not subject to approval by the electors new text begin , new text end and the
maturities may extend to not more than deleted text begin 30 deleted text end new text begin 35 new text end years deleted text begin from the
estimated date of completion of the project deleted text end new text begin for obligations sold
to finance housing for the elderly and 40 years for other
obligations issued under this subdivision new text end . The authority is the
municipality for purposes of chapter 475.

(b) The principal amount of the issue must be approved by
the governing body of the general jurisdiction governmental unit
whose general obligation is pledged. Public hearings must be
held on issuance of the obligations by both the authority and
the general jurisdiction governmental unit. The hearings must
be held at least 15 days, but not more than 120 days, before the
sale of the obligations.

(c) The maximum amount of general obligation bonds that may
be issued and outstanding under this section equals the greater
of (1) one-half of one percent of the taxable market value of
the general jurisdiction governmental unit whose general
obligation deleted text begin which includes a tax on property deleted text end is pledged, or (2)
$3,000,000. In the case of county or multicounty general
obligation bonds, the outstanding general obligation bonds of
all cities in the county or counties issued under this
subdivision must be added in calculating the limit under clause
(1).

(d) "General jurisdiction governmental unit" means the city
in which the housing development project is located. In the
case of a county or multicounty authority, the county or
counties may act as the general jurisdiction governmental unit.
In the case of a multicounty authority, the pledge of the
general obligation is a pledge of a tax on the taxable property
in each of the counties.

(e) "Qualified housing development project" means a housing
development project providing housing either for the elderly or
for individuals and families with incomes not greater than 80
percent of the median family income as estimated by the United
States Department of Housing and Urban Development for the
standard metropolitan statistical area or the nonmetropolitan
county in which the project is located deleted text begin , and will deleted text end new text begin . The project
must new text end be owned new text begin for the term of the bonds either new text end by the
authority deleted text begin for the term of the bonds. deleted text end new text begin or by a limited partnership
or other entity in which the authority or another entity under
the sole control of the authority is the sole general partner
and the partnership or other entity must receive (1) an
allocation from the Department of Finance or an entitlement
issuer of tax-exempt bonding authority for the project and a
preliminary determination by the Minnesota Housing Finance
Agency or the applicable suballocator of tax credits that the
project will qualify for four percent low-income housing tax
credits or (2) a reservation of nine percent low-income housing
tax credits from the Minnesota Housing Finance Agency or a
suballocator of tax credits for the project. new text end A qualified
housing development project may admit nonelderly individuals and
families with higher incomes if:

(1) three years have passed since initial occupancy;

(2) the authority finds the project is experiencing
unanticipated vacancies resulting in insufficient revenues,
because of changes in population or other unforeseen
circumstances that occurred after the initial finding of
adequate revenues; and

(3) the authority finds a tax levy or payment from general
assets of the general jurisdiction governmental unit will be
necessary to pay debt service on the bonds if higher income
individuals or families are not admitted.

Sec. 16.

Minnesota Statutes 2004, section 469.158, is
amended to read:

469.158 MANNER OF ISSUANCE OF BONDS; INTEREST RATE.

Bonds authorized under sections 469.152 to 469.165 must be
issued in accordance with the provisions of chapter 475 relating
to bonds payable from income of revenue producing conveniences,
except that public sale is not required, the provisions of
sections 475.62 and 475.63 do not apply, and the bonds may
mature at the time or times, in the amount or amounts, within deleted text begin 30
deleted text end new text begin 40 new text end years from date of issue, and may be sold at a price equal to
the percentage of the par value thereof, plus accrued interest,
and bearing interest at the rate or rates agreed by the
contracting party, the purchaser, and the municipality or
redevelopment agency, notwithstanding any limitation of interest
rate or cost or of the amounts of annual maturities contained in
any other law. Bonds issued to refund bonds previously issued
pursuant to sections 469.152 to 469.165 may be issued in amounts
determined by the municipality or redevelopment agency
notwithstanding the provisions of section 475.67, subdivision 3.

Sec. 17.

Minnesota Statutes 2004, section 469.1813,
subdivision 1, is amended to read:

Subdivision 1.

Authority.

The governing body of a
political subdivision may grant an abatement of the taxes
imposed by the political subdivision on a parcel of property, or
defer the payments of the taxes and abate the interest and
penalty that otherwise would apply, if:

(a) it expects the benefits to the political subdivision of
the proposed abatement agreement to at least equal the costs to
the political subdivision of the proposed agreement or intends
the abatement to phase in a property tax increase, as provided
in clause (b)(7); and

(b) it finds that doing so is in the public interest
because it will:

(1) increase or preserve tax base;

(2) provide employment opportunities in the political
subdivision;

(3) provide or help acquire or construct public facilities;

(4) help redevelop or renew blighted areas;

(5) help provide access to services for residents of the
political subdivision;

(6) finance or provide public infrastructure; deleted text begin or
deleted text end

(7) phase in a property tax increase on the parcel
resulting from an increase of 50 percent or more in one year on
the estimated market value of the parcel, other than increase
attributable to improvement of the parcel new text begin ; or
new text end

new text begin (8) finance historic or heritage preservation new text end .

Sec. 18.

Minnesota Statutes 2004, section 469.1813,
subdivision 6, is amended to read:

Subd. 6.

Duration limit.

(a) A political subdivision may
grant an abatement for a period no longer than deleted text begin ten deleted text end new text begin 15 new text end years,
except as provided under paragraph (b). The subdivision may
specify in the abatement resolution a shorter duration. If the
resolution does not specify a period of time, the abatement is
for eight years. If an abatement has been granted to a parcel
of property and the period of the abatement has expired, the
political subdivision that granted the abatement may not grant
another abatement for eight years after the expiration of the
first abatement. This prohibition does not apply to
improvements added after and not subject to the first abatement.

(b) A political subdivision proposing to abate taxes for a
parcel may request, in writing, that the other political
subdivisions in which the parcel is located grant an abatement
for the property. If one of the other political subdivisions
declines, in writing, to grant an abatement or if 90 days pass
after receipt of the request to grant an abatement without a
written response from one of the political subdivisions, the
duration limit for an abatement for the parcel by the requesting
political subdivision and any other participating political
subdivision is increased to deleted text begin 15 deleted text end new text begin 20 new text end years. If the political
subdivision which declined to grant an abatement later grants an
abatement for the parcel, the deleted text begin 15-year deleted text end new text begin 20-year new text end duration limit is
reduced by one year for each year that the declining political
subdivision grants an abatement for the parcel during the period
of the abatement granted by the requesting political
subdivision. The duration limit may not be reduced below the
limit under paragraph (a).

Sec. 19.

Minnesota Statutes 2004, section 473.197,
subdivision 4, is amended to read:

Subd. 4.

Debt reserve; levy.

To provide money to pay
debt service on bonds issued under the credit enhancement
program deleted text begin if pledged revenues are insufficient to pay debt service
deleted text end new text begin in repealed subdivision 1 of Minnesota Statutes 2004, section
473.197 new text end , the council must maintain a debt reserve fund deleted text begin in the
manner and with the effect provided by section 118A.04 for
public funds deleted text end new text begin until such a reserve is no longer pledged or
otherwise needed to pay debt service on such bonds new text end . deleted text begin To provide
funds for the debt reserve fund, the council may use up to
$3,000,000 of the proceeds of solid waste bonds issued by the
council under section 473.831 before its repeal. To provide
additional funds for the debt reserve fund, the council may levy
a tax on all taxable property in the metropolitan area and must
levy the tax deleted text end If sums in the debt reserve fund are insufficient
to cure any deficiency in the debt service fund established for
the bonds new text begin , the council must levy a tax on all taxable property
in the metropolitan area in the amount needed to cure the
deficiency new text end . The tax authorized by this section does not affect
the amount or rate of taxes that may be levied by the council
for other purposes and is not subject to limit as to rate or
amount.

Sec. 20.

Minnesota Statutes 2004, section 473.39,
subdivision 1f, is amended to read:

Subd. 1f.

Prohibition of certain obligations.

new text begin For
certificates of indebtedness, bonds, or other obligations
authorized by the legislature prior to January 1, 2005, to be
issued under this section, new text end the council may not issue new text begin such
new text end obligations for construction of light rail transit in the
Hiawatha corridor.

Sec. 21.

Minnesota Statutes 2004, section 473.39, is
amended by adding a subdivision to read:

new text begin Subd. 1k. new text end

new text begin Obligations. new text end

new text begin After July 1, 2005, in addition
to the authority in subdivisions 1a, 1b, 1c, 1d, 1e, 1g, 1h, 1i,
and 1j, the council may issue certificates of indebtedness,
bonds, or other obligations under this section in an amount not
exceeding $64,000,000 for capital expenditures as prescribed in
the council's regional transit master plan and transit capital
improvement program and for related costs, including the costs
of issuance and sale of the obligations.
new text end

Sec. 22.

Minnesota Statutes 2004, section 474A.061,
subdivision 2c, is amended to read:

Subd. 2c.

Public facilities pool allocation.

From the
beginning of the calendar year and continuing for a period of
120 days, the commissioner shall reserve deleted text begin $3,000,000 deleted text end new text begin $5,000,000
new text end of the available bonding authority from the public facilities
pool for applications for public facilities projects to be
financed by the Western Lake Superior Sanitary District.
Commencing on the second Tuesday in January and continuing on
each Monday through the last Monday in July, the commissioner
shall allocate available bonding authority from the public
facilities pool to applications for eligible public facilities
projects received on or before the Monday of the preceding
week. If there are two or more applications for public
facilities projects from the pool and there is insufficient
available bonding authority to provide allocations for all
projects in any one week, the available bonding authority shall
be awarded by lot unless otherwise agreed to by the respective
issuers.

Sec. 23.

Minnesota Statutes 2004, section 474A.131,
subdivision 1, is amended to read:

Subdivision 1.

Notice of issue.

Each issuer that issues
bonds with an allocation received under this chapter shall
provide a notice of issue to the department on forms provided by
the department stating:

(1) the date of issuance of the bonds;

(2) the title of the issue;

(3) the principal amount of the bonds;

(4) the type of qualified bonds under federal tax law;

(5) the dollar amount of the bonds issued that were subject
to the annual volume cap; and

(6) for entitlement issuers, whether the allocation is from
current year entitlement authority or is from carryforward
authority.

For obligations that are issued as a part of a series of
obligations, a notice must be provided for each series. A
penalty of one-half of the amount of the application deposit not
to exceed $5,000 shall apply to any issue of obligations for
which a notice of issue is not provided to the department within
five business days after issuance or before deleted text begin the last Monday deleted text end new text begin 4:30
p.m. on the last business day new text end in December, whichever occurs
first. Within 30 days after receipt of a notice of issue the
department shall refund a portion of the application deposit
equal to one percent of the amount of the bonding authority
actually issued if a one percent application deposit was made,
or equal to two percent of the amount of the bonding authority
actually issued if a two percent application deposit was made,
less any penalty amount.

Sec. 24.

Minnesota Statutes 2004, section 475.51,
subdivision 4, is amended to read:

Subd. 4.

Net debt.

"Net debt" means the amount remaining
after deducting from its gross debt the amount of current
revenues which are applicable within the current fiscal year to
the payment of any debt and the aggregate of the principal of
the following:

(1) Obligations issued for improvements which are payable
wholly or partly from the proceeds of special assessments levied
upon property specially benefited thereby, including those which
are general obligations of the municipality issuing them, if the
municipality is entitled to reimbursement in whole or in part
from the proceeds of the special assessments.

(2) Warrants or orders having no definite or fixed maturity.

(3) Obligations payable wholly from the income from revenue
producing conveniences.

(4) Obligations issued to create or maintain a permanent
improvement revolving fund.

(5) Obligations issued for the acquisition, and betterment
of public waterworks systems, and public lighting, heating or
power systems, and of any combination thereof or for any other
public convenience from which a revenue is or may be derived.

(6) Debt service loans and capital loans made to a school
district under the provisions of sections 126C.68 and 126C.69.

(7) Amount of all money and the face value of all
securities held as a debt service fund for the extinguishment of
obligations other than those deductible under this subdivision.

(8) Obligations to repay loans made under section 216C.37.

(9) Obligations to repay loans made from money received
from litigation or settlement of alleged violations of federal
petroleum pricing regulations.

(10) Obligations issued to pay pension fund liabilities
under section 475.52, subdivision 6, or any charter authority.

(11) new text begin Obligations issued to pay judgments against the
municipality under section 475.52, subdivision 6, or any charter
authority.
new text end

new text begin (12) new text end All other obligations which under the provisions of
law authorizing their issuance are not to be included in
computing the net debt of the municipality.

Sec. 25.

Minnesota Statutes 2004, section 475.52,
subdivision 1, is amended to read:

Subdivision 1.

Statutory cities.

Any statutory city may
issue bonds or other obligations for the acquisition or
betterment of public buildings, means of garbage disposal,
hospitals, nursing homes, homes for the aged, schools,
libraries, museums, art galleries, parks, playgrounds, stadia,
sewers, sewage disposal plants, subways, streets, sidewalks,
warning systems; for any utility or other public convenience
from which a revenue is or may be derived; for a permanent
improvement revolving fund; for changing, controlling or
bridging streams and other waterways; for the acquisition and
betterment of bridges and roads within two miles of the
corporate limits new text begin ; new text end for the acquisition of development rights in
the form of conservation easements under chapter 84C; and for
acquisition of equipment for snow removal, street construction
and maintenance, or fire fighting. Without limitation by the
foregoing the city may issue bonds to provide money for any
authorized corporate purpose except current expenses.

Sec. 26.

Minnesota Statutes 2004, section 475.52,
subdivision 3, is amended to read:

Subd. 3.

Counties.

Any county may issue bonds for the
acquisition or betterment of courthouses, county administrative
buildings, health or social service facilities, correctional
facilities, law enforcement centers, jails, morgues, libraries,
parks, and hospitals, for roads and bridges within the county or
bordering thereon and for road equipment and machinery and for
ambulances and related equipment new text begin ; new text end for the acquisition of
development rights in the form of conservation easements under
chapter 84C, and for capital equipment for the administration
and conduct of elections providing the equipment is uniform
countywide, except that the power of counties to issue bonds in
connection with a library shall not exist in Hennepin County.

Sec. 27.

Minnesota Statutes 2004, section 475.52,
subdivision 4, is amended to read:

Subd. 4.

Towns.

Any town may issue bonds for the
acquisition and betterment of town halls, town roads and
bridges, nursing homes and homes for the aged, and for
acquisition of equipment for snow removal, road construction or
maintenance, and fire fighting new text begin ; new text end for the acquisition of
development rights in the form of conservation easements under
chapter 84C new text begin ; new text end and for the acquisition and betterment of any
buildings to house and maintain town equipment.

Sec. 28.

Minnesota Statutes 2004, section 475.521,
subdivision 1, is amended to read:

Subdivision 1.

Definitions.

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

(a) "Bonds" mean an obligation defined under section 475.51.

(b) "Capital improvement" means acquisition or betterment
of public lands, buildings or other improvements for the purpose
of a city hall, new text begin town hall, library, new text end public safety facility, and
public works facility. An improvement must have an expected
useful life of five years or more to qualify. Capital
improvement does not include light rail transit or any activity
related to it, or a park, deleted text begin library, deleted text end road, bridge, administrative
building other than a city new text begin or town new text end hall, or land for any of
those facilities.

(c) deleted text begin "City" deleted text end new text begin "Municipality" new text end means a home rule charter or
statutory city new text begin or a town described in section 368.01,
subdivision 1 or 1a new text end .

Sec. 29.

Minnesota Statutes 2004, section 475.521,
subdivision 2, is amended to read:

Subd. 2.

Election requirement.

(a) Bonds issued by a
deleted text begin city deleted text end new text begin municipality new text end to finance capital improvements under an
approved capital improvements plan are not subject to the
election requirements of section 475.58. deleted text begin The bonds are subject
to the net debt limits under section 475.53. deleted text end The bonds must be
approved by an affirmative vote of three-fifths of the members
of a five-member deleted text begin city council deleted text end new text begin governing body new text end . In the case of
a deleted text begin city council deleted text end new text begin governing body new text end having more new text begin or less new text end than five
members, the bonds must be approved by a vote of at least
two-thirds of the deleted text begin city council deleted text end new text begin members of the governing body new text end .

(b) Before the issuance of bonds qualifying under this
section, the deleted text begin city deleted text end new text begin municipality new text end must publish a notice of its
intention to issue the bonds and the date and time of the
hearing to obtain public comment on the matter. The notice must
be published in the official newspaper of the deleted text begin city deleted text end new text begin municipality
new text end or in a newspaper of general circulation in the deleted text begin city
deleted text end new text begin municipality new text end . Additionally, the notice may be posted on the
official Web site, if any, of the deleted text begin city deleted text end new text begin municipality new text end . The notice
must be published at least 14 but not more than 28 days before
the date of the hearing.

(c) A deleted text begin city deleted text end new text begin municipality new text end may issue the bonds only after
obtaining the approval of a majority of the voters voting on the
question of issuing the obligations, if a petition requesting a
vote on the issuance is signed by voters equal to five percent
of the votes cast in the deleted text begin city deleted text end new text begin municipality new text end in the last general
election and is filed with the deleted text begin city deleted text end clerk within 30 days after
the public hearing. The commissioner of revenue shall prepare a
suggested form of the question to be presented at the election.

Sec. 30.

Minnesota Statutes 2004, section 475.521,
subdivision 3, is amended to read:

Subd. 3.

Capital improvement plan.

(a) A deleted text begin city
deleted text end new text begin municipality new text end may adopt a capital improvement plan. The plan
must cover at least a five-year period beginning with the date
of its adoption. The plan must set forth the estimated
schedule, timing, and details of specific capital improvements
by year, together with the estimated cost, the need for the
improvement, and sources of revenue to pay for the improvement.
In preparing the capital improvement plan, the deleted text begin city council
deleted text end new text begin governing body new text end must consider for each project and for the
overall plan:

(1) the condition of the deleted text begin city's deleted text end new text begin municipality's new text end existing
infrastructure, including the projected need for repair or
replacement;

(2) the likely demand for the improvement;

(3) the estimated cost of the improvement;

(4) the available public resources;

(5) the level of overlapping debt in the deleted text begin city deleted text end new text begin municipality new text end ;

(6) the relative benefits and costs of alternative uses of
the funds;

(7) operating costs of the proposed improvements; and

(8) alternatives for providing services most efficiently
through shared facilities with other deleted text begin cities deleted text end new text begin municipalities new text end or
local government units.

(b) The capital improvement plan and annual amendments to
it must be approved by the deleted text begin city council deleted text end new text begin governing body new text end after
public hearing.

Sec. 31.

Minnesota Statutes 2004, section 475.521,
subdivision 4, is amended to read:

Subd. 4.

Limitations on amount.

A deleted text begin city deleted text end new text begin municipality new text end may
not issue bonds under this section if the maximum amount of
principal and interest to become due in any year on all the
outstanding bonds issued under this section, including the bonds
to be issued, will equal or exceed deleted text begin 0.05367 deleted text end new text begin 0.16 new text end percent of new text begin the
new text end taxable market value of property in the deleted text begin county deleted text end new text begin municipality new text end .
Calculation of the limit must be made using the taxable market
value for the taxes payable year in which the obligations are
issued and sold. new text begin In the case of a municipality with a
population of 2,500 or more, the bonds are subject to the net
debt limits under section 475.53. In the case of a shared
facility in which more than one municipality participates, upon
compliance by each participating municipality with the
requirements of subdivision 2, the limitations in this
subdivision and the net debt represented by the bonds shall be
allocated to each participating municipality in proportion to
its required financial contribution to the financing of the
shared facility, as set forth in the joint powers agreement
relating to the shared facility. new text end This section does not limit
the authority to issue bonds under any other special or general
law.

Sec. 32.

Laws 1996, chapter 412, article 5, section 24, is
amended to read:

Sec. 24. new text begin BONDS PAID FROM TACONITE PRODUCTION TAX
REVENUES.
new text end

Subdivision 1.

Refunding bonds.

The appropriation of
funds from the distribution of taconite production tax revenues
to the taconite environmental protection tax fund and the
northeast Minnesota economic protection fund made by Laws 1988,
chapter 718, article 7, sections 62 and 63, Laws 1989, chapter
329, article 5, section 20, Laws 1990, chapter 604, article 8,
section 13, Laws 1992, chapter 499, article 5, section 29, deleted text begin and
by sections 18 to 20 deleted text end new text begin Laws 1996, chapter 412, article 5, sections
20 to 22, and Laws 2000, chapter 489, article 5, sections 24 to
26 new text end , shall continue to apply to bonds issued under Minnesota
Statutes, chapter 475, to refund bonds originally issued
pursuant to those chapters.

Subd. 2.

Local payments.

School districts that are
required in Laws 1988, chapter 718, article 7, sections 62 and
63, Laws 1989, chapter 329, article 5, section 20, Laws 1990,
chapter 604, article 8, section 13, Laws 1992, chapter 499,
article 5, section 29, deleted text begin and by sections 18 to 20 deleted text end new text begin Laws 1996,
chapter 412, article 5, sections 20 to 22, and Laws 2000,
chapter 489, article 5, sections 24 to 26 new text end , to impose levies to
pay debt service on the bonds issued under those provisions to
the extent the principal and interest on the bonds is not paid
by distributions from the taconite environmental protection fund
and the northeast Minnesota economic protection trust, may pay
their portion of the principal and interest from any funds
available to them. To the extent a school district uses funds
other than the proceeds of a property tax levy to pay its share
of the principal and interest on the bonds, the requirement to
impose a property tax to pay the local share does not apply to
the school district.

Sec. 33.

Laws 2003, chapter 127, article 12, section 38,
is amended to read:

Sec. 38 deleted text begin MEMBERS MUST deleted text end new text begin AUTHORITY TO new text end LEVY TAXES deleted text begin FOR
AUTHORITY deleted text end .

deleted text begin (a) A member shall, at the request of the authority, levy a
tax in any year for the benefit of the authority. deleted text end new text begin The authority
is a special taxing district as defined in Minnesota Statutes,
section 275.066, clause (13), with the power to adopt and
certify a property tax levy to the county auditor. The
authority may levy a tax in any year for the benefit of the
authority. new text end The tax deleted text begin is, deleted text end for each member deleted text begin , deleted text end new text begin is new text end a pro rata portion
of the total amount of tax requested by the authority based on
the taxable market value within deleted text begin a deleted text end new text begin the new text end member's jurisdiction, but
in no event may the tax in any year exceed 0.01813 percent of
taxable market value. For purposes of this section, "taxable
market value" has the meaning as given in Minnesota Statutes,
section 273.032.

deleted text begin (b) The treasurer of each member city or town shall, within
15 days after receiving the property tax settlements from the
county treasurer, pay to the treasurer of the authority the
amount collected for this purpose. The money must be used by
the authority for the purposes provided by sections 35 to 41.
deleted text end

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for taxes
levied in 2005, payable in 2006, and thereafter.
new text end

Sec. 34. new text begin CITY OF BEMIDJI; DURATION EXTENSION FOR TAX
ABATEMENT.
new text end

new text begin Notwithstanding the limitation in Minnesota Statutes,
section 469.1813, subdivision 6, the city of Bemidji may extend
the duration of the tax abatement given to support development
within the fairgrounds district of the city for an additional
four years beyond the duration permitted under that section.
new text end

Sec. 35. new text begin TOWN OF WHITE; OBLIGATIONS AUTHORIZED.
new text end

new text begin Subdivision 1. new text end

new text begin Obligations. new text end

new text begin Notwithstanding any
provision of law or charter to the contrary, the town of White
may pledge its general obligation, as defined in Minnesota
Statutes, section 475.51, subdivision 10, to secure the
financing of local improvements as provided in this section.
new text end

new text begin Subd. 2. new text end

new text begin Special rules. new text end

new text begin (a) The obligations are subject
to the provisions of Minnesota Statutes, chapter 429, except as
provided in this subdivision.
new text end

new text begin (b) The obligations must be issued to finance:
new text end

new text begin (1) the cost of local improvements described in Minnesota
Statutes, section 429.021, located within the area referred to
in Laws 2003, chapter 119, section 2;
new text end

new text begin (2) any reserves required to market the obligation; and
new text end

new text begin (3) the costs of issuing the obligations.
new text end

new text begin (c) The obligations must be additionally secured by special
assessments levied or to be levied by the city of Biwabik within
the area referred to in paragraph (b).
new text end

new text begin (d) The pledge of special assessments by the city of
Biwabik for the payment of the obligations must be made by
written agreement by and between the town of White and the city
of Biwabik and must be filed with the county auditor.
new text end

new text begin (e) Notwithstanding Minnesota Statutes, section 475.58, no
election is required to approve the obligations.
new text end

new text begin (f) The obligations are not included in computing any debt
limitation applicable to the town of White or the city of
Biwabik, and the levy of taxes under Minnesota Statutes, section
475.61, to pay principal of and interest on the obligations is
not subject to any levy limitation.
new text end

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective upon local
approval by the town of White and the city of Biwabik in
compliance with the requirements of Minnesota Statutes, section
645.021.
new text end

Sec. 36. new text begin SAUK RIVER WATERSHED DISTRICT.
new text end

new text begin Notwithstanding Minnesota Statutes, section 103D.905,
subdivision 3, the Sauk River Watershed District may annually
levy an additional amount up to $100,000 for its general fund.
new text end

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective, without local
approval, beginning with the taxes levied in 2005, payable in
2006.
new text end

Sec. 37. new text begin DEFINITIONS.
new text end

new text begin Subdivision 1. new text end

new text begin Application. new text end

new text begin For the purposes of sections
37 to 40, the terms defined in this section have the meanings
given them.
new text end

new text begin Subd. 2. new text end

new text begin City. new text end

new text begin "City" means the city of St. Paul, its
mayor, city council, and any other board, authority, commission,
or officer authorized by law, charter, or ordinance to exercise
city powers of the nature referred to in sections 37 to 40.
new text end

new text begin Subd. 3. new text end

new text begin Rivercentre complex. new text end

new text begin "RiverCentre complex"
means collectively the auditorium, convention, conference and
education center, arena, and parking ramp facilities presently
and commonly known as the Roy Wilkins Auditorium, St. Paul
RiverCentre, Xcel Energy Center, and RiverCentre Parking Ramp,
including all property, real or personal, tangible or
intangible, located in the city, intended to be used as part of
the RiverCentre complex or additions to or extensions of it.
new text end

Sec. 38. new text begin ST. PAUL; CREATION OF NONPROFIT ORGANIZATION.
new text end

new text begin Subdivision 1. new text end

new text begin Authority to create a nonprofit
organization. new text end

new text begin As required under Minnesota Statutes, section
465.717, and notwithstanding any other law, city charter
provision, or ordinance to the contrary, the city of St. Paul
may participate in the creation of a nonprofit organization for
the purposes provided sections 37 to 40.
new text end

new text begin Subd. 2. new text end

new text begin Governing board; appointment process. new text end

new text begin (a) The
mayor of the city, subject to approval by the city council,
shall appoint a majority of the members of the governing board
of the nonprofit organization performing all or a part of the
activities necessary to carry out the purposes specified in
sections 37 to 40. The mayor of the city may designate any
officer or employee of the city to serve as a member of the
governing board of any nonprofit organization.
new text end

new text begin (b) In addition to the appointments made by the mayor under
paragraph (a), the mayor of the city shall designate three
members of the city council to serve on the governing board of
the nonprofit organization.
new text end

new text begin (c) Notwithstanding any provision contained in the articles
of incorporation and bylaws of the nonprofit organization, any
member of the governing board appointed by the mayor may be
removed only by the mayor of the city for cause.
new text end

new text begin Subd. 3. new text end

new text begin President. new text end

new text begin The governing board of the nonprofit
organization shall select, subject to the approval of the mayor
of the city, a president to serve as chief executive officer and
general manager of the nonprofit organization.
new text end

new text begin Subd. 4. new text end

new text begin Conflicts of interest. new text end

new text begin The procedures in
Minnesota Statutes, section 317A.255, subdivision 1, paragraph
(b), relating to director conflicts of interest, are not
required if the contract or other transaction is between the
city and the nonprofit organization.
new text end

Sec. 39. new text begin RIVERCENTRE MANAGEMENT; OPERATIONS CONTRACT.
new text end

new text begin Subdivision 1. new text end

new text begin Authority to contract with nonprofit
organization. new text end

new text begin The city may enter into an agreement with the
nonprofit organization created in section 38 to equip, maintain,
manage, and operate all or a portion of the RiverCentre complex
and to manage and operate a convention bureau to market and
promote the city as a tourist or convention center. Except as
otherwise provided in sections 37 to 40, the nonprofit
organization may only contract and utilize and expend funds for
these purposes under the direction of its governing board,
subject to the accounting, financial reporting, and other
conditions that the city may prescribe in a contract made under
sections 37 to 40 between the city and the nonprofit
organization. The nonprofit organization may use the services
of the office of the city attorney and the city's purchasing
department. All activities performed to carry out these
purposes are deemed to be for a public purpose.
new text end

new text begin Subd. 2. new text end [BONDHOLDERS' RIGHTS AND RIVERCENTRE COMPLEX TAX
EXEMPTIONS PRESERVED.] new text begin (a) The city must protect the rights of
holders of bonds issued for the RiverCentre complex, including
preserving the tax-exempt status of the bonds.
new text end

new text begin (b) The use and operation of the RiverCentre complex by the
nonprofit organization with which the city contracts under
sections 37 to 40 is a use, lease, or occupancy for public,
governmental, and municipal purposes, and the complex is exempt
from taxation by the state or any political subdivision of the
state during such use, to the extent it would be exempt if the
complex was equipped, maintained, managed, and operated by the
city.
new text end

new text begin (c) Gross receipts of tickets and admissions to events at
the RiverCentre complex sponsored by the nonprofit organization
created in section 38 do not qualify for the sales tax exemption
under Minnesota Statutes, section 297A.70, subdivision 10.
new text end

new text begin Subd. 3. new text end

new text begin Applicable general laws. new text end

new text begin The following statutes
apply to the nonprofit organization with which the city
contracts under sections 37 to 40 the same as they apply to the
city:
new text end

new text begin (a) Minnesota Statutes, chapter 13D, the Minnesota Open
Meeting Law; and
new text end

new text begin (b) Minnesota Statutes, chapter 13, the Government Data
Practices Act.
new text end

new text begin Subd. 4. new text end

new text begin Succession. new text end

new text begin The nonprofit organization with
which the city contracts under this act is the successor to all
powers, rights, assets, privileges, and interests held and
enjoyed by the RiverCentre authority on the effective date of
sections 37 to 40, and established by the provisions of Laws
1967, chapter 459, sections 1, 2, 4, and 8, subdivisions 2 and
3, clause (3), as amended; Laws 1982, chapter 523, article 25,
sections 4 and 5, as amended; Laws 1998, chapter 404, sections
81 and 82; and Minnesota Statutes, section 297A.98. On the
effective date of the contract between the city and the
nonprofit organization authorized by sections 37 to 40, the
RiverCentre authority ceases to exist for only so long as the
contract is in effect, and all other laws or provisions
specifically relating to the RiverCentre authority and the
RiverCentre complex that are not otherwise referenced in
sections 37 to 40, do not apply to the nonprofit organization.
new text end

Sec. 40. new text begin LIABILITY.
new text end

new text begin The nonprofit organization with which the city contracts
under sections 37 to 40 is a "municipality," and the officers,
directors, employees, and agents of the nonprofit organization
are "employees, officers, or agents," under Minnesota Statutes,
chapter 466, relating to tort liability. The city must defend,
save harmless, and indemnify the nonprofit organization,
including the nonprofit's officers, directors, employees, and
agents, against any claim or demand arising out of the nonprofit
organization's performance under the contract.
new text end

Sec. 41. new text begin APPLICATION.
new text end

new text begin Sections 19, 20, 21, and 42 apply in the counties of Anoka,
Carver, Dakota, Hennepin, Ramsey, Scott, and Washington.
new text end

Sec. 42. new text begin REPEALER.
new text end

new text begin Minnesota Statutes 2004, section 473.197, subdivisions 1,
2, 3, and 5, are repealed.
new text end

Sec. 43. new text begin EFFECTIVE DATE.
new text end

new text begin (a) Sections 1 and 37 to 40 are effective the day after the
city council and the chief clerical officer of the city of St.
Paul have timely completed their compliance with Minnesota
Statutes, section 645.023, subdivisions 2 and 3.
new text end

new text begin (b) Except as otherwise provided, this article is effective
the day following final enactment.
new text end

ARTICLE 2

TAX INCREMENT FINANCING

Section 1.

Minnesota Statutes 2004, section 116J.556, is
amended to read:

116J.556 LOCAL MATCH REQUIREMENT.

deleted text begin (a) deleted text end In order to qualify for a grant under sections 116J.551
to 116J.557, the municipality must pay for at least one-quarter
of the project costs as a local match. The municipality shall
pay an amount of the project costs equal to at least 12 percent
of the cleanup costs from the municipality's general fund, a
property tax levy for that purpose, or other unrestricted money
available to the municipality (excluding tax increments). These
unrestricted moneys may be spent for project costs, other than
cleanup costs, and qualify for the local match payment equal to
12 percent of cleanup costs. The rest of the local match may be
paid with tax increments, regional, state, or federal money
available for the redevelopment of brownfields or any other
money available to the municipality.

deleted text begin (b) If the development authority establishes a tax
increment financing district or hazardous substance subdistrict
on the site to pay for part of the local match requirement, the
district or subdistrict must be decertified when an amount of
tax increments equal to no more than three times the costs of
implementing the response action plan for the site and the
administrative costs for the district or subdistrict have been
received, after deducting the amount of the state grant.
deleted text end

new text begin EFFECTIVE DATE. new text end

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

Sec. 2.

Minnesota Statutes 2004, section 469.174,
subdivision 11, is amended to read:

Subd. 11.

Housing district.

"Housing district" means a
type of tax increment financing district which consists of a
project, or a portion of a project, intended for occupancy, in
part, by persons or families of low and moderate income, as
defined in chapter 462A, Title II of the National Housing Act of
1934, the National Housing Act of 1959, the United States
Housing Act of 1937, as amended, Title V of the Housing Act of
1949, as amended, any other similar present or future federal,
state, or municipal legislation, or the regulations promulgated
under any of those acts deleted text begin . A district does not qualify as a
housing district under this subdivision if the fair market value
of the improvements which are constructed in the district for
commercial uses or for uses other than low and moderate income
housing consists of more than 20 percent of the total fair
market value of the planned improvements in the development plan
or agreement. The fair market value of the improvements may be
determined using the cost of construction, capitalized income,
or other appropriate method of estimating market value deleted text end new text begin , and that
satisfies the requirements of section 469.1761 new text end . Housing project
means a project, or a portion of a project, that meets all of
the qualifications of a housing district under this subdivision,
whether or not actually established as a housing district.

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for districts
for which the request for certification was filed with the
county auditor after October 5, 1989, except (1) the new
language is effective for requests for certification made after
June 30, 2005, and (2) the fair market value of the improvements
which are constructed for commercial uses in a district for
which the request for certification was filed with the county
auditor after October 5, 1989, and before July 1, 2005, may not
exceed more than 20 percent of total fair market value of the
planned improvements in the development plan or agreement.
new text end

Sec. 3.

Minnesota Statutes 2004, section 469.174,
subdivision 25, is amended to read:

Subd. 25.

Increment.

"Increment," "tax increment," "tax
increment revenues," "revenues derived from tax increment," and
other similar terms for a district include:

(1) taxes paid by the captured net tax capacity, but
excluding any excess taxes, as computed under section 469.177;

(2) the proceeds from the sale or lease of property,
tangible or intangible, new text begin to the extent the property was new text end purchased
by the authority with tax increments;

(3) principal and interest received on loans or other
advances made by the authority with tax increments; deleted text begin and
deleted text end

(4) interest or other investment earnings on or from tax
increments new text begin ;
new text end

new text begin (5) repayments or return of tax increments made to the
authority under agreements for districts for which the request
for certification was made after August 1, 1993; and
new text end

new text begin (6) the market value homestead credit paid to the authority
under section 273.1384 new text end .

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for tax
increment financing districts, regardless of when the request
for certification was made, including districts for which the
request for certification was made before August 1, 1979,
provided that the amendment to clause (2) applies only to the
extent that the underlying provisions of clause (2) apply to the
district and to the sale or lease under prior law. This
effective date does not affect the application of clause (1),
(3), or (4).
new text end

Sec. 4.

Minnesota Statutes 2004, section 469.175,
subdivision 1, is amended to read:

Subdivision 1.

Tax increment financing plan.

A tax
increment financing plan shall contain:

(1) a statement of objectives of an authority for the
improvement of a project;

(2) a statement as to the development program for the
project, including the property within the project, if any, that
the authority intends to acquire new text begin , identified by parcel number,
identifiable property name, block, or other appropriate means
indicating the area in which the authority intends to acquire
properties new text end ;

(3) a list of any development activities that the plan
proposes to take place within the project, for which contracts
have been entered into at the time of the preparation of the
plan, including the names of the parties to the contract, the
activity governed by the contract, the cost stated in the
contract, and the expected date of completion of that activity;

(4) identification or description of the type of any other
specific development reasonably expected to take place within
the project, and the date when the development is likely to
occur;

(5) estimates of the following:

(i) cost of the project, including administrative expenses,
except that if part of the cost of the project is paid or
financed with increment from the tax increment financing
district, the tax increment financing plan for the district must
contain an estimate of the amount of the cost of the project,
including administrative expenses, that will be paid or financed
with tax increments from the district;

(ii) amount of bonded indebtedness to be incurred;

(iii) sources of revenue to finance or otherwise pay public
costs;

(iv) the most recent net tax capacity of taxable real
property within the tax increment financing district and within
any subdistrict;

(v) the estimated captured net tax capacity of the tax
increment financing district at completion; and

(vi) the duration of the tax increment financing district's
and any subdistrict's existence;

(6) statements of the authority's alternate estimates of
the impact of tax increment financing on the net tax capacities
of all taxing jurisdictions in which the tax increment financing
district is located in whole or in part. For purposes of one
statement, the authority shall assume that the estimated
captured net tax capacity would be available to the taxing
jurisdictions without creation of the district, and for purposes
of the second statement, the authority shall assume that none of
the estimated captured net tax capacity would be available to
the taxing jurisdictions without creation of the district or
subdistrict;

(7) identification and description of studies and analyses
used to make the determination set forth in subdivision 3,
clause (2); and

(8) identification of all parcels to be included in the
district or any subdistrict.

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for tax
increment financing plans and amendments to tax increment
financing plans approved after June 30, 2005.
new text end

Sec. 5.

Minnesota Statutes 2004, section 469.175,
subdivision 4a, is amended to read:

Subd. 4a.

Filing plan with state.

(a) The authority must
file a copy of the tax increment financing plan and amendments
to the plan with the commissioner of revenue new text begin and the state
auditor new text end . The authority must also file a copy of the development
plan or the project plan for the project area with the
commissioner of revenue deleted text begin . The commissioner of revenue shall
provide a copy of a plan to the state auditor upon request deleted text end new text begin and
the state auditor new text end .

(b) Filing under this subdivision must be made within 60
days after the latest of:

(1) the filing of the request for certification of the
district;

(2) approval of the plan by the municipality; or

(3) adoption of the plan by the authority.

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for plans and
amendments approved after June 30, 2005.
new text end

Sec. 6.

Minnesota Statutes 2004, section 469.175,
subdivision 6, is amended to read:

Subd. 6.

Annual financial reporting.

(a) The state
auditor shall develop a uniform system of accounting and
financial reporting for tax increment financing districts. The
system of accounting and financial reporting shall, as nearly as
possible:

(1) provide for full disclosure of the sources and uses of
public funds in the district;

(2) permit comparison and reconciliation with the affected
local government's accounts and financial reports;

(3) permit auditing of the funds expended on behalf of a
district, including a single district that is part of a
multidistrict project or that is funded in part or whole through
the use of a development account funded with tax increments from
other districts or with other public money;

(4) be consistent with generally accepted accounting
principles.

(b) The authority must annually submit to the state auditor
a financial report in compliance with paragraph (a). Copies of
the report must also be provided to the county auditor and to
the governing body of the municipality, if the authority is not
the municipality. To the extent necessary to permit compliance
with the requirement of financial reporting, the county and any
other appropriate local government unit or private entity must
provide the necessary records or information to the authority or
the state auditor as provided by the system of accounting and
financial reporting developed pursuant to paragraph (a). The
authority must submit the annual report for a year on or before
August 1 of the next year.

(c) The annual financial report must also include the
following items:

(1) the original net tax capacity of the district and any
subdistrict under section 469.177, subdivision 1;

(2) the net tax capacity for the reporting period of the
district and any subdistrict;

(3) the captured net tax capacity of the district;

(4) any fiscal disparity deduction from the captured net
tax capacity under section 469.177, subdivision 3;

(5) the captured net tax capacity retained for tax
increment financing under section 469.177, subdivision 2,
paragraph (a), clause (1);

(6) any captured net tax capacity distributed among
affected taxing districts under section 469.177, subdivision 2,
paragraph (a), clause (2);

(7) the type of district;

(8) the date the municipality approved the tax increment
financing plan and the date of approval of any modification of
the tax increment financing plan, the approval of which requires
notice, discussion, a public hearing, and findings under
subdivision 4, paragraph (a);

(9) the date the authority first requested certification of
the original net tax capacity of the district and the date of
the request for certification regarding any parcel added to the
district;

(10) the date the county auditor first certified the
original net tax capacity of the district and the date of
certification of the original net tax capacity of any parcel
added to the district;

(11) the month and year in which the authority has received
or anticipates it will receive the first increment from the
district;

(12) the date the district must be decertified;

(13) for the reporting period and prior years of the
district, the actual amount received from, at least, the
following categories:

(i) tax increments paid by the captured net tax capacity
retained for tax increment financing under section 469.177,
subdivision 2, paragraph (a), clause (1), but excluding any
excess taxes;

(ii) tax increments that are interest or other investment
earnings on or from tax increments;

(iii) tax increments that are proceeds from the sale or
lease of property, tangible or intangible, purchased by the
authority with tax increments;

(iv) tax increments that are repayments of loans or other
advances made by the authority with tax increments;

(v) bond or loan proceeds;

(vi) special assessments;

(vii) grants; deleted text begin and
deleted text end

(viii) transfers from funds not exclusively associated with
the district new text begin ; and
new text end

new text begin (ix) the market value homestead credit paid to the
authority under section 273.1384 new text end ;

(14) for the reporting period and for the prior years of
the district, the actual amount expended for, at least, the
following categories:

(i) acquisition of land and buildings through condemnation
or purchase;

(ii) site improvements or preparation costs;

(iii) installation of public utilities, parking facilities,
streets, roads, sidewalks, or other similar public improvements;

(iv) administrative costs, including the allocated cost of
the authority;

(v) public park facilities, facilities for social,
recreational, or conference purposes, or other similar public
improvements; and

(vi) transfers to funds not exclusively associated with the
district;

(15) deleted text begin for properties sold to developers, the total cost of
the property to the authority and the price paid by the
developer;
deleted text end

deleted text begin (16) the amount of any payments and the value of any
in-kind benefits, such as physical improvements and the use of
building space, that are paid or financed with tax increments
and are provided to another governmental unit other than the
municipality during the reporting period;
deleted text end

deleted text begin (17) deleted text end the amount of any payments for activities and
improvements located outside of the district that are paid for
or financed with tax increments;

deleted text begin (18) deleted text end new text begin (16) new text end the amount of payments of principal and interest
that are made during the reporting period on any nondefeased:

(i) general obligation tax increment financing bonds;

(ii) other tax increment financing bonds; and

(iii) notes and pay-as-you-go contracts;

deleted text begin (19) deleted text end new text begin (17) new text end the principal amount, at the end of the reporting
period, of any nondefeased:

(i) general obligation tax increment financing bonds;

(ii) other tax increment financing bonds; and

(iii) notes and pay-as-you-go contracts;

deleted text begin (20) deleted text end new text begin (18) new text end the amount of principal and interest payments
that are due for the current calendar year on any nondefeased:

(i) general obligation tax increment financing bonds;

(ii) other tax increment financing bonds; and

(iii) notes and pay-as-you-go contracts;

deleted text begin (21) deleted text end new text begin (19) new text end if the fiscal disparities contribution under
chapter 276A or 473F for the district is computed under section
469.177, subdivision 3, paragraph (a), the amount of increased
property taxes imposed on other properties in the municipality
that approved the tax increment financing plan as a result of
the fiscal disparities contribution;

deleted text begin (22) whether the tax increment financing plan or other
governing document permits increment revenues to be expended:
deleted text end

deleted text begin (i) to pay bonds, the proceeds of which were or may be
expended on activities outside of the district;
deleted text end

deleted text begin (ii) for deposit into a common bond fund from which money
may be expended on activities located outside of the district;
or
deleted text end

deleted text begin (iii) to otherwise finance activities located outside of
the tax increment financing district;
deleted text end

deleted text begin (23) deleted text end new text begin (20) new text end the estimate, if any, contained in the tax
increment financing plan of the amount of the cost of the
project, including administrative expenses, that will be paid or
financed with tax increment; and

deleted text begin (24) deleted text end new text begin (21) new text end any additional information the state auditor may
require.

(d) The commissioner of revenue shall prescribe the method
of calculating the increased property taxes under paragraph (c),
clause deleted text begin (21) deleted text end new text begin (19) new text end , and the form of the statement disclosing this
information on the annual statement under subdivision 5.

(e) The reporting requirements imposed by this subdivision
apply to districts certified before, on, and after August 1,
1979.

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for reports
required to be filed after December 31, 2005.
new text end

Sec. 7.

Minnesota Statutes 2004, section 469.176,
subdivision 2, is amended to read:

Subd. 2.

Excess increments.

(a) The authority shall
annually determine the amount of excess increments for a
district, if any. This determination must be based on the tax
increment financing plan in effect on December 31 of the year
and the increments and other revenues received as of December 31
of the year. new text begin The authority must spend or return the excess
increments under paragraph (c) within nine months after the end
of the year.
new text end

(b) For purposes of this subdivision, "excess increments"
equals the excess of:

(1) total increments collected from the district since its
certification, reduced by any excess increments paid under
paragraph (c), clause (4), for a prior year, over

(2) the total costs authorized by the tax increment
financing plan to be paid with increments from the district,
reduced, but not below zero, by the sum of:

(i) the amounts of those authorized costs that have been
paid from sources other than tax increments from the district;

(ii) revenues, other than tax increments from the district,
that are dedicated for or otherwise required to be used to pay
those authorized costs and that the authority has received and
that are not included in item (i); deleted text begin and
deleted text end

(iii) the amount of principal and interest obligations due
on outstanding bonds after December 31 of the year and not
prepaid under paragraph (c) in a prior year new text begin ; and
new text end

new text begin (iv) increased by the sum of the transfers of increments
made under section 469.1763, subdivision 6, to reduce deficits
in other districts made by December 31 of the year new text end .

(c) The authority shall use excess increment only to do one
or more of the following:

(1) prepay any outstanding bonds;

(2) discharge the pledge of tax increment for any
outstanding bonds;

(3) pay into an escrow account dedicated to the payment of
any outstanding bonds; or

(4) return the excess amount to the county auditor who
shall distribute the excess amount to the city or town, county,
and school district in which the tax increment financing
district is located in direct proportion to their respective
local tax rates.

(d) new text begin For purposes of a district for which the request for
certification was made prior to August 1, 1979, excess
increments equal the amount of increments on hand on December
31, less the principal and interest obligations due on
outstanding bonds or advances, qualifying under subdivision 1c,
clauses (1), (2), and (5), after December 31 of the year and not
prepaid under paragraph (c).
new text end

new text begin (e) new text end The county auditor must report to the commissioner of
education the amount of any excess tax increment distributed to
a school district within 30 days of the distribution.

new text begin (f) For purposes of this subdivision, "outstanding bonds"
means bonds which are secured by increments from the district.
new text end

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for districts,
regardless of when the request for certification was made, and
applies to calculations of excess increments beginning in
calendar year 2005.
new text end

Sec. 8.

Minnesota Statutes 2004, section 469.176,
subdivision 4d, is amended to read:

Subd. 4d.

Housing districts.

Revenue derived from tax
increment from a housing district must be used solely to finance
the cost of housing projects as defined in deleted text begin section deleted text end new text begin sections
new text end 469.174, subdivision 11 new text begin , and 469.1761 new text end . The cost of public
improvements directly related to the housing projects and the
allocated administrative expenses of the authority may be
included in the cost of a housing project.

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for all
districts to which the provisions of Minnesota Statutes, section
469.1761, apply.
new text end

Sec. 9.

Minnesota Statutes 2004, section 469.1761,
subdivision 1, is amended to read:

Subdivision 1.

Requirement imposed.

new text begin (a) new text end In order for a
tax increment financing district to qualify as a housing
district deleted text begin , deleted text end new text begin :
new text end

new text begin (1) new text end the income limitations provided in this section must be
satisfied new text begin ; and
new text end

new text begin (2) no more than 20 percent of the square footage of
buildings that receive assistance from tax increments may
consist of commercial, retail, or other nonresidential uses new text end .

new text begin (b) new text end The requirements imposed by this section apply to
deleted text begin residential deleted text end property receiving assistance financed with tax
increments, including interest reduction, land transfers at less
than the authority's cost of acquisition, utility service or
connections, roads, new text begin parking facilities, new text end or other subsidies. The
provisions of this section do not apply to districts located in
a targeted area as defined in section 462C.02, subdivision 9,
clause (e).

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for districts
for which the request for certification was made after June 30,
2005.
new text end

Sec. 10.

Minnesota Statutes 2004, section 469.1761,
subdivision 3, is amended to read:

Subd. 3.

Rental property.

For residential rental
property, the property must satisfy the income requirements for
a qualified residential rental project as defined in section
142(d) of the Internal Revenue Code. deleted text begin A property also satisfies
the requirements of section 142(d) if 50 percent of the
residential units in the project are occupied by individuals
whose income is 80 percent or less of area median gross income.
deleted text end The requirements of this subdivision apply for the duration of
the tax increment financing district.

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for districts
for which the request for certification was made after June 30,
2004.
new text end

Sec. 11.

Minnesota Statutes 2004, section 469.1763,
subdivision 6, is amended to read:

Subd. 6.

Pooling permitted for deficits.

(a) This
subdivision applies only to districts for which the request for
certification was made before August 1, 2001, and without regard
to whether the request for certification was made prior to
August 1, 1979.

(b) The municipality for the district may transfer
available increments from another tax increment financing
district located in the municipality, if the transfer is
necessary to eliminate a deficit in the district to which the
increments are transferred. A deficit in the district for
purposes of this subdivision means the lesser of the following
two amounts:

(1)(i) the amount due during the calendar year to pay
preexisting obligations of the district; minus

(ii) the total increments collected or to be collected from
properties located within the district that are available for
the calendar year including amounts collected in prior years
that are currently available; plus

(iii) total increments from properties located in other
districts in the municipality including amounts collected in
prior years that are available to be used to meet the district's
obligations under this section, excluding this subdivision, or
other provisions of law (but excluding a special tax under
section 469.1791 and the grant program under Laws 1997, chapter
231, article 1, section 19, or Laws 2001, First Special Session
chapter 5); or

(2) the reduction in increments collected from properties
located in the district for the calendar year as a result of the
changes in class rates in Laws 1997, chapter 231, article 1;
Laws 1998, chapter 389, article 2; and Laws 1999, chapter 243,
and Laws 2001, First Special Session chapter 5, or the
elimination of the general education tax levy under Laws 2001,
First Special Session chapter 5.

new text begin The authority may compute the deficit amount under clause
(1) only (without regard to the limit under clause (2)) if the
authority makes an irrevocable commitment, by resolution, to use
increments from the district to which increments are to be
transferred and any transferred increments only to pay
preexisting obligations and administrative expenses for the
district that are required to be paid under section 469.176,
subdivision 4h, paragraph (a).
new text end

(c) A preexisting obligation means:

(1) bonds issued and sold before August 1, 2001, or bonds
issued pursuant to a binding contract requiring the issuance of
bonds entered into before July 1, 2001, and bonds issued to
refund such bonds or to reimburse expenditures made in
conjunction with a signed contractual agreement entered into
before August 1, 2001, to the extent that the bonds are secured
by a pledge of increments from the tax increment financing
district; and

(2) binding contracts entered into before August 1, 2001,
to the extent that the contracts require payments secured by a
pledge of increments from the tax increment financing district.

(d) The municipality may require a development authority,
other than a seaway port authority, to transfer available
increments including amounts collected in prior years that are
currently available for any of its tax increment financing
districts in the municipality to make up an insufficiency in
another district in the municipality, regardless of whether the
district was established by the development authority or another
development authority. This authority applies notwithstanding
any law to the contrary, but applies only to a development
authority that:

(1) was established by the municipality; or

(2) the governing body of which is appointed, in whole or
part, by the municipality or an officer of the municipality or
which consists, in whole or part, of members of the governing
body of the municipality. The municipality may use this
authority only after it has first used all available increments
of the receiving development authority to eliminate the
insufficiency and exercised any permitted action under section
469.1792, subdivision 3, for preexisting districts of the
receiving development authority to eliminate the insufficiency.

(e) The authority under this subdivision to spend tax
increments outside of the area of the district from which the
tax increments were collected:

(1) is an exception to the restrictions under section
469.176, deleted text begin subdivision deleted text end new text begin subdivisions 4b, 4c, 4d, 4e, new text end 4i, new text begin and 4j;
the expenditure limits under section 469.176, subdivision 1c;
new text end and the other provisions of this section deleted text begin , deleted text end new text begin ; new text end and the percentage
restrictions under subdivision 2 must be calculated after
deducting increments spent under this subdivision from the total
increments for the district; and

(2) applies notwithstanding the provisions of the Tax
Increment Financing Act in effect for districts for which the
request for certification was made before June 30, 1982, or any
other law to the contrary.

(f) If a preexisting obligation requires the development
authority to pay an amount that is limited to the increment from
the district or a specific development within the district and
if the obligation requires paying a higher amount to the extent
that increments are available, the municipality may determine
that the amount due under the preexisting obligation equals the
higher amount and may authorize the transfer of increments under
this subdivision to pay up to the higher amount. The existence
of a guarantee of obligations by the individual or entity that
would receive the payment under this paragraph is disregarded in
the determination of eligibility to pool under this
subdivision. The authority to transfer increments under this
paragraph may only be used to the extent that the payment of all
other preexisting obligations in the municipality due during the
calendar year have been satisfied.

new text begin (g) For transfers of increments made in calendar year 2005
and later, the reduction in increments as a result of the
elimination of the general education tax levy for purposes of
paragraph (b), clause (2), for a taxes payable year equals the
general education tax rate for the school district under
Minnesota Statutes 2000, section 273.1382, subdivision 1, for
taxes payable in 2001, multiplied by the captured tax capacity
of the district for the current taxes payable year.
new text end

new text begin EFFECTIVE DATE. new text end

new text begin This section applies to transfers of
increments made after the effective date of the original
enactment of Minnesota Statutes, section 469.1763, subdivision 6.
new text end

Sec. 12.

Minnesota Statutes 2004, section 469.177,
subdivision 1, is amended to read:

Subdivision 1.

Original net tax capacity.

(a) Upon or
after adoption of a tax increment financing plan, the auditor of
any county in which the district is situated shall, upon request
of the authority, certify the original net tax capacity of the
tax increment financing district and that portion of the
district overlying any subdistrict as described in the tax
increment financing plan and shall certify in each year
thereafter the amount by which the original net tax capacity has
increased or decreased as a result of a change in tax exempt
status of property within the district and any subdistrict,
reduction or enlargement of the district or changes pursuant to
subdivision 4.

(b) If the classification under section 273.13 of property
located in a district changes to a classification that has a
different assessment ratio, the original net tax capacity of
that property must be redetermined at the time when its use is
changed as if the property had originally been classified in the
same class in which it is classified after its use is changed.

(c) The amount to be added to the original net tax capacity
of the district as a result of previously tax exempt real
property within the district becoming taxable equals the net tax
capacity of the real property as most recently assessed pursuant
to section 273.18 or, if that assessment was made more than one
year prior to the date of title transfer rendering the property
taxable, the net tax capacity assessed by the assessor at the
time of the transfer. If improvements are made to tax exempt
property after certification of the district and before the
parcel becomes taxable, the assessor shall, at the request of
the authority, separately assess the estimated market value of
the improvements. If the property becomes taxable, the county
auditor shall add to original net tax capacity, the net tax
capacity of the parcel, excluding the separately assessed
improvements. If substantial taxable improvements were made to
a parcel after certification of the district and if the property
later becomes tax exempt, in whole or part, as a result of the
authority acquiring the property through foreclosure or exercise
of remedies under a lease or other revenue agreement or as a
result of tax forfeiture, the amount to be added to the original
net tax capacity of the district as a result of the property
again becoming taxable is the amount of the parcel's value that
was included in original net tax capacity when the parcel was
first certified. The amount to be added to the original net tax
capacity of the district as a result of enlargements equals the
net tax capacity of the added real property as most recently
certified by the commissioner of revenue as of the date of
modification of the tax increment financing plan pursuant to
section 469.175, subdivision 4.

(d) If the net tax capacity of a property increases because
the property no longer qualifies under the Minnesota
Agricultural Property Tax Law, section 273.111; the Minnesota
Open Space Property Tax Law, section 273.112; or the
Metropolitan Agricultural Preserves Act, chapter 473H, or
because platted, unimproved property is improved or deleted text begin three years
pass deleted text end new text begin market value is increased new text end after approval of the plat under
section 273.11, subdivision deleted text begin 1 deleted text end new text begin 14, 14a, or 14b new text end , the increase in
net tax capacity must be added to the original net tax capacity.

(e) The amount to be subtracted from the original net tax
capacity of the district as a result of previously taxable real
property within the district becoming tax exempt, or a reduction
in the geographic area of the district, shall be the amount of
original net tax capacity initially attributed to the property
becoming tax exempt or being removed from the district. If the
net tax capacity of property located within the tax increment
financing district is reduced by reason of a court-ordered
abatement, stipulation agreement, voluntary abatement made by
the assessor or auditor or by order of the commissioner of
revenue, the reduction shall be applied to the original net tax
capacity of the district when the property upon which the
abatement is made has not been improved since the date of
certification of the district and to the captured net tax
capacity of the district in each year thereafter when the
abatement relates to improvements made after the date of
certification. The county auditor may specify reasonable form
and content of the request for certification of the authority
and any modification thereof pursuant to section 469.175,
subdivision 4.

(f) If a parcel of property contained a substandard
building that was demolished or removed and if the authority
elects to treat the parcel as occupied by a substandard building
under section 469.174, subdivision 10, paragraph (b), the
auditor shall certify the original net tax capacity of the
parcel using the greater of (1) the current net tax capacity of
the parcel, or (2) the estimated market value of the parcel for
the year in which the building was demolished or removed, but
applying the class rates for the current year.

(g) For a redevelopment district qualifying under section
469.174, subdivision 10, paragraph (a), clause (4), as a
qualified disaster area, the auditor shall certify the value of
the land as the original tax capacity for any parcel in the
district that contains a building that suffered substantial
damage as a result of the disaster or emergency.

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for land
platted on or after August 1, 1991.
new text end

Sec. 13.

Minnesota Statutes 2004, section 469.1771,
subdivision 5, is amended to read:

Subd. 5.

Disposition of payments.

If the authority does
not have sufficient increments or other available money to make
a payment required by this section, the municipality that
approved the district must use any available money to make the
payment including the levying of property taxes. Money received
by the county auditor under this section must be distributed as
excess increments under section 469.176, subdivision 2,
paragraph deleted text begin (a) deleted text end new text begin (c) new text end , clause (4), except that if the county auditor
receives the payment after (1) 60 days from a municipality's
receipt of the state auditor's notification under subdivision 1,
paragraph (c), of noncompliance requiring the payment, or (2)
the commencement of an action by the county attorney to compel
the payment, then no distributions may be made to the
municipality that approved the tax increment financing district.

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective at the same
time as the amendments to Minnesota Statutes, section 469.176,
subdivision 2, by Laws 2003, chapter 127, article 10, section 11.
new text end

Sec. 14.

Minnesota Statutes 2004, section 469.178,
subdivision 1, is amended to read:

Subdivision 1.

Generally.

Notwithstanding any other law,
no bonds, payment for which tax increment is pledged, shall be
issued in connection with any project for which tax increment
financing has been undertaken except as authorized in this
section. The proceeds from the bonds shall be used only in
accordance with section 469.176, deleted text begin subdivision deleted text end new text begin subdivisions new text end 4 new text begin to
4l new text end , as if the proceeds were tax increment, except that a tax
increment financing plan need not be adopted for any project for
which tax increment financing has been undertaken prior to
August 1, 1979, pursuant to laws not requiring a tax increment
financing plan. The bonds are not included for purposes of
computing the net debt of any municipality.

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for tax
increment financing districts for which the request for
certification was made after August 1, 1979.
new text end

Sec. 15. new text begin EXTENSION OF TIME TO EXPEND TAX INCREMENT.
new text end

new text begin Notwithstanding any contrary provision of law or charter,
for tax increment financing district number 3, established on
December 19, 1994, by Brooklyn Center Resolution No. 94-273,
Minnesota Statutes, section 469.1763, subdivision 3, applies to
the district by permitting a period of 13 years for commencement
of activities within the district.
new text end

new text begin EFFECTIVE DATE. new text end

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

Sec. 16. new text begin FAIRMONT; ABATEMENT AUTHORITY.
new text end

new text begin The city of Fairmont, Martin County, and Independent School
District No. 2752, Fairmont Area Schools, may each grant an
abatement under Minnesota Statutes, sections 469.1812 to
469.1815, for property located in tax increment financing
district No. 20 in the city of Fairmont, notwithstanding any law
to the contrary. The total amount of the abatement for each
political subdivision may not exceed the taxes paid by the
original tax capacity of the district for each year of its
existence. Notwithstanding Minnesota Statutes, section 471.87,
or any other law governing conflicts of interest, a local
elected official may have a financial interest in and benefit
from the tax abatement authorized in this section if the
official discloses the interest and potential benefit on the
record, and abstains from voting on the matter.
new text end

new text begin EFFECTIVE DATE. new text end

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

Sec. 17. new text begin WABASHA TAX INCREMENT FINANCING DISTRICT.
new text end

new text begin Subdivision 1. new text end

new text begin District extension. new text end

new text begin The governing body of
the city of Wabasha may elect to extend the duration of its
redevelopment tax increment financing district number 3 by up to
three additional years.
new text end

new text begin Subd. 2. new text end

new text begin Five-year rule. new text end

new text begin The requirements of Minnesota
Statutes, section 469.1763, subdivision 3, that activities must
be undertaken within a five-year period from the date of
certification of a tax increment financing district must be
considered to be met for the city of Wabasha redevelopment tax
increment district number 3, if the activities are undertaken
within ten years from the date of certification of the district.
new text end

new text begin Subd. 3. new text end

new text begin National eagle center. new text end

new text begin Notwithstanding the
provisions of Minnesota Statutes, section 469.176, subdivision
4l, or any other law, the city of Wabasha may spend the proceeds
of tax increment bonds issued prior to January 1, 2000, to pay
the costs of acquiring and constructing a National Eagle Center
in the city. The city of Wabasha may also use tax increment
from its tax increment districts to pay the debt service on such
bonds, or any bonds issued to refund such bonds, subject to
legal restrictions on the pooling of tax increment. These bonds
may not be treated as preexisting obligations under Minnesota
Statutes, section 469.1794.
new text end

new text begin Subd. 4. new text end

new text begin Pooling. new text end

new text begin Except as otherwise specifically
provided in this section, all increments from district number 3
must be spent on activities within the district and
administrative expenses.
new text end

new text begin EFFECTIVE DATE. new text end

new text begin Subdivision 1 is effective upon
compliance with Minnesota Statutes, sections 469.1782,
subdivision 2, and 645.021. Subdivisions 2 and 3 are effective
upon compliance by the governing body of the city of Wabasha
with Minnesota Statutes, section 645.021.
new text end

Sec. 18. new text begin CITY OF RICHFIELD; TAX INCREMENT FINANCING
DISTRICT.
new text end

new text begin Subdivision 1. new text end

new text begin Authorization. new text end

new text begin The city of Richfield may
create a tax increment financing district consisting of an area
lying west of Trunk Highway 77 extending: to 16th Avenue
between Crosstown Highway 62 and 66th Street; to 17th Avenue
between 66th and 69th Streets; and to 18th Avenue between 69th
and 72nd Streets. The city or its housing and redevelopment
authority may be the authority for the purposes of Minnesota
Statutes, sections 469.174 to 469.179.
new text end

new text begin Subd. 2. new text end

new text begin District is redevelopment district. new text end

new text begin The
redevelopment tax increment district created pursuant to
subdivision 1 is deemed to be a redevelopment district and is
subject to Minnesota Statutes, sections 469.174 to 469.179,
except that:
new text end

new text begin (1) expenditures for activities as defined in Minnesota
Statutes, section 469.1763, subdivision 1, paragraph (b),
anywhere in the district are deemed to be the costs of
correcting conditions that allow the designation of
redevelopment districts pursuant to Minnesota Statutes, section
469.174, subdivision 10; and
new text end

new text begin (2) the five-year rule under Minnesota Statutes, section
469.1763, subdivision 3, does not apply.
new text end

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective upon local
approval by the city of Richfield in compliance with Minnesota
Statutes, section 645.021.
new text end

Sec. 19. new text begin CITY OF MOUNDS VIEW; TAX INCREMENT FINANCING
DISTRICT.
new text end

new text begin Subdivision 1. new text end

new text begin Establishment. new text end

new text begin The city of Mounds View
may establish within the corporate boundaries of the city one or
more economic development tax increment financing districts
subject to the special rules under subdivision 2. The districts
must be located on property that is currently exempt from
taxation and within the area bounded by, and including, on the
north County Road J west of Coral Sea Street and 82nd Lane NE
east of Coral Sea Street, on the east Coral Sea Street north of
82nd Lane NE and Interstate Highway 35W south of 82nd Lane NE,
on the south and southwest U.S. Highway 10, and on the west the
western boundary of Outlot A, Sysco, according to the recorded
plat thereof, and situated in Ramsey County, Minnesota.
new text end

new text begin Subd. 2. new text end

new text begin Special rules. new text end

new text begin (a) If the city elects upon the
adoption of the tax increment financing plan for the district,
the rules under this section apply to the district.
new text end

new text begin (b) The duration limit under Minnesota Statutes, section
469.176, subdivision 1b, clause (3), is extended to 25 years
after receipt of the first increment.
new text end

new text begin (c) The five-year rule under Minnesota Statutes, section
469.1763, subdivision 3, is extended to a ten-year period.
new text end

new text begin (d) The limitations on spending increment outside of the
district under Minnesota Statutes, section 469.1763, subdivision
2, and on spending increment for developments more than 15
percent of the square footage of which is used for purposes
other than those listed in Minnesota Statutes, section 469.176,
subdivision 4c, do not apply. Increments may only be expended
on costs, improvements, or activities:
new text end

new text begin (1) within the area defined in subdivision 1 and related to
development occurring within the area defined in subdivision 1,
whether or not included in a tax increment financing district;
and
new text end

new text begin (2) consisting of one or more of the following:
new text end

new text begin (i) acquisition and removal of existing billboards;
new text end

new text begin (ii) acquisition of land and easements, if the parcel is
occupied by a building constructed before 1990;
new text end

new text begin (iii) sanitary sewer, sewer, and water improvements;
new text end

new text begin (iv) road improvements;
new text end

new text begin (v) parking, including structured parking; and
new text end

new text begin (vi) administrative expenses.
new text end

new text begin (e) Notwithstanding paragraph (d), clause (1), increments
may be expended on costs, improvements, or activities outside
the area defined in subdivision 1, wherever located, whether or
not included in a redevelopment tax increment financing
district, for sanitary sewer, sewer, and water improvements and
improvements to Coral Sea Street, Airport Road, 82nd Lane NE,
County Road J, U.S. Highway 10, and Interstate Highway 35W so
long as the improvements are related to development within the
area defined in subdivision 1.
new text end

new text begin (f) The limitation on the ability to elect the method of
computation under Minnesota Statutes, section 469.177,
subdivision 3, for an economic development district does not
apply and the city or authority may elect the method of
computation under paragraph (a) or (b) of section 469.177,
subdivision 3.
new text end

new text begin Subd. 3. new text end

new text begin Expiration. new text end

new text begin The authority to approve tax
increment financing plans to establish a tax increment financing
district under this section expires on December 31, 2015.
new text end

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective upon approval
by the governing body of the city of Mounds View and upon
compliance by the city with Minnesota Statutes, sections
469.1782, subdivision 2, and 645.021, subdivision 3.
new text end

Sec. 20. new text begin REPEALER.
new text end

new text begin Minnesota Statutes 2004, sections 469.176, subdivision 1a;
and 469.1766; and Laws 1998, chapter 389, article 11, section
19, subdivision 3, are repealed.
new text end

new text begin EFFECTIVE DATE. new text end

new text begin The repeal of Minnesota Statutes, section
469.1766, is effective for districts for which the request for
certification was made after August 1, 1993. The repeal of
Minnesota Statutes, section 469.176, subdivision 1a, is
effective the day following final enactment, provided that
Minnesota Statutes, section 469.176, subdivision 1a, is
satisfied for any district to which it applies, if bonds have
been issued, property acquired, or public improvements
constructed before the end of the three-year period, regardless
of whether the action was undertaken before or after
certification of the district. The repeal of Laws 1998, chapter
389, article 11, section 19, subdivision 3, is effective upon
compliance by the city of Minneapolis with Minnesota Statutes,
section 645.021, subdivision 2.
new text end

ARTICLE 3

INTERNATIONAL ECONOMIC DEVELOPMENT ZONE

Section 1.

Minnesota Statutes 2004, section 272.02, is
amended by adding a subdivision to read:

new text begin Subd. 68. new text end

new text begin International economic development zone
property. new text end

new text begin (a) Improvements to real property, and personal
property, classified under section 273.13, subdivision 24, and
located within the international economic development zone
designated under section 469.322, are exempt from ad valorem
taxes levied under chapter 275, if the improvements are:
new text end

new text begin (1) part of a regional distribution center as defined in
section 469.321; or
new text end

new text begin (2) occupied by a qualified business as defined in section
469.321, that uses the improvements primarily in freight
forwarding operations.
new text end

new text begin (b) The exemption applies beginning for the first
assessment year after designation of the international economic
development zone. The exemption applies to each assessment year
that begins during the duration of the international economic
development zone. To be exempt under paragraph (a), clause (2),
the property must be occupied by July 1 of the assessment year
by a qualified business that has signed the business subsidy
agreement by July 1 of the assessment year.
new text end

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective beginning for
property taxes payable in 2008.
new text end

Sec. 2.

Minnesota Statutes 2004, section 290.01,
subdivision 19b, is amended to read:

Subd. 19b.

Subtractions from federal taxable income.

For
individuals, estates, and trusts, there shall be subtracted from
federal taxable income:

(1) interest income on obligations of any authority,
commission, or instrumentality of the United States to the
extent includable in taxable income for federal income tax
purposes but exempt from state income tax under the laws of the
United States;

(2) if included in federal taxable income, the amount of
any overpayment of income tax to Minnesota or to any other
state, for any previous taxable year, whether the amount is
received as a refund or as a credit to another taxable year's
income tax liability;

(3) the amount paid to others, less the amount used to
claim the credit allowed under section 290.0674, not to exceed
$1,625 for each qualifying child in grades kindergarten to 6 and
$2,500 for each qualifying child in grades 7 to 12, for tuition,
textbooks, and transportation of each qualifying child in
attending an elementary or secondary school situated in
Minnesota, North Dakota, South Dakota, Iowa, or Wisconsin,
wherein a resident of this state may legally fulfill the state's
compulsory attendance laws, which is not operated for profit,
and which adheres to the provisions of the Civil Rights Act of
1964 and chapter 363A. For the purposes of this clause,
"tuition" includes fees or tuition as defined in section
290.0674, subdivision 1, clause (1). As used in this clause,
"textbooks" includes books and other instructional materials and
equipment purchased or leased for use in elementary and
secondary schools in teaching only those subjects legally and
commonly taught in public elementary and secondary schools in
this state. Equipment expenses qualifying for deduction
includes expenses as defined and limited in section 290.0674,
subdivision 1, clause (3). "Textbooks" does not include
instructional books and materials used in the teaching of
religious tenets, doctrines, or worship, the purpose of which is
to instill such tenets, doctrines, or worship, nor does it
include books or materials for, or transportation to,
extracurricular activities including sporting events, musical or
dramatic events, speech activities, driver's education, or
similar programs. For purposes of the subtraction provided by
this clause, "qualifying child" has the meaning given in section
32(c)(3) of the Internal Revenue Code;

(4) income as provided under section 290.0802;

(5) to the extent included in federal adjusted gross
income, income realized on disposition of property exempt from
tax under section 290.491;

(6) to the extent included in federal taxable income,
postservice benefits for youth community service under section
124D.42 for volunteer service under United States Code, title
42, sections 12601 to 12604;

(7) to the extent not deducted in determining federal
taxable income by an individual who does not itemize deductions
for federal income tax purposes for the taxable year, an amount
equal to 50 percent of the excess of charitable contributions
allowable as a deduction for the taxable year under section
170(a) of the Internal Revenue Code over $500;

(8) for taxable years beginning before January 1, 2008, the
amount of the federal small ethanol producer credit allowed
under section 40(a)(3) of the Internal Revenue Code which is
included in gross income under section 87 of the Internal
Revenue Code;

(9) for individuals who are allowed a federal foreign tax
credit for taxes that do not qualify for a credit under section
290.06, subdivision 22, an amount equal to the carryover of
subnational foreign taxes for the taxable year, but not to
exceed the total subnational foreign taxes reported in claiming
the foreign tax credit. For purposes of this clause, "federal
foreign tax credit" means the credit allowed under section 27 of
the Internal Revenue Code, and "carryover of subnational foreign
taxes" equals the carryover allowed under section 904(c) of the
Internal Revenue Code minus national level foreign taxes to the
extent they exceed the federal foreign tax credit;

(10) in each of the five tax years immediately following
the tax year in which an addition is required under subdivision
19a, clause (7), an amount equal to one-fifth of the delayed
depreciation. For purposes of this clause, "delayed
depreciation" means the amount of the addition made by the
taxpayer under subdivision 19a, clause (7), minus the positive
value of any net operating loss under section 172 of the
Internal Revenue Code generated for the tax year of the
addition. The resulting delayed depreciation cannot be less
than zero; deleted text begin and
deleted text end

(11) job opportunity building zone income as provided under
section 469.316 new text begin ; and
new text end

new text begin (12) international economic development zone income as
provided under section 469.325 new text end .

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for tax years
beginning after December 31, 2006.
new text end

Sec. 3.

Minnesota Statutes 2004, section 290.01,
subdivision 29, is amended to read:

Subd. 29.

Taxable income.

The term "taxable income"
means:

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

(2) for corporations, the taxable net income less

(i) the net operating loss deduction under section 290.095;

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

(iii) the exemption for operating in a job opportunity
building zone under section 469.317; deleted text begin and
deleted text end

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

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

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for tax years
beginning after December 31, 2006.
new text end

Sec. 4.

Minnesota Statutes 2004, section 290.06,
subdivision 2c, is amended to read:

Subd. 2c.

Schedules of rates for individuals, estates,
and trusts.

(a) The income taxes imposed by this chapter upon
married individuals filing joint returns and surviving spouses
as defined in section 2(a) of the Internal Revenue Code must be
computed by applying to their taxable net income the following
schedule of rates:

(1) On the first $25,680, 5.35 percent;

(2) On all over $25,680, but not over $102,030, 7.05
percent;

(3) On all over $102,030, 7.85 percent.

Married individuals filing separate returns, estates, and
trusts must compute their income tax by applying the above rates
to their taxable income, except that the income brackets will be
one-half of the above amounts.

(b) The income taxes imposed by this chapter upon unmarried
individuals must be computed by applying to taxable net income
the following schedule of rates:

(1) On the first $17,570, 5.35 percent;

(2) On all over $17,570, but not over $57,710, 7.05
percent;

(3) On all over $57,710, 7.85 percent.

(c) The income taxes imposed by this chapter upon unmarried
individuals qualifying as a head of household as defined in
section 2(b) of the Internal Revenue Code must be computed by
applying to taxable net income the following schedule of rates:

(1) On the first $21,630, 5.35 percent;

(2) On all over $21,630, but not over $86,910, 7.05
percent;

(3) On all over $86,910, 7.85 percent.

(d) In lieu of a tax computed according to the rates set
forth in this subdivision, the tax of any individual taxpayer
whose taxable net income for the taxable year is less than an
amount determined by the commissioner must be computed in
accordance with tables prepared and issued by the commissioner
of revenue based on income brackets of not more than $100. The
amount of tax for each bracket shall be computed at the rates
set forth in this subdivision, provided that the commissioner
may disregard a fractional part of a dollar unless it amounts to
50 cents or more, in which case it may be increased to $1.

(e) An individual who is not a Minnesota resident for the
entire year must compute the individual's Minnesota income tax
as provided in this subdivision. After the application of the
nonrefundable credits provided in this chapter, the tax
liability must then be multiplied by a fraction in which:

(1) the numerator is the individual's Minnesota source
federal adjusted gross income as defined in section 62 of the
Internal Revenue Code and increased by the additions required
under section 290.01, subdivision 19a, clauses (1), (5), and
(6), and reduced by the subtraction under section 290.01,
subdivision 19b, deleted text begin clause deleted text end new text begin clauses new text end (11) new text begin and (12) new text end , and the Minnesota
assignable portion of the subtraction for United States
government interest under section 290.01, subdivision 19b,
clause (1), after applying the allocation and assignability
provisions of section 290.081, clause (a), or 290.17; and

(2) the denominator is the individual's federal adjusted
gross income as defined in section 62 of the Internal Revenue
Code of 1986, increased by the amounts specified in section
290.01, subdivision 19a, clauses (1), (5), and (6), and reduced
by the amounts specified in section 290.01, subdivision 19b,
clauses (1) deleted text begin and deleted text end new text begin , new text end (11) new text begin , and (12) new text end .

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for tax years
beginning after December 31, 2006.
new text end

Sec. 5.

Minnesota Statutes 2004, section 290.06, is
amended by adding a subdivision to read:

new text begin Subd. 32. new text end

new text begin International economic development zone job
credit. new text end

new text begin A taxpayer that is a qualified business, as defined in
section 469.321, subdivision 6, is allowed a credit as
determined under section 469.327 against the tax imposed by this
chapter.
new text end

new text begin EFFECTIVE DATE. new text end

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

Sec. 6.

Minnesota Statutes 2004, section 290.067,
subdivision 1, is amended to read:

Subdivision 1.

Amount of credit.

(a) A taxpayer may take
as a credit against the tax due from the taxpayer and a spouse,
if any, under this chapter an amount equal to the dependent care
credit for which the taxpayer is eligible pursuant to the
provisions of section 21 of the Internal Revenue Code subject to
the limitations provided in subdivision 2 except that in
determining whether the child qualified as a dependent, income
received as a Minnesota family investment program grant or
allowance to or on behalf of the child must not be taken into
account in determining whether the child received more than half
of the child's support from the taxpayer, and the provisions of
section 32(b)(1)(D) of the Internal Revenue Code do not apply.

(b) If a child who has not attained the age of six years at
the close of the taxable year is cared for at a licensed family
day care home operated by the child's parent, the taxpayer is
deemed to have paid employment-related expenses. If the child
is 16 months old or younger at the close of the taxable year,
the amount of expenses deemed to have been paid equals the
maximum limit for one qualified individual under section 21(c)
and (d) of the Internal Revenue Code. If the child is older
than 16 months of age but has not attained the age of six years
at the close of the taxable year, the amount of expenses deemed
to have been paid equals the amount the licensee would charge
for the care of a child of the same age for the same number of
hours of care.

(c) If a married couple:

(1) has a child who has not attained the age of one year at
the close of the taxable year;

(2) files a joint tax return for the taxable year; and

(3) does not participate in a dependent care assistance
program as defined in section 129 of the Internal Revenue Code,
in lieu of the actual employment related expenses paid for that
child under paragraph (a) or the deemed amount under paragraph
(b), the lesser of (i) the combined earned income of the couple
or (ii) the amount of the maximum limit for one qualified
individual under section 21(c) and (d) of the Internal Revenue
Code will be deemed to be the employment related expense paid
for that child. The earned income limitation of section 21(d)
of the Internal Revenue Code shall not apply to this deemed
amount. These deemed amounts apply regardless of whether any
employment-related expenses have been paid.

(d) If the taxpayer is not required and does not file a
federal individual income tax return for the tax year, no credit
is allowed for any amount paid to any person unless:

(1) the name, address, and taxpayer identification number
of the person are included on the return claiming the credit; or

(2) if the person is an organization described in section
501(c)(3) of the Internal Revenue Code and exempt from tax under
section 501(a) of the Internal Revenue Code, the name and
address of the person are included on the return claiming the
credit.

In the case of a failure to provide the information required
under the preceding sentence, the preceding sentence does not
apply if it is shown that the taxpayer exercised due diligence
in attempting to provide the information required.

In the case of a nonresident, part-year resident, or a
person who has earned income not subject to tax under this
chapter including earned income excluded pursuant to section
290.01, subdivision 19b, deleted text begin clause deleted text end new text begin clauses new text end (11) new text begin and (12) new text end , the
credit determined under section 21 of the Internal Revenue Code
must be allocated based on the ratio by which the earned income
of the claimant and the claimant's spouse from Minnesota sources
bears to the total earned income of the claimant and the
claimant's spouse.

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for tax years
beginning after December 31, 2006.
new text end

Sec. 7.

Minnesota Statutes 2004, section 290.0671,
subdivision 1, is amended to read:

Subdivision 1.

Credit allowed.

(a) An individual is
allowed a credit against the tax imposed by this chapter equal
to a percentage of earned income. To receive a credit, a
taxpayer must be eligible for a credit under section 32 of the
Internal Revenue Code.

(b) For individuals with no qualifying children, the credit
equals 1.9125 percent of the first $4,620 of earned income. The
credit is reduced by 1.9125 percent of earned income or modified
adjusted gross income, whichever is greater, in excess of
$5,770, but in no case is the credit less than zero.

(c) For individuals with one qualifying child, the credit
equals 8.5 percent of the first $6,920 of earned income and 8.5
percent of earned income over $12,080 but less than $13,450.
The credit is reduced by 5.73 percent of earned income or
modified adjusted gross income, whichever is greater, in excess
of $15,080, but in no case is the credit less than zero.

(d) For individuals with two or more qualifying children,
the credit equals ten percent of the first $9,720 of earned
income and 20 percent of earned income over $14,860 but less
than $16,800. The credit is reduced by 10.3 percent of earned
income or modified adjusted gross income, whichever is greater,
in excess of $17,890, but in no case is the credit less than
zero.

(e) For a nonresident or part-year resident, the credit
must be allocated based on the percentage calculated under
section 290.06, subdivision 2c, paragraph (e).

(f) For a person who was a resident for the entire tax year
and has earned income not subject to tax under this chapter,
including income excluded under section 290.01, subdivision 19b,
clause (11) new text begin or (12) new text end , the credit must be allocated based on the
ratio of federal adjusted gross income reduced by the earned
income not subject to tax under this chapter over federal
adjusted gross income.

(g) For tax years beginning after December 31, 2001, and
before December 31, 2004, the $5,770 in paragraph (b), the
$15,080 in paragraph (c), and the $17,890 in paragraph (d),
after being adjusted for inflation under subdivision 7, are each
increased by $1,000 for married taxpayers filing joint returns.

(h) For tax years beginning after December 31, 2004, and
before December 31, 2007, the $5,770 in paragraph (b), the
$15,080 in paragraph (c), and the $17,890 in paragraph (d),
after being adjusted for inflation under subdivision 7, are each
increased by $2,000 for married taxpayers filing joint returns.

(i) For tax years beginning after December 31, 2007, and
before December 31, 2010, the $5,770 in paragraph (b), the
$15,080 in paragraph (c), and the $17,890 in paragraph (d),
after being adjusted for inflation under subdivision 7, are each
increased by $3,000 for married taxpayers filing joint returns.
For tax years beginning after December 31, 2008, the $3,000 is
adjusted annually for inflation under subdivision 7.

(j) The commissioner shall construct tables showing the
amount of the credit at various income levels and make them
available to taxpayers. The tables shall follow the schedule
contained in this subdivision, except that the commissioner may
graduate the transition between income brackets.

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for tax years
beginning after December 31, 2006.
new text end

Sec. 8.

Minnesota Statutes 2004, section 290.091,
subdivision 2, is amended to read:

Subd. 2.

Definitions.

For purposes of the tax imposed by
this section, the following terms have the meanings given:

(a) "Alternative minimum taxable income" means the sum of
the following for the taxable year:

(1) the taxpayer's federal alternative minimum taxable
income as defined in section 55(b)(2) of the Internal Revenue
Code;

(2) the taxpayer's itemized deductions allowed in computing
federal alternative minimum taxable income, but excluding:

(i) the charitable contribution deduction under section 170
of the Internal Revenue Code to the extent that the deduction
exceeds 1.0 percent of adjusted gross income, as defined in
section 62 of the Internal Revenue Code;

(ii) the medical expense deduction;

(iii) the casualty, theft, and disaster loss deduction; and

(iv) the impairment-related work expenses of a disabled
person;

(3) for depletion allowances computed under section 613A(c)
of the Internal Revenue Code, with respect to each property (as
defined in section 614 of the Internal Revenue Code), to the
extent not included in federal alternative minimum taxable
income, the excess of the deduction for depletion allowable
under section 611 of the Internal Revenue Code for the taxable
year over the adjusted basis of the property at the end of the
taxable year (determined without regard to the depletion
deduction for the taxable year);

(4) to the extent not included in federal alternative
minimum taxable income, the amount of the tax preference for
intangible drilling cost under section 57(a)(2) of the Internal
Revenue Code determined without regard to subparagraph (E);

(5) to the extent not included in federal alternative
minimum taxable income, the amount of interest income as
provided by section 290.01, subdivision 19a, clause (1); and

(6) the amount of addition required by section 290.01,
subdivision 19a, clause (7);

less the sum of the amounts determined under the following:

(1) interest income as defined in section 290.01,
subdivision 19b, clause (1);

(2) an overpayment of state income tax as provided by
section 290.01, subdivision 19b, clause (2), to the extent
included in federal alternative minimum taxable income;

(3) the amount of investment interest paid or accrued
within the taxable year on indebtedness to the extent that the
amount does not exceed net investment income, as defined in
section 163(d)(4) of the Internal Revenue Code. Interest does
not include amounts deducted in computing federal adjusted gross
income; and

(4) amounts subtracted from federal taxable income as
provided by section 290.01, subdivision 19b, clauses (10) deleted text begin and deleted text end new text begin ,
new text end (11) new text begin , and (12) new text end .

In the case of an estate or trust, alternative minimum
taxable income must be computed as provided in section 59(c) of
the Internal Revenue Code.

(b) "Investment interest" means investment interest as
defined in section 163(d)(3) of the Internal Revenue Code.

(c) "Tentative minimum tax" equals 6.4 percent of
alternative minimum taxable income after subtracting the
exemption amount determined under subdivision 3.

(d) "Regular tax" means the tax that would be imposed under
this chapter (without regard to this section and section
290.032), reduced by the sum of the nonrefundable credits
allowed under this chapter.

(e) "Net minimum tax" means the minimum tax imposed by this
section.

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for tax years
beginning after December 31, 2006.
new text end

Sec. 9.

Minnesota Statutes 2004, section 290.0921,
subdivision 3, is amended to read:

Subd. 3.

Alternative minimum taxable income.

"Alternative minimum taxable income" is Minnesota net income as
defined in section 290.01, subdivision 19, and includes the
adjustments and tax preference items in sections 56, 57, 58, and
59(d), (e), (f), and (h) of the Internal Revenue Code. If a
corporation files a separate company Minnesota tax return, the
minimum tax must be computed on a separate company basis. If a
corporation is part of a tax group filing a unitary return, the
minimum tax must be computed on a unitary basis. The following
adjustments must be made.

(1) For purposes of the depreciation adjustments under
section 56(a)(1) and 56(g)(4)(A) of the Internal Revenue Code,
the basis for depreciable property placed in service in a
taxable year beginning before January 1, 1990, is the adjusted
basis for federal income tax purposes, including any
modification made in a taxable year under section 290.01,
subdivision 19e, or Minnesota Statutes 1986, section 290.09,
subdivision 7, paragraph (c).

For taxable years beginning after December 31, 2000, the
amount of any remaining modification made under section 290.01,
subdivision 19e, or Minnesota Statutes 1986, section 290.09,
subdivision 7, paragraph (c), not previously deducted is a
depreciation allowance in the first taxable year after December
31, 2000.

(2) The portion of the depreciation deduction allowed for
federal income tax purposes under section 168(k) of the Internal
Revenue Code that is required as an addition under section
290.01, subdivision 19c, clause (16), is disallowed in
determining alternative minimum taxable income.

(3) The subtraction for depreciation allowed under section
290.01, subdivision 19d, clause (19), is allowed as a
depreciation deduction in determining alternative minimum
taxable income.

(4) The alternative tax net operating loss deduction under
sections 56(a)(4) and 56(d) of the Internal Revenue Code does
not apply.

(5) The special rule for certain dividends under section
56(g)(4)(C)(ii) of the Internal Revenue Code does not apply.

(6) The special rule for dividends from section 936
companies under section 56(g)(4)(C)(iii) does not apply.

(7) The tax preference for depletion under section 57(a)(1)
of the Internal Revenue Code does not apply.

(8) The tax preference for intangible drilling costs under
section 57(a)(2) of the Internal Revenue Code must be calculated
without regard to subparagraph (E) and the subtraction under
section 290.01, subdivision 19d, clause (4).

(9) The tax preference for tax exempt interest under
section 57(a)(5) of the Internal Revenue Code does not apply.

(10) The tax preference for charitable contributions of
appreciated property under section 57(a)(6) of the Internal
Revenue Code does not apply.

(11) For purposes of calculating the tax preference for
accelerated depreciation or amortization on certain property
placed in service before January 1, 1987, under section 57(a)(7)
of the Internal Revenue Code, the deduction allowable for the
taxable year is the deduction allowed under section 290.01,
subdivision 19e.

For taxable years beginning after December 31, 2000, the
amount of any remaining modification made under section 290.01,
subdivision 19e, not previously deducted is a depreciation or
amortization allowance in the first taxable year after December
31, 2004.

(12) For purposes of calculating the adjustment for
adjusted current earnings in section 56(g) of the Internal
Revenue Code, the term "alternative minimum taxable income" as
it is used in section 56(g) of the Internal Revenue Code, means
alternative minimum taxable income as defined in this
subdivision, determined without regard to the adjustment for
adjusted current earnings in section 56(g) of the Internal
Revenue Code.

(13) For purposes of determining the amount of adjusted
current earnings under section 56(g)(3) of the Internal Revenue
Code, no adjustment shall be made under section 56(g)(4) of the
Internal Revenue Code with respect to (i) the amount of foreign
dividend gross-up subtracted as provided in section 290.01,
subdivision 19d, clause (1), (ii) the amount of refunds of
income, excise, or franchise taxes subtracted as provided in
section 290.01, subdivision 19d, clause (10), or (iii) the
amount of royalties, fees or other like income subtracted as
provided in section 290.01, subdivision 19d, clause (11).

(14) Alternative minimum taxable income excludes the income
from operating in a job opportunity building zone as provided
under section 469.317.

(15) Alternative minimum taxable income excludes the income
from operating in a biotechnology and health sciences industry
zone as provided under section 469.337.

new text begin (16) Alternative minimum taxable income excludes the income
from operating in an international economic development zone as
provided under section 469.326.
new text end

Items of tax preference must not be reduced below zero as a
result of the modifications in this subdivision.

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for tax years
beginning after December 31, 2006.
new text end

Sec. 10.

Minnesota Statutes 2004, section 290.0922,
subdivision 2, is amended to read:

Subd. 2.

Exemptions.

The following entities are exempt
from the tax imposed by this section:

(1) corporations exempt from tax under section 290.05;

(2) real estate investment trusts;

(3) regulated investment companies or a fund thereof; and

(4) entities having a valid election in effect under
section 860D(b) of the Internal Revenue Code;

(5) town and farmers' mutual insurance companies;

(6) cooperatives organized under chapter 308A that provide
housing exclusively to persons age 55 and over and are
classified as homesteads under section 273.124, subdivision 3;
deleted text begin and
deleted text end

(7) an entity, if for the taxable year all of its property
is located in a job opportunity building zone designated under
section 469.314 and all of its payroll is a job opportunity
building zone payroll under section 469.310 new text begin ; and
new text end

new text begin (8) an entity, if for the taxable year all of its property
is located in an international economic development zone
designated under section 469.322, and all of its payroll is
international economic development zone payroll under section
469.321 new text end .

Entities not specifically exempted by this subdivision are
subject to tax under this section, notwithstanding section
290.05.

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for tax years
beginning after December 31, 2006.
new text end

Sec. 11.

Minnesota Statutes 2004, section 290.0922,
subdivision 3, is amended to read:

Subd. 3.

Definitions.

(a) "Minnesota sales or receipts"
means the total sales apportioned to Minnesota pursuant to
section 290.191, subdivision 5, the total receipts attributed to
Minnesota pursuant to section 290.191, subdivisions 6 to 8,
and/or the total sales or receipts apportioned or attributed to
Minnesota pursuant to any other apportionment formula applicable
to the taxpayer.

(b) "Minnesota property" means total Minnesota tangible
property as provided in section 290.191, subdivisions 9 to 11,
any other tangible property located in Minnesota, but does not
include property located in a job opportunity building zone
designated under section 469.314 new text begin , new text end or property of a qualified
business located in a biotechnology and health sciences industry
zone designated under section 469.334 new text begin , or property of a
qualified business located in the international economic
development zone designated under section 469.322 new text end . Intangible
property shall not be included in Minnesota property for
purposes of this section. Taxpayers who do not utilize tangible
property to apportion income shall nevertheless include
Minnesota property for purposes of this section. On a return
for a short taxable year, the amount of Minnesota property
owned, as determined under section 290.191, shall be included in
Minnesota property based on a fraction in which the numerator is
the number of days in the short taxable year and the denominator
is 365.

(c) "Minnesota payrolls" means total Minnesota payrolls as
provided in section 290.191, subdivision 12, but does not
include job opportunity building zone payrolls under section
469.310, subdivision 8, or biotechnology and health sciences
industry zone deleted text begin payroll deleted text end new text begin payrolls new text end under section 469.330,
subdivision 8 new text begin , or international economic development zone
payrolls under section 469.321, subdivision 9 new text end . Taxpayers who do
not utilize payrolls to apportion income shall nevertheless
include Minnesota payrolls for purposes of this section.

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for tax years
beginning after December 31, 2006.
new text end

Sec. 12.

Minnesota Statutes 2004, section 297A.68, is
amended by adding a subdivision to read:

new text begin Subd. 40. new text end

new text begin International economic development zones. new text end

new text begin (a)
Purchases of tangible personal property or taxable services by a
qualified business, as defined in section 469.321, are exempt if
the property or services are primarily used or consumed in the
international economic development zone designated under section
469.322.
new text end

new text begin (b) Purchase and use of construction materials, supplies,
and equipment incorporated into the construction of improvements
to real property in the international economic development zone
are exempt if the improvements after completion of construction
are to be used as a regional distribution center as defined in
section 469.321 or otherwise used in the conduct of freight
forwarding activities of a qualified business as defined in
section 469.321. This exemption applies regardless of whether
the purchases are made by the business or a contractor.
new text end

new text begin (c) The exemptions under this subdivision apply to a local
sales and use tax, regardless of whether the local tax is
imposed on sales taxable under this chapter or in another law,
ordinance, or charter provision.
new text end

new text begin (d) The exemption in paragraph (a) applies to sales during
the duration of the zone, if the purchase was made and delivery
received after the business signs the business subsidy agreement
required under chapter 469. The exemption in paragraph (b)
applies to sales made before the end of the duration of the
zone, if the purchase and delivery were made after June 30, 2006.
new text end

new text begin EFFECTIVE DATE. new text end

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

Sec. 13.

new text begin [469.321] DEFINITIONS.
new text end

new text begin Subdivision 1. new text end

new text begin Scope. new text end

new text begin For purposes of sections 469.321
to 469.328, the following terms have the meanings given.
new text end

new text begin Subd. 2. new text end

new text begin Foreign trade zone. new text end

new text begin "Foreign trade zone" means
a foreign trade zone designated pursuant to United States Code,
title 19, section 81a, for the right to use the powers provided
in United States Code, title 19, sections 81a to 81u, or a
subzone authorized by the foreign trade zone.
new text end

new text begin Subd. 3. new text end

new text begin Foreign trade zone authority. new text end

new text begin "Foreign trade
zone authority" means the Greater Metropolitan Foreign Trade
Zone Commission number 119, a joint powers authority created by
the county of Hennepin, the cities of Minneapolis and
Bloomington, and the Metropolitan Airports Commission, under the
authority of section 469.059, 469.101, or 471.59, which includes
any other political subdivisions that enter into the authority
after its creation.
new text end

new text begin Subd. 4. new text end

new text begin International economic development zone or
zone. new text end

new text begin An "international economic development zone" or "zone" is
a zone so designated under section 469.322.
new text end

new text begin Subd. 5. new text end

new text begin Person. new text end

new text begin "Person" includes an individual,
corporation, partnership, limited liability company,
association, or any other entity.
new text end

new text begin Subd. 6. new text end

new text begin Qualified business. new text end

new text begin "Qualified business" means
a person who has signed a business subsidy agreement as required
under sections 116J.993 to 116J.995 and 469.323, subdivision 4,
carrying on a trade or business at a place of business located
within the international economic development zone that is:
new text end

new text begin (1)(i) engaged in the furtherance of international export
or import of goods as a freight forwarder; and (ii) certified by
the foreign trade zone authority as a trade or business that
furthers the purpose of developing international distribution
capacity and capability; or
new text end

new text begin (2) the owner or operator of a regional distribution center.
new text end

new text begin Subd. 7. new text end

new text begin Regional distribution center. new text end

new text begin A "regional
distribution center" is a distribution center developed within a
foreign trade zone. The regional distribution center must have
as its primary purpose, the facilitation of the gathering of
freight for the purpose of centralizing the functions necessary
for the shipment of freight in international commerce,
including, but not limited to, security and customs functions.
new text end

new text begin Subd. 8. new text end

new text begin International economic development zone
percentage or zone percentage. new text end

new text begin "International economic
development zone percentage" or "zone percentage" means the
following fraction reduced to a percentage:
new text end

new text begin (1) the numerator of the fraction is:
new text end

new text begin (i) the ratio of the taxpayer's property factor under
section 290.191 located in the zone for the taxable year which
is land, buildings, machinery and equipment, inventories, and
other tangible personal property that is a regional distribution
center or is used in the furtherance of the taxpayer's freight
forwarding operations over the property factor numerator
determined under section 290.191, plus
new text end

new text begin (ii) the ratio of the taxpayer's international economic
development zone payroll factor under subdivision 9 over the
payroll factor numerator determined under section 290.191; and
new text end

new text begin (2) the denominator of the fraction is two.
new text end

new text begin When calculating the zone percentage for a business that is
part of a unitary business as defined under section 290.17,
subdivision 4, the denominator of the payroll and property
factors is the Minnesota payroll and property of the unitary
business as reported on the combined report under section
290.17, subdivision 4, paragraph (j).
new text end

new text begin Subd. 9. new text end

new text begin International economic development zone payroll
factor or international economic development zone payroll.
new text end

new text begin "International economic development zone payroll factor" or
"international economic development zone payroll" is that
portion of the payroll factor under section 290.191 used to
operate a regional distribution center, or used in the
furtherance of the taxpayer's freight forwarding operations that
represents:
new text end

new text begin (1) wages or salaries paid to an individual for services
performed in the international economic development zone; or
new text end

new text begin (2) wages or salaries paid to individuals working from
offices within the international economic development zone, if
their employment requires them to work outside the zone and the
work is incidental to the work performed by the individual
within the zone. However, in no case does zone payroll include
wages paid for work performed outside the zone of an employee
who performs more than ten percent of total services for the
employer outside the zone.
new text end

new text begin Subd. 10. new text end

new text begin Freight forwarder. new text end

new text begin "Freight forwarder" is a
business that, for compensation, ensures that goods produced or
sold by another business move from point of origin to point of
destination.
new text end

new text begin EFFECTIVE DATE. new text end

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

Sec. 14.

new text begin [469.3215] APPLICATION FOR DESIGNATION.
new text end

new text begin Subdivision 1. new text end

new text begin Who may apply. new text end

new text begin One or more local
government units, or a joint powers board under section 471.59,
acting on behalf of two or more units, may apply for designation
of an area as an international economic development zone. All
or part of the area proposed for designation as a zone must be
located within the boundaries of each of the governmental
units. A local government unit may not submit or have submitted
on its behalf more than one application for designation of an
international economic development zone.
new text end

new text begin Subd. 2. new text end

new text begin Application content. new text end

new text begin (a) The application must
include:
new text end

new text begin (1) a resolution or ordinance adopted by each of the cities
or towns and the counties in which the zone is located, agreeing
to provide all of the local tax exemptions provided under
section 469.315;
new text end

new text begin (2) an agreement by the applicant to treat incentives
provided under the zone designation as business subsidies under
sections 116J.993 to 116J.995 and to comply with the
requirements of that law; and
new text end

new text begin (3) supporting evidence to allow the authority to evaluate
the application.
new text end

new text begin (b) Applications must be submitted to the authority no
later than December 31, 2005.
new text end

new text begin EFFECTIVE DATE. new text end

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

Sec. 15.

new text begin [469.322] DESIGNATION OF INTERNATIONAL ECONOMIC
DEVELOPMENT ZONE.
new text end

new text begin (a) An area designated as a foreign trade zone may be
designated by the foreign trade zone authority as an
international economic development zone if within the zone a
regional distribution center is being developed pursuant to
section 469.323. The zone must consist of contiguous area of
not less than 500 acres and not more than 1,000 acres. The
designation authority under this section is limited to one zone.
new text end

new text begin (b) In making the designation, the foreign trade zone
authority, in consultation with the Minnesota Department of
Transportation, the Minnesota Department of Employment and
Economic Development, the Minnesota Department of Revenue, and
the Metropolitan Council, shall consider access to major
transportation routes, consistency with current state
transportation and air cargo planning, adequacy of the size of
the site, access to airport facilities, present and future
capacity at the designated airport, the capability to meet
integrated present and future air cargo, security, and
inspection services, and access to other infrastructure and
financial incentives to maximize the security, efficiency, and
volume of Minnesota's export shipments. The border of the
international economic development zone must be no more than 60
miles distant or 90 minutes drive time from the border of the
Minneapolis-St. Paul International Airport.
new text end

new text begin (c) Prior to a final site designation, the foreign trade
zone authority, in consultation with the applicant, must conduct
a transportation impact study based on the regional model and
utilizing traffic forecasting and assignments. The results must
be used to evaluate the effects of the proposed use on the
transportation system and identify any needed improvements. If
the site is in the metropolitan area the study must also
evaluate the effect of the transportation impacts on the
Metropolitan Transportation System plan as well as the
comprehensive plans of the municipalities that would be
affected. The cost of the study must be paid by the applicant.
new text end

new text begin (d) Final zone designation must be made by June 30, 2006.
new text end

new text begin (e) Duration of the zone is a 12-year period beginning on
January 1, 2007.
new text end

new text begin EFFECTIVE DATE. new text end

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

Sec. 16.

new text begin [469.323] FOREIGN TRADE ZONE AUTHORITY POWERS.
new text end

new text begin Subdivision 1. new text end

new text begin Development of regional distribution
center. new text end

new text begin The foreign trade zone authority shall be responsible
for creating a development plan for the regional distribution
center. The regional distribution center must be developed with
the purpose of expanding, on a regional basis, international
distribution capacity and capability. The foreign trade zone
authority shall consult only with municipalities that have
indicated to the authority an interest in locating the
international economic development zone within their boundaries,
as well as interested businesses, potential financiers, and
appropriate state and federal agencies.
new text end

new text begin Subd. 2. new text end

new text begin Business plan. new text end

new text begin Before designation of an
international economic development zone under section 469.322,
the governing body of the foreign trade zone authority shall
prepare a business plan. The plan must establish performance
goals for the zone. These goals must set out, at a minimum, the
amount of investment, the number of jobs, and the amount of
freight handled expected to be attained at the end of three-,
five-, and ten-year periods by the zone. The plan also must
include an analysis of the economic feasibility of the regional
distribution center once it becomes operational and of the
operations of freight forwarders and other businesses that
choose to locate within the boundaries of the zone. The
analysis must provide profitability models that:
new text end

new text begin (1) include the benefits of the incentives;
new text end

new text begin (2) estimate the amount of time needed to achieve
profitability; and
new text end

new text begin (3) analyze the length of time incentives will be necessary
to the economic viability of the regional distribution center.
new text end

new text begin If the governing body of the foreign trade authority
determines that the models do not establish the economic
feasibility of the project, the regional distribution center
does not meet the development requirements of this section and
section 469.322.
new text end

new text begin Subd. 3. new text end

new text begin Port authority powers. new text end

new text begin The governing body of
the foreign trade zone authority may establish a port authority
that has the same powers as a port authority established under
section 469.049. If the foreign trade zone authority
establishes a port authority, the governing body of the foreign
trade zone authority may exercise all powers granted to a city
by sections 469.048 to 469.068 or other law, except the power to
levy property taxes under section 469.053.
new text end

new text begin Subd. 4. new text end

new text begin Business subsidy law. new text end

new text begin Tax exemptions and job
credits provided under this section are business subsidies paid
by the affected local government for the purpose of sections
116J.871 and 116J.993 to 116J.995.
new text end

new text begin EFFECTIVE DATE. new text end

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

Sec. 17.

new text begin [469.324] TAX INCENTIVES IN INTERNATIONAL
ECONOMIC DEVELOPMENT ZONE.
new text end

new text begin Subdivision 1. new text end

new text begin Availability. new text end

new text begin Qualified businesses that
operate in an international economic development zone,
individuals who invest in a regional distribution center or
qualified businesses that operate in an international economic
development zone, and property located in an international
economic development zone qualify for:
new text end

new text begin (1) exemption from individual income taxes as provided
under section 469.325;
new text end

new text begin (2) exemption from corporate franchise taxes as provided
under section 469.326;
new text end

new text begin (3) exemption from the state sales and use tax and any
local sales and use taxes on qualifying purchases as provided in
section 297A.68, subdivision 40;
new text end

new text begin (4) exemption from the property tax as provided in section
272.02, subdivision 68; and
new text end

new text begin (5) the jobs credit allowed under section 469.327.
new text end

Sec. 18.

new text begin [469.325] INDIVIDUAL INCOME TAX EXEMPTION.
new text end

new text begin Subdivision 1. new text end

new text begin Application. new text end

new text begin An individual, estate, or
trust operating a trade or business in the international
economic development zone, and an individual making a qualifying
investment in a qualified business operating in the
international economic development zone, qualifies for the
exemptions from taxes imposed under chapter 290, as provided in
this section. The exemptions provided under this section apply
only to the extent that the income otherwise would be taxable
under chapter 290. Subtractions under this section from federal
taxable income, alternative minimum taxable income, or any other
base subject to tax are limited to the amount that otherwise
would be included in the tax base absent the exemption under
this section. This section applies only to tax years beginning
during the duration of the zone.
new text end

new text begin Subd. 2. new text end

new text begin Rents. new text end

new text begin An individual, estate, or trust is
exempt from the taxes imposed under chapter 290 on net rents
derived from real or tangible personal property used by a
qualified business and located in the zone for the taxable year
in which the zone was designated an international economic
development zone. If tangible personal property was used both
within and outside of the zone by the qualified business, the
exemption amount for the net rental income must be multiplied by
a fraction, the numerator of which is the number of days the
property was used in the zone and the denominator of which is
the total days the property is rented by a qualified business.
new text end

new text begin Subd. 3. new text end

new text begin Business income. new text end

new text begin An individual, estate, or
trust is exempt from the taxes imposed under chapter 290 on net
income from the operation of a qualified business in the
international economic development zone. If the trade or
business is carried on within and outside of the zone and the
individual is not a resident of Minnesota, the exemption must be
apportioned based on the zone percentage for the taxable year.
If the trade or business is carried on within or outside of the
zone and the individual is a resident of Minnesota, the
exemption must be apportioned based on the zone percentage for
the taxable year, except the ratios under section 469.321,
subdivision 8, clause (1), items (i) and (ii), must use the
denominators of the property and payroll factors determined
under section 290.191. No subtraction is allowed under this
section in excess of 20 percent of the sum of the international
economic development zone payroll and the adjusted basis of the
property at the time that the property is first used in the
international economic development zone by the business.
new text end

new text begin Subd. 4. new text end

new text begin Capital gains. new text end

new text begin (a) An individual, estate, or
trust is exempt from the taxes imposed under chapter 290 on:
new text end

new text begin (1) net gain derived on a sale or exchange of real property
located in the international economic development zone and used
by a qualified business. If the property was held by the
individual, estate, or trust during a period when the zone was
not designated, the gain must be prorated based on the
percentage of time, measured in calendar days, that the real
property was held by the individual during the period the zone
designation was in effect to the total period of time the real
property was held by the individual;
new text end

new text begin (2) net gain derived on a sale or exchange of tangible
personal property used by a qualified business in the
international economic development zone. If the property was
held by the individual, estate, or trust during a period when
the zone was not designated, the gain must be prorated based on
the percentage of time, measured in calendar days, that the
property was held by the individual during the period the zone
designation was in effect to the total period of time the
property was held by the individual, estate, or trust. If the
tangible personal property was used outside of the zone during
the period of the zone's designation, the exemption must be
multiplied by a fraction, the numerator of which is the number
of days the property was used in the zone during the time of the
designation and the denominator of which is the total days the
property was held during the time of the designation; and
new text end

new text begin (3) net gain derived on a sale of an ownership interest in
a qualified business operating in the international economic
development zone, meeting the requirements of paragraph (b).
The exemption on the gain must be multiplied by the zone
percentage of the business for the taxable year prior to the
sale.
new text end

new text begin (b) A qualified business meets the requirements of
paragraph (a), clause (3), if it is a corporation, an S
corporation, or a partnership, and for the taxable year its
international economic development zone percentage exceeds 25
percent. For purposes of paragraph (a), clause (3), the zone
percentage must be calculated by modifying the ratios under
section 469.321, subdivision 8, clause (1), items (i) and (ii),
to use the denominators of the property and payroll factors
determined under section 290.191. Upon the request of an
individual, estate, or trust holding an ownership interest in
the entity, the entity must certify to the owner, in writing,
the international economic development zone percentage needed to
determine the exemption.
new text end

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for tax years
beginning after December 31, 2006.
new text end

Sec. 19.

new text begin [469.326] CORPORATE FRANCHISE TAX EXEMPTION.
new text end

new text begin (a) A qualified business is exempt from taxation under
section 290.02, the alternative minimum tax under section
290.0921, and the minimum fee under section 290.0922, on the
portion of its income attributable to operations within the
international economic development zone. This exemption is
determined as follows:
new text end

new text begin (1) for purposes of the tax imposed under section 290.02,
by multiplying its taxable net income by its zone percentage and
subtracting the result in determining taxable income;
new text end

new text begin (2) for purposes of the alternative minimum tax under
section 290.0921, by multiplying its alternative minimum taxable
income by its zone percentage and reducing alternative minimum
taxable income by this amount; and
new text end

new text begin (3) for purposes of the minimum fee under section 290.0922,
by excluding property and payroll in the zone from the
computations of the fee or by exempting the entity under section
290.0922, subdivision 2, clause (8).
new text end

new text begin (b) No subtraction is allowed under this section in excess
of 20 percent of the sum of the corporation's international
economic development zone payroll and the adjusted basis of the
zone property at the time that the property is first used in the
international economic development zone by the corporation.
new text end

new text begin (c) This section applies only to tax years beginning during
the duration of the international economic development zone.
new text end

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for tax years
beginning after December 31, 2006.
new text end

Sec. 20.

new text begin [469.327] JOBS CREDIT.
new text end

new text begin Subdivision 1. new text end

new text begin Credit allowed. new text end

new text begin A qualified business is
allowed a credit against the taxes imposed under chapter 290.
The credit equals seven percent of the:
new text end

new text begin (1) lesser of:
new text end

new text begin (i) zone payroll for the taxable year, less the zone
payroll for the base year; or
new text end

new text begin (ii) total Minnesota payroll for the taxable year, less
total Minnesota payroll for the base year; minus
new text end

new text begin (2) $30,000 multiplied by the number of full-time
equivalent employees that the qualified business employs in the
international economic development zone for the taxable year,
minus the number of full-time equivalent employees the business
employed in the zone in the base year, but not less than zero.
new text end

new text begin Subd. 2. new text end

new text begin Definitions. new text end

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

new text begin (b) "Base year" means the taxable year beginning during the
calendar year in which the zone designation was made under
section 469.322, paragraph (d).
new text end

new text begin (c) "Full-time equivalent employees" means the equivalent
of annualized expected hours of work equal to 2,080 hours.
new text end

new text begin (d) "Minnesota payroll" means the wages or salaries
attributed to Minnesota under section 290.191, subdivision 12,
for the qualified business or the unitary business of which the
qualified business is a part, whichever is greater.
new text end

new text begin (e) "Zone payroll" means wages or salaries used to
determine the zone payroll factor for the qualified business,
less the amount of compensation attributable to any employee
that exceeds $100,000.
new text end

new text begin Subd. 3. new text end

new text begin Inflation adjustment. new text end

new text begin For taxable years
beginning after December 31, 2004, the dollar amounts in
subdivisions 1, clause (2); and 2, paragraph (e), are annually
adjusted for inflation. The commissioner of revenue shall
adjust the amounts by the percentage determined under section
290.06, subdivision 2d, for the taxable year.
new text end

new text begin Subd. 4. new text end

new text begin Refundable. new text end

new text begin If the amount of the credit exceeds
the liability for tax under chapter 290, the commissioner of
revenue shall refund the excess to the qualified business.
new text end

new text begin Subd. 5. new text end

new text begin Appropriation. new text end

new text begin An amount sufficient to pay the
refunds authorized by this section is appropriated to the
commissioner of revenue from the general fund.
new text end

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for tax years
beginning after December 31, 2006.
new text end

Sec. 21.

new text begin [469.328] REPAYMENT OF TAX BENEFITS.
new text end

new text begin Subdivision 1. new text end

new text begin Repayment obligation. new text end

new text begin A person must repay
the amount of the tax reduction received under section 469.324,
subdivision 1, clauses (1) to (5), or credit received under
section 469.327, during the two years immediately before it
ceased to operate in the zone as a qualified business, if the
person ceased to operate its facility located within the zone,
ceased to be in compliance with the terms of the business
subsidy agreement, or otherwise ceases to be or is not a
qualified business.
new text end

new text begin Subd. 2. new text end

new text begin Disposition of repayment. new text end

new text begin The repayment must be
paid to the state to the extent it represents a state tax
reduction and to the county to the extent it represents a
property tax reduction. Any amount repaid to the state must be
deposited in the general fund. Any amount repaid to the county
for the property tax exemption must be distributed to the local
governments with authority to levy taxes in the zone in the same
manner provided for distribution of payment of delinquent
property taxes. Any repayment of local sales or use taxes must
be repaid to the jurisdiction imposing the local sales or use
tax.
new text end

new text begin Subd. 3. new text end

new text begin Repayment procedures. new text end

new text begin (a) For the repayment of
taxes imposed under chapter 290 or 297A or local taxes collected
pursuant to section 297A.99, a person must file an amended
return with the commissioner of revenue and pay any taxes
required to be repaid within 30 days after ceasing to be a
qualified business. The amount required to be repaid is
determined by calculating the tax for the period for which
repayment is required without regard to the tax reductions and
credits allowed under section 469.324.
new text end

new text begin (b) For the repayment of property taxes, the county auditor
shall prepare a tax statement for the person, applying the
applicable tax extension rates for each payable year and provide
a copy to the business. The person must pay the taxes to the
county treasurer within 30 days after receipt of the tax
statement. The taxpayer may appeal the valuation and
determination of the property tax to the tax court within 30
days after receipt of the tax statement.
new text end

new text begin (c) The provisions of chapters 270 and 289A relating to the
commissioner of revenue's authority to audit, assess, and
collect the tax and to hear appeals are applicable to the
repayment required under paragraphs (a) and (b). The
commissioner may impose civil penalties as provided in chapter
289A, and the additional tax and penalties are subject to
interest at the rate provided in section 270.75, from 30 days
after ceasing to do business in the zone until the date the tax
is paid.
new text end

new text begin (d) If a property tax is not repaid under paragraph (c),
the county treasurer shall add the amount required to be repaid
to the property taxes assessed against the property for payment
in the year following the year in which the treasurer discovers
that the person ceased to operate in the international economic
development zone.
new text end

new text begin (e) For determining the tax required to be repaid, a tax
reduction is deemed to have been received on the date that the
tax would have been due if the person had not been entitled to
the tax reduction.
new text end

new text begin (f) The commissioner of revenue may assess the repayment of
taxes under paragraph (d) at any time within two years after the
person ceases to be a qualified business, or within any period
of limitations for the assessment of tax under section 289A.38,
whichever is later.
new text end

new text begin Subd. 4. new text end

new text begin Waiver authority. new text end

new text begin The commissioner of revenue
may waive all or part of a repayment, if, in consultation with
the foreign trade zone authority and appropriate officials from
the state and local government units, including the commissioner
of employment and economic development, determines that
requiring repayment of the tax is not in the best interest of
the state or local government and the business ceased operating
as a result of circumstances beyond its control, including, but
not limited to:
new text end

new text begin (1) a natural disaster;
new text end

new text begin (2) unforeseen industry trends; or
new text end

new text begin (3) loss of a major supplier or customer.
new text end

new text begin EFFECTIVE DATE. new text end

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

Sec. 22.

new text begin [469.329] REPORTING REQUIREMENTS.
new text end

new text begin An applicant receiving designation of an international
economic development zone under section 469.322 must annually
report to the commissioner of employment and economic
development on its progress in meeting the zone performance
goals under the business plan for the zone and the applicant's
compliance with the business subsidy law under sections 116J.993
to 116J.995.
new text end

new text begin EFFECTIVE DATE. new text end

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