Minnesota Legislature
HF 2540
1st Unofficial Engrossment - 83rd Legislature (2003 - 2004) Posted on 12/15/2009 12:00am
KEY: stricken = removed, old language.
underscored = added, new language.
1.1 A bill for an act 1.2 relating to financing and operation of state and local 1.3 government; making policy, technical, administrative, 1.4 enforcement, collection, refund, and other changes to 1.5 income, franchise, property, sales and use, estate, 1.6 health care provider, cigarette and tobacco products, 1.7 insurance premiums, aggregate removal, mortgage 1.8 registry, occupation, net proceeds, and production 1.9 taxes, and other taxes and tax-related provisions; 1.10 establishing a regional investment credit; 1.11 establishing a credit for carsharing; providing an 1.12 income tax checkoff; providing a refund for transit 1.13 passes; changing the rent credit calculation; 1.14 authorizing sales tax exemptions; authorizing local 1.15 government sales taxes; repealing the sunset of sales 1.16 tax on alcoholic beverages and rental cars; 1.17 authorizing distributions of tax proceeds; changing 1.18 provisions relating to fiscal disparities, education 1.19 financing, state debt collection procedures, 1.20 sustainable forest incentives programs, business 1.21 subsidy, and tax data provisions; conforming 1.22 provisions to certain changes in federal law; changing 1.23 powers and duties of certain local governments and 1.24 authorities and state departments or agencies; 1.25 providing for payments of certain aids and 1.26 reimbursements to local units of government; providing 1.27 for certain school levies; providing for issuance of 1.28 obligations by local governments, and use of the 1.29 proceeds of the debt; authorizing certain joint 1.30 ventures to provide utility services; authorizing use 1.31 of nonprofit organizations to manage certain 1.32 enterprises; requiring transfer of a parking facility; 1.33 changing tax increment financing provisions, and 1.34 providing authorities to certain districts; changing 1.35 provisions relating to certificates of title of motor 1.36 vehicles and manufactured homes; requiring a state 1.37 aviation plan; authorizing establishment of an 1.38 International Economic Development Zone and providing 1.39 for tax incentives; regulating tax preparers; imposing 1.40 requirement on vendors that contract with the state to 1.41 collect sales taxes; changing electronic filing 1.42 provisions; prohibiting misrepresentation of 1.43 employment; providing for filling of vacancies on the 1.44 Tax Court; establishing biotechnology and health 1.45 science industry grants; imposing requirements related 1.46 to JOBZ; providing for studies and reports; providing 2.1 penalties; creating an education reserve account; 2.2 providing for allocation and transfers of funds; 2.3 appropriating money; amending Minnesota Statutes 2002, 2.4 sections 15.06, subdivision 6; 16D.10; 116J.993, 2.5 subdivision 3, by adding a subdivision; 116J.994, 2.6 subdivision 5, by adding a subdivision; 123B.53, by 2.7 adding a subdivision; 123B.55; 123B.71, subdivision 9; 2.8 126C.17, subdivision 6, by adding subdivisions; 2.9 161.1231, by adding a subdivision; 168A.02, 2.10 subdivision 2; 168A.05, subdivision 1b; 168A.11, 2.11 subdivisions 1, 2, by adding a subdivision; 174.03, by 2.12 adding a subdivision; 270.02, subdivision 3; 270.65; 2.13 270.69, subdivision 4; 270B.01, subdivision 8; 2.14 270B.12, subdivision 9; 272.01, subdivision 2; 272.02, 2.15 subdivisions 1a, 7, 22, by adding subdivisions; 2.16 272.029, subdivisions 4, 6; 273.11, by adding 2.17 subdivisions; 273.112, subdivision 3; 273.124, 2.18 subdivision 8; 273.1384, subdivision 3; 273.19, 2.19 subdivision 1a; 274.14; 275.065, subdivision 1a; 2.20 275.07, subdivisions 1, 4; 276.04, subdivision 2; 2.21 278.03, subdivision 1; 279.01, subdivision 1, by 2.22 adding a subdivision; 282.016; 282.21; 282.224; 2.23 282.301; 287.04; 289A.08, subdivision 1; 289A.12, 2.24 subdivision 3; 289A.20, subdivision 2; 289A.31, 2.25 subdivision 2; 289A.37, subdivision 5; 289A.38, 2.26 subdivision 6; 289A.39, subdivision 1; 289A.56, by 2.27 adding a subdivision; 289A.60, subdivision 6; 290.05, 2.28 subdivision 1; 290.06, subdivisions 22, 28, by adding 2.29 subdivisions; 290.0674, subdivision 2; 290.091, 2.30 subdivision 3; 290.10; 290.17, subdivision 4; 290.191, 2.31 subdivisions 1, 2, 3, 5, by adding a subdivision; 2.32 290.92, subdivisions 1, 4b; 290.9705, subdivision 1; 2.33 290A.03, subdivision 11, by adding a subdivision; 2.34 290A.19; 290C.05; 295.50, subdivision 4; 296A.22, by 2.35 adding a subdivision; 297A.61, by adding a 2.36 subdivision; 297A.67, by adding subdivisions; 297A.68, 2.37 subdivisions 4, 19, by adding subdivisions; 297A.70, 2.38 by adding a subdivision; 297A.71, by adding 2.39 subdivisions; 297A.75, subdivisions 1, 2; 297A.87, 2.40 subdivisions 2, 3; 297A.99, subdivisions 1, 2, 3; 2.41 297F.01, by adding a subdivision; 297F.09, by adding a 2.42 subdivision; 297I.01, by adding subdivisions; 297I.05, 2.43 subdivisions 4, 5, by adding a subdivision; 298.001, 2.44 by adding subdivisions; 298.01, subdivisions 3, 3a, 4; 2.45 298.015, subdivisions 1, 2; 298.016, subdivision 4; 2.46 298.018, as amended; 298.24, subdivision 1; 298.28, 2.47 subdivisions 9a, 9b, 10; 298.2961, by adding a 2.48 subdivision; 298.75, subdivision 2; 325D.33, 2.49 subdivision 6; 428A.101; 428A.21; 452.25, subdivision 2.50 3; 462A.071, subdivision 6; 469.034, subdivision 2; 2.51 469.1734, subdivision 6; 469.174, by adding a 2.52 subdivision; 469.176, by adding subdivisions; 2.53 469.1761, by adding a subdivision; 469.1792, as 2.54 amended; 471.342, subdivisions 3, 5, by adding a 2.55 subdivision; 473.39, by adding a subdivision; 473.843, 2.56 subdivisions 3, 5; 473F.02, subdivision 7; 473F.08, by 2.57 adding subdivisions; 474A.131, subdivision 1; 475.52, 2.58 subdivisions 1, 3, 4; 477A.011, subdivision 3; 2.59 477A.016; 477A.11, subdivision 4, by adding a 2.60 subdivision; 477A.12, subdivisions 1, 2; 477A.14, 2.61 subdivision 1; 480B.01, subdivisions 1, 10; 504B.215, 2.62 by adding a subdivision; Minnesota Statutes 2003 2.63 Supplement, sections 116J.994, subdivisions 4, 9; 2.64 123B.53, subdivision 4; 126C.17, subdivisions 7, 9; 2.65 168A.05, subdivision 1a; 270.30, subdivision 8; 2.66 270B.12, subdivision 13; 272.02, subdivisions 47, 56; 2.67 273.11, subdivision 1a; 273.124, subdivision 1; 2.68 273.13, subdivisions 23, 25; 274.014, subdivision 3; 2.69 275.025, subdivision 1; 275.065, subdivision 3; 2.70 276.112; 289A.02, subdivision 7; 289A.08, subdivision 2.71 16; 289A.19, subdivision 4; 289A.20, subdivision 4; 3.1 289A.40, subdivision 2; 290.01, subdivisions 7, 19, 3.2 19a, 19b, 19c, 19d, 31; 290.06, subdivision 2c; 3.3 290.0674, subdivision 1; 290.091, subdivision 2; 3.4 290A.03, subdivision 15; 290C.10; 291.005, subdivision 3.5 1; 297A.668, subdivisions 1, 3, 5; 297A.669, 3.6 subdivision 16; 297A.68, subdivisions 2, 5, 39; 3.7 297A.70, subdivision 8; 297A.99, subdivision 5, 12; 3.8 297B.03; 297F.08, subdivision 12; 297F.09, 3.9 subdivisions 1, 2; 298.223, subdivision 1; 298.27; 3.10 298.75, subdivision 1; 349.12, subdivision 25; 373.01, 3.11 subdivision 3; 373.40, subdivision 1; 403.21, 3.12 subdivision 8; 403.27, subdivisions 1, 3; 403.31, 3.13 subdivision 6; 410.32; 412.301; 469.174, subdivision 3.14 10; 469.175, subdivisions 1, 4, 6; 469.176, 3.15 subdivision 1c; 469.310, subdivision 11; 469.330, 3.16 subdivision 11; 469.335; 469.337; 475.521, subdivision 3.17 4; 475.58, subdivision 3b; 477A.011, subdivisions 34, 3.18 36; 477A.013, subdivisions 8, 9; 477A.03, subdivisions 3.19 2a, 2b; Laws 1986, chapter 379, section 1; Laws 1986, 3.20 chapter 379, section 2, subdivision 1; Laws 1991, 3.21 chapter 291, article 8, section 27, subdivision 4; 3.22 Laws 1991, chapter 291, article 8, section 27, 3.23 subdivision 5; Laws 1996, chapter 471, article 2, 3.24 section 29; Laws 1998, chapter 389, article 3, section 3.25 41; Laws 1998, chapter 389, article 3, section 42, 3.26 subdivision 2, as amended; Laws 1998, chapter 389, 3.27 article 8, section 43, subdivision 3; Laws 1998, 3.28 chapter 389, article 8, section 43, subdivision 4; 3.29 Laws 1998, chapter 389, article 11, section 19, 3.30 subdivision 3; Laws 1998, chapter 389, article 11, 3.31 section 24, subdivision 1; Laws 1998, chapter 389, 3.32 article 11, section 24, subdivision 2; Laws 1999, 3.33 chapter 243, article 4, section 18, subdivision 1; 3.34 Laws 1999, chapter 243, article 4, section 18, 3.35 subdivision 3; Laws 1999, chapter 243, article 4, 3.36 section 18, subdivision 4; Laws 2001, First Special 3.37 Session chapter 5, article 12, section 67; Laws 2001, 3.38 First Special Session chapter 5, article 12, section 3.39 95; Laws 2002, chapter 377, article 12, section 16, 3.40 subdivision 1; Laws 2003, chapter 127, article 12, 3.41 section 38; Laws 2003, First Special Session chapter 3.42 21, article 4, section 12, subdivision 11; Laws 2003, 3.43 First Special Session chapter 21, article 5, section 3.44 13; Laws 2003, First Special Session chapter 21, 3.45 article 6, section 9; proposing coding for new law in 3.46 Minnesota Statutes, chapters 174; 270; 273; 278; 290; 3.47 290C; 297F; 298; 325D; 325F; 469; 473; repealing 3.48 Minnesota Statutes 2002, sections 273.19, subdivision 3.49 5; 274.05; 275.15; 283.07; 289A.26, subdivision 2a; 3.50 289A.60, subdivision 21; 290.191, subdivision 4; 3.51 295.55, subdivision 4; 295.60, subdivision 4; 297a.99, 3.52 subdivision 13; 297E.12, subdivision 10; 297F.09, 3.53 subdivision 7; 297G.09, subdivision 6; 297I.35, 3.54 subdivision 2; 297I.85, subdivision 7; 298.01, 3.55 subdivisions 3c, 3d, 4d, 4e; 298.017; Minnesota 3.56 Statutes 2003 Supplement, sections 270.30, subdivision 3.57 1; 298.227; Laws 1975, chapter 287, section 5; Laws 3.58 2003, chapter 127, article 9, section 9, subdivision 3.59 4; Minnesota Rules, parts 8093.2000; 8093.3000; 3.60 8130.0110, subpart 4; 8130.0200, subparts 5, 6; 3.61 8130.0400, subpart 9; 8130.1200, subparts 5, 6; 3.62 8130.2900; 8130.3100, subpart 1; 8130.4000, subparts 3.63 1, 2; 8130.4200, subpart 1; 8130.4400, subpart 3; 3.64 8130.5200; 8130.5600, subpart 3; 8130.5800, subpart 5; 3.65 8130.7300, subpart 5; 8130.8800, subpart 4. 3.66 BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA: 3.67 ARTICLE 1 3.68 INCOME TAX 4.1 Section 1. Minnesota Statutes 2003 Supplement, section 4.2 289A.02, subdivision 7, is amended to read: 4.3 Subd. 7. [INTERNAL REVENUE CODE.] Unless specifically 4.4 defined otherwise, "Internal Revenue Code" means the Internal 4.5 Revenue Code of 1986, as amended throughJune 15, 2003November 4.6 11, 2003. 4.7[EFFECTIVE DATE.] This section is effective for actions 4.8 required on or after November 11, 2003. 4.9 Sec. 2. Minnesota Statutes 2002, section 289A.08, 4.10 subdivision 1, is amended to read: 4.11 Subdivision 1. [GENERALLY; INDIVIDUALS.] (a) A taxpayer 4.12 must file a return for each taxable year the taxpayer is 4.13 required to file a return under section 6012 of the Internal 4.14 Revenue Code, except that: 4.15 (1) an individual who is not a Minnesota resident for any 4.16 part of the year is not required to file a Minnesota income tax 4.17 return if the individual's gross income derived from Minnesota 4.18 sources as determined under sections 290.081, paragraph (a), and 4.19 290.17, is less than the filing requirements for a single 4.20 individual who is a full year resident of Minnesota; and 4.21 (2) an individual who is a Minnesota resident is not 4.22 required to file a Minnesota income tax return if the 4.23 individual's gross income derived from Minnesota sources as 4.24 determined under section 290.17, less the amount of the 4.25 individual's gross income that consists of compensation paid to 4.26 members of the armed forces of the United States or United 4.27 Nations for active duty performed outside Minnesota, is less 4.28 than the filing requirements for a single individual who is a 4.29 full-year resident of Minnesota. 4.30 (b) The decedent's final income tax return, and other 4.31 income tax returns for prior years where the decedent had gross 4.32 income in excess of the minimum amount at which an individual is 4.33 required to file and did not file, must be filed by the 4.34 decedent's personal representative, if any. If there is no 4.35 personal representative, the return or returns must be filed by 4.36 the transferees, as defined in section 289A.38, subdivision 13, 5.1 who receive property of the decedent. 5.2 (c) The term "gross income," as it is used in this section, 5.3 has the same meaning given it in section 290.01, subdivision 20. 5.4[EFFECTIVE DATE.] This section is effective for taxable 5.5 years beginning after December 31, 2003. 5.6 Sec. 3. Minnesota Statutes 2002, section 289A.39, 5.7 subdivision 1, is amended to read: 5.8 Subdivision 1. [EXTENSIONS FOR SERVICE MEMBERS.] (a) The 5.9 limitations of time provided by this chapter, chapter 290 5.10 relating to income taxes, chapter 271 relating to the Tax Court 5.11 for filing returns, paying taxes, claiming refunds, commencing 5.12 action thereon, appealing to the Tax Court from orders relating 5.13 to income taxes, and the filing of petitions under chapter 278 5.14 that would otherwise be dueMay 15, 1996May 1, 2004, and 5.15 appealing to the Supreme Court from decisions of the Tax Court 5.16 relating to income taxes are extended, as provided in section 5.17 7508 of the Internal Revenue Code. 5.18 (b) If a member of the National Guard or reserves is called 5.19 to active duty in the armed forces, the limitations of time 5.20 provided by this chapter and chapters 290 and 290A relating to 5.21 income taxes and claims for property tax refunds are extended by 5.22 the following period of time: 5.23 (1) in the case of an individual whose active service is in 5.24 the United States, six months; or 5.25 (2) in the case of an individual whose active service 5.26 includes service abroad, the period of initial service plus six 5.27 months. 5.28 Nothing in this paragraph reduces the time within which an 5.29 act is required or permitted under paragraph (a). 5.30 (c) If an individual entitled to the benefit of paragraph 5.31 (a) files a return during the period disregarded under paragraph 5.32 (a), interest must be paid on an overpayment or refundable 5.33 credit from the due date of the return, notwithstanding section 5.34 289A.56, subdivision 2. 5.35 (d) The provisions of this subdivision apply to the spouse 5.36 of an individual entitled to the benefits of this subdivision 6.1 with respect to a joint return filed by the spouses. 6.2[EFFECTIVE DATE.] This section is effective for taxable 6.3 years beginning after December 31, 2002, and for property taxes 6.4 payable after 2003. 6.5 Sec. 4. Minnesota Statutes 2003 Supplement, section 6.6 290.01, subdivision 7, is amended to read: 6.7 Subd. 7. [RESIDENT.] (a) The term "resident" means any 6.8 individual domiciled in Minnesota, except that an individual is 6.9 not a "resident" for the period of time that the individual is 6.10either:6.11(1) on active duty stationed outside of Minnesota while in6.12the armed forces of the United States or the United Nations; or6.13(2)a "qualified individual" as defined in section 6.14 911(d)(1) of the Internal Revenue Code, if the qualified 6.15 individual notifies the county within three months of moving out 6.16 of the country that homestead status be revoked for the 6.17 Minnesota residence of the qualified individual, and the 6.18 property is not classified as a homestead while the individual 6.19 remains a qualified individual. 6.20 (b) "Resident" also means any individual domiciled outside 6.21 the state who maintains a place of abode in the state and spends 6.22 in the aggregate more than one-half of the tax year in 6.23 Minnesota, unless: 6.24 (1) the individual or the spouse of the individual is in 6.25 the armed forces of the United States; or 6.26 (2) the individual is covered under the reciprocity 6.27 provisions in section 290.081. 6.28 For purposes of this subdivision, presence within the state 6.29 for any part of a calendar day constitutes a day spent in the 6.30 state. Individuals shall keep adequate records to substantiate 6.31 the days spent outside the state. 6.32 The term "abode" means a dwelling maintained by an 6.33 individual, whether or not owned by the individual and whether 6.34 or not occupied by the individual, and includes a dwelling place 6.35 owned or leased by the individual's spouse. 6.36 (c) Neither the commissioner nor any court shall consider 7.1 charitable contributions made by an individual within or without 7.2 the state in determining if the individual is domiciled in 7.3 Minnesota. 7.4[EFFECTIVE DATE.] This section is effective for taxable 7.5 years beginning after December 31, 2003. 7.6 Sec. 5. Minnesota Statutes 2003 Supplement, section 7.7 290.01, subdivision 19, is amended to read: 7.8 Subd. 19. [NET INCOME.] The term "net income" means the 7.9 federal taxable income, as defined in section 63 of the Internal 7.10 Revenue Code of 1986, as amended through the date named in this 7.11 subdivision, incorporating any elections made by the taxpayer in 7.12 accordance with the Internal Revenue Code in determining federal 7.13 taxable income for federal income tax purposes, and with the 7.14 modifications provided in subdivisions 19a to 19f. 7.15 In the case of a regulated investment company or a fund 7.16 thereof, as defined in section 851(a) or 851(g) of the Internal 7.17 Revenue Code, federal taxable income means investment company 7.18 taxable income as defined in section 852(b)(2) of the Internal 7.19 Revenue Code, except that: 7.20 (1) the exclusion of net capital gain provided in section 7.21 852(b)(2)(A) of the Internal Revenue Code does not apply; 7.22 (2) the deduction for dividends paid under section 7.23 852(b)(2)(D) of the Internal Revenue Code must be applied by 7.24 allowing a deduction for capital gain dividends and 7.25 exempt-interest dividends as defined in sections 852(b)(3)(C) 7.26 and 852(b)(5) of the Internal Revenue Code; and 7.27 (3) the deduction for dividends paid must also be applied 7.28 in the amount of any undistributed capital gains which the 7.29 regulated investment company elects to have treated as provided 7.30 in section 852(b)(3)(D) of the Internal Revenue Code. 7.31 The net income of a real estate investment trust as defined 7.32 and limited by section 856(a), (b), and (c) of the Internal 7.33 Revenue Code means the real estate investment trust taxable 7.34 income as defined in section 857(b)(2) of the Internal Revenue 7.35 Code. 7.36 The net income of a designated settlement fund as defined 8.1 in section 468B(d) of the Internal Revenue Code means the gross 8.2 income as defined in section 468B(b) of the Internal Revenue 8.3 Code. 8.4 The provisions of sections 1113(a), 1117, 1206(a), 1313(a), 8.5 1402(a), 1403(a), 1443, 1450, 1501(a), 1605, 1611(a), 1612, 8.6 1616, 1617, 1704(l), and 1704(m) of the Small Business Job 8.7 Protection Act, Public Law 104-188, the provisions of Public Law 8.8 104-117, the provisions of sections 313(a) and (b)(1), 602(a), 8.9 913(b), 941, 961, 971, 1001(a) and (b), 1002, 1003, 1012, 1013, 8.10 1014, 1061, 1062, 1081, 1084(b), 1086, 1087, 1111(a), 1131(b) 8.11 and (c), 1211(b), 1213, 1530(c)(2), 1601(f)(5) and (h), and 8.12 1604(d)(1) of the Taxpayer Relief Act of 1997, Public Law 8.13 105-34, the provisions of section 6010 of the Internal Revenue 8.14 Service Restructuring and Reform Act of 1998, Public Law 8.15 105-206, the provisions of section 4003 of the Omnibus 8.16 Consolidated and Emergency Supplemental Appropriations Act, 8.17 1999, Public Law 105-277, and the provisions of section 318 of 8.18 the Consolidated Appropriation Act of 2001, Public Law 106-554, 8.19 shall become effective at the time they become effective for 8.20 federal purposes. 8.21 The Internal Revenue Code of 1986, as amended through 8.22 December 31, 1996, shall be in effect for taxable years 8.23 beginning after December 31, 1996. 8.24 The provisions of sections 202(a) and (b), 221(a), 225, 8.25 312, 313, 913(a), 934, 962, 1004, 1005, 1052, 1063, 1084(a) and 8.26 (c), 1089, 1112, 1171, 1204, 1271(a) and (b), 1305(a), 1306, 8.27 1307, 1308, 1309, 1501(b), 1502(b), 1504(a), 1505, 1527, 1528, 8.28 1530, 1601(d), (e), (f), and (i) and 1602(a), (b), (c), and (e) 8.29 of the Taxpayer Relief Act of 1997, Public Law 105-34, the 8.30 provisions of sections 6004, 6005, 6012, 6013, 6015, 6016, 7002, 8.31 and 7003 of the Internal Revenue Service Restructuring and 8.32 Reform Act of 1998, Public Law 105-206, the provisions of 8.33 section 3001 of the Omnibus Consolidated and Emergency 8.34 Supplemental Appropriations Act, 1999, Public Law 105-277, the 8.35 provisions of section 3001 of the Miscellaneous Trade and 8.36 Technical Corrections Act of 1999, Public Law 106-36,andthe 9.1 provisions of section 316 of the Consolidated Appropriation Act 9.2 of 2001, Public Law 106-554, and the provision of section 101 of 9.3 the Military Family Tax Relief Act of 2003, Public Law 108-121, 9.4 shall become effective at the time they become effective for 9.5 federal purposes. 9.6 The Internal Revenue Code of 1986, as amended through 9.7 December 31, 1997, shall be in effect for taxable years 9.8 beginning after December 31, 1997. 9.9 The provisions of sections 5002, 6009, 6011, and 7001 of 9.10 the Internal Revenue Service Restructuring and Reform Act of 9.11 1998, Public Law 105-206, the provisions of section 9010 of the 9.12 Transportation Equity Act for the 21st Century, Public Law 9.13 105-178, the provisions of sections 1004, 4002, and 5301 of the 9.14 Omnibus Consolidation and Emergency Supplemental Appropriations 9.15 Act, 1999, Public Law 105-277, the provision of section 303 of 9.16 the Ricky Ray Hemophilia Relief Fund Act of 1998, Public Law 9.17 105-369, the provisions of sections 532, 534, 536, 537, and 538 9.18 of the Ticket to Work and Work Incentives Improvement Act of 9.19 1999, Public Law 106-170, the provisions of the Installment Tax 9.20 Correction Act of 2000, Public Law 106-573, and the provisions 9.21 of section 309 of the Consolidated Appropriation Act of 2001, 9.22 Public Law 106-554, shall become effective at the time they 9.23 become effective for federal purposes. 9.24 The Internal Revenue Code of 1986, as amended through 9.25 December 31, 1998, shall be in effect for taxable years 9.26 beginning after December 31, 1998. 9.27 The provisions of the FSC Repeal and Extraterritorial 9.28 Income Exclusion Act of 2000, Public Law 106-519, and the 9.29 provision of section 412 of the Job Creation and Worker 9.30 Assistance Act of 2002, Public Law 107-147, shall become 9.31 effective at the time it became effective for federal purposes. 9.32 The Internal Revenue Code of 1986, as amended through 9.33 December 31, 1999, shall be in effect for taxable years 9.34 beginning after December 31, 1999. The provisions of sections 9.35 306 and 401 of the Consolidated Appropriation Act of 2001, 9.36 Public Law 106-554, and the provision of section 632(b)(2)(A) of 10.1 the Economic Growth and Tax Relief Reconciliation Act of 2001, 10.2 Public Law 107-16, and provisions of sections 101 and 402 of the 10.3 Job Creation and Worker Assistance Act of 2002, Public Law 10.4 107-147, shall become effective at the same time it became 10.5 effective for federal purposes. 10.6 The Internal Revenue Code of 1986, as amended through 10.7 December 31, 2000, shall be in effect for taxable years 10.8 beginning after December 31, 2000. The provisions of sections 10.9 659a and 671 of the Economic Growth and Tax Relief 10.10 Reconciliation Act of 2001, Public Law 107-16, the provisions of 10.11 sections 104, 105, and 111 of the Victims of Terrorism Tax 10.12 Relief Act of 2001, Public Law 107-134,andthe provisions of 10.13 sections 201, 403, 413, and 606 of the Job Creation and Worker 10.14 Assistance Act of 2002, Public Law 107-147, and the provision of 10.15 section 102 of the Military Family Tax Relief Act of 2003, 10.16 Public Law 108-121, shall become effective at the same time it 10.17 became effective for federal purposes. 10.18 The Internal Revenue Code of 1986, as amended through March 10.19 15, 2002, shall be in effect for taxable years beginning after 10.20 December 31, 2001. 10.21 The provisions of sections 101 and 102 of the Victims of 10.22 Terrorism Tax Relief Act of 2001, Public Law 107-134, shall 10.23 become effective at the same time it becomes effective for 10.24 federal purposes. 10.25 The Internal Revenue Code of 1986, as amended through June 10.26 15, 2003, shall be in effect for taxable years beginning after 10.27 December 31, 2002. The provisions of section 201 of the Jobs 10.28 and Growth Tax Relief and Reconciliation Act of 2003,H.R. 2, if10.29it is enacted into lawPublic Law 108-27, and the provisions of 10.30 sections 103, 106, 108, 109, and 110 of the Military Family Tax 10.31 Relief Act of 2003, Public Law 108-121, are effective at the 10.32 same time it became effective for federal purposes. 10.33 The Internal Revenue Code of 1986, as amended through 10.34 November 11, 2003, shall be in effect for taxable years 10.35 beginning after December 31, 2003. 10.36 Except as otherwise provided, references to the Internal 11.1 Revenue Code in subdivisions 19a to 19g mean the code in effect 11.2 for purposes of determining net income for the applicable year. 11.3[EFFECTIVE DATE.] This section is effective the day 11.4 following final enactment. 11.5 Sec. 6. Minnesota Statutes 2003 Supplement, section 11.6 290.01, subdivision 19a, is amended to read: 11.7 Subd. 19a. [ADDITIONS TO FEDERAL TAXABLE INCOME.] For 11.8 individuals, estates, and trusts, there shall be added to 11.9 federal taxable income: 11.10 (1)(i) interest income on obligations of any state other 11.11 than Minnesota or a political or governmental subdivision, 11.12 municipality, or governmental agency or instrumentality of any 11.13 state other than Minnesota exempt from federal income taxes 11.14 under the Internal Revenue Code or any other federal statute; 11.15 and 11.16 (ii) exempt-interest dividends as defined in section 11.17 852(b)(5) of the Internal Revenue Code, except the portion of 11.18 the exempt-interest dividends derived from interest income on 11.19 obligations of the state of Minnesota or its political or 11.20 governmental subdivisions, municipalities, governmental agencies 11.21 or instrumentalities, but only if the portion of the 11.22 exempt-interest dividends from such Minnesota sources paid to 11.23 all shareholders represents 95 percent or more of the 11.24 exempt-interest dividends that are paid by the regulated 11.25 investment company as defined in section 851(a) of the Internal 11.26 Revenue Code, or the fund of the regulated investment company as 11.27 defined in section 851(g) of the Internal Revenue Code, making 11.28 the payment; and 11.29 (iii) for the purposes of items (i) and (ii), interest on 11.30 obligations of an Indian tribal government described in section 11.31 7871(c) of the Internal Revenue Code shall be treated as 11.32 interest income on obligations of the state in which the tribe 11.33 is located; 11.34 (2) the amount of income taxes paid or accrued within the 11.35 taxable year under this chapter and income taxes paid to any 11.36 other state or to any province or territory of Canada, to the 12.1 extent allowed as a deduction under section 63(d) of the 12.2 Internal Revenue Code, but the addition may not be more than the 12.3 amount by which the itemized deductions as allowed under section 12.4 63(d) of the Internal Revenue Code exceeds the amount of the 12.5 standard deduction as defined in section 63(c) of the Internal 12.6 Revenue Code. For the purpose of this paragraph, the 12.7 disallowance of itemized deductions under section 68 of the 12.8 Internal Revenue Code of 1986, income tax is the last itemized 12.9 deduction disallowed; 12.10 (3) the capital gain amount of a lump sum distribution to 12.11 which the special tax under section 1122(h)(3)(B)(ii) of the Tax 12.12 Reform Act of 1986, Public Law 99-514, applies; 12.13 (4) the amount of income taxes paid or accrued within the 12.14 taxable year under this chapter and income taxes paid to any 12.15 other state or any province or territory of Canada, to the 12.16 extent allowed as a deduction in determining federal adjusted 12.17 gross income. For the purpose of this paragraph, income taxes 12.18 do not include the taxes imposed by sections 290.0922, 12.19 subdivision 1, paragraph (b), 290.9727, 290.9728, and 290.9729; 12.20 (5) the amount of expense, interest, or taxes disallowed 12.21 pursuant to section 290.10; 12.22 (6) the amount of a partner's pro rata share of net income 12.23 which does not flow through to the partner because the 12.24 partnership elected to pay the tax on the income under section 12.25 6242(a)(2) of the Internal Revenue Code;and12.26 (7) 80 percent of the depreciation deduction allowed under 12.27 section 168(k) of the Internal Revenue Code. For purposes of 12.28 this clause, if the taxpayer has an activity that in the taxable 12.29 year generates a deduction for depreciation under section 168(k) 12.30 and the activity generates a loss for the taxable year that the 12.31 taxpayer is not allowed to claim for the taxable year, "the 12.32 depreciation allowed under section 168(k)" for the taxable year 12.33 is limited to excess of the depreciation claimed by the activity 12.34 under section 168(k) over the amount of the loss from the 12.35 activity that is not allowed in the taxable year. In succeeding 12.36 taxable years when the losses not allowed in the taxable year 13.1 are allowed, the depreciation under section 168(k) is allowed; 13.2 (8) the amount of mortgage interest paid on a residential 13.3 home with a market value greater than $500,000 as determined 13.4 under section 273.11, that exceeds $25,000 to the extent 13.5 deducted from federal taxable income; and 13.6 (9) the amount of expenses disallowed under section 290.10, 13.7 subdivision 2. 13.8[EFFECTIVE DATE.] This section is effective for taxable 13.9 years beginning after December 31, 2003. 13.10 Sec. 7. Minnesota Statutes 2003 Supplement, section 13.11 290.01, subdivision 19b, is amended to read: 13.12 Subd. 19b. [SUBTRACTIONS FROM FEDERAL TAXABLE INCOME.] For 13.13 individuals, estates, and trusts, there shall be subtracted from 13.14 federal taxable income: 13.15 (1) interest income on obligations of any authority, 13.16 commission, or instrumentality of the United States to the 13.17 extent includable in taxable income for federal income tax 13.18 purposes but exempt from state income tax under the laws of the 13.19 United States; 13.20 (2) if included in federal taxable income, the amount of 13.21 any overpayment of income tax to Minnesota or to any other 13.22 state, for any previous taxable year, whether the amount is 13.23 received as a refund or as a credit to another taxable year's 13.24 income tax liability; 13.25 (3) the amount paid to others, less the amount used to 13.26 claim the credit allowed under section 290.0674, not to exceed 13.27 $1,625 for each qualifying child in grades kindergarten to 6 and 13.28 $2,500 for each qualifying child in grades 7 to 12, for tuition, 13.29 textbooks, and transportation of each qualifying child in 13.30 attending an elementary or secondary school situated in 13.31 Minnesota, North Dakota, South Dakota, Iowa, or Wisconsin, 13.32 wherein a resident of this state may legally fulfill the state's 13.33 compulsory attendance laws, which is not operated for profit, 13.34 and which adheres to the provisions of the Civil Rights Act of 13.35 1964 and chapter 363A. For the purposes of this clause, 13.36 "tuition" includes fees or tuition as defined in section 14.1 290.0674, subdivision 1, clause (1). As used in this clause, 14.2 "textbooks" includes books and other instructional materials and 14.3 equipment purchased or leased for use in elementary and 14.4 secondary schools in teaching only those subjects legally and 14.5 commonly taught in public elementary and secondary schools in 14.6 this state. Equipment expenses qualifying for deduction 14.7 includes expenses as defined and limited in section 290.0674, 14.8 subdivision 1, clause (3). "Textbooks" does not include 14.9 instructional books and materials used in the teaching of 14.10 religious tenets, doctrines, or worship, the purpose of which is 14.11 to instill such tenets, doctrines, or worship, nor does it 14.12 include books or materials for, or transportation to, 14.13 extracurricular activities including sporting events, musical or 14.14 dramatic events, speech activities, driver's education, or 14.15 similar programs. For purposes of the subtraction provided by 14.16 this clause, "qualifying child" has the meaning given in section 14.17 32(c)(3) of the Internal Revenue Code; 14.18 (4) income as provided under section 290.0802; 14.19 (5) to the extent included in federal adjusted gross 14.20 income, income realized on disposition of property exempt from 14.21 tax under section 290.491; 14.22 (6) to the extent included in federal taxable income, 14.23 postservice benefits for youth community service under section 14.24 124D.42 for volunteer service under United States Code, title 14.25 42, sections 12601 to 12604; 14.26 (7) to the extent not deducted in determining federal 14.27 taxable income by an individual who does not itemize deductions 14.28 for federal income tax purposes for the taxable year, an amount 14.29 equal to 50 percent of the excess of charitable contributions 14.30 allowable as a deduction for the taxable year under section 14.31 170(a) of the Internal Revenue Code over $500; 14.32 (8) for taxable years beginning before January 1, 2008, the 14.33 amount of the federal small ethanol producer credit allowed 14.34 under section 40(a)(3) of the Internal Revenue Code which is 14.35 included in gross income under section 87 of the Internal 14.36 Revenue Code; 15.1 (9) for individuals who are allowed a federal foreign tax 15.2 credit for taxes that do not qualify for a credit under section 15.3 290.06, subdivision 22, an amount equal to the carryover of 15.4 subnational foreign taxes for the taxable year, but not to 15.5 exceed the total subnational foreign taxes reported in claiming 15.6 the foreign tax credit. For purposes of this clause, "federal 15.7 foreign tax credit" means the credit allowed under section 27 of 15.8 the Internal Revenue Code, and "carryover of subnational foreign 15.9 taxes" equals the carryover allowed under section 904(c) of the 15.10 Internal Revenue Code minus national level foreign taxes to the 15.11 extent they exceed the federal foreign tax credit; 15.12 (10) in each of the five tax years immediately following 15.13 the tax year in which an addition is required under subdivision 15.14 19a, clause (7), an amount equal to one-fifth of the delayed 15.15 depreciation. For purposes of this clause, "delayed 15.16 depreciation" means the amount of the addition made by the 15.17 taxpayer under subdivision 19a, clause (7), minus the positive 15.18 value of any net operating loss under section 172 of the 15.19 Internal Revenue Code generated for the tax year of the 15.20 addition. The resulting delayed depreciation cannot be less 15.21 than zero;and15.22 (11) job opportunity building zone income as provided under 15.23 section 469.316; 15.24 (12) to the extent included in federal taxable income, an 15.25 amount, not to exceed $10,000, equal to an individual's 15.26 unreimbursed expenses for travel, lodging, and lost wages net of 15.27 sick pay related to the individual's donation of one or more of 15.28 the individual's organs to another person for human organ 15.29 transplantation. For purposes of determining the extent to 15.30 which expenses are included in federal taxable income, expenses 15.31 qualifying under this paragraph are the first expenses 15.32 considered in determining the medical expense deduction allowed 15.33 under section 213 of the Internal Revenue Code. For purposes of 15.34 this clause, "organ" means all or part of an individual's liver, 15.35 pancreas, kidney, intestine, lung, or bone marrow, and "human 15.36 organ transplantation" means the medical procedure by which 16.1 transfer of a human organ is made from the body of one person to 16.2 the body of another person. An individual may claim the 16.3 subtraction in this clause for each instance of organ donation 16.4 for transplantation, during the taxable year in which the 16.5 expenses or lost wages occur; 16.6 (13) the amount of compensation paid to members of the 16.7 Minnesota National Guard or other reserve components of the 16.8 United States military for active service performed in 16.9 Minnesota, excluding compensation for services performed under 16.10 the Active Guard Reserve (AGR) program. For purposes of this 16.11 clause, "active service" means (i) state active service as 16.12 defined in section 190.05, subdivision 5a, clause (1); (ii) 16.13 federally funded state active service as defined in section 16.14 190.05, subdivision 5b; or (iii) federal active service as 16.15 defined in section 190.05, subdivision 5c, but "active service" 16.16 excludes services performed exclusively for purposes of basic 16.17 combat training, advanced individual training, annual training, 16.18 and periodic inactive duty training; special training 16.19 periodically made available to reserve members; and service 16.20 performed in accordance with section 190.08, subdivision 3; and 16.21 (14) the amount of compensation paid to members of the 16.22 armed forces of the United States or United Nations for active 16.23 duty performed outside Minnesota. 16.24[EFFECTIVE DATE.] This section is effective for taxable 16.25 years beginning after December 31, 2003. 16.26 Sec. 8. Minnesota Statutes 2003 Supplement, section 16.27 290.01, subdivision 19c, is amended to read: 16.28 Subd. 19c. [CORPORATIONS; ADDITIONS TO FEDERAL TAXABLE 16.29 INCOME.] For corporations, there shall be added to federal 16.30 taxable income: 16.31 (1) the amount of any deduction taken for federal income 16.32 tax purposes for income, excise, or franchise taxes based on net 16.33 income or related minimum taxes, including but not limited to 16.34 the tax imposed under section 290.0922, paid by the corporation 16.35 to Minnesota, another state, a political subdivision of another 16.36 state, the District of Columbia, or any foreign country or 17.1 possession of the United States; 17.2 (2) interest not subject to federal tax upon obligations 17.3 of: the United States, its possessions, its agencies, or its 17.4 instrumentalities; the state of Minnesota or any other state, 17.5 any of its political or governmental subdivisions, any of its 17.6 municipalities, or any of its governmental agencies or 17.7 instrumentalities; the District of Columbia; or Indian tribal 17.8 governments; 17.9 (3) exempt-interest dividends received as defined in 17.10 section 852(b)(5) of the Internal Revenue Code; 17.11 (4) the amount of any net operating loss deduction taken 17.12 for federal income tax purposes under section 172 or 832(c)(10) 17.13 of the Internal Revenue Code or operations loss deduction under 17.14 section 810 of the Internal Revenue Code; 17.15 (5) the amount of any special deductions taken for federal 17.16 income tax purposes under sections 241 to 247 of the Internal 17.17 Revenue Code; 17.18 (6) losses from the business of mining, as defined in 17.19 section 290.05, subdivision 1, clause (a), that are not subject 17.20 to Minnesota income tax; 17.21 (7) the amount of any capital losses deducted for federal 17.22 income tax purposes under sections 1211 and 1212 of the Internal 17.23 Revenue Code; 17.24 (8) the exempt foreign trade income of a foreign sales 17.25 corporation under sections 921(a) and 291 of the Internal 17.26 Revenue Code; 17.27 (9) the amount of percentage depletion deducted under 17.28 sections 611 through 614 and 291 of the Internal Revenue Code; 17.29 (10) for certified pollution control facilities placed in 17.30 service in a taxable year beginning before December 31, 1986, 17.31 and for which amortization deductions were elected under section 17.32 169 of the Internal Revenue Code of 1954, as amended through 17.33 December 31, 1985, the amount of the amortization deduction 17.34 allowed in computing federal taxable income for those 17.35 facilities; 17.36 (11) the amount of any deemed dividend from a foreign 18.1 operating corporation determined pursuant to section 290.17, 18.2 subdivision 4, paragraph (g); 18.3 (12) the amount of any environmental tax paid under section 18.4 59(a) of the Internal Revenue Code; 18.5 (13) the amount of a partner's pro rata share of net income 18.6 which does not flow through to the partner because the 18.7 partnership elected to pay the tax on the income under section 18.8 6242(a)(2) of the Internal Revenue Code; 18.9 (14) the amount of net income excluded under section 114 of 18.10 the Internal Revenue Code; 18.11 (15) any increase in subpart F income, as defined in 18.12 section 952(a) of the Internal Revenue Code, for the taxable 18.13 year when subpart F income is calculated without regard to the 18.14 provisions of section 614 of Public Law 107-147;and18.15 (16) 80 percent of the depreciation deduction allowed under 18.16 section 168(k) of the Internal Revenue Code. For purposes of 18.17 this clause, if the taxpayer has an activity that in the taxable 18.18 year generates a deduction for depreciation under section 168(k) 18.19 and the activity generates a loss for the taxable year that the 18.20 taxpayer is not allowed to claim for the taxable year, "the 18.21 depreciation allowed under section 168(k)" for the taxable year 18.22 is limited to excess of the depreciation claimed by the activity 18.23 under section 168(k) over the amount of the loss from the 18.24 activity that is not allowed in the taxable year. In succeeding 18.25 taxable years when the losses not allowed in the taxable year 18.26 are allowed, the depreciation under section 168(k) is allowed; 18.27 and 18.28 (17) the amount of expenses disallowed under section 18.29 290.10, subdivision 2. 18.30[EFFECTIVE DATE.] This section is effective for taxable 18.31 years beginning after December 31, 2003. 18.32 Sec. 9. Minnesota Statutes 2003 Supplement, section 18.33 290.01, subdivision 31, is amended to read: 18.34 Subd. 31. [INTERNAL REVENUE CODE.] Unless specifically 18.35 defined otherwise, "Internal Revenue Code" means the Internal 18.36 Revenue Code of 1986, as amended throughJune 15, 2003December 19.1 31, 2003. 19.2[EFFECTIVE DATE.] This section is effective the day 19.3 following final enactment except the changes incorporated by 19.4 federal changes are effective at the same times as the changes 19.5 were effective for federal purposes. 19.6 Sec. 10. Minnesota Statutes 2002, section 290.05, 19.7 subdivision 1, is amended to read: 19.8 Subdivision 1. [EXEMPT ENTITIES.] The following 19.9 corporations, individuals, estates, trusts, and organizations 19.10 shall be exempted from taxation under this chapter, provided 19.11 that every such person or corporation claiming exemption under 19.12 this chapter, in whole or in part, must establish to the 19.13 satisfaction of the commissioner the taxable status of any 19.14 income or activity: 19.15 (a) corporations, individuals, estates, and trusts engaged 19.16 in the business of mining or producing iron ore and other ores 19.17 the mining or production of which is subject to the occupation 19.18 tax imposed by section 298.01; but if any such corporation, 19.19 individual, estate, or trust engages in any other business or 19.20 activity or has income from any property not used in such 19.21 business it shall be subject to this tax computed on the net 19.22 income from such property or such other business or activity. 19.23 Royalty shall not be considered as income from the business of 19.24 mining or producing iron ore within the meaning of this section; 19.25 (b) the United States of America, the state of Minnesota or 19.26 any political subdivision of either agencies or 19.27 instrumentalities, whether engaged in the discharge of 19.28 governmental or proprietary functions;and19.29 (c) any insurance company; and 19.30 (d) a corporation engaged in the business of operating a 19.31 personal rapid transit system, as defined in section 297A.61, 19.32 subdivision 37, in this state, independent of any government 19.33 subsidies, but if the corporation engages in any other business 19.34 or activity or has income from any property not used in the 19.35 business of operating a personal rapid transit system, it is 19.36 subject to this tax computed on the net income from the property 20.1 or business or activity. 20.2[EFFECTIVE DATE.] This section is effective for taxable 20.3 years beginning after December 31, 2008. 20.4 Sec. 11. Minnesota Statutes 2003 Supplement, section 20.5 290.06, subdivision 2c, is amended to read: 20.6 Subd. 2c. [SCHEDULES OF RATES FOR INDIVIDUALS, ESTATES, 20.7 AND TRUSTS.] (a) The income taxes imposed by this chapter upon 20.8 married individuals filing joint returns and surviving spouses 20.9 as defined in section 2(a) of the Internal Revenue Code must be 20.10 computed by applying to their taxable net income the following 20.11 schedule of rates: 20.12 (1) On the first $25,680, 5.35 percent; 20.13 (2) On all over $25,680, but not over $102,030, 7.05 20.14 percent; 20.15 (3) On all over $102,030,7.858.0 percent. 20.16 Married individuals filing separate returns, estates, and 20.17 trusts must compute their income tax by applying the above rates 20.18 to their taxable income, except that the income brackets will be 20.19 one-half of the above amounts. 20.20 (b) The income taxes imposed by this chapter upon unmarried 20.21 individuals must be computed by applying to taxable net income 20.22 the following schedule of rates: 20.23 (1) On the first $17,570, 5.35 percent; 20.24 (2) On all over $17,570, but not over $57,710, 7.05 20.25 percent; 20.26 (3) On all over $57,710,7.858.0 percent. 20.27 (c) The income taxes imposed by this chapter upon unmarried 20.28 individuals qualifying as a head of household as defined in 20.29 section 2(b) of the Internal Revenue Code must be computed by 20.30 applying to taxable net income the following schedule of rates: 20.31 (1) On the first $21,630, 5.35 percent; 20.32 (2) On all over $21,630, but not over $86,910, 7.05 20.33 percent; 20.34 (3) On all over $86,910,7.858.0 percent. 20.35 (d) In lieu of a tax computed according to the rates set 20.36 forth in this subdivision, the tax of any individual taxpayer 21.1 whose taxable net income for the taxable year is less than an 21.2 amount determined by the commissioner must be computed in 21.3 accordance with tables prepared and issued by the commissioner 21.4 of revenue based on income brackets of not more than $100. The 21.5 amount of tax for each bracket shall be computed at the rates 21.6 set forth in this subdivision, provided that the commissioner 21.7 may disregard a fractional part of a dollar unless it amounts to 21.8 50 cents or more, in which case it may be increased to $1. 21.9 (e) An individual who is not a Minnesota resident for the 21.10 entire year must compute the individual's Minnesota income tax 21.11 as provided in this subdivision. After the application of the 21.12 nonrefundable credits provided in this chapter, the tax 21.13 liability must then be multiplied by a fraction in which: 21.14 (1) the numerator is the individual's Minnesota source 21.15 federal adjusted gross income as defined in section 62 of the 21.16 Internal Revenue Code and increased by the additions required 21.17 under section 290.01, subdivision 19a, clauses (1), (5), and 21.18 (6), and reduced by the subtraction under section 290.01, 21.19 subdivision 19b, clause (11), and the Minnesota assignable 21.20 portion of the subtraction for United States government interest 21.21 under section 290.01, subdivision 19b, clause (1), after 21.22 applying the allocation and assignability provisions of section 21.23 290.081, clause (a), or 290.17; and 21.24 (2) the denominator is the individual's federal adjusted 21.25 gross income as defined in section 62 of the Internal Revenue 21.26 Code of 1986, increased by the amounts specified in section 21.27 290.01, subdivision 19a, clauses (1), (5), and (6), and reduced 21.28 by the amounts specified in section 290.01, subdivision 19b, 21.29 clauses (1) and (11). 21.30[EFFECTIVE DATE.] This section is effective only if 21.31 sections 16 and 17 of this article are enacted for taxable years 21.32 beginning after December 31, 2004. 21.33 Sec. 12. Minnesota Statutes 2002, section 290.06, 21.34 subdivision 28, is amended to read: 21.35 Subd. 28. [CREDITREFUNDS FOR TRANSIT PASSES.]A taxpayer21.36 (a) An employer maytake a credit against the tax due under this22.1chapterclaim a refund equal to 30 percent of the expense 22.2 incurred by thetaxpayeremployer to provide transit passes, for 22.3 use in Minnesota, to employees of the taxpayer. 22.4 (b) As used in this subdivision, the following terms have 22.5 the meanings given: 22.6 (1) "employer" means an individual or entity subject to tax 22.7 under this chapter or an entity that is exempt from taxation 22.8 under section 290.05, but excluding entities enumerated in 22.9 section 290.05, subdivision 1, paragraph (b); and 22.10 (2) "transit pass" has the meaning given in section 22.11 132(f)(5)(A) of the Internal Revenue Code. 22.12 (c) If thetaxpayeremployer purchases the transit passes 22.13 from the transit system operator, and resells them to the 22.14 employees, thecreditrefund is based on the amount of the 22.15 difference between the price paid for the passes by the employer 22.16 and the amount charged to employees. 22.17 (d) The commissioner shall prescribe the forms for and the 22.18 manner in which the refund may be claimed. The commissioner 22.19 must provide for paying refunds at least quarterly. The 22.20 commissioner may set a minimum amount of qualifying expenses 22.21 that must be incurred before a refund may be claimed. 22.22 (e) An amount sufficient to pay the refunds required by 22.23 this subdivision is appropriated to the commissioner of revenue. 22.24[EFFECTIVE DATE.] This section is effective for transit 22.25 passes purchased after December 31, 2004. 22.26 Sec. 13. Minnesota Statutes 2002, section 290.06, is 22.27 amended by adding a subdivision to read: 22.28 Subd. 32. [REGIONAL INVESTMENT CREDIT.] (a) A credit is 22.29 allowed against the tax imposed by this chapter for investment 22.30 in a qualifying regional angel investment network fund. The 22.31 credit equals 25 percent of the taxpayer's investment made in 22.32 the fund for the taxable year, but not to exceed the lesser of: 22.33 (1) the liability for tax under this chapter; or 22.34 (2) the amount of the certificate under paragraph (c) 22.35 provided to the taxpayer by the fund. 22.36 (b) For purposes of this subdivision, a regional angel 23.1 investment network fund means a pool investment fund that: 23.2 (1) is organized as a limited liability company and 23.3 consists of members who are accredited investors within the 23.4 meaning of Regulation D of the Securities and Exchange 23.5 Commission, Code of Federal Regulations, title 17, section 23.6 230.501(a); and 23.7 (2) primarily makes equity investments in emerging and 23.8 expanding small businesses as defined by the Small Business 23.9 Administration, or cooperative associations as defined in 23.10 chapter 308B, that are located in local communities in Minnesota 23.11 outside of the metropolitan area as defined in section 473.121, 23.12 subdivision 2, and does not make investments in residential real 23.13 estate. 23.14 (c) Regional angel investment network funds may apply to 23.15 the commissioner of employment and economic development for 23.16 certification as a qualifying regional angel investment network 23.17 fund. The application must be in the form and made under 23.18 procedures specified by the commissioner of employment and 23.19 economic development. The commissioner of employment and 23.20 economic development may certify up to ten qualifying funds and 23.21 provide certificates entitling investors in the funds to credits 23.22 under this subdivision of up to $250,000 for each fund. The 23.23 commissioner of employment and economic development must not 23.24 issue a total amount of certificates for all funds of more than 23.25 $2,500,000. In awarding certificates under this paragraph, the 23.26 commissioner of employment and economic development shall 23.27 generally award them to qualified applicants in the order in 23.28 which the applications are received, but shall also seek to 23.29 certify funds that are broadly dispersed across the entire state 23.30 outside of the metropolitan area, as defined in section 473.121, 23.31 subdivision 2. 23.32 (d) The commissioner of revenue may require a taxpayer to 23.33 provide a copy of the credit certificate under paragraph (c) to 23.34 verify the taxpayer's entitlement to a credit under this 23.35 subdivision. 23.36 (e) If the amount of the credit under this subdivision for 24.1 any taxable year exceeds the limitation under paragraph (a), 24.2 clause (1), the excess is a credit carryover to each of the 15 24.3 succeeding taxable years. The entire amount of the excess 24.4 unused credit for the taxable year must be carried first to the 24.5 earliest of the taxable years to which the credit may be carried 24.6 and then to each successive year to which the credit may be 24.7 carried. The amount of the unused credit which may be added 24.8 under this paragraph may not exceed the taxpayer's liability for 24.9 tax for the taxable year. 24.10[EFFECTIVE DATE.] This section is effective the day 24.11 following final enactment, for taxable years beginning after 24.12 December 31, 2004. It applies to investments made after the 24.13 fund has been certified by the commissioner of employment and 24.14 economic development. 24.15 Sec. 14. Minnesota Statutes 2002, section 290.06, is 24.16 amended by adding a subdivision to read: 24.17 Subd. 33. [CARSHARING CREDIT.] (a) For purposes of this 24.18 subdivision, a "carsharing organization" means an organization 24.19 that: 24.20 (1) is described in section 501(c) of the Internal Revenue 24.21 Code; 24.22 (2) is comprised of members who purchase the use of a motor 24.23 vehicle from the organization; 24.24 (3) owns or leases a fleet of motor vehicles that are 24.25 available to members of the organization to pay for the use of a 24.26 vehicle on an hourly or per trip basis; and 24.27 (4) does not assign exclusive rights of use of specific 24.28 vehicles to individual members or allow individual members to 24.29 keep a vehicle in the member's sole possession. 24.30 (b) A taxpayer may take a credit against the tax due under 24.31 this chapter for the expenses incurred by the taxpayer to 24.32 purchase a membership and pay monthly dues to a carsharing 24.33 organization or to provide memberships and pay monthly dues to a 24.34 carsharing organization for employees of the taxpayer. The 24.35 amount of the credit is equal to the lesser of the actual cost 24.36 of the membership fee and the monthly dues, or $390. If an 25.1 employer purchases the membership or pays the monthly dues to 25.2 the nonprofit carsharing organization and resells the membership 25.3 to its employees or charges the monthly dues to its employees, 25.4 the credit allowed to the employer is the amount of the 25.5 difference between the amount paid by the employer and the 25.6 amount charged to the employee. 25.7 (c) A taxpayer who owns a parking facility that charges 25.8 customers an amount to park vehicles at the facility and 25.9 provides dedicated parking space at no charge to a nonprofit 25.10 carsharing organization to park the motor vehicles that are used 25.11 by the members of the organization on an hourly or per-trip 25.12 basis, may take a credit against the tax due under this chapter 25.13 for the value of the dedicated parking space provided to the 25.14 nonprofit carsharing organization. The value of the dedicated 25.15 parking space is equal to the lowest amount charged to customers 25.16 who pay to park at the facility calculated on an hourly, daily, 25.17 or other long-term rate that results in the lowest total cost. 25.18[EFFECTIVE DATE.] This section is effective for taxable 25.19 years beginning after December 31, 2004. 25.20 Sec. 15. Minnesota Statutes 2002, section 290.0674, 25.21 subdivision 2, is amended to read: 25.22 Subd. 2. [LIMITATIONS.] (a) For claimants with income not 25.23 greater than $33,500, the maximum credit allowed is $1,000per25.24 multiplied by the number of claimant's qualifyingchild and25.25$2,000 per familychildren in grades kindergarten through grade 25.26 12. No credit is allowed for education-related expenses for 25.27 claimants with income greater than $37,500. The maximum credit 25.28 perchildclaimant is reduced by $1 for each $4 of household 25.29 income over $33,500,and the maximum credit per family is25.30reduced by $2 for each $4 of household income over $33,500,but 25.31 in no case is the credit less than zero. 25.32 For purposes of this section "income" has the meaning given 25.33 in section 290.067, subdivision 2a. In the case of a married 25.34 claimant, a credit is not allowed unless a joint income tax 25.35 return is filed. 25.36 (b) For a nonresident or part-year resident, the credit 26.1 determined under subdivision 1 and the maximum credit amount in 26.2 paragraph (a) must be allocated using the percentage calculated 26.3 in section 290.06, subdivision 2c, paragraph (e). 26.4[EFFECTIVE DATE.] This section is effective for tax years 26.5 beginning after December 31, 2004. 26.6 Sec. 16. Minnesota Statutes 2003 Supplement, section 26.7 290.091, subdivision 2, is amended to read: 26.8 Subd. 2. [DEFINITIONS.] For purposes of the tax imposed by 26.9 this section, the following terms have the meanings given: 26.10 (a) "Alternative minimum taxable income" means the sum of 26.11 the following for the taxable year: 26.12 (1) the taxpayer's federal alternative minimum taxable 26.13 income as defined in section 55(b)(2) of the Internal Revenue 26.14 Code; 26.15 (2) the taxpayer's itemized deductions allowed in computing 26.16 federal alternative minimum taxable income, but excluding: 26.17 (i) the charitable contribution deduction under section 170 26.18 of the Internal Revenue Codeto the extent that the deduction26.19exceeds 1.0 percent of adjusted gross income, as defined in26.20section 62 of the Internal Revenue Code; 26.21 (ii) the medical expense deduction; 26.22 (iii) the casualty, theft, and disaster loss deduction;and26.23 (iv) the impairment-related work expenses of a disabled 26.24 person; and 26.25 (v) the amount of the exemption allowed the taxpayer under 26.26 section 151(c) of the Internal Revenue Code; 26.27 (3) for depletion allowances computed under section 613A(c) 26.28 of the Internal Revenue Code, with respect to each property (as 26.29 defined in section 614 of the Internal Revenue Code), to the 26.30 extent not included in federal alternative minimum taxable 26.31 income, the excess of the deduction for depletion allowable 26.32 under section 611 of the Internal Revenue Code for the taxable 26.33 year over the adjusted basis of the property at the end of the 26.34 taxable year (determined without regard to the depletion 26.35 deduction for the taxable year); 26.36 (4) to the extent not included in federal alternative 27.1 minimum taxable income, the amount of the tax preference for 27.2 intangible drilling cost under section 57(a)(2) of the Internal 27.3 Revenue Code determined without regard to subparagraph (E); 27.4 (5) to the extent not included in federal alternative 27.5 minimum taxable income, the amount of interest income as 27.6 provided by section 290.01, subdivision 19a, clause (1); and 27.7 (6) the amount of addition required by section 290.01, 27.8 subdivision 19a, clause (7); 27.9 less the sum of the amounts determined under the following: 27.10 (1) interest income as defined in section 290.01, 27.11 subdivision 19b, clause (1); 27.12 (2) an overpayment of state income tax as provided by 27.13 section 290.01, subdivision 19b, clause (2), to the extent 27.14 included in federal alternative minimum taxable income; 27.15 (3) the amount of investment interest paid or accrued 27.16 within the taxable year on indebtedness to the extent that the 27.17 amount does not exceed net investment income, as defined in 27.18 section 163(d)(4) of the Internal Revenue Code. Interest does 27.19 not include amounts deducted in computing federal adjusted gross 27.20 income; and 27.21 (4) amounts subtracted from federal taxable income as 27.22 provided by section 290.01, subdivision 19b, clauses (10)and27.23(11)to (12). 27.24 In the case of an estate or trust, alternative minimum 27.25 taxable income must be computed as provided in section 59(c) of 27.26 the Internal Revenue Code. 27.27 (b) "Investment interest" means investment interest as 27.28 defined in section 163(d)(3) of the Internal Revenue Code. 27.29 (c) "Tentative minimum tax" equals 6.4 percent of 27.30 alternative minimum taxable income after subtracting the 27.31 exemption amount determined under subdivision 3. 27.32 (d) "Regular tax" means the tax that would be imposed under 27.33 this chapter (without regard to this section and section 27.34 290.032), reduced by the sum of the nonrefundable credits 27.35 allowed under this chapter. 27.36 (e) "Net minimum tax" means the minimum tax imposed by this 28.1 section. 28.2[EFFECTIVE DATE.] This section is effective only if 28.3 sections 11 and 17 of this article are enacted for taxable years 28.4 beginning after December 31, 2004. 28.5 Sec. 17. Minnesota Statutes 2002, section 290.091, 28.6 subdivision 3, is amended to read: 28.7 Subd. 3. [EXEMPTION AMOUNT.] (a) For purposes of computing 28.8 the alternative minimum tax, the exemption amount isthe28.9exemption determined under section 55(d) of the Internal Revenue28.10Code, as amended through December 31, 1992, except that28.11alternative minimum taxable income as determined under this28.12section must be substituted in the computation of the phase out28.13under section 55(d)(3)$66,300 for married individuals filing 28.14 joint returns; and $33,150 for married individuals filing 28.15 separate returns, single individuals, and head of household 28.16 filers. 28.17 (b) The exemption amount determined under this subdivision 28.18 is reduced by an amount equal to 25 percent of the amount by 28.19 which the alternative minimum income exceeds $248,600 for 28.20 married individuals filing joint returns; and $124,300 for 28.21 married individuals filing separate returns, single individuals, 28.22 and head of household filers. 28.23 (c) For taxable years beginning after December 31, 2005, 28.24 the exemption amounts under paragraph (a), and the income 28.25 amounts in paragraph (b), must be adjusted for inflation. The 28.26 commissioner shall make the inflation adjustments in accordance 28.27 with section 1(f) of the Internal Revenue Code except that for 28.28 the purposes of this subdivision the percentage increase must be 28.29 determined from the year starting September 1, 2004, and ending 28.30 August 31, 2005, as the base year for adjusting for inflation 28.31 for the tax year beginning after December 31, 2005. The 28.32 determination of the commissioner under this subdivision is not 28.33 a rule under the Administrative Procedure Act. 28.34[EFFECTIVE DATE.] This section is effective only if 28.35 sections 11 and 16 of this article are enacted for taxable years 28.36 beginning after December 31, 2004. 29.1 Sec. 18. Minnesota Statutes 2002, section 290.10, is 29.2 amended to read: 29.3 290.10 [NONDEDUCTIBLE ITEMS.] 29.4 Subdivision 1. [EXPENSES, INTEREST, AND TAXES.] Except as 29.5 provided in section 290.17, subdivision 4, paragraph (i), in 29.6 computing the net income of a taxpayer no deduction shall in any 29.7 case be allowed for expenses, interest and taxes connected with 29.8 or allocable against the production or receipt of all income not 29.9 included in the measure of the tax imposed by this chapter, 29.10 except that for corporations engaged in the business of mining 29.11 or producing iron ore, the mining of which is subject to the 29.12 occupation tax imposed by section 298.01, subdivision 4, this 29.13 shall not prevent the deduction of expenses and other items to 29.14 the extent that the expenses and other items are allowable under 29.15 this chapter and are not deductible, capitalizable, retainable 29.16 in basis, or taken into account by allowance or otherwise in 29.17 computing the occupation tax and do not exceed the amounts taken 29.18 for federal income tax purposes for that year. Occupation taxes 29.19 imposed under chapter 298, royalty taxes imposed under chapter 29.20 299, or depletion expenses may not be deducted under this clause. 29.21 Subd. 2. [FINES, PENALTIES, DAMAGES, AND EXPENSES.] (a) No 29.22 deduction from taxable income for a trade or business expense 29.23 under section 162(a) of the Internal Revenue Code shall be 29.24 allowed for any fine, penalty, damages, or expenses paid to: 29.25 (1) the government of the United States, a state, a 29.26 territory or possession of the United States, the District of 29.27 Columbia, or the Commonwealth of Puerto Rico; 29.28 (2) the government of a foreign country; or 29.29 (3) a political subdivision of, or corporation or other 29.30 entity serving as an agency or instrumentality of, any 29.31 government described in clause (1) or (2). 29.32 (b) For purposes of this subdivision, "fine, penalty, 29.33 damages, or expenses" include, but are not limited to, any 29.34 amount: 29.35 (1) paid pursuant to a conviction or a plea of guilty or 29.36 nolo contendere for any crime in a criminal proceeding; 30.1 (2) paid as a civil penalty imposed by federal, state, or 30.2 local law, including tax penalties and interest; 30.3 (3) paid in settlement of the taxpayer's actual or 30.4 potential liability for a civil or criminal fine or penalty; 30.5 (4) forfeited as collateral posted in connection with a 30.6 proceeding that could result in imposition of a fine or penalty; 30.7 or 30.8 (5) legal fees and related expenses paid or incurred in the 30.9 prosecution or civil action arising from a violation of the law 30.10 imposing the fine or civil penalty, court costs assessed against 30.11 the taxpayer, or stenographic and printing charges, compensatory 30.12 damages, punitive damages, or restitution. 30.13[EFFECTIVE DATE.] This section is effective for taxable 30.14 years beginning after December 31, 2003. 30.15 Sec. 19. Minnesota Statutes 2002, section 290.191, 30.16 subdivision 2, is amended to read: 30.17 Subd. 2. [APPORTIONMENT FORMULA OF GENERAL APPLICATION.] 30.18 Except for those trades or businesses required to use a 30.19 different formula under subdivision 3 or section 290.36, and for 30.20 those trades or businesses that receive permission to use some 30.21 other method under section 290.20or under subdivision 4, a 30.22 trade or business required to apportion its net income must 30.23 apportion its income to this state on the basis ofthe30.24percentage obtained by taking the sum of:30.25(1) 75 percent ofthe percentage which the sales made 30.26 within this state in connection with the trade or business 30.27 during the tax period are of the total sales wherever made in 30.28 connection with the trade or business during the tax period;. 30.29(2) 12.5 percent of the percentage which the total tangible30.30property used by the taxpayer in this state in connection with30.31the trade or business during the tax period is of the total30.32tangible property, wherever located, used by the taxpayer in30.33connection with the trade or business during the tax period; and30.34(3) 12.5 percent of the percentage which the taxpayer's30.35total payrolls paid or incurred in this state or paid in respect30.36to labor performed in this state in connection with the trade or31.1business during the tax period are of the taxpayer's total31.2payrolls paid or incurred in connection with the trade or31.3business during the tax period.31.4[EFFECTIVE DATE.] This section is effective for taxable 31.5 years beginning after December 31, 2004, only if section 21 of 31.6 this article is enacted. 31.7 Sec. 20. Minnesota Statutes 2002, section 290.191, 31.8 subdivision 3, is amended to read: 31.9 Subd. 3. [APPORTIONMENT FORMULA FOR FINANCIAL 31.10 INSTITUTIONS.] Except for an investment company required to 31.11 apportion its income under section 290.36, a financial 31.12 institution that is required to apportion its net income must 31.13 apportion its net income to this state on the basis of the 31.14 percentageobtained by taking the sum of:31.15(1) 75 percent of the percentagewhich the receipts from 31.16 within this state in connection with the trade or business 31.17 during the tax period are of the total receipts in connection 31.18 with the trade or business during the tax period, from wherever 31.19 derived;. 31.20(2) 12.5 percent of the percentage which the sum of the31.21total tangible property used by the taxpayer in this state and31.22the intangible property owned by the taxpayer and attributed to31.23this state in connection with the trade or business during the31.24tax period is of the sum of the total tangible property,31.25wherever located, used by the taxpayer and the intangible31.26property owned by the taxpayer and attributed to all states in31.27connection with the trade or business during the tax period; and31.28(3) 12.5 percent of the percentage which the taxpayer's31.29total payrolls paid or incurred in this state or paid in respect31.30to labor performed in this state in connection with the trade or31.31business during the tax period are of the taxpayer's total31.32payrolls paid or incurred in connection with the trade or31.33business during the tax period.31.34[EFFECTIVE DATE.] This section is effective for taxable 31.35 years beginning after December 31, 2004, only if section 21 of 31.36 this article is enacted. 32.1 Sec. 21. Minnesota Statutes 2002, section 290.191, 32.2 subdivision 5, is amended to read: 32.3 Subd. 5. [DETERMINATION OF SALES FACTOR.] For purposes of 32.4 this section, the following rules apply in determining the sales 32.5 factor. 32.6 (a) The sales factor includes all sales, gross earnings, or 32.7 receipts received in the ordinary course of the business, except 32.8 that the following types of income are not included in the sales 32.9 factor: 32.10 (1) interest; 32.11 (2) dividends; 32.12 (3) sales of capital assets as defined in section 1221 of 32.13 the Internal Revenue Code; 32.14 (4) sales of property used in the trade or business, except 32.15 sales of leased property of a type which is regularly sold as 32.16 well as leased; 32.17 (5) sales of debt instruments as defined in section 32.18 1275(a)(1) of the Internal Revenue Code or sales of stock; and 32.19 (6) royalties, fees, or other like income of a type which 32.20 qualify for a subtraction from federal taxable income under 32.21 section 290.01, subdivision 19(d)(11). 32.22 (b) Sales of tangible personal property are made within 32.23 this state if the property is received by a purchaser at a point 32.24 within this state, and the taxpayer is taxable in this state, 32.25 regardless of the f.o.b. point, other conditions of the sale, or 32.26 the ultimate destination of the property. 32.27 (c) Tangible personal property delivered to a common or 32.28 contract carrier or foreign vessel for delivery to a purchaser 32.29 in another state or nation is a sale in that state or nation, 32.30 regardless of f.o.b. point or other conditions of the sale. If 32.31 the taxpayer is not taxable in the state of the delivery and the 32.32 property is shipped from an office, factory, warehouse, or other 32.33 place of storage in this state, sales of tangible personal 32.34 property outside this state are attributed to this state 32.35 regardless of the terms of shipping, delivery, or other 32.36 conditions of sale. 33.1 (d) Notwithstanding paragraphs (b) and (c), when 33.2 intoxicating liquor, wine, fermented malt beverages, cigarettes, 33.3 or tobacco products are sold to a purchaser who is licensed by a 33.4 state or political subdivision to resell this property only 33.5 within the state of ultimate destination, the sale is made in 33.6 that state. 33.7 (e) Sales made by or through a corporation that is 33.8 qualified as a domestic international sales corporation under 33.9 section 992 of the Internal Revenue Code are not considered to 33.10 have been made within this state. 33.11 (f) Sales, rents, royalties, and other income in connection 33.12 with real property is attributed to the state in which the 33.13 property is located. 33.14 (g) Receipts from the lease or rental of tangible personal 33.15 property, including finance leases and true leases, must be 33.16 attributed to this state if the property is located in this 33.17 state and to other states if the property is not located in this 33.18 state. Receipts from the lease or rental of moving property 33.19 including, but not limited to, motor vehicles, rolling stock, 33.20 aircraft, vessels, or mobile equipment are included in the 33.21 numerator of the receipts factor to the extent that the property 33.22 is used in this state. The extent of the use of moving property 33.23 is determined as follows: 33.24 (1) A motor vehicle is used wholly in the state in which it 33.25 is registered. 33.26 (2) The extent that rolling stock is used in this state is 33.27 determined by multiplying the receipts from the lease or rental 33.28 of the rolling stock by a fraction, the numerator of which is 33.29 the miles traveled within this state by the leased or rented 33.30 rolling stock and the denominator of which is the total miles 33.31 traveled by the leased or rented rolling stock. 33.32 (3) The extent that an aircraft is used in this state is 33.33 determined by multiplying the receipts from the lease or rental 33.34 of the aircraft by a fraction, the numerator of which is the 33.35 number of landings of the aircraft in this state and the 33.36 denominator of which is the total number of landings of the 34.1 aircraft. 34.2 (4) The extent that a vessel, mobile equipment, or other 34.3 mobile property is used in the state is determined by 34.4 multiplying the receipts from the lease or rental of the 34.5 property by a fraction, the numerator of which is the number of 34.6 days during the taxable year the property was in this state and 34.7 the denominator of which is the total days in the taxable year. 34.8 (h) Royalties and other income not described in paragraph 34.9 (a), clause (6), received for the use of or for the privilege of 34.10 using intangible property, including patents, know-how, 34.11 formulas, designs, processes, patterns, copyrights, trade names, 34.12 service names, franchises, licenses, contracts, customer lists, 34.13 or similar items, must be attributed to the state in which the 34.14 property is used by the purchaser. If the property is used in 34.15 more than one state, the royalties or other income must be 34.16 apportioned to this state pro rata according to the portion of 34.17 use in this state. If the portion of use in this state cannot 34.18 be determined, the royalties or other income must be excluded 34.19 from both the numerator and the denominator. Intangible 34.20 property is used in this state if the purchaser uses the 34.21 intangible property or the rights therein in the regular course 34.22 of its business operations in this state, regardless of the 34.23 location of the purchaser's customers. 34.24 (i) Sales of intangible property are made within the state 34.25 in which the property is used by the purchaser. If the property 34.26 is used in more than one state, the sales must be apportioned to 34.27 this state pro rata according to the portion of use in this 34.28 state. If the portion of use in this state cannot be 34.29 determined, the sale must be excluded from both the numerator 34.30 and the denominator of the sales factor. Intangible property is 34.31 used in this state if the purchaser used the intangible property 34.32 in the regular course of its business operations in this state. 34.33 (j) Receipts from the performance of services must be 34.34 attributed to the state where the services are received. For 34.35 the purposes of this section, receipts from the performance of 34.36 services provided to a corporation, partnership, or trust may 35.1 only be attributed to a state where it has a fixed place of 35.2 doing business. If the state where the services are received is 35.3 not readily determinable or is a state where the corporation, 35.4 partnership, or trust receiving the service does not have a 35.5 fixed place of doing business, the services shall be deemed to 35.6 be received at the location of the office of the customer from 35.7 which the services were ordered in the regular course of the 35.8 customer's trade or business. If the ordering office cannot be 35.9 determined, the services shall be deemed to be received at the 35.10 office of the customer to which the services are billed. If the 35.11 taxpayer is not taxable in the state of the purchaser, the sale 35.12 is attributed to this state if the greater proportion of the 35.13 service is performed in this state. 35.14[EFFECTIVE DATE.] This section is effective for taxable 35.15 years beginning after December 31, 2003, only if sections 19 and 35.16 20 of this article are enacted. 35.17 Sec. 22. [290.433] [GLOBAL WAR ON TERRORISM CHECKOFF.] 35.18 Every individual who files an income tax return or property 35.19 tax refund claim, and every corporation that files an income tax 35.20 return, may designate on their return that $1 or more shall be 35.21 added to the tax or deducted from the refund that would 35.22 otherwise be payable by or to that individual or corporation and 35.23 paid into an account to be established for the purpose of paying 35.24 bonuses to residents of this state who are veterans of the 35.25 global war on terrorism. The commissioner shall, on the income 35.26 tax returns and the property tax refund claim form, notify 35.27 filers of their right to designate that a portion of their tax 35.28 or refund shall be paid into the account for veterans of the 35.29 global war on terrorism. The amounts designated under this 35.30 section shall be annually appropriated to the commissioner of 35.31 the Department of Veterans Affairs to pay bonuses to veterans of 35.32 the global war on terrorism as determined by law. All interest 35.33 earned on money accrued shall be credited to the account by the 35.34 commissioner of finance. 35.35[EFFECTIVE DATE.] This section is effective for taxable 35.36 years beginning after December 31, 2003, and for property tax 36.1 refund claims for property taxes payable after December 31, 2003. 36.2 Sec. 23. Minnesota Statutes 2002, section 290.92, 36.3 subdivision 4b, is amended to read: 36.4 Subd. 4b. [WITHHOLDING BY PARTNERSHIPS.] (a) A partnership 36.5 shall deduct and withhold a tax as provided in paragraph (b) for 36.6 nonresident individual partners based on their distributive 36.7 shares of partnership income for a taxable year of the 36.8 partnership. 36.9 (b) The amount of tax withheld is determined by multiplying 36.10 the partner's distributive share allocable to Minnesota under 36.11 section 290.17, paid or credited during the taxable year by the 36.12 highest rate used to determine the income tax liability for an 36.13 individual under section 290.06, subdivision 2c, except that the 36.14 amount of tax withheld may be determined by the commissioner if 36.15 the partner submits a withholding exemption certificate under 36.16 subdivision 5. 36.17 (c) The commissioner may reduce or abate the tax withheld 36.18 under this subdivision if the partnership had reasonable cause 36.19 to believe that no tax was due under this section. 36.20 (d) Notwithstanding paragraph (a), a partnership is not 36.21 required to deduct and withhold tax for a nonresident partner if: 36.22 (1) the partner elects to have the tax due paid as part of 36.23 the partnership's composite return under section 289A.08, 36.24 subdivision 7; 36.25 (2) the partner has Minnesota assignable federal adjusted 36.26 gross income from the partnership of less than $1,000; or 36.27 (3) the partnership is liquidated or terminated, the income 36.28 was generated by a transaction related to the termination or 36.29 liquidation, and no cash or other property was distributed in 36.30 the current or prior taxable year;or36.31 (4) the distributive shares of partnership income are 36.32 attributable to: 36.33 (i) income required to be recognized because of discharge 36.34 of indebtedness; 36.35 (ii) income recognized because of a sale, exchange, or 36.36 other disposition of real estate, depreciable property, or 37.1 property described in section 179 of the Internal Revenue Code; 37.2 or 37.3 (iii) income recognized on the sale, exchange, or other 37.4 disposition of any property that has been the subject of a basis 37.5 reduction pursuant to section 108, 734, 743, 754, or 1017 of the 37.6 Internal Revenue Code 37.7 to the extent that the income does not include cash received or 37.8 receivable or, if there is cash received or receivable, to the 37.9 extent that the cash is required to be used to pay indebtedness 37.10 by the partnership or a secured debt on partnership property; or 37.11 (5) the partnership is a publicly traded partnership, as 37.12 defined in section 7704(b) of the Internal Revenue Code. 37.13 (e) For purposes of subdivision 6a, and sections 289A.09, 37.14 subdivision 2, 289A.20, subdivision 2, paragraph (c), 289A.50, 37.15 289A.56, 289A.60, and 289A.63, a partnership is considered an 37.16 employer. 37.17 (f) To the extent that income is exempt from withholding 37.18 under paragraph (d), clause (4), the commissioner has a lien in 37.19 an amount up to the amount that would be required to be withheld 37.20 with respect to the income of the partner attributable to the 37.21 partnership interest, but for the application of paragraph (d), 37.22 clause (4). The lien arises under section 270.69 from the date 37.23 of assessment of the tax against the partner, and attaches to 37.24 that partner's share of the profits and any other money due or 37.25 to become due to that partner in respect of the partnership. 37.26 Notice of the lien may be sent by mail to the partnership, 37.27 without the necessity for recording the lien. The notice has 37.28 the force and effect of a levy under section 270.70, and is 37.29 enforceable against the partnership in the manner provided by 37.30 that section. Upon payment in full of the liability subsequent 37.31 to the notice of lien, the partnership must be notified that the 37.32 lien has been satisfied. 37.33[EFFECTIVE DATE.] This section is effective for taxable 37.34 years beginning after December 31, 2003. 37.35 Sec. 24. Minnesota Statutes 2002, section 290A.03, 37.36 subdivision 11, is amended to read: 38.1 Subd. 11. [RENT CONSTITUTING PROPERTY TAXES.] "Rent 38.2 constituting property taxes" means1917 percent of the gross 38.3 rent actually paid in cash, or its equivalent, or the portion of 38.4 rent paid in lieu of property taxes, in any calendar year by a 38.5 claimant for the right of occupancy of the claimant's Minnesota 38.6 homestead in the calendar year, and which rent constitutes the 38.7 basis, in the succeeding calendar year of a claim for relief 38.8 under this chapter by the claimant. 38.9 If the amount of rent paid by the claimant for actual 38.10 property taxes paid on the unit exceeds 17 percent of rent paid, 38.11 the amount of rent constituting property taxes shall be 38.12 determined by multiplying the gross rent paid by the claimant 38.13 for the calendar year for the unit by a fraction, the numerator 38.14 of which is the net tax on the property where the unit is 38.15 located and the denominator of which is the total scheduled 38.16 rent. In no case may the rent constituting property taxes 38.17 exceed 50 percent of the gross rent paid by the claimant during 38.18 that calendar year. 38.19[EFFECTIVE DATE.] This section is effective for property 38.20 taxes payable in 2004 and thereafter, and for refund claims 38.21 based on property taxes payable in 2004 and thereafter. 38.22 Sec. 25. Minnesota Statutes 2002, section 290A.03, is 38.23 amended by adding a subdivision to read: 38.24 Subd. 11a. [TOTAL SCHEDULED RENT.] "Total scheduled rent" 38.25 means the sum of the monthly rents assigned to the residential 38.26 rental units in the property multiplied by 12. The assigned 38.27 rents are the rents effective on April 15 for taxes payable in 38.28 2004 and thereafter. In determining total scheduled rent, no 38.29 deduction is allowed for vacant units, uncollected rent, or 38.30 reduced cash rents in units occupied by employees or agents of 38.31 the property owner. 38.32[EFFECTIVE DATE.] This section is effective for rent paid 38.33 on and after January 1, 2004. 38.34 Sec. 26. Minnesota Statutes 2003 Supplement, section 38.35 290A.03, subdivision 15, is amended to read: 38.36 Subd. 15. [INTERNAL REVENUE CODE.] "Internal Revenue Code" 39.1 means the Internal Revenue Code of 1986, as amended throughJune39.215, 2003November 11, 2003. 39.3[EFFECTIVE DATE.] This section is effective the day 39.4 following final enactment except the changes to household income 39.5 generated by federal changes to federal adjusted gross income 39.6 are effective at the same time federal changes are effective. 39.7 Sec. 27. Minnesota Statutes 2002, section 290A.19, is 39.8 amended to read: 39.9 290A.19 [OWNER OR MANAGING AGENT TO FURNISH RENT 39.10 CERTIFICATE.] 39.11 The owner or managing agent of any property for which rent 39.12 is paid for occupancy as a homestead must furnish a certificate 39.13 of rent paid to a person who is a renter on December 31, in the 39.14 form prescribed by the commissioner. The certificate of rent 39.15 paid must show the calculation of rent constituting property 39.16 taxes as provided in section 290A.03, subdivisions 11 and 11a. 39.17 If the renter moves before December 31, the owner or managing 39.18 agent may give the certificate to the renter at the time of 39.19 moving, or mail the certificate to the forwarding address if an 39.20 address has been provided by the renter. The certificate must 39.21 be made available to the renter before February 1 of the year 39.22 following the year in which the rent was paid. The owner or 39.23 managing agent must retain a duplicate of each certificate or an 39.24 equivalent record showing the same information for a period of 39.25 three years. The duplicate or other record must be made 39.26 available to the commissioner upon request. For the purposes of 39.27 this section, "owner" includes a park owner as defined under 39.28 section 327C.01, subdivision 6, and "property" includes a lot as 39.29 defined under section 327C.01, subdivision 3. 39.30[EFFECTIVE DATE.] This section is effective for 39.31 certificates of rent paid furnished for rent paid on and after 39.32 January 1, 2004. 39.33 Sec. 28. Minnesota Statutes 2003 Supplement, section 39.34 291.005, subdivision 1, is amended to read: 39.35 Subdivision 1. Unless the context otherwise clearly 39.36 requires, the following terms used in this chapter shall have 40.1 the following meanings: 40.2 (1) "Federal gross estate" means the gross estate of a 40.3 decedent as valued and otherwise determined for federal estate 40.4 tax purposes by federal taxing authorities pursuant to the 40.5 provisions of the Internal Revenue Code. 40.6 (2) "Minnesota gross estate" means the federal gross estate 40.7 of a decedent after (a) excluding therefrom any property 40.8 included therein which has its situs outside Minnesota, and (b) 40.9 including therein any property omitted from the federal gross 40.10 estate which is includable therein, has its situs in Minnesota, 40.11 and was not disclosed to federal taxing authorities. 40.12 (3) "Personal representative" means the executor, 40.13 administrator or other person appointed by the court to 40.14 administer and dispose of the property of the decedent. If 40.15 there is no executor, administrator or other person appointed, 40.16 qualified, and acting within this state, then any person in 40.17 actual or constructive possession of any property having a situs 40.18 in this state which is included in the federal gross estate of 40.19 the decedent shall be deemed to be a personal representative to 40.20 the extent of the property and the Minnesota estate tax due with 40.21 respect to the property. 40.22 (4) "Resident decedent" means an individual whose domicile 40.23 at the time of death was in Minnesota. 40.24 (5) "Nonresident decedent" means an individual whose 40.25 domicile at the time of death was not in Minnesota. 40.26 (6) "Situs of property" means, with respect to real 40.27 property, the state or country in which it is located; with 40.28 respect to tangible personal property, the state or country in 40.29 which it was normally kept or located at the time of the 40.30 decedent's death; and with respect to intangible personal 40.31 property, the state or country in which the decedent was 40.32 domiciled at death. 40.33 (7) "Commissioner" means the commissioner of revenue or any 40.34 person to whom the commissioner has delegated functions under 40.35 this chapter. 40.36 (8) "Internal Revenue Code" means the United States 41.1 Internal Revenue Code of 1986, as amended throughDecember 31,41.22002November 11, 2003. 41.3[EFFECTIVE DATE.] This section is effective for estates of 41.4 decedents dying after January 31, 2003. 41.5 Sec. 29. [DISTRIBUTION.] 41.6 For the fiscal year beginning July 1, 2005, the revenue 41.7 collected under Minnesota Statutes, section 290.01, subdivision 41.8 19a, clause (8), for taxable years beginning after December 31, 41.9 2003, and before January 1, 2005, is appropriated to each of the 41.10 listed agencies in the designated percentages and must be used 41.11 only for the following programs: (a) Department of Human 41.12 Services, (1) emergencies service programs under Laws 1997, 41.13 chapter 162, article 3, five percent; (2) transitional housing 41.14 operations under Minnesota Statutes, section 119A.43, 25 41.15 percent; (3) transitional housing operations targeted to 41.16 unaccompanied youth under Minnesota Statutes, section 119A.43, 41.17 five percent; (b) Minnesota Housing Finance Agency, (1) 41.18 Minnesota housing trust fund, under Minnesota Statutes, section 41.19 462A.201, 30 percent; (2) rental housing under Minnesota 41.20 Statutes, section 462A.2097, ten percent; (3) family homeless 41.21 prevention and assistance program, under Minnesota Statutes, 41.22 section 462A.204, 25 percent. 41.23 Sec. 30. [STUDY; CORPORATE FRANCHISE TAX.] 41.24 The commissioners of the Departments of Finance and Revenue 41.25 shall conduct a comprehensive study to identify the reasons for 41.26 the decline in corporate tax receipts. The study shall include 41.27 an analysis of the current and future effect of existing 41.28 corporate tax provisions, both independently and interactively 41.29 with other provisions; how tax provisions are changing business 41.30 practices; and the impact of outsourcing or relocation of 41.31 business operations and jobs. On or before February 1, 2005, 41.32 the commissioners shall report to the chairpersons of the house 41.33 and senate tax committees the results of the study and shall 41.34 include recommendations for changes to the tax laws that would 41.35 reduce tax incentives for businesses to outsource or relocate 41.36 business operations or jobs. 42.1 Sec. 31. [REPEALER.] 42.2 Minnesota Statutes 2002, section 290.191, subdivision 4, is 42.3 repealed. 42.4[EFFECTIVE DATE.] This section is effective for taxable 42.5 years beginning after December 31, 2003. 42.6 ARTICLE 2 42.7 SALES TAX 42.8 Section 1. Minnesota Statutes 2002, section 297A.61, is 42.9 amended by adding a subdivision to read: 42.10 Subd. 37. [PERSONAL RAPID TRANSIT SYSTEM.] "Personal rapid 42.11 transit system" means a transportation system of small, 42.12 computer-controlled vehicles, transporting one to three 42.13 passengers on elevated guideways in a transportation network 42.14 operating on demand and nonstop directly to any stations in the 42.15 network. The system shall provide service on a regular and 42.16 continuing basis and operate independent of any government 42.17 subsidies. 42.18[EFFECTIVE DATE.] This section is effective for sales and 42.19 purchases made after June 30, 2008. 42.20 Sec. 2. Minnesota Statutes 2002, section 297A.67, is 42.21 amended by adding a subdivision to read: 42.22 Subd. 32. [GEOTHERMAL EQUIPMENT.] The loop field 42.23 collection system and the heat pump of a geothermal heating and 42.24 cooling system is exempt. 42.25[EFFECTIVE DATE.] This section is effective for sales and 42.26 purchases occurring on and after July 1, 2004. 42.27 Sec. 3. Minnesota Statutes 2002, section 297A.67, is 42.28 amended by adding a subdivision to read: 42.29 Subd. 33. [BIOMASS FUEL STOVES.] Stoves designed to burn 42.30 fuel pellets made from biomass materials are exempt. 42.31[EFFECTIVE DATE.] This section is effective for sales and 42.32 purchases made after June 30, 2004. 42.33 Sec. 4. Minnesota Statutes 2003 Supplement, section 42.34 297A.68, subdivision 5, is amended to read: 42.35 Subd. 5. [CAPITAL EQUIPMENT.] (a) Capital equipment is 42.36 exempt. The tax must be imposed and collected as if the rate 43.1 under section 297A.62, subdivision 1, applied, and then refunded 43.2 in the manner provided in section 297A.75. 43.3 "Capital equipment" means machinery and equipment purchased 43.4 or leased, and used in this state by the purchaser or lessee 43.5 primarily for manufacturing, fabricating, mining, or refining 43.6 tangible personal property to be sold ultimately at retail if 43.7 the machinery and equipment are essential to the integrated 43.8 production process of manufacturing, fabricating, mining, or 43.9 refining. Capital equipment also includes machinery and 43.10 equipment used to electronically transmit results retrieved by a 43.11 customer of an on-line computerized data retrieval system. 43.12 (b) Capital equipment includes, but is not limited to: 43.13 (1) machinery and equipment used to operate, control, or 43.14 regulate the production equipment; 43.15 (2) machinery and equipment used for research and 43.16 development, design, quality control, and testing activities; 43.17 (3) environmental control devices that are used to maintain 43.18 conditions such as temperature, humidity, light, or air pressure 43.19 when those conditions are essential to and are part of the 43.20 production process; 43.21 (4) materials and supplies used to construct and install 43.22 machinery or equipment; 43.23 (5) repair and replacement parts, including accessories, 43.24 whether purchased as spare parts, repair parts, or as upgrades 43.25 or modifications to machinery or equipment; 43.26 (6) materials used for foundations that support machinery 43.27 or equipment; 43.28 (7) materials used to construct and install special purpose 43.29 buildings used in the production process; 43.30 (8) ready-mixed concrete equipment in which the ready-mixed 43.31 concrete is mixed as part of the delivery process regardless if 43.32 mounted on a chassis and leases of ready-mixed concrete trucks; 43.33 and 43.34 (9) machinery or equipment used for research, development, 43.35 design, or production of computer software. 43.36 (c) Capital equipment does not include the following: 44.1 (1) motor vehicles taxed under chapter 297B; 44.2 (2) machinery or equipment used to receive or store raw 44.3 materials; 44.4 (3) building materials, except for materials included in 44.5 paragraph (b), clauses (6) and (7); 44.6 (4) machinery or equipment used for nonproduction purposes, 44.7 including, but not limited to, the following: plant security, 44.8 fire prevention, first aid, and hospital stations; support 44.9 operations or administration; pollution control; and plant 44.10 cleaning, disposal of scrap and waste, plant communications, 44.11 space heating, cooling, lighting, or safety; 44.12 (5) farm machinery and aquaculture production equipment as 44.13 defined by section 297A.61, subdivisions 12 and 13; 44.14 (6) machinery or equipment purchased and installed by a 44.15 contractor as part of an improvement to real property; or 44.16 (7) any other item that is not essential to the integrated 44.17 process of manufacturing, fabricating, mining, or refining. 44.18 (d) For purposes of this subdivision: 44.19 (1) "Equipment" means independent devices or tools separate 44.20 from machinery but essential to an integrated production 44.21 process, including computers and computer software, used in 44.22 operating, controlling, or regulating machinery and equipment; 44.23 and any subunit or assembly comprising a component of any 44.24 machinery or accessory or attachment parts of machinery, such as 44.25 tools, dies, jigs, patterns, and molds. 44.26 (2) "Fabricating" means to make, build, create, produce, or 44.27 assemble components or property to work in a new or different 44.28 manner. 44.29 (3) "Integrated production process" means a process or 44.30 series of operations through which tangible personal property is 44.31 manufactured, fabricated, mined, or refined. For purposes of 44.32 this clause, (i) manufacturing begins with the removal of raw 44.33 materials from inventory and ends when the last process prior to 44.34 loading for shipment has been completed; (ii) fabricating begins 44.35 with the removal from storage or inventory of the property to be 44.36 assembled, processed, altered, or modified and ends with the 45.1 creation or production of the new or changed product; (iii) 45.2 mining begins with the removal of overburden from the site of 45.3 the ores, minerals, stone, peat deposit, or surface materials 45.4 and ends when the last process before stockpiling is completed; 45.5 and (iv) refining begins with the removal from inventory or 45.6 storage of a natural resource and ends with the conversion of 45.7 the item to its completed form. 45.8 (4) "Machinery" means mechanical, electronic, or electrical 45.9 devices, including computers and computer software, that are 45.10 purchased or constructed to be used for the activities set forth 45.11 in paragraph (a), beginning with the removal of raw materials 45.12 from inventory through completion of the product, including 45.13 packaging of the product. 45.14 (5) "Machinery and equipment used for pollution control" 45.15 means machinery and equipment used solely to eliminate, prevent, 45.16 or reduce pollution resulting from an activity described in 45.17 paragraph (a). 45.18 (6) "Manufacturing" means an operation or series of 45.19 operations where raw materials are changed in form, composition, 45.20 or condition by machinery and equipment and which results in the 45.21 production of a new article of tangible personal property. For 45.22 purposes of this subdivision, "manufacturing" includes the 45.23 generation of electricity or steam to be sold at retail. 45.24 (7) "Mining" means the extraction of minerals, ores, stone, 45.25 or peat. 45.26 (8) "On-line data retrieval system" means a system whose 45.27 cumulation of information is equally available and accessible to 45.28 all its customers. 45.29 (9) "Primarily" means machinery and equipment used 50 45.30 percent or more of the time in an activity described in 45.31 paragraph (a). 45.32 (10) "Refining" means the process of converting a natural 45.33 resource to an intermediate or finished product, including the 45.34 treatment of water to be sold at retail. 45.35 (11) This subdivision does not apply to telecommunications 45.36 equipment as provided in subdivision 35, and does not apply to 46.1 wire, cable, fiber, poles, or conduit for telecommunications 46.2 services. 46.3[EFFECTIVE DATE.] This section is effective for purchases 46.4 made after July 31, 2001. 46.5 Sec. 5. Minnesota Statutes 2002, section 297A.68, 46.6 subdivision 19, is amended to read: 46.7 Subd. 19. [PETROLEUM PRODUCTS.] The following petroleum 46.8 products are exempt: 46.9 (1) products upon which a tax has been imposed and paid 46.10 under chapter 296A, and for which no refund has been or will be 46.11 allowed because the buyer used the fuel for nonhighway use; 46.12 (2) products that are used in the improvement of 46.13 agricultural land by constructing, maintaining, and repairing 46.14 drainage ditches, tile drainage systems, grass waterways, water 46.15 impoundment, and other erosion control structures; 46.16 (3) products purchased by a transit system receiving 46.17 financial assistance under section 174.24, 256B.0625, 46.18 subdivision 17, or 473.384; 46.19 (4) products purchased by an ambulance service licensed 46.20 under chapter 144E; 46.21 (5) products used in a passenger snowmobile, as defined in 46.22 section 296A.01, subdivision 39, for off-highway business use as 46.23 part of the operations of a resort as provided under section 46.24 296A.16, subdivision 2, clause (2);or46.25 (6) products purchased by a state or a political 46.26 subdivision of a state for use in motor vehicles exempt from 46.27 registration under section 168.012, subdivision 1, paragraph 46.28 (b); or 46.29 (7) products purchased for use as fuel for a commuter rail 46.30 system operating under sections 174.80 to 174.90. The tax must 46.31 be imposed and collected as if the rate under section 297A.62, 46.32 subdivision 1, applied, and then refunded in the manner provided 46.33 in section 297A.75. 46.34[EFFECTIVE DATE.] This section is effective for purchases 46.35 made after June 30, 2004. 46.36 Sec. 6. Minnesota Statutes 2002, section 297A.68, is 47.1 amended by adding a subdivision to read: 47.2 Subd. 40. [MOVIES AND TELEVISION; INPUTS TO PRODUCTION.] 47.3 The sale of tangible personal property primarily used or 47.4 consumed directly in the preproduction, production, and 47.5 postproduction of movies and television shows that are produced 47.6 for domestic and international commercial distribution are 47.7 exempt. "Preproduction" and "production" include all the 47.8 activities related to the preparation of shooting and the 47.9 shooting of movies and television shows, including film 47.10 processing. Equipment rented for preproduction and production 47.11 activities are exempt. "Postproduction" includes all activities 47.12 related to editing and finishing of the movie or television 47.13 show. This exemption does not apply to tangible personal 47.14 property or services used primarily in administration, general 47.15 management, or marketing. Machinery and equipment purchased for 47.16 use in producing movies and television shows, fuel, electricity, 47.17 gas, or steam used for space heating and lighting, food, 47.18 lodging, and any property or service for the personal use of any 47.19 individual are not exempt under this subdivision. 47.20[EFFECTIVE DATE.] This section is effective for sales and 47.21 purchases made after June 30, 2004. 47.22 Sec. 7. Minnesota Statutes 2002, section 297A.68, is 47.23 amended by adding a subdivision to read: 47.24 Subd. 41. [PERSONAL RAPID TRANSIT SYSTEM.] (a) Machinery, 47.25 equipment, and supplies purchased or leased, and used by the 47.26 purchaser or lessee in this state directly in the provision of a 47.27 personal rapid transit system as defined in section 297A.61, 47.28 subdivision 37, are exempt. Machinery, equipment, and supplies 47.29 that qualify for this exemption include, but are not limited to, 47.30 the following: 47.31 (1) vehicles, guideways, and related parts used directly in 47.32 the transit system; 47.33 (2) computers and equipment used primarily for operating, 47.34 controlling, and regulating the system; 47.35 (3) machinery, equipment, furniture, and fixtures necessary 47.36 for the functioning of system stations; 48.1 (4) machinery, equipment, implements, tools, and supplies 48.2 used to maintain vehicles, guideways, and stations; and 48.3 (5) electricity and other fuels used in the provision of 48.4 the transit service, including heating, cooling, and lighting of 48.5 system stations. 48.6 (b) This exemption does not include machinery, equipment, 48.7 and supplies used for support and administration operations. 48.8[EFFECTIVE DATE.] This section is effective for sales and 48.9 purchases made after June 30, 2008. 48.10 Sec. 8. Minnesota Statutes 2003 Supplement, section 48.11 297A.70, subdivision 8, is amended to read: 48.12 Subd. 8. [REGIONWIDE PUBLIC SAFETY RADIO COMMUNICATION 48.13 SYSTEM; PRODUCTS AND SERVICES.] Products and services including, 48.14 but not limited to, end user equipment used for construction, 48.15 ownership, operation, maintenance, and enhancement ofthe48.16backbone system of thea regionwide or statewide public safety 48.17 radio communication system established under sections 403.21 to 48.18 403.34, are exempt.For purposes of this subdivision, backbone48.19system is defined in section 403.21, subdivision 9. This48.20subdivision is effective for purchases, sales, storage, use, or48.21consumption occurring before August 1, 2005, in the counties of48.22Anoka, Carver, Dakota, Hennepin, Ramsey, Scott, and Washington.48.23[EFFECTIVE DATE.] This section is effective for sales and 48.24 purchases made on and after July 1, 2004. 48.25 Sec. 9. Minnesota Statutes 2002, section 297A.70, is 48.26 amended by adding a subdivision to read: 48.27 Subd. 17. [DONATED MEALS.] Meals that are normally sold at 48.28 retail in the ordinary business activities of the taxpayer are 48.29 exempt if the meals are donated to a nonprofit group as defined 48.30 in subdivision 4 for fund-raising purposes. 48.31[EFFECTIVE DATE.] This section is effective for donations 48.32 made after June 30, 2004. 48.33 Sec. 10. Minnesota Statutes 2002, section 297A.71, is 48.34 amended by adding a subdivision to read: 48.35 Subd. 33. [COMMUTER RAIL MATERIAL, SUPPLIES, AND 48.36 EQUIPMENT.] Materials and supplies consumed in, and equipment 49.1 incorporated in the construction, equipment, or improvement of a 49.2 commuter rail transportation system operated under sections 49.3 174.80 and 174.90 are exempt. This exemption includes railroad 49.4 cars and engines and related equipment. 49.5[EFFECTIVE DATE.] This section is effective for purchases 49.6 made after June 30, 2004. 49.7 Sec. 11. Minnesota Statutes 2002, section 297A.71, is 49.8 amended by adding a subdivision to read: 49.9 Subd. 34. [WASTE RECOVERY FACILITY.] Materials and 49.10 supplies used or consumed in, and equipment incorporated into, 49.11 the construction, improvement, or expansion of a waste-to-energy 49.12 resource recovery facility are exempt if the facility uses 49.13 biomass or mixed municipal solid waste as a primary fuel to 49.14 generate steam or electricity. 49.15[EFFECTIVE DATE.] This section is effective for sales and 49.16 purchases made after June 30, 2004. 49.17 Sec. 12. Minnesota Statutes 2002, section 297A.71, is 49.18 amended by adding a subdivision to read: 49.19 Subd. 35. [PERSONAL RAPID TRANSIT SYSTEM.] Materials and 49.20 supplies used or consumed in, and equipment incorporated into 49.21 the construction, expansion, or improvement of a personal rapid 49.22 transit system as defined in section 297A.61, subdivision 37, 49.23 are exempt. 49.24[EFFECTIVE DATE.] This section is effective for sales and 49.25 purchases made after June 30, 2008. 49.26 Sec. 13. Minnesota Statutes 2002, section 297A.71, is 49.27 amended by adding a subdivision to read: 49.28 Subd. 36. [ST. MARY'S DULUTH CLINIC HEALTH 49.29 SYSTEM.] Materials and supplies used or consumed in and 49.30 equipment incorporated into the construction of the hospital 49.31 portion of the St. Mary's Duluth Clinic Health System are exempt. 49.32[EFFECTIVE DATE.] This section is effective for purchases 49.33 made on or after July 1, 2004, and on or before December 31, 49.34 2006. 49.35 Sec. 14. Minnesota Statutes 2002, section 297A.75, 49.36 subdivision 1, is amended to read: 50.1 Subdivision 1. [TAX COLLECTED.] The tax on the gross 50.2 receipts from the sale of the following exempt items must be 50.3 imposed and collected as if the sale were taxable and the rate 50.4 under section 297A.62, subdivision 1, applied. The exempt items 50.5 include: 50.6 (1) capital equipment exempt under section 297A.68, 50.7 subdivision 5; 50.8 (2) building materials for an agricultural processing 50.9 facility exempt under section 297A.71, subdivision 13; 50.10 (3) building materials for mineral production facilities 50.11 exempt under section 297A.71, subdivision 14; 50.12 (4) building materials for correctional facilities under 50.13 section 297A.71, subdivision 3; 50.14 (5) building materials used in a residence for disabled 50.15 veterans exempt under section 297A.71, subdivision 11; 50.16 (6) chair lifts, ramps, elevators, and associated building 50.17 materials exempt under section 297A.71, subdivision 12; 50.18 (7) building materials for the Long Lake Conservation 50.19 Center exempt under section 297A.71, subdivision 17; 50.20 (8) materials, supplies, fixtures, furnishings, and 50.21 equipment for a county law enforcement and family service center 50.22 under section 297A.71, subdivision 26;and50.23 (9) materials and supplies for qualified low-income housing 50.24 under section 297A.71, subdivision 23; and 50.25 (10) fuel purchased for commuter rail systems under section 50.26 297A.68, subdivision 19, clause (7). 50.27[EFFECTIVE DATE.] This section is effective for purchases 50.28 made after June 30, 2004. 50.29 Sec. 15. Minnesota Statutes 2002, section 297A.75, 50.30 subdivision 2, is amended to read: 50.31 Subd. 2. [REFUND; ELIGIBLE PERSONS.] Upon application on 50.32 forms prescribed by the commissioner, a refund equal to the tax 50.33 paid on the gross receipts of the exempt items must be paid to 50.34 the applicant. Only the following persons may apply for the 50.35 refund: 50.36 (1) for subdivision 1, clauses (1) to (3), the applicant 51.1 must be the purchaser; 51.2 (2) for subdivision 1, clauses (4), (7), and (8), the 51.3 applicant must be the governmental subdivision; 51.4 (3) for subdivision 1, clause (5), the applicant must be 51.5 the recipient of the benefits provided in United States Code, 51.6 title 38, chapter 21; 51.7 (4) for subdivision 1, clause (6), the applicant must be 51.8 the owner of the homestead property;and51.9 (5) for subdivision 1, clause (9), the owner of the 51.10 qualified low-income housing project; and 51.11 (6) for subdivision 1, clause (10), the operator of the 51.12 commuter rail system. 51.13[EFFECTIVE DATE.] This section is effective for purchases 51.14 made after June 30, 2004. 51.15 Sec. 16. Minnesota Statutes 2002, section 297A.87, 51.16 subdivision 2, is amended to read: 51.17 Subd. 2. [SELLER'S PERMIT OR ALTERNATE STATEMENT.] (a) The 51.18 operator of an event under subdivision 1 shall obtain one of the 51.19 following from a person who wishes to do business as a seller at 51.20 the event: 51.21 (1) evidence that the person holds a valid seller's permit 51.22 under section 297A.84;or51.23 (2) a written statement that the person is not offering for 51.24 sale any item that is taxable under this chapter; or 51.25 (3) a written statement that this is the only selling event 51.26 that the person will be participating in for that calendar year, 51.27 that the person will be participating for three or fewer days, 51.28 and that the person will make $500 or less in total sales in the 51.29 calendar year. The written statement shall include the person's 51.30 name, address, and telephone number. 51.31 (b) The operator shall require the evidence or statement as 51.32 a prerequisite to participating in the event as a seller. 51.33[EFFECTIVE DATE.] This section is effective for selling 51.34 events occurring after June 15, 2004. 51.35 Sec. 17. Minnesota Statutes 2002, section 297A.87, 51.36 subdivision 3, is amended to read: 52.1 Subd. 3. [OCCASIONAL SALE PROVISIONSNOTAPPLICABLE UNDER 52.2 LIMITED CIRCUMSTANCES.] The isolated and occasional 52.3 saleprovisionsprovision under section 297A.67, subdivision 23, 52.4orapplies, provided that the seller only participates for three 52.5 or fewer days in one event per calendar year, makes $500 or less 52.6 in sales in the calendar year, and provides the written 52.7 statement required in subdivision 2, paragraph (a), clause (3). 52.8 The isolated and occasional sales provision under section 52.9 297A.68, subdivision 25,dodoes not apply to a seller at an 52.10 event under this section. 52.11[EFFECTIVE DATE.] This section is effective for selling 52.12 events occurring after June 15, 2004. 52.13 Sec. 18. Minnesota Statutes 2002, section 297A.99, 52.14 subdivision 1, is amended to read: 52.15 Subdivision 1. [CITIES OF THE FIRST CLASS; AUTHORIZATION; 52.16 SCOPE.] (a) Apolitical subdivision of this statecity of the 52.17 first class, as defined in section 410.01, may, by ordinance, 52.18 impose a general sales taxif permitted by special law or if the52.19political subdivision enacted and imposed the tax before the52.20effective date of section 477A.016 and its predecessor provision52.21 at a rate of tax of one-half of one percent, except the city of 52.22 Duluth may impose a tax at a rate not to exceed one percent. A 52.23 city of the first class may, by ordinance, extend the time to 52.24 impose a sales tax that was enacted before July 1, 2004. 52.25 (b)This section governs the imposition of a general sales52.26tax by the political subdivision. The provisions of this52.27section preempt the provisions of any special law:52.28(1) enacted before June 2, 1997, or52.29(2) enacted on or after June 2, 1997, that does not52.30explicitly exempt the special law provision from this section's52.31rules by referenceThe provisions of subdivisions 4 through 12 52.32 apply to a tax imposed under this subdivision. 52.33 (c)This section does not apply to or preempt a sales tax52.34on motor vehicles orA city of the first class may impose, by 52.35 ordinance, a special excise tax on motor vehicles of up to $20 52.36 per motor vehicle purchased or acquired from any person engaged 53.1 in the business of selling motor vehicles within the city. 53.2[EFFECTIVE DATE.] This section is effective on and after 53.3 July 1, 2004. 53.4 Sec. 19. Minnesota Statutes 2002, section 297A.99, 53.5 subdivision 2, is amended to read: 53.6 Subd. 2. [LOCAL RESOLUTION BEFORE APPLICATION FORCITIES 53.7 OF THE SECOND AND THIRD CLASS; AUTHORITY; SCOPE.]Before the53.8governing body of a political subdivision requests legislative53.9approval of a special law for a local sales tax that is53.10administered under this section, it shall adopt a resolution53.11indicating its approval of the tax. The resolution must53.12include, at a minimum, information on the proposed tax rate, how53.13the revenues will be used, the total revenue that will be raised53.14before the tax expires, and the estimated length of time that53.15the tax will be in effect. This subdivision applies to local53.16laws enacted after June 30, 1998.(a) Subject to the limitations 53.17 in paragraphs (b) to (d), a city of the second or third class, 53.18 as defined in section 410.01, may, by ordinance, impose a 53.19 general sales tax at a rate of one-half of one percent, and may 53.20 extend the time to impose a sales tax that was enacted prior to 53.21 July 1, 2004. 53.22 (b) The proceeds of a tax imposed or extended under this 53.23 subdivision must be dedicated exclusively to payment of the cost 53.24 of a specific capital improvement that provides a benefit to the 53.25 city and to the county, region, or territory beyond the city 53.26 boundaries, and must be an improvement in at least one of the 53.27 following areas: 53.28 (1) regional convention or civic centers; 53.29 (2) regional airports; 53.30 (3) public libraries; 53.31 (4) the city's matching funds requirement for major capital 53.32 infrastructure improvements to arterial roads, bridges, or 53.33 railroads; 53.34 (5) public safety equipment or facilities for dispatching, 53.35 communications, computers, or training; or 53.36 (6) flood control or protection. 54.1 (c) Prior to imposition of the tax, the city must provide 54.2 to the commissioner information that shows the tax will fund an 54.3 improvement that meets the requirements of paragraph (b). 54.4 (d) If the city passes an ordinance to impose the tax, the 54.5 ordinance must be published for two consecutive weeks in a 54.6 newspaper of general circulation within the city. The ordinance 54.7 is not effective until it has been submitted to the voters of 54.8 the city at a general election and a majority of votes cast on 54.9 the question of approving the tax are in the affirmative. 54.10[EFFECTIVE DATE.] This section is effective on and after 54.11 July 1, 2004. 54.12 Sec. 20. Minnesota Statutes 2002, section 297A.99, 54.13 subdivision 3, is amended to read: 54.14 Subd. 3. [REQUIREMENTS FOR ADOPTION, USE, TERMINATION54.15 SPECIAL LAW; LOCAL RESOLUTION; REFERENDUM.] (a)Imposition of a54.16local sales tax is subject to approval by voters of the54.17political subdivision at a general electionA city of the second 54.18 or third class that proposes to adopt a sales tax to pay for the 54.19 costs of a project that is not included in subdivision 2, and 54.20 cities of the fourth class and counties may impose a general 54.21 sales tax if permitted by special law. 54.22 (b)The proceeds of the tax must be dedicated exclusively54.23to payment of the cost of a specific capital improvement which54.24is designated at least 90 days before the referendum on54.25imposition of the tax is conductedBefore the governing body of 54.26 a city or county requests legislative approval of a special law 54.27 for a local sales tax that is administered under this section, 54.28 it shall adopt a resolution indicating its approval of the tax. 54.29 The resolution must include, at a minimum, information on the 54.30 proposed tax rate, how the revenues will be used, the total 54.31 revenue that will be raised before the tax expires, and the 54.32 estimated length of time that the tax will be in effect. 54.33 (c)The tax must terminate after the improvement designated54.34under paragraph (b) has been completedImposition of a local 54.35 sales tax under this subdivision is subject to approval by 54.36 voters of the city or county at a general election. 55.1 (d)After a sales tax imposed by a political subdivision55.2has expired or been terminated, the political subdivision is55.3prohibited from imposing a local sales tax for a period of one55.4year. Notwithstanding subdivision 13, this paragraph applies to55.5all local sales taxes in effect at the time of or imposed after55.6May 26, 1999The proceeds of the tax must be dedicated 55.7 exclusively to payment of the cost of a specific capital 55.8 improvement which is designated at least 90 days before the 55.9 referendum on imposition of the tax is conducted. 55.10 (e) The tax must terminate after the improvement designated 55.11 under paragraph (d) has been completed. 55.12[EFFECTIVE DATE.] This section is effective on and after 55.13 July 1, 2004. 55.14 Sec. 21. Minnesota Statutes 2003 Supplement, section 55.15 297A.99, subdivision 5, is amended to read: 55.16 Subd. 5. [TAX RATE.] (a) The tax rate is as specified in 55.17 subdivision 1 or 2, or in the special law authorization and as 55.18 imposed by the political subdivision. 55.19 (b) The full political subdivision rate applies to any 55.20 sales that are taxed at a state rate, and the political 55.21 subdivision must not have more than one local sales tax rate or 55.22 more than one local use tax rate. This paragraph does not apply 55.23 to sales or use taxes imposed on electricity, piped natural or 55.24 artificial gas, or other heating fuels delivered by the seller, 55.25 or the retail sale or transfer of motor vehicles, aircraft, 55.26 watercraft, modular homes, manufactured homes, or mobile homes. 55.27[EFFECTIVE DATE.] This section is effective on and after 55.28 July 1, 2004. 55.29 Sec. 22. Minnesota Statutes 2003 Supplement, section 55.30 297A.99, subdivision 12, is amended to read: 55.31 Subd. 12. [EFFECTIVE DATES; NOTIFICATION.] (a) A political 55.32 subdivision may impose a tax under this section starting only on 55.33 the first day of a calendarquarteryear. A political 55.34 subdivision may repeal a tax under this section stopping only on 55.35 the last day of a calendar quarter. 55.36 (b) The political subdivision shall notify the commissioner 56.1 of revenue at least 90 days before imposing, changing the rate 56.2 of, or repealing a tax under this section. 56.3 (c) The political subdivision shall change the rate of tax 56.4 imposed under this section starting only on the first day of a 56.5 calendar quarter, and only after the commissioner has notified 56.6 sellers at least 60 days prior to the change. 56.7 (d) The political subdivision shall apply the rate change 56.8 for sales tax imposed under this section to purchases from 56.9 printed catalogs, wherein the purchaser computed the tax based 56.10 upon local tax rates published in the catalog, starting only on 56.11 the first day of a calendar quarter, and only after the 56.12 commissioner has notified sellers at least 120 days prior to the 56.13 change. 56.14 (e) The political subdivision shall apply local 56.15 jurisdiction boundary changes to taxes imposed under this 56.16 section starting only on the first day of a calendar quarter, 56.17 and only after the commissioner has notified sellers at least 60 56.18 days prior to the change. 56.19[EFFECTIVE DATE.] This section is effective on and after 56.20 July 1, 2004. 56.21 Sec. 23. Minnesota Statutes 2003 Supplement, section 56.22 297B.03, is amended to read: 56.23 297B.03 [EXEMPTIONS.] 56.24 There is specifically exempted from the provisions of this 56.25 chapter and from computation of the amount of tax imposed by it 56.26 the following: 56.27 (1) purchase or use, including use under a lease purchase 56.28 agreement or installment sales contract made pursuant to section 56.29 465.71, of any motor vehicle by the United States and its 56.30 agencies and instrumentalities and by any person described in 56.31 and subject to the conditions provided in section 297A.67, 56.32 subdivision 11; 56.33 (2) purchase or use of any motor vehicle by any person who 56.34 was a resident of another state or country at the time of the 56.35 purchase and who subsequently becomes a resident of Minnesota, 56.36 provided the purchase occurred more than 60 days prior to the 57.1 date such person began residing in the state of Minnesota and 57.2 the motor vehicle was registered in the person's name in the 57.3 other state or country; 57.4 (3) purchase or use of any motor vehicle by any person 57.5 making a valid election to be taxed under the provisions of 57.6 section 297A.90; 57.7 (4) purchase or use of any motor vehicle previously 57.8 registered in the state of Minnesota when such transfer 57.9 constitutes a transfer within the meaning of section 118, 331, 57.10 332, 336, 337, 338, 351, 355, 368, 721, 731, 1031, 1033, or 57.11 1563(a) of the Internal Revenue Code of 1986, as amended through 57.12 December 31, 1999; 57.13 (5) purchase or use of any vehicle owned by a resident of 57.14 another state and leased to a Minnesota based private or for 57.15 hire carrier for regular use in the transportation of persons or 57.16 property in interstate commerce provided the vehicle is titled 57.17 in the state of the owner or secured party, and that state does 57.18 not impose a sales tax or sales tax on motor vehicles used in 57.19 interstate commerce; 57.20 (6) purchase or use of a motor vehicle by a private 57.21 nonprofit or public educational institution for use as an 57.22 instructional aid in automotive training programs operated by 57.23 the institution. "Automotive training programs" includes motor 57.24 vehicle body and mechanical repair courses but does not include 57.25 driver education programs; 57.26 (7) purchase of a motor vehicle for use as an ambulance by 57.27 an ambulance service licensed under section 144E.10; 57.28 (8) purchase of a motor vehicle by or for a public library, 57.29 as defined in section 134.001, subdivision 2, as a bookmobile or 57.30 library delivery vehicle; 57.31 (9) purchase of a ready-mixed concrete truck; 57.32 (10) purchase or use of a motor vehicle by a town for use 57.33 exclusively for road maintenance, including snowplows and dump 57.34 trucks, but not including automobiles, vans, or pickup trucks; 57.35 (11) purchase or use of a motor vehicle by a corporation, 57.36 society, association, foundation, or institution organized and 58.1 operated exclusively for charitable, religious, or educational 58.2 purposes, except a public school, university, or library, but 58.3 only if the vehicle is: 58.4 (i) a truck, as defined in section 168.011, a bus, as 58.5 defined in section 168.011, or a passenger automobile, as 58.6 defined in section 168.011, if the automobile is designed and 58.7 used for carrying more than nine persons including the driver; 58.8 and 58.9 (ii) intended to be used primarily to transport tangible 58.10 personal property or individuals, other than employees, to whom 58.11 the organization provides service in performing its charitable, 58.12 religious, or educational purpose; 58.13 (12) purchase of a motor vehicle for use by a transit 58.14 provider exclusively to provide transit service is exempt if the 58.15 transit provider is either (i) receiving financial assistance or 58.16 reimbursement under section 174.24 or 473.384, or (ii) operating 58.17 under section 174.29, 473.388, or 473.405; 58.18 (13) purchase or use of a motor vehicle by a qualified 58.19 business, as defined in section 469.310, located in a job 58.20 opportunity building zone, if the motor vehicle is principally 58.21 garaged in the job opportunity building zone and is primarily 58.22 used as part of or in direct support of the person's operations 58.23 carried on in the job opportunity building zone. The exemption 58.24 under this clause applies to sales, if the purchase was made and 58.25 delivery received during the duration of the job opportunity 58.26 building zone. The exemption under this clause also applies to 58.27 any local sales and use tax; 58.28 (14) purchase or use after June 30, 2004, and before July 58.29 1, 2007, of a motor vehicle by a state agency or political 58.30 subdivision, provided that the motor vehicle has a fuel 58.31 efficiency greater than 45 miles per gallon in highway use, and 58.32 greater than 35 miles per gallon in city use, as certified by 58.33 the United States Environmental Protection Agency. 58.34[EFFECTIVE DATE.] This section is effective for sales and 58.35 transfers made after June 30, 2004, and before July 1, 2007. 58.36 Sec. 24. Minnesota Statutes 2002, section 477A.016, is 59.1 amended to read: 59.2 477A.016 [NEW TAXES PROHIBITED.] 59.3 No county, city, town or other taxing authority shall 59.4increase a present tax orimpose anewtax onsales orincome. 59.5[EFFECTIVE DATE.] This section is effective on and after 59.6 July 1, 2004. 59.7 Sec. 25. Laws 1986, chapter 379, section 1, is amended to 59.8 read: 59.9 Section 1. [CITY OF ST. CLOUD; LIQUOR AND FOOD TAX.] 59.10 Subdivision 1. [LIQUOR AND FOOD TAX AUTHORIZED.] 59.11 Notwithstanding Minnesota Statutes, section 477A.016, or any 59.12 ordinance, city charter, or other provision of law, the city of 59.13 St. Cloud may, by ordinance, impose a sales tax supplemental to 59.14 the general sales tax imposed in Minnesota Statutes, chapter 59.15 297A, the proceeds of which shall be used in accordance with 59.16 subdivision 2. The tax imposed by the city maybenotmore than59.17oneexceed two percent on the gross receipts from all retail 59.18 on-sales of intoxicating liquor and fermented malt beverages 59.19 sold at licensed on-sale liquor establishments located within 59.20 its geographic boundaries, or not more thanonetwo percent on 59.21 the gross receipts from the retail sale of food and beverages 59.22 not subject to the liquor tax by a restaurant or place of 59.23 refreshment located within its geographic boundaries, or both. 59.24 For purposes of this act, the city shall define the terms 59.25 "restaurant" and "place of refreshment" by resolution. The 59.26 governing body of the city may adopt an ordinance establishing a 59.27 convention center taxing district. The ordinance shall describe 59.28 with particularity the area within the city to be included in 59.29 the district. If the city establishes a convention center 59.30 taxing district, the sales taxes authorized under this 59.31 subdivision may be imposed only upon the sales occurring at 59.32 on-sale liquor establishments, restaurants, or other places of 59.33 refreshment located within the district. The city may impose a 59.34 tax at a rate that is greater than one percent, not to exceed 59.35 two percent, only after the approval of the voters of the city 59.36 at the next general election. 60.1 Subd. 2. [USE OF PROCEEDS OF LIQUOR AND FOOD TAX.] The 60.2 proceeds of any tax imposed under subdivision 1 shall be used by 60.3 the city to pay all or a portion of the expenses of constructing 60.4 a convention center facilityorand related facilities, and the 60.5 municipal athletic complex. Authorized expenses include, but 60.6 are not limited to, securing or paying debt service on bonds or 60.7 other obligations issued to finance the construction of a 60.8 convention center facilityorand related facilities, and the 60.9 municipal athletic complex. For the purposes of this act, 60.10 "related facilities" means all publicly owned real or personal 60.11 property that the governing body of the city determines will be 60.12 necessary to facilitate the use of theconvention center60.13 facilities including, but not limited to, parking, skyways, 60.14 lighting, and landscaping. 60.15 Subd. 3. [EXPIRATION OF TAXING AUTHORITY.] The authority 60.16 granted by subdivision 1 to the city to impose a liquor and food 60.17 tax shall expire when the principal and interest on any bonds or 60.18 other obligations issued to finance construction of a convention 60.19 center facilityorand related facilities, and municipal 60.20 athletic complex have been paid or at an earlier time as the 60.21 city shall, by ordinance, determine. 60.22[EFFECTIVE DATE.] This section is effective the day after 60.23 compliance by the city of St. Cloud with Minnesota Statutes, 60.24 section 645.021, subdivision 3. 60.25 Sec. 26. Laws 1986, chapter 379, section 2, subdivision 1, 60.26 is amended to read: 60.27 Subdivision 1. [ADDITIONAL TAX AUTHORIZED.] 60.28 Notwithstanding Minnesota Statutes, section 477A.016, or any 60.29 ordinance, city charter, or other provision of law, the city of 60.30 St. Cloud may, by ordinance, impose a tax at a rate not to 60.31 exceedtwothree percent in addition to the tax authorized under 60.32 Laws 1979, chapter 197, on the gross receipts from the 60.33 furnishing for consideration of lodging at a hotel, motel, 60.34 rooming house, tourist court, or resort other than the renting 60.35 or leasing of it for a continuous period of 30 days or 60.36 more. The city may impose a tax at a rate that is greater than 61.1 two percent, not to exceed three percent, only after the 61.2 approval of the voters of the city at the next general election. 61.3[EFFECTIVE DATE.] This section is effective the day after 61.4 compliance by the city of St. Cloud with Minnesota Statutes, 61.5 section 645.021, subdivision 3. 61.6 Sec. 27. Laws 1991, chapter 291, article 8, section 27, 61.7 subdivision 4, is amended to read: 61.8 Subd. 4. [EXPIRATION OF TAXING AUTHORITY AND EXPENDITURE 61.9 LIMITATION.] The authority granted by subdivisions 1 and 2 to 61.10 the city to impose a sales tax and an excise tax shall expire 61.11 when the principal and interest on any bonds or obligations 61.12 issued to finance construction of Riverfront 2000 and related 61.13 facilities have been paid or at an earlier time as the city 61.14 shall, by ordinance, determine.The total capital,61.15administrative, and operating expenditures payable from bond61.16proceeds and revenues received from the taxes authorized by61.17subdivisions 1 and 2, excluding investment earnings on bond61.18proceeds and revenues, shall not exceed $25,000,000 for61.19Riverfront 2000 and related facilities.61.20[EFFECTIVE DATE.] This section is effective upon compliance 61.21 by the city of Mankato with Minnesota Statutes, section 645.021, 61.22 subdivision 3. 61.23 Sec. 28. Laws 1991, chapter 291, article 8, section 27, 61.24 subdivision 5, is amended to read: 61.25 Subd. 5. [BONDS.] The city of Mankato may issue general 61.26 obligation bonds of the city in an aggregate amount not to 61.27 exceed $25,000,000 for Riverfront 2000 and related facilities, 61.28 without election under Minnesota Statutes, chapter 475, on the 61.29 question of issuance of the bonds or a tax to pay them. The 61.30 debt represented by bonds issued for Riverfront 2000 and related 61.31 facilities shall not be included in computing any debt 61.32 limitations applicable to the city of Mankato, and the levy of 61.33 taxes required by section 475.61 to pay principal of and 61.34 interest on the bonds shall not be subject to any levy 61.35 limitation or be included in computing or applying any levy 61.36 limitation applicable to the city. 62.1[EFFECTIVE DATE.] This section is effective upon compliance 62.2 by the city of Mankato with Minnesota Statutes, section 645.021, 62.3 subdivision 3. 62.4 Sec. 29. Laws 1996, chapter 471, article 2, section 29, is 62.5 amended to read: 62.6 Sec. 29. [CITY OF HERMANTOWN; SALES AND USE TAX.] 62.7 Subdivision 1. [SALES AND USE TAX AUTHORIZED.] (a) 62.8 Notwithstanding Minnesota Statutes, section 477A.016, or any 62.9 other contrary provision of law, ordinance, or city charter, the 62.10 city of Hermantown may, by ordinance, impose an additional sales 62.11 and use tax of up to one percent on salestransactions, storage, 62.12 and use taxable pursuant to Minnesota Statutes, chapter 297A, 62.13 that occur within the city. 62.14 (b) The proceeds of the first one-half of one percent of 62.15 tax imposed under this section must be usedto meet the costs of62.16 by the city for the following projects: 62.17 (1) extending a sewer interceptor line; 62.18 (2) construction of a booster pump station, reservoirs, and 62.19 related improvements to the water system; and 62.20 (3) construction of a police and fire station. 62.21 (c) Revenues received from the remaining one-half of one 62.22 percent of the tax authorized under this section must be used by 62.23 the city to pay all or part of the capital and administrative 62.24 costs of developing, acquiring, constructing, and initially 62.25 furnishing and equipping for the following projects: 62.26 (1) construction of a community recreation center; 62.27 (2) completion of a civic center services complex; 62.28 (3) construction and relocation of a new public works 62.29 facility; 62.30 (4) construction of roads, street improvements, and other 62.31 traffic control measures within the city; and 62.32 (5) acquisition, construction, and improvement of parks and 62.33 trails within the city. 62.34 (d) Authorized expenses include, but are not limited to, 62.35 acquiring property, paying construction, administrative, and 62.36 operating expenses related to the development of the projects 63.1 listed in paragraph (c), paying debt service on bonds or other 63.2 obligations, including lease obligations, issued to finance 63.3 construction, expansion, or improvement of the projects listed 63.4 in paragraph (c), and other compatible uses, including but not 63.5 limited to, parking, lighting, and landscaping. 63.6 Subd. 2. [REFERENDUM.] (a) If the Hermantown city council 63.7 proposes to impose the sales tax authorized by this section, it 63.8 shall conduct a referendum on the issue. 63.9 (b) If the Hermantown city council initially imposes the 63.10 tax at a rate that is less than one percent and proposes 63.11 increasing the tax rate at a later date up to the full one 63.12 percent, it shall conduct a referendum on the increase. 63.13 (c) The question of imposing or increasing the tax must be 63.14 submitted to the voters at a special or general election. The 63.15 tax may not be imposed unless a majority of votes cast on the 63.16 question of imposing the tax are in the affirmative. The 63.17 commissioner of revenue shall prepare a suggested form of 63.18 question to be presented at the election. This subdivision 63.19 applies notwithstanding any city charter provision to the 63.20 contrary. 63.21 Subd. 3. [ENFORCEMENT; COLLECTION; AND ADMINISTRATION OF 63.22 TAXES.] A sales tax imposed under this section must be reported 63.23 and paid to the commissioner of revenue with the state sales 63.24 taxes, and be subject to the same penalties, interest, and 63.25 enforcement provisions. The proceeds of the tax, less refunds 63.26 and a proportionate share of the cost of collection, shall be 63.27 remitted at least quarterly to the city. The commissioner shall 63.28 deduct from the proceeds remitted an amount that equals the 63.29 indirect statewide cost as well as the direct and indirect 63.30 department costs necessary to administer, audit, and collect the 63.31 tax. The amount deducted shall be deposited in the state 63.32 general fund. 63.33 Subd. 3a. [BONDING AUTHORITY.] (a) The city may issue 63.34 general obligation bonds under Minnesota Statutes, chapter 475, 63.35 to finance the costs in subdivision 1, paragraph (c). The total 63.36 amount of bonds issued for the projects under subdivision 1, 64.1 paragraph (c), may not exceed $12,900,000 in the aggregate. An 64.2 election to approve the bonds is not required. 64.3 (b) The bonds are not included in computing any debt 64.4 limitation applicable to the city and the levy of taxes under 64.5 Minnesota Statutes, section 475.61, to pay principal of and 64.6 interest on the bonds is not subject to any levy limitation. 64.7 (c) The taxes authorized under this section may be pledged 64.8 to and used for the payment of the bonds and any bonds issued to 64.9 refund them. 64.10 Subd. 4. [TERMINATION.] The portion of the tax authorized 64.11under this sectionto finance the improvements described in 64.12 subdivision 1, paragraph (b), terminates at the later of (1) ten 64.13 years after the date of initial imposition of the tax, or (2) on 64.14 the first day of the second month next succeeding a 64.15 determination by the city council that sufficient funds have 64.16 been received from that portion of the tax dedicated to finance 64.17thethose improvementsdescribed in subdivision 1, clauses (1)64.18to (3),and to prepay or retire at maturity the principal, 64.19 interest, and premium due on any bonds issued for the 64.20 improvements. The portion of the tax authorized to finance the 64.21 improvements described in subdivision 1, paragraph (c), 64.22 terminates when the revenues raised are sufficient to finance 64.23 those improvements, up to an amount equal to $12,900,000 plus 64.24 any interest, premium, and other costs associated with the bonds 64.25 issued under subdivision 3a. The city council may terminate 64.26 this portion of the tax earlier. Any funds remaining after 64.27 completion of the improvements and retirement or redemption of 64.28 the bonds may be placed in the general fund of the city. 64.29Subd. 5. [LOCAL APPROVAL; EFFECTIVE DATE.] This section is64.30effective the day after final enactment, upon compliance with64.31Minnesota Statutes, section 645.021, subdivision 3, by the city64.32of Hermantown.64.33[EFFECTIVE DATE.] This section is effective the day after 64.34 the governing body of the city of Hermantown and its chief 64.35 clerical officer comply with Minnesota Statutes, section 64.36 645.021, subdivisions 2 and 3. 65.1 Sec. 30. Laws 1998, chapter 389, article 8, section 43, 65.2 subdivision 3, is amended to read: 65.3 Subd. 3. [USE OF REVENUES.] Revenues received from the 65.4 taxes authorized by subdivisions 1 and 2 must be used by the 65.5 city to pay for the cost of collecting and administering the 65.6 taxes and to pay for the following projects: 65.7 (1) transportation infrastructure improvements including 65.8bothregional highway and airport improvements; 65.9 (2) improvements to the civic center complex; 65.10 (3) a municipal water, sewer, and storm sewer project 65.11 necessary to improve regional ground water quality; and 65.12 (4) construction of a regional recreation and sports center 65.13 andassociatedother higher education facilities available for 65.14 both community and student use, located at or adjacent to the65.15Rochester center. 65.16 The total amount of capital expenditures or bonds for these 65.17 projects that may be paid from the revenues raised from the 65.18 taxes authorized in this section may not exceed 65.19$71,500,000$111,500,000. The total amount of capital 65.20 expenditures or bonds for the project in clause (4) that may be 65.21 paid from the revenues raised from the taxes authorized in this 65.22 section may not exceed$20,000,000$28,000,000. 65.23 Sec. 31. Laws 1998, chapter 389, article 8, section 43, 65.24 subdivision 4, is amended to read: 65.25 Subd. 4. [BONDING AUTHORITY.] (a) The city may issue bonds 65.26 under Minnesota Statutes, chapter 475, to finance the capital 65.27 expenditure and improvement projects. An election to approve 65.28 the bonds under Minnesota Statutes, section 475.58, may be held 65.29 in combination with the election to authorize imposition of the 65.30 tax under subdivision 1. Whether to permit imposition of the 65.31 tax and issuance of bonds may be posed to the voters as a single 65.32 question. The question must state that the sales tax revenues 65.33 are pledged to pay the bonds, but that the bonds are general 65.34 obligations and will be guaranteed by the city's property taxes. 65.35 (b) The issuance of bonds under this subdivision is not 65.36 subject to Minnesota Statutes, section 275.60. 66.1 (c) The bonds are not included in computing any debt 66.2 limitation applicable to the city, and the levy of taxes under 66.3 Minnesota Statutes, section 475.61, to pay principal of and 66.4 interest on the bonds is not subject to any levy limitation. 66.5 The aggregate principal amount of bonds, plus the aggregate of 66.6 the taxes used directly to pay eligible capital expenditures and 66.7 improvements may not exceed$71,500,000$111,500,000, plus an 66.8 amount equal to the costs related to issuance of the bonds. 66.9 (d) The taxes may be pledged to and used for the payment of 66.10 the bonds and any bonds issued to refund them, only if the bonds 66.11 and any refunding bonds are general obligations of the city. 66.12 Sec. 32. Laws 1999, chapter 243, article 4, section 18, 66.13 subdivision 1, is amended to read: 66.14 Subdivision 1. [SALES AND USE TAX.] (a) Notwithstanding 66.15 Minnesota Statutes, section297A.48, subdivision 1a,477A.016, 66.16 or any other provision of law, ordinance, or city charter, if 66.17 approved by the city voters at the first municipal general 66.18 election held after the date of final enactment of this act or 66.19 at a special election held November 2, 1999, the city of Proctor 66.20 may impose by ordinance a sales and use tax of up to one-half of 66.21 one percent for the purposes specified in subdivision 3, 66.22 paragraph (a). The provisions of Minnesota Statutes, 66.23 section297A.48297A.99, govern the imposition, administration, 66.24 collection, and enforcement of the tax authorized under this 66.25 subdivision. 66.26 (b) The city of Proctor may impose by ordinance an 66.27 additional sales and use tax of up to one-half of one percent if 66.28 approved by the city voters at a general election or at a 66.29 special election held for this purpose. The revenues received 66.30 from this additional tax must be used for the purposes specified 66.31 in subdivision 3, paragraph (b). 66.32[EFFECTIVE DATE.] This section is effective the day 66.33 following final enactment, upon compliance by the city of 66.34 Proctor with Minnesota Statutes, section 645.021, subdivision 3. 66.35 Sec. 33. Laws 1999, chapter 243, article 4, section 18, 66.36 subdivision 3, is amended to read: 67.1 Subd. 3. [USE OF REVENUES.] (a) Revenues received from 67.2 taxes authorized by subdivisions 1, paragraph (a), and 2 must be 67.3 used by the city to pay the cost of collecting the taxes and to 67.4 pay for construction and improvement of the following city 67.5 facilities: 67.6 (1) streets; and 67.7 (2) constructing and equipping the Proctor community 67.8 activity center. 67.9 Authorized expenses include, but are not limited to, 67.10 acquiring property, paying construction and operating expenses 67.11 related to the development of an authorized facility, and paying 67.12 debt service on bonds or other obligations, including lease 67.13 obligations, issued to finance the construction, expansion, or 67.14 improvement of an authorized facility. The capital expenses for 67.15 all projects authorized under this paragraph that may be paid 67.16 with these taxes is limited to $3,600,000, plus an amount equal 67.17 to the costs related to issuance of the bonds. 67.18 (b) Revenues received from taxes authorized by subdivision 67.19 1, paragraph (b), must be used by the city to pay the cost of 67.20 collecting the taxes and for construction and improvements of 67.21 city streets, public utilities, sidewalks, bikeways, and trails. 67.22[EFFECTIVE DATE.] This section is effective the day 67.23 following final enactment, upon compliance by the city of 67.24 Proctor with Minnesota Statutes, section 645.021, subdivision 3. 67.25 Sec. 34. Laws 1999, chapter 243, article 4, section 18, 67.26 subdivision 4, is amended to read: 67.27 Subd. 4. [BONDING AUTHORITY.] (a) The city may issue bonds 67.28 under Minnesota Statutes, chapter 475, to finance the capital 67.29 expenditure and improvement projects described in subdivision 67.30 3. An election to approve the bonds under Minnesota Statutes, 67.31 section 475.58, is not required. 67.32 (b) The issuance of bonds under this subdivision is not 67.33 subject to Minnesota Statutes, sections 275.60 and279.61275.61. 67.34 (c) The bonds are not included in computing any debt 67.35 limitation applicable to the city, and the levy of taxes under 67.36 Minnesota Statutes, section 475.61, to pay principal of and 68.1 interest on the bonds is not subject to any levy limitation. 68.2 (d) For projects described in subdivision 3, paragraph (a), 68.3 the aggregate principal amount of bonds, plus the aggregate of 68.4 the taxes used directly to pay eligible capital expenditures and 68.5 improvements, may not exceed $3,600,000, plus an amount equal to 68.6 the costs related to issuance of the bonds, including interest 68.7 on the bonds. For projects described in subdivision 3, 68.8 paragraph (b), the aggregate principal amount of bonds may not 68.9 exceed $7,200,000, plus an amount equal to the costs related to 68.10 issuance of the bonds, including interest on the bonds. 68.11 (e) The sales and use and excise taxes authorized in this 68.12 section may be pledged to and used for the payment of the bonds 68.13 and any bonds issued to refund them only if the bonds and any 68.14 refunding bonds are general obligations of the city. 68.15[EFFECTIVE DATE.] This section is effective the day 68.16 following final enactment, upon compliance by the city of 68.17 Proctor with Minnesota Statutes, section 645.021, subdivision 3. 68.18 Sec. 35. Laws 2001, First Special Session chapter 5, 68.19 article 12, section 67, the effective date, is amended to read: 68.20[EFFECTIVE DATE.] This section is effective for purchases 68.21 and sales made after June 30, 2001, and beforeJanuary 1, 200368.22 July 1, 2006. 68.23[EFFECTIVE DATE.] This section is effective the day 68.24 following final enactment. 68.25 Sec. 36. Laws 2001, First Special Session chapter 5, 68.26 article 12, section 95, is amended to read: 68.27 Sec. 95. [REPEALER.] 68.28 (a) Minnesota Statutes 2000, sections 297A.61, subdivision 68.29 16; 297A.68, subdivision 21; and 297A.71, subdivisions 2 and 16, 68.30 are repealed effective for sales and purchases occurring after 68.31 June 30, 2001, except that the repeal of section 297A.61, 68.32 subdivision 16, paragraph (d), is effective for sales and 68.33 purchases occurring after July 31, 2001. 68.34(b) Minnesota Statutes 2000, sections 297A.62, subdivision68.352, and 297A.64, subdivision 1, are repealed effective for sales68.36and purchases made after December 31, 2005.69.1(c)(b) Minnesota Statutes 2000, section 297A.71, 69.2 subdivision 15, is repealed effective for sales and purchases 69.3 made after June 30, 2002. 69.4(d)(c) Minnesota Statutes 2000, section 289A.60, 69.5 subdivision 15, is repealed effective for liabilities after 69.6 January 1, 2003. 69.7[EFFECTIVE DATE.] This section is effective the day 69.8 following final enactment. 69.9 Sec. 37. Laws 2002, chapter 377, article 12, section 16, 69.10 subdivision 1, is amended to read: 69.11 Subdivision 1. [NONPROFIT CORPORATION MAY BE ESTABLISHED.] 69.12 The city of Thief River Falls may incorporate or authorize the 69.13 incorporation of a nonprofit corporation to operate a community 69.14 or regional center in the city. A nonprofit corporation 69.15 incorporated under this section is exempt from payment of sales 69.16 and use tax on materials, equipment, and supplies consumed or 69.17 incorporated into the construction of the community or regional 69.18 center. The exemption under this section applies to purchases 69.19 by the nonprofit corporation, a contractor, subcontractor, or 69.20 builder. A contractor, subcontractor, or builder that does not 69.21 pay sales tax on purchases for construction of the community or 69.22 regional center shall not charge sales or use tax to the 69.23 nonprofit corporation. The nonprofit corporation may file a 69.24 claim for refund for any sales taxes paid on the construction 69.25 costs of the community or regional center, and the commissioner 69.26 of revenue shall pay the refunded amount directly to the 69.27 nonprofit corporation. 69.28[EFFECTIVE DATE.] This section is effective retroactively 69.29 for purchases made on and after July 1, 2002. 69.30 Sec. 38. [CITY OF ALBERT LEA; SALES AND USE TAX.] 69.31 Subdivision 1. [SALES AND USE TAX 69.32 AUTHORIZED.] Notwithstanding Minnesota Statutes, section 69.33 477A.016, or any other provision of law, ordinance, or city 69.34 charter, the city of Albert Lea may, by ordinance, impose a 69.35 sales and use tax of one-half of one percent for the purposes 69.36 specified in subdivision 2. The provisions of Minnesota 70.1 Statutes, section 297A.99, govern the imposition, 70.2 administration, collection, and enforcement of the tax 70.3 authorized under this subdivision. 70.4 Subd. 2. [USE OF REVENUES.] The proceeds of the tax 70.5 imposed under this section shall be used to pay for lake 70.6 improvement projects as detailed in the Shell Rock River 70.7 watershed plan. 70.8 Subd. 3. [REFERENDUM.] If the Albert Lea City Council 70.9 proposes to impose the tax authorized by this section, the 70.10 question of imposing the tax must be submitted to the voters at 70.11 the next general election. 70.12 Subd. 4. [TERMINATION OF TAXES.] The taxes imposed under 70.13 this section expire at the earlier of (1) ten years after the 70.14 taxes are first imposed, or (2) when the city council first 70.15 determines that the amount of revenues raised to pay for the 70.16 projects under subdivision 2, shall meet or exceed the sum of 70.17 $15,000,000. Any funds remaining after completion of the 70.18 projects may be placed in the general fund of the city. 70.19[EFFECTIVE DATE.] This section is effective the day after 70.20 compliance by the governing body of the city of Albert Lea with 70.21 Minnesota Statutes, section 645.021, subdivision 3. 70.22 Sec. 39. [CITY OF BEAVER BAY; TAXES AUTHORIZED.] 70.23 Subdivision 1. [SALES AND USE TAXES.] Notwithstanding 70.24 Minnesota Statutes, section 477A.016, or any other provision of 70.25 law or ordinance, if approved by the voters of the city at the 70.26 next general election held after the date of final enactment of 70.27 this act, the city of Beaver Bay may impose by ordinance a sales 70.28 and use tax at a rate of up to one percent for the purposes 70.29 specified in subdivision 2. The provisions of Minnesota 70.30 Statutes, section 297A.99, govern the imposition, 70.31 administration, collection, and enforcement of the tax 70.32 authorized under this subdivision. 70.33 Subd. 2. [USE OF REVENUES.] The revenues received from 70.34 taxes authorized by subdivision 1 must be used to pay the bonded 70.35 indebtedness on the city community building and to provide 70.36 funding for recreational facilities, the upgrading of the water 71.1 and sewer system, upgrading and replacement of fire equipment, 71.2 and improvement of streets. 71.3 Subd. 3. [TERMINATION OF TAXES.] The authority granted 71.4 under subdivision 1 to the city of Beaver Bay to impose sales 71.5 and use taxes expires when the city council determines that the 71.6 amount of revenue received to pay the costs of the projects 71.7 described in subdivision 2 shall meet or exceed $1,500,000. Any 71.8 funds remaining after completion of the projects may be placed 71.9 in the general fund of the city. The tax imposed under 71.10 subdivision 1 may expire at an earlier time if the city so 71.11 determines by ordinance. 71.12[EFFECTIVE DATE.] This section is effective the day after 71.13 the governing body of the city of Beaver Bay and its chief 71.14 clerical officer timely comply with Minnesota Statutes, section 71.15 645.021, subdivisions 2 and 3. 71.16 Sec. 40. [CITY OF BEMIDJI.] 71.17 Subdivision 1. [SALES AND USE TAX AUTHORIZED.] 71.18 Notwithstanding Minnesota Statutes, section 477A.016, or any 71.19 other provision of law, ordinance, or city charter, pursuant to 71.20 the approval of the city voters at the general election held on 71.21 November 5, 2002, the city of Bemidji may impose by ordinance a 71.22 sales and use tax of one-half of one percent for the purposes 71.23 specified in subdivision 2. The provisions of Minnesota 71.24 Statutes, section 297A.99, govern the imposition, 71.25 administration, collection, and enforcement of the tax 71.26 authorized under this subdivision. 71.27 Subd. 2. [USE OF REVENUES.] Revenues received from the tax 71.28 authorized by subdivision 1 must be used for the cost of 71.29 collecting and administering the tax and to pay all or part of 71.30 the capital or administrative costs of the acquisition, 71.31 construction, and improvement of parks and trails within the 71.32 city, as provided for in the city of Bemidji's parks, open 71.33 space, and trail system plan, adopted by the Bemidji City 71.34 Council on November 21, 2001. Authorized expenses include, but 71.35 are not limited to, acquiring property, paying construction 71.36 expenses related to the development of these facilities and 72.1 improvements, and securing and paying debt service on bonds or 72.2 other obligations issued to finance acquisition, construction, 72.3 improvement, or development of parks and trails within the city 72.4 of Bemidji. 72.5 Subd. 3. [BONDS.] Pursuant to the approval of the city 72.6 voters at the general election held on November 5, 2002, the 72.7 city of Bemidji may issue, without an additional election, 72.8 general obligation bonds of the city in an amount not to exceed 72.9 $9,826,000 to pay capital and administrative expenses for the 72.10 acquisition, construction, improvement, and development of parks 72.11 and trails as specified in subdivision 2. The debt represented 72.12 by the bonds must not be included in computing any debt 72.13 limitations applicable to the city, and the levy of taxes 72.14 required by Minnesota Statutes, section 475.61, to pay the 72.15 principal of any interest on the bonds must not be subject to 72.16 any levy limitations or be included in computing or applying any 72.17 levy limitation applicable to the city. 72.18 Subd. 4. [TERMINATION OF TAX.] The tax imposed under 72.19 subdivision 1 expires when the Bemidji City Council determines 72.20 that the amount described in subdivision 3 has been received 72.21 from the tax to finance the capital and administrative costs for 72.22 acquisition, construction, improvement, and development of parks 72.23 and trails and to repay or retire at maturity the principal, 72.24 interest, and premium due on any bonds issued for the park and 72.25 trail improvements under subdivision 3. Any funds remaining 72.26 after completion of the park and trail improvements and 72.27 retirement or redemption of the bonds may be placed in the 72.28 general fund of the city. The tax imposed under subdivision 1 72.29 may expire at an earlier time if the city so determines by 72.30 ordinance. 72.31[EFFECTIVE DATE.] This section is effective the day after 72.32 compliance by the governing body of the city of Bemidji with 72.33 Minnesota Statutes, section 645.021, subdivision 3. 72.34 Sec. 41. [CITY OF CLOQUET; TAXES AUTHORIZED.] 72.35 Subdivision 1. [SALES AND USE TAX.] Notwithstanding 72.36 Minnesota Statutes, section 477A.016, or any other provision of 73.1 law, ordinance, or city charter, if approved by the voters 73.2 pursuant to Minnesota Statutes, section 297A.99, the city of 73.3 Cloquet may impose by ordinance a sales and use tax of up to 73.4 one-half of one percent for the purpose specified in subdivision 73.5 3. The provisions of Minnesota Statutes, section 297A.99, 73.6 govern the imposition, administration, collection, and 73.7 enforcement of the tax authorized under this subdivision. 73.8 Subd. 2. [EXCISE TAX AUTHORIZED.] Notwithstanding 73.9 Minnesota Statutes, section 477A.016, or any other provision of 73.10 law, ordinance, or city charter, the city of Cloquet may impose 73.11 by ordinance, for the purposes specified in subdivision 3, an 73.12 excise tax of up to $20 per motor vehicle, as defined by 73.13 ordinance, purchased or acquired from any person engaged within 73.14 the city in the business of selling motor vehicles at retail. 73.15 Subd. 3. [USE OF REVENUES.] Revenues received from taxes 73.16 authorized by subdivisions 1 and 2 must be used by the city to 73.17 pay the cost of collecting the taxes and to pay for the 73.18 following projects: 73.19 (1) construction and implementation of riverfront task 73.20 force park improvements including Veteran's Park; 73.21 (2) extension of water and sewer lines and other 73.22 improvements to city infrastructure necessary for construction 73.23 of a city industrial park; and 73.24 (3) costs associated with the closure of the Cloquet 73.25 Municipal Landfill. 73.26 Authorized expenses include, but are not limited to, 73.27 acquiring property and paying construction expenses related to 73.28 these improvements, and paying debt service on bonds or other 73.29 obligations issued to finance acquisition and construction of 73.30 these improvements. 73.31 Subd. 4. [BONDING AUTHORITY.] (a) The city may issue bonds 73.32 under Minnesota Statutes, chapter 475, to pay capital and 73.33 administrative expenses for the improvements described in 73.34 subdivision 3 in an amount that does not exceed $7,000,000. An 73.35 election to approve the bonds under Minnesota Statutes, section 73.36 475.58, is not required. 74.1 (b) The issuance of bonds under this subdivision is not 74.2 subject to Minnesota Statutes, sections 275.60 and 275.61. 74.3 (c) The debt represented by the bonds is not included in 74.4 computing any debt limitation applicable to the city, and any 74.5 levy of taxes under Minnesota Statutes, section 475.61, to pay 74.6 principal of and interest on the bonds is not subject to any 74.7 levy limitation. 74.8 Subd. 5. [TERMINATION OF TAXES.] The taxes imposed under 74.9 subdivisions 1 and 2 expire at the earlier of (1) 14 years, or 74.10 (2) when the city council determines that sufficient funds have 74.11 been received from the taxes to finance the capital and 74.12 administrative costs of the improvements described in 74.13 subdivision 3, plus the additional amount needed to pay the 74.14 costs related to issuance of bonds under subdivision 4, 74.15 including interest on the bonds. Any funds remaining after 74.16 completion of the project and retirement or redemption of the 74.17 bonds may be placed in the general fund of the city. The taxes 74.18 imposed under subdivisions 1 and 2 may expire at an earlier time 74.19 if the city so determines by ordinance. 74.20[EFFECTIVE DATE.] This section is effective the day after 74.21 the governing body of the city of Cloquet and its chief clerical 74.22 officer timely comply with Minnesota Statutes, section 645.021, 74.23 subdivisions 2 and 3. 74.24 Sec. 42. [CITY OF CLEARWATER.] 74.25 Subdivision 1. [SALES AND USE TAX AUTHORIZED.] 74.26 Notwithstanding Minnesota Statutes, section 477A.016, or any 74.27 other provision of law, ordinance, or city charter, pursuant to 74.28 the approval of the city voters at the next general election or 74.29 at a special election held for this purpose, the city of 74.30 Clearwater may impose by ordinance a sales and use tax of 74.31 one-half of one percent for the purposes specified in 74.32 subdivision 2. The provisions of Minnesota Statutes, section 74.33 297A.99, govern the imposition, administration, collection, and 74.34 enforcement of the tax authorized under this subdivision. 74.35 Subd. 2. [USE OF REVENUES.] Revenues received from the tax 74.36 authorized by subdivision 1 must be used for the cost of 75.1 collecting and administering the tax and to pay all or part of 75.2 the capital or administrative costs of the development, 75.3 acquisition, construction, and improvement of parks, trails, 75.4 parkland, open space, and land and buildings for a regional 75.5 community and recreation center. Authorized expenses include, 75.6 but are not limited to, acquiring property, paying construction 75.7 expenses related to the development of these facilities and 75.8 improvements, and securing and paying debt service on bonds or 75.9 other obligations issued to finance acquisition, construction, 75.10 improvement, or development. 75.11 Subd. 3. [BONDS.] Pursuant to the approval of the city 75.12 voters to impose the tax authorized in subdivision 1, the city 75.13 of Clearwater may issue without an additional election general 75.14 obligation bonds of the city in an amount not to exceed 75.15 $3,000,000 to pay capital and administrative expenses for the 75.16 acquisition, construction, improvement, and development of the 75.17 projects specified in subdivision 2. The debt represented by 75.18 the bonds must not be included in computing any debt limitations 75.19 applicable to the city, and the levy of taxes required by 75.20 Minnesota Statutes, section 475.61, to pay the principal or any 75.21 interest on the bonds must not be subject to any levy 75.22 limitations or be included in computing or applying any levy 75.23 limitation applicable to the city. 75.24 Subd. 4. [TERMINATION OF TAX.] The tax imposed under 75.25 subdivision 1 expires when the Clearwater City Council 75.26 determines that the amount described in subdivision 3 has been 75.27 received from the tax to finance the capital and administrative 75.28 costs for acquisition, construction, improvement, and 75.29 development of the projects specified in subdivision 2 and to 75.30 repay or retire at maturity the principal, interest, and premium 75.31 due on any bonds issued for the projects under subdivision 3. 75.32 Any funds remaining after completion of the projects specified 75.33 in subdivision 2 and retirement or redemption of the bonds may 75.34 be placed in the general fund of the city. The tax imposed 75.35 under subdivision 1 may expire at an earlier time if the city so 75.36 determines by ordinance. 76.1[EFFECTIVE DATE.] This section is effective the day after 76.2 compliance by the governing body of the city of Clearwater with 76.3 Minnesota Statutes, section 645.021, subdivision 3. 76.4 Sec. 43. [CITY OF MEDFORD; SALES AND USE TAX.] 76.5 Subdivision 1. [SALES AND USE TAX AUTHORIZED.] 76.6 Notwithstanding Minnesota Statutes, section 477A.016, or any 76.7 other provision of law, ordinance, or city charter, the city of 76.8 Medford may, by ordinance, impose a sales and use tax of 76.9 one-half of one percent for the purposes specified in 76.10 subdivision 2. Except as otherwise specifically provided, the 76.11 provisions of Minnesota Statutes, section 297A.99, govern the 76.12 imposition, administration, collection, and enforcement of the 76.13 tax authorized under this subdivision. 76.14 Subd. 2. [USE OF REVENUES.] The proceeds of the tax 76.15 imposed under this section must be used to pay up to $5,000,000 76.16 in costs related to improving the city's wastewater system and 76.17 wastewater treatment plant. 76.18 Subd. 3. [REFERENDUM.] If the Medford City Council 76.19 proposes to impose the tax authorized by this section, the 76.20 question of imposing the tax must be submitted to the voters at 76.21 the next general election. The tax may not be imposed unless 76.22 the majority of votes cast on the question of imposing the tax 76.23 are in the affirmative. The commissioner of revenue shall 76.24 prepare a suggested form of the question to be presented at the 76.25 election. The question must state that the sales tax revenues 76.26 would be pledged to pay any bonds issued under subdivision 4 and 76.27 that these bonds are guaranteed by the city's property taxes. 76.28 Subd. 4. [BONDING AUTHORITY.] (a) The city may issue bonds 76.29 under Minnesota Statutes, chapter 475, to finance the capital 76.30 expenditure and improvement projects authorized under 76.31 subdivision 2. The total amount of bonds issued for the 76.32 projects listed in subdivision 2 may not exceed $5,000,000 in 76.33 aggregate. An election to approve the bonds, as required under 76.34 Minnesota Statutes, section 475.58, is not required. 76.35 (b) The issuance of the bonds under this subdivision is not 76.36 subject to Minnesota Statutes, sections 275.60 and 275.61. 77.1 (c) The bonds are not included in computing any debt 77.2 limitation applicable to the city, and the levy of taxes under 77.3 Minnesota Statutes, section 475.61, to pay the principal of and 77.4 interest on the bonds is not subject to any levy limitation. 77.5 (d) The taxes authorized under this section may be pledged 77.6 to and used for the payment of the bonds and any bonds issued to 77.7 refund them only if the bonds and any refunding bonds are 77.8 general obligations of the city. 77.9 Subd. 5. [TERMINATION OF TAXES.] The taxes imposed under 77.10 this section expire at the earlier of (1) 20 years after the 77.11 taxes are first imposed, or (2) when the city council first 77.12 determines that the amount of revenues raised to pay for the 77.13 projects under subdivision 2 shall meet or exceed the sum of 77.14 $5,000,000, plus an amount equal to the costs related to the 77.15 issuance of bonds under subdivision 4. Any funds remaining 77.16 after completion of the projects and retirement or redemption of 77.17 the bonds may be placed in the general funds of the city. 77.18[EFFECTIVE DATE.] This section is effective the day after 77.19 compliance with the governing body of the city of Medford with 77.20 Minnesota Statutes, section 645.021, subdivision 3. 77.21 Sec. 44. [CITY OF PARK RAPIDS.] 77.22 Subdivision 1. [SALES AND USE TAX AUTHORIZED.] 77.23 Notwithstanding Minnesota Statutes, section 477A.016, or any 77.24 other provision of law, ordinance, or city charter, pursuant to 77.25 the approval of the city voters at the next general election or 77.26 at a special election held for this purpose, the city of Park 77.27 Rapids may impose by ordinance a sales and use tax of one 77.28 percent for the purposes specified in subdivision 2. The 77.29 provisions of Minnesota Statutes, section 297A.99, govern the 77.30 imposition, administration, collection, and enforcement of the 77.31 tax authorized under this subdivision. 77.32 Subd. 2. [USE OF REVENUES.] Revenues received from the tax 77.33 authorized by subdivision 1 must be used for the cost of 77.34 collecting and administering the tax and to pay all or part of 77.35 the capital or administrative costs of the development, 77.36 acquisition, construction, and improvement of the following 78.1 projects: 78.2 (1) two-thirds of the cost of construction and operation of 78.3 a community center that may include a senior citizen center, 78.4 fitness center, swimming pool, meeting rooms, indoor track, and 78.5 racquetball, basketball, and tennis courts, provided that an 78.6 amount equal to one-third of the cost of construction is 78.7 received from private sources; 78.8 (2) capital improvement projects including, but not limited 78.9 to, installation of water, sewer, storm sewer, street 78.10 improvements, new city water tower and well, costs related to 78.11 improvements to marked trunk highway 34; and 78.12 (3) park improvements. 78.13 Authorized expenses include, but are not limited to, 78.14 acquiring property, paying construction expenses related to the 78.15 development of these facilities and improvements, and securing 78.16 and paying debt service on bonds or other obligations issued to 78.17 finance acquisition, construction, improvement, or development. 78.18 Subd. 3. [BONDS.] Pursuant to the approval of the city 78.19 voters to impose the tax authorized in subdivision 1, the city 78.20 of Park Rapids may issue without an additional election general 78.21 obligation bonds of the city to pay capital and administrative 78.22 expenses for the acquisition, construction, improvement, and 78.23 development of the projects specified in subdivision 2. The 78.24 debt represented by the bonds must not be included in computing 78.25 any debt limitations applicable to the city, and the levy of 78.26 taxes required by Minnesota Statutes, section 475.61, to pay the 78.27 principal or any interest on the bonds must not be subject to 78.28 any levy limitations or be included in computing or applying any 78.29 levy limitation applicable to the city. 78.30 Subd. 4. [TERMINATION OF TAX.] The tax imposed under 78.31 subdivision 1 expires the earlier of July 1, 2023, or when the 78.32 city council determines that sufficient revenues have been 78.33 received to retire the bonds in subdivision 3. Any funds 78.34 remaining after completion of the projects specified in 78.35 subdivision 2 and retirement or redemption of the bonds may be 78.36 placed in the general fund of the city. The tax imposed under 79.1 subdivision 1 may expire at an earlier time if the city so 79.2 determines by ordinance. 79.3[EFFECTIVE DATE.] This section is effective the day after 79.4 compliance by the governing body of the city of Park Rapids with 79.5 Minnesota Statutes, section 645.021, subdivision 3. 79.6 Sec. 45. [CITY OF PROCTOR; LODGING TAX.] 79.7 The city of Proctor may use up to ten percent of the 79.8 revenues received from the lodging tax imposed by the city under 79.9 Minnesota Statutes, section 469.190, for preservation of the 79.10 Caboose and the Baldwin Locomotive, Class M3 Mallet, Number 225, 79.11 donated to the city by the Duluth, Missabe and Iron Range 79.12 Railway Company, and the F-101F aircraft, serial number 59-0407, 79.13 donated to the city by the Department of the Air Force. 79.14[EFFECTIVE DATE.] This section is effective the day 79.15 following final enactment. 79.16 Sec. 46. [ST. CLOUD AREA CITIES; SALES AND USE TAX 79.17 AUTHORIZED.] 79.18 Subdivision 1. [SALES AND USE TAX 79.19 AUTHORIZED.] Notwithstanding Minnesota Statutes, sections 79.20 297A.99, subdivision 3, paragraph (d), and 477A.016, or any 79.21 other provision of law, ordinance, or city charter, each of the 79.22 cities of St. Cloud, Sartell, Sauk Rapids, St. Augusta, St. 79.23 Joseph, and Waite Park may impose by ordinance a sales and use 79.24 tax at the rate of one-half of one percent for the purposes 79.25 specified in subdivision 2, pursuant to the approval of the 79.26 voters of that city at the next general election. The 79.27 provisions of Minnesota Statutes, section 297A.99, except 79.28 subdivision 3, paragraph (d), govern the imposition, 79.29 administration, collection, and enforcement of the tax 79.30 authorized under this subdivision. 79.31 Subd. 2. [USE OF REVENUES.] (a) Revenues received from the 79.32 tax authorized by subdivision 1 must be used for the cost of 79.33 collecting and administering the tax and to pay all or part of 79.34 the capital or administrative costs of the development, 79.35 acquisition, construction, improvement, and securing and paying 79.36 debt service on bonds or other obligations issued to finance the 80.1 following regional projects: 80.2 (1) St. Cloud Regional Airport; 80.3 (2) major transportation improvements; 80.4 (3) arts, libraries, and community centers; 80.5 (4) acquisition and improvement of park land and open 80.6 space; and 80.7 (5) St. Cloud Civic Center remodeling and expansion, not to 80.8 exceed $20,000,000 from the amount allocated to St. Cloud under 80.9 subdivision 3, clause (2). 80.10 (b) The revenues returned to each city under subdivision 3 80.11 may only be used to fund projects that have been approved by 80.12 voters at the referendum authorizing this tax. 80.13 Subd. 3. [ALLOCATION OF SALES AND USE TAX REVENUES TO 80.14 CITIES.] Revenues collected from the taxes authorized by 80.15 subdivision 1, after paying the cost of collecting and 80.16 administering the tax, shall be allocated to cities imposing the 80.17 tax as follows: 80.18 (1) the first $900,000 of revenues collected annually, 80.19 indexed annually to the Consumer Price Index, to the city of St. 80.20 Cloud for expansion of the St. Cloud Civic Center or the 80.21 construction and relocation of the Great River Regional Library; 80.22 and 80.23 (2) the revenues collected from the taxes imposed under 80.24 subdivision 1 that exceed the amount needed to meet the 80.25 obligations under clause (1) in any year shall be returned to 80.26 the cities pursuant to a joint powers agreement allocating sales 80.27 tax revenues among the cities. 80.28 Subd. 4. [ST. CLOUD BONDING AUTHORIZED.] Pursuant to the 80.29 approval of the city voters to impose the tax authorized in 80.30 subdivision 1, the city of St. Cloud may issue without an 80.31 additional election, general obligation bonds of the city not to 80.32 exceed $80,000,000 to pay the costs of the projects specified in 80.33 subdivision 2. The debt represented by the bonds must not be 80.34 included in computing any debt limitations applicable to the 80.35 city, and the levy of taxes required by Minnesota Statutes, 80.36 section 475.61, to pay the principal or any interest on the 81.1 bonds must not be subject to any levy limitations or be included 81.2 in computing or applying any levy limitation applicable to the 81.3 city. 81.4 Subd. 5. [TERMINATION OF TAX.] The tax imposed in the city 81.5 of St. Cloud under subdivision 1 expires when the city council 81.6 determines that sufficient funds have been collected from the 81.7 tax to retire or redeem the bonds authorized under subdivision 81.8 3. The taxes imposed in the cities of Sartell, Sauk Rapids, St. 81.9 Augusta, St. Joseph, and Waite Park expire when the projects 81.10 authorized under subdivision 2 have been completed, but no later 81.11 than 20 years after the date the tax is first imposed. Any 81.12 funds remaining after completion of the projects specified in 81.13 subdivision 2 and retirement or redemption of the bonds may be 81.14 placed in the general fund of the city. The tax imposed under 81.15 subdivision 1 may expire at an earlier time if the city so 81.16 determines by ordinance. 81.17[EFFECTIVE DATE.] This section is effective the day after 81.18 compliance by the governing body of the city with Minnesota 81.19 Statutes, section 645.021, subdivision 3, for sales and 81.20 purchases on and after January 1, 2006. 81.21 Sec. 47. [SALES AND USE TAX COMPLIANCE GAP.] 81.22 The commissioner must reduce the amount of the compliance 81.23 gap in the payment of sales and use tax by 25 percent before 81.24 December 31, 2006; and must reduce the compliance gap in the 81.25 payment of sales and use tax by an additional 25 percent before 81.26 December 31, 2008. The commissioner must establish an effective 81.27 method to allow individuals who purchase taxable products or 81.28 services and have not paid the tax at the time of the purchase 81.29 to pay the tax. The commissioner must advise residents of this 81.30 state how to pay sales and use tax. 81.31[EFFECTIVE DATE.] This section is effective the day 81.32 following final enactment. 81.33 Sec. 48. [WAITE PARK; LOCAL SALES TAX AUTHORIZED.] 81.34 Notwithstanding Minnesota Statutes, section 477A.016, or 81.35 any other provision of law, ordinance, or charter, the city of 81.36 Waite Park may impose a sales and use tax of one-half of one 82.1 percent pursuant to approval of the city voters at an election 82.2 held in November 2003. 82.3 Revenues from the tax imposed under this section must be 82.4 used for the purposes listed in Laws 2002, chapter 377, article 82.5 11, section 2, subdivision 2, and approved by the voters in the 82.6 November 2003 referendum. The amount of revenues collected from 82.7 this tax which may be spent for airport costs under Laws 2002, 82.8 chapter 377, article 11, section 2, subdivision 2, paragraph 82.9 (a), is limited to $25,000 for each quarter in which the tax is 82.10 imposed with the remainder returned to the city to be spent on 82.11 the other allowed uses. 82.12 The tax under this section shall be imposed beginning July 82.13 1, 2004, and shall expire at the same time as the taxes imposed 82.14 under Laws 2002, chapter 377, article 11, section 2. 82.15[EFFECTIVE DATE.] This section is effective the day 82.16 following final enactment, upon compliance of the governing body 82.17 of the city of Waite Park with Minnesota Statutes, section 82.18 645.021, subdivision 3. 82.19 Sec. 49. [CITY OF WASECA; SALES AND USE TAX.] 82.20 Subdivision 1. [SALES AND USE TAX 82.21 AUTHORIZED.] Notwithstanding Minnesota Statutes, section 82.22 477A.016, or any other provision of law, ordinance, or city 82.23 charter, the city of Waseca may, by ordinance, impose a sales 82.24 and use tax of one-half of one percent for the purposes 82.25 specified in subdivision 2. The provisions of Minnesota 82.26 Statutes, section 297A.99, govern the imposition, 82.27 administration, collection, and enforcement of the tax 82.28 authorized under this subdivision. 82.29 Subd. 2. [USE OF REVENUES.] The proceeds of the tax 82.30 imposed under this section must be used to pay for up to 82.31 $1,820,000 in costs related to one or more of the following 82.32 capital projects as described in the referendum in subdivision 3: 82.33 (1) water quality and lake improvements; 82.34 (2) community center improvements; 82.35 (3) an industrial incubator; and 82.36 (4) downtown improvements, including a theatre and blighted 83.1 property acquisition. 83.2 Subd. 3. [REFERENDUM.] If the Waseca city council proposes 83.3 to impose the tax authorized by this section, the question of 83.4 imposing the tax must be submitted to the voters at the next 83.5 general election. The tax may not be imposed unless the 83.6 majority of votes cast on the question of imposing the tax are 83.7 in the affirmative. The specific projects to be funded by the 83.8 tax must be identified at least 90 days before the referendum is 83.9 held and included in the question presented at the election. 83.10 The question must state that the sales tax revenues would be 83.11 pledged to pay any bonds issued under subdivision 4 and that 83.12 these bonds are guaranteed by the city's property taxes. 83.13 Subd. 4. [BONDING AUTHORITY.] The city may issue bonds 83.14 under Minnesota Statutes, chapter 475, to finance the capital 83.15 expenditure and improvement projects authorized under 83.16 subdivision 2 and approved under subdivision 3. The total 83.17 amount of bonds issued for the projects approved in subdivision 83.18 3 may not exceed $1,820,000 in aggregate. An election to 83.19 approve the bonds, as required under Minnesota Statutes, section 83.20 475.58, is not required. 83.21 Subd. 5. [TERMINATION OF TAXES.] The taxes imposed under 83.22 this section expire at the earlier of (1) ten years after the 83.23 taxes are first imposed, or (2) when the city council first 83.24 determines that the amount of revenues raised is sufficient to 83.25 finance the capital projects approved under subdivision 3 and to 83.26 prepay or retire at maturity the principal, interest, and 83.27 premium due on any bonds issued under subdivision 4. Any funds 83.28 remaining after completion of the projects may be placed in the 83.29 general funds of the city. 83.30[EFFECTIVE DATE.] This section is effective the day after 83.31 compliance with the governing body of the city of Waseca with 83.32 Minnesota Statutes, section 645.021, subdivision 3. 83.33 Sec. 50. [CITY OF WINONA.] 83.34 Subdivision 1. [SALES AND USE TAX 83.35 AUTHORIZED.] Notwithstanding Minnesota Statutes, section 83.36 477A.016, or any other provision of law, ordinance, or city 84.1 charter, if approved by the voters pursuant to Minnesota 84.2 Statutes, section 297A.99, the city of Winona may impose by 84.3 ordinance a sales and use tax of one-half of one percent for the 84.4 purposes specified in subdivision 3. The provisions of 84.5 Minnesota Statutes, section 297A.99, govern the imposition, 84.6 administration, collection, and enforcement of the tax 84.7 authorized under this subdivision. 84.8 Subd. 2. [EXCISE TAX AUTHORIZED.] Notwithstanding 84.9 Minnesota Statutes, section 477A.016, or any other provision of 84.10 law, ordinance, or city charter, the city of Winona may impose 84.11 by ordinance, for the purposes specified in subdivision 3, an 84.12 excise tax of up to $20 per motor vehicle, as defined by 84.13 ordinance, purchased or acquired from any person engaged within 84.14 the city in the business of selling motor vehicles at retail. 84.15 Subd. 3. [USE OF REVENUES.] Revenues received from the 84.16 taxes authorized by subdivisions 1 and 2 must be dedicated to 84.17 pay all or part of the capital or administrative costs of 84.18 transportation projects or transportation improvements located 84.19 within the city, and to pay the cost of collecting and 84.20 administering the tax. Authorized expenses include, but are not 84.21 limited to, acquiring property and paying construction and 84.22 engineering expenses related to the improvements. 84.23 Subd. 4. [TERMINATION OF TAX.] The taxes imposed under 84.24 subdivisions 1 and 2 expire when the Winona City Council 84.25 determines that sufficient funds have been received from the tax 84.26 to pay the costs of the transportation projects or improvements 84.27 to which the tax was dedicated or ten years after imposition of 84.28 the tax, whichever is earlier. Any funds remaining after 84.29 completion of the transportation project or transportation 84.30 improvements may be placed in a capital project fund of the city. 84.31 The tax imposed under subdivisions 1 and 2 may expire at an 84.32 earlier time if the city so determines by ordinance. 84.33[EFFECTIVE DATE.] This section is effective the day after 84.34 compliance by the governing body of the city of Winona with 84.35 Minnesota Statutes, section 645.021, subdivision 3. 84.36 Sec. 51. [DISTRIBUTION.] 85.1 For revenues from sales after December 31, 2005, and before 85.2 January 1, 2007, 70 percent of all revenues, including penalties 85.3 and interest, derived from the tax imposed under Minnesota 85.4 Statutes, section 297A.62, subdivision 2, are appropriated to 85.5 the commissioner of revenue for distribution to counties as 85.6 provided in this section. For sales after December 31, 2006, 85.7 the total amount distributed under this section for each year is 85.8 the same amount that was distributed for sales in 2006. Fifty 85.9 percent of the revenue must be allocated among all counties on a 85.10 per capita basis and 50 percent of the revenue must be allocated 85.11 to the county where the retail sale was made. The commissioner 85.12 shall determine the county in which a retail sale was made by 85.13 using zip codes. The commissioner shall distribute the revenue 85.14 to counties on or before the last day of each calendar quarter. 85.15 The revenue distributed to counties must be used to reduce 85.16 property taxes. To qualify for this distribution, a county must 85.17 certify to the commissioner of revenue that it has increased its 85.18 funding for chemical dependency treatment programs that tend to 85.19 reduce the burden of property taxation caused by individuals who 85.20 are chemically dependent. The amount of the increase must be at 85.21 least ten percent of the amount to be distributed. 85.22[EFFECTIVE DATE.] This section is effective for sales made 85.23 after December 31, 2005. 85.24 Sec. 52. [REPEALER.] 85.25 Minnesota Statutes 2002, section 297A.99, subdivision 13, 85.26 is repealed effective July 1, 2004. 85.27 ARTICLE 3 85.28 PROPERTY TAXES 85.29 Section 1. Minnesota Statutes 2002, section 123B.53, is 85.30 amended by adding a subdivision to read: 85.31 Subd. 1a. [DEBT SERVICE LEVIES; CHOICE OF TAX BASE.] A 85.32 school board may by resolution elect to levy the debt service 85.33 for a bond issued after July 1, 2004, against the referendum 85.34 market value of the district, as defined under section 126C.01, 85.35 subdivision 3, rather than the net tax capacity of the district, 85.36 except that for purposes of this subdivision, noncommercial 4c(1) 86.1 property under section 273.13 is valued at its market value. A 86.2 resolution to levy against referendum market value must be 86.3 passed at an open meeting of the board, at least 60 days prior 86.4 to the referendum election. 86.5[EFFECTIVE DATE.] This section is effective the day 86.6 following final enactment. 86.7 Sec. 2. Minnesota Statutes 2003 Supplement, section 86.8 123B.53, subdivision 4, is amended to read: 86.9 Subd. 4. [DEBT SERVICE EQUALIZATION REVENUE.] (a) The debt 86.10 service equalization revenue of a district equals the sum of the 86.11 first tier debt service equalization revenue and the second tier 86.12 debt service equalization revenue. 86.13 (b) The first tier debt service equalization revenue of a 86.14 district equals the greater of zero or the eligible debt service 86.15 revenue minus the amount raised by a levy of 15 percent times 86.16 the adjusted net tax capacity of the district minus the second 86.17 tier debt service equalization revenue of the district. 86.18 (c) The second tier debt service equalization revenue of a 86.19 district equals the greater of zero or the eligible debt service 86.20 revenue, excluding alternative facilities levies under section 86.21 123B.59, subdivision 5, minus the amount raised by a levy of 25 86.22 percent times the adjusted net tax capacity of the district. 86.23 (d) Debt service equalization revenue is determined as 86.24 provided under this subdivision regardless of whether the debt 86.25 service is being levied against net tax capacity or referendum 86.26 market value. 86.27[EFFECTIVE DATE.] This section is effective July 1, 2004. 86.28 Sec. 3. Minnesota Statutes 2002, section 123B.55, is 86.29 amended to read: 86.30 123B.55 [DEBT SERVICE LEVY.] 86.31 Subdivision 1. [LEVY AMOUNT.] A district may levy the 86.32 amounts necessary to make payments for bonds issued and for 86.33 interest on them, including the bonds and interest on them, 86.34 issued as authorized by Minnesota Statutes 1974, section 86.35 275.125, subdivision 3, clause (7)(C); and the amounts necessary 86.36 for repayment of debt service loans and capital loans, minus the 87.1 amount of debt service equalization revenue of the district. 87.2 Subd. 2. [AID APPORTIONMENT.] A district's debt service 87.3 equalization aid shall be apportioned between the net tax 87.4 capacity debt service levy and the referendum market value debt 87.5 service levy in the same proportions as eligible debt service 87.6 revenues resulting from bonds issued against net tax capacity 87.7 are to eligible debt service revenues resulting from bonds 87.8 issued against referendum market value. 87.9 Subd. 3. [NET TAX CAPACITY DEBT SERVICE LEVY.] The levy 87.10 amount determined under subdivision 1, plus the eligible debt 87.11 service revenues resulting from bonds issued against net tax 87.12 capacity, minus the debt service equalization aid apportioned to 87.13 the net tax capacity debt service levy, must be levied against 87.14 the net tax capacity of the district as determined under section 87.15 273.13 and must be included with the other net tax capacity 87.16 levies certified to the county auditor under section 275.07. 87.17 Subd. 4. [REFERENDUM MARKET VALUE DEBT SERVICE LEVY.] The 87.18 eligible debt service revenues resulting from bonds issued 87.19 against referendum market value, minus the debt service 87.20 equalization aid apportioned to the referendum market value debt 87.21 service levy, must be levied against the referendum market value 87.22 of the district as defined in section 126C.01, subdivision 3, 87.23 and must be separately certified to the county auditor under 87.24 section 275.07. 87.25[EFFECTIVE DATE.] This section is effective beginning with 87.26 taxes payable in 2005. 87.27 Sec. 4. Minnesota Statutes 2002, section 123B.71, 87.28 subdivision 9, is amended to read: 87.29 Subd. 9. [INFORMATION REQUIRED.] A school board proposing 87.30 to construct a facility described in subdivision 8 shall submit 87.31 to the commissioner a proposal containing information including 87.32 at least the following: 87.33 (1) the geographic area and population to be served, 87.34 preschool through grade 12 student enrollments for the past five 87.35 years, and student enrollment projections for the next five 87.36 years; 88.1 (2) a list of existing facilities by year constructed, 88.2 their uses, and an assessment of the extent to which alternate 88.3 facilities are available within the school district boundaries 88.4 and in adjacent school districts; 88.5 (3) a list of the specific deficiencies of the facility 88.6 that demonstrate the need for a new or renovated facility to be 88.7 provided, and a list of the specific benefits that the new or 88.8 renovated facility will provide to the students, teachers, and 88.9 community users served by the facility; 88.10 (4) the relationship of the project to any priorities 88.11 established by the school district, educational cooperatives 88.12 that provide support services, or other public bodies in the 88.13 service area; 88.14 (5) a specification of how the project will increase 88.15 community use of the facility and whether and how the project 88.16 will increase collaboration with other governmental or nonprofit 88.17 entities; 88.18 (6) a description of the project, including the 88.19 specification of site and outdoor space acreage and square 88.20 footage allocations for classrooms, laboratories, and support 88.21 spaces; estimated expenditures for the major portions of the 88.22 project; and the dates the project will begin and be completed; 88.23 (7) a specification of the source of financing the project; 88.24 the scheduled date for a bond issue or school board action; a 88.25 schedule of payments, including debt service equalization aid; 88.26 whether the debt service will be levied against net tax capacity 88.27 or referendum market value; and the effect of a bond issue on 88.28 local property taxes by the property class and valuation; 88.29 (8) an analysis of how the proposed new or remodeled 88.30 facility will affect school district operational or 88.31 administrative staffing costs, and how the district's operating 88.32 budget will cover any increased operational or administrative 88.33 staffing costs; 88.34 (9) a description of the consultation with local or state 88.35 road and transportation officials on school site access and 88.36 safety issues, and the ways that the project will address those 89.1 issues; 89.2 (10) a description of how indoor air quality issues have 89.3 been considered and a certification that the architects and 89.4 engineers designing the facility will have professional 89.5 liability insurance; 89.6 (11) as required under section 123B.72, for buildings 89.7 coming into service after July 1, 2002, a certification that the 89.8 plans and designs for the extensively renovated or new 89.9 facility's heating, ventilation, and air conditioning systems 89.10 will meet or exceed code standards; will provide for the 89.11 monitoring of outdoor airflow and total airflow of ventilation 89.12 systems; and will provide an indoor air quality filtration 89.13 system that meets ASHRAE standard 52.1; 89.14 (12) a specification of any desegregation requirements that 89.15 cannot be met by any other reasonable means; and 89.16 (13) a specification, if applicable, of how the facility 89.17 will utilize environmentally sustainable school facility design 89.18 concepts. 89.19[EFFECTIVE DATE.] This section is effective July 1, 2004. 89.20 Sec. 5. Minnesota Statutes 2002, section 126C.17, 89.21 subdivision 6, is amended to read: 89.22 Subd. 6. [REFERENDUM EQUALIZATION LEVY.] (a) For fiscal 89.23 year 2003and laterthrough 2006, a district's referendum 89.24 equalization levy equals the sum of the first tier referendum 89.25 equalization levy and the second tier referendum equalization 89.26 levy. 89.27 (b) A district's first tier referendum equalization levy 89.28 equals the district's first tier referendum equalization revenue 89.29 times the lesser of one or the ratio of the district's 89.30 referendum market value per resident marginal cost pupil unit to 89.31 $476,000. 89.32 (c) A district's second tier referendum equalization levy 89.33 equals the district's second tier referendum equalization 89.34 revenue times the lesser of one or the ratio of the district's 89.35 referendum market value per resident marginal cost pupil unit to 89.36 $270,000. 90.1 Sec. 6. Minnesota Statutes 2002, section 126C.17, is 90.2 amended by adding a subdivision to read: 90.3 Subd. 6a. [LOCAL EFFORT LEVEL.] (a) For fiscal year 2007 90.4 and later, a district's local effort level equals the sum of the 90.5 first tier referendum equalization level and the second tier 90.6 referendum local effort level. 90.7 (b) A district's first tier referendum local effort level 90.8 equals the district's first tier referendum equalization revenue 90.9 times the lesser of one or the ratio of the district's 90.10 referendum market value per resident marginal cost pupil unit to 90.11 $476,000. 90.12 (c) A district's second tier referendum local effort level 90.13 equals the district's second tier referendum equalization 90.14 revenue times the lesser of one or the ratio of the district's 90.15 referendum market value per resident marginal cost pupil unit to 90.16 $270,000. 90.17 Sec. 7. Minnesota Statutes 2002, section 126C.17, is 90.18 amended by adding a subdivision to read: 90.19 Subd. 6b. [LOCAL EFFORT REVENUE.] (a) For fiscal years 90.20 2007 and later, a school district's local effort revenue is 90.21 equal to its local effort level for that year. 90.22 (b) For referenda authorized under subdivision 9 prior to 90.23 June 30, 2005, a school district's local effort revenue must be 90.24 levied against the district's referendum market value according 90.25 to subdivision 10. 90.26 (c) For referenda authorized or renewed under subdivision 9 90.27 after June 30, 2005, that have been approved to be levied 90.28 against referendum market value, the local effort revenue must 90.29 be levied against the district's referendum market value 90.30 according to subdivision 10. 90.31 (d) For referenda authorized or renewed under subdivision 9 90.32 after June 30, 2005, that have been approved to be imposed as a 90.33 school referendum tax according to section 290.0621, the local 90.34 effort revenue must be raised as a tax against income liability 90.35 according to section 290.0621. 90.36 Sec. 8. Minnesota Statutes 2003 Supplement, section 91.1 126C.17, subdivision 7, is amended to read: 91.2 Subd. 7. [REFERENDUM EQUALIZATION AID.] (a) For fiscal 91.3 years 2004 through 2006, a district's referendum equalization 91.4 aid equals the difference between its referendum equalization 91.5 revenue and levy. For fiscal years 2007 and later, a district's 91.6 referendum equalization aid equals the difference between its 91.7 referendum equalization revenue and its local effort revenue. 91.8 (b) If a district's actual levy for first or second tier 91.9 referendum equalization revenue in fiscal years 2004 through 91.10 2006 is less than its maximum levy limit for that tier, aid 91.11 shall be proportionately reduced. If a district's actual local 91.12 effort revenue for first or second tier referendum equalization 91.13 revenue in fiscal years 2007 and later is less than its maximum 91.14 local effort revenue limit for that tier, aid shall be 91.15 proportionately reduced. 91.16 (c) Notwithstanding paragraph (a), the referendum 91.17 equalization aid for a district, where the referendum 91.18 equalization aid under paragraph (a) exceeds 90 percent of the 91.19 referendum revenue, must not exceed 18.6 percent of the formula 91.20 allowance times the district's resident marginal cost pupil 91.21 units. For fiscal years 2004 through 2006, a district's 91.22 referendum levy is increased by the amount of any reduction in 91.23 referendum aid under this paragraph. For fiscal years 2007 and 91.24 later, a district's local effort level is increased by the 91.25 amount of any reduction in referendum aid under this paragraph. 91.26 Sec. 9. Minnesota Statutes 2003 Supplement, section 91.27 126C.17, subdivision 9, is amended to read: 91.28 Subd. 9. [REFERENDUM REVENUE.] (a) The revenue authorized 91.29 by section 126C.10, subdivision 1, may be increased in the 91.30 amount approved by the voters of the district at a referendum 91.31 called for the purpose. The referendum may be called by the 91.32 board or shall be called by the board upon written petition of 91.33 qualified voters of the district. The referendum must be 91.34 conducted one or two calendar years before the increased levy 91.35 authority, if approved, first becomes payable. Only one 91.36 election to approve an increase may be held in a calendar year. 92.1 Unless the referendum is conducted by mail under paragraph (g), 92.2 the referendum must be held on the first Tuesday after the first 92.3 Monday in November. The ballot must state the maximum amount of 92.4 the increased revenue per resident marginal cost pupil unit, the92.5estimated referendum tax rate as a percentage of referendum92.6market value in the first year it is to be levied, and that the92.7revenue must be used to finance school operations. The ballot 92.8 may state a schedule, determined by the board, of increased 92.9 revenue per resident marginal cost pupil unit that differs from 92.10 year to year over the number of years for which the increased 92.11 revenue is authorized.If the ballot contains a schedule92.12showing different amounts, it must also indicate the estimated92.13referendum tax rate as a percent of referendum market value for92.14the amount specified for the first year and for the maximum92.15amount specified in the schedule.The ballot, including a 92.16 ballot on the question to revoke or reduce the increased revenue 92.17 amount under paragraph (c), must abbreviate the term "per 92.18 resident marginal cost pupil unit" as "per pupil unit." The 92.19 ballot may state that existing referendumlevytaxing authority 92.20 is expiring. In this case, if the referendum authority is based 92.21 on a property tax levy, the ballot may also compare the proposed 92.22 levy authority to the existing expiring levy authority, and 92.23 express the proposed increase as the amount, if any, over the 92.24 expiring referendum levy authority. The ballot must designate 92.25 the specific number of years, not to exceed ten, for which the 92.26 referendum authorization applies. The notice required under 92.27 section 275.60 may be modified to read, in cases of renewing 92.28 existing levies: 92.29 "BY VOTING "YES" ON THIS BALLOT QUESTION, YOU MAY BE VOTING 92.30 FOR A PROPERTY TAX INCREASE." 92.31 If the referendum is on a proposed income tax under section 92.32 290.0621, the notice must read: 92.33 "BY VOTING "YES" ON THIS BALLOT QUESTION, YOU MAY BE VOTING 92.34 FOR AN INCOME TAX INCREASE." 92.35 The ballot may contain a textual portion with the 92.36 information required in this subdivision and a question stating 93.1 substantially the following: 93.2 "Shall the increase in the revenue proposed by (petition 93.3 to) the board of ........., School District No. .., be approved?" 93.4 If approved, an amount equal to the approved revenue per 93.5 resident marginal cost pupil unit times the resident marginal 93.6 cost pupil units for the school year beginning in the year after 93.7 the levy is certified or the income tax is imposed shall be 93.8 authorized for certification for the number of years approved, 93.9 if applicable, or until revoked or reduced by the voters of the 93.10 district at a subsequent referendum. A referendum may be 93.11 conducted on the question of converting an existing referendum 93.12 property tax levy to a school referendum income tax to be 93.13 imposed under section 290.0621. 93.14 (b) The board must prepare and deliver by first class mail 93.15 at least 15 days but no more than 30 days before the day of the 93.16 referendum to each taxpayer a notice of the referendum and the 93.17 proposed revenue increase. The board need not mail more than 93.18 one notice to any taxpayer. For the purpose of giving mailed 93.19 notice under this subdivision for a referendum based on a 93.20 property tax levy, owners must be those shown to be owners on 93.21 the records of the county auditor or, in any county where tax 93.22 statements are mailed by the county treasurer, on the records of 93.23 the county treasurer. Every property owner whose name does not 93.24 appear on the records of the county auditor or the county 93.25 treasurer is deemed to have waived this mailed notice unless the 93.26 owner has requested in writing that the county auditor or county 93.27 treasurer, as the case may be, include the name on the records 93.28 for this purpose. The notice for a referendum based on a 93.29 property tax levy must project the anticipated amount of tax 93.30 increase in annual dollarsand annual percentagefor typical 93.31 residential homesteads, agricultural homesteads, apartments, and 93.32 commercial-industrial property within the school district. For 93.33 the purpose of giving mailed notice under this subdivision, for 93.34 a referendum based on an income tax under section 290.0621, 93.35 taxpayers must be those shown to be domiciled in the school 93.36 district as indicated on the space which must be provided for 94.1 this information on the Minnesota individual income tax form for 94.2 the taxable year ending before the calendar year when the 94.3 referendum is conducted. Every individual whose domicile is in 94.4 the school district whose name does not appear on the income tax 94.5 return as having a domicile in the district is deemed to have 94.6 waived this mailed notice unless the individual has requested in 94.7 writing that the county auditor or county treasurer, as the case 94.8 may be, include the individual's name on the records for this 94.9 purpose. The notice must project the anticipated amount of tax 94.10 increase in annual dollars and annual percentage for typical 94.11 family incomes within the school district. 94.12 The notice for a referendum based on a property tax levy 94.13 may state that an existing referendum levy is expiring and 94.14 project the anticipated amount of increase over the existing 94.15 referendum levy in the first year, if any, in annual dollarsand94.16annual percentagefor typical residential homesteads, 94.17 agricultural homesteads, apartments, and commercial-industrial 94.18 property within the district. 94.19 The notice must include the following statement: "Passage 94.20 of this referendum will result in an increase in your property 94.21 taxes." However, in cases of renewing existing levies, the 94.22 notice may include the following statement: "Passage of this 94.23 referendum may result in an increase in your property taxes." 94.24 The notice for a referendum based on income tax may state 94.25 that an existing income tax referendum authority is expiring and 94.26 project the anticipated amount of increase over the existing 94.27 referendum levy in the first year, if any, in annual dollars and 94.28 annual percentage for typical family incomes within the district. 94.29 The notice must include the following statement: "Passage 94.30 of this referendum will result in an increase in your personal 94.31 income taxes." However, in cases of renewing existing income 94.32 tax referendum authorities, the notice may include the following 94.33 statement: "Passage of this referendum may result in an 94.34 increase in your personal income taxes." 94.35 (c) A referendum on the question of revoking or reducing 94.36 the increased revenue amount authorized pursuant to paragraph 95.1 (a) may be called by the board and shall be called by the board 95.2 upon the written petition of qualified voters of the district. 95.3 A referendum to revoke or reduce the revenue amount must state 95.4 the amount per resident marginal cost pupil unit by which the 95.5 authority is to be reduced. Revenue authority approved by the 95.6 voters of the district pursuant to paragraph (a) must be 95.7 available to the school district at least once before it is 95.8 subject to a referendum on its revocation or reduction for 95.9 subsequent years. Only one revocation or reduction referendum 95.10 may be held to revoke or reduce referendum revenue for any 95.11 specific year and for years thereafter. 95.12 (d) A petition authorized by paragraph (a) or (c) is 95.13 effective if signed by a number of qualified voters in excess of 95.14 15 percent of the registered voters of the district on the day 95.15 the petition is filed with the board. A referendum invoked by 95.16 petition must be held on the date specified in paragraph (a). 95.17 (e) The approval of 50 percent plus one of those voting on 95.18 the question is required to pass a referendum authorized by this 95.19 subdivision. 95.20 (f) At least 15 days before the day of the referendum, the 95.21 district must submit a copy of the notice required under 95.22 paragraph (b) to the commissioner and to the county auditor of 95.23 each county in which the district is located. Within 15 days 95.24 after the results of the referendum have been certified by the 95.25 board, or in the case of a recount, the certification of the 95.26 results of the recount by the canvassing board, the district 95.27 must notify the commissioner of the results of the referendum. 95.28[EFFECTIVE DATE.] This section is effective for referenda 95.29 conducted on or after July 1, 2004. 95.30 Sec. 10. Minnesota Statutes 2002, section 168A.05, 95.31 subdivision 1b, is amended to read: 95.32 Subd. 1b. [MANUFACTURED HOME; EXEMPTION.] The provisions 95.33 of subdivision 1a shall not apply to (1) a manufactured home 95.34 which is sold or otherwise disposed of pursuant to section 95.35 504B.271 by the owner of a manufactured home park as defined in 95.36 section 327.14, subdivision 3, or (2) a manufactured home which 96.1 is sold pursuant to section 504B.265 by the owner of a 96.2 manufactured home park. No county auditor or treasurer shall 96.3 require a manufactured home park owner to satisfy the delinquent 96.4 or current year's personal property taxes owed as condition of 96.5 the title transfer to the park owner. 96.6[EFFECTIVE DATE.] This section is effective the day 96.7 following final enactment. 96.8 Sec. 11. [174.11] [COMMISSIONER TO NOTIFY COUNTY AUDITOR 96.9 OF PROPERTY ACQUISITIONS.] 96.10 Upon acquisition of any taxable real property, the 96.11 commissioner must notify the county auditor of the county where 96.12 the property is located that the property has been acquired. 96.13 Sec. 12. Minnesota Statutes 2002, section 272.02, 96.14 subdivision 22, is amended to read: 96.15 Subd. 22. [WIND ENERGY CONVERSION SYSTEMS.] All real and 96.16 personal property of a wind energy conversion system as defined 96.17 in section 272.029, subdivision 2, is exempt from property tax 96.18 except that the land on which the property is located remains 96.19 taxable. If approved by the county where the property is 96.20 located, the value of the land on which the wind energy 96.21 conversion system is located shall not be increased or 96.22 decreased, but shall be valued in the same manner as similar 96.23 land that has not been improved with a wind energy conversion 96.24 system. The land shall be classified based on the most probable 96.25 use of the property if it were not improved with a wind energy 96.26 conversion system. 96.27[EFFECTIVE DATE.] This section is effective for assessment 96.28 year 2004 and thereafter, for taxes payable in 2005 and 96.29 thereafter. 96.30 Sec. 13. Minnesota Statutes 2003 Supplement, section 96.31 272.02, subdivision 47, is amended to read: 96.32 Subd. 47. [POULTRY LITTER BIOMASS GENERATION FACILITY; 96.33 PERSONAL PROPERTY.] Notwithstanding subdivision 9, clause (a), 96.34 attached machinery and other personal property which is part of 96.35 an electrical generating facility that meets the requirements of 96.36 this subdivision is exempt. At the time of construction, the 97.1 facility must: 97.2 (1) be designed to utilize poultry litter as a primary fuel 97.3 source; and 97.4 (2) be constructed for the purpose of generating power at 97.5 the facility that will be sold pursuant to a contract approved 97.6 by the Public Utilities Commission in accordance with the 97.7 biomass mandate imposed under section 216B.2424. 97.8 Construction of the facility must be commenced after 97.9 January 1, 2003, and before December 31,20032004. Property 97.10 eligible for this exemption does not include electric 97.11 transmission lines and interconnections or gas pipelines and 97.12 interconnections appurtenant to the property or the facility. 97.13[EFFECTIVE DATE.] This section is effective for taxes 97.14 levied in 2004, payable in 2005, and thereafter. 97.15 Sec. 14. Minnesota Statutes 2003 Supplement, section 97.16 272.02, subdivision 56, is amended to read: 97.17 Subd. 56. [ELECTRIC GENERATION FACILITY; PERSONAL 97.18 PROPERTY.] (a) Notwithstanding subdivision 9, clause (a), 97.19 attached machinery and other personal property which is part of 97.20 a combined-cycle combustion-turbine electric generation facility 97.21 that exceeds550300 megawatts of installed capacity and that 97.22 meets the requirements of this subdivision is exempt. At the 97.23 time of construction, the facility must: 97.24 (1) be designed to utilize natural gas as a primary fuel; 97.25 (2) not be owned by a public utility as defined in section 97.26 216B.02, subdivision 4; 97.27 (3) be located within five miles of an existing natural gas 97.28 pipeline and within four miles of an existing electrical 97.29 transmission substation; 97.30 (4) be located outside the metropolitan area as defined 97.31 under section 473.121, subdivision 2; and 97.32 (5) be designed to provide energy and ancillary services 97.33 and have received a certificate of need under section 216B.243. 97.34 (b) Construction of the facility must be commenced after 97.35 January 1, 2004, and before January 1, 2007, except that 97.36 property eligible for this exemption includes any expansion of 98.1 the facility that also meets the requirements of paragraph (a), 98.2 clauses (1) to (5), without regard to the date that construction 98.3 of the expansion commences. Property eligible for this 98.4 exemption does not include electric transmission lines and 98.5 interconnections or gas pipelines and interconnections 98.6 appurtenant to the property or the facility. 98.7[EFFECTIVE DATE.] This section is effective for taxes 98.8 levied in 2005, payable in 2006, and thereafter. 98.9 Sec. 15. Minnesota Statutes 2002, section 272.02, is 98.10 amended by adding a subdivision to read: 98.11 Subd. 68. [ELECTRIC GENERATION FACILITY; PERSONAL 98.12 PROPERTY.] (a) Notwithstanding subdivision 9, clause (a), 98.13 attached machinery and other personal property which is part of 98.14 a simple-cycle combustion-turbine electric generation facility 98.15 that exceeds 290 megawatts of installed capacity and that meets 98.16 the requirements of this subdivision is exempt. At the time of 98.17 construction, the facility must: 98.18 (1) be designed to utilize natural gas as a primary fuel; 98.19 (2) not be owned by a public utility as defined in section 98.20 216B.02, subdivision 4; 98.21 (3) be located within five miles of an existing natural gas 98.22 pipeline and within five miles of an existing electrical 98.23 transmission substation; 98.24 (4) be located outside the metropolitan area as defined 98.25 under section 473.121, subdivision 2; 98.26 (5) be designed to provide peaking capacity energy and 98.27 ancillary services and have satisfied all of the requirements 98.28 under section 216B.243; and 98.29 (6) have received, by resolution, the approval from the 98.30 governing body of the county, city, and school district in which 98.31 the proposed facility is to be located for the exemption of 98.32 personal property under this subdivision. 98.33 (b) Construction of the facility must be commenced after 98.34 January 1, 2005, and before January 1, 2009. Property eligible 98.35 for this exemption does not include electric transmission lines 98.36 and interconnections or gas pipelines and interconnections 99.1 appurtenant to the property or the facility. 99.2[EFFECTIVE DATE.] This section is effective for assessment 99.3 year 2006, taxes payable in 2007, and thereafter. 99.4 Sec. 16. Minnesota Statutes 2002, section 272.02, is 99.5 amended by adding a subdivision to read: 99.6 Subd. 69. [ELECTRIC GENERATION FACILITY; PERSONAL 99.7 PROPERTY.] Notwithstanding subdivision 9, clause (a), attached 99.8 machinery and other personal property which is part of a 99.9 simple-cycle, combustion-turbine electric generation facility 99.10 that exceeds 300 megawatts of installed capacity and that meets 99.11 the requirements of this subdivision is exempt. At the time of 99.12 the construction, the facility must: 99.13 (1) be designed to utilize natural gas as a primary fuel; 99.14 (2) be owned by a public utility as defined in section 99.15 216B.02, subdivision 4, and be located at or interconnected with 99.16 an existing generating plant of the utility; 99.17 (3) be designed to provide peaking, emergency backup, or 99.18 contingency services; 99.19 (4) satisfy a resource need identified in an approved 99.20 integrated resource plan filed under section 216B.2422; and 99.21 (5) have received, by resolution, the approval from the 99.22 governing body of the county and the city for the exemption of 99.23 personal property under this subdivision. 99.24 Construction of the facility must be commenced after 99.25 January 1, 2004, and before January 1, 2006. Property eligible 99.26 for this exemption does not include electric transmission lines 99.27 and interconnections or gas pipelines and interconnections 99.28 appurtenant to the property or the facility. 99.29[EFFECTIVE DATE.] This section is effective beginning with 99.30 assessment year 2005, for taxes payable in 2006, and thereafter. 99.31 Sec. 17. Minnesota Statutes 2002, section 272.02, is 99.32 amended by adding a subdivision to read: 99.33 Subd. 70. [ELECTRIC GENERATION FACILITY PERSONAL 99.34 PROPERTY.] (a) Notwithstanding subdivision 9, clause (a), and 99.35 section 453.54, subdivision 20, attached machinery and other 99.36 personal property which is part of an electric generation 100.1 facility that exceeds 150 megawatts of installed capacity and 100.2 meets the requirements of this subdivision is exempt. At the 100.3 time of construction, the facility must: 100.4 (1) be designed to utilize natural gas as a primary fuel; 100.5 (2) be owned and operated by a municipal power agency as 100.6 defined in section 453.52, subdivision 8; 100.7 (3) have received the certificate of need under section 100.8 216B.243; 100.9 (4) be located outside the metropolitan area as defined 100.10 under section 473.121, subdivision 2; and 100.11 (5) be designed to be a combined-cycle facility, although 100.12 initially the facility will be operated as a simple-cycle 100.13 combustion turbine. 100.14 (b) To qualify under this subdivision, an agreement must be 100.15 negotiated between the municipal power agency and the host city, 100.16 for a payment in lieu of property taxes to the host city. 100.17 (c) Construction of the facility must be commenced after 100.18 January 1, 2004, and before January 1, 2006. Property eligible 100.19 for this exemption does not include electric transmission lines 100.20 and interconnections or gas pipelines and interconnections 100.21 appurtenant to the property or the facility. 100.22[EFFECTIVE DATE.] This section is effective for assessment 100.23 year 2005, taxes payable in 2006, and thereafter. 100.24 Sec. 18. Minnesota Statutes 2002, section 272.02, is 100.25 amended by adding a subdivision to read: 100.26 Subd. 71. [BIOMASS ELECTRIC GENERATION FACILITY; PERSONAL 100.27 PROPERTY.] (a) Notwithstanding subdivision 9, clause (a), 100.28 attached machinery and other personal property which is a part 100.29 of an electric generation facility, including remote boilers 100.30 that comprise part of the district heating system, generating up 100.31 to 30 megawatts of installed capacity and that meets the 100.32 requirements of this subdivision is exempt. At the time of 100.33 construction, the facility must: 100.34 (1) be designed to utilize a minimum 90 percent waste 100.35 biomass as a fuel; 100.36 (2) not be owned by a public utility as defined in section 101.1 216B.02, subdivision 4; 101.2 (3) be located within a city of the first class and have 101.3 its primary location at a former garbage transfer station; and 101.4 (4) be designed to have capability to provide baseload 101.5 energy and district heating. 101.6 (b) Construction of the facility must be commenced after 101.7 January 1, 2004, and before January 1, 2008. Property eligible 101.8 for this exemption does not include electric transmission lines 101.9 and interconnections or gas pipelines and interconnections 101.10 appurtenant to the property or the facility. 101.11[EFFECTIVE DATE.] This section is effective for assessment 101.12 year 2005, taxes payable in 2006, and thereafter. 101.13 Sec. 19. Minnesota Statutes 2002, section 272.02, is 101.14 amended by adding a subdivision to read: 101.15 Subd. 72. [ELECTRIC GENERATION FACILITY; PERSONAL 101.16 PROPERTY.] (a) Notwithstanding subdivision 9, clause (a), 101.17 attached machinery and other personal property that is part of 101.18 either a simple-cycle, combustion-turbine electric generation 101.19 facility that equals or exceeds 150 megawatts of installed 101.20 capacity, or a combined-cycle, combustion-turbine electric 101.21 generation facility that equals or exceeds 225 megawatts of 101.22 installed capacity, and that in either case meets the 101.23 requirements of this subdivision, is exempt. At the time of 101.24 construction, the facility must: 101.25 (1) be designed to utilize natural gas as a primary fuel; 101.26 (2) not be owned by a public utility as defined in section 101.27 216B.02, subdivision 4; 101.28 (3) be located in a metropolitan county defined in section 101.29 473.121, subdivision 4, that has a population greater than 101.30 190,000 and less than 225,000 in the most recent federal 101.31 decennial census, within one mile of an existing natural gas 101.32 pipeline, and within one mile of an existing electrical 101.33 transmission substation; and 101.34 (4) be designed to provide energy and ancillary services 101.35 and have received a certificate of need under section 216B.243. 101.36 (b) Construction of the facility must be commenced after 102.1 January 1, 2005, and before January 1, 2008. Property eligible 102.2 for this exemption does not include electric transmission lines 102.3 and interconnections or gas pipelines and interconnections 102.4 appurtenant to the property or the facility. 102.5[EFFECTIVE DATE.] This section is effective for taxes 102.6 levied in 2005, payable in 2006, and thereafter. 102.7 Sec. 20. Minnesota Statutes 2002, section 272.02, is 102.8 amended by adding a subdivision to read: 102.9 Subd. 73. [PERSONAL RAPID TRANSIT SYSTEM.] All property 102.10 used in the operation and support of a personal rapid transit 102.11 system as defined in section 297A.61, subdivision 37, that 102.12 provides service to the public on a regular and continuing 102.13 basis, is exempt, provided that it is operated independent of 102.14 any government subsidies. 102.15[EFFECTIVE DATE.] This section is effective for taxes 102.16 payable in 2005 and subsequent years. 102.17 Sec. 21. Minnesota Statutes 2002, section 272.029, 102.18 subdivision 4, is amended to read: 102.19 Subd. 4. [REPORTS.] (a) An owner of a wind energy 102.20 conversion system subject to tax under subdivision 3 shall file 102.21 a report with the commissioner of revenue annually on or before 102.22March 1February 1 detailing the amount of electricity in 102.23 kilowatt-hours that was produced by the wind energy conversion 102.24 system for the previous calendar year. The commissioner shall 102.25 prescribe the form of the report. The report must contain the 102.26 information required by the commissioner to determine the tax 102.27 due to each county under this section for the current year. If 102.28 an owner of a wind energy conversion system subject to taxation 102.29 under this section fails to file the report by the due date, the 102.30 commissioner of revenue shall determine the tax based upon the 102.31 nameplate capacity of the system multiplied by a capacity factor 102.32 of 40 percent. 102.33 (b) On or beforeMarch 31February 28, the commissioner of 102.34 revenue shall notify the owner of the wind energy conversion 102.35 systems of the tax due to each county for the current year and 102.36 shall certify to the county auditor of each county in which the 103.1 systems are located the tax due from each owner for the current 103.2 year. 103.3[EFFECTIVE DATE.] This section is effective for taxes 103.4 payable in 2005 and thereafter. 103.5 Sec. 22. Minnesota Statutes 2002, section 272.029, 103.6 subdivision 6, is amended to read: 103.7 Subd. 6. [DISTRIBUTION OF REVENUES.] Revenues from the 103.8 taxes imposed under subdivision 5 must be part of the settlement 103.9 between the county treasurer and the county auditor under 103.10 section 276.09. The revenue must be distributed by the county 103.11 auditor or the county treasurer to all local taxing 103.12 jurisdictions in which the wind energy conversion system is 103.13 located, in the same proportion that each of the taxing 103.14 jurisdiction'scurrentprevious year's net tax capacity based 103.15 tax rate is to thecurrentprevious year's total local net tax 103.16 capacity based rate. 103.17[EFFECTIVE DATE.] This section is effective for taxes 103.18 payable in 2004 and thereafter. 103.19 Sec. 23. Minnesota Statutes 2003 Supplement, section 103.20 273.11, subdivision 1a, is amended to read: 103.21 Subd. 1a. [LIMITED MARKET VALUE.] In the case of: 103.22 (1) all property classified as agricultural homestead or 103.23 nonhomestead, residential homestead or nonhomestead, timber,or103.24 noncommercial seasonal residential recreational, or class 1c 103.25 resort property; and 103.26 (2) property classified as commercial-industrial that has a 103.27 total market value less than $500,000, the assessor shall 103.28 compare the value with the taxable portion of the value 103.29 determined in the preceding assessment except that for class 1c 103.30 resort property for assessment year 2004, the assessor shall 103.31 determine the limited market value as provided in subdivision 1b. 103.32For assessment year 2002, the amount of the increase shall103.33not exceed the greater of (1) ten percent of the value in the103.34preceding assessment, or (2) 15 percent of the difference103.35between the current assessment and the preceding assessment.103.36 For assessment year 2003 and thereafter, the amount of the 104.1 increase shall not exceed the greater of (1) 12 percent of the 104.2 value in the preceding assessment, or (2) 20 percent of the 104.3 difference between the current assessment and the preceding 104.4 assessment. 104.5For assessment year 2004, the amount of the increase shall104.6not exceed the greater of (1) 15 percent of the value in the104.7preceding assessment, or (2) 25 percent of the difference104.8between the current assessment and the preceding assessment.104.9For assessment year 2005, the amount of the increase shall104.10not exceed the greater of (1) 15 percent of the value in the104.11preceding assessment, or (2) 33 percent of the difference104.12between the current assessment and the preceding assessment.104.13For assessment year 2006, the amount of the increase shall104.14not exceed the greater of (1) 15 percent of the value in the104.15preceding assessment, or (2) 50 percent of the difference104.16between the current assessment and the preceding assessment.104.17 This limitation shall not apply to increases in value due 104.18 to improvements. For purposes of this subdivision, the term 104.19 "assessment" means the value prior to any exclusion under 104.20 subdivision 16. 104.21The provisions of this subdivision shall be in effect104.22through assessment year 2006 as provided in this subdivision.104.23 For purposes of this subdivision and subdivision 1b, "class 104.24 1c resort property" includes the portion of the property 104.25 classified class 1a or 1b homestead, the portion of the property 104.26 classified 1c, plus any remaining portion of the resort that is 104.27 classified 4c under section 273.13, subdivision 25, paragraph 104.28 (d), clause (1). 104.29 For purposes of the assessment/sales ratio study conducted 104.30 under section 127A.48, and the computation of state aids paid 104.31 under chapters 122A, 123A, 123B, 124D, 125A, 126C, 127A, and 104.32 477A, market values and net tax capacities determined under this 104.33 subdivision and subdivision 16, shall be used. 104.34 In the case of commercial-industrial property that 104.35 qualifies under clause (2) of the first paragraph of this 104.36 subdivision, for the first assessment year when the total market 105.1 value of the property exceeds $500,000, 33 percent of the 105.2 difference between the current assessment and the preceding 105.3 assessment must be added to the limited market value. For the 105.4 next assessment year, 50 percent of the difference between the 105.5 current assessment and the preceding assessment must be added to 105.6 the limited market value. In the third assessment year after 105.7 the total market value of the property initially exceeds 105.8 $500,000, this subdivision will no longer apply to the property. 105.9[EFFECTIVE DATE.] This section is effective the day 105.10 following final enactment for assessment year 2004, and 105.11 thereafter. 105.12 Sec. 24. Minnesota Statutes 2002, section 273.11, is 105.13 amended by adding a subdivision to read: 105.14 Subd. 1b. [CLASS 1C RESORTS; 2004 ASSESSMENT ONLY.] For 105.15 assessment year 2004, the valuation increase on class 1c resort 105.16 property shall not exceed the greater of (1) 15 percent of the 105.17 value of its 2002 assessment, or (2) 25 percent of the 105.18 difference in value between its 2004 assessment and its 2002 105.19 assessment. The valuation increase on class 1c resort property 105.20 for the 2005 and 2006 assessment years shall be determined based 105.21 upon the schedule contained in subdivision 1a. 105.22[EFFECTIVE DATE.] This section is effective the day 105.23 following final enactment. 105.24 Sec. 25. Minnesota Statutes 2002, section 273.11, is 105.25 amended by adding a subdivision to read: 105.26 Subd. 21. [VALUATION EXCLUSION FOR SEWAGE TREATMENT SYSTEM 105.27 IMPROVEMENTS.] Owners of property classified as class 1a, 1b, 105.28 1c, 2a, 4b, 4bb, or noncommercial 4c under section 273.13 may 105.29 apply for a valuation exclusion under this subdivision, provided 105.30 that the property is located in a county which has authorized 105.31 valuation exclusions under this subdivision, and provided that 105.32 the following conditions are met: 105.33 (1) a notice of noncompliance has been issued by a licensed 105.34 compliance inspector with regard to the individual sewage 105.35 treatment system serving the property under section 115.55, 105.36 subdivision 5b; 106.1 (2) the owner of the property furnishes documentation to 106.2 the satisfaction of the assessor that the property's individual 106.3 sewage treatment system has been replaced or refurbished, 106.4 including replacement of the individual system with a community 106.5 or cluster system, between May 1, 2004, and December 31, 2006; 106.6 and 106.7 (3) a certificate of compliance has been issued for the new 106.8 or refurbished system under section 115.55, subdivision 5. 106.9 Application must be made to the assessor on a form 106.10 prescribed by the commissioner of revenue. Property meeting the 106.11 requirements of this subdivision is eligible for a valuation 106.12 exclusion equal to 50 percent of the actual costs incurred, to a 106.13 maximum exclusion of $7,500, for a period of five years, after 106.14 which the amount of the exclusion will be added to the estimated 106.15 market value of the property. The valuation exclusion 106.16 terminates upon the sale of the property. If a property owner 106.17 applies for exclusion under this subdivision between January 1 106.18 and June 30 of any year, the exclusion first applies for taxes 106.19 payable in the following year. If a property owner applies for 106.20 exclusion under this subdivision between July 1 and December 31 106.21 of any year, the exclusion first applies for taxes payable in 106.22 the second following year. 106.23[EFFECTIVE DATE.] This section is effective for taxes 106.24 payable in 2005 and subsequent years. 106.25 Sec. 26. Minnesota Statutes 2002, section 273.11, is 106.26 amended by adding a subdivision to read: 106.27 Subd. 22. [VALUATION EXCLUSION FOR LEAD HAZARD REDUCTION.] 106.28 Owners of property classified as class 1a, 1b, 1c, 2a, 4b, or 106.29 4bb under section 273.13 may apply for a valuation exclusion for 106.30 lead hazard reduction, provided that the property is located in 106.31 a city which has authorized valuation exclusions under this 106.32 subdivision. A city which authorizes valuation exclusions under 106.33 this subdivision must establish guidelines for qualifying lead 106.34 hazard reduction projects and must designate an agency within 106.35 the city to issue certificates of completion of qualifying 106.36 projects. For purposes of this subdivision, "lead hazard 107.1 reduction" has the same meaning as in section 144.9501, 107.2 subdivision 17. 107.3 The property owner must obtain a certificate from the city 107.4 stating that the project has been completed and stating the cost 107.5 incurred by the owner in completing the project. Only projects 107.6 originating after April 30, 2004, may qualify for exclusion 107.7 under this subdivision. The property owner shall apply for a 107.8 valuation exclusion to the assessor on a form prescribed by the 107.9 commissioner of revenue. 107.10 A qualifying property is eligible for a valuation exclusion 107.11 equal to 50 percent of the actual costs incurred, to a maximum 107.12 exclusion of $15,000, for a period of five years, after which 107.13 the amount of the exclusion will be added to the estimated 107.14 market value of the property. The valuation exclusion shall 107.15 terminate upon the sale of the property. If a property owner 107.16 applies for exclusion under this subdivision between January 1 107.17 and June 30 of any year, the exclusion shall first apply for 107.18 taxes payable in the following year. If a property owner 107.19 applies for exclusion under this subdivision between July 1 and 107.20 December 31 of any year, the exclusion shall first apply for 107.21 taxes payable in the second following year. 107.22[EFFECTIVE DATE.] This section is effective for taxes 107.23 payable in 2005 and subsequent years. 107.24 Sec. 27. [273.1115] [AGGREGATE RESOURCE PRESERVATION 107.25 PROPERTY TAX LAW.] 107.26 Subdivision 1. [REQUIREMENTS.] Real estate is entitled to 107.27 valuation under this section only if all of the following 107.28 requirements are met: 107.29 (1) the property is classified 1a, 1b, 2a, or 2b property 107.30 under section 273.13, subdivisions 22 and 23; 107.31 (2) the property is at least ten contiguous acres, when the 107.32 application is filed under subdivision 2; 107.33 (3) the owner has filed a completed application for 107.34 deferment as specified in subdivision 2 with the county assessor 107.35 in the county in which the property is located; 107.36 (4) there are no delinquent taxes on the property; and 108.1 (5) a covenant on the land restricts its use as provided in 108.2 subdivision 2, clause (4). 108.3 Subd. 2. [APPLICATION.] Application for valuation 108.4 deferment under this section must be filed by May 1 of the 108.5 assessment year. Any application filed and granted continues in 108.6 effect for subsequent years until the property no longer 108.7 qualifies, provided that supplemental affidavits under 108.8 subdivision 6 are timely filed. The application must be filed 108.9 with the assessor of the county in which the real property is 108.10 located on such form as may be prescribed by the commissioner of 108.11 revenue. The application must be executed and acknowledged in 108.12 the manner required by law to execute and acknowledge a deed and 108.13 must contain at least the following information and any other 108.14 information the commissioner deems necessary: 108.15 (1) the legal description of the area; 108.16 (2) the name and address of owner; 108.17 (3) a copy of the affidavit filed under section 273.13, 108.18 subdivision 23, paragraph (h), in the case of property 108.19 classified class 2b, clause (5); or in the case of property 108.20 classified 1a, 1b, 2a, and 2b, clauses (1) to (3), the 108.21 application must include a similar document with the same 108.22 information as contained in the affidavit under section 273.13, 108.23 subdivision 23, paragraph (h); and 108.24 (4) a statement of proof from the owner that the land 108.25 contains a restrictive covenant limiting its use for the 108.26 property's surface to that which exists on the date of the 108.27 application and limiting its future use to the preparation and 108.28 removal of the aggregate commercial deposit under its surface. 108.29 To qualify under this clause, the covenant must be binding 108.30 on the owner or the owner's successor or assignee, and run with 108.31 the land, except as provided in subdivision 4 allowing for the 108.32 cancellation of the covenant under certain conditions. 108.33 Subd. 3. [DETERMINATION OF VALUE.] Upon timely application 108.34 by the owner as provided in subdivision 2, notwithstanding 108.35 sections 272.03, subdivision 8, and 273.11, the value of any 108.36 qualifying land described in subdivision 2 must be valued as if 109.1 it were agricultural property, using a per acre valuation equal 109.2 to the current year's per acre valuation of agricultural land in 109.3 the county. The assessor shall not consider any additional 109.4 value resulting from potential alternative and future uses of 109.5 the property. The buildings located on the land shall be valued 109.6 by the assessor in the normal manner. 109.7 Subd. 4. [CANCELLATION OF COVENANT.] The covenant required 109.8 under subdivision 2 may be canceled in two ways: 109.9 (1) by the owner beginning with the next subsequent 109.10 assessment year provided that the additional taxes as determined 109.11 under subdivision 5 are paid by the owner at the time of 109.12 cancellation; and 109.13 (2) by the city or town in which the property is located 109.14 beginning with the next subsequent assessment year, if the city 109.15 council or town board: 109.16 (i) changes the conditional use of the property; 109.17 (ii) revokes the mining permit; or 109.18 (iii) changes the zoning to disallow mining. 109.19 No additional taxes are imposed on the property under this 109.20 clause. 109.21 Subd. 4a. [COUNTY TERMINATION.] Within two years of the 109.22 effective date of this section, a county may, following notice 109.23 and public hearing, terminate application of this section in the 109.24 county. The termination is effective upon adoption of a 109.25 resolution of the county board. A termination applies 109.26 prospectively and does not affect property enrolled under this 109.27 section prior to the termination date. A county may reauthorize 109.28 application of this section by a resolution of the county board 109.29 revoking the termination. 109.30 Subd. 5. [ADDITIONAL TAXES.] When real property which has 109.31 been valued and assessed under this section no longer qualifies, 109.32 the portion of the land classified under subdivision 1, clause 109.33 (1), is subject to additional taxes. The additional tax amount 109.34 is determined by: 109.35 (1) computing the difference between (i) the current year's 109.36 taxes determined in accordance with subdivision 5, and (ii) an 110.1 amount as determined by the assessor based upon the property's 110.2 current year's estimated market value of like real estate at its 110.3 highest and best use and the appropriate local tax rate; and 110.4 (2) multiplying the amount determined in clause (1) by the 110.5 number of years the land was in the program under this section. 110.6 The current year's estimated market value as determined by 110.7 the assessor must not exceed the market value that would result 110.8 if the property was sold in an arms-length transaction and must 110.9 not be greater than it would have been had the actual bona fide 110.10 sale price of the property been used in lieu of that market 110.11 value. The additional taxes must be extended against the 110.12 property on the tax list for the current year, except that 110.13 interest or penalties must not be levied on such additional 110.14 taxes if timely paid. 110.15 The additional tax under this subdivision must not be 110.16 imposed on that portion of the property which has actively been 110.17 mined and has been removed from the program based upon the 110.18 supplemental affidavits filed under subdivision 6. 110.19 Subd. 6. [SUPPLEMENTAL AFFIDAVITS; MINING ACTIVITY ON 110.20 LAND.] When any portion of the property begins to be actively 110.21 mined, the owner must file a supplemental affidavit within 60 110.22 days from the day any aggregate is removed stating the number of 110.23 acres of the property that is actively being mined. The acres 110.24 actively being mined shall be (1) valued and classified under 110.25 section 273.13, subdivision 24, in the next subsequent 110.26 assessment year, and (2) removed from the aggregate resource 110.27 preservation property tax program under this section. The 110.28 additional taxes under subdivision 5 must not be imposed on the 110.29 acres that are actively being mined and have been removed from 110.30 the program under this section. 110.31 Copies of the original affidavit and all supplemental 110.32 affidavits must be filed with the county assessor, the local 110.33 zoning administrator, and the Department of Natural Resources, 110.34 Division of Land and Minerals. A supplemental affidavit must be 110.35 filed each time a subsequent portion of the property is actively 110.36 mined, provided that the minimum acreage change is five acres, 111.1 even if the actual mining activity constitutes less than five 111.2 acres. Failure to file the affidavits timely shall result in 111.3 the property losing its valuation deferment under this section, 111.4 and additional taxes must be imposed as calculated under 111.5 subdivision 5. 111.6 Subd. 7. [LIEN.] The additional tax imposed by this 111.7 section is a lien upon the property assessed to the same extent 111.8 and for the same duration as other taxes imposed upon property 111.9 within this state and, when collected, must be distributed in 111.10 the manner provided by law for the collection and distribution 111.11 of other property taxes. 111.12 Subd. 8. [CONTINUATION OF TAX TREATMENT UPON SALE.] When 111.13 real property qualifying under subdivision 1 is sold, additional 111.14 taxes must not be extended against the property if the property 111.15 continues to qualify under subdivision 1, and the new owner 111.16 files an application with the assessor for continued deferment 111.17 within 30 days after the sale. 111.18 Subd. 9. [DEFINITIONS.] For purposes of this section, 111.19 "commercial aggregate deposit" and "actively mined" have the 111.20 meanings given them in section 273.13, subdivision 23, paragraph 111.21 (h). 111.22[EFFECTIVE DATE.] This section is effective for taxes 111.23 levied in 2004, payable in 2005, and thereafter, except that for 111.24 the 2004 assessment year, the application date under subdivision 111.25 4 shall be September 1, 2004, and subdivision 4a is effective 111.26 the day following final enactment. 111.27 Sec. 28. [273.1116] [HOMESTEAD RESORTS; VALUATION AND 111.28 DEFERMENT.] 111.29 Subdivision 1. [REQUIREMENTS.] Real property qualifying 111.30 for classification as class 1c under section 273.13, subdivision 111.31 22, paragraph (c), is entitled to valuation and tax deferment 111.32 under this section, provided that if part of a resort is not 111.33 classified as class 1c, only that portion of the value of the 111.34 property that is classified as class 1c property qualifies under 111.35 this section. 111.36 Subd. 2. [DETERMINATION OF VALUE.] Upon timely application 112.1 by the owner, as provided in subdivision 4, the value of real 112.2 property described in subdivision 1 must be determined by the 112.3 assessor solely with reference to its classification value as 112.4 class 1c property, notwithstanding sections 272.03, subdivision 112.5 8, and 273.11. The owner must furnish information on the income 112.6 generated by the property and other information required by the 112.7 assessor to determine the value of the property. The assessor 112.8 shall not consider any added values resulting from other factors. 112.9 Subd. 3. [SEPARATE DETERMINATION OF MARKET VALUE AND TAX.] 112.10 The assessor shall, however, make a separate determination of 112.11 the market value of the real estate. The assessor shall record 112.12 on the property assessment records the tax based upon the 112.13 appropriate local tax rate applicable to the property in the 112.14 taxing district. 112.15 Subd. 4. [APPLICATION.] Application for deferment of taxes 112.16 and assessment under this section must be filed by May 1 of the 112.17 year prior to the year in which the taxes are payable. The 112.18 application must be filed with the assessor of the taxing 112.19 district in which the real property is located on a form 112.20 prescribed by the commissioner of revenue. The assessor may 112.21 require proof by affidavit or otherwise that the property 112.22 qualifies under subdivision 1. An application approved by the 112.23 assessor continues in effect for subsequent years until the 112.24 property no longer qualifies under subdivision 1. 112.25 Subd. 5. [ADDITIONAL TAXES.] When real property valued and 112.26 assessed under this section no longer qualifies under 112.27 subdivision 1, the portion no longer qualifying is subject to 112.28 additional taxes, in the amount equal to the difference between 112.29 the taxes determined in accordance with subdivision 2, and the 112.30 amount determined under subdivision 3, provided, however, that 112.31 the amount determined under subdivision 3 must not be greater 112.32 than it would have been had the actual bona fide sale price of 112.33 the real property at an arms-length transaction been used in 112.34 lieu of the market value determined under subdivision 3. The 112.35 additional taxes must be extended against the property on the 112.36 tax list for the current year, except that no interest or 113.1 penalties may be levied on the additional taxes if timely paid, 113.2 and except that the additional taxes must only be levied with 113.3 respect to the last seven years that the property has been 113.4 valued and assessed under this section. 113.5 Subd. 6. [LIEN.] The tax imposed by this section is a lien 113.6 on the property assessed to the same extent and for the same 113.7 duration as other taxes imposed on property within this state. 113.8 The tax must be annually extended by the county auditor and when 113.9 payable must be collected and distributed in the manner provided 113.10 by law for the collection and distribution of other property 113.11 taxes. 113.12 Subd. 7. [SPECIAL LOCAL ASSESSMENTS.] The payment of 113.13 special local assessments levied after June 30, 2004, for 113.14 improvements made to any real property described in subdivision 113.15 2, together with the interest thereon must, on timely 113.16 application under subdivision 4, be deferred as long as the 113.17 property qualifies under subdivision 1. If special assessments 113.18 against the property have been deferred under this subdivision, 113.19 the governmental unit shall file with the county recorder in the 113.20 county in which the property is located a certificate containing 113.21 the legal description of the affected property and of the amount 113.22 deferred. When the property no longer qualifies under 113.23 subdivision 1, all deferred special assessments plus interest 113.24 are payable in equal installments spread over the time remaining 113.25 until the last maturity date of the bonds issued to finance the 113.26 improvement for which the assessments were levied. If the bonds 113.27 have matured, the deferred special assessments plus interest are 113.28 payable within 90 days. The provisions of section 429.061, 113.29 subdivision 2, apply to the collection of these installments. 113.30 Penalty must not be levied on the special assessments if timely 113.31 paid. 113.32 Subd. 8. [CONTINUATION OF TAX TREATMENT UPON SALE.] When 113.33 real property qualifying under subdivision 1 is sold, no 113.34 additional taxes or deferred special assessments plus interest 113.35 may be extended against the property if: 113.36 (1) the property continues to qualify pursuant to 114.1 subdivision 1; and 114.2 (2) the new owner files an application for continued 114.3 deferment within 30 days after the sale. 114.4 Subd. 9. [APPLICABILITY OF SPECIAL ASSESSMENT PROVISIONS.] 114.5 This section applies to special local assessments levied after 114.6 June 30, 2004, and payable in the years thereafter, but shall 114.7 not apply to any special assessments levied at any time by a 114.8 county or district court under the provisions of chapter 116A. 114.9[EFFECTIVE DATE.] This section is effective for taxes 114.10 levied in 2004, payable in 2005, and thereafter. For 114.11 applications for taxes payable in 2005 only, the application 114.12 deadline in subdivision 4 is extended to August 1, 2004. 114.13 Sec. 29. Minnesota Statutes 2002, section 273.112, 114.14 subdivision 3, is amended to read: 114.15 Subd. 3. [REQUIREMENTS.] Real estate shall be entitled to 114.16 valuation and tax deferment under this section only if it is: 114.17 (a) actively and exclusively devoted to golf, skiing, lawn 114.18 bowling, croquet, polo, or archery or firearms range 114.19 recreational use or other recreational uses carried on at the 114.20 establishment; 114.21 (b) five acres in size or more, except in the case of a 114.22 lawn bowling or croquet green or an archery or firearms range; 114.23 (c)(1) operated by private individuals or, in the case of a 114.24 lawn bowling or croquet green, by private individuals or 114.25 corporations, and open to the public; or 114.26 (2) operated by firms or corporations for the benefit of 114.27 employees or guests; or 114.28 (3) operated by private clubs having a membership of 50 or 114.29 more or open to the public, provided that the club does not 114.30 discriminate in membership requirements or selection on the 114.31 basis of sex or marital status; and 114.32 (d) made available for use in the case of real estate 114.33 devoted to golf without discrimination on the basis of sex 114.34 during the time when the facility is open to use by the public 114.35 or by members, except that use for golf may be restricted on the 114.36 basis of sex no more frequently than one, or part of one, 115.1 weekend each calendar month for each sex and no more than two, 115.2 or part of two, weekdays each week for each sex. 115.3 If a golf club membership allows use of golf course 115.4 facilities by more than one adult per membership, the use must 115.5 be equally available to all adults entitled to use of the golf 115.6 course under the membership, except that use may be restricted 115.7 on the basis of sex as permitted in this section. Memberships 115.8 that permit play during restricted times may be allowed only if 115.9 the restricted times apply to all adults using the membership. 115.10 A golf club may not offer a membership or golfing privileges to 115.11 a spouse of a member that provides greater or less access to the 115.12 golf course than is provided to that person's spouse under the 115.13 same or a separate membership in that club, except that the 115.14 terms of a membership may provide that one spouse may have no 115.15 right to use the golf course at any time while the other spouse 115.16 may have either limited or unlimited access to the golf course. 115.17 A golf club may have or create an individual membership 115.18 category which entitles a member for a reduced rate to play 115.19 during restricted hours as established by the club. The club 115.20 must have on record a written request by the member for such 115.21 membership. 115.22 A golf club that has food or beverage facilities or 115.23 services must allow equal access to those facilities and 115.24 services for both men and women members in all membership 115.25 categories at all times. Nothing in this paragraph shall be 115.26 construed to require service or access to facilities to persons 115.27 under the age of 21 years or require any act that would violate 115.28 law or ordinance regarding sale, consumption, or regulation of 115.29 alcoholic beverages. 115.30 For purposes of this subdivision and subdivision 7a, 115.31 discrimination means a pattern or course of conduct and not 115.32 linked to an isolated incident. 115.33[EFFECTIVE DATE.] This section is effective for taxes 115.34 levied in 2004, payable in 2005, and thereafter. 115.35 Sec. 30. Minnesota Statutes 2003 Supplement, section 115.36 273.124, subdivision 1, is amended to read: 116.1 Subdivision 1. [GENERAL RULE.] (a) Residential real estate 116.2 that is occupied and used for the purposes of a homestead by its 116.3 owner, who must be a Minnesota resident, is a residential 116.4 homestead. 116.5 Agricultural land, as defined in section 273.13, 116.6 subdivision 23, that is occupied and used as a homestead by its 116.7 owner, who must be a Minnesota resident, is an agricultural 116.8 homestead. 116.9 Dates for establishment of a homestead and homestead 116.10 treatment provided to particular types of property are as 116.11 provided in this section. 116.12 Property held by a trustee under a trust is eligible for 116.13 homestead classification if the requirements under this chapter 116.14 are satisfied. 116.15 The assessor shall require proof, as provided in 116.16 subdivision 13, of the facts upon which classification as a 116.17 homestead may be determined. Notwithstanding any other law, the 116.18 assessor may at any time require a homestead application to be 116.19 filed in order to verify that any property classified as a 116.20 homestead continues to be eligible for homestead status. 116.21 Notwithstanding any other law to the contrary, the Department of 116.22 Revenue may, upon request from an assessor, verify whether an 116.23 individual who is requesting or receiving homestead 116.24 classification has filed a Minnesota income tax return as a 116.25 resident for the most recent taxable year for which the 116.26 information is available. 116.27 When there is a name change or a transfer of homestead 116.28 property, the assessor may reclassify the property in the next 116.29 assessment unless a homestead application is filed to verify 116.30 that the property continues to qualify for homestead 116.31 classification. 116.32 (b) For purposes of this section, homestead property shall 116.33 include property which is used for purposes of the homestead but 116.34 is separated from the homestead by a road, street, lot, 116.35 waterway, or other similar intervening property. The term "used 116.36 for purposes of the homestead" shall include but not be limited 117.1 to uses for gardens, garages, or other outbuildings commonly 117.2 associated with a homestead, but shall not include vacant land 117.3 held primarily for future development. In order to receive 117.4 homestead treatment for the noncontiguous property, the owner 117.5 must use the property for the purposes of the homestead, and 117.6 must apply to the assessor, both by the deadlines given in 117.7 subdivision 9. After initial qualification for the homestead 117.8 treatment, additional applications for subsequent years are not 117.9 required. 117.10 (c) Residential real estate that is occupied and used for 117.11 purposes of a homestead by a relative of the owner is a 117.12 homestead but only to the extent of the homestead treatment that 117.13 would be provided if the related owner occupied the property. 117.14 For purposes of this paragraph and paragraph (g), "relative" 117.15 means a parent, stepparent, child, stepchild, grandparent, 117.16 grandchild, brother, sister, uncle, aunt, nephew, or niece. 117.17 This relationship may be by blood or marriage. Property that 117.18 has been classified as seasonal residential recreational 117.19 property at any time during which it has been owned by the 117.20 current owner or spouse of the current owner will not be 117.21 reclassified as a homestead unless it is occupied as a homestead 117.22 by the owner; this prohibition also applies to property that, in 117.23 the absence of this paragraph, would have been classified as 117.24 seasonal residential recreational property at the time when the 117.25 residence was constructed. Neither the related occupant nor the 117.26 owner of the property may claim a property tax refund under 117.27 chapter 290A for a homestead occupied by a relative. In the 117.28 case of a residence located on agricultural land, only the 117.29 house, garage, and immediately surrounding one acre of land 117.30 shall be classified as a homestead under this paragraph, except 117.31 as provided in paragraph (d). 117.32 (d) Agricultural property that is occupied and used for 117.33 purposes of a homestead by a relative of the owner, is a 117.34 homestead, only to the extent of the homestead treatment that 117.35 would be provided if the related owner occupied the property, 117.36 and only if all of the following criteria are met: 118.1 (1) the relative who is occupying the agricultural property 118.2 is a son, daughter, grandson, granddaughter, father, or mother 118.3 of the owner of the agricultural property or a son, daughter, 118.4 grandson, or granddaughter of the spouse of the owner of the 118.5 agricultural property; 118.6 (2) the owner of the agricultural property must be a 118.7 Minnesota resident; 118.8 (3) the owner of the agricultural property must not receive 118.9 homestead treatment on any other agricultural property in 118.10 Minnesota; and 118.11 (4) the owner of the agricultural property is limited to 118.12 only one agricultural homestead per family under this paragraph. 118.13 Neither the related occupant nor the owner of the property 118.14 may claim a property tax refund under chapter 290A for a 118.15 homestead occupied by a relative qualifying under this 118.16 paragraph. For purposes of this paragraph, "agricultural 118.17 property" means the house, garage, other farm buildings and 118.18 structures, and agricultural land. 118.19 Application must be made to the assessor by the owner of 118.20 the agricultural property to receive homestead benefits under 118.21 this paragraph. The assessor may require the necessary proof 118.22 that the requirements under this paragraph have been met. 118.23 (e) In the case of property owned by a property owner who 118.24 is married, the assessor must not deny homestead treatment in 118.25 whole or in part if only one of the spouses occupies the 118.26 property and the other spouse is absent due to: (1) marriage 118.27 dissolution proceedings, (2) legal separation, (3) employment or 118.28 self-employment in another location, or (4) other personal 118.29 circumstances causing the spouses to live separately, not 118.30 including an intent to obtain two homestead classifications for 118.31 property tax purposes. To qualify under clause (3), the 118.32 spouse's place of employment or self-employment must be at least 118.33 50 miles distant from the other spouse's place of employment, 118.34 and the homesteads must be at least 50 miles distant from each 118.35 other. Homestead treatment, in whole or in part, shall not be 118.36 denied to the owner's spouse who previously occupied the 119.1 residence with the owner if the absence of the owner is due to 119.2 one of the exceptions provided in this paragraph. 119.3 (f) The assessor must not deny homestead treatment in whole 119.4 or in part if: 119.5 (1) in the case of a property owner who is not married, the 119.6 owner is absent due to residence in a nursing home, boarding 119.7 care facility, or an elderly assisted living facility property 119.8 as defined in section 273.13, subdivision 25a, and the property 119.9 is not otherwise occupied; or 119.10 (2) in the case of a property owner who is married, the 119.11 owner or the owner's spouse or both are absent due to residence 119.12 in a nursing home, boarding care facility, or an elderly 119.13 assisted living facility property as defined in section 273.13, 119.14 subdivision 25a, and the property is not occupied or is occupied 119.15 only by the owner's spouse. 119.16 (g) If an individual is purchasing property with the intent 119.17 of claiming it as a homestead and is required by the terms of 119.18 the financing agreement to have a relative shown on the deed as 119.19 a co-owner, the assessor shall allow a full homestead 119.20 classification. This provision only applies to first-time 119.21 purchasers, whether married or single, or to a person who had 119.22 previously been married and is purchasing as a single individual 119.23 for the first time. The application for homestead benefits must 119.24 be on a form prescribed by the commissioner and must contain the 119.25 data necessary for the assessor to determine if full homestead 119.26 benefits are warranted. 119.27 (h) If residential or agricultural real estate is occupied 119.28 and used for purposes of a homestead by a child of a deceased 119.29 owner and the property is subject to jurisdiction of probate 119.30 court, the child shall receive relative homestead classification 119.31 under paragraph (c) or (d) to the same extent they would be 119.32 entitled to it if the owner was still living, until the probate 119.33 is completed. For purposes of this paragraph, "child" includes 119.34 a relationship by blood or by marriage. 119.35 (i) If a single family home, duplex, or triplex classified 119.36 as either residential homestead or agricultural homestead is 120.1 also used to provide licensed child care, the portion of the 120.2 property used for licensed child care must be classified as 120.3 homestead property. 120.4[EFFECTIVE DATE.] This section is effective in assessment 120.5 year 2004 and thereafter, for taxes payable in 2005, and 120.6 thereafter. 120.7 Sec. 31. Minnesota Statutes 2003 Supplement, section 120.8 273.13, subdivision 23, is amended to read: 120.9 Subd. 23. [CLASS 2.] (a) Class 2a property is agricultural 120.10 land including any improvements that is homesteaded. The market 120.11 value of the house and garage and immediately surrounding one 120.12 acre of land has the same class rates as class 1a property under 120.13 subdivision 22. The value of the remaining land including 120.14 improvements up to and including $600,000 market value has a net 120.15 class rate of 0.55 percent of market value. The remaining 120.16 property over $600,000 market value has a class rate of one 120.17 percent of market value. 120.18 (b) Class 2b property is (1) real estate, rural in 120.19 character and used exclusively for growing trees for timber, 120.20 lumber, and wood and wood products; (2) real estate that is not 120.21 improved with a structure and is used exclusively for growing 120.22 trees for timber, lumber, and wood and wood products, if the 120.23 owner has participated or is participating in a cost-sharing 120.24 program for afforestation, reforestation, or timber stand 120.25 improvement on that particular property, administered or 120.26 coordinated by the commissioner of natural resources; (3) real 120.27 estate that is nonhomestead agricultural land;or(4) a landing 120.28 area or public access area of a privately owned public use 120.29 airport; or (5) land with a commercial aggregate deposit that is 120.30 not actively being mined and is not otherwise classified as 120.31 class 2a or 2b, clauses (1) to (3). Class 2b property has a net 120.32 class rate of one percent of market value. 120.33 (c) Agricultural land as used in this section means 120.34 contiguous acreage of ten acres or more, used during the 120.35 preceding year for agricultural purposes. "Agricultural 120.36 purposes" as used in this section means the raising or 121.1 cultivation of agricultural products. "Agricultural purposes" 121.2 also includes enrollment in the Reinvest in Minnesota program 121.3 under sections 103F.501 to 103F.535 or the federal Conservation 121.4 Reserve Program as contained in Public Law 99-198 if the 121.5 property was classified as agricultural (i) under this 121.6 subdivision for the assessment year 2002 or (ii) in the year 121.7 prior to its enrollment. Contiguous acreage on the same parcel, 121.8 or contiguous acreage on an immediately adjacent parcel under 121.9 the same ownership, may also qualify as agricultural land, but 121.10 only if it is pasture, timber, waste, unusable wild land, or 121.11 land included in state or federal farm programs. Agricultural 121.12 classification for property shall be determined excluding the 121.13 house, garage, and immediately surrounding one acre of land, and 121.14 shall not be based upon the market value of any residential 121.15 structures on the parcel or contiguous parcels under the same 121.16 ownership. 121.17 (d) Real estate, excluding the house, garage, and 121.18 immediately surrounding one acre of land, of less than ten acres 121.19 which is exclusively and intensively used for raising or 121.20 cultivating agricultural products, shall be considered as 121.21 agricultural land. 121.22 Land shall be classified as agricultural even if all or a 121.23 portion of the agricultural use of that property is the leasing 121.24 to, or use by another person for agricultural purposes. 121.25 Classification under this subdivision is not determinative 121.26 for qualifying under section 273.111. 121.27 The property classification under this section supersedes, 121.28 for property tax purposes only, any locally administered 121.29 agricultural policies or land use restrictions that define 121.30 minimum or maximum farm acreage. 121.31 (e) The term "agricultural products" as used in this 121.32 subdivision includes production for sale of: 121.33 (1) livestock, dairy animals, dairy products, poultry and 121.34 poultry products, fur-bearing animals, horticultural and nursery 121.35 stock, fruit of all kinds, vegetables, forage, grains, bees, and 121.36 apiary products by the owner; 122.1 (2) fish bred for sale and consumption if the fish breeding 122.2 occurs on land zoned for agricultural use; 122.3 (3) the commercial boarding of horses if the boarding is 122.4 done in conjunction with raising or cultivating agricultural 122.5 products as defined in clause (1); 122.6 (4) property which is owned and operated by nonprofit 122.7 organizations used for equestrian activities, excluding racing; 122.8 (5) game birds and waterfowl bred and raised for use on a 122.9 shooting preserve licensed under section 97A.115; 122.10 (6) insects primarily bred to be used as food for animals; 122.11 (7) trees, grown for sale as a crop, and not sold for 122.12 timber, lumber, wood, or wood products; and 122.13 (8) maple syrup taken from trees grown by a person licensed 122.14 by the Minnesota Department of Agriculture under chapter 28A as 122.15 a food processor. 122.16 (f) If a parcel used for agricultural purposes is also used 122.17 for commercial or industrial purposes, including but not limited 122.18 to: 122.19 (1) wholesale and retail sales; 122.20 (2) processing of raw agricultural products or other goods; 122.21 (3) warehousing or storage of processed goods; and 122.22 (4) office facilities for the support of the activities 122.23 enumerated in clauses (1), (2), and (3), 122.24 the assessor shall classify the part of the parcel used for 122.25 agricultural purposes as class 1b, 2a, or 2b, whichever is 122.26 appropriate, and the remainder in the class appropriate to its 122.27 use. The grading, sorting, and packaging of raw agricultural 122.28 products for first sale is considered an agricultural purpose. 122.29 A greenhouse or other building where horticultural or nursery 122.30 products are grown that is also used for the conduct of retail 122.31 sales must be classified as agricultural if it is primarily used 122.32 for the growing of horticultural or nursery products from seed, 122.33 cuttings, or roots and occasionally as a showroom for the retail 122.34 sale of those products. Use of a greenhouse or building only 122.35 for the display of already grown horticultural or nursery 122.36 products does not qualify as an agricultural purpose. 123.1 The assessor shall determine and list separately on the 123.2 records the market value of the homestead dwelling and the one 123.3 acre of land on which that dwelling is located. If any farm 123.4 buildings or structures are located on this homesteaded acre of 123.5 land, their market value shall not be included in this separate 123.6 determination. 123.7 (g) To qualify for classification under paragraph (b), 123.8 clause (4), a privately owned public use airport must be 123.9 licensed as a public airport under section 360.018. For 123.10 purposes of paragraph (b), clause (4), "landing area" means that 123.11 part of a privately owned public use airport properly cleared, 123.12 regularly maintained, and made available to the public for use 123.13 by aircraft and includes runways, taxiways, aprons, and sites 123.14 upon which are situated landing or navigational aids. A landing 123.15 area also includes land underlying both the primary surface and 123.16 the approach surfaces that comply with all of the following: 123.17 (i) the land is properly cleared and regularly maintained 123.18 for the primary purposes of the landing, taking off, and taxiing 123.19 of aircraft; but that portion of the land that contains 123.20 facilities for servicing, repair, or maintenance of aircraft is 123.21 not included as a landing area; 123.22 (ii) the land is part of the airport property; and 123.23 (iii) the land is not used for commercial or residential 123.24 purposes. 123.25 The land contained in a landing area under paragraph (b), clause 123.26 (4), must be described and certified by the commissioner of 123.27 transportation. The certification is effective until it is 123.28 modified, or until the airport or landing area no longer meets 123.29 the requirements of paragraph (b), clause (4). For purposes of 123.30 paragraph (b), clause (4), "public access area" means property 123.31 used as an aircraft parking ramp, apron, or storage hangar, or 123.32 an arrival and departure building in connection with the airport. 123.33 (h) To qualify for classification under paragraph (b), 123.34 clause (5), the property must be at least ten contiguous acres 123.35 in size and the owner of the property must record with the 123.36 county recorder of the county in which the property is located 124.1 an affidavit containing: 124.2 (1) a legal description of the property; 124.3 (2) a disclosure that the property contains a commercial 124.4 aggregate deposit that is not actively being mined; 124.5 (3) documentation that the conditional use under the county 124.6 or local zoning ordinance of this property is for mining; and 124.7 (4) documentation that a permit has been issued by the 124.8 local unit of government or the mining activity is allowed under 124.9 local ordinance. The disclosure must include a statement from a 124.10 registered professional geologist, engineer, or soil scientist 124.11 delineating the deposit and certifying that it is a commercial 124.12 aggregate deposit. 124.13 For purposes of this section and section 273.1115, 124.14 "commercial aggregate deposit" means a deposit that will yield 124.15 crushed stone or sand and gravel that is suitable for use as a 124.16 construction aggregate; and "actively mined" means the removal 124.17 of top soil and overburden in preparation for excavation or 124.18 excavation of a commercial deposit. 124.19 (i) When any portion of the property under this subdivision 124.20 or section 273.13, subdivision 22, begins to be actively mined, 124.21 the owner must file a supplemental affidavit within 60 days from 124.22 the day any aggregate is removed stating the number of acres of 124.23 the property that is actively being mined. The acres actively 124.24 being mined must be (1) valued and classified under section 124.25 273.13, subdivision 24, in the next subsequent assessment year, 124.26 and (2) removed from the aggregate resource preservation 124.27 property tax program under section 273.1115, if the land was 124.28 enrolled in that program. Copies of the original affidavit and 124.29 all supplemental affidavits must be filed with the county 124.30 assessor, the local zoning administrator, and the Department of 124.31 Natural Resources, Division of Land and Minerals. A 124.32 supplemental affidavit must be filed each time a subsequent 124.33 portion of the property is actively mined, provided that the 124.34 minimum acreage change is five acres, even if the actual mining 124.35 activity constitutes less than five acres. 124.36[EFFECTIVE DATE.] This section is effective for taxes 125.1 levied in 2004, payable in 2005, and thereafter. 125.2 Sec. 32. Minnesota Statutes 2003 Supplement, section 125.3 273.13, subdivision 25, is amended to read: 125.4 Subd. 25. [CLASS 4.] (a) Class 4a is residential real 125.5 estate containing four or more units and used or held for use by 125.6 the owner or by the tenants or lessees of the owner as a 125.7 residence for rental periods of 30 days or more. Class 4a also 125.8 includes hospitals licensed under sections 144.50 to 144.56, 125.9 other than hospitals exempt under section 272.02, and contiguous 125.10 property used for hospital purposes, without regard to whether 125.11 the property has been platted or subdivided. The market value 125.12 of class 4a property has a class rate of 1.8 percent for taxes 125.13 payable in 2002, 1.5 percent for taxes payable in 2003, and 1.25 125.14 percent for taxes payable in 2004 and thereafter, except that 125.15 class 4a property consisting of a structure for which 125.16 construction commenced after June 30, 2001, has a class rate of 125.17 1.25 percent of market value for taxes payable in 2003 and 125.18 subsequent years. 125.19 (b) Class 4b includes: 125.20 (1) residential real estate containing less than four units 125.21 that does not qualify as class 4bb, other than seasonal 125.22 residential recreational property; 125.23 (2) manufactured homes not classified under any other 125.24 provision; 125.25 (3) a dwelling, garage, and surrounding one acre of 125.26 property on a nonhomestead farm classified under subdivision 23, 125.27 paragraph (b) containing two or three units; and 125.28 (4) unimproved property that is classified residential as 125.29 determined under subdivision 33. 125.30 The market value of class 4b property has a class rate of 125.31 1.5 percent for taxes payable in 2002, and 1.25 percent for 125.32 taxes payable in 2003 and thereafter. 125.33 (c) Class 4bb includes: 125.34 (1) nonhomestead residential real estate containing one 125.35 unit, other than seasonal residential recreational property; and 125.36 (2) a single family dwelling, garage, and surrounding one 126.1 acre of property on a nonhomestead farm classified under 126.2 subdivision 23, paragraph (b). 126.3 Class 4bb property has the same class rates as class 1a 126.4 property under subdivision 22. 126.5 Property that has been classified as seasonal residential 126.6 recreational property at any time during which it has been owned 126.7 by the current owner or spouse of the current owner does not 126.8 qualify for class 4bb. 126.9 (d) Class 4c property includes: 126.10 (1) except as provided in subdivision 22, paragraph (c), 126.11 real property devoted to temporary and seasonal residential 126.12 occupancy for recreation purposes, including real property 126.13 devoted to temporary and seasonal residential occupancy for 126.14 recreation purposes and not devoted to commercial purposes for 126.15 more than 250 days in the year preceding the year of 126.16 assessment. For purposes of this clause, property is devoted to 126.17 a commercial purpose on a specific day if any portion of the 126.18 property is used for residential occupancy, and a fee is charged 126.19 for residential occupancy. In order for a property to be 126.20 classified as class 4c, seasonal residential recreational for 126.21 commercial purposes, at least 40 percent of the annual gross 126.22 lodging receipts related to the property must be from business 126.23 conducted during 90 consecutive days and either (i) at least 60 126.24 percent of all paid bookings by lodging guests during the year 126.25 must be for periods of at least two consecutive nights; or (ii) 126.26 at least 20 percent of the annual gross receipts must be from 126.27 charges for rental of fish houses, boats and motors, 126.28 snowmobiles, downhill or cross-country ski equipment, or charges 126.29 for marina services, launch services, and guide services, or the 126.30 sale of bait and fishing tackle. For purposes of this 126.31 determination, a paid booking of five or more nights shall be 126.32 counted as two bookings. Class 4c also includes commercial use 126.33 real property used exclusively for recreational purposes in 126.34 conjunction with class 4c property devoted to temporary and 126.35 seasonal residential occupancy for recreational purposes, up to 126.36 a total of two acres, provided the property is not devoted to 127.1 commercial recreational use for more than 250 days in the year 127.2 preceding the year of assessment and is located within two miles 127.3 of the class 4c property with which it is used. Class 4c 127.4 property classified in this clause also includes the remainder 127.5 of class 1c resorts provided that the entire property including 127.6 that portion of the property classified as class 1c also meets 127.7 the requirements for class 4c under this clause; otherwise the 127.8 entire property is classified as class 3. Owners of real 127.9 property devoted to temporary and seasonal residential occupancy 127.10 for recreation purposes and all or a portion of which was 127.11 devoted to commercial purposes for not more than 250 days in the 127.12 year preceding the year of assessment desiring classification as 127.13 class 1c or 4c, must submit a declaration to the assessor 127.14 designating the cabins or units occupied for 250 days or less in 127.15 the year preceding the year of assessment by January 15 of the 127.16 assessment year. Those cabins or units and a proportionate 127.17 share of the land on which they are located will be designated 127.18 class 1c or 4c as otherwise provided. The remainder of the 127.19 cabins or units and a proportionate share of the land on which 127.20 they are located will be designated as class 3a. The owner of 127.21 property desiring designation as class 1c or 4c property must 127.22 provide guest registers or other records demonstrating that the 127.23 units for which class 1c or 4c designation is sought were not 127.24 occupied for more than 250 days in the year preceding the 127.25 assessment if so requested. The portion of a property operated 127.26 as a (1) restaurant, (2) bar, (3) gift shop, and (4) other 127.27 nonresidential facility operated on a commercial basis not 127.28 directly related to temporary and seasonal residential occupancy 127.29 for recreation purposes shall not qualify for class 1c or 4c; 127.30 (2) qualified property used as a golf course if: 127.31 (i) it is open to the public on a daily fee basis. It may 127.32 charge membership fees or dues, but a membership fee may not be 127.33 required in order to use the property for golfing, and its green 127.34 fees for golfing must be comparable to green fees typically 127.35 charged by municipal courses; and 127.36 (ii) it meets the requirements of section 273.112, 128.1 subdivision 3, paragraph (d). 128.2 A structure used as a clubhouse, restaurant, or place of 128.3 refreshment in conjunction with the golf course is classified as 128.4 class 3a property; 128.5 (3) real property up to a maximum of one acre of land owned 128.6 by a nonprofit community service oriented organization; provided 128.7 that the property is not used for a revenue-producing activity 128.8 for more than six days in the calendar year preceding the year 128.9 of assessment and the property is not used for residential 128.10 purposes on either a temporary or permanent basis. For purposes 128.11 of this clause, a "nonprofit community service oriented 128.12 organization" means any corporation, society, association, 128.13 foundation, or institution organized and operated exclusively 128.14 for charitable, religious, fraternal, civic, or educational 128.15 purposes, and which is exempt from federal income taxation 128.16 pursuant to section 501(c)(3), (10), or (19) of the Internal 128.17 Revenue Code of 1986, as amended through December 31, 1990. For 128.18 purposes of this clause, "revenue-producing activities" shall 128.19 include but not be limited to property or that portion of the 128.20 property that is used as an on-sale intoxicating liquor or 3.2 128.21 percent malt liquor establishment licensed under chapter 340A, a 128.22 restaurant open to the public, bowling alley, a retail store, 128.23 gambling conducted by organizations licensed under chapter 349, 128.24 an insurance business, or office or other space leased or rented 128.25 to a lessee who conducts a for-profit enterprise on the 128.26 premises. Any portion of the property which is used for 128.27 revenue-producing activities for more than six days in the 128.28 calendar year preceding the year of assessment shall be assessed 128.29 as class 3a. The use of the property for social events open 128.30 exclusively to members and their guests for periods of less than 128.31 24 hours, when an admission is not charged nor any revenues are 128.32 received by the organization shall not be considered a 128.33 revenue-producing activity; 128.34 (4) postsecondary student housing of not more than one acre 128.35 of land that is owned by a nonprofit corporation organized under 128.36 chapter 317A and is used exclusively by a student cooperative, 129.1 sorority, or fraternity for on-campus housing or housing located 129.2 within two miles of the border of a college campus; 129.3 (5) manufactured home parks as defined in section 327.14, 129.4 subdivision 3; 129.5 (6) real property that is actively and exclusively devoted 129.6 to indoor fitness, health, social, recreational, and related 129.7 uses, is owned and operated by a not-for-profit corporation, and 129.8 is located within the metropolitan area as defined in section 129.9 473.121, subdivision 2; 129.10 (7) a leased or privately owned noncommercial aircraft 129.11 storage hangar not exempt under section 272.01, subdivision 2, 129.12 and the land on which it is located, provided that: 129.13 (i) the land is on an airport owned or operated by a city, 129.14 town, county, Metropolitan Airports Commission, or group 129.15 thereof; and 129.16 (ii) the land lease, or any ordinance or signed agreement 129.17 restricting the use of the leased premise, prohibits commercial 129.18 activity performed at the hangar. 129.19 If a hangar classified under this clause is sold after June 129.20 30, 2000, a bill of sale must be filed by the new owner with the 129.21 assessor of the county where the property is located within 60 129.22 days of the sale; and 129.23 (8) residential real estate, a portion of which is used by 129.24 the owner for homestead purposes, and that is also a place of 129.25 lodging, if all of the following criteria are met: 129.26 (i) rooms are provided for rent to transient guests that 129.27 generally stay for periods of 14 or fewer days; 129.28 (ii) meals are provided to persons who rent rooms, the cost 129.29 of which is incorporated in the basic room rate; 129.30 (iii) meals are not provided to the general public except 129.31 for special events on fewer than seven days in the calendar year 129.32 preceding the year of the assessment; and 129.33 (iv) the owner is the operator of the property. 129.34 The market value subject to the 4c classification under this 129.35 clause is limited to five rental units. Any rental units on the 129.36 property in excess of five, must be valued and assessed as class 130.1 3a. The portion of the property used for purposes of a 130.2 homestead by the owner must be classified as class 1a property 130.3 under subdivision 22. 130.4 Class 4c property has a class rate of 1.5 percent of market 130.5 value, except that (i) each parcel of seasonal residential 130.6 recreational property not used for commercial purposes has the 130.7 same class rates as class 4bb property, (ii) manufactured home 130.8 parks assessed under clause (5) have the same class rate as 130.9 class 4b property, (iii) commercial-use seasonal residential 130.10 recreational property has a class rate of one percent for the 130.11 first $500,000 of market value, which includes any market value 130.12 receiving the one percent rate under subdivision 22, and 1.25 130.13 percent for the remaining market value, (iv) the market value of 130.14 property described in clause (4) has a class rate of one 130.15 percent, (v) the market value of property described in clauses 130.16 (2) and (6) has a class rate of 1.25 percent, and (vi) that 130.17 portion of the market value of property in clause (8) qualifying 130.18 for class 4c property has a class rate of 1.25 percent. 130.19 (e) Class 4d property is qualifying low-income rental 130.20 housing certified to the assessor by the Housing Finance Agency 130.21 under sections 273.126 and 462A.071. Class 4d includes land in 130.22 proportion to the total market value of the building that is 130.23 qualifying low-income rental housing. 130.24 Class 4d property has a class rate of 0.55 percent for 130.25 taxes payable in 2006 and thereafter. 130.26 Sec. 33. [273.1321] [VALUATION OF LOW-INCOME RENTAL 130.27 PROPERTY; CAPITALIZED VALUE OF NET OPERATING INCOME.] 130.28 Subdivision 1. [REQUIREMENT.] Low-income rental property 130.29 classified as class 4d under section 273.13, subdivision 25, is 130.30 entitled to valuation under this section if at least 75 percent 130.31 of the units in the rental housing property meet any of the 130.32 following qualifications: 130.33 (1) the units are subject to a housing assistance payments 130.34 contract under section 8 of the United States Housing Act of 130.35 1937, as amended; 130.36 (2) the units are rent-restricted and income-restricted 131.1 units of a qualified low-income housing project receiving tax 131.2 credits under section 42(g) of the Internal Revenue Code of 131.3 1986, as amended; 131.4 (3) the units are financed by the Rural Housing Service of 131.5 the United States Department of Agriculture and receive payments 131.6 under the rental assistance program pursuant to section 521(a) 131.7 of the Housing Act of 1949, as amended; or 131.8 (4) the units are subject to rent and income restrictions 131.9 under the terms of financial assistance provided to the rental 131.10 housing property by a federal, state, or local unit of 131.11 government as evidenced by a document recorded against the 131.12 property. 131.13 The restrictions must require assisted units to be occupied 131.14 by residents whose household income at the time of initial 131.15 occupancy does not exceed 60 percent of the greater of area or 131.16 state median income, adjusted for family size, as determined by 131.17 the United States Department of Housing and Urban Development. 131.18 The restriction must also require the rents for assisted units 131.19 to not exceed 30 percent of 60 percent of the greater of area or 131.20 state median income, adjusted for family size, as determined by 131.21 the United States Department of Housing and Urban Development. 131.22 Subd. 2. [DETERMINATION OF VALUE.] (a) The value of any 131.23 rental housing property meeting the qualifications of 131.24 subdivision 1 shall be determined, upon timely application by 131.25 the owner in the manner provided in subdivision 3, on the basis 131.26 of the restricted use of the property, notwithstanding sections 131.27 272.03, subdivision 8, and 273.11, by capitalizing the net 131.28 operating income prior to the payment of debt service. 131.29 (b) Net operating income prior to payment of debt service 131.30 must be the amounts shown in a financial statement prepared by 131.31 an independent certified public accountant or firm. The 131.32 financial statement must show the revenues, expenses, cash 131.33 flows, assets, liabilities, and net assets for the property for 131.34 which an application is made under this section. 131.35 (c) The capitalization rate applied to net operating income 131.36 shall be established jointly by the commissioner and the Housing 132.1 Finance Agency based on market data and industry standards. The 132.2 commissioner and the Housing Finance Agency shall jointly 132.3 establish separate rates based on types of rental housing 132.4 properties and their locations. 132.5 Subd. 3. [APPLICATION.] (a) Application for assessment 132.6 under this section must be filed by February 28 of the levy 132.7 year, or at a later date the Housing Finance Agency deems 132.8 practicable. The application must be filed with the Housing 132.9 Finance Agency, on a form prescribed by the agency, and must 132.10 contain the information required by the Housing Finance Agency. 132.11 (b) Each application must include: 132.12 (1) the property tax identification number; 132.13 (2) evidence that the property meets the requirements of 132.14 subdivision 1; and 132.15 (3) a true and correct copy of the financial statement 132.16 related to the property. 132.17 (c) The applicant must pay an application fee to be set by 132.18 the Housing Finance Agency. The application fee charged by the 132.19 agency must approximately equal the costs of processing and 132.20 reviewing the applications. The fee must be deposited in the 132.21 housing development fund. 132.22 Subd. 4. [CERTIFICATION.] By June 1 of each levy year, the 132.23 Housing Finance Agency must certify to local assessors the 132.24 valuation, as determined under this section, of rental 132.25 properties that apply and are qualified for valuation under this 132.26 section. In making the certification, the Housing Finance 132.27 Agency may rely on the application and supporting information 132.28 supplied by the property owner. 132.29[EFFECTIVE DATE.] This section is effective for taxes 132.30 levied in 2005, payable in 2006, and thereafter. 132.31 Sec. 34. [273.1322] [VACANT COMMERCIAL INDUSTRIAL 132.32 PROPERTIES.] 132.33 Subdivision 1. [AUTHORITY.] A city may establish, by 132.34 ordinance, a program to encourage redevelopment, provide for 132.35 better utilization of commercial industrial property, and 132.36 eliminate blighting influences by revoking the eligibility of 133.1 individual commercial industrial properties to receive the 133.2 credit authorized under section 273.1398, subdivision 4. The 133.3 program may revoke eligibility only if the property has been 133.4 vacant, as defined in subdivision 3, clauses (1) to (3), for 133.5 three or more consecutive years prior to the current assessment 133.6 year, or under subdivision 3, clause (4), for five or more 133.7 consecutive years prior to the current assessment year. 133.8 Subd. 2. [MINIMUM REQUIREMENTS.] The program must provide: 133.9 (1) standards for determining whether a property is vacant; 133.10 (2) written assessment notice by the city or county to the 133.11 property owner informing the owner that the property's 133.12 eligibility will be revoked; 133.13 (3) opportunity for the property owner to appeal the 133.14 revocation at the board of equalization; 133.15 (4) timely notice to the county assessor of the property's 133.16 eligibility revocation, if the city has a city assessor and the 133.17 city assessor has revoked the property's eligibility; and 133.18 (5) any other provisions the city determines are necessary 133.19 or appropriate to the operation of the program to achieve its 133.20 purposes. 133.21 Subd. 3. [DEFINITION OF VACANT.] A program established 133.22 under this section may provide that a property is vacant if the 133.23 property is: 133.24 (1) condemned, dangerous, or having multiple building code 133.25 violations; 133.26 (2) condemned and illegally occupied; 133.27 (3) either occupied or unoccupied, during which time the 133.28 enforcement officer for the municipality has issued multiple 133.29 orders to correct nuisance conditions; or 133.30 (4) unoccupied and not utilized for a commercial or 133.31 industrial purpose. 133.32 Subd. 4. [NOTICE TO PROPERTY OWNER.] The municipality 133.33 shall give notice to the property owner requiring that any 133.34 conditions in subdivision 3, clauses (1) to (3), be remedied, 133.35 and that the property be occupied and used for a commercial or 133.36 industrial purpose for at least 180 days during the next 134.1 12-month period, or else the property may cease to be eligible 134.2 for the credit under section 273.1398, subdivision 4. 134.3[EFFECTIVE DATE.] This section is effective for taxes 134.4 payable in 2006 and thereafter. 134.5 Sec. 35. Minnesota Statutes 2002, section 273.1384, 134.6 subdivision 3, is amended to read: 134.7 Subd. 3. [CREDIT REIMBURSEMENTS.] (a) The county auditor 134.8 shall determine the tax reductions allowed under this section 134.9 within the county for each taxes payable year and shall certify 134.10 that amount to the commissioner of revenue as a part of the 134.11 abstracts of tax lists submitted by the county auditors under 134.12 section 275.29. 134.13 (b) In the case of class 1a, class lc, or class 2a 134.14 homestead property which is located within a city, the county 134.15 auditor shall determine whether the net tax on each parcel is 134.16 less than the applicable percentage of its taxable market value 134.17 provided in this paragraph for the year. For taxes payable in 134.18 2006 and 2007, if the net tax on the property is less than 0.7 134.19 percent of its taxable market value, the county auditor shall 134.20 reduce the reimbursement to the county and the city for the 134.21 credit allowed under subdivision 1 by the amount of the 134.22 difference. For taxes payable in 2008 and 2009, if the net tax 134.23 on the property is less than 0.8 percent of its taxable market 134.24 value, the county auditor shall reduce the reimbursement to the 134.25 county and the city for the credit allowed under subdivision 1 134.26 by the amount of the difference. For taxes payable in 2010 and 134.27 2011, if the net tax on the property is less than 0.9 percent of 134.28 its taxable market value, the county auditor shall reduce the 134.29 reimbursement to the county and the city for the credit allowed 134.30 under subdivision 1 by the amount of the difference. For taxes 134.31 payable in 2012 and thereafter, if the net tax on the property 134.32 is less than one percent of its taxable market value, the county 134.33 auditor shall reduce the reimbursement to the county and the 134.34 city for the credit allowed under subdivision 1 by the amount of 134.35 the difference. The market value credit reimbursement cannot be 134.36 less than zero. 135.1 (c) Any prior year adjustments shall also be certified on 135.2 the abstracts of tax lists. The commissioner shall review the 135.3 certifications for accuracy, and may make such changes as are 135.4 deemed necessary, or return the certification to the county 135.5 auditor for correction. If there is no reduction of the 135.6 reimbursements under paragraph (b), the credits under this 135.7 section must be used to proportionately reduce the net tax 135.8 capacity-based property tax payable to each local taxing 135.9 jurisdiction as provided in section 273.1393. If there is a 135.10 reduction under paragraph (b), the reimbursements paid to the 135.11 city and county must be reduced in proportion to the amount of 135.12 their levies. 135.13[EFFECTIVE DATE.] This section is effective for taxes 135.14 levied in 2005, payable in 2006, and thereafter. 135.15 Sec. 36. [273.323] [EFFECTIVE DATE FOR RULES FOR VALUATION 135.16 OF ELECTRIC AND TRANSMISSION PIPELINE UTILITY PROPERTY.] 135.17 Rules adopted by the commissioner that prescribe the method 135.18 of valuing property of electric and transmission pipeline 135.19 utilities may not take effect before the end of the regular 135.20 legislative session in the calendar year following adoption of 135.21 the rules. 135.22[EFFECTIVE DATE.] This section is effective the day 135.23 following final enactment. 135.24 Sec. 37. Minnesota Statutes 2003 Supplement, section 135.25 275.025, subdivision 1, is amended to read: 135.26 Subdivision 1. [LEVY AMOUNT.] (a) The state general levy 135.27 is levied against commercial-industrial property and seasonal 135.28 residential recreational property, as defined in this section. 135.29 The state general levy base amount is $592,000,000 for taxes 135.30 payable in 2002. For taxes payable in subsequent years on 135.31 seasonal residential recreational property, the levy base amount 135.32 is increased each year by multiplying the levy base amount 135.33 for that class of property for the prior year by the sum of one 135.34 plus the rate of increase, if any, in the implicit price 135.35 deflator for government consumption expenditures and gross 135.36 investment for state and local governments prepared by the 136.1 Bureau of Economic Analysts of the United States Department of 136.2 Commerce for the 12-month period ending March 31 of the year 136.3 prior to the year the taxes are payable. For taxes payable in 136.4 2005 and subsequent years on commercial-industrial property, the 136.5 tax is imposed under this subdivision at the rate of the tax 136.6 imposed under this subdivision for taxes payable in 2002. The 136.7 tax under this section is not treated as a local tax rate under 136.8 section 469.177 and is not the levy of a governmental unit under 136.9 chapters 276A and 473F. 136.10 (b) Beginning with taxes payable in 2007, and in each year 136.11 thereafter, the commissioner of finance shall deposit in the 136.12 education reserve account established in section 52, the 136.13 increased amount of the state general levy for that year over 136.14 the state general levy base amount for taxes payable in 2002. 136.15 (c) The commissioner shall increase or decrease the 136.16 preliminary or final rate for a year as necessary to account for 136.17 errors and tax base changes that affected a preliminary or final 136.18 rate for either of the two preceding years. Adjustments are 136.19 allowed to the extent that the necessary information is 136.20 available to the commissioner at the time the rates for a year 136.21 must be certified, and for the following reasons: 136.22 (1) an erroneous report of taxable value by a local 136.23 official; 136.24 (2) an erroneous calculation by the commissioner; and 136.25 (3) an increase or decrease in taxable value for 136.26 commercial-industrial or seasonal residential recreational 136.27 property reported on the abstracts of tax lists submitted under 136.28 section 275.29 that was not reported on the abstracts of 136.29 assessment submitted under section 270.11, subdivision 2, for 136.30 the same year. 136.31 The commissioner may, but need not, make adjustments if the 136.32 total difference in the tax levied for the year would be less 136.33 than $100,000. 136.34[EFFECTIVE DATE.] This section is effective for taxes 136.35 payable in 2004 and subsequent years. 136.36 Sec. 38. Minnesota Statutes 2003 Supplement, section 137.1 275.065, subdivision 3, is amended to read: 137.2 Subd. 3. [NOTICE OF PROPOSED PROPERTY TAXES.] (a) The 137.3 county auditor shall prepare and the county treasurer shall 137.4 deliver after November 10 and on or before November 24 each 137.5 year, by first class mail to each taxpayer at the address listed 137.6 on the county's current year's assessment roll, a notice of 137.7 proposed property taxes. 137.8 (b) The commissioner of revenue shall prescribe the form of 137.9 the notice. 137.10 (c) The notice must inform taxpayers that it contains the 137.11 amount of property taxes each taxing authority proposes to 137.12 collect for taxes payable the following year. In the case of a 137.13 town, or in the case of the state general tax, the final tax 137.14 amount will be its proposed tax. In the case of taxing 137.15 authorities required to hold a public meeting under subdivision 137.16 6, the notice must clearly state that each taxing authority, 137.17 including regional library districts established under section 137.18 134.201, and including the metropolitan taxing districts as 137.19 defined in paragraph (i), but excluding all other special taxing 137.20 districts and towns, will hold a public meeting to receive 137.21 public testimony on the proposed budget and proposed or final 137.22 property tax levy, or, in case of a school district, on the 137.23 current budget and proposed property tax levy. It must clearly 137.24 state the time and place of each taxing authority's meeting, a 137.25 telephone number for the taxing authority that taxpayers may 137.26 call if they have questions related to the notice, and an 137.27 address where comments will be received by mail. 137.28 (d) The notice must state for each parcel: 137.29 (1) the market value of the property as determined under 137.30 section 273.11, and used for computing property taxes payable in 137.31 the following year and for taxes payable in the current year as 137.32 each appears in the records of the county assessor on November 1 137.33 of the current year; and, in the case of residential property, 137.34 whether the property is classified as homestead or 137.35 nonhomestead. The notice must clearly inform taxpayers of the 137.36 years to which the market values apply and that the values are 138.1 final values; 138.2 (2) the items listed below, shown separately by county, 138.3 city or town, and state general tax, net of the residential and 138.4 agricultural homestead credit under section 273.1384, voter 138.5 approved school levy, other local school levy, and the sum of 138.6 the special taxing districts, and as a total of all taxing 138.7 authorities: 138.8 (i) the actual tax for taxes payable in the current year; 138.9 and 138.10 (ii) the proposed tax amount. 138.11 If the county levy under clause (2) includes an amount for 138.12 a lake improvement district as defined under sections 103B.501 138.13 to 103B.581, the amount attributable for that purpose must be 138.14 separately stated from the remaining county levy amount. 138.15 In the case of a town or the state general tax, the final 138.16 tax shall also be its proposed tax unless the town changes its 138.17 levy at a special town meeting under section 365.52. If a 138.18 school district has certified under section 126C.17, subdivision 138.19 9, that a referendum will be held in the school district at the 138.20 November general election, the county auditor must note next to 138.21 the school district's proposed amount that a referendum is 138.22 pending and that, if approved by the voters, the tax amount may 138.23 be higher than shown on the notice. In the case of the city of 138.24 Minneapolis, the levy for the Minneapolis Library Board and the 138.25 levy for Minneapolis Park and Recreation shall be listed 138.26 separately from the remaining amount of the city's levy. In the 138.27 case of the city of St. Paul, the levy for the St. Paul Library 138.28 Agency must be listed separately from the remaining amount of 138.29 the city's levy. In the case of Ramsey County, any amount 138.30 levied under section 134.07 may be listed separately from the 138.31 remaining amount of the county's levy. In the case of a parcel 138.32 where tax increment or the fiscal disparities areawide tax under 138.33 chapter 276A or 473F applies, the proposed tax levy on the 138.34 captured value or the proposed tax levy on the tax capacity 138.35 subject to the areawide tax must each be stated separately and 138.36 not included in the sum of the special taxing districts; and 139.1 (3) the increase or decrease between the total taxes 139.2 payable in the current year and the total proposed taxes, 139.3 expressed as a percentage. 139.4 For purposes of this section, the amount of the tax on 139.5 homesteads qualifying under the senior citizens' property tax 139.6 deferral program under chapter 290B is the total amount of 139.7 property tax before subtraction of the deferred property tax 139.8 amount. 139.9 (e) The notice must clearly state that the proposed or 139.10 final taxes do not include the following: 139.11 (1) special assessments; 139.12 (2) levies approved by the voters after the date the 139.13 proposed taxes are certified, including bond referenda and 139.14 school district levy referenda; 139.15 (3) a levy limit increase approved by the voters by the 139.16 first Tuesday after the first Monday in November of the levy 139.17 year as provided under section 275.73; 139.18 (4) amounts necessary to pay cleanup or other costs due to 139.19 a natural disaster occurring after the date the proposed taxes 139.20 are certified; 139.21 (5) amounts necessary to pay tort judgments against the 139.22 taxing authority that become final after the date the proposed 139.23 taxes are certified; and 139.24 (6) the contamination tax imposed on properties which 139.25 received market value reductions for contamination. 139.26 (f) Except as provided in subdivision 7, failure of the 139.27 county auditor to prepare or the county treasurer to deliver the 139.28 notice as required in this section does not invalidate the 139.29 proposed or final tax levy or the taxes payable pursuant to the 139.30 tax levy. 139.31 (g) If the notice the taxpayer receives under this section 139.32 lists the property as nonhomestead, and satisfactory 139.33 documentation is provided to the county assessor by the 139.34 applicable deadline, and the property qualifies for the 139.35 homestead classification in that assessment year, the assessor 139.36 shall reclassify the property to homestead for taxes payable in 140.1 the following year. 140.2 (h) In the case of class 4 residential property used as a 140.3 residence for lease or rental periods of 30 days or more, the 140.4 taxpayer must either: 140.5 (1) mail or deliver a copy of the notice of proposed 140.6 property taxes to each tenant, renter, or lessee; or 140.7 (2) post a copy of the notice in a conspicuous place on the 140.8 premises of the property. 140.9 The notice must be mailed or posted by the taxpayer by 140.10 November 27 or within three days of receipt of the notice, 140.11 whichever is later. A taxpayer may notify the county treasurer 140.12 of the address of the taxpayer, agent, caretaker, or manager of 140.13 the premises to which the notice must be mailed in order to 140.14 fulfill the requirements of this paragraph. 140.15 (i) For purposes of this subdivision, subdivisions 5a and 140.16 6, "metropolitan special taxing districts" means the following 140.17 taxing districts in the seven-county metropolitan area that levy 140.18 a property tax for any of the specified purposes listed below: 140.19 (1) Metropolitan Council under section 473.132, 473.167, 140.20 473.249, 473.325, 473.446, 473.521, 473.547, or 473.834; 140.21 (2) Metropolitan Airports Commission under section 473.667, 140.22 473.671, or 473.672; and 140.23 (3) Metropolitan Mosquito Control Commission under section 140.24 473.711. 140.25 For purposes of this section, any levies made by the 140.26 regional rail authorities in the county of Anoka, Carver, 140.27 Dakota, Hennepin, Ramsey, Scott, or Washington under chapter 140.28 398A shall be included with the appropriate county's levy and 140.29 shall be discussed at that county's public hearing. 140.30[EFFECTIVE DATE.] This section is effective for notices for 140.31 property taxes levied in 2004, payable in 2005, and thereafter. 140.32 Sec. 39. Minnesota Statutes 2002, section 276.04, 140.33 subdivision 2, is amended to read: 140.34 Subd. 2. [CONTENTS OF TAX STATEMENTS.] (a) The treasurer 140.35 shall provide for the printing of the tax statements. The 140.36 commissioner of revenue shall prescribe the form of the property 141.1 tax statement and its contents. The statement must contain a 141.2 tabulated statement of the dollar amount due to each taxing 141.3 authority and the amount of the state tax from the parcel of 141.4 real property for which a particular tax statement is prepared. 141.5 The dollar amounts attributable to the county, the state tax, 141.6 the voter approved school tax, the other local school tax, the 141.7 township or municipality, and the total of the metropolitan 141.8 special taxing districts as defined in section 275.065, 141.9 subdivision 3, paragraph (i), must be separately stated. The 141.10 amounts due all other special taxing districts, if any, may be 141.11 aggregated. If the county levy under this paragraph includes an 141.12 amount for a lake improvement district as defined under sections 141.13 103B.501 to 103B.581, the amount attributable for that purpose 141.14 must be separately stated from the remaining county levy 141.15 amount. In the case of Ramsey County, if the county levy under 141.16 this paragraph includes an amount for public library service 141.17 under section 134.07, the amount attributable for that purpose 141.18 may be separately stated from the remaining county levy amount. 141.19 The amount of the tax on homesteads qualifying under the senior 141.20 citizens' property tax deferral program under chapter 290B is 141.21 the total amount of property tax before subtraction of the 141.22 deferred property tax amount. The amount of the tax on 141.23 contamination value imposed under sections 270.91 to 270.98, if 141.24 any, must also be separately stated. The dollar amounts, 141.25 including the dollar amount of any special assessments, may be 141.26 rounded to the nearest even whole dollar. For purposes of this 141.27 section whole odd-numbered dollars may be adjusted to the next 141.28 higher even-numbered dollar. The amount of market value 141.29 excluded under section 273.11, subdivision 16, if any, must also 141.30 be listed on the tax statement. 141.31 (b) The property tax statements for manufactured homes and 141.32 sectional structures taxed as personal property shall contain 141.33 the same information that is required on the tax statements for 141.34 real property. 141.35 (c) Real and personal property tax statements must contain 141.36 the following information in the order given in this paragraph. 142.1 The information must contain the current year tax information in 142.2 the right column with the corresponding information for the 142.3 previous year in a column on the left: 142.4 (1) the property's estimated market value under section 142.5 273.11, subdivision 1; 142.6 (2) the property's taxable market value after reductions 142.7 under section 273.11, subdivisions 1a and 16; 142.8 (3) the property's gross tax, calculated by adding the 142.9 property's total property tax to the sum of the aids enumerated 142.10 in clause (4); 142.11 (4) a total of the following aids: 142.12 (i) education aids payable under chapters 122A, 123A, 123B, 142.13 124D, 125A, 126C, and 127A; 142.14 (ii) local government aids for cities, towns, and counties 142.15 under chapter 477A; 142.16 (iii) disparity reduction aid under section 273.1398; and 142.17 (iv) homestead and agricultural credit aid under section 142.18 273.1398; 142.19 (5) for homestead residential and agricultural properties, 142.20 the credits under section 273.1384; 142.21 (6) any credits received under sections 273.119; 273.123; 142.22 273.135; 273.1391; 273.1398, subdivision 4; 469.171; and 142.23 473H.10, except that the amount of credit received under section 142.24 273.135 must be separately stated and identified as "taconite 142.25 tax relief"; and 142.26 (7) the net tax payable in the manner required in paragraph 142.27 (a). 142.28 (d) If the county uses envelopes for mailing property tax 142.29 statements and if the county agrees, a taxing district may 142.30 include a notice with the property tax statement notifying 142.31 taxpayers when the taxing district will begin its budget 142.32 deliberations for the current year, and encouraging taxpayers to 142.33 attend the hearings. If the county allows notices to be 142.34 included in the envelope containing the property tax statement, 142.35 and if more than one taxing district relative to a given 142.36 property decides to include a notice with the tax statement, the 143.1 county treasurer or auditor must coordinate the process and may 143.2 combine the information on a single announcement. 143.3 The commissioner of revenue shall certify to the county 143.4 auditor the actual or estimated aids enumerated in clause (4) 143.5 that local governments will receive in the following year. The 143.6 commissioner must certify this amount by January 1 of each year. 143.7[EFFECTIVE DATE.] This section is effective for property 143.8 tax statements for taxes payable in 2005 and thereafter. 143.9 Sec. 40. [278.021] [PETITIONS INVOLVING LOW-INCOME RENTAL 143.10 HOUSING PROPERTY.] 143.11 Notwithstanding section 278.02, in the case of real 143.12 property that meets the definition of qualifying low-income 143.13 housing rental property established in section 273.126, the 143.14 petition may include any and all such parcels of real property 143.15 in which the petitioner has an estate, right, title, interest, 143.16 or lien, except that all such parcels included in the petition 143.17 must be located in the same county. Contiguous qualifying 143.18 low-income rental housing property overlapping county boundaries 143.19 may be included in the same petition. 143.20 Sec. 41. Minnesota Statutes 2002, section 278.03, 143.21 subdivision 1, is amended to read: 143.22 Subdivision 1. [REAL PROPERTY.]In the case of real143.23property,If the proceedings instituted by the filing of the 143.24 petition have not been completed before the 16th day of May next 143.25 following the filing or, in the case of class 1c property or 143.26 class 4c resort property before the 16th day of June for taxes 143.27 payable in 2005 and 2006 only, the petitioner shall pay to the 143.28 county treasurer 50 percent of the tax levied for such year 143.29 against the property involved, unless permission to continue 143.30 prosecution of the petition without such payment is obtained as 143.31 herein provided. If the proceedings instituted by the filing of 143.32 the petition have not been completed by the next October 16, or, 143.33 in the case of class 1b agricultural homestead, class 2a 143.34 agricultural homestead, and class 2b(2) agricultural 143.35 nonhomestead property, November 16, the petitioner shall pay to 143.36 the county treasurer 50 percent of the unpaid balance of the 144.1 taxes levied for the year against the property involved if the 144.2 unpaid balance is $2,000 or less and 80 percent of the unpaid 144.3 balance if the unpaid balance is over $2,000, unless permission 144.4 to continue prosecution of the petition without payment is 144.5 obtained as herein provided. The petitioner, upon ten days' 144.6 notice to the county attorney and to the county auditor, given 144.7 at least ten days prior to the 16th day of May or, in the case 144.8 of class 1c or class 4c resort property, the 16th day of June 144.9 for taxes payable in 2005 and 2006 only, or the 16th day of 144.10 October, or, in the case of class 1b agricultural homestead, 144.11 class 2a agricultural homestead, and class 2b(2) agricultural 144.12 nonhomestead property, the 16th day of November, may apply to 144.13 the court for permission to continue prosecution of the petition 144.14 without payment; and, if it is made to appear 144.15 (1) that the proposed review is to be taken in good faith; 144.16 (2) that there is probable cause to believe that the 144.17 property may be held exempt from the tax levied or that the tax 144.18 may be determined to be less than 50 percent of the amount 144.19 levied; and 144.20 (3) that it would work a hardship upon petitioner to pay 144.21 the taxes due, 144.22 the court may permit the petitioner to continue prosecution 144.23 of the petition without payment, or may fix a lesser amount to 144.24 be paid as a condition of continuing the prosecution of the 144.25 petition. 144.26 Failure to make payment of the amount required when due 144.27 shall operate automatically to dismiss the petition and all 144.28 proceedings thereunder unless the payment is waived by an order 144.29 of the court permitting the petitioner to continue prosecution 144.30 of the petition without payment. The petition shall be 144.31 automatically reinstated upon payment of the entire tax plus 144.32 interest and penalty if the payment is made within one year of 144.33 the dismissal. The county treasurer shall, upon request of the 144.34 petitioner, issue duplicate receipts for the tax payment, one of 144.35 which shall be filed by the petitioner in the proceeding. 144.36 Sec. 42. Minnesota Statutes 2002, section 279.01, 145.1 subdivision 1, is amended to read: 145.2 Subdivision 1. [DUE DATES; PENALTIES.] Except as provided 145.3 insubdivision 3 or 4this section, on May 16 or 21 days after 145.4 the postmark date on the envelope containing the property tax 145.5 statement, whichever is later, a penalty shall accrue and 145.6 thereafter be charged upon all unpaid taxes on real estate on 145.7 the current lists in the hands of the county treasurer. The 145.8 penalty shall be at a rate of two percent on homestead property 145.9 until May 31 and four percent on June 1. The penalty on 145.10 nonhomestead property shall be at a rate of four percent until 145.11 May 31 and eight percent on June 1. This penalty shall not 145.12 accrue until June 1 of each year, or 21 days after the postmark 145.13 date on the envelope containing the property tax statements, 145.14 whichever is later, on commercial use real property used for 145.15 seasonal residential recreational purposes and classified as 145.16 class 1c or 4c, and on other commercial use real property 145.17 classified as class 3a, provided that over 60 percent of the 145.18 gross income earned by the enterprise on the class 3a property 145.19 is earned during the months of May, June, July, and August. Any 145.20 property owner of such class 3a property who pays the first half 145.21 of the tax due on the property after May 15 and before June 1, 145.22 or 21 days after the postmark date on the envelope containing 145.23 the property tax statement, whichever is later, shall attach an 145.24 affidavit to the payment attesting to compliance with the income 145.25 provision of this subdivision. Thereafter, for both homestead 145.26 and nonhomestead property, on the first day of each month 145.27 beginning July 1, up to and including October 1 following, an 145.28 additional penalty of one percent for each month shall accrue 145.29 and be charged on all such unpaid taxes provided that if the due 145.30 date was extended beyond May 15 as the result of any delay in 145.31 mailing property tax statements no additional penalty shall 145.32 accrue if the tax is paid by the extended due date. If the tax 145.33 is not paid by the extended due date, then all penalties that 145.34 would have accrued if the due date had been May 15 shall be 145.35 charged. When the taxes against any tract or lot exceed $50, 145.36 one-half thereof may be paid prior to May 16 or 21 days after 146.1 the postmark date on the envelope containing the property tax 146.2 statement, whichever is later; and, if so paid, no penalty shall 146.3 attach; the remaining one-half shall be paid at any time prior 146.4 to October 16 following, without penalty; but, if not so paid, 146.5 then a penalty of two percent shall accrue thereon for homestead 146.6 property and a penalty of four percent on nonhomestead 146.7 property. Thereafter, for homestead property, on the first day 146.8 of November an additional penalty of four percent shall accrue 146.9 and on the first day of December following, an additional 146.10 penalty of two percent shall accrue and be charged on all such 146.11 unpaid taxes. Thereafter, for nonhomestead property, on the 146.12 first day of November and December following, an additional 146.13 penalty of four percent for each month shall accrue and be 146.14 charged on all such unpaid taxes. If one-half of such taxes 146.15 shall not be paid prior to May 16 or 21 days after the postmark 146.16 date on the envelope containing the property tax statement, 146.17 whichever is later, the same may be paid at any time prior to 146.18 October 16, with accrued penalties to the date of payment added, 146.19 and thereupon no penalty shall attach to the remaining one-half 146.20 until October 16 following. 146.21 This section applies to payment of personal property taxes 146.22 assessed against improvements to leased property, except as 146.23 provided by section 277.01, subdivision 3. 146.24 A county may provide by resolution that in the case of a 146.25 property owner that has multiple tracts or parcels with 146.26 aggregate taxes exceeding $50, payments may be made in 146.27 installments as provided in this subdivision. 146.28 The county treasurer may accept payments of more or less 146.29 than the exact amount of a tax installment due. If the accepted 146.30 payment is less than the amount due, payments must be applied 146.31 first to the penalty accrued for the year the payment is made. 146.32 Acceptance of partial payment of tax does not constitute a 146.33 waiver of the minimum payment required as a condition for filing 146.34 an appeal under section 278.03 or any other law, nor does it 146.35 affect the order of payment of delinquent taxes under section 146.36 280.39. 147.1 Sec. 43. Minnesota Statutes 2002, section 279.01, is 147.2 amended by adding a subdivision to read: 147.3 Subd. 5. [SEASONAL RESIDENTIAL RECREATIONAL PROPERTY USED 147.4 FOR COMMERCIAL PURPOSES.] For taxes payable in 2005 and 2006 147.5 only, in the case of class 1c property and class 4c seasonal 147.6 residential recreational property used for commercial purposes, 147.7 no penalties shall accrue to the first one-half property tax 147.8 payment as provided in this section if paid by June 15. On June 147.9 16, a penalty shall accrue and thereafter be charged upon all 147.10 unpaid taxes. On class 1c property the penalty is at a rate of 147.11 two percent until June 31, and four percent on July 1. On class 147.12 4c seasonal residential recreational property used for 147.13 commercial purposes, the penalty is four percent until June 31 147.14 and eight percent on July 1. Thereafter, for both class 1c and 147.15 class 4c seasonal residential recreational property used for 147.16 commercial purposes, on the first day of September and on the 147.17 first day of October, an additional penalty of one percent shall 147.18 accrue and be charged on unpaid taxes. The remaining one-half 147.19 property taxes must be paid and penalties accrue as provided in 147.20 subdivision 1. 147.21 Sec. 44. [290.0621] [SCHOOL REFERENDUM TAX.] 147.22 Subdivision 1. [IMPOSITION.] In addition to all other 147.23 taxes imposed by this chapter, a tax is imposed on individuals 147.24 who are domiciled on the last day of the taxable year within the 147.25 territory of a school district in which the voters approved an 147.26 income tax increase at a referendum conducted under section 147.27 126C.17, subdivision 9, for that purpose in 2005 or a subsequent 147.28 year. This tax does not apply to referendums on bond issues. 147.29 Individuals domiciled in the district on the last day of the 147.30 taxable year are subject to the tax. 147.31 Subd. 2. [RATE.] The commissioner of revenue shall 147.32 annually determine the rate of the tax imposed under this 147.33 section as a percentage of the state income tax liability of 147.34 individuals subject to the tax by each district. The school 147.35 referendum tax rate is equal to the ratio of (i) the district's 147.36 local effort revenue under section 126C.17, subdivision 6b, to 148.1 (ii) the state income tax liability of all individuals domiciled 148.2 in the district on the last day of the previous taxable year. 148.3 Subd. 3. [REVENUE DISTRIBUTION.] Revenue raised in 148.4 subdivision 1 must be placed in a special account in the general 148.5 fund. The amount necessary to make payments to school districts 148.6 under this section is annually appropriated from the general 148.7 fund to the commissioner of education and must be paid to school 148.8 districts according to section 127A.45. 148.9 Sec. 45. Minnesota Statutes 2002, section 462A.071, 148.10 subdivision 6, is amended to read: 148.11 Subd. 6. [SECTION 8, TAX CREDIT, AND RURAL HOUSING SERVICE 148.12 UNITS.] (a) The agency may deem units as meeting the 148.13 requirements of section 273.126 and this section, if the units:148.14(1) are subject to a housing assistance payments contract148.15under section 8 of the United States Housing Act of 1937, as148.16amended;148.17(2) are rent and income restricted units of a qualified148.18low-income housing project receiving tax credits under section148.1942(g) of the Internal Revenue Code of 1986, as amended; or148.20(3) are financed by the Rural Housing Service of the United148.21States Department of Agriculture and receive payments under the148.22rental assistance program pursuant to section 521(a) of the148.23Housing Act of 1949, as amendedmeet the requirements provided 148.24 in section 273.1321, subdivision 1. 148.25 (b) The agency may certify these deemed units under 148.26 subdivision 1 based on a simplified application procedure that 148.27 verifies the unit's qualifications under paragraph (a). 148.28 Sec. 46. Minnesota Statutes 2002, section 473F.08, is 148.29 amended by adding a subdivision to read: 148.30 Subd. 3c. [UNCOMPENSATED CARE REIMBURSEMENT.] (a) As used 148.31 in this subdivision, the following terms have the meanings given 148.32 in this paragraph. 148.33 (1) "Uncompensated care" means the sum of (i) the amount 148.34 that would have been charged by a facility for rendering free or 148.35 discounted care to persons who cannot afford to pay and for 148.36 which the facility did not expect payment and (ii) the amount 149.1 that had been charged by a facility for rendering care to 149.2 persons and billed to that person or a third-party payer for 149.3 which the facility expected but did not receive payment. 149.4 Uncompensated care does not include contractual write-offs. 149.5 (2) A "qualifying hospital" means a hospital in the area 149.6 that is: 149.7 (i) owned or operated by a local unit of government, or 149.8 formerly owned by a university or is a private nonprofit 149.9 hospital that leases its building from the county in which it is 149.10 located; and 149.11 (ii) has a licensed bed capacity greater than 400. 149.12 (b) A county that contains a qualifying hospital is 149.13 eligible for reimbursement of that portion of gross charges for 149.14 uncompensated care determined by multiplying the hospital's 149.15 gross charges during the base year by the percentage of 149.16 uncompensated care provided by the hospital during the base year 149.17 minus one-half of one percent of those gross charges, dividing 149.18 the result by two, and adjusting to cost by multiplying that 149.19 result by the hospital's cost-to-charge ratio during the base 149.20 year. By July 15, 2005, and each subsequent year, the county 149.21 shall notify its county auditor, as well as the administrative 149.22 auditor, of the amount of qualifying uncompensated care 149.23 provided, adjusted to cost using the hospital's cost-to-charge 149.24 ratio, during the 12-month period ending on June 30 of the 149.25 current year. 149.26 (c) The amount certified under paragraph (b) shall be 149.27 certified annually by the county auditor to the administrative 149.28 auditor as an addition to the county's areawide levy under 149.29 subdivision 5. 149.30 (d) The administrative auditor shall pay one-half of the 149.31 reimbursement to the county auditor of the county that contains 149.32 the qualifying hospital on or before June 15 and the remaining 149.33 one-half of the reimbursement on or before November 15. The 149.34 county auditor receiving the payment shall disburse the 149.35 reimbursement to the qualifying hospital within 15 days of 149.36 receipt of the reimbursement. 150.1 (e) Prior to the reporting specified in paragraph (b) 150.2 above, all qualifying hospitals that participate in this program 150.3 shall agree upon and implement a common standard for reporting 150.4 uncompensated care, and a common standard for determining 150.5 eligibility for uncompensated care for all participating 150.6 hospitals. 150.7[EFFECTIVE DATE.] This section is effective for fiscal 150.8 disparities contribution and distribution tax capacities for 150.9 taxes payable in 2006 and 2007 only. 150.10 Sec. 47. Minnesota Statutes 2002, section 473F.08, is 150.11 amended by adding a subdivision to read: 150.12 Subd. 3d. [HENNEPIN COUNTY PUBLIC DEFENDER COST 150.13 REIMBURSEMENT.] (a) Hennepin County is eligible for 150.14 reimbursement of costs incurred by the county under section 150.15 611.26, subdivision 3a, paragraph (c). By July 15, 2005, and 150.16 each subsequent year, the county shall notify the county auditor 150.17 and the administrative auditor, of the amount of that cost 150.18 incurred by the county during the 12-month period ending on June 150.19 30 of the current year. 150.20 (b) The reimbursement under this subdivision for costs 150.21 incurred during the 12-month period ending June 30, 2005, is 150.22 equal to 25 percent of those costs. The reimbursement under 150.23 this subdivision for costs incurred during the 12-month period 150.24 ending June 30, 2006, is equal to 50 percent of those costs. 150.25 (c) The amount certified under paragraph (b) shall be 150.26 certified annually by the Hennepin County auditor to the 150.27 administrative auditor as an addition to the county's areawide 150.28 levy under subdivision 5. 150.29 (d) The administrative auditor shall pay one-half of the 150.30 reimbursement to the Hennepin County auditor on or before June 150.31 15 and the remaining one-half of the reimbursement on or before 150.32 November 15. 150.33[EFFECTIVE DATE.] This section is effective for fiscal 150.34 disparities contribution and distribution tax capacities for 150.35 taxes payable in 2006 and 2007 only. 150.36 Sec. 48. Laws 1998, chapter 389, article 3, section 41, is 151.1 amended to read: 151.2 Sec. 41. [SPECIAL ASSESSMENT DEFERRAL AUTHORIZED.] 151.3 Notwithstanding Minnesota Statutes, chapter 429, a city may 151.4 defer the payment of any special assessment levied against a 151.5 property qualifying under section 38 as determined by the city. 151.6 Any special assessment, the payment of which has been deferred 151.7 by the city, must be paid in full or a payment agreement may be 151.8 approved by the city if the ownership of property is transferred 151.9 to anyone or any entity. Payment or a payment agreement must be 151.10 made within 60 days of the transfer of ownership. 151.11[EFFECTIVE DATE.] This section is effective the day 151.12 following final enactment. 151.13 Sec. 49. Laws 1998, chapter 389, article 3, section 42, 151.14 subdivision 2, as amended by Laws 2002, chapter 377, article 4, 151.15 section 24, is amended to read: 151.16 Subd. 2. [RECAPTURE.] (a) Property or any portion thereof 151.17 qualifying under section 38 is subject to additional taxes if: 151.18 (1) ownership of the property is transferred to anyone 151.19 other than the spouse or child of the current owner; 151.20 (2) the current owner or the spouse or child of the current 151.21 owner has not conveyed or entered into a contract before July 1, 151.22 2007, to convey for ownership or public easement rights, (i) a 151.23 portion of the property toaone or more nonprofitfoundation151.24 foundations orcorporation operatingcorporations; and (ii) a 151.25 portion of the property to one or more local governments; and 151.26 those entities shall separately or jointly operate the property 151.27 as an art park providing the services included in section 38, 151.28 clauses (2) to (5), and may also use some of the property for 151.29 other public purposes as determined by the local governments; or 151.30 (3) the nonprofit foundation or corporation to which a 151.31 portion of the property was transferred ceases to provide the 151.32 services included in section 38, clauses (2) to (5), earlier 151.33 than ten years following the effective date of theconveyance151.34 conveyances or of the execution of thecontractcontracts to 151.35 convey. 151.36 (b) The additional taxes are imposed at the earlier of (1) 152.1 the year following transfer of ownership to anyone other than 152.2 the spouse or child of the current owner or a nonprofit 152.3 foundation or corporation or local government operating the 152.4 property as an art park and used for other public purposes, or 152.5 (2) for taxes payable in 2008, or (3) in the event the nonprofit 152.6 foundation or corporation to which a portion of the property was 152.7 conveyed ceases to provide the required services within ten 152.8 years after the conveyance, for taxes payable in the year 152.9 following the year when it ceased to do so. 152.10 The county board, with the approval of the city council, 152.11 shall determine the amount of the additional taxes due on the 152.12 portion of property which is no longer utilized as an art park; 152.13 provided, however, that the additional taxesare equal tomust 152.14 not be greater than the difference between the taxes determined 152.15 on that portion of the property utilized as an art park under 152.16 sections 39 and 40 and the amount determined under subdivision 1 152.17 for all years that the property qualified under section 38.The152.18additional taxes must be extended against the property on the152.19tax list for the current year; provided, however, thatNo 152.20 interest or penalties may be levied on the additionaltaxes if152.21timely paidamount provided that it is paid within 30 days of 152.22 the county's notice. 152.23[EFFECTIVE DATE.] This section is effective the day 152.24 following final enactment. 152.25 Sec. 50. Laws 2003, chapter 127, article 12, section 38, 152.26 is amended to read: 152.27 Sec. 38. [MEMBERS MUSTAUTHORITY TO LEVY TAXESFOR152.28AUTHORITY.] 152.29(a) A member shall, at the request of the authority, levy a152.30tax in any year for the benefit of the authority.The authority 152.31 is a special taxing district as defined in Minnesota Statutes, 152.32 section 275.066, clause (13), with the power to adopt and 152.33 certify a property tax levy to the county auditor. The 152.34 authority may levy a tax in any year for the benefit of the 152.35 authority. The taxis,for each member,is a pro rata portion 152.36 of the total amount of tax requested by the authority based on 153.1 the taxable market value withinathe member's jurisdiction, but 153.2 in no event may the tax in any year exceed 0.01813 percent of 153.3 taxable market value. For purposes of this section, "taxable 153.4 market value" has the meaning as given in Minnesota Statutes, 153.5 section 273.032. 153.6(b) The treasurer of each member city or town shall, within153.715 days after receiving the property tax settlements from the153.8county treasurer, pay to the treasurer of the authority the153.9amount collected for this purpose. The money must be used by153.10the authority for the purposes provided by sections 35 to 41.153.11[EFFECTIVE DATE.] This section is effective for taxes 153.12 levied in 2004, payable in 2005, and thereafter. 153.13 Sec. 51. Laws 2003, First Special Session chapter 21, 153.14 article 4, section 12, subdivision 11, is amended to read: 153.15 Subd. 11. [EFFECTIVE DATE; LOCAL APPROVAL.] This section 153.16 is effective the day after the governing body of St. Louis 153.17 county and its chief clerical officer timely complete their 153.18 compliance with Minnesota Statutes, section 645.021, 153.19 subdivisions 2 and 3, provided that the certificate of approval 153.20 is filed with the secretary of state before January 1, 2006. 153.21If effective before September 1, 2003, the first levy is153.22the payable 2004 levy;If effectivebetween September 1, 2003,153.23andbefore September 1, 2004, the first levy is the payable 2005 153.24 levy; if effective after August 31, 2004, and before September 153.25 1, 2005, the first levy is the payable 2006 levy; and if 153.26 effective after August 31, 2005, the first levy is the payable 153.27 2007 levy. 153.28 Sec. 52. [EDUCATION RESERVE ACCOUNT; APPROPRIATION.] 153.29 (a) There is created in the state treasury an education 153.30 reserve account as a special revenue fund for deposit of 153.31 appropriations and other receipts as provided by law. 153.32 (b) $26,080,000 is appropriated from the general fund to 153.33 the education reserve account in fiscal year 2005. This is a 153.34 onetime appropriation. Of this amount, the following amounts 153.35 are appropriated to the commissioner of education in the fiscal 153.36 years indicated to supplement the general education aid program 154.1 under Minnesota Statutes, section 126C.13, subdivision 4: 154.2 (1) $5,366,000 in fiscal year 2005; 154.3 (2) $48,000 in fiscal year 2006; and 154.4 (3) $45,000 in fiscal year 2007. 154.5 (c) As provided in Minnesota Statutes, section 275.025, 154.6 subdivision 1, beginning with taxes payable in 2007, the 154.7 commissioner of finance shall deposit in the education reserve 154.8 account the increased amount of the state general levy for that 154.9 year over the state general levy base amount for taxes payable 154.10 in 2002. 154.11 (d) Each year, one-half of the annual amount will be 154.12 deposited in the education reserve account in the state fiscal 154.13 year corresponding to the first six months of the calendar year, 154.14 and the other half will be deposited in the state fiscal year 154.15 corresponding to the last six months of the calendar year. The 154.16 amounts in the education reserve account do not lapse or cancel 154.17 each year, but remain until appropriated by law for education 154.18 aid or higher education funding. 154.19 Sec. 53. [STUDY OF POLLUTION CONTROL EXEMPTION.] 154.20 The commissioner of revenue must study the application of 154.21 the property tax exemption provided under Minnesota Statutes, 154.22 section 272.02, subdivision 10, to personal property used for 154.23 pollution control as part of an electric generation system. The 154.24 commissioner must present a recommendation to the legislature by 154.25 January 15, 2005, that would limit the exemption to property 154.26 that is directly and exclusively used for pollution control 154.27 purposes. 154.28 Sec. 54. [SUPPLEMENTARY AID.] 154.29 (a) If a bill styled as H.F. No. 2028 is enacted at the 154.30 2004 legislative session and includes provisions authorizing 154.31 supplementary levy authority for school districts for deferred 154.32 maintenance and capital projects, that section is repealed. 154.33 (b) For fiscal years 2006, 2007, and 2008 only, each school 154.34 district is eligible to receive $12 times the adjusted marginal 154.35 cost pupil units annually for one or more of the following uses: 154.36 (1) outstanding disability access projects; 155.1 (2) onetime health- and safety-related projects that are 155.2 not eligible for health and safety revenue under Minnesota 155.3 Statutes, section 123B.57; 155.4 (3) outstanding construction deficit costs of school 155.5 facilities shared with the community; 155.6 (4) utility and other costs of operating a district-owned 155.7 community center where the district colocates services with 155.8 other local units of government, in proportion to the amount of 155.9 time the district uses the facility; 155.10 (5) the district's share of the costs of building 155.11 noninstructional facilities that will be operated in cooperation 155.12 with other local units of government; 155.13 (6) the cost of leasing school-related storage facilities; 155.14 (7) the costs associated with leases of administrative and 155.15 classroom space shared with other school districts or higher 155.16 education institutions; 155.17 (8) outstanding building lease levy amounts under Minnesota 155.18 Statutes, section 126C.40, subdivision 1; outstanding 155.19 unemployment insurance amount under Minnesota Statutes, section 155.20 126C.43, subdivision 2; outstanding amount necessary for 155.21 judgments against the district under Minnesota Statutes, section 155.22 126C.43, subdivision 3; and additional costs under the safe 155.23 schools levy under Minnesota Statutes, section 126C.44; 155.24 (9) a school district whose total concentration of free and 155.25 reduced price lunch students increased between fiscal year 2003 155.26 and 2004 may utilize the revenue under this section, according 155.27 to Minnesota Statutes, section 126C.13, subdivision 5; 155.28 (10) retired employee health benefits; or 155.29 (11) other district deferred maintenance projects or 155.30 capital projects eligible under Minnesota Statutes, section 155.31 126C.10, subdivision 14. 155.32 (c) In a form and manner determined by the Department of 155.33 Education, each district shall submit to the department the aid 155.34 received under this section for each category in paragraph (a). 155.35 (d) For each year in which payments to school districts are 155.36 made under this section, the Department of Education shall make 156.1 payments to districts using the estimated adjusted marginal cost 156.2 pupil unit count contained in the preceding year's February 156.3 forecast for the corresponding fiscal year. 156.4 (e) In fiscal years 2006, 2007, and 2008, if insufficient 156.5 aid is appropriated to fund the provisions of this section, each 156.6 school district may levy an amount equal to the amount by which 156.7 the appropriation is deficient: 156.8 (i) for taxes payable in 2006 only, if insufficient aid is 156.9 provided during the 2005 legislative session for fiscal year 156.10 2006, each school district may levy an amount equal to the 156.11 amount by which the appropriation is deficient and may recognize 156.12 that revenue for fiscal year 2006; 156.13 (ii) for taxes payable in 2007 only, if insufficient aid is 156.14 provided during the 2005 or 2006 legislative session for fiscal 156.15 year 2007, each school district may levy an amount equal to the 156.16 amount by which the appropriation is deficient and may recognize 156.17 that revenue for fiscal year 2007; and 156.18 (iii) for taxes payable in 2008 only, if insufficient aid 156.19 is provided during the 2007 legislative session for fiscal year 156.20 2008, each school district may levy an amount equal to the 156.21 amount by which the appropriation is deficient and may recognize 156.22 that revenue for fiscal year 2008. 156.23[EFFECTIVE DATE.] This section is effective for revenue for 156.24 fiscal years 2006, 2007, and 2008. 156.25 Sec. 55. [PRINSBURG; SPECIAL LEVY AUTHORITY.] 156.26 Subdivision 1. [BOARD APPROVAL.] Notwithstanding any law 156.27 to the contrary, the board of Common School District No. 815, 156.28 Prinsburg, may continue to operate as a common school district 156.29 provided that: 156.30 (1) the district adopts an annual resolution by May 1 of 156.31 each year declaring that it will be operating for the following 156.32 school year; 156.33 (2) for fiscal years 2006 and later, the district's 156.34 proposed budget for the following year shows that the district 156.35 will not return to statutory operating debt under Minnesota 156.36 Statutes, section 123B.81; and 157.1 (3) the district has passed a referendum under subdivision 157.2 4 authorizing levy authority for the coming school year. 157.3 Subd. 2. [DETERMINATION OF OUTSTANDING OBLIGATIONS.] Prior 157.4 to exercising the authority to levy under this section, the 157.5 boards of Common School District No. 815 and Independent School 157.6 District No. 2180, MACCRAY, must mutually agree to the amount of 157.7 the outstanding tuition owed by the Prinsburg School District to 157.8 the MACCRAY School District. If the districts cannot agree to 157.9 the amount of the tuition owed, the districts may submit all 157.10 relevant information to the commissioner of education who shall 157.11 determine the amount of the obligation owed to the MACCRAY 157.12 School District. 157.13 Subd. 3. [STATUTORY OPERATING DEBT.] For taxes payable in 157.14 2005, 2006, and 2007, Common School District No. 815, Prinsburg, 157.15 may levy the amount necessary to eliminate a deficit in the net 157.16 unappropriated balance in the operating funds of the district, 157.17 determined as of June 30, 2004, and certified and adjusted by 157.18 the commissioner. This levy may also include the amount 157.19 necessary to eliminate the estimated deficit for fiscal year 157.20 2005. 157.21 Subd. 4. [ANNUAL LEVY AUTHORITY.] (a) Common School 157.22 District No. 815, Prinsburg, may levy the amount necessary to 157.23 eliminate any projected deficit in the district's operating 157.24 budget for the preceding school year, excluding the amounts 157.25 raised by this subdivision, if the district's voters approve a 157.26 referendum according to the provisions of this subdivision. 157.27 (b) The referendum shall be called by the school board. 157.28 The ballot must state that the annual levy will be the estimated 157.29 amount necessary to eliminate the previous year's estimated 157.30 operating deficit. The ballot must designate the specific 157.31 number of years, not to exceed five, for which the referendum 157.32 authorization applies. The ballot shall state substantially the 157.33 following: 157.34 "Shall the increase in the levy proposed by the Board of 157.35 Prinsburg, Common School District No. 815, be approved?" 157.36 If approved, the amount necessary to eliminate the previous 158.1 year's estimated operating deficit may be authorized for 158.2 certification for the number of years approved. 158.3 (c) The board must follow the notice provisions of 158.4 Minnesota Statutes, section 126C.17. 158.5 (d) This levy is not subject to the property tax 158.6 recognition shift under Minnesota Statutes, sections 123B.75, 158.7 subdivision 5, and 127A.441. 158.8 Subd. 5. [FISCAL YEAR 2005 ONLY.] Notwithstanding the 158.9 provisions of this section, for fiscal year 2005 only, Common 158.10 School District No. 815, Prinsburg, may continue to operate as a 158.11 common school district upon approval of a referendum under 158.12 subdivision 4. 158.13[EFFECTIVE DATE.] This section is effective the day 158.14 following final enactment. 158.15 Sec. 56. [SAUK RIVER WATERSHED DISTRICT.] 158.16 Notwithstanding Minnesota Statutes, section 103D.905, 158.17 subdivision 3, the Sauk River Watershed District may annually 158.18 levy up to 0.01 percent of taxable market value for its 158.19 administrative fund. 158.20[EFFECTIVE DATE.] This section is effective, without local 158.21 approval, beginning with the taxes levied in 2004, payable in 158.22 2005. 158.23 Sec. 57. [COMMERCIAL-INDUSTRIAL LAND VALUE TAXATION; LOCAL 158.24 OPTION.] 158.25 The governing body of any municipality that has a 158.26 population in excess of 70,000, or any municipality located in 158.27 the taconite tax relief area defined in Minnesota Statutes, 158.28 section 273.134, may by resolution adopt a system of valuing 158.29 commercial-industrial property in its jurisdiction that is based 158.30 on the value of the land, not including improvements. The 158.31 governing body may make the election under this section if it 158.32 finds that implementation of the land value system will enhance 158.33 economic development in the city. An election under this 158.34 section must be made by December 31, 2004. If any municipality 158.35 makes the election, it must notify the commissioner of revenue 158.36 of the election and the legislature must enact during the 2005 159.1 legislative session the legislation necessary to implement the 159.2 system for taxes levied in 2005, payable in 2006, and thereafter. 159.3 Sec. 58. [STUDY REQUIRED.] 159.4 By February 1, 2005, the fiscal staff of the house of 159.5 representatives and senate shall conduct a study of the 159.6 metropolitan revenue distribution program contained in Minnesota 159.7 Statutes, chapter 473F, commonly known as the fiscal disparities 159.8 program, and shall make a report by March 1, 2005, to the chairs 159.9 of the house and senate tax committees consisting of the 159.10 findings of the study and any recommendations resulting from the 159.11 study. 159.12 The study shall primarily address the question of whether 159.13 the program is achieving the purposes for which it was created. 159.14 Additionally, the study shall address the following questions: 159.15 (1) How has the program affected property tax disparities 159.16 across the Twin Cities metropolitan area? 159.17 (2) Is the formula for contributing tax base to the 159.18 areawide pool reasonable? Should certain commercial-industrial 159.19 tax base continue to be exempt from contribution to the areawide 159.20 pool, such as tax base in existence prior to 1979, tax base in 159.21 tax increment financing districts established before 1979, and 159.22 tax base located at the Minneapolis-St. Paul International 159.23 Airport? Should contribution amounts be adjusted for 159.24 differences in sales ratios between communities? 159.25 (3) Is the formula for distributing tax base from the 159.26 areawide pool reasonable? Should the formula reflect measures 159.27 of need in addition to population? Should the distribution 159.28 formula be based on tax capacity rather than market value? 159.29 (4) Does the program help promote orderly growth and 159.30 encourage environmentally sound land use? 159.31 (5) Does the program reduce competition for 159.32 commercial-industrial tax base between communities? Is reduced 159.33 competition for commercial-industrial tax base desirable? 159.34 (6) Do local governments derive sufficient tax revenues 159.35 from commercial-industrial property to cover the costs of 159.36 providing services to the property, considering the tax base 160.1 that must be contributed to the areawide pool? 160.2 (7) Could improvements be made in the administration of the 160.3 program? 160.4[EFFECTIVE DATE.] This section is effective July 1, 2004. 160.5 Sec. 59. [TOWNSHIP LEVY ADJUSTMENT FOR WIND ENERGY 160.6 PRODUCTION TAX; PAYABLE 2004 ONLY.] 160.7 Notwithstanding the deadlines in Minnesota Statutes, 160.8 section 275.07, towns located in Lincoln or Pipestone County are 160.9 authorized to adjust their payable 2004 levy for all or a 160.10 portion of their estimated wind energy production tax amounts 160.11 for 2004, as computed by the commissioner of revenue from 160.12 reports filed under Minnesota Statutes, section 272.029, 160.13 subdivision 4. The Lincoln and Pipestone county auditors may 160.14 adjust the payable 2004 levy certifications under Minnesota 160.15 Statutes, section 275.07, subdivision 1, based upon the towns 160.16 that have recertified their levies under this section by March 160.17 15, 2004. 160.18[EFFECTIVE DATE.] This section is effective for taxes 160.19 levied in 2003, payable in 2004 only. 160.20 Sec. 60. [FEE STUDIES.] 160.21 Subdivision 1. [STATE AGENCY FEES.] The commissioner of 160.22 each state agency that imposes any fee on individuals or 160.23 businesses in this state must report to the commissioner of 160.24 revenue by January 15, 2005, on the type and amount of fees 160.25 imposed, amount and type of fee increases since January 1, 2003, 160.26 the revenues derived from each fee for each of the most recent 160.27 four fiscal years, and the use of the revenues from the fees. 160.28 The commissioner of revenue shall compile this information and 160.29 provide a comprehensive report on all state agency fees to the 160.30 finance and tax committees of the senate and the appropriations 160.31 and tax committees of the house of representatives by February 160.32 15, 2005. 160.33 Subd. 2. [SCHOOL FEES.] By January 15, 2005, the 160.34 Department of Education shall provide the house and senate 160.35 education finance divisions and tax committees with a report 160.36 that examines the total annual fees collected under Minnesota 161.1 Public School Fee Law, Minnesota Statutes, sections 123B.34 to 161.2 123B.39, in fiscal years 2002 to 2004. The report must detail 161.3 all different types of fees charged to Minnesota students under 161.4 the law. The report must report total fees statewide as well as 161.5 by school district and charter school. 161.6 Subd. 3. [CITY FEES.] Each home rule charter or statutory 161.7 city must report to the commissioner of revenue by January 15, 161.8 2005, on the type and amount of fees it imposes, amount and type 161.9 of fee increases since January 1, 2003, the revenues derived 161.10 from each fee for each of the most recent four calendar years, 161.11 and the use of the revenues from the fees. The commissioner of 161.12 revenue shall compile this information and provide a 161.13 comprehensive report on all city fees to the finance and tax 161.14 committees of the senate and the appropriations and tax 161.15 committees of the house of representatives by February 15, 2005. 161.16 ARTICLE 4 161.17 AIDS TO LOCAL GOVERNMENTS 161.18 Section 1. Minnesota Statutes 2003 Supplement, section 161.19 477A.011, subdivision 34, is amended to read: 161.20 Subd. 34. [CITY REVENUE NEED.] (a) For a city with a 161.21 population equal to or greater than 2,500, "city revenue need" 161.22 is the sum of (1) 5.0734098 times the pre-1940 housing 161.23 percentage; plus (2) 19.141678 times the population decline 161.24 percentage; plus (3) 2504.06334 times the road accidents factor; 161.25 plus (4) 355.0547; minus (5) the metropolitan area factor; minus 161.26 (6) 49.10638 times the household size. 161.27 (b) For a city with a population less than 2,500, "city 161.28 revenue need" is the sum of (1) 2.387 times the pre-1940 housing 161.29 percentage; plus (2) 2.67591 times the commercial industrial 161.30 percentage; plus (3) 3.16042 times the population decline 161.31 percentage; plus (4) 1.206 times the transformed population; 161.32 minus (5) 62.772. 161.33 (c) The city revenue need cannot be less than zero. 161.34 (d) For calendar year 2005 and subsequent years, the city 161.35 revenue need for a city, as determined in paragraphs (a) to (c), 161.36 is multiplied by the ratio of theannualmost recently available 162.1 first quarter implicit price deflator for government consumption 162.2 expenditures and gross investment for state and local 162.3 governments as prepared by the United States Department of 162.4 Commerce,for the most recently available yearto the2003first 162.5 quarter 2000 implicit price deflator for state and local 162.6 government purchases. 162.7 Sec. 2. Minnesota Statutes 2003 Supplement, section 162.8 477A.011, subdivision 36, is amended to read: 162.9 Subd. 36. [CITY AID BASE.] (a) Except as otherwise 162.10 provided in this subdivision, "city aid base" is zero. 162.11 (b) The city aid base for any city with a population less 162.12 than 500 is increased by $40,000 for aids payable in calendar 162.13 year 1995 and thereafter, and the maximum amount of total aid it 162.14 may receive under section 477A.013, subdivision 9, paragraph 162.15 (c), is also increased by $40,000 for aids payable in calendar 162.16 year 1995 only, provided that: 162.17 (i) the average total tax capacity rate for taxes payable 162.18 in 1995 exceeds 200 percent; 162.19 (ii) the city portion of the tax capacity rate exceeds 100 162.20 percent; and 162.21 (iii) its city aid base is less than $60 per capita. 162.22 (c) The city aid base for a city is increased by $20,000 in 162.23 1998 and thereafter and the maximum amount of total aid it may 162.24 receive under section 477A.013, subdivision 9, paragraph (c), is 162.25 also increased by $20,000 in calendar year 1998 only, provided 162.26 that: 162.27 (i) the city has a population in 1994 of 2,500 or more; 162.28 (ii) the city is located in a county, outside of the 162.29 metropolitan area, which contains a city of the first class; 162.30 (iii) the city's net tax capacity used in calculating its 162.31 1996 aid under section 477A.013 is less than $400 per capita; 162.32 and 162.33 (iv) at least four percent of the total net tax capacity, 162.34 for taxes payable in 1996, of property located in the city is 162.35 classified as railroad property. 162.36 (d) The city aid base for a city is increased by $200,000 163.1 in 1999 and thereafter and the maximum amount of total aid it 163.2 may receive under section 477A.013, subdivision 9, paragraph 163.3 (c), is also increased by $200,000 in calendar year 1999 only, 163.4 provided that: 163.5 (i) the city was incorporated as a statutory city after 163.6 December 1, 1993; 163.7 (ii) its city aid base does not exceed $5,600; and 163.8 (iii) the city had a population in 1996 of 5,000 or more. 163.9 (e) The city aid base for a city is increased by $450,000 163.10 in 1999 to 2008 and the maximum amount of total aid it may 163.11 receive under section 477A.013, subdivision 9, paragraph (c), is 163.12 also increased by $450,000 in calendar year 1999 only, provided 163.13 that: 163.14 (i) the city had a population in 1996 of at least 50,000; 163.15 (ii) its population had increased by at least 40 percent in 163.16 the ten-year period ending in 1996; and 163.17 (iii) its city's net tax capacity for aids payable in 1998 163.18 is less than $700 per capita. 163.19 (f)Beginning in 2004, the city aid base for a city is163.20equal to the sum of its city aid base in 2003 and the amount of163.21additional aid it was certified to receive under section 477A.06163.22in 2003. For 2004 only, the maximum amount of total aid a city163.23may receive under section 477A.013, subdivision 9, paragraph163.24(c), is also increased by the amount it was certified to receive163.25under section 477A.06 in 2003.163.26(g)The city aid base for a city is increased by $150,000 163.27 for aids payable in 2000 and thereafter, and the maximum amount 163.28 of total aid it may receive under section 477A.013, subdivision 163.29 9, paragraph (c), is also increased by $150,000 in calendar year 163.30 2000 only, provided that: 163.31 (1) the city has a population that is greater than 1,000 163.32 and less than 2,500; 163.33 (2) its commercial and industrial percentage for aids 163.34 payable in 1999 is greater than 45 percent; and 163.35 (3) the total market value of all commercial and industrial 163.36 property in the city for assessment year 1999 is at least 15 164.1 percent less than the total market value of all commercial and 164.2 industrial property in the city for assessment year 1998. 164.3(h)(g) The city aid base for a city is increased by 164.4 $200,000 in 2000 and thereafter, and the maximum amount of total 164.5 aid it may receive under section 477A.013, subdivision 9, 164.6 paragraph (c), is also increased by $200,000 in calendar year 164.7 2000 only, provided that: 164.8 (1) the city had a population in 1997 of 2,500 or more; 164.9 (2) the net tax capacity of the city used in calculating 164.10 its 1999 aid under section 477A.013 is less than $650 per 164.11 capita; 164.12 (3) the pre-1940 housing percentage of the city used in 164.13 calculating 1999 aid under section 477A.013 is greater than 12 164.14 percent; 164.15 (4) the 1999 local government aid of the city under section 164.16 477A.013 is less than 20 percent of the amount that the formula 164.17 aid of the city would have been if the need increase percentage 164.18 was 100 percent; and 164.19 (5) the city aid base of the city used in calculating aid 164.20 under section 477A.013 is less than $7 per capita. 164.21(i)(h) The city aid base for a city is increased by 164.22 $102,000 in 2000 and thereafter, and the maximum amount of total 164.23 aid it may receive under section 477A.013, subdivision 9, 164.24 paragraph (c), is also increased by $102,000 in calendar year 164.25 2000 only, provided that: 164.26 (1) the city has a population in 1997 of 2,000 or more; 164.27 (2) the net tax capacity of the city used in calculating 164.28 its 1999 aid under section 477A.013 is less than $455 per 164.29 capita; 164.30 (3) the net levy of the city used in calculating 1999 aid 164.31 under section 477A.013 is greater than $195 per capita; and 164.32 (4) the 1999 local government aid of the city under section 164.33 477A.013 is less than 38 percent of the amount that the formula 164.34 aid of the city would have been if the need increase percentage 164.35 was 100 percent. 164.36(j)(i) The city aid base for a city is increased by 165.1 $32,000 in 2001 and thereafter, and the maximum amount of total 165.2 aid it may receive under section 477A.013, subdivision 9, 165.3 paragraph (c), is also increased by $32,000 in calendar year 165.4 2001 only, provided that: 165.5 (1) the city has a population in 1998 that is greater than 165.6 200 but less than 500; 165.7 (2) the city's revenue need used in calculating aids 165.8 payable in 2000 was greater than $200 per capita; 165.9 (3) the city net tax capacity for the city used in 165.10 calculating aids available in 2000 was equal to or less than 165.11 $200 per capita; 165.12 (4) the city aid base of the city used in calculating aid 165.13 under section 477A.013 is less than $65 per capita; and 165.14 (5) the city's formula aid for aids payable in 2000 was 165.15 greater than zero. 165.16(k)(j) The city aid base for a city is increased by $7,200 165.17 in 2001 and thereafter, and the maximum amount of total aid it 165.18 may receive under section 477A.013, subdivision 9, paragraph 165.19 (c), is also increased by $7,200 in calendar year 2001 only, 165.20 provided that: 165.21 (1) the city had a population in 1998 that is greater than 165.22 200 but less than 500; 165.23 (2) the city's commercial industrial percentage used in 165.24 calculating aids payable in 2000 was less than ten percent; 165.25 (3) more than 25 percent of the city's population was 60 165.26 years old or older according to the 1990 census; 165.27 (4) the city aid base of the city used in calculating aid 165.28 under section 477A.013 is less than $15 per capita; and 165.29 (5) the city's formula aid for aids payable in 2000 was 165.30 greater than zero. 165.31(l)(k) The city aid base for a city is increased by 165.32 $45,000 in 2001 and thereafter and by an additional $50,000 in 165.33 calendar years 2002 to 2011, and the maximum amount of total aid 165.34 it may receive under section 477A.013, subdivision 9, paragraph 165.35 (c), is also increased by $45,000 in calendar year 2001 only, 165.36 and by $50,000 in calendar year 2002 only, provided that: 166.1 (1) the net tax capacity of the city used in calculating 166.2 its 2000 aid under section 477A.013 is less than $810 per 166.3 capita; 166.4 (2) the population of the city declined more than two 166.5 percent between 1988 and 1998; 166.6 (3) the net levy of the city used in calculating 2000 aid 166.7 under section 477A.013 is greater than $240 per capita; and 166.8 (4) the city received less than $36 per capita in aid under 166.9 section 477A.013, subdivision 9, for aids payable in 2000. 166.10 The city aid base for a city described in this paragraph is also 166.11 increased by $250,000 in calendar years 2005 to 2014, and the 166.12 maximum amount of total aid it may receive under section 166.13 477A.013, subdivision 9, paragraph (c), is also increased by 166.14 $250,000 in calendar year 2005 only. 166.15(m)(l) The city aid base for a city with a population of 166.16 10,000 or more which is located outside of the seven-county 166.17 metropolitan area is increased in 2002 and thereafter, and the 166.18 maximum amount of total aid it may receive under section 166.19 477A.013, subdivision 9, paragraph (b) or (c), is also increased 166.20 in calendar year 2002 only, by an amount equal to the lesser of: 166.21 (1)(i) the total population of the city,as determined by166.22the United States Bureau of the Census, in the 2000 census,(ii) 166.23 minus 5,000, (iii) times 60; or 166.24 (2) $2,500,000. 166.25(n)(m) The city aid base is increased by $50,000 in 2002 166.26 and thereafter, and the maximum amount of total aid it may 166.27 receive under section 477A.013, subdivision 9, paragraph (c), is 166.28 also increased by $50,000 in calendar year 2002 only, provided 166.29 that: 166.30 (1) the city is located in the seven-county metropolitan 166.31 area; 166.32 (2) its population in 2000 is between 10,000 and 20,000; 166.33 and 166.34 (3) its commercial industrial percentage, as calculated for 166.35 city aid payable in 2001, was greater than 25 percent. 166.36(o)(n) The city aid base for a city is increased by 167.1 $150,000 in calendar years 2002 to 2011 and the maximum amount 167.2 of total aid it may receive under section 477A.013, subdivision 167.3 9, paragraph (c), is also increased by $150,000 in calendar year 167.4 2002 only, provided that: 167.5 (1) the city had a population of at least 3,000 but no more 167.6 than 4,000 in 1999; 167.7 (2) its home county is located within the seven-county 167.8 metropolitan area; 167.9 (3) its pre-1940 housing percentage is less than 15 167.10 percent; and 167.11 (4) its city net tax capacity per capita for taxes payable 167.12 in 2000 is less than $900 per capita. 167.13(p)(o) The city aid base for a city is increased by 167.14 $200,000 beginning in calendar year 2003 and the maximum amount 167.15 of total aid it may receive under section 477A.013, subdivision 167.16 9, paragraph (c), is also increased by $200,000 in calendar year 167.17 2003 only, provided that the city qualified for an increase in 167.18 homestead and agricultural credit aid under Laws 1995, chapter 167.19 264, article 8, section 18. 167.20(q)(p) The city aid base for a city is increased by 167.21 $200,000 in 2004 only and the maximum amount of total aid it may 167.22 receive under section 477A.013, subdivision 9, is also increased 167.23 by $200,000 in calendar year 2004 only, if the city is the site 167.24 of a nuclear dry cask storage facility. 167.25(r)(q) The city aid base for a city is increased by 167.26 $10,000 in 2004 and thereafter and the maximum total aid it may 167.27 receive under section 477A.013, subdivision 9, is also increased 167.28 by $10,000 in calendar year 2004 only, if the city was included 167.29 in a federal major disaster designation issued on April 1, 1998, 167.30 and its pre-1940 housing stock was decreased by more than 40 167.31 percent between 1990 and 2000. 167.32 (r) The city aid base for a city is increased by $25,000 in 167.33 2005 only and the maximum total aid it may receive under section 167.34 477A.013, subdivision 9, is also increased by $25,000 in 2005 167.35 only, if the city (1) received no aid under section 477A.013 in 167.36 2004; (2) had a population in 2002 greater than 20,000 and less 168.1 than 50,000; and (3) had an adjusted net tax capacity of less 168.2 than $750 per capita for aids payable in 2004. 168.3[EFFECTIVE DATE.] This section is effective beginning with 168.4 aids payable in 2004. 168.5 Sec. 3. Minnesota Statutes 2003 Supplement, section 168.6 477A.013, subdivision 8, is amended to read: 168.7 Subd. 8. [CITY FORMULA AID.] In calendar year 2004 and 168.8 subsequent years, the formula aid for a city is equal to the 168.9 need increase percentage multiplied by the difference between 168.10 (1) the city's revenue need multiplied by its population, and 168.11 (2)the sum ofthe city's net tax capacity multiplied by the tax 168.12 effort rate, and the taconite aids under sections 298.28 and168.13298.282, multiplied by the following percentages:168.14(i) zero percent for aids payable in 2004;168.15(ii) 25 percent for aids payable in 2005;168.16(iii) 50 percent for aids payable in 2006;168.17(iv) 75 percent for aids payable in 2007; and168.18(v) 100 percent for aids payable in 2008 and thereafter. 168.19 No city may have a formula aid amount less than zero. The need 168.20 increase percentage must be the same for all cities. 168.21 The applicable need increase percentage must be calculated 168.22 by the Department of Revenue so that the total of the aid under 168.23 subdivision 9 equals the total amount available for aid under 168.24 section 477A.03 after the subtraction under section 477A.014, 168.25 subdivisions 4 and 5. 168.26 Sec. 4. Minnesota Statutes 2003 Supplement, section 168.27 477A.013, subdivision 9, is amended to read: 168.28 Subd. 9. [CITY AID DISTRIBUTION.] (a) In calendar year 168.29 2002 and thereafter, each city shall receive an aid distribution 168.30 equal to the sum of (1) the city formula aid under subdivision 168.31 8, and (2) its city aid base. 168.32 (b)The aid for a city in calendar year 2004 shall not168.33exceed the amount of its aid in calendar year 2003 after the168.34reductions under Laws 2003, First Special Session chapter 21,168.35article 5.168.36(c) For aids payable in 2005 and thereafter, the total aid169.1for any city shall not exceed the sum of (1) ten percent of the169.2city's net levy for the year prior to the aid distribution plus169.3(2) its total aid in the previous year.For aids payable in 169.4 2005 and thereafter, the total aid for any city with a 169.5 population of 2,500 or more may not decrease from its total aid 169.6 under this section in the previous year by an amount greater 169.7 than ten percent of its net levy in the year prior to the aid 169.8 distribution. 169.9(d) For aids payable in 2004 only, the total aid for a city169.10with a population less than 2,500 may not be less than the169.11amount it was certified to receive in 2003 minus the greater of169.12(1) the reduction to this aid payment in 2003 under Laws 2003,169.13First Special Session chapter 21, article 5, or (2) five percent169.14of its 2003 aid amount.(c) For aids payable in 2005 and 169.15 thereafter, the total aid for a city with a population less than 169.16 2,500 must not be less than the amount it was certified to 169.17 receive in the previous year minus five percent of its 2003 169.18 certified aid amount. 169.19[EFFECTIVE DATE.] This section is effective for aids 169.20 payable in 2005 and thereafter. 169.21 Sec. 5. Minnesota Statutes 2003 Supplement, section 169.22 477A.03, subdivision 2a, is amended to read: 169.23 Subd. 2a. [CITIES.]For aids payable in 2004, the total169.24aids paid under section 477A.013, subdivision 9, are limited to169.25$429,000,000.For aids payable in 2005and thereafter, the 169.26 total aids paid under section 477A.013, subdivision 9, are 169.27 increased to$437,052,000$497,052,000. For aids payable in 169.28 2006 and subsequent years, the total aids paid under section 169.29 477A.013, subdivision 9, are increased by $6,000,000 each year 169.30 until the need increase percentage equals one. 169.31[EFFECTIVE DATE.] This section is effective for aids 169.32 payable in 2005 and thereafter. 169.33 Sec. 6. Minnesota Statutes 2002, section 477A.11, 169.34 subdivision 4, is amended to read: 169.35 Subd. 4. [OTHER NATURAL RESOURCES LAND.] "Other natural 169.36 resources land" means:170.1(1)any other land presently owned in fee title by the 170.2 state and administered by the commissioner, or any tax-forfeited 170.3 land, other than platted lots within a city or those lands 170.4 described under subdivision 3, clause (2), which is owned by the 170.5 state and administered by the commissioner or by the county in 170.6 which it is located; and170.7(2) land leased by the state from the United States of170.8America through the United States Secretary of Agriculture170.9pursuant to Title III of the Bankhead Jones Farm Tenant Act,170.10which land is commonly referred to as land utilization project170.11land that is administered by the commissioner. 170.12[EFFECTIVE DATE.] This section is effective for aids 170.13 payable in 2005 and thereafter. 170.14 Sec. 7. Minnesota Statutes 2002, section 477A.11, is 170.15 amended by adding a subdivision to read: 170.16 Subd. 5. [LAND UTILIZATION PROJECT LAND.] "Land 170.17 utilization project land" means land that is leased by the state 170.18 from the United States through the United States Secretary of 170.19 Agriculture according to Title III of the Bankhead Jones Farm 170.20 Tenant Act and that is administered by the commissioner. 170.21 Sec. 8. Minnesota Statutes 2002, section 477A.12, 170.22 subdivision 1, is amended to read: 170.23 Subdivision 1. [TYPES OF LAND; PAYMENTS.] (a) As an offset 170.24 for expenses incurred by counties and towns in support of 170.25 natural resources lands, the following amounts are annually 170.26 appropriated to the commissioner of natural resources from the 170.27 general fund for transfer to the commissioner of revenue. The 170.28 commissioner of revenue shall pay the transferred funds to 170.29 counties as required by sections 477A.11 to 477A.145. The 170.30 amounts are: 170.31 (1) for acquired natural resources land, $3, as adjusted 170.32 for inflation under section 477A.145, multiplied by the total 170.33 number of acres of acquired natural resources land or, at the 170.34 county's option three-fourths of one percent of the appraised 170.35 value of all acquired natural resources land in the county, 170.36 whichever is greater; 171.1 (2) $3, as adjusted for inflation under section 477A.145, 171.2 multiplied by the total number of acres of land utilization 171.3 project land; 171.4 (3) 75 cents, as adjusted for inflation under section 171.5 477A.145, multiplied by the number of acres of 171.6 county-administered other natural resources land; and 171.7(3)(4) 37.5 cents, as adjusted for inflation under section 171.8 477A.145, multiplied by the number of acres of 171.9 commissioner-administered other natural resources land located 171.10 in each county as of July 1 of each year prior to the payment 171.11 year. 171.12 (b) The amount determined under paragraph (a), clause (1), 171.13 is payable for land that is acquired from a private owner and 171.14 owned by the Department of Transportation for the purpose of 171.15 replacing wetland losses caused by transportation projects, but 171.16 only if the county contains more than 500 acres of such land at 171.17 the time the certification is made under subdivision 2. 171.18[EFFECTIVE DATE.] This section is effective for aids 171.19 payable in 2005 and thereafter. 171.20 Sec. 9. Minnesota Statutes 2002, section 477A.12, 171.21 subdivision 2, is amended to read: 171.22 Subd. 2. [PROCEDURE.] Lands for which payments in lieu are 171.23 made pursuant to section 97A.061, subdivision 3, and Laws 1973, 171.24 chapter 567, shall not be eligible for payments under this 171.25 section. Each county auditor shall certify to the Department of 171.26 Natural Resources during July of each year prior to the payment 171.27 year the number of acres of county-administered other natural 171.28 resources land within the county. The Department of Natural 171.29 resources may, in addition to the certification of acreage, 171.30 require descriptive lists of land so certified. The 171.31 commissioner of natural resources shall determine and certify to 171.32 the commissioner of revenue by March 1 of the payment year: 171.33 (1) the number of acres and most recent appraised value of 171.34 acquired natural resources land within each county; 171.35 (2) the number of acres of commissioner-administered 171.36 natural resources land within each county;and172.1 (3) the number of acres of county-administered other 172.2 natural resources land within each county, based on the reports 172.3 filed by each county auditor with the commissioner of natural 172.4 resources; and 172.5 (4) the number of acres of land utilization project land 172.6 within each county and the net proceeds from timber sales on 172.7 land utilization project lands in each county. 172.8 The commissioner of transportation shall determine and 172.9 certify to the commissioner of revenue by March 1 of the payment 172.10 year the number of acres of land and the appraised value of the 172.11 land described in subdivision 1, paragraph (b), but only if it 172.12 exceeds 500 acres. 172.13 The commissioner of revenue shall determine the 172.14 distributions provided for in this section using the number of 172.15 acres and appraised values certified by the commissioner of 172.16 natural resources and the commissioner of transportation by 172.17 March 1 of the payment year. 172.18[EFFECTIVE DATE.] This section is effective for aids 172.19 payable in 2005 and thereafter. 172.20 Sec. 10. Minnesota Statutes 2002, section 477A.14, 172.21 subdivision 1, is amended to read: 172.22 Subdivision 1. [GENERAL DISTRIBUTION.] Except as provided 172.23 in subdivision 2 or in section 97A.061, subdivision 5, 40 172.24 percent of the total payment to the county shall be deposited in 172.25 the county general revenue fund to be used to provide property 172.26 tax levy reduction. The remainder shall be distributed by the 172.27 county in the following priority: 172.28 (a) 37.5 cents, as adjusted for inflation under section 172.29 477A.145, for each acre of county-administered other natural 172.30 resources land shall be deposited in a resource development fund 172.31 to be created within the county treasury for use in resource 172.32 development, forest management, game and fish habitat 172.33 improvement, and recreational development and maintenance of 172.34 county-administered other natural resources land. Any county 172.35 receiving less than $5,000 annually for the resource development 172.36 fund may elect to deposit that amount in the county general 173.1 revenue fund; 173.2 (b) From the funds remaining, within 30 days of receipt of 173.3 the payment to the county, the county treasurer shall pay each 173.4 organized township 30 cents, as adjusted for inflation under 173.5 section 477A.145, for each acre of acquired natural resources 173.6 land, each acre of land utilization project land, and each acre 173.7 of land described in section 477A.12, subdivision 1, paragraph 173.8 (b), and 7.5 cents, as adjusted for inflation under section 173.9 477A.145, for each acre of other natural resources land located 173.10 within its boundaries. Payments for natural resources lands not 173.11 located in an organized township shall be deposited in the 173.12 county general revenue fund. Payments to counties and townships 173.13 pursuant to this paragraph shall be used to provide property tax 173.14 levy reduction, except that of the payments for natural 173.15 resources lands not located in an organized township, the county 173.16 may allocate the amount determined to be necessary for 173.17 maintenance of roads in unorganized townships. Provided that, 173.18 if the total payment to the county pursuant to section 477A.12 173.19 is not sufficient to fully fund the distribution provided for in 173.20 this clause, the amount available shall be distributed to each 173.21 township and the county general revenue fund on a pro rata 173.22 basis; and 173.23 (c) Any remaining funds shall be deposited in the county 173.24 general revenue fund. Provided that, if the distribution to the 173.25 county general revenue fund exceeds $35,000, the excess shall be 173.26 used to provide property tax levy reduction. 173.27[EFFECTIVE DATE.] This section is effective for aids 173.28 payable in 2005 and thereafter. 173.29 Sec. 11. Laws 2003, First Special Session chapter 21, 173.30 article 5, section 13, is amended to read: 173.31 Sec. 13. [2004 CITY AID REDUCTIONS.] 173.32 The commissioner of revenue shall compute an aid reduction 173.33 amount for 2004 for each city as provided in this section. 173.34 The initial aid reduction amount for each city is the 173.35 amount by which the city's aid distribution under Minnesota 173.36 Statutes, section 477A.013, and related provisions payable in 174.1 2003 exceeds the city's 2004 distribution under those provisions. 174.2 The minimum aid reduction amount for a city is the amount 174.3 of its reduction in 2003 under section 12. If a city receives 174.4 an increase to its city aid base under Minnesota Statutes, 174.5 section 477A.011, subdivision 36, its minimum aid reduction is 174.6 reduced by an equal amount. 174.7 The maximum aid reduction amount for a city is an amount 174.8 equal to 14 percent of the city's total 2004 levy plus aid 174.9 revenue base, except that if the city has a city net tax 174.10 capacity for aids payable in 2004, as defined in Minnesota 174.11 Statutes, section 477A.011, subdivision 20, of $700 per capita 174.12 or less, the maximum aid reduction shall not exceed an amount 174.13 equal to 13 percent of the city's total 2004 levy plus aid 174.14 revenue base. 174.15 If the initial aid reduction amount for a city is less than 174.16 the minimum aid reduction amount for that city, the final aid 174.17 reduction amount for the city is the sum of the initial aid 174.18 reduction amount and the lesser of the amount of the city's 174.19 payable 2004 reimbursement under Minnesota Statutes, section 174.20 273.1384, or the difference between the minimum and initial aid 174.21 reduction amounts for the city, and the amount of the final aid 174.22 reduction in excess of the initial aid reduction is deducted 174.23 from the city's reimbursements pursuant to Minnesota Statutes, 174.24 section 273.1384. 174.25 If the initial aid reduction amount for a city is greater 174.26 than the maximum aid reduction amount for the city, the city 174.27 receives an additional distribution under this section equal to 174.28 the result of subtracting the maximum aid reduction amount from 174.29 the initial aid reduction amount. This distribution shall be 174.30 paid in equal installments in 2004 on the dates specified in 174.31 Minnesota Statutes, section 477A.015. The amount necessary for 174.32 these additional distributions is appropriated to the 174.33 commissioner of revenue from the general fund in fiscal year 174.34 2005. 174.35The initial aid reduction is applied to the city's174.36distribution pursuant to Minnesota Statutes, section 477A.013,175.1and any aid reduction in excess of the initial aid reduction is175.2applied to the city's reimbursements pursuant to Minnesota175.3Statutes, section 273.1384.175.4 To the extent that sufficient information is available on 175.5 each payment date in 2004, the commissioner of revenue shall pay 175.6 the reimbursements reduced under this section in equal 175.7 installments on the payment dates provided in law. 175.8[EFFECTIVE DATE.] This section is effective for aids 175.9 payable in 2004. 175.10 ARTICLE 5 175.11 LOCAL DEVELOPMENT 175.12 Section 1. Minnesota Statutes 2002, section 116J.993, 175.13 subdivision 3, is amended to read: 175.14 Subd. 3. [BUSINESS SUBSIDY.] "Business subsidy" or 175.15 "subsidy" means a state or local government agency grant, 175.16 contribution of personal property, real property, 175.17 infrastructure, the principal amount of a loan at rates below 175.18 those commercially available to the recipient, any reduction or 175.19 deferral of any tax or any fee, any guarantee of any payment 175.20 under any loan, lease, or other obligation, or any preferential 175.21 use of government facilities given to a business. 175.22 The following forms of financial assistance are not a 175.23 business subsidy: 175.24 (1) a business subsidy of less than $25,000; 175.25 (2) assistance that is generally available to all 175.26 businesses or to a general class of similar businesses, such as 175.27 a line of business, size, location, or similar general criteria; 175.28 (3) public improvements to buildings or lands owned by the 175.29 state or local government that serve a public purpose and do not 175.30 principally benefit a single business or defined group of 175.31 businesses at the time the improvements are made; 175.32 (4) redevelopment property polluted by contaminants as 175.33 defined in section 116J.552, subdivision 3; 175.34 (5) assistance provided for the sole purpose of renovating 175.35 old or decaying building stock or bringing it up to code and 175.36 assistance provided for designated historic preservation 176.1 districts, provided that the assistance is equal to or less than 176.2 50 percent of the total cost; 176.3 (6) assistance to provide job readiness and training 176.4 services if the sole purpose of the assistance is to provide 176.5 those services, except when such assistance is paid for by 176.6 expenditures of tax increments under section 469.176, 176.7 subdivision 4m; 176.8 (7) assistance for housing; 176.9 (8) assistance for pollution control or abatement, 176.10 including assistance for a tax increment financing hazardous 176.11 substance subdistrict as defined under section 469.174, 176.12 subdivision 23; 176.13 (9) assistance for energy conservation; 176.14 (10) tax reductions resulting from conformity with federal 176.15 tax law; 176.16 (11) workers' compensation and unemployment compensation; 176.17 (12) benefits derived from regulation; 176.18 (13) indirect benefits derived from assistance to 176.19 educational institutions; 176.20 (14) funds from bonds allocated under chapter 474A, bonds 176.21 issued to refund outstanding bonds, and bonds issued for the 176.22 benefit of an organization described in section 501(c)(3) of the 176.23 Internal Revenue Code of 1986, as amended through December 31, 176.24 1999; 176.25 (15) assistance for a collaboration between a Minnesota 176.26 higher education institution and a business; 176.27 (16) assistance for a tax increment financing soils 176.28 condition district as defined under section 469.174, subdivision 176.29 19; 176.30 (17) redevelopment when the recipient's investment in the 176.31 purchase of the site and in site preparation is 70 percent or 176.32 more of the assessor's current year's estimated market value; 176.33 (18) general changes in tax increment financing law and 176.34 other general tax law changes of a principally technical nature; 176.35 (19) federal assistance until the assistance has been 176.36 repaid to, and reinvested by, the state or local government 177.1 agency; 177.2 (20) funds from dock and wharf bonds issued by a seaway 177.3 port authority; 177.4 (21) business loans and loan guarantees of $75,000 or less; 177.5 and 177.6 (22) federal loan funds provided through the United States 177.7 Department of Commerce, Economic Development Administration. 177.8 Sec. 2. Minnesota Statutes 2002, section 116J.993, is 177.9 amended by adding a subdivision to read: 177.10 Subd. 8. [RESIDENCE.] "Residence" means the place where an 177.11 individual has established a permanent home from which the 177.12 individual has no present intention of moving. 177.13 Sec. 3. Minnesota Statutes 2003 Supplement, section 177.14 116J.994, subdivision 4, is amended to read: 177.15 Subd. 4. [WAGE AND JOB GOALS.] The subsidy agreement, in 177.16 addition to any other goals, must include: (1) goals for the 177.17 number of jobs created, which may include separate goals for the 177.18 number of part-time or full-time jobs, or, in cases where job 177.19 loss is specific and demonstrable, goals for the number of jobs 177.20 retained; (2) wage goals for any jobs created or retained; and 177.21 (3) wage goals for any jobs to be enhanced through increased 177.22 wages. After a public hearing, if the creation or retention of 177.23 jobs is determined not to be a goal, the wage and job goals may 177.24 be set at zero. The goals for the number of jobs to be created 177.25 or retained must result in job creation or retention by the 177.26 recipient within the granting jurisdiction overall. 177.27 In addition to other specific goal time frames, the wage 177.28 and job goals must contain specific goals to be attained within 177.29 two years of the benefit date. 177.30[EFFECTIVE DATE.] This section is effective August 1, 2004, 177.31 and applies to subsidy agreements entered into on or after that 177.32 date. 177.33 Sec. 4. Minnesota Statutes 2002, section 116J.994, 177.34 subdivision 5, is amended to read: 177.35 Subd. 5. [PUBLIC NOTICE AND HEARING.] (a) Before granting 177.36 a business subsidy that exceeds $500,000 for a state government 178.1 grantor and $100,000 for a local government grantor, the grantor 178.2 must provide public notice and a hearing on the subsidy. A 178.3 public hearing and notice under this subdivision is not required 178.4 if a hearing and notice on the subsidy is otherwise required by 178.5 law. 178.6 (b) Public notice of a proposed business subsidy under this 178.7 subdivision by a state government grantor, other than the Iron 178.8 Range Resources and Rehabilitation Board, must be published in 178.9 the State Register. Public notice of a proposed business 178.10 subsidy under this subdivision by a local government grantor or 178.11 the Iron Range Resources and Rehabilitation Board must be 178.12 published in a local newspaper of general circulation. The 178.13 public notice must identify the location at which information 178.14 about the business subsidy, including a summary of the terms of 178.15 the subsidy, is available. Published notice should be 178.16 sufficiently conspicuous in size and placement to distinguish 178.17 the notice from the surrounding text. The grantor must make the 178.18 information available in printed paper copies and, if possible, 178.19 on the Internet. The government agency must provide at least a 178.20 ten-day notice for the public hearing. 178.21 (c) The public notice must include the date, time, and 178.22 place of the hearing. 178.23 (d) The public hearing by a state government grantor other 178.24 than the Iron Range Resources and Rehabilitation Board must be 178.25 held in St. Paul. 178.26 (e) If more than one nonstate grantor provides a business 178.27 subsidy to the same recipient, the nonstate grantors may 178.28 designate one nonstate grantor to hold a single public hearing 178.29 regarding the business subsidies provided by all nonstate 178.30 grantors. For the purposes of this paragraph, "nonstate 178.31 grantor" includes the iron range resources and rehabilitation 178.32 board. 178.33 (f) The public notice of any public meeting about a 178.34 business subsidy agreement, including those required by this 178.35 subdivision and by subdivision 4, must include notice that a 178.36 person with residence in or the owner of taxable property in the 179.1 granting jurisdiction may file a written complaint with the 179.2 grantor if the grantor fails to comply with sections 116J.993 to 179.3 116J.995, and that no action may be filed against the grantor 179.4 for such failure to comply unless a written complaint is filed. 179.5 Sec. 5. Minnesota Statutes 2003 Supplement, section 179.6 116J.994, subdivision 9, is amended to read: 179.7 Subd. 9. [COMPILATION AND SUMMARY REPORT.] The Department 179.8 of Employment and Economic Development must publish a 179.9 compilation and summary of the results of the reports for the 179.10 previous calendar year by August 1 of 2004 and every other year 179.11 thereafter. The reports of the government agencies to the 179.12 department and the compilation and summary report of the 179.13 department must be made available to the public. The 179.14 commissioner must make copies of all business subsidy reports 179.15 submitted by local and state granting agencies available on the 179.16 department's Web site by October 1 of the year in which they 179.17 were submitted. 179.18 The commissioner must coordinate the production of reports 179.19 so that useful comparisons across time periods and across 179.20 grantors can be made. The commissioner may add other 179.21 information to the report as the commissioner deems necessary to 179.22 evaluate business subsidies. Among the information in the 179.23 summary and compilation report, the commissioner must include: 179.24 (1) total amount of subsidies awarded in each development 179.25 region of the state; 179.26 (2) distribution of business subsidy amounts by size of the 179.27 business subsidy; 179.28 (3) distribution of business subsidy amounts by time 179.29 category; 179.30 (4) distribution of subsidies by type and by public 179.31 purpose; 179.32 (5) percent of all business subsidies that reached their 179.33 goals; 179.34 (6) percent of business subsidies that did not reach their 179.35 goals by two years from the benefit date; 179.36 (7) total dollar amount of business subsidies that did not 180.1 meet their goals after two years from the benefit date; 180.2 (8) percent of subsidies that did not meet their goals and 180.3 that did not receive repayment; 180.4 (9) list of recipients that have failed to meet the terms 180.5 of a subsidy agreement in the past five years and have not 180.6 satisfied their repayment obligations; 180.7 (10) number of part-time and full-time jobs within separate 180.8 bands of wages; and 180.9 (11) benefits paid within separate bands of wages. 180.10 Sec. 6. Minnesota Statutes 2002, section 116J.994, is 180.11 amended by adding a subdivision to read: 180.12 Subd. 11. [ENFORCEMENT.] (a) A person with residence in or 180.13 an owner of taxable property located in the jurisdiction of the 180.14 grantor may bring an action for equitable relief arising out of 180.15 the failure of the grantor to comply with sections 116J.993 to 180.16 116J.995. The court may award a prevailing party in an action 180.17 under this subdivision costs and reasonable attorney fees. 180.18 (b) Prior to bringing an action, the party must file a 180.19 written complaint with the grantor stating the alleged violation 180.20 and proposing a remedy. The grantor has up to 30 days to reply 180.21 to the complaint in writing and may take action to comply with 180.22 sections 116J.993 to 116J.995. 180.23 (c) The written complaint under this subdivision for 180.24 failure to comply with subdivisions 1 to 5, must be filed with 180.25 the grantor within 180 days after approval of the subsidy 180.26 agreement under subdivision 3, paragraph (d). An action under 180.27 this subdivision must be commenced within 30 days following 180.28 receipt of the grantor's reply, or within 180 days after 180.29 approval of the subsidy agreement under subdivision 3, paragraph 180.30 (d), whichever is later. 180.31[EFFECTIVE DATE.] This section is effective August 1, 2004, 180.32 and applies to subsidy agreements entered into on or after that 180.33 date. 180.34 Sec. 7. Minnesota Statutes 2002, section 161.1231, is 180.35 amended by adding a subdivision to read: 180.36 Subd. 11. [TRANSFER OF OWNERSHIP.] The commissioner shall, 181.1 at the earliest feasible date after receiving payment, transfer 181.2 ownership of the parking facilities to the city of Minneapolis. 181.3 The payment must be equal to the amount of state funds spent by 181.4 the commissioner for construction of the facilities. Upon 181.5 assuming ownership of the facilities, the city shall operate the 181.6 facilities in accordance with the rules adopted by the 181.7 commissioner under subdivision 2. Upon assumption of ownership, 181.8 the city shall assume the authority to collect fees for use of 181.9 the facilities under subdivision 5. The commissioner shall take 181.10 no action under this section that would result in federal 181.11 sanctions against Minnesota or require the repayment of any 181.12 state funds to the federal government. The commissioner shall 181.13 deposit all money received under this subdivision in the trunk 181.14 highway fund. 181.15[EFFECTIVE DATE.] This section is effective the day after 181.16 the governing body of the city of Minneapolis and its chief 181.17 clerical officer comply with Minnesota Statutes, section 181.18 645.021, subdivisions 2 and 3. 181.19 Sec. 8. Minnesota Statutes 2002, section 469.034, 181.20 subdivision 2, is amended to read: 181.21 Subd. 2. [GENERAL OBLIGATION REVENUE BONDS.] (a) An 181.22 authority may pledge the general obligation of the general 181.23 jurisdiction governmental unit as additional security for bonds 181.24 payable from income or revenues of the project or the 181.25 authority. The authority must find that the pledged revenues 181.26 will equal or exceed 110 percent of the principal and interest 181.27 due on the bonds for each year. The proceeds of the bonds must 181.28 be used for a qualified housing development project or 181.29 projects. The obligations must be issued and sold in the manner 181.30 and following the procedures provided by chapter 475, except the 181.31 obligations are not subject to approval by the electors and the 181.32 maturities may extend to not more than 30 years from the 181.33 estimated date of completion of the project. The authority is 181.34 the municipality for purposes of chapter 475. 181.35 (b) The principal amount of the issue must be approved by 181.36 the governing body of the general jurisdiction governmental unit 182.1 whose general obligation is pledged. Public hearings must be 182.2 held on issuance of the obligations by both the authority and 182.3 the general jurisdiction governmental unit. The hearings must 182.4 be held at least 15 days, but not more than 120 days, before the 182.5 sale of the obligations. 182.6 (c) The maximum amount of general obligation bonds that may 182.7 be issued and outstanding under this section equals the greater 182.8 of (1) one-half of one percent of the taxable market value of 182.9 the general jurisdiction governmental unit whose general 182.10 obligation which includes a tax on property is pledged, or (2) 182.11 $3,000,000. In the case of county or multicounty general 182.12 obligation bonds, the outstanding general obligation bonds of 182.13 all cities in the county or counties issued under this 182.14 subdivision must be added in calculating the limit under clause 182.15 (1). 182.16 (d) "General jurisdiction governmental unit" means the city 182.17 in which the housing development project is located. In the 182.18 case of a county or multicounty authority, the county or 182.19 counties may act as the general jurisdiction governmental unit. 182.20 In the case of a multicounty authority, the pledge of the 182.21 general obligation is a pledge of a tax on the taxable property 182.22 in each of the counties. 182.23 (e) "Qualified housing development project" means a housing 182.24 development project providing housing either for the elderly or 182.25 for individuals and families with incomes not greater than 80 182.26 percent of the median family income as estimated by the United 182.27 States Department of Housing and Urban Development for the 182.28 standard metropolitan statistical area or the nonmetropolitan 182.29 county in which the project is located, and will. The project 182.30 must be owned for the term of the bonds either by the authority 182.31for the term of the bondsor by a limited partnership or other 182.32 entity in which the authority or another entity under the sole 182.33 control of the authority is the sole general partner. The 182.34 partnership or other entity must receive either: (1) an 182.35 allocation from the Department of Finance or an entitlement 182.36 issuer of tax-exempt bonding authority for the project and a 183.1 preliminary determination by the Minnesota Housing Finance 183.2 Agency or the applicable suballocator of tax credits that the 183.3 project will qualify for four percent low-income housing tax 183.4 credits; or (2) a reservation of nine percent low-income housing 183.5 tax credits from the Minnesota Housing Finance Agency or a 183.6 suballocator of tax credits for the project. A qualified 183.7 housing development project may admit nonelderly individuals and 183.8 families with higher incomes if: 183.9 (1) three years have passed since initial occupancy; 183.10 (2) the authority finds the project is experiencing 183.11 unanticipated vacancies resulting in insufficient revenues, 183.12 because of changes in population or other unforeseen 183.13 circumstances that occurred after the initial finding of 183.14 adequate revenues; and 183.15 (3) the authority finds a tax levy or payment from general 183.16 assets of the general jurisdiction governmental unit will be 183.17 necessary to pay debt service on the bonds if higher income 183.18 individuals or families are not admitted. 183.19[EFFECTIVE DATE.] This section is effective for bonds 183.20 issued after the day following final enactment. 183.21 Sec. 9. Minnesota Statutes 2003 Supplement, section 183.22 469.174, subdivision 10, is amended to read: 183.23 Subd. 10. [REDEVELOPMENT DISTRICT.] (a) "Redevelopment 183.24 district" means a type of tax increment financing district 183.25 consisting of a project, or portions of a project, within which 183.26 the authority finds by resolution that one or more of the 183.27 following conditions, reasonably distributed throughout the 183.28 district, exists: 183.29 (1) parcels consisting of 70 percent of the area of the 183.30 district are occupied by buildings, streets, utilities, paved or 183.31 gravel parking lots, or other similar structures and more than 183.32 50 percent of the buildings, not including outbuildings, are 183.33 structurally substandard to a degree requiring substantial 183.34 renovation or clearance; 183.35 (2) the property consists of vacant, unused, underused, 183.36 inappropriately used, or infrequently used railyards, rail 184.1 storage facilities, or excessive or vacated railroad 184.2 rights-of-way; 184.3 (3) tank facilities, or property whose immediately previous 184.4 use was for tank facilities, as defined in section 115C.02, 184.5 subdivision 15, if the tank facilities: 184.6 (i) have or had a capacity of more than 1,000,000 gallons; 184.7 (ii) are located adjacent to rail facilities; and 184.8 (iii) have been removed or are unused, underused, 184.9 inappropriately used, or infrequently used; or 184.10 (4) a qualifying disaster area, as defined in subdivision 184.11 10b. 184.12 (b) For purposes of this subdivision, "structurally 184.13 substandard" shall mean containing defects in structural 184.14 elements or a combination of deficiencies in essential utilities 184.15 and facilities, light and ventilation, fire protection including 184.16 adequate egress, layout and condition of interior partitions, or 184.17 similar factors, which defects or deficiencies are of sufficient 184.18 total significance to justify substantial renovation or 184.19 clearance. A building originally constructed for use as a 184.20 public or private school, 50 percent or more of the square 184.21 footage of which was constructed 30 or more years before 184.22 approval of the plan, is deemed to be structurally substandard 184.23 for purposes of this subdivision, notwithstanding paragraph (c), 184.24 if the tax increment financing plan provides for demolition or 184.25 substantial renovation of the building. 184.26 (c) A building is not structurally substandard if it is in 184.27 compliance with the building code applicable to new buildings or 184.28 could be modified to (1) satisfy the building code, plus (2) if 184.29 the tax increment financing plan provides for demolition or 184.30 substantial renovation of the building, abate or remove asbestos 184.31 and lead, at a cost of less than 15 percent of the cost of 184.32 constructing a new structure of the same square footage and type 184.33 on the site. The municipality may find that a building is not 184.34 disqualified as structurally substandard under the preceding 184.35 sentence on the basis of reasonably available evidence, such as 184.36 the size, type, and age of the building, the average cost of 185.1 plumbing, electrical, or structural repairs, or other similar 185.2 reliable evidence. The municipality may not make such a 185.3 determination without an interior inspection of the property, 185.4 but need not have an independent, expert appraisal prepared of 185.5 the cost of repair and rehabilitation of the building. An 185.6 interior inspection of the property is not required, if the 185.7 municipality finds that (1) the municipality or authority is 185.8 unable to gain access to the property after using its best 185.9 efforts to obtain permission from the party that owns or 185.10 controls the property; and (2) the evidence otherwise supports a 185.11 reasonable conclusion that the building is structurally 185.12 substandard. Items of evidence that support such a conclusion 185.13 include recent fire or police inspections, on-site property tax 185.14 appraisals or housing inspections, exterior evidence of 185.15 deterioration, or other similar reliable evidence. Written 185.16 documentation of the findings and reasons why an interior 185.17 inspection was not conducted must be made and retained under 185.18 section 469.175, subdivision 3, clause (1). Failure of a 185.19 building to be disqualified under the provisions of this 185.20 paragraph is a necessary, but not a sufficient, condition to 185.21 determining that the building is substandard. 185.22 (d) A parcel is deemed to be occupied by a structurally 185.23 substandard building for purposes of the finding under paragraph 185.24 (a) if all of the following conditions are met: 185.25 (1) the parcel was occupied by a substandard building 185.26 within three years of the filing of the request for 185.27 certification of the parcel as part of the district with the 185.28 county auditor; 185.29 (2) the substandard building was demolished or removed by 185.30 the authority or the demolition or removal was financed by the 185.31 authority or was done by a developer under a development 185.32 agreement with the authority; 185.33 (3) the authority found by resolution before the demolition 185.34 or removal that the parcel was occupied by a structurally 185.35 substandard building and that after demolition and clearance the 185.36 authority intended to include the parcel within a district; and 186.1 (4) upon filing the request for certification of the tax 186.2 capacity of the parcel as part of a district, the authority 186.3 notifies the county auditor that the original tax capacity of 186.4 the parcel must be adjusted as provided by section 469.177, 186.5 subdivision 1, paragraph (f). 186.6 (e) For purposes of this subdivision, a parcel is not 186.7 occupied by buildings, streets, utilities, paved or gravel 186.8 parking lots, or other similar structures unless 15 percent of 186.9 the area of the parcel contains buildings, streets, utilities, 186.10 paved or gravel parking lots, or other similar structures. 186.11 (f) For districts consisting of two or more noncontiguous 186.12 areas, each area must qualify as a redevelopment district under 186.13 paragraph (a) to be included in the district, and the entire 186.14 area of the district must satisfy paragraph (a). 186.15[EFFECTIVE DATE.] This section is effective for districts 186.16 for which the request for certification was made after June 30, 186.17 2004. 186.18 Sec. 10. Minnesota Statutes 2002, section 469.174, is 186.19 amended by adding a subdivision to read: 186.20 Subd. 30. [URBAN RENEWAL AREA.] "Urban renewal area" means 186.21 a contiguous geographic area designated within a project and 186.22 within which all parcels must be eligible for inclusion in a 186.23 redevelopment, renewal and renovation, or soils condition 186.24 district or are currently located within a redevelopment, 186.25 renewal and renovation, or soils condition district certified 186.26 within ten years before or after the date of approval of the 186.27 urban renewal area by the city or county, whichever is later. 186.28 In determining eligibility for inclusion in a district, each 186.29 parcel may only be considered as a part of one district. 186.30[EFFECTIVE DATE.] This section is effective for urban 186.31 renewal areas established on or after the date of final 186.32 enactment. 186.33 Sec. 11. Minnesota Statutes 2003 Supplement, section 186.34 469.175, subdivision 1, is amended to read: 186.35 Subdivision 1. [TAX INCREMENT FINANCING PLAN.] A tax 186.36 increment financing plan shall contain: 187.1 (1) a statement of objectives of an authority for the 187.2 improvement of a project; 187.3 (2) a statement as to the development program for the 187.4 project, including the property within the project, if any, that 187.5 the authority intends to acquire; 187.6 (3) a list of any development activities that the plan 187.7 proposes to take place within the project, for which contracts 187.8 have been entered into at the time of the preparation of the 187.9 plan, including the names of the parties to the contract, the 187.10 activity governed by the contract, the cost stated in the 187.11 contract, and the expected date of completion of that activity; 187.12 (4) identification or description of the type of any other 187.13 specific development reasonably expected to take place within 187.14 the project, and the date when the development is likely to 187.15 occur; 187.16 (5) estimates of the following: 187.17 (i) cost of the project, including administrative expenses, 187.18 except that if part of the cost of the project is paid or 187.19 financed with increment from the tax increment financing 187.20 district, the tax increment financing plan for the district must 187.21 contain an estimate of the amount of the cost of the project, 187.22 including administrative expenses, that will be paid or financed 187.23 with tax increments from the district; 187.24 (ii) amount of bonded indebtedness to be incurred; 187.25 (iii) sources of revenue to finance or otherwise pay public 187.26 costs; 187.27 (iv) the most recent net tax capacity of taxable real 187.28 property within the tax increment financing district and within 187.29 any subdistrict; 187.30 (v) the estimated captured net tax capacity of the tax 187.31 increment financing district at completion; and 187.32 (vi) the duration of the tax increment financing district's 187.33 and any subdistrict's existence; 187.34 (6) statements of the authority's alternate estimates of 187.35 the impact of tax increment financing on the net tax capacities 187.36 of all taxing jurisdictions in which the tax increment financing 188.1 district is located in whole or in part. For purposes of one 188.2 statement, the authority shall assume that the estimated 188.3 captured net tax capacity would be available to the taxing 188.4 jurisdictions without creation of the district, and for purposes 188.5 of the second statement, the authority shall assume that none of 188.6 the estimated captured net tax capacity would be available to 188.7 the taxing jurisdictions without creation of the district or 188.8 subdistrict; 188.9 (7) identification and description of studies and analyses 188.10 used to make the determination set forth in subdivision 3, 188.11 clause (2);and188.12 (8) identification of all parcels to be included in the 188.13 district or any subdistrict; and 188.14 (9) identification of any job training costs intended to be 188.15 paid by use of tax increments, including the name of the 188.16 employer whose employees will be trained and the nature and cost 188.17 of the training. The plan is not required to identify the 188.18 provider of the job training. 188.19[EFFECTIVE DATE.] This section applies to districts for 188.20 which the request for certification was made after July 31, 188.21 1979, and is effective for tax increment financing plans 188.22 approved after June 30, 2004. 188.23 Sec. 12. Minnesota Statutes 2003 Supplement, section 188.24 469.175, subdivision 4, is amended to read: 188.25 Subd. 4. [MODIFICATION OF PLAN.] (a) A tax increment 188.26 financing plan may be modified by an authority. 188.27 (b) The authority may make the following modifications only 188.28 upon the notice and after the discussion, public hearing, and 188.29 findings required for approval of the original plan: 188.30 (1) any reduction or enlargement of geographic area of the 188.31 project or tax increment financing district that does not meet 188.32 the requirements of paragraph (e); 188.33 (2) increase in amount of bonded indebtedness to be 188.34 incurred; 188.35 (3) a determination to capitalize interest on the debt if 188.36 that determination was not a part of the original plan, or to 189.1 increase or decrease the amount of interest on the debt to be 189.2 capitalized; 189.3 (4) increase in the portion of the captured net tax 189.4 capacity to be retained by the authority; 189.5 (5) increase in the estimate of the cost of the project, 189.6 including administrative expenses, that will be paid or financed 189.7 with tax increment from the district;or189.8 (6) designation of additional property to be acquired by 189.9 the authority; or 189.10 (7) a decision to pay for job training for employees of a 189.11 business located in the district that was not a part of the 189.12 original plan. 189.13 (c) If an authority changes the type of district to another 189.14 type of district, this change is not a modification but requires 189.15 the authority to follow the procedure set forth in sections 189.16 469.174 to 469.179 for adoption of a new plan, including 189.17 certification of the net tax capacity of the district by the 189.18 county auditor. 189.19 (d) If a redevelopment district or a renewal and renovation 189.20 district is enlarged, the reasons and supporting facts for the 189.21 determination that the addition to the district meets the 189.22 criteria of section 469.174, subdivision 10, paragraph (a), 189.23 clauses (1) and (2), or subdivision 10a, must be documented. 189.24 (e) The requirements of paragraph (b) do not apply if (1) 189.25 the only modification is elimination of parcels from the project 189.26 or district and (2)(A) the current net tax capacity of the 189.27 parcels eliminated from the district equals or exceeds the net 189.28 tax capacity of those parcels in the district's original net tax 189.29 capacity or (B) the authority agrees that, notwithstanding 189.30 section 469.177, subdivision 1, the original net tax capacity 189.31 will be reduced by no more than the current net tax capacity of 189.32 the parcels eliminated from the district. The authority must 189.33 notify the county auditor of any modification that reduces or 189.34 enlarges the geographic area of a district or a project area. 189.35 (f) The geographic area of a tax increment financing 189.36 district may be reduced, but shall not be enlarged after five 190.1 years following the date of certification of the original net 190.2 tax capacity by the county auditor or after August 1, 1984, for 190.3 tax increment financing districts authorized prior to August 1, 190.4 1979. 190.5[EFFECTIVE DATE.] This section is effective for districts 190.6 for which the request for certification was made after July 31, 190.7 1979, and is effective for modifications made after June 30, 190.8 2004. 190.9 Sec. 13. Minnesota Statutes 2003 Supplement, section 190.10 469.175, subdivision 6, is amended to read: 190.11 Subd. 6. [ANNUAL FINANCIAL REPORTING.] (a) The state 190.12 auditor shall develop a uniform system of accounting and 190.13 financial reporting for tax increment financing districts. The 190.14 system of accounting and financial reporting shall, as nearly as 190.15 possible: 190.16 (1) provide for full disclosure of the sources and uses of 190.17 public funds in the district; 190.18 (2) permit comparison and reconciliation with the affected 190.19 local government's accounts and financial reports; 190.20 (3) permit auditing of the funds expended on behalf of a 190.21 district, including a single district that is part of a 190.22 multidistrict project or that is funded in part or whole through 190.23 the use of a development account funded with tax increments from 190.24 other districts or with other public money; 190.25 (4) be consistent with generally accepted accounting 190.26 principles. 190.27 (b) The authority must annually submit to the state auditor 190.28 a financial report in compliance with paragraph (a). Copies of 190.29 the report must also be provided to the county auditor and to 190.30 the governing body of the municipality, if the authority is not 190.31 the municipality. To the extent necessary to permit compliance 190.32 with the requirement of financial reporting, the county and any 190.33 other appropriate local government unit or private entity must 190.34 provide the necessary records or information to the authority or 190.35 the state auditor as provided by the system of accounting and 190.36 financial reporting developed pursuant to paragraph (a). The 191.1 authority must submit the annual report for a year on or before 191.2 August 1 of the next year. 191.3 (c) The annual financial report must also include the 191.4 following items: 191.5 (1) the original net tax capacity of the district and any 191.6 subdistrict under section 469.177, subdivision 1; 191.7 (2) the net tax capacity for the reporting period of the 191.8 district and any subdistrict; 191.9 (3) the captured net tax capacity of the district; 191.10 (4) any fiscal disparity deduction from the captured net 191.11 tax capacity under section 469.177, subdivision 3; 191.12 (5) the captured net tax capacity retained for tax 191.13 increment financing under section 469.177, subdivision 2, 191.14 paragraph (a), clause (1); 191.15 (6) any captured net tax capacity distributed among 191.16 affected taxing districts under section 469.177, subdivision 2, 191.17 paragraph (a), clause (2); 191.18 (7) the type of district; 191.19 (8) the date the municipality approved the tax increment 191.20 financing plan and the date of approval of any modification of 191.21 the tax increment financing plan, the approval of which requires 191.22 notice, discussion, a public hearing, and findings under 191.23 subdivision 4, paragraph (a); 191.24 (9) the date the authority first requested certification of 191.25 the original net tax capacity of the district and the date of 191.26 the request for certification regarding any parcel added to the 191.27 district; 191.28 (10) the date the county auditor first certified the 191.29 original net tax capacity of the district and the date of 191.30 certification of the original net tax capacity of any parcel 191.31 added to the district; 191.32 (11) the month and year in which the authority has received 191.33 or anticipates it will receive the first increment from the 191.34 district; 191.35 (12) the date the district must be decertified; 191.36 (13) for the reporting period and prior years of the 192.1 district, the actual amount received from, at least, the 192.2 following categories: 192.3 (i) tax increments paid by the captured net tax capacity 192.4 retained for tax increment financing under section 469.177, 192.5 subdivision 2, paragraph (a), clause (1), but excluding any 192.6 excess taxes; 192.7 (ii) tax increments that are interest or other investment 192.8 earnings on or from tax increments; 192.9 (iii) tax increments that are proceeds from the sale or 192.10 lease of property, tangible or intangible, purchased by the 192.11 authority with tax increments; 192.12 (iv) tax increments that are repayments of loans or other 192.13 advances made by the authority with tax increments; 192.14 (v) bond or loan proceeds; 192.15 (vi) special assessments; 192.16 (vii) grants; and 192.17 (viii) transfers from funds not exclusively associated with 192.18 the district; 192.19 (14) for the reporting period and for the prior years of 192.20 the district, the actual amount expended for, at least, the 192.21 following categories: 192.22 (i) acquisition of land and buildings through condemnation 192.23 or purchase; 192.24 (ii) site improvements or preparation costs; 192.25 (iii) installation of public utilities, parking facilities, 192.26 streets, roads, sidewalks, or other similar public improvements; 192.27 (iv) administrative costs, including the allocated cost of 192.28 the authority; 192.29 (v) public park facilities, facilities for social, 192.30 recreational, or conference purposes, or other similar public 192.31 improvements;and192.32 (vi) transfers to funds not exclusively associated with the 192.33 district; and 192.34 (vii) job training as permitted under section 469.176, 192.35 subdivision 4m; 192.36 (15) for properties sold to developers, the total cost of 193.1 the property to the authority and the price paid by the 193.2 developer; 193.3 (16) the amount of any payments and the value of any 193.4 in-kind benefits, such as physical improvements and the use of 193.5 building space, that are paid or financed with tax increments 193.6 and are provided to another governmental unit other than the 193.7 municipality during the reporting period; 193.8 (17) the amount of any payments for activities and 193.9 improvements located outside of the district that are paid for 193.10 or financed with tax increments; 193.11 (18) the amount of payments of principal and interest that 193.12 are made during the reporting period on any nondefeased: 193.13 (i) general obligation tax increment financing bonds; 193.14 (ii) other tax increment financing bonds; and 193.15 (iii) notes and pay-as-you-go contracts; 193.16 (19) the principal amount, at the end of the reporting 193.17 period, of any nondefeased: 193.18 (i) general obligation tax increment financing bonds; 193.19 (ii) other tax increment financing bonds; and 193.20 (iii) notes and pay-as-you-go contracts; 193.21 (20) the amount of principal and interest payments that are 193.22 due for the current calendar year on any nondefeased: 193.23 (i) general obligation tax increment financing bonds; 193.24 (ii) other tax increment financing bonds; and 193.25 (iii) notes and pay-as-you-go contracts; 193.26 (21) if the fiscal disparities contribution under chapter 193.27 276A or 473F for the district is computed under section 469.177, 193.28 subdivision 3, paragraph (a), the amount of increased property 193.29 taxes imposed on other properties in the municipality that 193.30 approved the tax increment financing plan as a result of the 193.31 fiscal disparities contribution; 193.32 (22) whether the tax increment financing plan or other 193.33 governing document permits increment revenues to be expended: 193.34 (i) to pay bonds, the proceeds of which were or may be 193.35 expended on activities outside of the district; 193.36 (ii) for deposit into a common bond fund from which money 194.1 may be expended on activities located outside of the district; 194.2 or 194.3 (iii) to otherwise finance activities located outside of 194.4 the tax increment financing district; 194.5 (23) the estimate, if any, contained in the tax increment 194.6 financing plan of the amount of the cost of the project, 194.7 including administrative expenses, that will be paid or financed 194.8 with tax increment; and 194.9 (24) any additional information the state auditor may 194.10 require. 194.11 (d) The commissioner of revenue shall prescribe the method 194.12 of calculating the increased property taxes under paragraph (c), 194.13 clause (21), and the form of the statement disclosing this 194.14 information on the annual statement under subdivision 5. 194.15 (e) The reporting requirements imposed by this subdivision 194.16 apply to districts certified before, on, and after August 1, 194.17 1979. 194.18[EFFECTIVE DATE.] This section is effective for reports 194.19 filed in 2005 and thereafter. 194.20 Sec. 14. Minnesota Statutes 2003 Supplement, section 194.21 469.176, subdivision 1c, is amended to read: 194.22 Subd. 1c. [DURATION LIMITS; PRE-1979 DISTRICTS.] (a) For 194.23 tax increment financing districts created prior to August 1, 194.24 1979, no tax increment shall be paid to the authority after 194.25 April 1, 2001, or the term of a nondefeased bond or obligation 194.26 outstanding on April 1, 1990, secured by increments from the 194.27 district or project area, whichever time is greater, provided 194.28 that in no case will a tax increment be paid to an authority 194.29 after August 1, 2009, from such a district. If a district's 194.30 termination date is extended beyond April 1, 2001, because bonds 194.31 were outstanding on April 1, 1990, with maturities extending 194.32 beyond April 1, 2001, the following restrictions apply. No 194.33 increment collected from the district may be expended after 194.34 April 1, 2001, except to pay or repay: 194.35 (1) bonds issued before April 1, 1990; 194.36 (2) bonds issued to refund the principal of the outstanding 195.1 bonds and pay associated issuance costs; 195.2 (3) administrative expenses of the district required to be 195.3 paid under section 469.176, subdivision 4h, paragraph (a); 195.4 (4) transfers of increment permitted under section 195.5 469.1763, subdivision 6;and195.6 (5) any advance or payment made by the municipality or the 195.7 authority after June 1, 2002, to pay any bonds listed in clause 195.8 (1) or (2); and 195.9 (6) amounts authorized under paragraph (d). 195.10 (b) Each year, any increments from a district subject to 195.11 this subdivision must be first applied to pay obligations listed 195.12 under paragraph (a), clauses (1) and (2), and administrative 195.13 expenses under paragraph (a), clause (3). Any remaining 195.14 increments may be used for transfers of increments permitted 195.15 under section 469.1763, subdivision 6, and to make payments 195.16 underparagraphparagraphs (a), clause (5), and (d). 195.17 (c) When sufficient money has been received to pay in full 195.18 or defease obligations under paragraph (a), clauses (1), (2), 195.19 and (5), and no spending is permitted by paragraph (d) for the 195.20 year, the tax increment project or district must be decertified. 195.21 (d) In addition to the expenditures authorized under 195.22 paragraph (a), clauses (1) to (5), a city may expend increments 195.23 from a tax increment financing district subject to this 195.24 subdivision after April 1, 2001, if all of the following 195.25 conditions are met: 195.26 (1) the captured tax capacity for all tax increment 195.27 financing districts constituted less than six percent of the 195.28 city's total tax capacity for taxes payable in 2003; and 195.29 (2) the population of the city exceeds 50,000. 195.30[EFFECTIVE DATE.] This section is effective for tax 195.31 increment financing districts for which the request for 195.32 certification was made before August 1, 1979. 195.33 Sec. 15. Minnesota Statutes 2002, section 469.176, is 195.34 amended by adding a subdivision to read: 195.35 Subd. 4m. [USE OF INCREMENTS FOR JOB 195.36 TRAINING.] Notwithstanding the limits on use of increments in 196.1 subdivision 4, 4b, 4c, or 4j, increments may be expended for job 196.2 training that is intended to result in new job growth within a 196.3 tax increment financing district. The authority may expend 196.4 increments directly for the cost of the job training or may 196.5 reimburse an employer located within the district or a 196.6 municipality in which the district is located for job training 196.7 expenditures. Increments may be expended only for job training 196.8 programs that are approved for this purpose by the local 196.9 workforce council established under section 268.666 that has 196.10 jurisdiction over the workforce service area that includes the 196.11 tax increment financing district. For purposes of section 196.12 469.1763, increments expended under this subdivision are 196.13 considered to be expended on activities in the district. 196.14[EFFECTIVE DATE.] This section is effective for districts 196.15 for which the request for certification was made after July 31, 196.16 1979, provided that districts for which the request for 196.17 certification was made before the effective date of this act 196.18 must modify their plans to provide for this expenditure. 196.19 Sec. 16. Minnesota Statutes 2002, section 469.176, is 196.20 amended by adding a subdivision to read: 196.21 Subd. 8. [URBAN RENEWAL AREA.] (a) An authority may create 196.22 an urban renewal area only upon the notice and after the 196.23 discussion, public hearing, and findings required for approval 196.24 of the original project. In addition, the authority must obtain 196.25 written approval from the county in which the urban renewal area 196.26 is to be located. After approval by the city and county, the 196.27 authority shall notify the commissioner of revenue of the 196.28 approved urban renewal area. 196.29 (b) All provisions of sections 469.174 through 469.1799 196.30 apply except: 196.31 (1) the five-year rule under section 469.1763, subdivision 196.32 3, is extended to ten years; 196.33 (2) the limitation on spending increment outside of the 196.34 district under section 469.1763, subdivision 2, does not apply, 196.35 provided that increments may only be expended on improvements or 196.36 activities within the urban renewal area, and increments from a 197.1 soils condition district must be expended as provided under 197.2 subdivision 4b; and 197.3 (3) the local tax rate certification required under section 197.4 469.177, subdivision 1a, does not apply. 197.5[EFFECTIVE DATE.] This section is effective for urban 197.6 renewal areas established on or after the date of final 197.7 enactment. 197.8 Sec. 17. Minnesota Statutes 2002, section 469.1761, is 197.9 amended by adding a subdivision to read: 197.10 Subd. 3a. [MIXED-INCOME OCCUPANCY PROJECTS.] (a) 197.11 Notwithstanding the income requirements in subdivisions 2 and 3, 197.12 or section 469.174, subdivision 11, an authority may create 197.13 housing districts for developments that contain both 197.14 owner-occupied and residential rental units for mixed-income 197.15 occupancy. Such a district consists of a project, or a portion 197.16 of a project, intended for occupancy, in part, by persons of low 197.17 and moderate income as defined in chapter 462A, title II, of the 197.18 National Housing Act of 1934; the National Housing Act of 1959; 197.19 the United States Housing Act of 1937, as amended; title V of 197.20 the Housing Act of 1949, as amended; any other similar present 197.21 or future federal, state, or municipal legislation, or the 197.22 regulations promulgated under any of those acts, as further 197.23 specified in this section. Twenty percent of the units in the 197.24 development in the housing district must be occupied by 197.25 individuals whose family income is equal to or less than 50 197.26 percent of area median gross income, and an additional 60 197.27 percent of the units in the development in the housing district 197.28 must be occupied by individuals whose family income is equal to 197.29 or less than 115 percent of area median gross income. Twenty 197.30 percent of the units in the development in the housing district 197.31 are not required to be subject to any income limitations. 197.32 (b) For purposes of this subdivision, "family income" means 197.33 the median gross income for the area as determined under section 197.34 42 of the Internal Revenue Code of 1986, as amended. The income 197.35 requirements of this subdivision are satisfied if the sum of 197.36 qualified owner-occupied units and qualified residential rental 198.1 units equals the required total number of qualified units. 198.2 Owner-occupied units must be initially purchased and occupied by 198.3 individuals whose family income satisfies the income 198.4 requirements of this subdivision. For residential rental 198.5 property, the income requirements of this subdivision apply for 198.6 the duration of the tax increment district. 198.7 (c) The development in the housing district, but not the 198.8 project, does not qualify under this subdivision if the fair 198.9 market value of the improvements that are constructed for 198.10 commercial uses or for uses other than owner-occupied and rental 198.11 mixed-income housing consists of more than 20 percent of the 198.12 total fair market value of the planned improvements in the 198.13 development plan or agreement. The fair market value of the 198.14 improvements may be determined using the cost of construction, 198.15 capitalized income, or other appropriate method of estimating 198.16 market value. 198.17[EFFECTIVE DATE.] This section is effective for districts 198.18 for which certification is requested after July 31, 2004. 198.19 Sec. 18. Minnesota Statutes 2002, section 469.1792, as 198.20 amended by Laws 2003, chapter 127, is amended to read: 198.21 469.1792 [SPECIAL DEFICIT AUTHORITY.] 198.22 Subdivision 1. [SCOPE.] This section applies only to an 198.23 authority with a preexisting district for which: 198.24 (1) the increments from the district were insufficient to 198.25 pay preexisting obligations as a result of the class rate 198.26 changes or the elimination of the state-determined general 198.27 education property tax levy under this act, or both;or198.28 (2)(i) the development authority has a binding contract, 198.29 entered into before August 1, 2001, with a person requiring the 198.30 authority to pay to the person an amount that may not exceed the 198.31 increment from the district or a specific development within the 198.32 district; and 198.33 (ii) the authority is unable to pay the full amount under 198.34 the contract from the pledged increments or other increments 198.35 from the district that would have been due if the class rate 198.36 changes or elimination of the state-determined general education 199.1 property tax levy or both had not been made under Laws 2001, 199.2 First Special Session chapter 5; 199.3 (3) the authority amends its tax increment financing plan 199.4 to establish an affordable housing account to which increments 199.5 are pledged; or 199.6 (4) the authority amends its tax increment financing plan 199.7 to establish a hazardous substance, pollutant, or contaminant 199.8 remediation account to which increments are pledged. 199.9 Subd. 2. [DEFINITIONS.] (a) For purposes of this section, 199.10 the following terms have the meanings given. 199.11 (b) "Affordable housing account" means an account in which 199.12 increment is deposited solely for affordable housing activities 199.13 as defined in section 469.174, subdivision 11. 199.14 (c) "Hazardous substance, pollutant, or contaminant 199.15 remediation account" means an account in which increment is 199.16 deposited solely for removal or remediation activities described 199.17 in section 469.174, subdivisions 16 to 19. 199.18(b)(d) "Preexisting district" means a tax increment 199.19 financing district for which the request for certification was 199.20 made before August 1, 2001. 199.21(c)(e) "Preexisting obligation" means a bond or binding 199.22 contract that: 199.23 (1)(i) was issued or approved before August 1, 2001, or was 199.24 issued pursuant to a binding contract entered into before July 199.25 1, 2001; or 199.26 (ii) was issued to refinance an obligation under item (i), 199.27 if the refinancing does not increase the present value of the 199.28 debt service; and 199.29 (2) is secured by increments from a preexisting district. 199.30 Subd. 3. [ACTIONS AUTHORIZED.] (a) An authority with a 199.31 district qualifying under this section may take either or both 199.32 of the following actions for any or all of its preexisting 199.33 districts: 199.34 (1) the authority may elect that the original local tax 199.35 rate under section 469.177, subdivision 1a, does not apply to 199.36 the district; and 200.1 (2) the authority may elect the fiscal disparities 200.2 contribution will be computed under section 469.177, subdivision 200.3 3, paragraph (a), regardless of the election that was made for 200.4 the district or if the district is an economic development 200.5 district for which the request for certification was made after 200.6 June 30, 1997. 200.7 (b) The authority may take action under this subdivision 200.8 only after the municipality approves the action, by resolution, 200.9 after notice and public hearing in the manner provided under 200.10 section 469.175, subdivision 3. To be effective for taxes 200.11 payable in the following year, the resolution must be adopted 200.12 and the county auditor must be notified of the adoption on or 200.13 before July 1. 200.14 Subd. 4. [EXPENDITURES FROM AFFORDABLE HOUSING 200.15 ACCOUNTS.] Increment from an affordable housing account may be 200.16 spent by an authority anywhere within its area of operation. 200.17 Notwithstanding the definition of a project under section 200.18 469.174, increments may be spent to assist housing that meets 200.19 the requirements under section 469.1761. The limitation imposed 200.20 by section 469.1763, subdivision 2, does not apply to any 200.21 transfers of increment to the affordable housing account to the 200.22 extent that the amount transferred to the account under this 200.23 subdivision does not exceed ten percent of the revenue derived 200.24 from tax increments paid by properties in the district in the 200.25 year. 200.26 Subd. 5. [EXPENDITURES FROM HAZARDOUS SUBSTANCE, 200.27 POLLUTANT, OR CONTAMINANT REMEDIATION ACCOUNT.] Increment from a 200.28 hazardous substance, pollutant, or contaminant remediation 200.29 account may be spent by an authority anywhere within its area of 200.30 operation. Notwithstanding the definition of a project under 200.31 section 469.174, increments may be expended to remediation and 200.32 removal activities that meet the requirements of section 200.33 469.176, subdivision 4b or 4e. The limitation imposed by 200.34 section 469.1763, subdivision 2, does not apply to any transfers 200.35 of increment to the hazardous substance, pollutant, or 200.36 contaminant remediation account to the extent that the amount 201.1 transferred to the account under this subdivision does not 201.2 exceed ten percent of the revenue derived from tax increments 201.3 paid by properties in the district in the year. 201.4[EFFECTIVE DATE.] This section is effective for actions 201.5 taken and resolutions approved after June 30, 2004. 201.6 Sec. 19. Minnesota Statutes 2003 Supplement, section 201.7 469.310, subdivision 11, is amended to read: 201.8 Subd. 11. [QUALIFIED BUSINESS.] (a) "Qualified business" 201.9 means a person carrying on a trade or business at a place of 201.10 business located within a job opportunity building zone. 201.11 (b) A person that relocates a trade or business from 201.12 outside a job opportunity building zone into a zone is not a 201.13 qualified business, unless the business: 201.14 (1)(i) increases full-time employment in the first full 201.15 year of operation within the job opportunity building zone by at 201.16 least 20 percent measured relative to the operations that were 201.17 relocated and maintains the required level of employment for 201.18 each year the zone designation applies; or 201.19 (ii) makes a capital investment in the property located 201.20 within a zone equivalent to ten percent of the gross revenues of 201.21 operation that were relocated in the immediately preceding 201.22 taxable year; and 201.23 (2) enters a binding written agreement with the 201.24 commissioner that: 201.25 (i) pledges the business will meet the requirements of 201.26 clause (1); 201.27 (ii) provides for repayment of all tax benefits enumerated 201.28 under section 469.315 to the business under the procedures in 201.29 section 469.319, if the requirements of clause (1) are not met 201.30 for the taxable year or for taxes payable during the year in 201.31 which the requirements were not met; and 201.32 (iii) contains any other terms the commissioner determines 201.33 appropriate. 201.34 (c) A business is not a qualified business if at its 201.35 location or locations in the zone, the business is primarily 201.36 engaged in making retail sales to purchasers who are physically 202.1 present at the business's zone location. 202.2[EFFECTIVE DATE.] This section is effective the day 202.3 following final enactment and applies to any business entering a 202.4 business subsidy agreement for a job opportunity development 202.5 zone after that date. 202.6 Sec. 20. Laws 1998, chapter 389, article 11, section 19, 202.7 subdivision 3, is amended to read: 202.8 Subd. 3. [DURATION OF DISTRICT.] Notwithstanding the 202.9 provisions of Minnesota Statutes, section 469.176, subdivision 202.10 1b, no tax increment may be paid to the authority or the city 202.11 after18 years from the date of receipt by the authority of the202.12first increment generated from the final phase of202.13redevelopment. In no case may increments be paid to the202.14authority after30 years from approval of the tax increment 202.15 plan."Final phase of redevelopment" means that phase of202.16redevelopment activity which completes the rehabilitation of the202.17Lake Street site.202.18[EFFECTIVE DATE.] This section is effective upon compliance 202.19 with Minnesota Statutes, sections 469.1782, subdivision 2, and 202.20 645.021, subdivision 2. 202.21 Sec. 21. Laws 1998, chapter 389, article 11, section 24, 202.22 subdivision 1, is amended to read: 202.23 Subdivision 1. [SPECIAL RULES.] (a) If the city elects 202.24 upon the adoption of the tax increment financing plan for the 202.25 district, the rules under this section apply to one or more 202.26 redevelopmentor soils conditiontax increment financing 202.27 districts established by the city of New Brighton or a 202.28 development authority of the city in the area bounded on the 202.29 north by the south boundary line of tax increment district 202.30 number 8 extended to Long Lake regional park, on the east by 202.31 interstate highway 35W, on the south by interstate highway 694, 202.32 and on the west by Long Lake regional park. 202.33 (b)The five-year rule under Minnesota Statutes, section202.34469.1763, subdivision 3, is extended to nine years for the202.35district.202.36(c)The limitations on spending increment outside of the 203.1 district under Minnesota Statutes, section 469.1763, subdivision 203.2 2, do not apply, but the following limitations apply: 203.3 (1) increments may only be expended on improvements or 203.4 activities within the area defined in paragraph (a); and 203.5 (2) increment from the area described in paragraph (d) must 203.6 be expended within the area or for administrative expenses, 203.7 sanitary sewer relocation, and the cost of road improvements 203.8 that are a direct result of development occurring within that 203.9 area. 203.10 (c) The certified original local tax rate for the district 203.11 under Minnesota Statutes, section 469.177, subdivision 1a, does 203.12 not apply. 203.13 (d) The requirements for qualifying a redevelopment 203.14 district under Minnesota Statutes, section 469.174, subdivision 203.15 10, do not apply to the parcels identified as 20-30-23-14-0004, 203.16 20-30-23-14-0003, 20-30-23-41-0001, 21-30-23-32-0009, 203.17 21-30-23-32-0010, 20-30-23-41-0015, 20-30-23-41-0003, 203.18 21-30-23-32-0013, 20-30-23-41-0004, 20-30-23-41-0016, 203.19 20-30-23-41-0005, 20-30-23-41-0006, 20-30-23-41-0007, 203.20 20-30-23-41-0014, 20-30-23-41-0010, and 20-30-23-44-0002, or to 203.21 railroad property in the district. The area of each parcel and 203.22 the railroad property shall be deemed eligible for the purpose 203.23 of qualifying for inclusion in a redevelopment district. 203.24 Sec. 22. Laws 1998, chapter 389, article 11, section 24, 203.25 subdivision 2, is amended to read: 203.26 Subd. 2. [EXPIRATION.](a) The exception from the203.27limitations of Minnesota Statutes, section 469.1763, subdivision203.282, expires 18 years after the receipt of the first increment203.29from a district to which the city has elected that this section203.30applies.203.31(b)The authority to approve tax increment financing plans 203.32 to establish a tax increment financing district or districts 203.33 under this section expires on December 31,20082013. 203.34[EFFECTIVE DATE.] This section is effective upon approval 203.35 by the governing bodies of the city of New Brighton and Ramsey 203.36 County and upon compliance by the city with Minnesota Statutes, 204.1 section 645.021, subdivision 3. 204.2 Sec. 23. [ANOKA COUNTY REGIONAL RAILROAD AUTHORITY 204.3 POWERS.] 204.4 Subdivision 1. [ECONOMIC DEVELOPMENT POWERS AND 204.5 DUTIES.] The Anoka County Regional Railroad Authority may 204.6 exercise any of the powers and duties of an economic development 204.7 authority under Minnesota Statutes, sections 469.090, 469.098, 204.8 and 469.101 to 469.106. The Anoka County Regional Railroad 204.9 Authority may exercise the powers under Minnesota Statutes, 204.10 sections 469.001 to 469.047, for the purpose of transit-oriented 204.11 development, except that the Anoka County Regional Railroad 204.12 Authority must not exercise the power to tax under Minnesota 204.13 Statutes, section 469.033, subdivision 6. In applying Minnesota 204.14 Statutes, sections 469.001 to 469.047, 469.090, 469.098, and 204.15 469.101 to 469.106, to the Anoka County Regional Railroad 204.16 Authority, the county is considered to be the city and the 204.17 county board is considered to be the city council. 204.18 Subd. 2. [RELATION TO LOCAL AUTHORITIES.] Nothing in 204.19 subdivision 1 shall change or impair the powers or duties of a 204.20 city, town, municipal housing and redevelopment authority, or 204.21 municipal economic development authority. 204.22 Subd. 3. [LOCAL APPROVAL.] If any economic development 204.23 project is constructed in the county pursuant to the 204.24 authorization in this section, the project must be approved by 204.25 the governing body of each city or town within which the project 204.26 will be constructed. 204.27[EFFECTIVE DATE.] This section is effective the day after 204.28 the governing body of the Anoka County Regional Railroad 204.29 Authority and its chief clerical officer timely complete their 204.30 compliance with Minnesota Statutes, section 645.021, 204.31 subdivisions 2 and 3. 204.32 Sec. 24. [CITY OF DETROIT LAKES; REDEVELOPMENT TAX 204.33 INCREMENT FINANCING DISTRICT.] 204.34 Subdivision 1. [AUTHORIZATION.] At the election of the 204.35 governing body of the city of Detroit Lakes, upon adoption of 204.36 the tax increment financing plan for the district described in 205.1 this section, the rules provided under this section apply to 205.2 each such district. 205.3 Subd. 2. [DEFINITION.] In this section, "district" means a 205.4 redevelopment district established by the city of Detroit Lakes 205.5 or the Detroit Lakes Development Authority within the following 205.6 area: 205.7 Beginning at the intersection of Washington Avenue and the 205.8 Burlington Northern Santa Fe Railroad then east to the 205.9 intersection of Roosevelt Avenue then south to the intersection 205.10 of Highway 10/Frazee Street then west to the intersection of 205.11 Frazee Street and the alley that parallels Washington Avenue 205.12 then north to the point of beginning. 205.13 More than one district may be created under this act. 205.14 Subd. 3. [QUALIFICATION AS REDEVELOPMENT DISTRICT; SPECIAL 205.15 RULES.] The district shall be a redevelopment district under 205.16 Minnesota Statutes, section 469.174, subdivision 10. All 205.17 buildings that are removed to facilitate the Highway 10 205.18 Realignment Project are deemed to be "structurally 205.19 substandard." The three-year limit after demolition of the 205.20 buildings to request tax increment financing certification 205.21 provided in Minnesota Statutes, section 469.174, subdivision 10, 205.22 paragraph (d), clause (1), does not apply. 205.23 Subd. 4. [EXPIRATION.] The authority to approve tax 205.24 increment financing plans to establish a tax increment financing 205.25 redevelopment district subject to this section expires on 205.26 December 31, 2014. 205.27 Subd. 5. [EFFECTIVE DATE.] This section is effective upon 205.28 approval of the governing body of the city of Detroit Lakes and 205.29 compliance with Minnesota Statutes, section 645.021, subdivision 205.30 3. 205.31 Sec. 25. [CITIES OF ELGIN, EYOTA, BYRON, AND ORONOCO; TAX 205.32 INCREMENT FINANCING DISTRICTS.] 205.33 Subdivision 1. [AUTHORIZATION.] Notwithstanding the 205.34 mileage limitation in Minnesota Statutes, section 469.174, 205.35 subdivision 27, the cities of Elgin, Eyota, Byron, and Oronoco 205.36 are deemed to be small cities for purposes of Minnesota 206.1 Statutes, sections 469.174 to 469.1799, as long as they do not 206.2 exceed the population limit in that section. 206.3 Subd. 2. [LOCAL APPROVAL.] This section is effective for 206.4 each of the cities of Elgin, Eyota, Byron, and Oronoco upon 206.5 approval of that city's governing body and compliance with 206.6 Minnesota Statutes, section 645.021, subdivisions 2 and 3. 206.7 Sec. 26. [CITY OF BROOKLYN CENTER; EXTENSION OF TIME TO 206.8 EXPEND TAX INCREMENT.] 206.9 For tax increment financing district number 3, established 206.10 on December 19, 1994, by Brooklyn Center Resolution No. 94-273, 206.11 Minnesota Statutes, section 469.1763, subdivision 3, applies to 206.12 the district by permitting a period of 13 years for commencement 206.13 of activities within the district. 206.14[EFFECTIVE DATE.] This section is effective upon approval 206.15 by the governing body of the city of Brooklyn Center and 206.16 compliance with Minnesota Statutes, section 645.021, subdivision 206.17 3. 206.18 Sec. 27. [CITY OF FAIRMONT; TAX INCREMENT FINANCING 206.19 DISTRICT.] 206.20 Subdivision 1. [AUTHORITY TO REDUCE ORIGINAL VALUE.] The 206.21 city of Fairmont may elect to reduce the original tax capacity 206.22 of a previously tax-exempt parcel, consisting of property 206.23 formerly owned by the United States Post Office, in tax 206.24 increment financing district No. 20, to the value of the land. 206.25 Subd. 2. [EFFECTIVE DATE.] This section is effective upon 206.26 compliance by the city of Fairmont with the requirements of 206.27 Minnesota Statutes, section 645.021. 206.28 Sec. 28. [CITY OF FERGUS FALLS; ECONOMIC DEVELOPMENT 206.29 PROPERTY.] 206.30 The provisions of Minnesota Statutes, section 272.02, 206.31 subdivision 39, apply to property located in the city of Fergus 206.32 Falls as if the city had a population of 5,000 or less. 206.33[EFFECTIVE DATE.] This section is effective for taxes 206.34 levied in 2004, payable in 2005, and thereafter. 206.35 Sec. 29. [CITY OF MINNEAPOLIS; SPECIAL SERVICE DISTRICTS; 206.36 MANAGEMENT BY NONPROFIT CORPORATIONS.] 207.1 The city of Minneapolis may elect, in the establishment of 207.2 a special service district, to provide that the activities of 207.3 the special service district may be managed by a nonprofit 207.4 corporation created to assist and act on behalf of the city in 207.5 implementing and providing services as authorized by Minnesota 207.6 Statutes, section 428A.02. The ordinance establishing the 207.7 district may not be adopted until the city certifies that no 207.8 current city employee is able and available to perform the 207.9 services called for by the contract and until that certification 207.10 is verified at the public hearing on the ordinance. 207.11 If the city intends to contract with a nonprofit 207.12 corporation to manage a special service district, the notice of 207.13 the hearing on the ordinance relating to creation of the 207.14 district must include a statement of that intent, and 207.15 certification that no city employee is able and available to 207.16 perform the service that would be provided within the special 207.17 service district. 207.18[EFFECTIVE DATE.] This section is effective for public 207.19 hearings on ordinances conducted after June 30, 2004, but only 207.20 after approval by the governing body of the city of Minneapolis 207.21 and compliance with Minnesota Statutes, section 645.021, 207.22 subdivision 3. 207.23 Sec. 30. [CITY OF ST. MICHAEL; TAX INCREMENT FINANCING 207.24 DISTRICT.] 207.25 Subdivision 1. [ESTABLISHMENT OF DISTRICT.] The city of St. 207.26 Michael may establish a redevelopment tax increment financing 207.27 district subject to Minnesota Statutes, sections 469.174 to 207.28 469.179, except as provided in this section. The district must 207.29 be established within an area that includes the downtown and 207.30 town center areas as designated by the city as well as all 207.31 parcels adjacent to marked Trunk Highway 241 within the city. 207.32 Subd. 2. [SPECIAL RULES.] (a) Notwithstanding the 207.33 requirements of Minnesota Statutes, section 469.174, subdivision 207.34 10, the district may be established and operated as a 207.35 redevelopment district. 207.36 (b) Notwithstanding the restrictions of Minnesota Statutes, 208.1 sections 469.176, subdivisions 4 and 4j, and 469.1763, 208.2 subdivision 2, revenues derived from tax increments from the 208.3 district created under this section may be used to meet the cost 208.4 of land acquisition, removal of buildings in the right-of-way 208.5 acquisition area, and other costs incurred by the city of St. 208.6 Michael in the expansion and improvement of marked Trunk Highway 208.7 241 within the city. 208.8 (c) Minnesota Statutes, section 469.176, subdivision 5, 208.9 does not apply to the district. 208.10[EFFECTIVE DATE.] This section is effective the day after 208.11 the governing body of the city of St. Michael complies with 208.12 Minnesota Statutes, section 645.021, subdivision 3. 208.13 Sec. 31. [WABASHA TAX INCREMENT FINANCING DISTRICT.] 208.14 Subdivision 1. [DISTRICT EXTENSION.] The governing body of 208.15 the city of Wabasha may elect to extend the duration of its 208.16 redevelopment tax increment financing district number 3 by up to 208.17 five additional years. 208.18 Subd. 2. [FIVE-YEAR RULE.] The requirements of Minnesota 208.19 Statutes, section 469.1763, subdivision 3, that activities must 208.20 be undertaken within a five-year period from the date of 208.21 certification of a tax increment financing district must be 208.22 considered to be met for the city of Wabasha redevelopment tax 208.23 increment district number 3, if the activities are undertaken 208.24 within ten years from the date of certification of the district. 208.25 Subd. 3. [NATIONAL EAGLE CENTER.] Notwithstanding the 208.26 provisions of Minnesota Statutes, section 469.176, subdivision 208.27 4l, or any other law, the city of Wabasha may spend the proceeds 208.28 of tax increment bonds issued prior to January 1, 2000, to pay 208.29 the costs of acquiring and constructing a National Eagle Center 208.30 in the city. The city of Wabasha may also use tax increment 208.31 from its tax increment districts to pay the debt service on such 208.32 bonds, or any bonds issued to refund such bonds, subject to 208.33 legal restrictions on the pooling of tax increment. 208.34[EFFECTIVE DATE.] Subdivision 1 is effective upon 208.35 compliance with the provisions of Minnesota Statutes, sections 208.36 469.1782, subdivision 2, and 645.021. Subdivisions 2 and 3 are 209.1 effective upon compliance by the governing body of the city of 209.2 Wabasha with the provisions of Minnesota Statutes, section 209.3 645.021. 209.4 Sec. 32. [JOBZ EXPENDITURE LIMITATIONS; AUDITS.] 209.5 Subdivision 1. [DETERMINATION OF TAX EXPENDITURES.] By 209.6 September 1, 2004, the commissioner of revenue, with the 209.7 assistance of the commissioner of employment and economic 209.8 development, must estimate the total amount of tax expenditures 209.9 projected to have been obligated for all job opportunity 209.10 building zone projects that have been approved before June 1, 209.11 2004. If the commissioner of revenue determines that the 209.12 estimated amount of tax expenditures for fiscal years 2005-2007 209.13 exceeds $13,780,000, the commissioner of revenue must inform the 209.14 chairs of the house of representatives and senate tax committees. 209.15 Subd. 2. [AUDITS.] The Tax Increment Financing, Investment 209.16 and Finance Division of the Office of the State Auditor must 209.17 annually audit the creation and operation of all job opportunity 209.18 building zones and business subsidy agreements entered into 209.19 under Minnesota Statutes, sections 469.310 to 469.320. 209.20 ARTICLE 6 209.21 PUBLIC FINANCE 209.22 Section 1. Minnesota Statutes 2003 Supplement, section 209.23 373.01, subdivision 3, is amended to read: 209.24 Subd. 3. [CAPITAL NOTES.] (a) A county board may, by 209.25 resolution and without referendum, issue capital notes subject 209.26 to the county debt limit to purchase capital equipment useful 209.27 for county purposes that has an expected useful life at least 209.28 equal to the term of the notes. The notes shall be payable in 209.29 not more than five years and shall be issued on terms and in a 209.30 manner the board determines. A tax levy shall be made for 209.31 payment of the principal and interest on the notes, in 209.32 accordance with section 475.61, as in the case of bonds. 209.33 (b) For purposes of this subdivision, "capital equipment" 209.34 means: 209.35 (1) public safety, ambulance, road construction or 209.36 maintenance, and medical equipment,; and 210.1 (2) computer hardware andoriginal operating system210.2 software, whether bundled with machinery or equipment or 210.3 unbundled, together with application development services and 210.4 training related to the use of the computer. 210.5 (c) The authority to issue capital notes fororiginal210.6operating systemscomputer software and related services expires 210.7 on July 1, 2005. 210.8 Sec. 2. Minnesota Statutes 2003 Supplement, section 210.9 373.40, subdivision 1, is amended to read: 210.10 Subdivision 1. [DEFINITIONS.] For purposes of this 210.11 section, the following terms have the meanings given. 210.12 (a) "Bonds" means an obligation as defined under section 210.13 475.51. 210.14 (b) "Capital improvement" means acquisition or betterment 210.15 of public lands,development rights in the form of conservation210.16easements under chapter 84C,buildings, or other improvements 210.17 within the county for the purpose of a county courthouse, 210.18 administrative building, health or social service facility, 210.19 correctional facility, jail, law enforcement center, hospital, 210.20 morgue, library, park, qualified indoor ice arena, and roads and 210.21 bridges, and the acquisition of development rights in the form 210.22 of conservation easements under chapter 84C. An improvement 210.23 must have an expected useful life of five years or more to 210.24 qualify. "Capital improvement" does not include light rail 210.25 transit or any activity related to it or a recreation or sports 210.26 facility building (such as, but not limited to, a gymnasium, ice 210.27 arena, racquet sports facility, swimming pool, exercise room or 210.28 health spa), unless the building is part of an outdoor park 210.29 facility and is incidental to the primary purpose of outdoor 210.30 recreation. 210.31 (c) "Commissioner" means the commissioner of employment and 210.32 economic development. 210.33 (d) "Metropolitan county" means a county located in the 210.34 seven-county metropolitan area as defined in section 473.121 or 210.35 a county with a population of 90,000 or more. 210.36 (e) "Population" means the population established by the 211.1 most recent of the following (determined as of the date the 211.2 resolution authorizing the bonds was adopted): 211.3 (1) the federal decennial census, 211.4 (2) a special census conducted under contract by the United 211.5 States Bureau of the Census, or 211.6 (3) a population estimate made either by the metropolitan 211.7 council or by the state demographer under section 4A.02. 211.8 (f) "Qualified indoor ice arena" means a facility that 211.9 meets the requirements of section 373.43. 211.10 (g) "Tax capacity" means total taxable market value, but 211.11 does not include captured market value. 211.12 Sec. 3. Minnesota Statutes 2003 Supplement, section 211.13 403.21, subdivision 8, is amended to read: 211.14 Subd. 8. [SUBSYSTEMS.] "Subsystems" or "public safety 211.15 radio subsystems" means systems identified in the plan or a plan 211.16 developed under section 403.36 as subsystems interconnected by 211.17 the first and third phase backbonein subsequent phasesand 211.18 operated by local government units for their own internal 211.19 operations. 211.20 Sec. 4. Minnesota Statutes 2003 Supplement, section 211.21 403.27, subdivision 1, is amended to read: 211.22 Subdivision 1. [AUTHORIZATION.] After consulting with the 211.23 commissioner of finance, the council, if requested by a vote of 211.24 at least two-thirds of all of the members of the Public Safety 211.25 Radio Communication System Planning Committee established under 211.26 section 403.36, may, by resolution, authorize the issuance of 211.27 its revenue bonds for any of the following purposes to: 211.28 (1) provide funds for regionwide mutual aid and emergency 211.29 medical services communications; 211.30 (2) provide funds for the elements of the first phase of 211.31 the regionwide public safety radio communications system that 211.32 the board determines are of regionwide benefit and support 211.33 mutual aid and emergency medical services communication 211.34 including, but not limited to, costs of master controllers of 211.35 the backbone; 211.36 (3) provide money for the second phase of the public safety 212.1 radio communication system; 212.2 (4) provide money for the third phase of the public safety 212.3 radio communication system; 212.4 (5) to the extent money is available after meeting the 212.5 needs described in clauses (1) to (3), provide money to 212.6 reimburse local units of government for amounts expended for 212.7 capital improvements to the first phase system previously paid 212.8 for by the local government units;or212.9 (6) to the extent money is available after meeting the 212.10 needs described in clauses (1) to (5), provide money for 212.11 assistance to a local government unit for up to 50 percent of 212.12 the cost of building a subsystem in the southeast or central 212.13 districts of the State Patrol; or 212.14 (7) refund bonds issued under this section. 212.15 Sec. 5. Minnesota Statutes 2003 Supplement, section 212.16 403.27, subdivision 3, is amended to read: 212.17 Subd. 3. [LIMITATIONS.] (a) The principal amount of the 212.18 bonds issued pursuant to subdivision 1, exclusive of any 212.19 original issue discount, shall not exceed the amount of 212.20 $10,000,000 plus the amount the council determines necessary to 212.21 pay the costs of issuance, fund reserves, debt service, and pay 212.22 for any bond insurance or other credit enhancement. 212.23 (b) In addition to the amount authorized under paragraph 212.24 (a), the council may issue bonds under subdivision 1 in a 212.25 principal amount of $3,306,300, plus the amount the council 212.26 determines necessary to pay the cost of issuance, fund reserves, 212.27 debt service, and any bond insurance or other credit 212.28 enhancement. The proceeds of bonds issued under this paragraph 212.29 may not be used to finance portable or subscriber radio sets. 212.30 (c) In addition to the amount authorized under paragraphs 212.31 (a) and (b), the council may issue bonds under subdivision 1 in 212.32 a principal amount of $18,000,000, plus the amount the council 212.33 determines necessary to pay the costs of issuance, fund 212.34 reserves, debt service, and any bond insurance or other credit 212.35 enhancement. The proceeds of bonds issued under this paragraph 212.36 must be used to pay up to 50 percent of the cost to a local 213.1 government unit of building a subsystem identified in the plan 213.2 adopted under section 403.23, subdivision 2, and may not be used 213.3 to finance portable or subscriber radio sets. The bond proceeds 213.4 may be used to make improvements to an existing 800 MHz radio 213.5 system that will interoperate with the regionwide public safety 213.6 radio communication system, provided that the improvements 213.7 conform to the board's plan and technical standards. The 213.8 council must time the sale and issuance of the bonds so that the 213.9 debt service on the bonds can be covered by the additional 213.10 revenue that will become available in the fiscal year ending 213.11 June 30, 2005, generated under section 403.11 and appropriated 213.12 under section 403.30. 213.13 (d) In addition to the amount authorized under paragraphs 213.14 (a) to (c), the council may issue bonds under subdivision 1 in a 213.15 principal amount of up to $27,000,000, plus the amount the 213.16 council determines necessary to pay the costs of issuance, fund 213.17 reserves, debt service, and any bond insurance or other credit 213.18 enhancement. The proceeds of bonds issued under this paragraph 213.19 are appropriated to the commissioner of public safety for phase 213.20 three of the public safety radio communication system. In 213.21 anticipation of the receipt by the commissioner of public safety 213.22 of the bond proceeds, the Metropolitan Radio Board may advance 213.23 money from its operating appropriation to the commissioner of 213.24 public safety to pay for design and preliminary engineering for 213.25 phase three. The commissioner of public safety must return 213.26 these amounts to the Metropolitan Radio Board when the bond 213.27 proceeds are received. 213.28 (e) In addition to the amount authorized under paragraphs 213.29 (a) to (d), the council may issue bonds under subdivision 1 in a 213.30 principal amount of up to $9,500,000, plus the amount the 213.31 council determines necessary to pay the costs of issuance, fund 213.32 reserves, debt service, and any bond insurance or other credit 213.33 enhancement. The proceeds of bonds issued under this paragraph 213.34 are appropriated to the commissioner of public safety for the 213.35 purpose of subdivision 1, clause (6), provided that the proceeds 213.36 may not be used to finance portable or subscriber radio sets. 214.1 Sec. 6. Minnesota Statutes 2003 Supplement, section 214.2 403.31, subdivision 6, is amended to read: 214.3 Subd. 6. [OPERATING COSTS OF PHASES THREE TO SIX.] (a) The 214.4 ongoing costs of the commissioner in operating phases three to 214.5 six of the statewide public safety radio communication system 214.6 shall be allocated among and paid by the following users, all in 214.7 accordance with the statewide public safety radio communication 214.8 system plan developed by the planning committee under section 214.9 403.36: 214.10 (1) the state of Minnesota for its operations using the 214.11 system; 214.12 (2) all local government units using the system; and 214.13 (3) other eligible users of the system. 214.14 (b) Each local government and other eligible users of 214.15 phases three to six of the system shall pay to the commissioner 214.16 all sums charged under this section, at the times and in the 214.17 manner determined by the commissioner. The governing body of 214.18 each local government shall take all action that may be 214.19 necessary to provide the funds required for these payments and 214.20 to make the payments when due. 214.21 (c) If the governing body of any local government using 214.22 phase three, four, five, or six of the system fails to meet any 214.23 payment to the commissioner under this subdivision when due, the 214.24 commissioner may certify to the auditor of the county in which 214.25 the government unit is located the amount required for payment 214.26 of the amount due with interest at six percent per year. The 214.27 auditor shall levy and extend the amount due, with interest, as 214.28 a tax upon all taxable property in the government unit for the 214.29 next calendar year, free from any existing limitations imposed 214.30 by law or charter. This tax shall be collected in the same 214.31 manner as the general taxes of the government unit, and the 214.32 proceeds of the tax, when collected, shall be paid by the county 214.33 treasurer to the commissioner and credited to the government 214.34 unit for which the tax was levied. 214.35 Sec. 7. Minnesota Statutes 2003 Supplement, section 214.36 410.32, is amended to read: 215.1 410.32 [CITIES MAY ISSUE CAPITAL NOTES FOR CAPITAL 215.2 EQUIPMENT.] 215.3 (a) Notwithstanding any contrary provision of other law or 215.4 charter, a home rule charter city may, by resolution and without 215.5 public referendum, issue capital notes subject to the city debt 215.6 limit to purchase capital equipment. 215.7 (b) For purposes of this section, "capital equipment" means: 215.8 (1) public safety equipment, ambulance and other medical 215.9 equipment, road construction and maintenance equipment, and 215.10 other capital equipment; and 215.11 (2) computer hardware andoriginal operating system215.12 software,providedwhether bundled with machinery or equipment 215.13 or unbundled, together with application development services and 215.14 training related to the use of the computer. 215.15 (c) The equipment or softwarehasmust have an expected 215.16 useful life at least as long as the term of the notes. 215.17 (d) The authority to issue capital notes fororiginal215.18operating systemcomputer software and related services expires 215.19 on July 1, 2005. 215.20 (e) The notes shall be payable in not more than five years 215.21 and be issued on terms and in the manner the city determines. 215.22 The total principal amount of the capital notes issued in a 215.23 fiscal year shall not exceed 0.03 percent of the market value of 215.24 taxable property in the city for that year. 215.25 (f) A tax levy shall be made for the payment of the 215.26 principal and interest on the notes, in accordance with section 215.27 475.61, as in the case of bonds. 215.28 (g) Notes issued under this section shall require an 215.29 affirmative vote of two-thirds of the governing body of the city. 215.30 (h) Notwithstanding a contrary provision of other law or 215.31 charter, a home rule charter city may also issue capital notes 215.32 subject to its debt limit in the manner and subject to the 215.33 limitations applicable to statutory cities pursuant to section 215.34 412.301. 215.35 Sec. 8. Minnesota Statutes 2003 Supplement, section 215.36 412.301, is amended to read: 216.1 412.301 [FINANCING PURCHASE OF CERTAIN EQUIPMENT.] 216.2 (a) The council may issue certificates of indebtedness or 216.3 capital notes subject to the city debt limits to 216.4 purchase capital equipment. 216.5 (b) For purposes of this section, "capital equipment" means: 216.6 (1) public safety equipment, ambulance and other medical 216.7 equipment, road constructionorand maintenance equipment, and 216.8 other capital equipment; and 216.9 (2) computer hardware andoriginal operating system216.10 software,providedwhether bundled with machinery or equipment 216.11 or unbundled, together with application development services and 216.12 training related to the use of the computer. 216.13 (c) The equipment or softwarehasmust have an expected 216.14 useful life at least as long as the terms of the certificates or 216.15 notes. 216.16 (d) The authority to issue capital notes fororiginal216.17operating systemcomputer software and related services expires 216.18 on July 1, 2005. 216.19 (e) Such certificates or notes shall be payable in not more 216.20 thanfiveten years and shall be issued on such terms and in 216.21 such manner as the council may determine. 216.22 (f) If the amount of the certificates or notes to be issued 216.23 to finance any such purchase exceeds 0.25 percent of the market 216.24 value of taxable property in the city, they shall not be issued 216.25 for at least ten days after publication in the official 216.26 newspaper of a council resolution determining to issue them; and 216.27 if before the end of that time, a petition asking for an 216.28 election on the proposition signed by voters equal to ten 216.29 percent of the number of voters at the last regular municipal 216.30 election is filed with the clerk, such certificates or notes 216.31 shall not be issued until the proposition of their issuance has 216.32 been approved by a majority of the votes cast on the question at 216.33 a regular or special election. 216.34 (g) A tax levy shall be made for the payment of the 216.35 principal and interest on such certificates or notes, in 216.36 accordance with section 475.61, as in the case of bonds. 217.1 Sec. 9. Minnesota Statutes 2002, section 428A.101, is 217.2 amended to read: 217.3 428A.101 [SPECIAL SERVICE DISTRICT; SUNSET OF 217.4 SELF-EXECUTING PROVISIONS.] 217.5 The establishment of a new special service district after 217.6 June 30,20052009, requires enactment of a special law 217.7 authorizing the establishment. 217.8 Sec. 10. Minnesota Statutes 2002, section 428A.21, is 217.9 amended to read: 217.10 428A.21 [SUNSET.] 217.11 No new housing improvement areas may be established under 217.12 sections 428A.11 to 428A.20 after June 30,20052009. After 217.13 June 30,20052009, a city may establish a housing improvement 217.14 area, provided that it receives enabling legislation authorizing 217.15 the establishment of the area. 217.16 Sec. 11. Minnesota Statutes 2002, section 452.25, 217.17 subdivision 3, is amended to read: 217.18 Subd. 3. [AUTHORITY.] (a) Upon the approval of its elected 217.19 utilities commission or, if there be none, its city council, a 217.20 municipal utility may enter into a joint venture with other 217.21 municipal utilities, municipal power agencies, cooperative 217.22 associations,orinvestor-owned utilities, or other private 217.23 investors to provide utility services. Retail electric utility 217.24 services provided by a joint venture must be within the 217.25 boundaries of each utility's exclusive electric service 217.26 territory as shown on the map of service territories maintained 217.27 by the department of commerce. The terms and conditions of the 217.28 joint venture are subject to ratification by the governing 217.29 bodies of the respective utilities and may include the formation 217.30 of a corporate or other separate legal entity with an 217.31 administrative and governance structure independent of the 217.32 respective utilities. 217.33 (b) A corporate or other separate legal entity, if formed: 217.34 (1) has the authority and legal capacity and, in the 217.35 exercise of the joint venture, the powers, privileges, 217.36 responsibilities, and duties authorized by this section; 218.1 (2) is subject to the laws and rules applicable to the 218.2 organization, internal governance, and activities of the entity; 218.3 (3) in connection with its property and affairs and in 218.4 connection with property within its control, may exercise any 218.5 and all powers that may be exercised by a natural person or a 218.6 private corporation or other private legal entity in connection 218.7 with similar property and affairs; 218.8 (4) a joint venture that does not include an investor-owned 218.9 utility may elect to be deemed a municipal utility or a 218.10 cooperative association for purposes of chapter 216B or other 218.11 federal or state law regulating utility operations; and 218.12 (5) for a joint venture that includes an investor-owned 218.13 utility, the commission has authority over the activities, 218.14 services, and rates of the joint venture, and may exercise that 218.15 authority, to the same extent the commission has authority over 218.16 the activities, services, and rates of the investor-owned 218.17 utility itself. 218.18 (c) Any corporation, if formed, must comply with section 218.19 465.719, subdivisions 9, 10, 11, 12, 13, and 14. The term 218.20 "political subdivision," as it is used in section 465.719, shall 218.21 refer to the city council of a city. In this paragraph, 218.22 "corporation" means a corporation organized under chapters 302A 218.23 and 317A. 218.24 Sec. 12. Minnesota Statutes 2002, section 469.034, 218.25 subdivision 2, is amended to read: 218.26 Subd. 2. [GENERAL OBLIGATION REVENUE BONDS.] (a) An 218.27 authority may pledge the general obligation of the general 218.28 jurisdiction governmental unit as additional security for bonds 218.29 payable from income or revenues of the project or the 218.30 authority. The authority must find that the pledged revenues 218.31 will equal or exceed 110 percent of the principal and interest 218.32 due on the bonds for each year. The proceeds of the bonds must 218.33 be used for a qualified housing development project or 218.34 projects. The obligations must be issued and sold in the manner 218.35 and following the procedures provided by chapter 475, except the 218.36 obligations are not subject to approval by the electors, and the 219.1 maturities may extend to not more than 30 years from the 219.2 estimated date of completion of the project for obligations sold 219.3 to finance housing for the elderly and 40 years for other 219.4 obligations issued under this subdivision. The authority is the 219.5 municipality for purposes of chapter 475. 219.6 (b) The principal amount of the issue must be approved by 219.7 the governing body of the general jurisdiction governmental unit 219.8 whose general obligation is pledged. Public hearings must be 219.9 held on issuance of the obligations by both the authority and 219.10 the general jurisdiction governmental unit. The hearings must 219.11 be held at least 15 days, but not more than 120 days, before the 219.12 sale of the obligations. 219.13 (c) The maximum amount of general obligation bonds that may 219.14 be issued and outstanding under this section equals the greater 219.15 of (1) one-half of one percent of the taxable market value of 219.16 the general jurisdiction governmental unit whose general 219.17 obligation which includes a tax on property is pledged, or (2) 219.18 $3,000,000. In the case of county or multicounty general 219.19 obligation bonds, the outstanding general obligation bonds of 219.20 all cities in the county or counties issued under this 219.21 subdivision must be added in calculating the limit under clause 219.22 (1). 219.23 (d) "General jurisdiction governmental unit" means the city 219.24 in which the housing development project is located. In the 219.25 case of a county or multicounty authority, the county or 219.26 counties may act as the general jurisdiction governmental unit. 219.27 In the case of a multicounty authority, the pledge of the 219.28 general obligation is a pledge of a tax on the taxable property 219.29 in each of the counties. 219.30 (e) "Qualified housing development project" means a housing 219.31 development project providing housing either for the elderly or 219.32 for individuals and families with incomes not greater than 80 219.33 percent of the median family income as estimated by the United 219.34 States Department of Housing and Urban Development for the 219.35 standard metropolitan statistical area or the nonmetropolitan 219.36 county in which the project is located, and will be owned by the 220.1 authority for the term of the bonds. A qualified housing 220.2 development project may admit nonelderly individuals and 220.3 families with higher incomes if: 220.4 (1) three years have passed since initial occupancy; 220.5 (2) the authority finds the project is experiencing 220.6 unanticipated vacancies resulting in insufficient revenues, 220.7 because of changes in population or other unforeseen 220.8 circumstances that occurred after the initial finding of 220.9 adequate revenues; and 220.10 (3) the authority finds a tax levy or payment from general 220.11 assets of the general jurisdiction governmental unit will be 220.12 necessary to pay debt service on the bonds if higher income 220.13 individuals or families are not admitted. 220.14 Sec. 13. Minnesota Statutes 2002, section 471.342, is 220.15 amended by adding a subdivision to read: 220.16 Subd. 2a. [WATER SUBMETERING.] In this section, "water 220.17 submetering" means metering devices in multifamily dwellings and 220.18 related services, which detect water leaks and monitor water 220.19 usage of specific units or areas. 220.20 Sec. 14. Minnesota Statutes 2002, section 471.342, 220.21 subdivision 3, is amended to read: 220.22 Subd. 3. [PROGRAM AUTHORITY.] A city may establish an 220.23 inflow and infiltration prevention program and a water 220.24 submetering program and provide loans and grants to property 220.25 owners to assist the owners in financing the cost of abating 220.26 inflow and infiltration and water conservation and leak 220.27 detection on their property. 220.28 Sec. 15. Minnesota Statutes 2002, section 471.342, 220.29 subdivision 5, is amended to read: 220.30 Subd. 5. [PROGRAM FINANCING.] The city may finance the 220.31programprograms with federal, state, private, or city funds. 220.32 City funds include, but are not limited to, general fund 220.33 appropriations, sanitary or storm sewer utility funds, and fees 220.34 or charges. A city may also issue revenue obligations payable 220.35 solely from fees and charges imposed for program costs and loan 220.36 repayments to finance the programs. 221.1 Sec. 16. Minnesota Statutes 2002, section 473.39, is 221.2 amended by adding a subdivision to read: 221.3 Subd. 1k. [OBLIGATIONS.] After July 1, 2004, in addition 221.4 to the authority in subdivisions 1a, 1b, 1c, 1d, 1e, 1g, 1h, 1i, 221.5 and 1j, the council may issue certificates of indebtedness, 221.6 bonds, or other obligations under this section in an amount not 221.7 exceeding $32,000,000 for capital expenditures as prescribed in 221.8 the council's regional transit master plan and transit capital 221.9 improvement program and for related costs, including the costs 221.10 of issuance and sale of the obligations. 221.11 Sec. 17. Minnesota Statutes 2002, section 474A.131, 221.12 subdivision 1, is amended to read: 221.13 Subdivision 1. [NOTICE OF ISSUE.] Each issuer that issues 221.14 bonds with an allocation received under this chapter shall 221.15 provide a notice of issue to the department on forms provided by 221.16 the department stating: 221.17 (1) the date of issuance of the bonds; 221.18 (2) the title of the issue; 221.19 (3) the principal amount of the bonds; 221.20 (4) the type of qualified bonds under federal tax law; 221.21 (5) the dollar amount of the bonds issued that were subject 221.22 to the annual volume cap; and 221.23 (6) for entitlement issuers, whether the allocation is from 221.24 current year entitlement authority or is from carryforward 221.25 authority. 221.26 For obligations that are issued as a part of a series of 221.27 obligations, a notice must be provided for each series. A 221.28 penalty of one-half of the amount of the application deposit not 221.29 to exceed $5,000 shall apply to any issue of obligations for 221.30 which a notice of issue is not provided to the department within 221.31 five business days after issuance or beforethe last Monday4:30 221.32 p.m. on the last business day in December, whichever occurs 221.33 first. Within 30 days after receipt of a notice of issue the 221.34 department shall refund a portion of the application deposit 221.35 equal to one percent of the amount of the bonding authority 221.36 actually issued if a one percent application deposit was made, 222.1 or equal to two percent of the amount of the bonding authority 222.2 actually issued if a two percent application deposit was made, 222.3 less any penalty amount. 222.4 Sec. 18. Minnesota Statutes 2002, section 475.52, 222.5 subdivision 1, is amended to read: 222.6 Subdivision 1. [STATUTORY CITIES.] Any statutory city may 222.7 issue bonds or other obligations for the acquisition or 222.8 betterment of public buildings, means of garbage disposal, 222.9 hospitals, nursing homes, homes for the aged, schools, 222.10 libraries, museums, art galleries, parks, playgrounds, stadia, 222.11 sewers, sewage disposal plants, subways, streets, sidewalks, 222.12 warning systems; for any utility or other public convenience 222.13 from which a revenue is or may be derived; for a permanent 222.14 improvement revolving fund; for changing, controlling or 222.15 bridging streams and other waterways; for the acquisition and 222.16 betterment of bridges and roads within two miles of the 222.17 corporate limits; for the acquisition of development rights in 222.18 the form of conservation easements under chapter 84C; and for 222.19 acquisition of equipment for snow removal, street construction 222.20 and maintenance, or fire fighting. Without limitation by the 222.21 foregoing the city may issue bonds to provide money for any 222.22 authorized corporate purpose except current expenses. 222.23 Sec. 19. Minnesota Statutes 2002, section 475.52, 222.24 subdivision 3, is amended to read: 222.25 Subd. 3. [COUNTIES.] Any county may issue bonds for the 222.26 acquisition or betterment of courthouses, county administrative 222.27 buildings, health or social service facilities, correctional 222.28 facilities, law enforcement centers, jails, morgues, libraries, 222.29 parks, and hospitals, for roads and bridges within the county or 222.30 bordering thereon and for road equipment and machinery and for 222.31 ambulances and related equipment, for the acquisition of 222.32 development rights in the form of conservation easements under 222.33 chapter 84C, and for capital equipment for the administration 222.34 and conduct of elections providing the equipment is uniform 222.35 countywide, except that the power of counties to issue bonds in 222.36 connection with a library shall not exist in Hennepin County. 223.1 Sec. 20. Minnesota Statutes 2002, section 475.52, 223.2 subdivision 4, is amended to read: 223.3 Subd. 4. [TOWNS.] Any town may issue bonds for the 223.4 acquisition and betterment of town halls, town roads and 223.5 bridges, nursing homes and homes for the aged, and for 223.6 acquisition of equipment for snow removal, road construction or 223.7 maintenance, and fire fighting, for the acquisition of 223.8 development rights in the form of conservation easements under 223.9 chapter 84C, and for the acquisition and betterment of any 223.10 buildings to house and maintain town equipment. 223.11 Sec. 21. Minnesota Statutes 2003 Supplement, section 223.12 475.521, subdivision 4, is amended to read: 223.13 Subd. 4. [LIMITATIONS ON AMOUNT.] A city may not issue 223.14 bonds under this section if the maximum amount of principal and 223.15 interest to become due in any year on all the outstanding bonds 223.16 issued under this section, including the bonds to be issued, 223.17 will equal or exceed0.053670.16 percent of the taxable market 223.18 value of property in thecountycity for a city that has a 223.19 population less than 2,500 and 0.05367 percent of the taxable 223.20 market value of property in the city for a city that has a 223.21 population of 2,500 or more. Calculation of the limit must be 223.22 made using the taxable market value for the taxes payable year 223.23 in which the obligations are issued and sold. This section does 223.24 not limit the authority to issue bonds under any other special 223.25 or general law. 223.26 Sec. 22. Minnesota Statutes 2003 Supplement, section 223.27 475.58, subdivision 3b, is amended to read: 223.28 Subd. 3b. [STREET RECONSTRUCTION.] (a) A municipality may, 223.29 without regard to the election requirement under subdivision 1, 223.30 issue and sell obligations for street reconstruction, if the 223.31 following conditions are met: 223.32 (1) the streets are reconstructed under a street 223.33 reconstruction plan that describes the streets to be 223.34 reconstructed, the estimated costs, and any planned 223.35 reconstruction of other streets in the municipality over the 223.36 next five years, and the plan and issuance of the obligations 224.1 has been approved by a vote of all of the members of the 224.2 governing body following a public hearing for which notice has 224.3 been published in the official newspaper at least ten days but 224.4 not more than 28 days prior to the hearing; and 224.5 (2) if a petition requesting a vote on the issuance is 224.6 signed by voters equal to five percent of the votes cast in the 224.7 last municipal general election and is filed with the municipal 224.8 clerk within 30 days of the public hearing, the municipality may 224.9 issue the bonds only after obtaining the approval of a majority 224.10 of the voters voting on the question of the issuance of the 224.11 obligations. 224.12 (b) Obligations issued under this subdivision are subject 224.13 to the debt limit of the municipality and are not excluded from 224.14 net debt under section 475.51, subdivision 4. 224.15 (c) For purposes of this subdivision, street reconstruction 224.16 includes utility replacement and relocation and other activities 224.17 incidental to the street reconstruction,butturn lanes, and 224.18 other improvements having a substantial public safety function 224.19 and realignments, other modifications to intersect with state 224.20 and county roads, and the local share of state and county road 224.21 projects. 224.22 (d) Except in the case of turn lanes, safety improvements, 224.23 intersection modifications, and the local share of state and 224.24 county road projects, street reconstruction does not include the 224.25 portion of project cost allocable to widening a street or adding 224.26 curbs and gutters where none previously existed. 224.27 Sec. 23. Minnesota Statutes 2002, section 504B.215, is 224.28 amended by adding a subdivision to read: 224.29 Subd. 5. [UTILITY CHARGES.] (a) Where submetering, as 224.30 defined in section 471.342, subdivision 2a, is installed, 224.31 metering equipment must comply with safety and technical 224.32 standards established by the American Water Works Association, 224.33 and must be installed in accordance with manufacturer's 224.34 instructions and applicable code. 224.35 (b) Where tenants are billed separately from rent for 224.36 utilities, the person or entity billing the tenants may not 225.1 collect in the aggregate more than the amount billed by the 225.2 utility for the utility service provided. The person or entity 225.3 may not collect from tenants as part of utility charges, 225.4 administrative, capital, or other expenses related to the 225.5 provision of utility service. Such expenses include, but are 225.6 not limited to, purchase and installation of submeters, 225.7 connection, disconnection, reconnection, billing, or other 225.8 servicing charges and late payment charges. 225.9 (c) The rate for utility service charged to tenants must be 225.10 the same rate that the bill payer of record is charged by the 225.11 utility. Recovery by the bill payer of record from the tenants 225.12 of any fixed monthly or periodic charges shall be made on a pro 225.13 rata basis. 225.14 (d) Upon a resident's request, an owner must provide a copy 225.15 of any bills received from the utility showing the billed rate 225.16 and total consumption and any bills, statements, or other 225.17 documentation of rates and consumption provided by any third 225.18 party to an owner during the prior 12 months. 225.19 (e) Any violation of this subdivision shall be considered a 225.20 violation of sections 325F.69 and 325D.44. 225.21 Sec. 24. [CITY OF ST. PAUL; RIVERCENTRE COMPLEX 225.22 OPERATION.] 225.23 Subdivision 1. [DEFINITIONS.] (a) For the purposes of this 225.24 section, the terms defined in this subdivision have the meanings 225.25 given them. 225.26 (b) "City" means the city of St. Paul, its mayor, city 225.27 council, and any other board, authority, commission, or officer 225.28 authorized by law, charter, or ordinance to exercise city powers 225.29 of the nature referred to in this section. 225.30 (c) "RiverCentre complex" means collectively the 225.31 auditorium, convention, conference and education center, arena, 225.32 and parking ramp facilities presently and commonly known as the 225.33 Roy Wilkins Auditorium, St. Paul RiverCentre, Xcel Energy 225.34 Center, and RiverCentre Parking Ramp, including all property, 225.35 real or personal, tangible or intangible, located in the city, 225.36 intended to be used as part of the RiverCentre complex or 226.1 additions to or extensions of it. 226.2 Subd. 2. [CREATION OF NONPROFIT ORGANIZATION.] As required 226.3 under Minnesota Statutes, section 465.717, and notwithstanding 226.4 any other law, city charter provision, or ordinance to the 226.5 contrary, the city of St. Paul may participate in the creation 226.6 of a nonprofit organization for the purposes provided in this 226.7 section. 226.8 Subd. 3. [GOVERNING BOARD.] (a) The mayor of the city, 226.9 subject to approval by the city council, shall appoint a 226.10 majority of the members of the governing board of the nonprofit 226.11 organization performing all or a part of the activities 226.12 necessary to carry out the purposes specified in this section. 226.13 The mayor may designate any officer or employee of the city to 226.14 serve as a member of the governing board of any nonprofit 226.15 organization. 226.16 (b) In addition to the appointments made by the mayor under 226.17 paragraph (a), the mayor shall designate two members of the city 226.18 council to serve on the governing board of the nonprofit 226.19 organization. 226.20 (c) Notwithstanding any provision contained in the articles 226.21 of incorporation and bylaws of the nonprofit organization, any 226.22 member of the governing board appointed by the mayor may be 226.23 removed only by the mayor. 226.24 (d) The governing board of the nonprofit organization shall 226.25 select, subject to the approval of the mayor, a president to 226.26 serve as chief executive officer and general manager of the 226.27 nonprofit organization. 226.28 (e) The procedures in Minnesota Statutes, section 317A.255, 226.29 subdivision 1, paragraph (b), relating to director conflicts of 226.30 interest, are not required if the contract or other transaction 226.31 is between the city and the nonprofit organization. 226.32 Subd. 4. [RIVERCENTRE MANAGEMENT; AUTHORITY TO CONTRACT 226.33 WITH NONPROFIT ORGANIZATION.] The city may enter into an 226.34 agreement with the nonprofit organization created in subdivision 226.35 2 to equip, maintain, manage, and operate all or a portion of 226.36 the RiverCentre complex and to manage and operate a convention 227.1 bureau to market and promote the city as a tourist or convention 227.2 center. Except as otherwise provided in this section, the 227.3 nonprofit organization may only contract and utilize and expend 227.4 funds for these purposes under the direction of its governing 227.5 board, subject to the accounting, financial reporting, and other 227.6 conditions that the city may prescribe in a contract made under 227.7 this section between the city and the nonprofit organization. 227.8 The nonprofit organization may use the services of the office of 227.9 the city attorney and the city's purchasing department. All 227.10 activities performed to carry out these purposes are deemed to 227.11 be for a public purpose. 227.12 Subd. 5. [BONDHOLDERS' RIGHTS AND RIVERCENTRE COMPLEX TAX 227.13 EXEMPTIONS PRESERVED.] (a) The city must protect the rights of 227.14 holders of bonds issued for the RiverCentre complex, including 227.15 preserving the tax-exempt status of the bonds. 227.16 (b) The use and operation of the RiverCentre complex by the 227.17 nonprofit organization with which the city contracts under this 227.18 act is a use, lease, or occupancy for public, governmental, and 227.19 municipal purposes, and the complex is exempt from taxation by 227.20 the state or any political subdivision of the state during such 227.21 use, to the extent it would be exempt if the complex was 227.22 equipped, maintained, managed, and operated by the city. 227.23 (c) Gross receipts of tickets and admissions to events at 227.24 the RiverCentre complex sponsored by the nonprofit organization 227.25 created in section 2 do not qualify for the sales tax exemption 227.26 under Minnesota Statutes, section 297A.70, subdivision 10. 227.27 Subd. 6. [APPLICABLE GENERAL LAWS.] The following statutes 227.28 apply to the nonprofit organization with which the city 227.29 contracts under this section the same as they apply to the city, 227.30 to the extent practicable: 227.31 (1) Minnesota Statutes, chapter 13D, the Minnesota Open 227.32 Meeting Law; and 227.33 (2) Minnesota Statutes, chapter 13, the Government Data 227.34 Practices Act. 227.35 Subd. 7. [SUCCESSION.] The nonprofit organization with 227.36 which the city contracts under this section is the successor to 228.1 all powers, rights, assets, privileges, and interests held and 228.2 enjoyed by the RiverCentre authority on the effective date of 228.3 this section, and established by the provisions of Laws 1967, 228.4 chapter 459, sections 1, 2, 4, and 8, subdivisions 2 and 3, 228.5 clause (3), as amended; Laws 1982, chapter 523, article 25, 228.6 sections 4 and 5, as amended; Laws 1998, chapter 404, sections 228.7 81 and 82; and Minnesota Statutes, section 297A.98. On the 228.8 effective date of the contract between the city and the 228.9 nonprofit organization authorized by this section, the 228.10 RiverCentre authority ceases to exist for only so long as the 228.11 contract is in effect, and all other laws or provisions 228.12 specifically relating to the RiverCentre authority and the 228.13 RiverCentre complex that are not otherwise referenced in this 228.14 section, do not apply to the nonprofit organization. 228.15 Subd. 8. [LIABILITY.] The nonprofit organization with 228.16 which the city contracts under this section is a "municipality," 228.17 and the officers, directors, employees, and agents of the 228.18 nonprofit organization are "employees, officers, or agents," 228.19 under Minnesota Statutes, chapter 466, relating to tort 228.20 liability. The city must defend, save harmless, and indemnify 228.21 the nonprofit organization, including the nonprofit's officers, 228.22 directors, employees, and agents, against any claim or demand 228.23 arising out of the nonprofit organization's performance under 228.24 the contract. 228.25[EFFECTIVE DATE.] This section is effective the day after 228.26 the city council and the chief clerical officer of the city of 228.27 St. Paul have timely completed their compliance with Minnesota 228.28 Statutes, section 645.023, subdivisions 2 and 3. 228.29 Sec. 25. [TRANSFER OF MHFA BONDING AUTHORITY TO HESO.] 228.30 Notwithstanding Minnesota Statutes, section 474A.03, 228.31 subdivision 2a, clause (b), the Minnesota Housing Finance Agency 228.32 may enter into an agreement with the Higher Education Services 228.33 Office under which the Higher Education Services Office issues 228.34 qualified student loan bonds, up to $50,000,000 of which are 228.35 issued pursuant to bonding authority allocated to the Minnesota 228.36 Housing Finance Agency in 2004 under Minnesota Statutes, section 229.1 474A.03, subdivision 2a, clause (a). This amount is in addition 229.2 to the bonding authority otherwise allocated to the Higher 229.3 Education Services Office under Minnesota Statutes, chapter 229.4 474A. Notwithstanding Minnesota Statutes, section 474A.04, 229.5 subdivision 1a, 474A.061, or 474A.091, subdivision 2, bonding 229.6 authority carried forward by the Minnesota Housing Financing 229.7 Agency from its allocation for 2004 under Minnesota Statutes, 229.8 section 474A.03, subdivision 2a, clause (b), are exempt from the 229.9 requirement that the bonding authority be permanently issued by 229.10 December 31 of the next succeeding calendar year. 229.11 Sec. 26. [APPLICATION.] 229.12 Section 16 applies in the counties of Anoka, Carver, 229.13 Dakota, Hennepin, Ramsey, Scott, and Washington. 229.14 Sec. 27. [EFFECTIVE DATE.] 229.15 Except as provided in section 24, this article is effective 229.16 the day following final enactment. 229.17 ARTICLE 7 229.18 INTERNATIONAL ECONOMIC DEVELOPMENT ZONE 229.19 Section 1. Minnesota Statutes 2002, section 174.03, is 229.20 amended by adding a subdivision to read: 229.21 Subd. 2a. [STATE AVIATION PLAN.] (a) Each revision of the 229.22 state transportation plan must include a chapter setting out a 229.23 state aviation plan. The plan must include the following: 229.24 (1) an analysis of the projected commercial aviation needs 229.25 of the state over the next 20 years; 229.26 (2) a description of the present capacity, function, and 229.27 levels of activity at each commercial service airport as 229.28 designated by the Federal Aviation Administration, each airport 229.29 that the commissioner determines is likely to become a 229.30 commercial service airport in the next 20 years, and any other 229.31 airport that the commissioner determines should be included by 229.32 reason of commercial passenger or cargo service levels; and 229.33 (3) a description of the capacity, function, and levels of 229.34 activity that each airport identified in clause (2) must have in 229.35 order to carry out the plan's goal and objectives and meet the 229.36 needs described under clause (1). 230.1 (b) In assessing aviation needs and the capacity, function, 230.2 and level of activity at any airport, the plan must consider 230.3 both commercial passenger service and cargo service. 230.4 Sec. 2. [174.032] [ADVISORY COUNCIL ON AVIATION PLANNING.] 230.5 Subdivision 1. [ADVISORY COUNCIL CREATED.] (a) The 230.6 commissioner shall create an Advisory Council on Aviation 230.7 Planning to advise the commissioner on the aviation chapter of 230.8 the state transportation plan. The council consists of the 230.9 following members appointed by the commissioner: 230.10 (1) one member of the Metropolitan Airports Commission; 230.11 (2) one representative of major commercial airlines; 230.12 (3) one representative of independent pilots who fly for 230.13 small business; 230.14 (4) one representative of the air cargo industry; 230.15 (5) two representatives of the business community unrelated 230.16 to aviation, one of whom must reside within the seven-county 230.17 metropolitan area and one of whom must reside outside that area; 230.18 (6) one representative of environmental interests; 230.19 (7) one employee of the Department of Transportation's 230.20 Office of Aeronautics; 230.21 (8) two representatives of neighborhoods that are 230.22 significantly affected by airplane noise; and 230.23 (9) one representative of tier-two airports (St. Cloud, 230.24 Duluth, Willmar, and Rochester). 230.25 (b) Members of the advisory council serve at the pleasure 230.26 of the appointing authority. Members shall serve without 230.27 compensation. 230.28 Subd. 2. [ADVISORY COUNCIL DUTIES.] (a) The Advisory 230.29 Council on Aviation Planning shall advise the commissioner on 230.30 the aviation planning chapter of the state transportation plan 230.31 required under section 174.03, subdivision 2a. In carrying out 230.32 these duties the advisory council shall prepare an initial draft 230.33 of the chapter and submit it to the commissioner, revise the 230.34 draft if so requested by the commissioner, and comment to the 230.35 commissioner on any revisions to the draft the commissioner 230.36 makes. In drafting the chapter the council shall consider: 231.1 (1) present and anticipated capacity needs of commercial 231.2 service airports, including limitations on expanding the 231.3 capacity of individual commercial service airports imposed by 231.4 state or local regulations, safety or environmental concerns, 231.5 and land uses near the airport that are incompatible with 231.6 airport operations; 231.7 (2) the needs of Minnesota residents and businesses for 231.8 passenger and cargo service, from both a statewide and regional 231.9 perspective; 231.10 (3) anticipated changes in commercial aircraft types and 231.11 characteristics; 231.12 (4) noise and other environmental impacts of aviation at 231.13 commercial service airports; 231.14 (5) trends in the aviation and airline industries; and 231.15 (6) relationship between aviation and other forms of 231.16 transportation covered by the state transportation plan. 231.17 (b) The advisory council may also make recommendations to 231.18 the commissioner, the Metropolitan Airports Commission, and the 231.19 legislature concerning the policy steps needed to implement the 231.20 chapter. 231.21 Subd. 3. [TERM OF COUNCIL; EXPIRATION; RECONVENING.] (a) 231.22 The commissioner shall appoint the first advisory council by 231.23 July 1, 2004. The council shall submit any recommendations it 231.24 makes to the legislature by January 15, 2005. The terms of all 231.25 members of the advisory council serving on July 1, 2004, expire 231.26 on January 1, 2006. 231.27 (b) The commissioner shall appoint and convene a new 231.28 advisory council not less than two years before the date on 231.29 which each revision of the state transportation plan is required 231.30 under section 174.03, subdivision 1a. Each such advisory 231.31 council must consist of members as prescribed in subdivision 1, 231.32 who shall serve on the same terms as set forth under subdivision 231.33 1. Each such advisory council expires on the date on which the 231.34 revision of the state transportation plan becomes final. 231.35 Sec. 3. Minnesota Statutes 2002, section 290.06, is 231.36 amended by adding a subdivision to read: 232.1 Subd. 32. [INTERNATIONAL ECONOMIC DEVELOPMENT ZONE JOB 232.2 CREDIT.] A taxpayer that is a qualified business, as defined in 232.3 section 469.321, subdivision 6, is allowed a credit as 232.4 determined under section 469.327 against the tax imposed by this 232.5 chapter. 232.6[EFFECTIVE DATE.] This section is effective for taxable 232.7 years beginning after December 31, 2004. 232.8 Sec. 4. [290.0681] [INTERNATIONAL ECONOMIC DEVELOPMENT 232.9 ZONE INVESTMENT CREDIT.] 232.10 A person is allowed a credit against the taxes imposed 232.11 under this chapter in an amount equal to 50 percent of the 232.12 amount of qualifying investment. A qualifying investment is an 232.13 amount invested in a regional distribution center, as developed 232.14 pursuant to section 469.322. Unused portions of the credit may 232.15 be carried over for five years. 232.16[EFFECTIVE DATE.] This section is effective for taxable 232.17 years beginning after December 31, 2004. 232.18 Sec. 5. Minnesota Statutes 2002, section 290.191, is 232.19 amended by adding a subdivision to read: 232.20 Subd. 4a. [APPORTIONMENT FORMULA FOR CERTAIN QUALIFIED 232.21 BUSINESSES.] (a) If the business of a corporation, partnership, 232.22 or proprietorship is a qualified business under section 469.321, 232.23 and has operations only within the international economic 232.24 development zone, then the taxpayer may apportion net income to 232.25 Minnesota based solely upon the percentage that the sales made 232.26 within this state in connection with its trade or business 232.27 during the tax period are of the total sales wherever made in 232.28 connection with the trade or business during the tax period. 232.29 Property and payroll factors are disregarded. 232.30 (b) If the taxpayer has operations both within the 232.31 international economic development zone and outside of the 232.32 international economic development zone, income will be 232.33 apportioned to Minnesota under the formula in subdivision 2, 232.34 except that only the Minnesota sales of the facility or 232.35 facilities located in the international economic development 232.36 zone will be included in the taxpayer's factors. Property and 233.1 payroll factors of the facility or facilities located in the 233.2 international economic development zone are disregarded. 233.3[EFFECTIVE DATE.] This section is effective for taxable 233.4 years beginning after December 31, 2004. 233.5 Sec. 6. Minnesota Statutes 2002, section 297A.68, is 233.6 amended by adding a subdivision to read: 233.7 Subd. 40. [INTERNATIONAL ECONOMIC DEVELOPMENT ZONES.] (a) 233.8 Purchases of tangible personal property or taxable services by a 233.9 qualified business, as defined in section 469.321, are exempt if 233.10 the property or services are primarily used or consumed in an 233.11 international economic development zone designated under section 233.12 469.322. 233.13 (b) Purchase and use of construction materials and supplies 233.14 for construction of improvements to real property in an 233.15 international economic development zone are exempt if the 233.16 improvements after completion of construction are to be used in 233.17 the conduct of a qualified business, as defined in section 233.18 469.321. This exemption applies regardless of whether the 233.19 purchases are made by the business or a contractor. 233.20 (c) The exemptions under this subdivision apply to a local 233.21 sales and use tax, regardless of whether the local tax is 233.22 imposed on sales taxable under this chapter or in another law, 233.23 ordinance, or charter provision. 233.24 (d) This subdivision applies to sales, if the purchase was 233.25 made and delivery received during the period provided under 233.26 section 469.324, subdivision 2. 233.27[EFFECTIVE DATE.] This section is effective for sales made 233.28 on or after the day following final enactment. 233.29 Sec. 7. [469.321] [DEFINITIONS.] 233.30 Subdivision 1. [SCOPE.] For purposes of sections 469.321 233.31 to 469.328, the following terms have the meanings given. 233.32 Subd. 2. [FOREIGN TRADE ZONE.] "Foreign trade zone" means 233.33 a foreign trade zone designated pursuant to United States Code, 233.34 title 19, section 81b, for the right to use the powers provided 233.35 in United States Code, title 19, sections 81a to 81u, or a 233.36 subzone authorized by the foreign trade zone. 234.1 Subd. 3. [FOREIGN TRADE ZONE AUTHORITY.] "Foreign trade 234.2 zone authority" means the Greater Metropolitan Foreign Trade 234.3 Zone Commission number 119, a joint powers authority created by 234.4 the county of Hennepin, the cities of Minneapolis and 234.5 Bloomington, and the Metropolitan Airports Commission, under the 234.6 authority of section 469.059, 469.101, or 471.59, which includes 234.7 any other political subdivisions that enter into the authority 234.8 after its creation. 234.9 Subd. 4. [INTERNATIONAL ECONOMIC DEVELOPMENT ZONE.] An 234.10 "international economic development zone" or "zone" is a zone so 234.11 designated under section 469.322. 234.12 Subd. 5. [PERSON.] "Person" includes an individual, 234.13 corporation, partnership, limited liability company, 234.14 association, or any other entity. 234.15 Subd. 6. [QUALIFIED BUSINESS.] (a) "Qualified business" 234.16 means a person carrying on a trade or business at a place of 234.17 business located within an international economic development 234.18 zone that is: 234.19 (1) engaged in the furtherance of international export or 234.20 import of goods; and 234.21 (2) certified by the foreign trade zone authority as a 234.22 trade or business that furthers the purpose of developing 234.23 international distribution capacity and capability. 234.24 (b) A person that relocates a trade or business from within 234.25 Minnesota but outside an international economic development zone 234.26 into an international economic development zone is not a 234.27 qualified business, unless the business: 234.28 (1)(i) increases full-time employment in the first full 234.29 year of operation within the international economic development 234.30 zone by at least 20 percent measured relative to the operations 234.31 that were relocated and maintains the required level of 234.32 employment for each year that tax incentives under section 234.33 469.324 are claimed; or 234.34 (ii) makes a capital investment in the property located 234.35 within a zone equal to at least ten percent of the gross 234.36 revenues of the operations that were relocated in the 235.1 immediately proceeding taxable year; and 235.2 (2) enters a binding written agreement with the foreign 235.3 trade zone authority that: 235.4 (i) pledges that the business will meet the requirements of 235.5 clause (1); 235.6 (ii) provides for repayment of all tax benefits enumerated 235.7 under section 469.324 to the business under the procedures in 235.8 section 469.328, if the requirements of clause (1) are not met 235.9 for the taxable year or for taxes payable during a year in which 235.10 the requirements were not met; and 235.11 (iii) contains any other terms the foreign trade zone 235.12 authority determines appropriate. 235.13 Clause (1) of this paragraph does not apply to a freight 235.14 forwarder. 235.15 (c) A qualified business must pay each employee total 235.16 compensation, including benefits not mandated by law, that on an 235.17 annualized basis is equal to at least 110 percent of the federal 235.18 poverty guidelines for a family of four. 235.19 Subd. 7. [REGIONAL DISTRIBUTION CENTER.] A "regional 235.20 distribution center" is a distribution center developed within a 235.21 foreign trade zone. The regional distribution center must have 235.22 as its primary purpose to facilitate gathering of freight for 235.23 the purpose of centralizing the functions necessary for the 235.24 shipment of freight in international commerce, including, but 235.25 not limited to, security and customs functions. 235.26 Subd. 8. [RELOCATE.] (a) "Relocate" means that a trade or 235.27 business: 235.28 (1) ceases one or more operations or functions at another 235.29 location in Minnesota and begins performing substantially the 235.30 same operations or functions at a location in an international 235.31 economic development zone; or 235.32 (2) reduces employment at another location in Minnesota 235.33 during a period starting one year before and ending one year 235.34 after it begins operations in an international economic 235.35 development zone and its employees in the international economic 235.36 development zone are engaged in the same line of business as the 236.1 employees at the location where it reduced employment. 236.2 (b) "Relocate" does not include an expansion by a business 236.3 that establishes a new facility that does not replace or 236.4 supplant an existing operation or employment, in whole or in 236.5 part. 236.6 (c) "Trade or business" includes any business entity that 236.7 is substantially similar in operation or ownership to the 236.8 business entity seeking to be a qualified business under this 236.9 section. 236.10 Subd. 9. [FREIGHT FORWARDER.] "Freight forwarder" is a 236.11 business that, for compensation, ensures that goods produced or 236.12 sold by another business move from point of origin to point of 236.13 destination. 236.14[EFFECTIVE DATE.] This section is effective the day 236.15 following final enactment. 236.16 Sec. 8. [469.322] [DESIGNATION OF INTERNATIONAL ECONOMIC 236.17 DEVELOPMENT ZONE.] 236.18 (a) An area designated as a foreign trade zone may be 236.19 designated by the foreign trade zone authority as an 236.20 international economic development zone if within the zone a 236.21 regional distribution center is being developed pursuant to 236.22 section 469.323. The zone must be not less than 500 acres and 236.23 not more than 1,000 acres in size. 236.24 (b) In making the designation, the foreign trade zone 236.25 authority, in consultation with the Minnesota Department of 236.26 Transportation and the Metropolitan Council, shall consider 236.27 access to major transportation routes, consistency with current 236.28 state transportation and air cargo planning, adequacy of the 236.29 size of the site, access to airport facilities, present and 236.30 future capacity at the designated airport, the capability to 236.31 meet integrated present and future air cargo, security, and 236.32 inspection services, and access to other infrastructure and 236.33 financial incentives. The border of the international economic 236.34 development zone must be no more than 60 miles distant or 90 236.35 minutes drive time from the border of the Minneapolis-St. Paul 236.36 International Airport. The county in which the zone is located 237.1 must be a member of the foreign trade zone authority. 237.2[EFFECTIVE DATE.] This section is effective the day 237.3 following final enactment. 237.4 Sec. 9. [469.323] [FOREIGN TRADE ZONE AUTHORITY POWERS.] 237.5 Subdivision 1. [DEVELOPMENT OF REGIONAL DISTRIBUTION 237.6 CENTER.] The foreign trade zone authority is responsible for 237.7 creating a development plan for the regional distribution 237.8 center. The regional distribution center must be developed with 237.9 the purpose of expanding, on a regional basis, international 237.10 distribution capacity and capability. The foreign trade zone 237.11 authority shall consult with municipalities that have indicated 237.12 to the authority an interest in locating the international 237.13 economic development zone within their boundaries and a 237.14 willingness to establish a tax increment financing district 237.15 coterminous with the boundaries of the zone, as well as 237.16 interested businesses, potential financiers, and appropriate 237.17 state and federal agencies. 237.18 Subd. 2. [BUSINESS PLAN.] Before designation of an 237.19 international economic development zone under section 469.322, 237.20 the governing body of the foreign trade zone authority shall 237.21 prepare a business plan. The plan must include an analysis of 237.22 the economic feasibility of the regional distribution center 237.23 once it becomes operational and of the operations of freight 237.24 forwarders and other businesses that choose to locate within the 237.25 boundaries of the zone. The analysis must provide profitability 237.26 models that: 237.27 (1) include the benefits of the incentives; 237.28 (2) estimate the amount of time needed to achieve 237.29 profitability; and 237.30 (3) analyze the length of time incentives will be necessary 237.31 to the economic viability of the regional distribution center. 237.32 If the governing body of the foreign trade authority 237.33 determines that the models do not establish the economic 237.34 feasibility of the project, the regional distribution center 237.35 does not meet the development requirements of this section and 237.36 section 469.322. 238.1 Subd. 3. [PORT AUTHORITY POWERS.] The governing body of 238.2 the foreign trade zone authority may establish a port authority 238.3 that has the same powers as a port authority established under 238.4 section 469.049. If the foreign trade zone authority 238.5 establishes a port authority, the governing body of the foreign 238.6 trade zone authority may exercise all powers granted to a city 238.7 by sections 469.048 to 469.068 within the area of the 238.8 international economic development zone, except it may not 238.9 impose or request imposition of a property tax levy under 238.10 section 469.053 by any city. 238.11 Subd. 4. [BUSINESS SUBSIDY LAW.] Tax exemptions, job 238.12 credits, and tax increment financing provided under this section 238.13 are business subsidies for the purpose of sections 116J.993 to 238.14 116J.995. 238.15[EFFECTIVE DATE.] This section is effective the day 238.16 following final enactment. 238.17 Sec. 10. [469.324] [TAX INCENTIVES IN INTERNATIONAL 238.18 ECONOMIC DEVELOPMENT ZONE.] 238.19 Subdivision 1. [AVAILABILITY.] Qualified businesses that 238.20 operate in an international economic development zone, 238.21 individuals who invest in a regional distribution center, or 238.22 qualified businesses that operate in an international economic 238.23 development zone qualify for: 238.24 (1) investment tax credits as provided under section 238.25 290.0681; 238.26 (2) special apportionment formula for corporate franchise 238.27 taxes as provided under section 290.191, subdivision 4a; 238.28 (3) exemption from the state sales and use tax and any 238.29 local sales and use taxes on qualifying purchases as provided in 238.30 section 297A.68, subdivision 40; 238.31 (4) the jobs credit allowed under section 469.327; and 238.32 (5) tax increment financing as provided in this chapter. 238.33 Subd. 2. [DURATION.] (a) Except as provided in paragraph 238.34 (b), the tax incentives described in subdivision 1, clauses (1), 238.35 (2), and (4), are available for no more than 12 consecutive 238.36 taxable years for any taxpayer that claims them. The tax 239.1 incentives described in subdivision 1, clause (3), are available 239.2 for each taxpayer that claims them for taxes otherwise payable 239.3 on transactions during a period of 12 years from the date when 239.4 the first exemption is claimed by that taxpayer under each 239.5 exemption. No exemptions described in subdivision 1, clauses 239.6 (1) to (4), are available after December 31, 2020. 239.7 (b) For taxpayers that are freight forwarders, the 239.8 durations provided under paragraph (a) are reduced to six years. 239.9 Subd. 3. [QUALIFICATION.] To receive the tax incentives 239.10 under this section, a qualified business must, by December 31 of 239.11 each year, certify to the commissioner of revenue the percentage 239.12 of its business activity within the zone that constitutes 239.13 international business activity for the year, measured by value 239.14 or volume of activity. If the percentage is less than 100 239.15 percent, the amount of the tax benefits provided under sections 239.16 290.06, subdivision 32, 290.0681, and 469.327 are reduced in 239.17 proportion to the percentage of business activity that is not 239.18 international business activity. The commissioner of revenue 239.19 may audit the business activities of a qualifying business to 239.20 determine its eligibility for tax benefits under this section. 239.21 Sec. 11. [469.327] [JOBS CREDIT.] 239.22 Subdivision 1. [CREDIT ALLOWED.] A qualified business is 239.23 allowed a credit against the taxes imposed under chapter 290. 239.24 The credit equals seven percent of the: 239.25 (1) lesser of: 239.26 (i) zone payroll for the taxable year, less the zone 239.27 payroll for the base year; or 239.28 (ii) total Minnesota payroll for the taxable year, less 239.29 total Minnesota payroll for the base year; minus 239.30 (2) $30,000 multiplied by the number of full-time 239.31 equivalent employees that the qualified business employs in the 239.32 international economic development zone for the taxable year, 239.33 minus the number of full-time equivalent employees the business 239.34 employed in the zone in the base year, but not less than zero. 239.35 Subd. 2. [DEFINITIONS.] (a) For purposes of this section, 239.36 the following terms have the meanings given. 240.1 (b) "Base year" means the taxable year beginning during the 240.2 calendar year prior to the calendar year in which the zone 240.3 designation took effect. 240.4 (c) "Full-time equivalent employees" means the equivalent 240.5 of annualized expected hours of work equal to 2,080 hours. 240.6 (d) "Minnesota payroll" means the wages or salaries 240.7 attributed to Minnesota under section 290.191, subdivision 12, 240.8 for the qualified business or the unitary business of which the 240.9 qualified business is a part, whichever is greater. 240.10 (e) "Zone payroll" means wages or salaries used to 240.11 determine the zone payroll factor for the qualified business, 240.12 less the amount of compensation attributable to any employee 240.13 that exceeds $70,000. 240.14 Subd. 3. [INFLATION ADJUSTMENT.] For taxable years 240.15 beginning after December 31, 2005, the dollar amounts in 240.16 subdivision 1, clause (2), and subdivision 2, paragraph (e), are 240.17 annually adjusted for inflation. The commissioner of revenue 240.18 shall adjust the amounts by the percentage determined under 240.19 section 290.06, subdivision 2d, for the taxable year. 240.20 Subd. 4. [REFUNDABLE.] If the amount of the credit exceeds 240.21 the liability for tax under chapter 290, the commissioner of 240.22 revenue shall refund the excess to the qualified business. 240.23 Subd. 5. [APPROPRIATION.] An amount sufficient to pay the 240.24 refunds authorized by this section is appropriated to the 240.25 commissioner of revenue from the general fund. 240.26[EFFECTIVE DATE.] This section is effective for taxable 240.27 years beginning after December 31, 2004. 240.28 Sec. 12. [469.328] [REPAYMENT OF TAX BENEFITS.] 240.29 Subdivision 1. [REPAYMENT OBLIGATION.] A person must repay 240.30 the amount of the tax reduction received under section 469.324, 240.31 subdivision 1, clauses (1) to (4), and refund received under 240.32 section 469.327, during the two years immediately before it 240.33 ceased to operate in the zone, if the person ceased to operate 240.34 its facility located within the zone or otherwise ceases to be 240.35 or is not a qualified business. 240.36 Subd. 2. [DISPOSITION OF REPAYMENT.] The repayment must be 241.1 paid to the state to the extent it represents a state tax 241.2 reduction. Any amount repaid to the state must be deposited in 241.3 the general fund. Any repayment of local sales or use taxes 241.4 must be repaid to the jurisdiction imposing the local sales or 241.5 use tax. 241.6 Subd. 3. [REPAYMENT PROCEDURES.] (a) For the repayment of 241.7 taxes imposed under chapter 290 or 297A or local taxes collected 241.8 pursuant to section 297A.99, a person must file an amended 241.9 return with the commissioner of revenue and pay any taxes 241.10 required to be repaid within 30 days after ceasing to be a 241.11 qualified business. The amount required to be repaid is 241.12 determined by calculating the tax for the period for which 241.13 repayment is required without regard to the tax reductions 241.14 allowed under section 469.324. 241.15 (b) The provisions of chapters 270 and 289A relating to the 241.16 commissioner of revenue's authority to audit, assess, and 241.17 collect the tax and to hear appeals are applicable to the 241.18 repayment required under paragraph (a). The commissioner may 241.19 impose civil penalties as provided in chapter 289A, and the 241.20 additional tax and penalties are subject to interest at the rate 241.21 provided in section 270.75, from 30 days after ceasing to do 241.22 business in the zone until the date the tax is paid. 241.23 (c) For determining the tax required to be repaid, a tax 241.24 reduction is deemed to have been received on the date that the 241.25 tax would have been due if the person had not been entitled to 241.26 the tax reduction. 241.27 (d) The commissioner of revenue may assess the repayment of 241.28 taxes under paragraph (b) at any time within two years after the 241.29 person ceases to be a qualified business, or within any period 241.30 of limitations for the assessment of tax under section 289A.38, 241.31 whichever is later. 241.32[EFFECTIVE DATE.] This section is effective the day 241.33 following final enactment. 241.34 Sec. 13. [DEPARTMENT OF EMPLOYMENT AND ECONOMIC 241.35 DEVELOPMENT STUDY; INTERNATIONAL AIR FREIGHT.] 241.36 The commissioner of employment and economic development 242.1 must study and analyze the issue of whether the state would 242.2 benefit from more than one international economic development 242.3 zone as defined in Minnesota Statutes, section 469.321. The 242.4 commissioner shall solicit input on the issue from businesses, 242.5 communities, and economic development organizations. The 242.6 commissioner must report the results of the study and analysis 242.7 to the committees of the legislature having jurisdiction over 242.8 economic development issues by December 1, 2004, along with any 242.9 legislative recommendations. 242.10 ARTICLE 8 242.11 MISCELLANEOUS 242.12 Section 1. Minnesota Statutes 2002, section 15.06, 242.13 subdivision 6, is amended to read: 242.14 Subd. 6. [GENERAL POWERS OF COMMISSIONERS.] Except as 242.15 otherwise expressly provided by law, a commissioner shall have 242.16 the following powers: 242.17 (1) to delegate to any subordinate employee the exercise of 242.18 specified statutory powers or duties as the commissioner may 242.19 deem advisable, subject to the commissioner's control; provided, 242.20 that every delegation shall be made by written order, filed with 242.21 the secretary of state; and further provided that only a deputy 242.22 commissioner may have all the powers or duties of the 242.23 commissioner. A commissioner who delegates the exercise of 242.24 identical powers or duties to ten or more subordinate employees, 242.25 may combine the delegation to these employees in one written 242.26 order. A delegation of authority granted by a commissioner 242.27 remains in effect until revoked by the commissioner, revoked by 242.28 a successor commissioner, or termination of the employees' 242.29 employment. A successor commissioner may continue to grant the 242.30 same delegations of authority that were granted by a previous 242.31 commissioner, by issuing a written order that is filed with the 242.32 secretary of state and lists the names of the subordinate 242.33 employees that have orders of delegations of authority, the date 242.34 the order was signed, and the date the order was filed with the 242.35 secretary of state; 242.36 (2) to appoint all subordinate employees and to prescribe 243.1 their duties; provided, that all departments and agencies shall 243.2 be subject to the provisions of chapter 43A; 243.3 (3) with the approval of the commissioner of 243.4 administration, to organize the department or agency as deemed 243.5 advisable in the interest of economy and efficiency; and 243.6 (4) to prescribe procedures for the internal management of 243.7 the department or agency to the extent that the procedures do 243.8 not directly affect the rights of or procedure available to the 243.9 public. 243.10[EFFECTIVE DATE.] This section is effective the day 243.11 following final enactment. 243.12 Sec. 2. Minnesota Statutes 2002, section 168A.02, 243.13 subdivision 2, is amended to read: 243.14 Subd. 2. [NO VEHICLE REGISTRATION WITHOUT TITLE.] The 243.15 department shall not register or renew the registration of a 243.16 vehicle for which a certificate of title is required unless a 243.17 certificate of title has been issued to the owneror, an 243.18 application therefor has been delivered to and approved by the 243.19 department, or the vehicle has a Minnesota certificate of title 243.20 and is being held for resale by a dealer under section 168A.11. 243.21 Sec. 3. Minnesota Statutes 2002, section 168A.11, 243.22 subdivision 1, is amended to read: 243.23 Subdivision 1. [APPLICATIONREQUIREMENTS UPON SUBSEQUENT 243.24 TRANSFER.] (a)IfA dealer who buys a vehicle and holds it for 243.25 resaleand procures the certificate of title from the owner, and243.26complies with subdivision 2 hereof, the dealerneed not apply 243.27 for a certificate of title, but. Upon transferring the vehicle 243.28 to another person, other than by the creation of a security 243.29 interest, the dealer shall promptly execute the assignment and 243.30 warranty of title by a dealer, showing the names and addresses 243.31 of the transferee and of any secured party holding a security 243.32 interest created or reserved at the time of the resale, and the 243.33 date of the security agreement in the spaces provided therefor 243.34 on the certificate of title or secure reassignment. 243.35 (b) If a dealer elects to apply for a certificate of title 243.36 on a vehicle held for resale, the dealer need not register the 244.1 vehicle but shall pay one month's registration tax. If a dealer 244.2 elects to apply for a certificate of title on a vehicle held for 244.3 resale, the department shall not place any legend on the title 244.4 that no motor vehicle sales tax was paid by the dealer, but may 244.5 indicate on the title whether the vehicle is a new or used 244.6 vehicle. 244.7 (c) With respect to motor vehicles subject to the 244.8 provisions of section 325E.15, the dealer shall also, in the 244.9 space provided therefor on the certificate of title or secure 244.10 reassignment, state the true cumulative mileage registered on 244.11 the odometer or that the exact mileage is unknown if the 244.12 odometer reading is known by the transferor to be different from 244.13 the true mileage. 244.14(c)(d) The transferee shall complete the application for 244.15 title section on the certificate of title or separate title 244.16 application form prescribed by the department. The dealer shall 244.17 mail or deliver the certificate to the registrar or deputy 244.18 registrar with the transferee's application for a new 244.19 certificate and appropriate taxes and fees, within ten business 244.20 days. 244.21 (e) With respect to vehicles sold to buyers who will remove 244.22 the vehicle from this state, the dealer shall remove any license 244.23 plates from the vehicle, issue a 31-day temporary permit 244.24 pursuant to section 168.091, and notify the registrar within 48 244.25 hours of the sale that the vehicle has been removed from this 244.26 state. The notification must be made in an electronic format 244.27 prescribed by the registrar. The dealer may contract with a 244.28 deputy registrar for the notification of sale to an out-of-state 244.29 buyer. The deputy registrar may charge a fee not to exceed $7 244.30 per transaction to provide this service. 244.31 Sec. 4. Minnesota Statutes 2002, section 168A.11, 244.32 subdivision 2, is amended to read: 244.33 Subd. 2. [PURCHASE RECEIPTNOTIFICATION ON VEHICLE HELD 244.34 FOR RESALE.]A dealer, on buying a vehicle for which the seller244.35does not present a certificate of title, shall at the time of244.36taking delivery of the vehicle execute a purchase receipt for245.1the vehicle in a format designated by the department, and245.2deliver a copy to the seller. In a format and at a time245.3prescribed by the registrar, the dealer shall notify the245.4registrar that the vehicle is being held for resale by the245.5dealer.Within 48 hours of acquiring a vehicle titled and 245.6 registered in Minnesota, a dealer shall notify the registrar 245.7 that the dealership is holding the vehicle for resale. The 245.8 notification must be made electronically as prescribed by the 245.9 registrar. The dealer may contract this service to a deputy 245.10 registrar and the registrar may charge a fee not to exceed $7 245.11 per transaction to provide this service. 245.12 Sec. 5. Minnesota Statutes 2002, section 168A.11, is 245.13 amended by adding a subdivision to read: 245.14 Subd. 4. [CENTRALIZED RECORD KEEPING.] Three or more new 245.15 motor vehicle dealers under common management or control may 245.16 designate to the department in writing a single location for 245.17 maintaining the records required by this section that are more 245.18 than 12 months old. The records must be open to inspection by a 245.19 representative of the department or a peace officer during 245.20 reasonable business hours. The location must be at the 245.21 established place of business of one of the affiliated dealers 245.22 or at a location within Minnesota not further than 25 miles from 245.23 the established place of business of one of the affiliated 245.24 dealers. 245.25 Sec. 6. Minnesota Statutes 2003 Supplement, section 245.26 270.30, subdivision 8, is amended to read: 245.27 Subd. 8. [EXEMPTIONS; ENFORCEMENT PROVISIONS.] The 245.28 provisions ofsubdivisions 6 and 7this section, except for 245.29 subdivision 4, do not apply to: 245.30 (1) an attorney admitted to practice under section 481.01; 245.31 (2) a certified public accountant holding a certificate 245.32 under section 326A.04 or a person issued a permit to practice 245.33 under section 326A.05; 245.34 (3) a person designated as a registered accounting 245.35 practitioner under Minnesota Rules, part 1105.6600, or a 245.36 registered accounting practitioner firm issued a permit under 246.1 Minnesota Rules, part 1105.7100; 246.2 (4) an enrolled agent who has passed the special enrollment 246.3 examination administered by the Internal Revenue Service;and246.4 (5) any fiduciary, or the regular employees of a fiduciary, 246.5 while acting on behalf of the fiduciary estate, the testator, 246.6 trustor, grantor, or beneficiaries of them; 246.7 (6) a tax preparer who provides tax preparation services 246.8 for fewer than six clients in a calendar year; 246.9 (7) a person who provides tax preparation services to a 246.10 spouse, parent, grandparent, child, or sibling; and 246.11 (8) an employee who provides tax preparation services for 246.12 an employer. 246.13 Sec. 7. [270.772] [MINIMUM DOLLAR REQUIREMENT FOR 246.14 ELECTRONIC PAYMENT OF TAXES AND FEES.] 246.15 Unless a requirement to make payments electronically 246.16 regardless of dollar amount is provided for by law for a 246.17 specific type of tax, fee, or surcharge, or for a group of 246.18 taxpayers or payors, payments of every tax, fee, or surcharge 246.19 administered by and payable to the commissioner in a calendar 246.20 year, including deposits and estimated payments, must be 246.21 remitted electronically if the liability of the taxpayer or 246.22 payor for the tax, fee, or surcharge in the preceding fiscal 246.23 year ending June 30 is $20,000 or more. This section does not 246.24 apply to individual income, estate, and airflight property taxes. 246.25[EFFECTIVE DATE.] This section is effective for payments 246.26 due in calendar year 2005, and in calendar years thereafter, 246.27 based on liabilities incurred in fiscal year ending June 30, 246.28 2004, and in fiscal years thereafter. 246.29 Sec. 8. Minnesota Statutes 2003 Supplement, section 246.30 289A.08, subdivision 16, is amended to read: 246.31 Subd. 16. [TAX REFUND OR RETURN PREPARERS; ELECTRONIC 246.32 FILING; PAPER FILING FEE IMPOSED.] (a) A "tax refund or return 246.33 preparer," as defined in section 289A.60, subdivision 13, 246.34 paragraph (g), who prepared more than 500 Minnesota individual 246.35 income tax returns for the prior calendar year must file all 246.36 Minnesota individual income tax returns prepared for the current 247.1 calendar year by electronic means. "Tax refund or return 247.2 preparer" does not include (i) an organization that meets the 247.3 requirements of section 501(c)(3) of the Internal Revenue Code 247.4 or (ii) an individual hired by such an organization for the 247.5 purpose of preparing tax returns. 247.6 (b) For tax returns prepared for the tax year beginning in 247.7 2001, the "500" in paragraph (a) is reduced to 250. 247.8 (c) For tax returns prepared for tax years beginning after 247.9 December 31, 2001, the "500" in paragraph (a) is reduced to 100. 247.10 (d) Paragraph (a) does not apply to a return if the 247.11 taxpayer has indicated on the return that the taxpayer did not 247.12 want the return filed by electronic means. 247.13 (e) For each return that is not filed electronically by a 247.14 tax refund or return preparer under this subdivision, including 247.15 returns filed under paragraph (d), a paper filing fee of $5 is 247.16 imposed upon the preparer. The fee is collected from the 247.17 preparer in the same manner as income tax. The fee does not 247.18 apply to returns that the commissioner requires to be filed in 247.19 paper form. 247.20[EFFECTIVE DATE.] This section is effective for returns 247.21 filed for tax years beginning after December 31, 2003. 247.22 Sec. 9. Minnesota Statutes 2002, section 289A.12, 247.23 subdivision 3, is amended to read: 247.24 Subd. 3. [RETURNS OR REPORTS BY PARTNERSHIPS, FIDUCIARIES, 247.25 AND S CORPORATIONS.] (a) Partnerships must file a return with 247.26 the commissioner for each taxable year. The return must conform 247.27 to the requirements of section 290.311, and must include the 247.28 names and addresses of the partners entitled to a distributive 247.29 share in their taxable net income, gain, loss, or credit, and 247.30 the amount of the distributive share to which each is entitled. 247.31 A partnership required to file a return for a partnership 247.32 taxable year must furnish a copy of the information required to 247.33 be shown on the return to a person who is a partner at any time 247.34 during the taxable year, on or before the day on which the 247.35 return for the taxable year was filed. A partnership with more 247.36 than 100 partners that is required to file a federal partnership 248.1 return electronically under Code of Federal Regulations, title 248.2 26, section 301.6011-3 (2003), must also file the return due 248.3 under this section electronically. If a return required to be 248.4 filed electronically is filed on paper, the return is still 248.5 valid but a penalty of $50 for each partner over 100 partners is 248.6 imposed for failing to file electronically. The commissioner 248.7 may waive the penalty if the partnership can demonstrate that 248.8 filing the return electronically creates a hardship. 248.9 (b) The fiduciary of an estate or trust making the return 248.10 required to be filed under section 289A.08, subdivision 2, for a 248.11 taxable year must give a beneficiary who receives a distribution 248.12 from the estate or trust with respect to the taxable year or to 248.13 whom any item with respect to the taxable year is allocated, a 248.14 statement containing the information required to be shown on the 248.15 return, on or before the date on which the return was filed. 248.16 (c) An S corporation must file a return with the 248.17 commissioner for a taxable year during which an election under 248.18 section 290.9725 is in effect, stating specifically the names 248.19 and addresses of the persons owning stock in the corporation at 248.20 any time during the taxable year, the number of shares of stock 248.21 owned by a shareholder at all times during the taxable year, the 248.22 shareholder's pro rata share of each item of the corporation for 248.23 the taxable year, and other information the commissioner 248.24 requires. An S corporation required to file a return under this 248.25 paragraph for any taxable year must furnish a copy of the 248.26 information shown on the return to the person who is a 248.27 shareholder at any time during the taxable year, on or before 248.28 the day on which the return for the taxable year was filed. 248.29 (d) The partnership or S corporation return must be signed 248.30 by someone designated by the partnership or S corporation. 248.31[EFFECTIVE DATE.] This section is effective for taxable 248.32 years beginning after December 31, 2003. 248.33 Sec. 10. Minnesota Statutes 2002, section 289A.20, 248.34 subdivision 2, is amended to read: 248.35 Subd. 2. [WITHHOLDING FROM WAGES, ENTERTAINER WITHHOLDING, 248.36 WITHHOLDING FROM PAYMENTS TO OUT-OF-STATE CONTRACTORS, AND 249.1 WITHHOLDING BY PARTNERSHIPS AND SMALL BUSINESS CORPORATIONS.] 249.2 (a) A tax required to be deducted and withheld during the 249.3 quarterly period must be paid on or before the last day of the 249.4 month following the close of the quarterly period, unless an 249.5 earlier time for payment is provided. A tax required to be 249.6 deducted and withheld from compensation of an entertainer and 249.7 from a payment to an out-of-state contractor must be paid on or 249.8 before the date the return for such tax must be filed under 249.9 section 289A.18, subdivision 2. Taxes required to be deducted 249.10 and withheld by partnerships and S corporations must be paid on 249.11 or before the date the return must be filed under section 249.12 289A.18, subdivision 2. 249.13 (b) An employer who, during the previous quarter, withheld 249.14 more than $1,500 of tax under section 290.92, subdivision 2a or 249.15 3, or 290.923, subdivision 2, must deposit tax withheld under 249.16 those sections with the commissioner within the time allowed to 249.17 deposit the employer's federal withheld employment taxes under 249.18 Code of Federal Regulations, title 26, section 31.6302-1, as 249.19 amended through December 31, 2001, without regard to the safe 249.20 harbor or de minimis rules in subparagraph (f) or the one-day 249.21 rule in subsection (c), clause (3). Taxpayers must submit a 249.22 copy of their federal notice of deposit status to the 249.23 commissioner upon request by the commissioner. 249.24 (c) The commissioner may prescribe by rule other return 249.25 periods or deposit requirements. In prescribing the reporting 249.26 period, the commissioner may classify payors according to the 249.27 amount of their tax liability and may adopt an appropriate 249.28 reporting period for the class that the commissioner judges to 249.29 be consistent with efficient tax collection. In no event will 249.30 the duration of the reporting period be more than one year. 249.31 (d) If less than the correct amount of tax is paid to the 249.32 commissioner, proper adjustments with respect to both the tax 249.33 and the amount to be deducted must be made, without interest, in 249.34 the manner and at the times the commissioner prescribes. If the 249.35 underpayment cannot be adjusted, the amount of the underpayment 249.36 will be assessed and collected in the manner and at the times 250.1 the commissioner prescribes. 250.2 (e)If the aggregate amount of the tax withheld during a250.3fiscal year ending June 30 under section 290.92, subdivision 2a250.4or 3, is equal to or exceeds the amounts established for250.5remitting federal withheld taxes pursuant to the regulations250.6promulgated under section 6302(h) of the Internal Revenue Code,250.7the employer must remit each required deposit for wages paid in250.8the subsequent calendar year by electronic means.250.9(f)A third-party bulk filer as defined in section 290.92, 250.10 subdivision 30, paragraph (a), clause (2), who remits 250.11 withholding deposits must remit all deposits by electronic means 250.12as provided in paragraph (e), regardless of the aggregate amount 250.13 of tax withheld during a fiscal year for all of the employers. 250.14[EFFECTIVE DATE.] This section is effective for payments 250.15 due in calendar year 2005, and in calendar years thereafter, 250.16 based upon liabilities incurred in fiscal year ending June 30, 250.17 2004, and in fiscal years thereafter. 250.18 Sec. 11. Minnesota Statutes 2003 Supplement, section 250.19 289A.20, subdivision 4, is amended to read: 250.20 Subd. 4. [SALES AND USE TAX.] (a) The taxes imposed by 250.21 chapter 297A are due and payable to the commissioner monthly on 250.22 or before the 20th day of the month following the month in which 250.23 the taxable event occurred, or following another reporting 250.24 period as the commissioner prescribes or as allowed under 250.25 section 289A.18, subdivision 4, paragraph (f) or (g), except 250.26 that use taxes due on an annual use tax return as provided under 250.27 section 289A.11, subdivision 1, are payable by April 15 250.28 following the close of the calendar year. 250.29 (b) A vendor having a liability of $120,000 or more during 250.30 a fiscal year ending June 30 must remit the June liability for 250.31 the next year in the following manner: 250.32 (1) Two business days before June 30 of the year, the 250.33 vendor must remit 85 percent of the estimated June liability to 250.34 the commissioner. 250.35 (2) On or before August 20 of the year, the vendor must pay 250.36 any additional amount of tax not remitted in June. 251.1(c) A vendor having a liability of $120,000 or more during251.2a fiscal year ending June 30 must remit all liabilities on251.3returns due for periods beginning in the subsequent calendar251.4year by electronic means on or before the 20th day of the month251.5following the month in which the taxable event occurred, or on251.6or before the 20th day of the month following the month in which251.7the sale is reported under section 289A.18, subdivision 4,251.8except for 85 percent of the estimated June liability, which is251.9due two business days before June 30. The remaining amount of251.10the June liability is due on August 20.251.11[EFFECTIVE DATE.] This section is effective for payments 251.12 due in calendar year 2005, and in calendar years thereafter, 251.13 based upon liabilities incurred in fiscal year ending June 30, 251.14 2004, and in fiscal years thereafter. 251.15 Sec. 12. Minnesota Statutes 2002, section 297F.01, is 251.16 amended by adding a subdivision to read: 251.17 Subd. 10a. [OUT-OF-STATE RETAILER.] "Out-of-state retailer" 251.18 means a person engaged outside of this state in the business of 251.19 selling, or offering to sell, cigarettes or tobacco products to 251.20 consumers located in this state. 251.21 Sec. 13. [297F.031] [REGISTRATION REQUIREMENT.] 251.22 Prior to making delivery sales or shipping cigarettes or 251.23 tobacco products in connection with any sales, an out-of-state 251.24 retailer shall file with the Department of Revenue a statement 251.25 setting forth the out-of-state retailer's name, trade name, and 251.26 the address of the out-of-state retailer's principal place of 251.27 business and any other place of business. 251.28 Sec. 14. Minnesota Statutes 2002, section 297F.09, is 251.29 amended by adding a subdivision to read: 251.30 Subd. 4a. [REPORTING REQUIREMENTS.] No later than the 18th 251.31 day of each calendar month, an out-of-state retailer that has 251.32 made a delivery of cigarettes or tobacco products or shipped or 251.33 delivered cigarettes or tobacco products into the state in a 251.34 delivery sale in the previous calendar month shall file with the 251.35 Department of Revenue reports in the form and in the manner 251.36 prescribed by the commissioner of revenue that provides for each 252.1 delivery sale, the name and address of the purchaser and the 252.2 brand or brands and quantity of cigarettes or tobacco products 252.3 sold. A tobacco retailer that meets the requirements of United 252.4 States Code, title 15, section 375 et seq. satisfies the 252.5 requirements of this subdivision. 252.6 Sec. 15. Minnesota Statutes 2002, section 297I.01, is 252.7 amended by adding a subdivision to read: 252.8 Subd. 6a. [DIRECT BUSINESS.] (a) "Direct business" means 252.9 all insurance provided by an insurance company or its agents, 252.10 and specifically includes stop-loss insurance purchased in 252.11 connection with a self-insurance plan for employee health 252.12 benefits or for other purposes, but excludes: 252.13 (1) reinsurance in which an insurance company assumes the 252.14 liability of another insurance company; and 252.15 (2) self-insurance. 252.16 (b) For purposes of this subdivision, an insurance company 252.17 includes a nonprofit health service corporation, health 252.18 maintenance organization, and community integrated service 252.19 network. 252.20[EFFECTIVE DATE.] This section is effective for insurance 252.21 premiums received after December 31, 2004. 252.22 Sec. 16. Minnesota Statutes 2002, section 297I.05, 252.23 subdivision 4, is amended to read: 252.24 Subd. 4. [MUTUAL PROPERTY AND CASUALTY COMPANIES WITH 252.25 TOTAL ASSETS LESS THAN $1,600,000,000 ON DECEMBER 31, 1989.] A 252.26 tax is imposed on mutual insurance companies that sell both 252.27 property and casualtycompaniesinsurance that had total assets 252.28 greater than $5,000,000 at the end of the calendar year but that 252.29 had total assets less than $1,600,000,000 on December 31, 1989. 252.30 The rate of tax is equal to:252.31(1) two percent of gross premiums less return premiums on252.32all direct business received by the insurer or agents of the252.33insurer in Minnesota for life insurance, in cash or otherwise,252.34during the year; and252.35(2)1.26 percent of gross premiums less return premiums on 252.36 allotherdirect business received by the insurer or agents of 253.1 the insurer in Minnesota, in cash or otherwise, during the year, 253.2 except for life insurance as provided in subdivision 14. 253.3[EFFECTIVE DATE.] This section is effective for premiums 253.4 received after December 31, 2004. 253.5 Sec. 17. Minnesota Statutes 2002, section 297I.05, is 253.6 amended by adding a subdivision to read: 253.7 Subd. 14. [LIFE INSURANCE.] A tax is imposed on life 253.8 insurance. The rate of tax equals 1.50 percent of gross 253.9 premiums less return premiums on all direct business received by 253.10 the insurer or agents of the insurer in Minnesota for life 253.11 insurance, in cash or otherwise, during the year. 253.12[EFFECTIVE DATE.] This section is effective for premiums 253.13 received after December 31, 2004. 253.14 Sec. 18. Minnesota Statutes 2002, section 298.01, 253.15 subdivision 3, is amended to read: 253.16 Subd. 3. [OCCUPATION TAX; OTHER ORES.] Every person 253.17 engaged in the business of mining or producing ores in this 253.18 state, except iron ore or taconite concentrates, shall pay an 253.19 occupation tax to the state of Minnesota as provided in this 253.20 subdivision. The tax is determined in the same manner as the 253.21 tax imposed by section 290.02, except that sections 290.05, 253.22 subdivision 1, clause (a),and290.17, subdivision 4, and 253.23 290.191, subdivision 2, do not apply. A person subject to 253.24 occupation tax under this section shall apportion its net income 253.25 on the basis of the percentage obtained by taking the sum of: 253.26 (1) 75 percent of the percentage which the sales made 253.27 within this state in connection with the trade or business 253.28 during the tax period are of the total sales wherever made in 253.29 connection with the trade or business during the tax period; 253.30 (2) 12.5 percent of the percentage which the total tangible 253.31 property used by the taxpayer in this state in connection with 253.32 the trade or business during the tax period is of the total 253.33 tangible property, wherever located, used by the taxpayer in 253.34 connection with the trade or business during the tax period; and 253.35 (3) 12.5 percent of the percentage which the taxpayer's 253.36 total payrolls paid or incurred in this state or paid in respect 254.1 to labor performed in this state in connection with the trade or 254.2 business during the tax period are of the taxpayer's total 254.3 payrolls paid or incurred in connection with the trade or 254.4 business during the tax period. 254.5 The tax is in addition to all other taxes. 254.6[EFFECTIVE DATE.] This section is effective for tax years 254.7 beginning after December 31, 2004. 254.8 Sec. 19. Minnesota Statutes 2002, section 298.01, 254.9 subdivision 4, is amended to read: 254.10 Subd. 4. [OCCUPATION TAX; IRON ORE; TACONITE 254.11 CONCENTRATES.] A person engaged in the business of mining or 254.12 producing of iron ore, taconite concentrates or direct reduced 254.13 ore in this state shall pay an occupation tax to the state of 254.14 Minnesota. The tax is determined in the same manner as the tax 254.15 imposed by section 290.02, except that sections 290.05, 254.16 subdivision 1, clause (a),and290.17, subdivision 4, and 254.17 290.191, subdivision 2, do not apply. A person subject to 254.18 occupation tax under this section shall apportion its net income 254.19 on the basis of the percentage obtained by taking the sum of: 254.20 (1) 75 percent of the percentage which the sales made 254.21 within this state in connection with the trade or business 254.22 during the tax period are of the total sales wherever made in 254.23 connection with the trade or business during the tax period; 254.24 (2) 12.5 percent of the percentage which the total tangible 254.25 property used by the taxpayer in this state in connection with 254.26 the trade or business during the tax period is of the total 254.27 tangible property, wherever located, used by the taxpayer in 254.28 connection with the trade or business during the tax period; and 254.29 (3) 12.5 percent of the percentage which the taxpayer's 254.30 total payrolls paid or incurred in this state or paid in respect 254.31 to labor performed in this state in connection with the trade or 254.32 business during the tax period are of the taxpayer's total 254.33 payrolls paid or incurred in connection with the trade or 254.34 business during the tax period. 254.35 The tax is in addition to all other taxes. 254.36[EFFECTIVE DATE.] This section is effective for tax years 255.1 beginning after December 31, 2004. 255.2 Sec. 20. [325D.125] [EMPLOYERS NOT TO MISREPRESENT STATUS 255.3 OF EMPLOYEES.] 255.4 Subdivision 1. [MISREPRESENTATION PROHIBITED.] No employer 255.5 shall misrepresent the nature of its employment relationship 255.6 with its employees to any federal, state, or local government 255.7 unit, to other employers or to its employees. An employer 255.8 misrepresents the nature of its employment relationship with its 255.9 employees if it makes any statement regarding the nature of the 255.10 relationship that the employer does not in good faith believe to 255.11 be true or if it fails to report individuals as employees when 255.12 legally required to do so. 255.13 Subd. 2. [EMPLOYEE COERCION PROHIBITED.] No employer shall 255.14 require or request any employee to enter into any agreement, or 255.15 sign any document, that results in misclassification of the 255.16 employee as an independent contractor or otherwise does not 255.17 accurately reflect the employment relationship with the employer. 255.18 Subd. 3. [VIOLATIONS.] Any court finding any person guilty 255.19 of violating this section shall transmit a copy of the 255.20 documentation of the finding of guilt to the commissioner of 255.21 labor and industry. The commissioner of labor and industry 255.22 shall report the finding of guilt to relevant state and federal 255.23 agencies, including at least the commissioner of commerce, the 255.24 commissioner of economic security, the commissioner of revenue, 255.25 the federal Internal Revenue Service, and the United States 255.26 Department of Labor. 255.27 Sec. 21. [325F.781] [REQUIREMENTS; TOBACCO PRODUCT 255.28 DELIVERY SALES.] 255.29 Subdivision 1. [DEFINITIONS.] (a) For purposes of this 255.30 section, the following terms have the meanings given, unless the 255.31 language or context clearly provides otherwise. 255.32 (b) "Consumer" means an individual who purchases, receives, 255.33 or possesses tobacco products for personal consumption and not 255.34 for resale. 255.35 (c) "Delivery sale" means: 255.36 (1) a sale of tobacco products to a consumer in this state 256.1 when: 256.2 (i) the purchaser submits the order for the sale by means 256.3 of a telephonic or other method of voice transmission, the mail 256.4 or any other delivery service, or the Internet or other on-line 256.5 service; or 256.6 (ii) the tobacco products are delivered by use of the mail 256.7 or other delivery service; or 256.8 (2) a sale of tobacco products that satisfies the criteria 256.9 in clause (1), item (i), regardless of whether the seller is 256.10 located inside or outside of the state. 256.11 A sale of tobacco products to an individual in this state 256.12 must be treated as a sale to a consumer, unless the individual 256.13 is licensed as a distributor or retailer of tobacco products. 256.14 (d) "Delivery service" means a person, including the United 256.15 States Postal Service, that is engaged in the commercial 256.16 delivery of letters, packages, or other containers. 256.17 (e) "Distributor" means a person, whether located inside or 256.18 outside of this state, other than a retailer, who sells or 256.19 distributes tobacco products in the state. Distributor does not 256.20 include a tobacco products manufacturer, export warehouse 256.21 proprietor, or importer with a valid permit under United States 256.22 Code, title 26, section 5712 (1997), if the person sells or 256.23 distributes tobacco products in this state only to distributors 256.24 who hold valid and current licenses under the laws of a state, 256.25 or to an export warehouse proprietor or another manufacturer. 256.26 Distributor does not include a common or contract carrier that 256.27 is transporting tobacco products under a proper bill of lading 256.28 or freight bill that states the quantity, source, and 256.29 destination of tobacco products, or a person who ships tobacco 256.30 products through this state by common or contract carrier under 256.31 a bill of lading or freight bill. 256.32 (f) "Retailer" means a person, whether located inside or 256.33 outside this state, who sells or distributes tobacco products to 256.34 a consumer in this state. 256.35 (g) "Tobacco products" means: 256.36 (1) cigarettes, as defined in section 297F.01, subdivision 257.1 3; and 257.2 (2) smokeless tobacco as defined in section 325F.76. 257.3 Subd. 2. [REQUIREMENTS FOR ACCEPTING ORDER FOR DELIVERY 257.4 SALE.] (a) This subdivision applies to acceptance of an order 257.5 for a delivery sale of tobacco products. 257.6 (b) When accepting the first order for a delivery sale from 257.7 a consumer, the tobacco retailer shall obtain the following 257.8 information from the person placing the order: 257.9 (1) a copy of a valid government-issued document that 257.10 provides the person's name, current address, photograph, and 257.11 date of birth; and 257.12 (2) an original written statement signed by the person 257.13 documenting that the person: 257.14 (i) is of legal age to purchase tobacco products in the 257.15 state; 257.16 (ii) has made a choice whether to receive mailings from a 257.17 tobacco retailer; 257.18 (iii) understands that providing false information may be a 257.19 violation of law; and 257.20 (iv) understands that it is a violation of law to purchase 257.21 tobacco products for subsequent resale or for delivery to 257.22 persons who are under the legal age to purchase tobacco products. 257.23 (c) If an order is made as a result of advertisement over 257.24 the Internet, the tobacco retailer shall request the e-mail 257.25 address of the purchaser and shall receive payment by credit 257.26 card or check prior to shipping. 257.27 (d) Prior to shipping the tobacco products, the tobacco 257.28 retailer shall verify the information provided under paragraph 257.29 (b) against a commercially available database. Any such 257.30 database or databases may also include age and identity 257.31 information from other government or validated commercial 257.32 sources, if that additional information is regularly used by 257.33 government and businesses for the purpose of identity 257.34 verification and authentication, and if the additional 257.35 information is used only to supplement and not to replace the 257.36 government-issued identification data in the age and identity 258.1 verification process. 258.2 Subd. 3. [REQUIREMENTS FOR SHIPPING A DELIVERY SALE.] (a) 258.3 This subdivision applies to a tobacco retailer shipping tobacco 258.4 products pursuant to a delivery sale. 258.5 (b) The tobacco retailer shall clearly mark the outside of 258.6 the package of tobacco products to be shipped "tobacco products - 258.7 adult signature required" and to show the name of the tobacco 258.8 retailer. 258.9 (c) The tobacco retailer shall utilize a delivery service 258.10 that imposes the following requirements: 258.11 (1) an adult must sign for the delivery; and 258.12 (2) the person signing for the delivery must show valid 258.13 government-issued identification that contains a photograph of 258.14 the person signing for the delivery and indicates that the 258.15 person signing for the delivery is of legal age to purchase 258.16 tobacco products and resides at the delivery address. 258.17 (d) The retailer must provide delivery instructions that 258.18 clearly indicate the requirements of this subdivision and must 258.19 declare that state law requires compliance with the requirements. 258.20 (e) No criminal penalty may be imposed on a person for a 258.21 violation of this section other than a violation described in 258.22 paragraph (f) or (g). Whenever it appears to the commissioner 258.23 that any person has engaged in any act or practice constituting 258.24 a violation of this section, and the violation is not within two 258.25 years of any previous violation of this section, the 258.26 commissioner shall issue and cause to be served upon the person 258.27 an order requiring the person to cease and desist from violating 258.28 this section. The order must give reasonable notice of the 258.29 rights of the person to request a hearing and must state the 258.30 reason for the entry of the order. Unless otherwise agreed 258.31 between the parties, a hearing shall be held not later than 258.32 seven days after the request for the hearing is received by the 258.33 commissioner after which and within 20 days after the receipt of 258.34 the administrative law judge's report and subsequent exceptions 258.35 and argument, the commissioner shall issue an order vacating the 258.36 cease and desist order, modifying it, or making it permanent as 259.1 the facts require. If no hearing is requested within 30 days of 259.2 the service of the order, the order becomes final and remains in 259.3 effect until modified or vacated by the commissioner. All 259.4 hearings shall be conducted in accordance with the provisions of 259.5 chapter 14. If the person to whom a cease and desist order is 259.6 issued fails to appear at the hearing after being duly notified, 259.7 the person shall be deemed in default, and the proceeding may be 259.8 determined against the person upon consideration of the cease 259.9 and desist order, the allegations of which may be deemed to be 259.10 true. 259.11 (f) Any person who violates this section within two years 259.12 of a violation for which a cease and desist order was issued 259.13 under paragraph (e), is guilty of a misdemeanor. 259.14 (g) Any person who commits a third or subsequent violation 259.15 of this section, including a violation for which a cease and 259.16 desist order was issued under paragraph (c), within any 259.17 subsequent two-year period is guilty of a gross misdemeanor. 259.18 Subd. 4. [COMMON CARRIERS.] This section may not be 259.19 construed as imposing liability upon any common carrier, or 259.20 officers or employees of the common carrier, when acting within 259.21 the scope of business of the common carrier. 259.22 Subd. 5. [REGISTRATION REQUIREMENT.] Prior to making 259.23 delivery sales or shipping tobacco products in connection with 259.24 any sales, an out-of-state retailer must meet the requirements 259.25 of section 297F.031. 259.26 Subd. 6. [COLLECTION OF TAXES.] (a) Prior to shipping any 259.27 tobacco products to a purchaser in this state, the out of state 259.28 retailer shall comply with all requirements of chapter 297F and 259.29 shall ensure that all state excise taxes and fees that apply to 259.30 such tobacco products have been collected and paid to the state 259.31 and that all related state excise tax stamps or other indicators 259.32 of state excise tax payment have been properly affixed to those 259.33 tobacco products. 259.34 (b) In addition to any penalties under chapter 297F, a 259.35 distributor who fails to pay any tax due according to paragraph 259.36 (a) shall pay, in addition to any other penalty, a penalty of 50 260.1 percent of the tax due but unpaid. 260.2 Subd. 7. [APPLICATION OF STATE LAWS.] All state laws that 260.3 apply to in-state tobacco product retailers shall apply to 260.4 Internet and mail-order sellers that sell into this state. 260.5 Subd. 8. [FORFEITURE.] Any tobacco product sold or 260.6 attempted to be sold in a delivery sale that does not meet the 260.7 requirements of this section is deemed to be contraband and is 260.8 subject to forfeiture in the same manner as and in accordance 260.9 with the provisions of section 297F.21. 260.10 Subd. 9. [CIVIL PENALTIES.] A tobacco retailer or 260.11 distributor who violates this section or rules adopted under 260.12 this section is subject to the following fines: 260.13 (1) for the first violation, a fine of not more than 260.14 $1,000; and 260.15 (2) for the second and any subsequent violation, a fine of 260.16 not more than $5,000. 260.17 Subd. 10. [ENFORCEMENT.] The attorney general may bring an 260.18 action to enforce this section and may seek injunctive relief, 260.19 including a preliminary or final injunction, and fines, 260.20 penalties, and equitable relief and may seek to prevent or 260.21 restrain actions in violation of this section by any person or 260.22 any person controlling such person. In addition, a violation of 260.23 this section is a violation of the Unlawful Trade Practices Act, 260.24 sections 325D.09 to 325D.16. 260.25[EFFECTIVE DATE.] This section is effective the day 260.26 following final enactment. 260.27 Sec. 22. Minnesota Statutes 2003 Supplement, section 260.28 469.335, is amended to read: 260.29 469.335 [APPLICATION FOR TAX BENEFITS.] 260.30 (a) To claim a tax credit or exemption against a state tax 260.31 under section 469.336, clauses (2) through (5), a business must 260.32 apply to the commissioner for a tax credit certificate. As a 260.33 condition of its application, the business must agree to furnish 260.34 information to the commissioner that is sufficient to verify the 260.35 eligibility for any credits or exemptions claimed. The total 260.36 amount of the state tax credits and exemptions allowed for the 261.1 specified period may not exceed the amount of the tax credit 261.2 certificates provided by the commissioner to the business. The 261.3 commissioner must verify to the commissioner of revenue the 261.4 amount of tax exemptions or credits for which each business is 261.5 eligible. 261.6 (b) A tax credit certificate issued under this section may 261.7 specify the particular tax exemptions or credits against a state 261.8 tax that the qualified business is eligible to claim under 261.9 section 469.336, clauses (2) through (5), and the amount of each 261.10 exemption or credit allowed. 261.11 (c) The commissioner may issue $1,000,000 of tax credits or 261.12 exemptions in fiscal year 2004.Any tax credits or exemptions261.13not awarded in fiscal year 2004 may be awarded in fiscal year261.142005.The commissioner may not award any additional tax credits 261.15 after June 30, 2004. 261.16 (d) A qualified business must use the tax credits or tax 261.17 exemptions granted under this section by the later of the end of 261.18 the state fiscal year or the taxpayer's tax year in which the 261.19 credits or exemptions are granted. 261.20[EFFECTIVE DATE.] This section is effective the day 261.21 following final enactment. 261.22 Sec. 23. [469.342] [BIOTECHNOLOGY AND HEALTH SCIENCES 261.23 INDUSTRY GRANTS.] 261.24 Subdivision 1. [GRANT ELIGIBILITY.] The commissioner shall 261.25 make grants to eligible businesses in the biotechnology and 261.26 health sciences industry to support the startup and growth of 261.27 biotechnology and health sciences businesses. An eligible 261.28 business is a business that: 261.29 (1) is engaged primarily in: 261.30 (i) researching, developing, and/or manufacturing a 261.31 biotechnology product or service or a biotechnology-related 261.32 health sciences product or service; 261.33 (ii) researching, developing, and/or manufacturing a 261.34 biotechnology medical device product or service or a 261.35 biotechnology-related medical device product or service; or 261.36 (iii) promoting, supplying, or servicing businesses 262.1 involved in clause (1) or (2), if the business derives more than 262.2 50 percent of its gross receipts from those activities; 262.3 (2) pledges that the business will increase full-time 262.4 employment in high-paying jobs by at least 20 percent in the 262.5 first full year of operation after a grant is awarded; 262.6 (3) shows a viable link between a higher education/research 262.7 institution and the business activities of the biotechnology or 262.8 health sciences business; and 262.9 (4) agrees to treat a grant awarded under this section as a 262.10 business subsidy under sections 116J.993 to 116J.995, and to 262.11 comply with the requirements of that law. 262.12 Subd. 2. [AMOUNT AND LIMITATIONS OF GRANTS.] The 262.13 commissioner may award grants in fiscal year 2007. The total of 262.14 the grants in aggregate may not exceed $5,000,000. 262.15 Subd. 3. [APPLICATION AND AWARD OF GRANTS.] A 262.16 biotechnology and health sciences business must apply for grants 262.17 under this section following the procedures established by the 262.18 commissioner. To be eligible for a grant, a business must 262.19 demonstrate to the commissioner that it meets the requirements 262.20 under subdivision 1, and provide any information required by the 262.21 commissioner to determine eligibility. All applications must be 262.22 received on or before October 1 of each year that grants may be 262.23 awarded, and the commissioner must advise each applicant on or 262.24 before December 31 of that year that a grant is awarded or an 262.25 explanation why a grant is not awarded. 262.26[EFFECTIVE DATE.] This section is effective July 1, 2004. 262.27 Sec. 24. [473.24] [POPULATION ESTIMATES.] 262.28 (a) The Metropolitan Council shall prepare an estimate of 262.29 population and of the number of households for each city and 262.30 town in the metropolitan area annually and convey the estimates 262.31 to the governing body of each city or town by June 1 of each 262.32 year. In the case of a city or town that is located partly 262.33 within and partly without the metropolitan area, the 262.34 Metropolitan Council shall estimate the proportion of the total 262.35 population and number of households that reside within the 262.36 area. The Metropolitan Council may prepare an estimate of the 263.1 population and of the number of households for any other 263.2 political subdivision located in the metropolitan area. 263.3 (b) A governing body of a city or town may challenge an 263.4 estimate made under this section by making its specific 263.5 objections to the Metropolitan Council by June 24. If the 263.6 challenge does not result in an acceptable estimate, the 263.7 governing body may have a special census conducted by the United 263.8 States Bureau of the Census. The Metropolitan Council shall 263.9 certify the population estimates to the commissioner of revenue 263.10 by July 15. The political subdivision must notify the 263.11 Metropolitan Council on or before July 1 of its intent to have 263.12 the special census conducted. The political subdivision must 263.13 bear all costs of the special census. Results of the special 263.14 census must be received by the Metropolitan Council by the next 263.15 May 15 to be used in that year's June 1 estimate under this 263.16 section. 263.17[EFFECTIVE DATE.] This section is effective the day 263.18 following final enactment. 263.19 Sec. 25. Minnesota Statutes 2002, section 473.843, 263.20 subdivision 3, is amended to read: 263.21 Subd. 3. [PAYMENT OF FEE.] On or before the 20th day of 263.22 each month each operator shall pay the fee due under this 263.23 section for the previous month, using a form provided by the 263.24 commissioner of revenue. 263.25An operator having a fee of $120,000 or more during a263.26fiscal year ending June 30 must pay all fees in the subsequent263.27calendar year by electronic means.263.28[EFFECTIVE DATE.] This section is effective for payments 263.29 due in calendar year 2005, and in calendar years thereafter, 263.30 based upon liabilities incurred in fiscal year ending June 30, 263.31 2004, and in fiscal years thereafter. 263.32 Sec. 26. Minnesota Statutes 2002, section 473F.02, 263.33 subdivision 7, is amended to read: 263.34 Subd. 7. [POPULATION.] "Population" means the most recent 263.35 estimate of the population of a municipality made by the 263.36 Metropolitan Council under section 473.24 and filed with the 264.1 commissioner of revenue as of July115 of the year in which a 264.2 municipality's distribution net tax capacity is calculated.The264.3council shall annually estimate the population of each264.4municipality as of a date which it determines and, in the case264.5of a municipality which is located partly within and partly264.6without the area, the proportion of the total which resides264.7within the area, and shall promptly thereafter file its264.8estimates with the commissioner of revenue.264.9[EFFECTIVE DATE.] This section is effective the day 264.10 following final enactment. 264.11 Sec. 27. Minnesota Statutes 2002, section 477A.011, 264.12 subdivision 3, is amended to read: 264.13 Subd. 3. [POPULATION.] "Population" means the 264.14 population estimated or established as of July115 in an aid 264.15 calculation year by the most recent federal census, by a special 264.16 census conducted under contract with the United States Bureau of 264.17 the Census, by a population estimate made by the Metropolitan 264.18 Council, or by a population estimate of the state demographer 264.19 made pursuant to section 4A.02, whichever is the most recent as 264.20 to the stated date of the count or estimate for the preceding 264.21 calendar year, and which has been certified to the commissioner 264.22 of revenue on or before July 15 of the aid calculation year. 264.23 The term "per capita" refers to population as defined by this 264.24 subdivision. No changes in population will be recognized for 264.25 the purposes of sections 477A.011 to 477A.014 after July 15 of 264.26 the aid calculation year. Clerical errors in the certification 264.27 or use of the estimates and counts established as of July 15 in 264.28 the aid calculation year are subject to correction within the 264.29 time periods allowed under section 477A.014. 264.30[EFFECTIVE DATE.] This section is effective the day 264.31 following final enactment. 264.32 Sec. 28. Minnesota Statutes 2002, section 480B.01, 264.33 subdivision 1, is amended to read: 264.34 Subdivision 1. [JUDICIAL VACANCIES.] If a judge of the 264.35 district courtor, Workers' Compensation Court of Appeals, or 264.36 Tax Court dies, resigns, retires, or is removed during the 265.1 judge's term of office, or if a new districtor, Workers' 265.2 Compensation Court of Appeals, or Tax Court judgeship is 265.3 created, the resulting vacancy must be filled by the governor as 265.4 provided in this section. 265.5[EFFECTIVE DATE.] This section is effective the day 265.6 following final enactment. 265.7 Sec. 29. Minnesota Statutes 2002, section 480B.01, 265.8 subdivision 10, is amended to read: 265.9 Subd. 10. [NOTICE TO THE PUBLIC.] Upon receiving notice 265.10 from the governor that a judicial vacancy has occurred or will 265.11 occur on a specified date, the chair shall provide notice of the 265.12 following information: 265.13 (1) the office that is or will be vacant; 265.14 (2) that applications from qualified persons or on behalf 265.15 of qualified persons are being accepted by the commission; 265.16 (3) that application forms may be obtained from the 265.17 governor or the commission at a named address; and 265.18 (4) that application forms must be returned to the 265.19 commission by a named date. 265.20 For a district court vacancy, the notice must be made 265.21 available to attorney associations in the judicial district 265.22 where the vacancy has occurred or will occur and to at least one 265.23 newspaper of general circulation in each county in the 265.24 district. For a Workers' Compensation Court of Appeals or Tax 265.25 Court vacancy, the notice must be given to state attorney 265.26 associations and all forms of the public media. 265.27[EFFECTIVE DATE.] This section is effective the day 265.28 following final enactment. 265.29 Sec. 30. [COMPACTS; RETALIATORY TAXES.] 265.30 The commissioner is authorized to enter into compact 265.31 agreements with other states for the purpose of eliminating 265.32 retaliatory insurance premiums tax provisions between this state 265.33 and other states. The commissioner shall report to the 265.34 chairpersons of the house and senate tax committees, on or 265.35 before February 1, 2005, on the actions the commissioner has 265.36 taken to enter into compact agreements with other states. 266.1 Sec. 31. [APPROPRIATION.] 266.2 (a) The amounts necessary to award grants as provided in 266.3 Minnesota Statutes, section 469.342, shall be appropriated to 266.4 the commissioner of employment and economic development from the 266.5 general fund. 266.6 (b) $3,000,000 is appropriated to the Department of Revenue 266.7 from fiscal year 2005 and each year thereafter, in addition to 266.8 any other appropriation provided under law. This money must be 266.9 used for operation of the department. 266.10 Sec. 32. [REPEALER.] 266.11 (a) Minnesota Statutes 2002, sections 289A.26, subdivision 266.12 2a; 289A.60, subdivision 21; 295.55, subdivision 4; 295.60, 266.13 subdivision 4; 297F.09, subdivision 7; 297G.09, subdivision 6; 266.14 297I.35, subdivision 2; and 297I.85, subdivision 7, are repealed. 266.15 (b) Minnesota Statutes 2003 Supplement, section 270.30, 266.16 subdivision 1, is repealed. 266.17[EFFECTIVE DATE.] Paragraph (a) of this section is 266.18 effective for payments due in calendar year 2005, and in 266.19 calendar years thereafter, based upon liabilities incurred in 266.20 fiscal year ending June 30, 2004, and in fiscal years 266.21 thereafter. Paragraph (b) is effective the day following final 266.22 enactment. 266.23 ARTICLE 9 266.24 DEPARTMENT OF REVENUE POLICY PROVISIONS 266.25 Section 1. Minnesota Statutes 2002, section 16D.10, is 266.26 amended to read: 266.27 16D.10 [CASE REVIEWER.] 266.28 Subdivision 1. [DUTIES.] The commissioner shall make a 266.29 case reviewer available to debtors. The reviewer must be 266.30 available to answer a debtor's questions concerning the 266.31 collection process and to review the collection activity taken. 266.32 If the reviewer reasonably believes that the particular action 266.33 being taken is unreasonable or unfair, the reviewer may make 266.34 recommendations to the commissioner in regard to the collection 266.35 action. 266.36 Subd. 2. [AUTHORITY TO ISSUE DEBTOR ASSISTANCE ORDER.] On 267.1 application filed by a debtor with the case reviewer, in the 267.2 form, manner, and in the time prescribed by the commissioner, 267.3 and after thorough investigation, the case reviewer may issue a 267.4 debtor assistance order if, in the determination of the case 267.5 reviewer, the manner in which the state debt collection laws are 267.6 being administered is creating or will create an unjust and 267.7 inequitable result for the debtor. Debtor assistance orders are 267.8 governed by the provisions relating to taxpayer assistance 267.9 orders under section 270.273. 267.10 Subd. 3. [TRANSFER OF DUTIES TO TAXPAYER RIGHTS ADVOCATE.] 267.11 All duties and authority of the case reviewer under subdivisions 267.12 1 and 2 are transferred to the taxpayer rights advocate. 267.13[EFFECTIVE DATE.] This section is effective the day 267.14 following final enactment. 267.15 Sec. 2. Minnesota Statutes 2002, section 270.02, 267.16 subdivision 3, is amended to read: 267.17 Subd. 3. [POWERS, ORGANIZATION, ASSISTANTS.] Subject to 267.18 the provisions of this chapter and other applicable laws the 267.19 commissioner shall have power to organize the department with 267.20 such divisions and other agencies as the commissioner deems 267.21 necessary and to appoint one deputy commissioner, a department 267.22 secretary, directors of divisions, and such other officers, 267.23 employees, and agents as the commissioner may deem necessary to 267.24 discharge the functions of the department, define the duties of 267.25 such officers, employees, and agents, and delegate to them any 267.26 of the commissioner's powers or duties, subject to the 267.27 commissioner's control and under such conditions as the 267.28 commissioner may prescribe. Appointments to exercise delegated 267.29 power to sign documents which require the signature of the 267.30 commissioner or a delegate by law shall be by written order 267.31 filed with the secretary of state as provided under section 267.32 15.06, subdivision 6. The delegations of authority granted by 267.33 the commissioner remain in effect until revoked by the 267.34 commissioner or a successor commissioner. 267.35[EFFECTIVE DATE.] This section is effective the day 267.36 following final enactment. 268.1 Sec. 3. [270.0611] [SUFFICIENCY OF NOTICE OF DETERMINATION 268.2 OR ACTION OF COMMISSIONER OF REVENUE.] 268.3 When a method of notification of a written determination or 268.4 action of the commissioner is not specifically provided for by 268.5 law, notice of the determination or action sent postage prepaid 268.6 by United States mail to the taxpayer or other person affected 268.7 by the determination or action at the taxpayer's or person's 268.8 last known address is sufficient. If the taxpayer or person 268.9 being notified is deceased or is under a legal disability, or if 268.10 a corporation being notified has terminated its existence, 268.11 notice to the last known address of the taxpayer, person, or 268.12 corporation is sufficient, unless the department has been 268.13 provided with a new address by a party authorized to receive 268.14 notices from the commissioner. 268.15[EFFECTIVE DATE.] This section is effective for notices 268.16 sent on or after the day following final enactment. 268.17 Sec. 4. Minnesota Statutes 2002, section 270.69, 268.18 subdivision 4, is amended to read: 268.19 Subd. 4. [PERIOD OF LIMITATIONS.] The lien imposed by this 268.20 section shall, notwithstanding any other provision of law to the 268.21 contrary, be enforceable from the time the lien arises and for 268.22 ten years from the date of filing the notice of lien, which must 268.23 be filed by the commissioner within five years after the date of 268.24 assessment of the tax or final administrative or judicial 268.25 determination of the assessment. A notice of lien filed in one 268.26 county may be transcribed to the secretary of state or to any 268.27 other county within ten years after the date of its filing, but 268.28 the transcription shall not extend the period during which the 268.29 lien is enforceable. A notice of lien may be renewed by the 268.30 commissioner before the expiration of the ten-year period for an 268.31 additional ten years. The taxpayer must receive written notice 268.32 of the renewal. 268.33[EFFECTIVE DATE.] This section is effective the day 268.34 following final enactment. 268.35 Sec. 5. Minnesota Statutes 2002, section 270B.01, 268.36 subdivision 8, is amended to read: 269.1 Subd. 8. [MINNESOTA TAX LAWS.] For purposes of this 269.2 chapter only, unless expressly stated otherwise, "Minnesota tax 269.3 laws" means: 269.4 (1) the taxes, refunds, and fees administered by or paid to 269.5 the commissioner under chapters 115B (except taxes imposed under 269.6 sections 115B.21 to 115B.24), 289A (except taxes imposed under 269.7 sections 298.01, 298.015, and 298.24), 290, 290A, 291, 295, 269.8 297A, and 297H, or any similar Indian tribal tax administered by 269.9 the commissioner pursuant to any tax agreement between the state 269.10 and the Indian tribal government, and includes any laws for the 269.11 assessment, collection, and enforcement of those taxes, refunds, 269.12 and fees; and 269.13 (2) section 273.1315. 269.14[EFFECTIVE DATE.] This section is effective the day 269.15 following final enactment. 269.16 Sec. 6. Minnesota Statutes 2003 Supplement, section 269.17 270B.12, subdivision 13, is amended to read: 269.18 Subd. 13. [COUNTY ASSESSORS; CLASS 1B HOMESTEADS.] The 269.19 commissioner may disclose to a county assessor, and to the 269.20 assessor's designated agents or employees, a listing of parcels 269.21 of property qualifying for the class 1b property tax 269.22 classification under section 273.13, subdivision 22, and the 269.23 names and addresses of qualified applicants. 269.24[EFFECTIVE DATE.] This section is effective the day 269.25 following final enactment. 269.26 Sec. 7. Minnesota Statutes 2002, section 289A.31, 269.27 subdivision 2, is amended to read: 269.28 Subd. 2. [JOINT INCOME TAX RETURNS.] (a) If a joint income 269.29 tax return is made by a husband and wife, the liability for the 269.30 tax is joint and several. A spouse who qualifies for relief 269.31 from a liability attributable to an underpayment under section 269.32 6015(b) of the Internal Revenue Code is relieved of the state 269.33 income tax liability on the underpayment. 269.34 (b) In the case of individuals who were a husband and wife 269.35 prior to the dissolution of their marriage or their legal 269.36 separation, or prior to the death of one of the individuals, for 270.1 tax liabilities reported on a joint or combined return, the 270.2 liability of each person is limited to the proportion of the tax 270.3 due on the return that equals that person's proportion of the 270.4 total tax due if the husband and wife filed separate returns for 270.5 the taxable year. This provision is effective only when the 270.6 commissioner receives written notice of the marriage 270.7 dissolution, legal separation, or death of a spouse from the 270.8 husband or wife. No refund may be claimed by an ex-spouse, 270.9 legally separated or widowed spouse for any taxes paid more than 270.10 60 days before receipt by the commissioner of the written notice. 270.11 (c) A request for calculation of separate liability 270.12 pursuant to paragraph (b) for taxes reported on a return must be 270.13 made within six years after the due date of the return. For 270.14 calculation of separate liability for taxes assessed by the 270.15 commissioner under section 289A.35 or 289A.37, the request must 270.16 be made within six years after the date of assessment. The 270.17 commissioner is not required to calculate separate liability if 270.18 the remaining unpaid liability for which recalculation is 270.19 requested is $100 or less. 270.20[EFFECTIVE DATE.] This section is effective for requests 270.21 for relief made on or after the day following final enactment. 270.22 Sec. 8. Minnesota Statutes 2002, section 289A.56, is 270.23 amended by adding a subdivision to read: 270.24 Subd. 7. [BIOTECHNOLOGY AND BORDER CITY ZONE 270.25 REFUNDS.] Notwithstanding subdivision 3, for refunds payable 270.26 under sections 297A.68, subdivision 38, and 469.1734, 270.27 subdivision 6, interest is computed from 90 days after the 270.28 refund claim is filed with the commissioner. 270.29[EFFECTIVE DATE.] This section is effective for refund 270.30 claims filed on or after July 1, 2004. 270.31 Sec. 9. Minnesota Statutes 2003 Supplement, section 270.32 290.01, subdivision 19d, is amended to read: 270.33 Subd. 19d. [CORPORATIONS; MODIFICATIONS DECREASING FEDERAL 270.34 TAXABLE INCOME.] For corporations, there shall be subtracted 270.35 from federal taxable income after the increases provided in 270.36 subdivision 19c: 271.1 (1) the amount of foreign dividend gross-up added to gross 271.2 income for federal income tax purposes under section 78 of the 271.3 Internal Revenue Code; 271.4 (2) the amount of salary expense not allowed for federal 271.5 income tax purposes due to claiming the federal jobs credit 271.6 under section 51 of the Internal Revenue Code; 271.7 (3) any dividend (not including any distribution in 271.8 liquidation) paid within the taxable year by a national or state 271.9 bank to the United States, or to any instrumentality of the 271.10 United States exempt from federal income taxes, on the preferred 271.11 stock of the bank owned by the United States or the 271.12 instrumentality; 271.13 (4) amounts disallowed for intangible drilling costs due to 271.14 differences between this chapter and the Internal Revenue Code 271.15 in taxable years beginning before January 1, 1987, as follows: 271.16 (i) to the extent the disallowed costs are represented by 271.17 physical property, an amount equal to the allowance for 271.18 depreciation under Minnesota Statutes 1986, section 290.09, 271.19 subdivision 7, subject to the modifications contained in 271.20 subdivision 19e; and 271.21 (ii) to the extent the disallowed costs are not 271.22 represented by physical property, an amount equal to the 271.23 allowance for cost depletion under Minnesota Statutes 1986, 271.24 section 290.09, subdivision 8; 271.25 (5) the deduction for capital losses pursuant to sections 271.26 1211 and 1212 of the Internal Revenue Code, except that: 271.27 (i) for capital losses incurred in taxable years beginning 271.28 after December 31, 1986, capital loss carrybacks shall not be 271.29 allowed; 271.30 (ii) for capital losses incurred in taxable years beginning 271.31 after December 31, 1986, a capital loss carryover to each of the 271.32 15 taxable years succeeding the loss year shall be allowed; 271.33 (iii) for capital losses incurred in taxable years 271.34 beginning before January 1, 1987, a capital loss carryback to 271.35 each of the three taxable years preceding the loss year, subject 271.36 to the provisions of Minnesota Statutes 1986, section 290.16, 272.1 shall be allowed; and 272.2 (iv) for capital losses incurred in taxable years beginning 272.3 before January 1, 1987, a capital loss carryover to each of the 272.4 five taxable years succeeding the loss year to the extent such 272.5 loss was not used in a prior taxable year and subject to the 272.6 provisions of Minnesota Statutes 1986, section 290.16, shall be 272.7 allowed; 272.8 (6) an amount for interest and expenses relating to income 272.9 not taxable for federal income tax purposes, if (i) the income 272.10 is taxable under this chapter and (ii) the interest and expenses 272.11 were disallowed as deductions under the provisions of section 272.12 171(a)(2), 265 or 291 of the Internal Revenue Code in computing 272.13 federal taxable income; 272.14 (7) in the case of mines, oil and gas wells, other natural 272.15 deposits, and timber for which percentage depletion was 272.16 disallowed pursuant to subdivision 19c, clause(11)(2), a 272.17 reasonable allowance for depletion based on actual cost. In the 272.18 case of leases the deduction must be apportioned between the 272.19 lessor and lessee in accordance with rules prescribed by the 272.20 commissioner. In the case of property held in trust, the 272.21 allowable deduction must be apportioned between the income 272.22 beneficiaries and the trustee in accordance with the pertinent 272.23 provisions of the trust, or if there is no provision in the 272.24 instrument, on the basis of the trust's income allocable to 272.25 each; 272.26 (8) for certified pollution control facilities placed in 272.27 service in a taxable year beginning before December 31, 1986, 272.28 and for which amortization deductions were elected under section 272.29 169 of the Internal Revenue Code of 1954, as amended through 272.30 December 31, 1985, an amount equal to the allowance for 272.31 depreciation under Minnesota Statutes 1986, section 290.09, 272.32 subdivision 7; 272.33 (9) amounts included in federal taxable income that are due 272.34 to refunds of income, excise, or franchise taxes based on net 272.35 income or related minimum taxes paid by the corporation to 272.36 Minnesota, another state, a political subdivision of another 273.1 state, the District of Columbia, or a foreign country or 273.2 possession of the United States to the extent that the taxes 273.3 were added to federal taxable income under section 290.01, 273.4 subdivision 19c, clause (1), in a prior taxable year; 273.5 (10) 80 percent of royalties, fees, or other like income 273.6 accrued or received from a foreign operating corporation or a 273.7 foreign corporation which is part of the same unitary business 273.8 as the receiving corporation; 273.9 (11) income or gains from the business of mining as defined 273.10 in section 290.05, subdivision 1, clause (a), that are not 273.11 subject to Minnesota franchise tax; 273.12 (12) the amount of handicap access expenditures in the 273.13 taxable year which are not allowed to be deducted or capitalized 273.14 under section 44(d)(7) of the Internal Revenue Code; 273.15 (13) the amount of qualified research expenses not allowed 273.16 for federal income tax purposes under section 280C(c) of the 273.17 Internal Revenue Code, but only to the extent that the amount 273.18 exceeds the amount of the credit allowed under section 273.19 290.068 or 469.339; 273.20 (14) the amount of salary expenses not allowed for federal 273.21 income tax purposes due to claiming the Indian employment credit 273.22 under section 45A(a) of the Internal Revenue Code; 273.23 (15) the amount of any refund of environmental taxes paid 273.24 under section 59A of the Internal Revenue Code; 273.25 (16) for taxable years beginning before January 1, 2008, 273.26 the amount of the federal small ethanol producer credit allowed 273.27 under section 40(a)(3) of the Internal Revenue Code which is 273.28 included in gross income under section 87 of the Internal 273.29 Revenue Code; 273.30 (17) for a corporation whose foreign sales corporation, as 273.31 defined in section 922 of the Internal Revenue Code, constituted 273.32 a foreign operating corporation during any taxable year ending 273.33 before January 1, 1995, and a return was filed by August 15, 273.34 1996, claiming the deduction under section 290.21, subdivision 273.35 4, for income received from the foreign operating corporation, 273.36 an amount equal to 1.23 multiplied by the amount of income 274.1 excluded under section 114 of the Internal Revenue Code, 274.2 provided the income is not income of a foreign operating 274.3 company; 274.4 (18) any decrease in subpart F income, as defined in 274.5 section 952(a) of the Internal Revenue Code, for the taxable 274.6 year when subpart F income is calculated without regard to the 274.7 provisions of section 614 of Public Law 107-147; and 274.8 (19) in each of the five tax years immediately following 274.9 the tax year in which an addition is required under subdivision 274.10 19c, clause (16), an amount equal to one-fifth of the delayed 274.11 depreciation. For purposes of this clause, "delayed 274.12 depreciation" means the amount of the addition made by the 274.13 taxpayer under subdivision 19c, clause (16). The resulting 274.14 delayed depreciation cannot be less than zero. 274.15[EFFECTIVE DATE.] This section is effective for tax years 274.16 beginning after December 31, 2003. 274.17 Sec. 10. Minnesota Statutes 2002, section 290.9705, 274.18 subdivision 1, is amended to read: 274.19 Subdivision 1. [WITHHOLDING OF PAYMENTS TO OUT-OF-STATE 274.20 CONTRACTORS.] (a) In this section, "person" means a person, 274.21 corporation, or cooperative, the state of Minnesota and its 274.22 political subdivisions, and a city, county, and school district 274.23 in Minnesota. 274.24 (b) A person who in the regular course of business is 274.25 hiring, contracting, or having a contract with a nonresident 274.26 person or foreign corporation, as defined in Minnesota Statutes 274.27 1986, section 290.01, subdivision 5, to perform construction 274.28 work in Minnesota, shall deduct and withhold eight percent of 274.29every paymentcumulative calendar year payments to the 274.30 contractorif the contract exceeds or can reasonably be expected274.31to exceed $100,000which exceed $50,000. 274.32[EFFECTIVE DATE.] This section is effective for payments 274.33 made after December 31, 2004. 274.34 Sec. 11. Minnesota Statutes 2003 Supplement, section 274.35 290C.10, is amended to read: 274.36 290C.10 [WITHDRAWAL PROCEDURES.] 275.1 An approved claimant under the sustainable forest incentive 275.2 program for a minimum of four years may notify the commissioner 275.3 of the intent to terminate enrollment. Within 90 days of 275.4 receipt of notice to terminate enrollment, the commissioner 275.5 shall inform the claimant in writing, acknowledging receipt of 275.6 this notice and indicating the effective date of termination 275.7 from the sustainable forest incentive program. Termination of 275.8 enrollment in the sustainable forest incentive program occurs on 275.9 January 1 of the fifth calendar year that begins after receipt 275.10 by the commissioner of the termination notice. After the 275.11 commissioner issues an effective date of termination, a claimant 275.12 wishing to continue the land's enrollment in the sustainable 275.13 forest incentive program beyond the termination date must apply 275.14 for enrollment as prescribed in section 290C.04. A claimant who 275.15 withdraws a parcel of land from this program may not reenroll 275.16 the parcel for a period of three years. Within 90 days after 275.17 the termination date, the commissioner shall execute and 275.18 acknowledge a document releasing the land from the covenant 275.19 required under this chapter. The document must be mailed to the 275.20 claimant and is entitled to be recorded. The commissioner may 275.21 allow early withdrawal from the Sustainable Forest Incentive Act 275.22 without penaltyin cases of condemnationwhen the state of 275.23 Minnesota, any local government unit, or any other entity which 275.24 has the right of eminent domain acquires title or possession to 275.25 the land for a public purpose notwithstanding the provisions of 275.26 this section. In the case of such acquisition, the commissioner 275.27 shall execute and acknowledge a document releasing the land 275.28 acquired by the state, local government unit, or other entity 275.29 from the covenant. All other enrolled land must remain in the 275.30 program. 275.31[EFFECTIVE DATE.] This section is effective the day 275.32 following final enactment. 275.33 Sec. 12. Minnesota Statutes 2002, section 469.1734, 275.34 subdivision 6, is amended to read: 275.35 Subd. 6. [SALES TAX EXEMPTION; EQUIPMENT; CONSTRUCTION 275.36 MATERIALS.] (a) The gross receipts from the sale of machinery 276.1 and equipment and repair parts are exempt from taxation under 276.2 chapter 297A, if the machinery and equipment: 276.3 (1) are used in connection with a trade or business; 276.4 (2) are placed in service in a city that is authorized to 276.5 designate a zone under section 469.1731, regardless of whether 276.6 the machinery and equipment are used in a zone; and 276.7 (3) have a useful life of 12 months or more. 276.8 (b) The gross receipts from the sale of construction 276.9 materials are exempt, if they are used to construct: 276.10 (1) a facility for use in a trade or business located in a 276.11 city that is authorized to designate a zone under section 276.12 469.1731, regardless of whether the facility is located in a 276.13 zone; or 276.14 (2) housing that is located in a zone. 276.15 The exemptions under this paragraph apply regardless of whether 276.16 the purchase is made by the owner, the user, or a contractor. 276.17 (c) A purchaser may claim an exemption under this 276.18 subdivision for tax on the purchases up to, but not exceeding: 276.19 (1) the amount of the tax credit certificates received from 276.20 the city, less 276.21 (2) any tax credit certificates used under the provisions 276.22 of subdivisions 4 and 5, and section 469.1732, subdivision 2. 276.23 (d) The tax on sales of items exempted under this 276.24 subdivision shall be imposed and collected as if the applicable 276.25 rate under section 297A.62 applied. Upon application by the 276.26 purchaser, on forms prescribed by the commissioner, a refund 276.27 equal to the tax paid shall be paid to the purchaser. The 276.28 application must include sufficient information to permit the 276.29 commissioner to verify the sales tax paid and the eligibility of 276.30 the claimant to receive the credit. No more than two 276.31 applications for refunds may be filed under this subdivision in 276.32 a calendar year. The provisions of section 289A.40 apply to the 276.33 refunds payable under this subdivision. There is annually 276.34 appropriated to the commissioner of revenue the amount required 276.35 to make the refunds, which must be deducted from the amount of 276.36 the city's allocation under section 469.169, subdivision 12, 277.1 that remains available and its limitation under section 469.1735. 277.2 The amount to be refunded shall bear interest at the rate in 277.3 section 270.76 from 90 days after the date the refund claim is 277.4 filed with the commissioner. 277.5[EFFECTIVE DATE.] This section is effective for refund 277.6 claims filed on or after July 1, 2004. 277.7 Sec. 13. Minnesota Statutes 2003 Supplement, section 277.8 469.310, subdivision 11, is amended to read: 277.9 Subd. 11. [QUALIFIED BUSINESS.] (a) "Qualified business" 277.10 means a person carrying on a trade or business at a place of 277.11 business located within a job opportunity building zone. A 277.12 person is a qualified business only on those parcels of land for 277.13 which it has entered into a business subsidy agreement, as 277.14 required under section 469.313, with the appropriate local 277.15 government unit in which the parcels are located. 277.16 (b) A person that relocates a trade or business from 277.17 outside a job opportunity building zone into a zone is not a 277.18 qualified business, unless the business: 277.19 (1)(i) increases full-time employment in the first full 277.20 year of operation within the job opportunity building zone by at 277.21 least 20 percent measured relative to the operations that were 277.22 relocated and maintains the required level of employment for 277.23 each year the zone designation applies; or 277.24 (ii) makes a capital investment in the property located 277.25 within a zone equivalent to ten percent of the gross revenues of 277.26 operation that were relocated in the immediately preceding 277.27 taxable year; and 277.28 (2) enters a binding written agreement with the 277.29 commissioner that: 277.30 (i) pledges the business will meet the requirements of 277.31 clause (1); 277.32 (ii) provides for repayment of all tax benefits enumerated 277.33 under section 469.315 to the business under the procedures in 277.34 section 469.319, if the requirements of clause (1) are not met 277.35 for the taxable year or for taxes payable during the year in 277.36 which the requirements were not met; and 278.1 (iii) contains any other terms the commissioner determines 278.2 appropriate. 278.3[EFFECTIVE DATE.] This section is effective retroactively 278.4 from June 9, 2003. 278.5 Sec. 14. Minnesota Statutes 2003 Supplement, section 278.6 469.330, subdivision 11, is amended to read: 278.7 Subd. 11. [QUALIFIED BUSINESS.] (a) "Qualified business" 278.8 means a person carrying on a trade or business at a 278.9 biotechnology and health sciences industry facility located 278.10 within a biotechnology and health sciences industry zone. A 278.11 person is a qualified business only on those parcels of land for 278.12 which it has entered into a business subsidy agreement, as 278.13 required under section 469.333, with the appropriate local 278.14 government unit in which the parcels are located. 278.15 (b) A person that relocates a biotechnology and health 278.16 sciences industry facility from outside a biotechnology and 278.17 health sciences industry zone into a zone is not a qualified 278.18 business, unless the business: 278.19 (1)(i) increases full-time employment in the first full 278.20 year of operation within the biotechnology and health sciences 278.21 industry zone by at least 20 percent measured relative to the 278.22 operations that were relocated and maintains the required level 278.23 of employment for each year the zone designation applies; or 278.24 (ii) makes a capital investment in the property located 278.25 within a zone equivalent to ten percent of the gross revenues of 278.26 operation that were relocated in the immediately preceding 278.27 taxable year; and 278.28 (2) enters a binding written agreement with the 278.29 commissioner that: 278.30 (i) pledges the business will meet the requirements of 278.31 clause (1); 278.32 (ii) provides for repayment of all tax benefits enumerated 278.33 under section 469.336 to the business under the procedures in 278.34 section 469.340, if the requirements of clause (1) are not met; 278.35 and 278.36 (iii) contains any other terms the commissioner determines 279.1 appropriate. 279.2[EFFECTIVE DATE.] This section is effective retroactively 279.3 from June 9, 2003. 279.4 Sec. 15. Minnesota Statutes 2003 Supplement, section 279.5 469.337, is amended to read: 279.6 469.337 [CORPORATE FRANCHISE TAX EXEMPTION.] 279.7 (a) A qualified business is exempt from taxation under 279.8 section 290.02, the alternative minimum tax under section 279.9 290.0921, and the minimum fee under section 290.0922, on the 279.10 portion of its income attributable to operations of a qualified 279.11 business within the biotechnology and health sciences industry 279.12 zone. This exemption is determined as follows: 279.13 (1) for purposes of the tax imposed under section 290.02, 279.14 by multiplying its taxable net income by its zone percentage and 279.15 subtracting the result in determining taxable income; 279.16 (2) for purposes of the alternative minimum tax under 279.17 section 290.0921, by multiplying its alternative minimum taxable 279.18 income by its zone percentage and reducing alternative minimum 279.19 taxable income by this amount; and 279.20 (3) for purposes of the minimum fee under section 290.0922, 279.21 by excluding zone property and payrollin the zonefrom the 279.22 computations of the fee. The qualified business is exempt from 279.23 the minimum fee if all of its property is located in the zone 279.24 and all of its payroll is zone payroll. 279.25 (b) No subtraction is allowed under this section in excess 279.26 of 20 percent of the sum of the corporation's biotechnology and 279.27 health sciences industry zone payroll and the adjusted basis of 279.28 the property at the time that the property is first used in the 279.29 biotechnology and health sciences industry zone by the 279.30 corporation. 279.31 (c) No reduction in tax is allowed in excess of the amount 279.32 allocated under section 469.335. 279.33[EFFECTIVE DATE.] This section is effective for tax years 279.34 beginning after December 31, 2003. 279.35 Sec. 16. [REPEALER.] 279.36 Laws 1975, chapter 287, section 5, and Laws 2003, chapter 280.1 127, article 9, section 9, subdivision 4, are repealed. 280.2[EFFECTIVE DATE.] This section is effective without local 280.3 approval for taxes payable in 2005 and thereafter. 280.4 ARTICLE 10 280.5 MINERALS; AGGREGATE 280.6 Section 1. Minnesota Statutes 2002, section 272.02, is 280.7 amended by adding a subdivision to read: 280.8 Subd. 68. [PROPERTY USED IN THE BUSINESS OF MINING SUBJECT 280.9 TO THE NET PROCEEDS TAX.] The following property used in the 280.10 business of mining subject to the net proceeds tax under section 280.11 298.015 is exempt: 280.12 (1) deposits of ores, metals, and minerals and the lands in 280.13 which they are contained; 280.14 (2) all real and personal property used in mining, 280.15 quarrying, producing, or refining ores, minerals, or metals, 280.16 including lands occupied by or used in connection with the 280.17 mining, quarrying, production, or refining facilities; and 280.18 (3) concentrate or direct reduced ore. 280.19 This exemption applies for each year that a person subject to 280.20 tax under section 298.015 uses the property for mining, 280.21 quarrying, producing, or refining ores, metals, or minerals. 280.22[EFFECTIVE DATE.] This section is effective for taxes 280.23 payable in 2005 and thereafter. 280.24 Sec. 2. Minnesota Statutes 2002, section 290.05, 280.25 subdivision 1, is amended to read: 280.26 Subdivision 1. [EXEMPT ENTITIES.] The following 280.27 corporations, individuals, estates, trusts, and organizations 280.28 shall be exempted from taxation under this chapter, provided 280.29 that every such person or corporation claiming exemption under 280.30 this chapter, in whole or in part, must establish to the 280.31 satisfaction of the commissioner the taxable status of any 280.32 income or activity: 280.33 (a) corporations, individuals, estates, and trusts engaged 280.34 in the business of mining or producing iron ore and mining, 280.35 producing, or refining other ores, metals, and minerals, the 280.36 miningor, production, or refining of which is subject to the 281.1 occupation tax imposed by section 298.01; but if any such 281.2 corporation, individual, estate, or trust engages in any other 281.3 business or activity or has income from any property not used in 281.4 such business it shall be subject to this tax computed on the 281.5 net income from such property or such other business or 281.6 activity. Royalty shall not be considered as income from the 281.7 business of mining or producing iron ore within the meaning of 281.8 this section; 281.9 (b) the United States of America, the state of Minnesota or 281.10 any political subdivision of either agencies or 281.11 instrumentalities, whether engaged in the discharge of 281.12 governmental or proprietary functions; and 281.13 (c) any insurance company. 281.14[EFFECTIVE DATE.] This section is effective for taxable 281.15 years beginning after December 31, 2003. 281.16 Sec. 3. Minnesota Statutes 2002, section 290.17, 281.17 subdivision 4, is amended to read: 281.18 Subd. 4. [UNITARY BUSINESS PRINCIPLE.] (a) If a trade or 281.19 business conducted wholly within this state or partly within and 281.20 partly without this state is part of a unitary business, the 281.21 entire income of the unitary business is subject to 281.22 apportionment pursuant to section 290.191. Notwithstanding 281.23 subdivision 2, paragraph (c), none of the income of a unitary 281.24 business is considered to be derived from any particular source 281.25 and none may be allocated to a particular place except as 281.26 provided by the applicable apportionment formula. The 281.27 provisions of this subdivision do not apply to business income 281.28 subject to subdivision 5, income of an insurance company,or281.29 income of an investment company determined under section 290.36, 281.30 or income of a mine or mineral processing facility subject to 281.31 tax under section 298.01. 281.32 (b) The term "unitary business" means business activities 281.33 or operations which result in a flow of value between them. The 281.34 term may be applied within a single legal entity or between 281.35 multiple entities and without regard to whether each entity is a 281.36 sole proprietorship, a corporation, a partnership or a trust. 282.1 (c) Unity is presumed whenever there is unity of ownership, 282.2 operation, and use, evidenced by centralized management or 282.3 executive force, centralized purchasing, advertising, 282.4 accounting, or other controlled interaction, but the absence of 282.5 these centralized activities will not necessarily evidence a 282.6 nonunitary business. Unity is also presumed when business 282.7 activities or operations are of mutual benefit, dependent upon 282.8 or contributory to one another, either individually or as a 282.9 group. 282.10 (d) Where a business operation conducted in Minnesota is 282.11 owned by a business entity that carries on business activity 282.12 outside the state different in kind from that conducted within 282.13 this state, and the other business is conducted entirely outside 282.14 the state, it is presumed that the two business operations are 282.15 unitary in nature, interrelated, connected, and interdependent 282.16 unless it can be shown to the contrary. 282.17 (e) Unity of ownership is not deemed to exist when a 282.18 corporation is involved unless that corporation is a member of a 282.19 group of two or more business entities and more than 50 percent 282.20 of the voting stock of each member of the group is directly or 282.21 indirectly owned by a common owner or by common owners, either 282.22 corporate or noncorporate, or by one or more of the member 282.23 corporations of the group. For this purpose, the term "voting 282.24 stock" shall include membership interests of mutual insurance 282.25 holding companies formed under section 60A.077. 282.26 (f) The net income and apportionment factors under section 282.27 290.191 or 290.20 of foreign corporations and other foreign 282.28 entities which are part of a unitary business shall not be 282.29 included in the net income or the apportionment factors of the 282.30 unitary business. A foreign corporation or other foreign entity 282.31 which is required to file a return under this chapter shall file 282.32 on a separate return basis. The net income and apportionment 282.33 factors under section 290.191 or 290.20 of foreign operating 282.34 corporations shall not be included in the net income or the 282.35 apportionment factors of the unitary business except as provided 282.36 in paragraph (g). 283.1 (g) The adjusted net income of a foreign operating 283.2 corporation shall be deemed to be paid as a dividend on the last 283.3 day of its taxable year to each shareholder thereof, in 283.4 proportion to each shareholder's ownership, with which such 283.5 corporation is engaged in a unitary business. Such deemed 283.6 dividend shall be treated as a dividend under section 290.21, 283.7 subdivision 4. 283.8 Dividends actually paid by a foreign operating corporation 283.9 to a corporate shareholder which is a member of the same unitary 283.10 business as the foreign operating corporation shall be 283.11 eliminated from the net income of the unitary business in 283.12 preparing a combined report for the unitary business. The 283.13 adjusted net income of a foreign operating corporation shall be 283.14 its net income adjusted as follows: 283.15 (1) any taxes paid or accrued to a foreign country, the 283.16 commonwealth of Puerto Rico, or a United States possession or 283.17 political subdivision of any of the foregoing shall be a 283.18 deduction; and 283.19 (2) the subtraction from federal taxable income for 283.20 payments received from foreign corporations or foreign operating 283.21 corporations under section 290.01, subdivision 19d, clause (10), 283.22 shall not be allowed. 283.23 If a foreign operating corporation incurs a net loss, 283.24 neither income nor deduction from that corporation shall be 283.25 included in determining the net income of the unitary business. 283.26 (h) For purposes of determining the net income of a unitary 283.27 business and the factors to be used in the apportionment of net 283.28 income pursuant to section 290.191 or 290.20, there must be 283.29 included only the income and apportionment factors of domestic 283.30 corporations or other domestic entities other than foreign 283.31 operating corporations that are determined to be part of the 283.32 unitary business pursuant to this subdivision, notwithstanding 283.33 that foreign corporations or other foreign entities might be 283.34 included in the unitary business. 283.35 (i) Deductions for expenses, interest, or taxes otherwise 283.36 allowable under this chapter that are connected with or 284.1 allocable against dividends, deemed dividends described in 284.2 paragraph (g), or royalties, fees, or other like income 284.3 described in section 290.01, subdivision 19d, clause (10), shall 284.4 not be disallowed. 284.5 (j) Each corporation or other entity, except a sole 284.6 proprietorship, that is part of a unitary business must file 284.7 combined reports as the commissioner determines. On the 284.8 reports, all intercompany transactions between entities included 284.9 pursuant to paragraph (h) must be eliminated and the entire net 284.10 income of the unitary business determined in accordance with 284.11 this subdivision is apportioned among the entities by using each 284.12 entity's Minnesota factors for apportionment purposes in the 284.13 numerators of the apportionment formula and the total factors 284.14 for apportionment purposes of all entities included pursuant to 284.15 paragraph (h) in the denominators of the apportionment formula. 284.16 (k) If a corporation has been divested from a unitary 284.17 business and is included in a combined report for a fractional 284.18 part of the common accounting period of the combined report: 284.19 (1) its income includable in the combined report is its 284.20 income incurred for that part of the year determined by 284.21 proration or separate accounting; and 284.22 (2) its sales, property, and payroll included in the 284.23 apportionment formula must be prorated or accounted for 284.24 separately. 284.25[EFFECTIVE DATE.] This section is effective for taxable 284.26 years beginning after December 31, 2003. 284.27 Sec. 4. Minnesota Statutes 2002, section 290.191, 284.28 subdivision 1, is amended to read: 284.29 Subdivision 1. [GENERAL RULE.] (a) Except as otherwise 284.30 provided in section 290.17, subdivision 5, the net income from a 284.31 trade or business carried on partly within and partly without 284.32 this state must be apportioned to this state as provided in this 284.33 section. To the extent that an entity is exempt from taxation 284.34 under this chapter as provided in section 290.05, the 284.35 apportionment factors associated with the entity's exempt 284.36 activities are excluded from the apportionment formula under 285.1 this section. 285.2 (b) For purposes of this section, "state" means a state of 285.3 the United States, the District of Columbia, the commonwealth of 285.4 Puerto Rico, or any territory or possession of the United States 285.5 or any foreign country. 285.6[EFFECTIVE DATE.] This section is effective for taxable 285.7 years beginning after December 31, 2003. 285.8 Sec. 5. Minnesota Statutes 2002, section 297A.68, 285.9 subdivision 4, is amended to read: 285.10 Subd. 4. [TACONITE, OTHER ORES, METALS, OR MINERALS; 285.11 PRODUCTION MATERIALS.] Mill liners, grinding rods, and grinding 285.12 balls that are substantially consumed in the production of 285.13 taconite or other ores, metals, or minerals are exempt when sold 285.14 to or stored, used, or consumed by persons taxed under the 285.15 in-lieu provisions of chapter 298. 285.16[EFFECTIVE DATE.] This section is effective for sales and 285.17 purchases made after June 30, 2005. 285.18 Sec. 6. Minnesota Statutes 2002, section 298.001, is 285.19 amended by adding a subdivision to read: 285.20 Subd. 9. [REFINING.] "Refining" means and is limited to 285.21 refining: 285.22 (1) of ores, metals, or mineral products, the mining, 285.23 extraction, or quarrying of which were subject to tax under 285.24 section 298.015; and 285.25 (2) carried on by the entity, or an affiliated entity, that 285.26 mined, extracted, or quarried the metal or mineral products. 285.27[EFFECTIVE DATE.] This section is effective for taxable 285.28 years beginning after December 31, 2003. 285.29 Sec. 7. Minnesota Statutes 2002, section 298.001, is 285.30 amended by adding a subdivision to read: 285.31 Subd. 10. [PRECIOUS MINERALS TAX RELIEF AREA.] The 285.32 "precious minerals tax relief area" means the area of the 285.33 following Independent School Districts: 285.34 (1) No. 166, Cook County; 285.35 (2) No. 316, Coleraine; 285.36 (3) No. 318, Grand Rapids; 286.1 (4) No. 319, Nashwauk-Keewatin; 286.2 (5) No. 381, Lake Superior; 286.3 (6) No. 695, Chisholm; 286.4 (7) No. 696, Ely; 286.5 (8) No. 701, Hibbing; 286.6 (9) No. 706, Virginia; 286.7 (10) No. 712, Mountain Iron-Buhl; 286.8 (11) No. 2711, Mesabi East; 286.9 (12) No. 2142, St. Louis County; and 286.10 (13) No. 2154, Eveleth-Gilbert. 286.11[EFFECTIVE DATE.] This section is effective for taxable 286.12 years beginning after December 31, 2003. 286.13 Sec. 8. Minnesota Statutes 2002, section 298.01, 286.14 subdivision 3, is amended to read: 286.15 Subd. 3. [OCCUPATION TAX; OTHER ORES.] Every person 286.16 engaged in the business of mining, refining, or producing ores, 286.17 metals, or minerals in this state, except iron ore or taconite 286.18 concentrates, shall pay an occupation tax to the state of 286.19 Minnesota as provided in this subdivision. For purposes of this 286.20 subdivision, mining includes the application of 286.21 hydrometallurgical processes. The tax is determined in the same 286.22 manner as the tax imposed by section 290.02, except that 286.23 sections 290.05, subdivision 1, clause (a), 290.0921, and 286.24 290.17, subdivision 4, do not apply. Except as provided in 286.25 section 290.05, subdivision 1, paragraph (a), the tax is in 286.26 addition to all other taxes. 286.27[EFFECTIVE DATE.] This section is effective for taxable 286.28 years beginning after December 31, 2003. 286.29 Sec. 9. Minnesota Statutes 2002, section 298.01, 286.30 subdivision 3a, is amended to read: 286.31 Subd. 3a. [GROSS INCOME.] (a) For purposes of determining 286.32 a person's taxable income under subdivision 3, gross income is 286.33 determined by the amount of gross proceeds from mining in this 286.34 state under section 298.016 and includes any gain or loss 286.35 recognized from the sale or disposition of assets used in the 286.36 business in this state. 287.1 (b) In applying section 290.191, subdivision 5, transfers 287.2 of ores, metals, or minerals that are subject to tax under this 287.3 chapter are deemed to be sales outside this state if the ores, 287.4 metals, or minerals are transported out of this state for 287.5 further processing or refining by the person engaged in mining 287.6 after the ores, metals, or minerals have been converted to a 287.7 marketable quality. 287.8 (c) In applying section 290.191, subdivision 5, transfers 287.9 of ores, metals, or minerals that are subject to tax under this 287.10 chapter are deemed to be sales within this state if the ores, 287.11 metals, or minerals are received by a purchaser at a point 287.12 within this state, and the taxpayer is taxable in this state, 287.13 regardless of the f.o.b. point, or other conditions of the sale, 287.14 or the ultimate destination of the property. 287.15[EFFECTIVE DATE.] This section is effective for taxable 287.16 years beginning after December 31, 2003. 287.17 Sec. 10. Minnesota Statutes 2002, section 298.01, 287.18 subdivision 4, is amended to read: 287.19 Subd. 4. [OCCUPATION TAX; IRON ORE; TACONITE 287.20 CONCENTRATES.] A person engaged in the business of mining or 287.21 producing of iron ore, taconite concentrates or direct reduced 287.22 ore in this state shall pay an occupation tax to the state of 287.23 Minnesota. The tax is determined in the same manner as the tax 287.24 imposed by section 290.02, except that sections 290.05, 287.25 subdivision 1, clause (a), 290.0921, and 290.17, subdivision 4, 287.26 do not apply. The tax is in addition to all other taxes. 287.27[EFFECTIVE DATE.] This section is effective for taxable 287.28 years beginning after December 31, 2003. 287.29 Sec. 11. Minnesota Statutes 2002, section 298.015, 287.30 subdivision 1, is amended to read: 287.31 Subdivision 1. [TAX IMPOSED.] A person engaged in the 287.32 business of mining shall pay to the state of Minnesota for 287.33 distribution as provided in section 298.018 a net proceeds tax 287.34 equal totwofour percent of the net proceeds from mining in 287.35 Minnesota. The tax applies to allmineral and energy resources287.36 ores, metals, and minerals minedor, extracted, produced, or 288.1 refined within the state of Minnesota except for sand, silica 288.2 sand, gravel, building stone, crushed rock, limestone, granite, 288.3 dimension granite, dimension stone, horticultural peat, clay, 288.4 soil, iron ore, and taconite concentrates. Except as provided 288.5 in section 272.02, subdivision 68, the tax is in addition to all 288.6 other taxes provided for by law. 288.7[EFFECTIVE DATE.] This section is effective for taxes 288.8 payable in 2005 and thereafter. 288.9 Sec. 12. Minnesota Statutes 2002, section 298.015, 288.10 subdivision 2, is amended to read: 288.11 Subd. 2. [NET PROCEEDS.] For purposes of this section, the 288.12 term "net proceeds" means the gross proceeds from mining, as 288.13 defined in section 298.016, less the same deductions allowedin288.14section 298.017for purposes of determining taxable income under 288.15 section 298.01, subdivision 3b. No other credits or deductions 288.16 shall apply to this taxexcept for those provided in section288.17298.017. 288.18[EFFECTIVE DATE.] This section is effective for taxes 288.19 payable in 2005 and thereafter. 288.20 Sec. 13. Minnesota Statutes 2002, section 298.016, 288.21 subdivision 4, is amended to read: 288.22 Subd. 4. [DEFINITIONS.] For the purposes of sections 288.23 298.015 and 298.017, the terms defined in this subdivision have 288.24 the meaning given them unless the context clearly indicates 288.25 otherwise. 288.26 (a) "Metal or mineral products" means all thosemineral and288.27energy resourcesores, metals, and minerals subject to the tax 288.28 provided in section 298.015. 288.29 (b) "Exploration" means activities designed and engaged in 288.30 to ascertain the existence, location, extent, or quality of any 288.31 deposit of metal or mineral products prior to the development of 288.32 a mining site. 288.33 (c) "Development" means activities designed and engaged in 288.34 to prepare or develop a potential mining site for mining after 288.35 the existence of metal or mineral products in commercially 288.36 marketable quantities has been disclosed including, but not 289.1 limited to, the clearing of forestation, the building of roads, 289.2 removal of overburden, or the sinking of shafts. 289.3 (d) "Research" means activities designed and engaged in to 289.4 create new or improved methods of mining, producing, processing, 289.5 beneficiating, smelting, or refining metal or mineral products. 289.6[EFFECTIVE DATE.] This section is effective for taxable 289.7 years beginning after December 31, 2004. 289.8 Sec. 14. Minnesota Statutes 2002, section 298.018, as 289.9 amended by Laws 2003, First Special Session chapter 21, article 289.10 11, sections 14, 15, is amended to read: 289.11 298.018 [DISTRIBUTION OF PROCEEDS.] 289.12 Subdivision 1. [WITHIN THETACONITEPRECIOUS MINERALS 289.13 ASSISTANCE AREA.] The proceeds of the tax paid under sections 289.14 298.015 to 298.017 on ores, metals, and mineralsand energy289.15resourcesmined or extracted within thetaconiteprecious 289.16 minerals assistance areadefined in section 273.1341, shall be 289.17 allocated as follows: 289.18 (1) five percent to the city or town within which the ores, 289.19 metals, or mineralsor energy resourcesare mined or extracted; 289.20 (2) ten percent to the taconite municipal aid account to be 289.21 distributedas provided in section 298.282to qualifying 289.22 municipalities, as defined in section 298.282 and located in the 289.23 precious minerals assistance area; 289.24 (3) ten percent to the school district within which the 289.25 ores, metals, or mineralsor energy resourcesare mined or 289.26 extracted; 289.27 (4)2030 percent toa group of school districts comprised289.28of those school districts wherein the mineral or energy resource289.29was mined or extracted or in which there is a qualifying289.30municipality as defined by section 273.134, paragraph (b), in289.31direct proportion to school district indexes as follows: for289.32each school district, its pupil units determined under section289.33126C.05 for the prior school year shall be multiplied by the289.34ratio of the average adjusted net tax capacity per pupil unit289.35for school districts receiving aid under this clause as289.36calculated pursuant to chapters 122A, 126C, and 127A for the290.1school year ending prior to distribution to the adjusted net tax290.2capacity per pupil unit of the district. Each district shall290.3receive that portion of the distribution which its index bears290.4to the sum of the indices for all school districts that receive290.5the distributionsthe state general fund to represent the 290.6 portion of the tax that is in lieu of the state general tax 290.7 under section 275.025; 290.8 (5) 20 percent to the county within which the ores, metals, 290.9 or mineralsor energy resourcesare mined or extracted; 290.10 (6)20 percent to St. Louis County acting as the counties'290.11fiscal agent to be distributed as provided in sections 273.134290.12to 273.136;290.13(7)five percent to the Iron Range Resources and 290.14 Rehabilitation Board for the purposes of section 298.22; 290.15(8) five(7) ten percent to the Douglas J. Johnson economic 290.16 protection trust fund; and 290.17(9) five(8) ten percent to the taconite environmental 290.18 protection fund. 290.19 The proceeds of the tax shall be distributed on July 15 290.20 each year. 290.21 Subd. 2. [OUTSIDE THETACONITEPRECIOUS MINERALS 290.22 ASSISTANCE AREA.] The proceeds of the tax paid under sections 290.23 298.015 to 298.017 on ores, metals, or mineralsand energy290.24resourcesmined or extracted outside of thetaconiteprecious 290.25 minerals assistance areadefined in section 273.1341, shall be 290.26 deposited in the general fund. 290.27 Subd. 3. [SEGREGATION OF FUNDS.] The proceeds of the tax 290.28 allocated under subdivision 1, clauses (2), (6), (7), and (8), 290.29 including any investment earnings on them, must be segregated 290.30 and separately accounted for in the respective funds or account 290.31 to which they are allocated. These amounts must only be 290.32 distributed to municipalities within the precious minerals 290.33 assistance area or used for projects located in the precious 290.34 minerals assistance area. 290.35[EFFECTIVE DATE.] This section is effective for 290.36 distribution of net proceeds tax revenues made after July 1, 291.1 2004. 291.2 Sec. 15. [298.021] [ROYALTY TAX.] 291.3 In addition to any other taxes imposed by law, a tax is 291.4 imposed on a royalty, as defined in section 290.923, subdivision 291.5 1, paid on ore, other than iron ore, taconite, iron sulphides, 291.6 or semitaconite. The tax equals 12 percent of the amount of the 291.7 royalty paid. The person paying the royalty shall withhold the 291.8 tax from the payment and remit the payment to the commissioner 291.9 at the times and under the procedures provided under section 291.10 290.923. The commissioner shall deposit proceeds in the general 291.11 fund and allocate the proceeds as provided under section 291.12 298.018, subdivision 1. 291.13[EFFECTIVE DATE.] This section is effective for royalties 291.14 paid after June 30, 2004. 291.15 Sec. 16. Minnesota Statutes 2003 Supplement, section 291.16 298.223, subdivision 1, is amended to read: 291.17 Subdivision 1. [CREATION; PURPOSES.] A fund called the 291.18 taconite environmental protection fund is created for the 291.19 purpose of reclaiming, restoring and enhancing those areas of 291.20 northeast Minnesota located within the taconite assistance area 291.21 defined in section 273.1341, that are adversely affected by the 291.22 environmentally damaging operations involved in mining taconite 291.23 and iron ore and producing iron ore concentrate and for the 291.24 purpose of promoting the economic development of northeast 291.25 Minnesota. The taconite environmental protection fund shall be 291.26 used for the following purposes: 291.27 (a) to initiate investigations into matters the Iron Range 291.28 Resources and Rehabilitation Board determines are in need of 291.29 study and which will determine the environmental problems 291.30 requiring remedial action; 291.31 (b) reclamation, restoration, or reforestation of minelands 291.32 not otherwise provided for by state law; 291.33 (c)local economic development projects including291.34construction of sewer and water systems, and otherpublic works, 291.35 including construction of sewer and water systems located within 291.36 the taconite assistance area defined in section 273.1341; 292.1 (d) monitoring of mineral industry related health problems 292.2 among mining employees. 292.3[EFFECTIVE DATE.] This section is effective the day 292.4 following final enactment. 292.5 Sec. 17. Minnesota Statutes 2002, section 298.24, 292.6 subdivision 1, is amended to read: 292.7 Subdivision 1. (a) For concentrate produced in 2001, 2002, 292.8 and 2003, there is imposed upon taconite and iron sulphides, and 292.9 upon the mining and quarrying thereof, and upon the production 292.10 of iron ore concentrate therefrom, and upon the concentrate so 292.11 produced, a tax of $2.103 per gross ton of merchantable iron ore 292.12 concentrate produced therefrom. 292.13 (b) For concentrates produced in 2004 and subsequent years, 292.14 the tax rate shall be equal to the preceding year's tax rate 292.15 plus an amount equal to the preceding year's tax rate multiplied 292.16 by the percentage increase in the implicit price deflator from 292.17 the fourth quarter of the second preceding year to the fourth 292.18 quarter of the preceding year. "Implicit price deflator" means 292.19 the implicit price deflator for the gross domestic product 292.20 prepared by the Bureau of Economic Analysis of the United States 292.21 Department of Commerce. 292.22 (c) On concentrates produced in 1997 and thereafter, an 292.23 additional tax is imposed equal to three cents per gross ton of 292.24 merchantable iron ore concentrate for each one percent that the 292.25 iron content of the product exceeds 72 percent, when dried at 292.26 212 degrees Fahrenheit. 292.27 (d) Except for taxes payable in 2004 through 2006, the tax 292.28 shall be imposed on the average of the production for the 292.29 current year and the previous two years. The rate of the tax 292.30 imposed will be the current year's tax rate. This clause shall 292.31 not apply in the case of the closing of a taconite facility if 292.32 the property taxes on the facility would be higher if this 292.33 clause and section 298.25 were not applicable. 292.34 (e) If the tax or any part of the tax imposed by this 292.35 subdivision is held to be unconstitutional, a tax of $2.103 per 292.36 gross ton of merchantable iron ore concentrate produced shall be 293.1 imposed. 293.2 (f) Consistent with the intent of this subdivision to 293.3 impose a tax based upon the weight of merchantable iron ore 293.4 concentrate, the commissioner of revenue may indirectly 293.5 determine the weight of merchantable iron ore concentrate 293.6 included in fluxed pellets by subtracting the weight of the 293.7 limestone, dolomite, or olivine derivatives or other basic flux 293.8 additives included in the pellets from the weight of the 293.9 pellets. For purposes of this paragraph, "fluxed pellets" are 293.10 pellets produced in a process in which limestone, dolomite, 293.11 olivine, or other basic flux additives are combined with 293.12 merchantable iron ore concentrate. No subtraction from the 293.13 weight of the pellets shall be allowed for binders, mineral and 293.14 chemical additives other than basic flux additives, or moisture. 293.15 (g)(1) Notwithstanding any other provision of this 293.16 subdivision, for any year before the plant reaches the level of 293.17 commercial production and for the first two years of a plant's 293.18 commercial production of direct reduced ore, no tax is imposed 293.19 under this section. As used in this paragraph, "commercial 293.20 production" is production of more than 50,000 tons of direct 293.21 reduced ore per year, and "direct reduced ore" is ore that 293.22 results in a product that has an iron content of at least 75 293.23 percent. For the third year of a plant's commercial production 293.24 of direct reduced ore, the rate to be applied to direct reduced 293.25 ore is 25 percent of the rate otherwise determined under this 293.26 subdivision. For the fourth such production year, the rate is 293.27 50 percent of the rate otherwise determined under this 293.28 subdivision; for the fifth such production year, the rate is 75 293.29 percent of the rate otherwise determined under this subdivision; 293.30 and for all subsequent production years, the full rate is 293.31 imposed. 293.32 (2) Subject to clause (1), production of direct reduced ore 293.33 in this state is subject to the tax imposed by this section, but 293.34 if that production is not produced by a producer of taconite or 293.35 iron sulfides, the production of taconite or iron sulfides 293.36 consumed in the production of direct reduced iron in this state 294.1 is not subject to the tax imposed by this section on taconite or 294.2 iron sulfides. 294.3 (3) Notwithstanding any other provision of this 294.4 subdivision, no tax is imposed under this section for the first 294.5 two years of noncommercial production of direct reduced ore. 294.6[EFFECTIVE DATE.] This section is effective for direct 294.7 reduced ore produced after the date of final enactment. 294.8 Sec. 18. Minnesota Statutes 2003 Supplement, section 294.9 298.27, is amended to read: 294.10 298.27 [COLLECTION AND PAYMENT OF TAX.] 294.11 The taxes provided by section 298.24 shall be paid directly 294.12 to each eligible county and the Iron Range Resources and 294.13 Rehabilitation Board. The commissioner of revenue shall notify 294.14 each producer of the amount to be paid each recipient prior to 294.15 February 15. Every person subject to taxes imposed by section 294.16 298.24 shall file a correct report covering the preceding year. 294.17 The report must contain the information required by the 294.18 commissioner. The report shall be filed by each producer on or 294.19 before February 1. A remittance equal to 50 percent of the 294.20 total tax required to be paid hereunder shall be paid on or 294.21 before February 24. A remittance equal to 20 percent of the 294.22 remaining total tax required to be paid hereunder shall be paid 294.23 on or before the first days of April, May, June, July, and 294.24 August24. On or before February 25 and August 25, the county 294.25 auditor shall make distribution of the payments previously 294.26 received by the county in the manner provided by section 294.27 298.28. Reports shall be made and hearings held upon the 294.28 determination of the tax in accordance with procedures 294.29 established by the commissioner of revenue. The commissioner of 294.30 revenue shall have authority to make reasonable rules as to the 294.31 form and manner of filing reports necessary for the 294.32 determination of the tax hereunder, and by such rules may 294.33 require the production of such information as may be reasonably 294.34 necessary or convenient for the determination and apportionment 294.35 of the tax. All the provisions of the occupation tax law with 294.36 reference to the assessment and determination of the occupation 295.1 tax, including all provisions for appeals from or review of the 295.2 orders of the commissioner of revenue relative thereto, but not 295.3 including provisions for refunds, are applicable to the taxes 295.4 imposed by section 298.24 except in so far as inconsistent 295.5 herewith. If any person subject to section 298.24 shall fail to 295.6 make the report provided for in this section at the time and in 295.7 the manner herein provided, the commissioner of revenue shall in 295.8 such case, upon information possessed or obtained, ascertain the 295.9 kind and amount of ore mined or produced and thereon find and 295.10 determine the amount of the tax due from such person. There 295.11 shall be added to the amount of tax due a penalty for failure to 295.12 report on or before February 1, which penalty shall equal ten 295.13 percent of the tax imposed and be treated as a part thereof. 295.14 If any person responsible for making a tax payment at the 295.15 time and in the manner herein provided fails to do so, there 295.16 shall be imposed a penalty equal to ten percent of the amount so 295.17 due, which penalty shall be treated as part of the tax due. 295.18 In the case of any underpayment of the tax payment required 295.19 herein, there may be added and be treated as part of the tax due 295.20 a penalty equal to ten percent of the amount so underpaid. 295.21 A person having a liability of $120,000 or more during a 295.22 calendar year must remit all liabilities by means of a funds 295.23 transfer as defined in section 336.4A-104, paragraph (a). The 295.24 funds transfer payment date, as defined in section 336.4A-401, 295.25 must be on or before the date the tax is due. If the date the 295.26 tax is due is not a funds transfer business day, as defined in 295.27 section 336.4A-105, paragraph (a), clause (4), the payment date 295.28 must be on or before the funds transfer business day next 295.29 following the date the tax is due. 295.30[EFFECTIVE DATE.] This section is effective for production 295.31 payable beginning calendar year 2005. 295.32 Sec. 19. Minnesota Statutes 2002, section 298.28, 295.33 subdivision 9a, is amended to read: 295.34 Subd. 9a. [TACONITE ECONOMIC DEVELOPMENTMINERAL 295.35 PROCESSING AND ENERGY DEVELOPMENT ASSISTANCE FUND.] (a) 30.1 295.36 cents per ton for distributions in20022005 and thereafter must 296.1 be paid to thetaconite economic development fundmineral 296.2 processing and energy development assistance fund under section 296.3 298.2962. No distribution shall be made under this paragraph in 296.4 2004 or any subsequent year in which total industry production 296.5 falls below 30 million tons.Distribution shall only be made to296.6a taconite producer's fund under section 298.227 if the producer296.7timely pays its tax under section 298.24 by the dates provided296.8under section 298.27, or pursuant to the due dates provided by296.9an administrative agreement with the commissioner.296.10 (b) An amount equal to 50 percent of the tax under section 296.11 298.24 for concentrate sold in the form of pellet chips and 296.12 fines not exceeding 5/16 inch in size and not including crushed 296.13 pellets shall be paid to thetaconite economicmineral 296.14 processing and energy development assistance fund under section 296.15 298.2962. The amount paid shall not exceed $700,000 annually 296.16 for all companies. If the initial amount to be paid to the fund 296.17 exceeds this amount, each company's payment shall be prorated so 296.18 the total does not exceed $700,000. 296.19[EFFECTIVE DATE.] This section is effective the day 296.20 following final enactment. 296.21 Sec. 20. Minnesota Statutes 2002, section 298.28, 296.22 subdivision 9b, is amended to read: 296.23 Subd. 9b. [TACONITE ENVIRONMENTAL FUND.] Five cents per 296.24 tonfor distributions in 1999, 2000, 2001, 2002, and 2003must 296.25 be paid to the taconite environmental fund for use under section 296.26 298.2961, subdivision 4. 296.27[EFFECTIVE DATE.] This section is effective for 296.28 distributions in 2004 and later years. 296.29 Sec. 21. Minnesota Statutes 2002, section 298.28, 296.30 subdivision 10, is amended to read: 296.31 Subd. 10. [INCREASE.] Beginning with distributions in2000296.32 2005, except for the amount of the revenue increases provided in 296.33 subdivision 4, paragraph (d), the amountdetermined under296.34subdivision 9 shall be increased in the same proportion asof 296.35 increased tax proceeds attributable to the increase in the 296.36 implicit price deflator as provided in section 298.24, 297.1 subdivision 1, is distributed to the taconite environmental 297.2 protection fund under section 298.223.Beginning with297.3distributions in 2003, the amount determined under subdivision297.46, paragraph (a), shall be increased in the same proportion as297.5the increase in the implicit price deflator as provided in297.6section 298.24, subdivision 1.297.7 Sec. 22. Minnesota Statutes 2002, section 298.2961, is 297.8 amended by adding a subdivision to read: 297.9 Subd. 4. [GRANT AND LOAN FUND.] (a) A fund is established 297.10 to receive distributions under section 298.28, subdivision 9b, 297.11 and to make grants or loans as provided in this subdivision. 297.12 Any grant or loan made under this subdivision must be approved 297.13 by a majority of the members of the Iron Range Resources and 297.14 Rehabilitation Board, established under section 298.22. 297.15 (b) Distributions received in calendar year 2004 are 297.16 allocated to the city of Virginia for improvements and repairs 297.17 to the city's steam heating system. 297.18 (c) Distributions received in calendar year 2005 are 297.19 allocated to a project of the public utilities commissions of 297.20 the cities of Hibbing and Virginia to convert their electrical 297.21 generating plants to the use of biomass products, such as wood. 297.22 (d) For distributions received in 2006 and later, amounts 297.23 are to be allocated to joint ventures with mining companies for 297.24 reclamation of lands containing abandoned or worked out mines to 297.25 convert these lands to marketable properties for residential, 297.26 recreational, commercial, or other valuable uses. 297.27[EFFECTIVE DATE.] This section is effective the day 297.28 following final enactment. 297.29 Sec. 23. [298.2962] [MINERAL PROCESSING AND ENERGY 297.30 DEVELOPMENT ASSISTANCE FUND.] 297.31 Subdivision 1. [CREATION OF FUND; DEPOSITS.] The amount 297.32 distributed under section 298.28, subdivision 9a, must be 297.33 deposited by the commissioner of iron range resources and 297.34 rehabilitation in a mineral processing and energy development 297.35 assistance fund, which is created in this section. In this 297.36 section, "commissioner" means the commissioner of iron range 298.1 resources and rehabilitation. 298.2 Subd. 2. [USE OF FUND.] The commissioner shall use money 298.3 in the fund to make grants, loans, or equity investments in 298.4 mineral processing and energy generating facilities including, 298.5 but not limited to, taconite processing, direct reduction 298.6 processing, steel production, and energy generation facilities. 298.7 Money in the fund may also be used to pay for the costs of 298.8 carrying out the commissioner's due diligence duties under this 298.9 section. Any grant, loan, or equity investment made under this 298.10 subdivision must be approved by a majority of the members of the 298.11 Iron Range Resources and Rehabilitation Board. 298.12 Subd. 3. [REQUIREMENTS PRIOR TO COMMITTING FUNDS.] The 298.13 commissioner, prior to making a commitment for a grant, loan, or 298.14 equity investment must, at a minimum, conduct due diligence 298.15 research regarding the proposed loan or equity investment, 298.16 including contracting with professionals as needed to assist in 298.17 the due diligence. 298.18 Subd. 4. [REQUIREMENTS FOR FUND DISBURSEMENTS.] The 298.19 commissioner may make conditional commitments for grants, loans, 298.20 or equity investments but disbursements of funds pursuant to a 298.21 commitment may not be made until commitments for the remainder 298.22 of a project's funding are made that are satisfactory to the 298.23 commissioner and disbursements are made from the other 298.24 commitments sufficient to protect the interests of the state in 298.25 its loan or investment. 298.26 Subd. 5. [COMPANY CONTRIBUTION.] The commissioner may 298.27 provide grants, loans, or equity investments that match, in a 298.28 proportion determined by the commissioner, an investment made by 298.29 the owner of a facility. 298.30 Sec. 24. Minnesota Statutes 2003 Supplement, section 298.31 298.75, subdivision 1, is amended to read: 298.32 Subdivision 1. [DEFINITIONS.] Except as may otherwise be 298.33 provided, the following words, when used in this section, shall 298.34 have the meanings herein ascribed to them. 298.35 (1) "Aggregate material" shall mean nonmetallic natural 298.36 mineral aggregate including, but not limited to sand, silica 299.1 sand, gravel, crushed rock, limestone, granite, and borrow, but 299.2 only if the borrow is transported on a public road, street, or 299.3 highway. Aggregate material shall not include dimension stone 299.4 and dimension granite. Aggregate material must be measured or 299.5 weighed after it has been extracted from the pit, quarry, or 299.6 deposit. 299.7 (2) "Person" shall mean any individual, firm, partnership, 299.8 corporation, organization, trustee, association, or other entity. 299.9 (3) "Operator" shall mean any person engaged in the 299.10 business of removing aggregate material from the surface or 299.11 subsurface of the soil, for the purpose of sale, either directly 299.12 or indirectly, through the use of the aggregate material in a 299.13 marketable product or service; except that operator does not 299.14 include persons engaged in a transaction in which: (i) the 299.15 person is allowed to remove or produce aggregate without a 299.16 mining permit; or (ii) the aggregate is moved within a project's 299.17 construction limits to other locations within that same 299.18 project's construction limits. 299.19 (4) "Extraction site" shall mean a pit, quarry, or deposit 299.20 containing aggregate material and any contiguous property to the 299.21 pit, quarry, or deposit which is used by the operator for 299.22 stockpiling the aggregate material. 299.23 (5) "Importer" shall mean any person who buys aggregate 299.24 material produced from a county not listed in paragraph (6) or 299.25 another state and causes the aggregate material to be imported 299.26 into a county in this state which imposes a tax on aggregate 299.27 material. 299.28 (6) "County" shall mean the counties of Pope, Stearns, 299.29 Benton, Sherburne, Carver, Scott, Dakota, Le Sueur, Kittson, 299.30 Marshall, Pennington, Red Lake, Polk, Norman, Mahnomen, Clay, 299.31 Becker, Carlton, St. Louis, Rock, Murray, Wilkin, Big Stone, 299.32 Sibley, Hennepin, Washington, Chisago, and Ramsey. County also 299.33 means any other county whose board has voted after a public 299.34 hearing to impose the tax under this section and has notified 299.35 the commissioner of revenue of the imposition of the tax. 299.36 (7) "Borrow" shall mean granular borrow, consisting of 300.1 durable particles of gravel and sand, crushed quarry or mine 300.2 rock, crushed gravel or stone, or any combination thereof, the 300.3 ratio of the portion passing the (#200) sieve divided by the 300.4 portion passing the (1 inch) sieve may not exceed 20 percent by 300.5 mass. 300.6[EFFECTIVE DATE.] This section is effective for aggregate 300.7 sold, imported, transported, or used from a stockpile after June 300.8 30, 2004. 300.9 Sec. 25. Minnesota Statutes 2002, section 298.75, 300.10 subdivision 2, is amended to read: 300.11 Subd. 2. [TAX IMPOSED.] A county shall impose upon every 300.12 importer and operator a production tax up to ten cents per cubic 300.13 yard or up to seven cents per ton of aggregate material removed 300.14 except that the county board may decide not to impose this tax 300.15 if it determines that in the previous year operators removed 300.16 less than 20,000 tons or 14,000 cubic yards of aggregate 300.17 material from that county. A county or town may exempt an 300.18 operator from the tax if the operator has removed less than 300.19 2,500 tons or 1,750 yards from the county in the year that the 300.20 tax is due and no other aggregate operator has removed material 300.21 from the same site in the same year. The tax shall be imposed 300.22 on aggregate material produced in the county when the aggregate 300.23 material is transported from the extraction site or sold. When 300.24 aggregate material is stored in a stockpile within the state of 300.25 Minnesota and a public highway, road or street is not used for 300.26 transporting the aggregate material, the tax shall be imposed 300.27 either when the aggregate material is sold, or when it is 300.28 transported from the stockpile site, or when it is used from the 300.29 stockpile, whichever occurs first. The tax shall be imposed on 300.30 an importer when the aggregate material is imported into the 300.31 county that imposes the tax. 300.32 If the aggregate material is transported directly from the 300.33 extraction site to a waterway, railway, or another mode of 300.34 transportation other than a highway, road or street, the tax 300.35 imposed by this section shall be apportioned equally between the 300.36 county where the aggregate material is extracted and the county 301.1 to which the aggregate material is originally transported. If 301.2 that destination is not located in Minnesota, then the county 301.3 where the aggregate material was extracted shall receive all of 301.4 the proceeds of the tax. 301.5[EFFECTIVE DATE.] This section is effective the day 301.6 following final enactment. 301.7 Sec. 26. [TRANSITION PROVISION.] 301.8 Each person with an alternative minimum tax credit on 301.9 December 31, 2003, pursuant to Minnesota Statutes 2002, section 301.10 298.01, may take that credit against occupation tax under the 301.11 provisions of Minnesota Statutes 2002, section 298.01, 301.12 subdivision 3d or 4e. 301.13[EFFECTIVE DATE.] This section is effective the day 301.14 following final enactment. 301.15 Sec. 27. [REPEALER.] 301.16 (a) Minnesota Statutes 2002, section 298.01, subdivisions 301.17 3c, 3d, 4d, and 4e, are repealed effective for taxable years 301.18 beginning after December 31, 2003. 301.19 (b) Minnesota Statutes 2002, section 298.017, is repealed 301.20 effective for taxes payable in 2005 and thereafter. 301.21 (c) Minnesota Statutes 2003 Supplement, section 298.227, is 301.22 repealed July 1, 2004. The commissioner of iron range resources 301.23 and rehabilitation must transfer any unobligated money in the 301.24 taconite economic development fund on that date to the mineral 301.25 processing and energy development assistance fund established 301.26 under Minnesota Statutes, section 298.2962. 301.27 ARTICLE 11 301.28 SALES AND USE TAXES 301.29 DEPARTMENT OF REVENUE TECHNICAL CHANGES 301.30 Section 1. Minnesota Statutes 2002, section 289A.38, 301.31 subdivision 6, is amended to read: 301.32 Subd. 6. [OMISSION IN EXCESS OF 25 PERCENT.] Additional 301.33 taxes may be assessed within 6-1/2 years after the due date of 301.34 the return or the date the return was filed, whichever is later, 301.35 if: 301.36 (1) the taxpayer omits from gross income an amount properly 302.1 includable in it that is in excess of 25 percent of the amount 302.2 of gross income stated in the return; 302.3 (2) the taxpayer omits from a sales, use, or withholding 302.4 tax return an amount of taxes in excess of 25 percent of the 302.5 taxes reported in the return; or 302.6 (3) the taxpayer omits from the gross estate assets in 302.7 excess of 25 percent of the gross estate reported in the return. 302.8[EFFECTIVE DATE.] This section is effective the day 302.9 following final enactment. 302.10 Sec. 2. Minnesota Statutes 2003 Supplement, section 302.11 289A.40, subdivision 2, is amended to read: 302.12 Subd. 2. [BAD DEBT LOSS.] If a claim relates to an 302.13 overpayment because of a failure to deduct a loss due to a bad 302.14 debt or to a security becoming worthless, the claim is 302.15 considered timely if filed within seven years from the date 302.16 prescribed for the filing of the return. A claim relating to an 302.17 overpayment of taxes under chapter 297A must be filed within 302.18 3-1/2 years from the date prescribed for filing the return, plus 302.19 any extensions granted for filing the return, but only if filed 302.20 within the extended time. The refund or credit is limited to 302.21 the amount of overpayment attributable to the loss. "Bad debt" 302.22 for purposes of this subdivision, has the same meaning as that 302.23 term is used in United States Code, title 26, section 166, 302.24 except that for a claim relating to an overpayment of taxes 302.25 under chapter 297A the following are excluded from the 302.26 calculation of bad debt: financing charges or interest; sales 302.27 or use taxes charged on the purchase price; uncollectible 302.28 amounts on property that remain in the possession of the seller 302.29 until the full purchase price is paid; expenses incurred in 302.30 attempting to collect any debt; and repossessed property. 302.31[EFFECTIVE DATE.] For claims relating to an overpayment of 302.32 taxes under chapter 297A, this section is effective for sales 302.33 and purchases made on or after January 1, 2004; for all other 302.34 bad debts or claims, this section is effective on or after July 302.35 1, 2003. 302.36 Sec. 3. Minnesota Statutes 2003 Supplement, section 303.1 297A.668, subdivision 1, is amended to read: 303.2 Subdivision 1. [APPLICABILITY.] The provisions of this 303.3 section apply regardless of the characterization of a product as 303.4 tangible personal property, a digital good, or a service; but do 303.5 not apply to telecommunications services,or the sales of motor 303.6 vehicles, watercraft, aircraft, modular homes, manufactured303.7homes, or mobile homes. These provisions only apply to 303.8 determine a seller's obligation to pay or collect and remit a 303.9 sales or use tax with respect to the seller's sale of a 303.10 product. These provisions do not affect the obligation of a 303.11 seller as purchaser to remit tax on the use of the product. 303.12[EFFECTIVE DATE.] This section is effective the day 303.13 following final enactment. 303.14 Sec. 4. Minnesota Statutes 2003 Supplement, section 303.15 297A.668, subdivision 3, is amended to read: 303.16 Subd. 3. [LEASE OR RENTAL OF TANGIBLE PERSONAL PROPERTY.] 303.17 The lease or rental of tangible personal property, other than 303.18 property identified in subdivision 4 or 5, shall be sourced as 303.19 required in paragraphs (a) to (c). 303.20 (a) For a lease or rental that requires recurring periodic 303.21 payments, the first periodic payment is sourced the same as a 303.22 retail sale in accordance with the provisions of subdivision62. 303.23 Periodic payments made subsequent to the first payment are 303.24 sourced to the primary property location for each period covered 303.25 by the payment. The primary property location must be as 303.26 indicated by an address for the property provided by the lessee 303.27 that is available to the lessor from its records maintained in 303.28 the ordinary course of business, when use of this address does 303.29 not constitute bad faith. The property location must not be 303.30 altered by intermittent use at different locations, such as use 303.31 of business property that accompanies employees on business 303.32 trips and service calls. 303.33 (b) For a lease or rental that does not require recurring 303.34 periodic payments, the payment is sourced the same as a retail 303.35 sale in accordance with the provisions of subdivision 2. 303.36 (c) This subdivision does not affect the imposition or 304.1 computation of sales or use tax on leases or rentals based on a 304.2 lump sum or accelerated basis, or on the acquisition of property 304.3 for lease. 304.4[EFFECTIVE DATE.] This section is effective for sales and 304.5 purchases made on or after January 1, 2004. 304.6 Sec. 5. Minnesota Statutes 2003 Supplement, section 304.7 297A.668, subdivision 5, is amended to read: 304.8 Subd. 5. [TRANSPORTATION EQUIPMENT.] (a) The retail sale, 304.9 including lease or rental, of transportation equipment shall be 304.10 sourced the same as a retail sale in accordance with the 304.11 provisions of subdivision 2, notwithstanding the exclusion of 304.12 lease or rental in subdivision 2. 304.13 (b) "Transportation equipment" means any of the following: 304.14 (1) locomotives and railcars that are utilized for the 304.15 carriage of persons or property in interstate commerce;and/or304.16 (2) trucks and truck-tractors with a gross vehicle weight 304.17 rating (GVWR) of 10,001 pounds or greater, trailers, 304.18 semitrailers, or passenger buses that are: 304.19 (i) registered through the international registration plan; 304.20 and 304.21 (ii) operated under authority of a carrier authorized and 304.22 certified by the United States Department of Transportation or 304.23 another federal authority to engage in the carriage of persons 304.24 or property in interstate commerce; 304.25 (3) aircraft that are operated by air carriers authorized 304.26 and certificated by the United States Department of 304.27 Transportation or another federal or a foreign authority to 304.28 engage in the carriage of persons or property in interstate 304.29 commerce; or 304.30 (4) containers designed for use on and component parts 304.31 attached or secured on the transportation equipment described in 304.32 items (1) through (3). 304.33[EFFECTIVE DATE.] This section is effective for sales and 304.34 purchases made on or after January 1, 2004. 304.35 Sec. 6. Minnesota Statutes 2003 Supplement, section 304.36 297A.669, subdivision 16, is amended to read: 305.1 Subd. 16. [SERVICE ADDRESS.] "Service address," for 305.2 purposes of this section, means: 305.3 (1) the location of the telecommunications equipment to 305.4 which a customer's call is charged and from which the call 305.5 originates or terminates, regardless of where the call is billed 305.6 or paid; 305.7 (2) if the location inparagraph (a)clause (1) is not 305.8 known, service address means the origination point of the signal 305.9 of the telecommunications services first identified by either 305.10 the seller's telecommunications system or in information 305.11 received by the seller from its service provider, where the 305.12 system used to transport the signals is not that of the seller; 305.13 or 305.14 (3) if the location inparagraphs (a)clauses (1) and 305.15(b)(2) is not known, the service address means the location of 305.16 the customer's place of primary use. 305.17[EFFECTIVE DATE.] This section is effective for sales and 305.18 purchases made on or after January 1, 2004. 305.19 Sec. 7. Minnesota Statutes 2003 Supplement, section 305.20 297A.68, subdivision 2, is amended to read: 305.21 Subd. 2. [MATERIALS CONSUMED IN INDUSTRIAL PRODUCTION.] 305.22 (a) Materials stored, used, or consumed in industrial production 305.23 of personal property intended to be sold ultimately at retail 305.24 are exempt, whether or not the item so used becomes an 305.25 ingredient or constituent part of the property produced. 305.26 Materials that qualify for this exemption include, but are not 305.27 limited to, the following: 305.28 (1) chemicals, including chemicals used for cleaning food 305.29 processing machinery and equipment; 305.30 (2) materials, including chemicals, fuels, and electricity 305.31 purchased by persons engaged in industrial production to treat 305.32 waste generated as a result of the production process; 305.33 (3) fuels, electricity, gas, and steam used or consumed in 305.34 the production process, except that electricity, gas, or steam 305.35 used for space heating, cooling, or lighting is exempt if (i) it 305.36 is in excess of the average climate control or lighting for the 306.1 production area, and (ii) it is necessary to produce that 306.2 particular product; 306.3 (4) petroleum products and lubricants; 306.4 (5) packaging materials, including returnable containers 306.5 used in packaging food and beverage products; 306.6 (6) accessory tools, equipment, and other items that are 306.7 separate detachable units with an ordinary useful life of less 306.8 than 12 months used in producing a direct effect upon the 306.9 product; and 306.10 (7) the following materials, tools, and equipment used in 306.11 metalcasting: crucibles, thermocouple protection sheaths and 306.12 tubes, stalk tubes, refractory materials, molten metal filters 306.13 and filter boxes, degassing lances, and base blocks. 306.14 (b) This exemption does not include: 306.15 (1) machinery, equipment, implements, tools, accessories, 306.16 appliances, contrivances and furniture and fixtures, except 306.17 those listed in paragraph (a), clause (6); and 306.18 (2) petroleum and special fuels used in producing or 306.19 generating power for propelling ready-mixed concrete trucks on 306.20 the public highways of this state. 306.21 (c) Industrial production includes, but is not limited to, 306.22 research, development, design or production of any tangible 306.23 personal property, manufacturing, processing (other than by 306.24 restaurants and consumers) of agricultural products (whether 306.25 vegetable or animal), commercial fishing, refining, smelting, 306.26 reducing, brewing, distilling, printing, mining, quarrying, 306.27 lumbering, generating electricity, the production of road 306.28 building materials, and the research, development, design, or 306.29 production of computer software. Industrial production does not 306.30 include painting, cleaning, repairing or similar processing of 306.31 property except as part of the original manufacturing process. 306.32 Industrial production does not include the furnishing of 306.33 services listed in section 297A.61, subdivision 3, paragraph 306.34 (g), clause (6), items (i) to (vi) and (viii). 306.35[EFFECTIVE DATE.] This section is effective the day 306.36 following final enactment. 307.1 Sec. 8. Minnesota Statutes 2003 Supplement, section 307.2 297A.68, subdivision 5, is amended to read: 307.3 Subd. 5. [CAPITAL EQUIPMENT.] (a) Capital equipment is 307.4 exempt. The tax must be imposed and collected as if the rate 307.5 under section 297A.62, subdivision 1, applied, and then refunded 307.6 in the manner provided in section 297A.75. 307.7 "Capital equipment" means machinery and equipment purchased 307.8 or leased, and used in this state by the purchaser or lessee 307.9 primarily for manufacturing, fabricating, mining, or refining 307.10 tangible personal property to be sold ultimately at retail if 307.11 the machinery and equipment are essential to the integrated 307.12 production process of manufacturing, fabricating, mining, or 307.13 refining. Capital equipment also includes machinery and 307.14 equipment used primarily to electronically transmit results 307.15 retrieved by a customer of an on-line computerized data 307.16 retrieval system. 307.17 (b) Capital equipment includes, but is not limited to: 307.18 (1) machinery and equipment used to operate, control, or 307.19 regulate the production equipment; 307.20 (2) machinery and equipment used for research and 307.21 development, design, quality control, and testing activities; 307.22 (3) environmental control devices that are used to maintain 307.23 conditions such as temperature, humidity, light, or air pressure 307.24 when those conditions are essential to and are part of the 307.25 production process; 307.26 (4) materials and supplies used to construct and install 307.27 machinery or equipment; 307.28 (5) repair and replacement parts, including accessories, 307.29 whether purchased as spare parts, repair parts, or as upgrades 307.30 or modifications to machinery or equipment; 307.31 (6) materials used for foundations that support machinery 307.32 or equipment; 307.33 (7) materials used to construct and install special purpose 307.34 buildings used in the production process; 307.35 (8) ready-mixed concrete equipment in which the ready-mixed 307.36 concrete is mixed as part of the delivery process regardless if 308.1 mounted on a chassis and leases of ready-mixed concrete trucks; 308.2 and 308.3 (9) machinery or equipment used for research, development, 308.4 design, or production of computer software. 308.5 (c) Capital equipment does not include the following: 308.6 (1) motor vehicles taxed under chapter 297B; 308.7 (2) machinery or equipment used to receive or store raw 308.8 materials; 308.9 (3) building materials, except for materials included in 308.10 paragraph (b), clauses (6) and (7); 308.11 (4) machinery or equipment used for nonproduction purposes, 308.12 including, but not limited to, the following: plant security, 308.13 fire prevention, first aid, and hospital stations; support 308.14 operations or administration; pollution control; and plant 308.15 cleaning, disposal of scrap and waste, plant communications, 308.16 space heating, cooling, lighting, or safety; 308.17 (5) farm machinery and aquaculture production equipment as 308.18 defined by section 297A.61, subdivisions 12 and 13; 308.19 (6) machinery or equipment purchased and installed by a 308.20 contractor as part of an improvement to real property;or308.21 (7) machinery and equipment used by restaurants in the 308.22 furnishing, preparing, or serving of prepared foods as defined 308.23 in section 297A.61, subdivision 31; 308.24 (8) machinery and equipment used to furnish the services 308.25 listed in section 297A.61, subdivision 3, paragraph (g), clause 308.26 (6), items (i) to (vi) and (viii); or 308.27 (9) any other item that is not essential to the integrated 308.28 process of manufacturing, fabricating, mining, or refining. 308.29 (d) For purposes of this subdivision: 308.30 (1) "Equipment" means independent devices or tools separate 308.31 from machinery but essential to an integrated production 308.32 process, including computers and computer software, used in 308.33 operating, controlling, or regulating machinery and equipment; 308.34 and any subunit or assembly comprising a component of any 308.35 machinery or accessory or attachment parts of machinery, such as 308.36 tools, dies, jigs, patterns, and molds. 309.1 (2) "Fabricating" means to make, build, create, produce, or 309.2 assemble components or property to work in a new or different 309.3 manner. 309.4 (3) "Integrated production process" means a process or 309.5 series of operations through which tangible personal property is 309.6 manufactured, fabricated, mined, or refined. For purposes of 309.7 this clause, (i) manufacturing begins with the removal of raw 309.8 materials from inventory and ends when the last process prior to 309.9 loading for shipment has been completed; (ii) fabricating begins 309.10 with the removal from storage or inventory of the property to be 309.11 assembled, processed, altered, or modified and ends with the 309.12 creation or production of the new or changed product; (iii) 309.13 mining begins with the removal of overburden from the site of 309.14 the ores, minerals, stone, peat deposit, or surface materials 309.15 and ends when the last process before stockpiling is completed; 309.16 and (iv) refining begins with the removal from inventory or 309.17 storage of a natural resource and ends with the conversion of 309.18 the item to its completed form. 309.19 (4) "Machinery" means mechanical, electronic, or electrical 309.20 devices, including computers and computer software, that are 309.21 purchased or constructed to be used for the activities set forth 309.22 in paragraph (a), beginning with the removal of raw materials 309.23 from inventory through completion of the product, including 309.24 packaging of the product. 309.25 (5) "Machinery and equipment used for pollution control" 309.26 means machinery and equipment used solely to eliminate, prevent, 309.27 or reduce pollution resulting from an activity described in 309.28 paragraph (a). 309.29 (6) "Manufacturing" means an operation or series of 309.30 operations where raw materials are changed in form, composition, 309.31 or condition by machinery and equipment and which results in the 309.32 production of a new article of tangible personal property. For 309.33 purposes of this subdivision, "manufacturing" includes the 309.34 generation of electricity or steam to be sold at retail. 309.35 (7) "Mining" means the extraction of minerals, ores, stone, 309.36 or peat. 310.1 (8) "On-line data retrieval system" means a system whose 310.2 cumulation of information is equally available and accessible to 310.3 all its customers. 310.4 (9) "Primarily" means machinery and equipment used 50 310.5 percent or more of the time in an activity described in 310.6 paragraph (a). 310.7 (10) "Refining" means the process of converting a natural 310.8 resource to an intermediate or finished product, including the 310.9 treatment of water to be sold at retail. 310.10[EFFECTIVE DATE.] This section is effective the day 310.11 following final enactment. 310.12 Sec. 9. Minnesota Statutes 2003 Supplement, section 310.13 297A.68, subdivision 39, is amended to read: 310.14 Subd. 39. [PREEXISTING BIDS OR CONTRACTS.] (a) The sale of 310.15 tangible personal property or services is exempt from tax or a 310.16 tax rate increase for a period of six months from the effective 310.17 date of the law change that results in the imposition of the tax 310.18 or the tax rate increase under this chapter if: 310.19 (1) the act imposing the tax or increasing the tax rate 310.20 does not have transitional effective date language for existing 310.21 construction contracts and construction bids; and 310.22 (2) the requirements of paragraph (b) are met. 310.23 (b) A sale is tax exempt under paragraph (a) if it meets 310.24 the requirements of either clause (1) or (2): 310.25 (1) For a construction contract: 310.26 (i) the goods or services sold must be used for the 310.27 performance of a bona fide written lump sum or fixed price 310.28 construction contract; 310.29 (ii) the contract must be entered into before the date the 310.30 goods or services become subject to the sales tax or the tax 310.31 rate was increased; 310.32 (iii) the contract must not provide for allocation of 310.33 future taxes; and 310.34 (iv) for each qualifying contract the contractor must give 310.35 the seller documentation of the contract on which an exemption 310.36 is to be claimed. 311.1 (2) For a construction bid: 311.2 (i) the goods or services sold must be used pursuant to an 311.3 obligation of a bid or bids; 311.4 (ii) the bid or bids must be submitted and accepted before 311.5 the date the goods or services became subject to the sales 311.6 tax or the tax rate was increased; 311.7 (iii) the bid or bids must not be able to be withdrawn, 311.8 modified, or changed without forfeiting a bond; and 311.9 (iv) for each qualifying bid, the contractor must give the 311.10 seller documentation of the bid on which an exemption is to be 311.11 claimed. 311.12[EFFECTIVE DATE.] This section is effective the day 311.13 following final enactment. 311.14 Sec. 10. [REPEALER.] 311.15 Minnesota Rules, parts 8130.0110, subpart 4; 8130.0200, 311.16 subparts 5 and 6; 8130.0400, subpart 9; 8130.1200, subparts 5 311.17 and 6; 8130.2900; 8130.3100, subpart 1; 8130.4000, subparts 1 311.18 and 2; 8130.4200, subpart 1; 8130.4400, subpart 3; 8130.5200; 311.19 8130.5600, subpart 3; 8130.5800, subpart 5; 8130.7300, subpart 311.20 5; and 8130.8800, subpart 4, are repealed. 311.21[EFFECTIVE DATE.] This section is effective the day 311.22 following final enactment. 311.23 ARTICLE 12 311.24 SPECIAL TAXES 311.25 DEPARTMENT OF REVENUE TECHNICAL CHANGES 311.26 Section 1. Minnesota Statutes 2002, section 287.04, is 311.27 amended to read: 311.28 287.04 [EXEMPTIONS.] 311.29 The tax imposed by section 287.035 does not apply to: 311.30 (a) A decree of marriage dissolution or an instrument made 311.31 pursuant to it. 311.32 (b) A mortgage given to correct a misdescription of the 311.33 mortgaged property. 311.34 (c) A mortgage or other instrument that adds additional 311.35 security for the same debt for which mortgage registry tax has 311.36 been paid. 312.1 (d) A contract for the conveyance of any interest in real 312.2 property, including a contract for deed. 312.3 (e) A mortgage secured by real property subject to the 312.4 minerals production tax of sections 298.24 to 298.28. 312.5 (f) The principal amount of a mortgage loan made under a 312.6 low and moderate income or other affordable housing program, if 312.7 the mortgagee is a federal, state, or local government agency. 312.8 (g) Mortgages granted by fraternal benefit societies 312.9 subject to section 64B.24. 312.10 (h) A mortgage amendment or extension, as defined in 312.11 section 287.01. 312.12 (i) An agricultural mortgage if the proceeds of the loan 312.13 secured by the mortgage are used to acquire or improve real 312.14 property classified under section 273.13, subdivision 23, 312.15 paragraph (a), or (b), clause (1), (2), or (3). 312.16 (j) A mortgage on an armory building as set forth in 312.17 section 193.147. 312.18[EFFECTIVE DATE.] This section is effective the day 312.19 following final enactment. 312.20 Sec. 2. Minnesota Statutes 2002, section 295.50, 312.21 subdivision 4, is amended to read: 312.22 Subd. 4. [HEALTH CARE PROVIDER.] (a) "Health care 312.23 provider" means: 312.24 (1) a person whose health care occupation is regulated or 312.25 required to be regulated by the state of Minnesota furnishing 312.26 any or all of the following goods or services directly to a 312.27 patient or consumer: medical, surgical, optical, visual, 312.28 dental, hearing, nursing services, drugs, laboratory, diagnostic 312.29 or therapeutic services; 312.30 (2) a person who provides goods and services not listed in 312.31 clause (1) that qualify for reimbursement under the medical 312.32 assistance program provided under chapter 256B; 312.33 (3) a staff model health plan company; 312.34 (4) an ambulance service required to be licensed; or 312.35 (5) a person who sells or repairs hearing aids and related 312.36 equipment or prescription eyewear. 313.1 (b) Health care provider does not include: 313.2 (1) hospitals; medical supplies distributors, except as 313.3 specified under paragraph (a), clause (5); nursing homes 313.4 licensed under chapter 144A or licensed in any other 313.5 jurisdiction; pharmacies; surgical centers; bus and taxicab 313.6 transportation, or any other providers of transportation 313.7 services other than ambulance services required to be licensed; 313.8 supervised living facilities for persons with mental retardation 313.9 or related conditions, licensed under Minnesota Rules, parts 313.10 4665.0100 to 4665.9900;residential care homes licensed under313.11chapter 144Bhousing with services establishments required to be 313.12 registered under chapter 144D; board and lodging establishments 313.13 providing only custodial services that are licensed under 313.14 chapter 157 and registered under section 157.17 to provide 313.15 supportive services or health supervision services; adult foster 313.16 homes as defined in Minnesota Rules, part 9555.5105; day 313.17 training and habilitation services for adults with mental 313.18 retardation and related conditions as defined in section 252.41, 313.19 subdivision 3; boarding care homes, as defined in Minnesota 313.20 Rules, part 4655.0100; and adult day care centers as defined in 313.21 Minnesota Rules, part 9555.9600; 313.22 (2) home health agencies as defined in Minnesota Rules, 313.23 part 9505.0175, subpart 15; a person providing personal care 313.24 services and supervision of personal care services as defined in 313.25 Minnesota Rules, part 9505.0335; a person providing private duty 313.26 nursing services as defined in Minnesota Rules, part 9505.0360; 313.27 and home care providers required to be licensed under chapter 313.28 144A; 313.29 (3) a person who employs health care providers solely for 313.30 the purpose of providing patient services to its employees; and 313.31 (4) an educational institution that employs health care 313.32 providers solely for the purpose of providing patient services 313.33 to its students if the institution does not receive fee for 313.34 service payments or payments for extended coverage. 313.35[EFFECTIVE DATE.] This section is effective the day 313.36 following final enactment. 314.1 Sec. 3. Minnesota Statutes 2002, section 296A.22, is 314.2 amended by adding a subdivision to read: 314.3 Subd. 9. [ABATEMENT OF PENALTY.] (a) The commissioner may 314.4 by written order abate any penalty imposed under this section, 314.5 if in the commissioner's opinion there is reasonable cause to do 314.6 so. 314.7 (b) A request for abatement of penalty must be filed with 314.8 the commissioner within 60 days of the date the notice stating 314.9 that a penalty has been imposed was mailed to the taxpayer's 314.10 last known address. 314.11 (c) If the commissioner issues an order denying a request 314.12 for abatement of penalty, the taxpayer may file an 314.13 administrative appeal as provided in section 296A.25 or appeal 314.14 to the Tax Court as provided in section 271.06. If the 314.15 commissioner does not issue an order on the abatement request 314.16 within 60 days from the date the request is received, the 314.17 taxpayer may appeal to the Tax Court as provided in section 314.18 271.06. 314.19[EFFECTIVE DATE.] This section is effective for penalties 314.20 imposed on or after the day following final enactment. 314.21 Sec. 4. Minnesota Statutes 2003 Supplement, section 314.22 297F.08, subdivision 12, is amended to read: 314.23 Subd. 12. [CIGARETTES IN INTERSTATE COMMERCE.] (a) A 314.24 person may not transport or cause to be transported from this 314.25 state cigarettes for sale in another state without first 314.26 affixing to the cigarettes the stamp required by the state in 314.27 which the cigarettes are to be sold or paying any other excise 314.28 tax on the cigarettes imposed by the state in which the 314.29 cigarettes are to be sold. 314.30 (b) A person may not affix to cigarettes the stamp required 314.31 by another state or pay any other excise tax on the cigarettes 314.32 imposed by another state if the other state prohibits stamps 314.33 from being affixed to the cigarettes, prohibits the payment of 314.34 any other excise tax on the cigarettes, or prohibits the sale of 314.35 the cigarettes. 314.36 (c) Not later than 15 days after the end of each calendar 315.1 quarter, a person who transports or causes to be transported 315.2 from this state cigarettes for sale in another state shall 315.3 submit to the commissioner a report identifying the quantity and 315.4 style of each brand of the cigarettes transported or caused to 315.5 be transported in the preceding calendar quarter, and the name 315.6 and address of each recipient of the cigarettes. This reporting 315.7 requirement only relates to cigarettes manufactured by companies 315.8 that are not original or subsequent participating manufacturers 315.9 in the Master Settlement Agreement with other states. 315.10 (d) For purposes of this section, "person" has the meaning 315.11 given in section 297F.01, subdivision 12. Person does not 315.12 include any common or contract carrier, or public warehouse that 315.13 is not owned, in whole or in part, directly or indirectly by 315.14 such person, and does not include a manufacturer thathas315.15entered intois an original or subsequent participating 315.16 manufacturer in the Master Settlement Agreement with other 315.17 states. 315.18[EFFECTIVE DATE.] This section is effective the day 315.19 following final enactment. 315.20 Sec. 5. Minnesota Statutes 2003 Supplement, section 315.21 297F.09, subdivision 1, is amended to read: 315.22 Subdivision 1. [MONTHLY RETURN; CIGARETTE DISTRIBUTOR.] On 315.23 or before the 18th day of each calendar month, a distributor 315.24 with a place of business in this state shall file a return with 315.25 the commissioner showing the quantity of cigarettes manufactured 315.26 or brought in from outside the state or purchased during the 315.27 preceding calendar month and the quantity of cigarettes sold or 315.28 otherwise disposed of in this state and outside this state 315.29 during that month. A licensed distributor outside this state 315.30 shall in like manner file a return showing the quantity of 315.31 cigarettes shipped or transported into this state during the 315.32 preceding calendar month. Returns must be made in the form and 315.33 manner prescribed by the commissioner and must contain any other 315.34 information required by the commissioner. The return must be 315.35 accompanied by a remittance for the full unpaid tax liability 315.36 shown by it.The return for the May liability and 85 percent of316.1the estimated June liability is due on the date payment of the316.2tax is due.For distributors subject to the accelerated tax 316.3 payment requirements in subdivision 10, the return for the May 316.4 liability is due two business days before June 30th of the year 316.5 and the return for the June liability is due on or before August 316.6 18th of the year. 316.7[EFFECTIVE DATE.] This section is effective the day 316.8 following final enactment. 316.9 Sec. 6. Minnesota Statutes 2003 Supplement, section 316.10 297F.09, subdivision 2, is amended to read: 316.11 Subd. 2. [MONTHLY RETURN; TOBACCO PRODUCTS DISTRIBUTOR.] 316.12 On or before the 18th day of each calendar month, a distributor 316.13 with a place of business in this state shall file a return with 316.14 the commissioner showing the quantity and wholesale sales price 316.15 of each tobacco product: 316.16 (1) brought, or caused to be brought, into this state for 316.17 sale; and 316.18 (2) made, manufactured, or fabricated in this state for 316.19 sale in this state, during the preceding calendar month. 316.20 Every licensed distributor outside this state shall in like 316.21 manner file a return showing the quantity and wholesale sales 316.22 price of each tobacco product shipped or transported to 316.23 retailers in this state to be sold by those retailers, during 316.24 the preceding calendar month. Returns must be made in the form 316.25 and manner prescribed by the commissioner and must contain any 316.26 other information required by the commissioner. The return must 316.27 be accompanied by a remittance for the full tax liability 316.28 shown.The return for the May liability and 85 percent of the316.29estimated June liability is due on the date payment of the tax316.30is due.For distributors subject to the accelerated tax payment 316.31 requirements in subdivision 10, the return for the May liability 316.32 is due two business days before June 30th of the year and the 316.33 return for the June liability is due on or before August 18th of 316.34 the year. 316.35[EFFECTIVE DATE.] This section is effective the day 316.36 following final enactment. 317.1 Sec. 7. Minnesota Statutes 2002, section 297I.01, is 317.2 amended by adding a subdivision to read: 317.3 Subd. 13a. [REINSURANCE.] "Reinsurance" is insurance 317.4 whereby an insurance company, for a consideration, agrees to 317.5 indemnify another insurance company against all or part of the 317.6 loss which the latter may sustain under the policy or policies 317.7 which it has issued. 317.8[EFFECTIVE DATE.] This section is effective the day 317.9 following final enactment. 317.10 Sec. 8. Minnesota Statutes 2002, section 297I.05, 317.11 subdivision 5, is amended to read: 317.12 Subd. 5. [HEALTH MAINTENANCE ORGANIZATIONS, NONPROFIT 317.13 HEALTH SERVICE PLAN CORPORATIONS, AND COMMUNITY INTEGRATED 317.14 SERVICE NETWORKS.] (a) Health maintenance organizations, 317.15 community integrated service networks, and nonprofit health care 317.16 service plan corporations are exempt from the tax imposed under 317.17 this section for premiums received in calendar years 2001 to 317.18 2003. 317.19 (b) For calendar years after 2003, a tax is imposed on 317.20 health maintenance organizations, community integrated service 317.21 networks, and nonprofit health care service plan corporations. 317.22 The rate of tax is equal to one percent of gross premiums less 317.23 return premiums on all direct business received by the 317.24 organization, network, or corporation or its agents in 317.25 Minnesota, in cash or otherwise, in the calendar year. 317.26 (c) In approving the premium rates as required in sections 317.27 62L.08, subdivision 8, and 62A.65, subdivision 3, the 317.28 commissioners of health and commerce shall ensure that any 317.29 exemption from tax as described in paragraph (a) is reflected in 317.30 the premium rate. 317.31 (d) The commissioner shall deposit all revenues, including 317.32 penalties and interest, collected under this chapter from health 317.33 maintenance organizations, community integrated service 317.34 networks, and nonprofit health service plan corporations in the 317.35 health care access fund. Refunds of overpayments of tax imposed 317.36 by this subdivision must be paid from the health care access 318.1 fund. There is annually appropriated from the health care 318.2 access fund to the commissioner the amount necessary to make any 318.3 refunds of the tax imposed under this subdivision. 318.4[EFFECTIVE DATE.] This section is effective January 1, 2004. 318.5 Sec. 9. [REPEALER.] 318.6 Minnesota Statutes 2002, section 297E.12, subdivision 10, 318.7 is repealed effective the day following final enactment. 318.8 ARTICLE 13 318.9 PROPERTY TAXES AND AIDS 318.10 DEPARTMENT OF REVENUE TECHNICAL PROVISIONS 318.11 Section 1. Minnesota Statutes 2003 Supplement, section 318.12 168A.05, subdivision 1a, is amended to read: 318.13 Subd. 1a. [MANUFACTURED HOME; STATEMENT OF PROPERTY TAX 318.14 PAYMENT.] In the case of a manufactured home as defined in 318.15 section 327.31, subdivision 6, the department shall not issue a 318.16 certificate of title unless the application under section 318.17 168A.04 is accompanied with a statement from the county auditor 318.18 or county treasurer where the manufactured home is presently 318.19 located, stating that all manufactured home personal property 318.20 taxes levied on the unit in the name of the current owner at the 318.21 time of transfer have been paid. For this purpose, manufactured 318.22 home personal property taxes are treated as levied on January 1 318.23 of the payable year. 318.24[EFFECTIVE DATE.] This section is effective the day 318.25 following final enactment. 318.26 Sec. 2. Minnesota Statutes 2002, section 270B.12, 318.27 subdivision 9, is amended to read: 318.28 Subd. 9. [COUNTY ASSESSORS; HOMESTEAD APPLICATION, 318.29 DETERMINATION, AND INCOME TAX STATUS.] (a) If, as a result of an 318.30 audit, the commissioner determines that a person is a Minnesota 318.31 nonresident or part-year resident for income tax purposes, the 318.32 commissioner may disclose the person's name, address, and Social 318.33 Security number to the assessor of any political subdivision in 318.34 the state, when there is reason to believe that the person may 318.35 have claimed or received homestead property tax benefits for a 318.36 corresponding assessment year in regard to property apparently 319.1 located in the assessor's jurisdiction. 319.2 (b) To the extent permitted by section 273.124, subdivision 319.3 1, paragraph (a), the Department of Revenue may verify to a 319.4 county assessor whether an individual who is requesting or 319.5 receiving a homestead classification has filed a Minnesota 319.6 income tax return as a resident for the most recent taxable year 319.7 for which the information is available. 319.8[EFFECTIVE DATE.] This section is effective the day 319.9 following final enactment. 319.10 Sec. 3. Minnesota Statutes 2002, section 272.01, 319.11 subdivision 2, is amended to read: 319.12 Subd. 2. (a) When any real or personal property which is 319.13 exempt from ad valorem taxes, and taxes in lieu thereof, is 319.14 leased, loaned, or otherwise made available and used by a 319.15 private individual, association, or corporation in connection 319.16 with a business conducted for profit, there shall be imposed a 319.17 tax, for the privilege of so using or possessing such real or 319.18 personal property, in the same amount and to the same extent as 319.19 though the lessee or user was the owner of such property. 319.20 (b) The tax imposed by this subdivision shall not apply to: 319.21 (1) property leased or used as a concession in or relative 319.22 to the use in whole or part of a public park, market, 319.23 fairgrounds, port authority, economic development authority 319.24 established under chapter 469, municipal auditorium, municipal 319.25 parking facility, municipal museum, or municipal stadium; 319.26 (2) property of an airport owned by a city, town, county, 319.27 or group thereof which is: 319.28 (i) leased to or used by any person or entity including a 319.29 fixed base operator; and 319.30 (ii) used as a hangar for the storage or repair of aircraft 319.31 or to provide aviation goods, services, or facilities to the 319.32 airport or general public; 319.33 the exception from taxation provided in this clause does not 319.34 apply to: 319.35 (i) property located at an airport owned or operated by the 319.36 Metropolitan Airports Commission or by a city of over 50,000 320.1 population according to the most recent federal census or such a 320.2 city's airport authority; 320.3 (ii) hangars leased by a private individual, association, 320.4 or corporation in connection with a business conducted for 320.5 profit other than an aviation-related business; or 320.6 (iii) facilities leased by a private individual, 320.7 association, or corporation in connection with a business for 320.8 profit, that consists of a major jet engine repair facility 320.9 financed, in whole or part, with the proceeds of state bonds and 320.10 located in a tax increment financing district; 320.11 (3) property constituting or used as a public pedestrian 320.12 ramp or concourse in connection with a public airport;or320.13 (4) property constituting or used as a passenger check-in 320.14 area or ticket sale counter, boarding area, or luggage claim 320.15 area in connection with a public airport but not the airports 320.16 owned or operated by the Metropolitan Airports Commission or 320.17 cities of over 50,000 population or an airport authority 320.18 therein. Real estate owned by a municipality in connection with 320.19 the operation of a public airport and leased or used for 320.20 agricultural purposes is not exempt; 320.21 (5) property leased, loaned, or otherwise made available to 320.22 a private individual, corporation, or association under a 320.23 cooperative farming agreement made pursuant to section 97A.135; 320.24 or 320.25 (6) property leased, loaned, or otherwise made available to 320.26 a private individual, corporation, or association under section 320.27 272.68, subdivision 4. 320.28 (c) Taxes imposed by this subdivision are payable as in the 320.29 case of personal property taxes and shall be assessed to the 320.30 lessees or users of real or personal property in the same manner 320.31 as taxes assessed to owners of real or personal property, except 320.32 that such taxes shall not become a lien against the property. 320.33 When due, the taxes shall constitute a debt due from the lessee 320.34 or user to the state, township, city, county, and school 320.35 district for which the taxes were assessed and shall be 320.36 collected in the same manner as personal property taxes. If 321.1 property subject to the tax imposed by this subdivision is 321.2 leased or used jointly by two or more persons, each lessee or 321.3 user shall be jointly and severally liable for payment of the 321.4 tax. 321.5 (d) The tax on real property of the state or any of its 321.6 political subdivisions that is leased by a private individual, 321.7 association, or corporation and becomes taxable under this 321.8 subdivision or other provision of law must be assessed and 321.9 collected as a personal property assessment. The taxes do not 321.10 become a lien against the real property. 321.11[EFFECTIVE DATE.] This section is effective the day 321.12 following final enactment. 321.13 Sec. 4. Minnesota Statutes 2002, section 272.02, 321.14 subdivision 1a, is amended to read: 321.15 Subd. 1a. [LIMITATIONS ON EXEMPTIONS.] The exemptions 321.16 granted by subdivision 1 are subject to the limits contained in 321.17 the other subdivisions of this section, section 272.025,or321.18273.13, subdivision 25, paragraph (c), clause (1) or (2), or321.19paragraph (d), clause (2)and all other provisions of applicable 321.20 law. 321.21[EFFECTIVE DATE.] This section is effective the day 321.22 following final enactment. 321.23 Sec. 5. Minnesota Statutes 2002, section 272.02, 321.24 subdivision 7, is amended to read: 321.25 Subd. 7. [INSTITUTIONS OF PUBLIC CHARITY.] Institutions of 321.26 purely public charity are exemptexcept parcels of property321.27containing structures and the structures described in section321.28273.13, subdivision 25, paragraph (e), other than those that321.29qualify for exemption under subdivision 26. In determining 321.30 whether rental housing property qualifies for exemption under 321.31 this subdivision, the following are not gifts or donations to 321.32 the owner of the rental housing: 321.33 (1) rent assistance provided by the government to or on 321.34 behalf of tenants, and 321.35 (2) financing assistance or tax credits provided by the 321.36 government to the owner on condition that specific units or a 322.1 specific quantity of units be set aside for persons or families 322.2 with certain income characteristics. 322.3[EFFECTIVE DATE.] This section is effective for taxes 322.4 payable in 2004 and thereafter. 322.5 Sec. 6. Minnesota Statutes 2002, section 272.02, is 322.6 amended by adding a subdivision to read: 322.7 Subd. 68. [PROPERTY SUBJECT TO TACONITE PRODUCTION TAX OR 322.8 NET PROCEEDS TAX.] (a) Except for mineral interests taxed under 322.9 section 273.165, and except for lands taxed under section 322.10 298.26, real and personal property described in section 298.25 322.11 is exempt to the extent the tax on taconite and iron sulphides 322.12 under section 298.24 is described in section 298.25 as being in 322.13 lieu of other taxes on such property. This exemption applies 322.14 for taxes payable in each year that the tax under section 298.24 322.15 is payable with respect to such property. 322.16 (b) Except for mineral interests taxed under section 322.17 273.165, deposits of mineral, metal, or energy resources the 322.18 mining of which is subject to taxation under section 298.015 are 322.19 exempt. This exemption applies for taxes payable in each year 322.20 that the tax under section 298.015 is payable with respect to 322.21 such property. 322.22[EFFECTIVE DATE.] This section is effective the day 322.23 following final enactment. 322.24 Sec. 7. Minnesota Statutes 2002, section 272.02, is 322.25 amended by adding a subdivision to read: 322.26 Subd. 69. [RELIGIOUS CORPORATIONS.] Personal and real 322.27 property that a religious corporation, formed under section 322.28 317A.909, necessarily uses for a religious purpose is exempt to 322.29 the extent provided in section 317A.909, subdivision 3. 322.30[EFFECTIVE DATE.] This section is effective the day 322.31 following final enactment. 322.32 Sec. 8. Minnesota Statutes 2002, section 272.02, is 322.33 amended by adding a subdivision to read: 322.34 Subd. 70. [CHILDREN'S HOMES.] Personal and real property 322.35 owned by a corporation formed under section 317A.907 is exempt 322.36 to the extent provided in section 317A.907, subdivision 7. 323.1[EFFECTIVE DATE.] This section is effective the day 323.2 following final enactment. 323.3 Sec. 9. Minnesota Statutes 2002, section 272.02, is 323.4 amended by adding a subdivision to read: 323.5 Subd. 71. [HOUSING AND REDEVELOPMENT AUTHORITY AND TRIBAL 323.6 HOUSING AUTHORITY PROPERTY.] Property owned by a housing and 323.7 redevelopment authority described in chapter 469, or by a 323.8 designated housing authority described in section 469.040, 323.9 subdivision 5, is exempt to the extent provided in chapter 469. 323.10[EFFECTIVE DATE.] This section is effective the day 323.11 following final enactment. 323.12 Sec. 10. Minnesota Statutes 2002, section 273.124, 323.13 subdivision 8, is amended to read: 323.14 Subd. 8. [HOMESTEAD OWNED BY OR LEASED TO FAMILY FARM 323.15 CORPORATION, JOINT FARM VENTURE, LIMITED LIABILITY COMPANY, OR 323.16 PARTNERSHIP.] (a) Each family farm corporation, each; each joint 323.17 family farm venture,; and each limited liability company, and323.18eachor partnershipoperatingwhich operates a family farm; is 323.19 entitled to class 1b under section 273.13, subdivision 22, 323.20 paragraph (b), or class 2a assessment for one homestead occupied 323.21 by a shareholder, member, or partner thereof who is residing on 323.22 the land, and actively engaged in farming of the land owned by 323.23 the family farm corporation, joint family farm venture, limited 323.24 liability company, or partnershipoperating a family farm. 323.25 Homestead treatment applies even if legal title to the property 323.26 is in the name of the family farm corporation, joint family farm 323.27 venture, limited liability company, or partnershipoperating the323.28family farm, and not in the name of the person residing on it. 323.29 "Family farm corporation," "family farm," and "partnership 323.30 operating a family farm" have the meanings given in section 323.31 500.24, except that the number of allowable shareholders, 323.32 members, or partners under this subdivision shall not exceed 323.33 12. "Limited liability company" has the meaning contained in 323.34 sections 322B.03, subdivision 28, and 500.24, subdivision 2, 323.35 paragraphs (l) and (m). "Joint family farm venture" means a 323.36 cooperative agreement among two or more farm enterprises 324.1 authorized to operate a family farm under section 500.24. 324.2 (b) In addition to property specified in paragraph (a), any 324.3 other residences owned by family farm corporations, joint family 324.4 farm ventures, limited liability companies, or partnerships 324.5operating a family farmdescribed in paragraph (a) which are 324.6 located on agricultural land and occupied as homesteads by its 324.7 shareholders, members, or partners who are actively engaged in 324.8 farming on behalf of that corporation, joint farm venture, 324.9 limited liability company, or partnership must also be assessed 324.10 as class 2a property or as class 1b property under section 324.11 273.13. 324.12 (c) Agricultural property that is owned by a member, 324.13 partner, or shareholder of a family farm corporation or joint 324.14 family farm venture, limited liability company operating a 324.15 family farm, or by a partnership operating a family farm and 324.16 leased to the family farm corporation, limited liability 324.17 company,orpartnershipoperating a family farm, or joint farm 324.18 venture, as defined in paragraph (a), is eligible for 324.19 classification as class 1b or class 2a under section 273.13, if 324.20 the owner is actually residing on the property, and is actually 324.21 engaged in farming the land on behalf of that corporation, joint 324.22 farm venture, limited liability company, or partnership. This 324.23 paragraph applies without regard to any legal possession rights 324.24 of the family farm corporation, joint family farm venture, 324.25 limited liability company, or partnershipoperating a family324.26farmunder the lease. 324.27[EFFECTIVE DATE.] This section is effective the day 324.28 following final enactment. 324.29 Sec. 11. Minnesota Statutes 2002, section 273.19, 324.30 subdivision 1a, is amended to read: 324.31 Subd. 1a. For purposes of this section, a lease includes 324.32 any agreement, except a cooperative farming agreement pursuant 324.33 to section 97A.135, subdivision 3, or a lease executed pursuant 324.34 to section 272.68, subdivision 4, permitting a nonexempt person 324.35 or entity to use the property, regardless of whether the 324.36 agreement is characterized as a lease. A lease has a "term of 325.1 at least one year" if the term is for a period of less than one 325.2 year and the lease permits the parties to renew the lease 325.3 without requiring that similar terms for leasing the property 325.4 will be offered to other applicants or bidders through a 325.5 competitive bidding or other form of offer to potential lessees 325.6 or users. 325.7[EFFECTIVE DATE.] This section is effective the day 325.8 following final enactment. 325.9 Sec. 12. Minnesota Statutes 2003 Supplement, section 325.10 274.014, subdivision 3, is amended to read: 325.11 Subd. 3. [PROOF OF COMPLIANCE; TRANSFER OF DUTIES.] Any 325.12 city or town that does not provide proof to the county assessor 325.13 by December 1, 2006, and each year thereafter, that it is in 325.14 compliance with the requirements of subdivision 2, and that it 325.15 had a quorum at each meeting of the board of appeal and 325.16 equalization in thepriorcurrent year, is deemed to have 325.17 transferred its board of appeal and equalization powers to the 325.18 county under section 274.01, subdivision 3, for the following 325.19 year's assessment. 325.20 The county shall notify the taxpayers when the board of 325.21 appeal and equalization for a city or town has been transferred 325.22 to the county under this subdivision and, prior to the meeting 325.23 time of the county board of equalization, the county shall make 325.24 available to those taxpayers a procedure for a review of the 325.25 assessments, including, but not limited to, open book meetings. 325.26 This alternate review process shall take place in April and May. 325.27 A local board whose powers are transferred to the county 325.28 under this subdivision may be reinstated by resolution of the 325.29 governing body of the city or town and upon proof of compliance 325.30 with the requirements of subdivision 2. The resolution and 325.31 proofs must be provided to the county assessor by December 1 in 325.32 order to be effective for the following year's assessment. 325.33[EFFECTIVE DATE.] This section is effective the day 325.34 following final enactment. 325.35 Sec. 13. Minnesota Statutes 2002, section 274.14, is 325.36 amended to read: 326.1 274.14 [LENGTH OF SESSION; RECORD.] 326.2The county board of equalization or the special board of326.3equalization appointed by it shall meet during the last ten326.4meeting days in June. For this purpose, "meeting days" are326.5defined as any day of the week excluding Saturday and Sunday.326.6 The board may meet on any ten consecutive meeting days in June, 326.7 after the second Friday in June, if. The actual meeting dates 326.8aremust be contained on the valuation notices mailed to each 326.9 property owner in the countyunderas provided in section 326.10 273.121. For this purpose, "meeting days" is defined as any day 326.11 of the week excluding Saturday and Sunday. No action taken by 326.12 the county board of review after June 30 is valid, except for 326.13 corrections permitted in sections 273.01 and 274.01. The county 326.14 auditor shall keep an accurate record of the proceedings and 326.15 orders of the board. The record must be published like other 326.16 proceedings of county commissioners. A copy of the published 326.17 record must be sent to the commissioner of revenue, with the 326.18 abstract of assessment required by section 274.16. 326.19[EFFECTIVE DATE.] This section is effective the day 326.20 following final enactment. 326.21 Sec. 14. Minnesota Statutes 2002, section 275.065, 326.22 subdivision 1a, is amended to read: 326.23 Subd. 1a. [OVERLAPPING JURISDICTIONS.] In the case of a 326.24 taxing authority lying in two or more counties, the home county 326.25 auditor shall certify the proposed levy and the proposed local 326.26 tax rate to the other county auditor bySeptember 20October 5. 326.27 The home county auditor must estimate the levy or rate in 326.28 preparing the notices required in subdivision 3, if the other 326.29 county has not certified the appropriate information. If 326.30 requested by the home county auditor, the other county auditor 326.31 must furnish an estimate to the home county auditor. 326.32[EFFECTIVE DATE.] This section is effective the day 326.33 following final enactment. 326.34 Sec. 15. Minnesota Statutes 2002, section 275.07, 326.35 subdivision 1, is amended to read: 326.36 Subdivision 1. [CERTIFICATION OF LEVY.] (a) Except as 327.1 provided under paragraph (b), the taxes voted by cities, 327.2 counties, school districts, and special districts shall be 327.3 certified by the proper authorities to the county auditor on or 327.4 before five working days after December 20 in each year. A town 327.5 must certify the levy adopted by the town board to the county 327.6 auditor by September 15 each year. If the town board modifies 327.7 the levy at a special town meeting after September 15, the town 327.8 board must recertify its levy to the county auditor on or before 327.9 five working days after December 20.The taxes certified shall327.10not be reduced by the county auditor by the aid received under327.11section 273.1398, subdivision 2, but shall be reduced by the327.12county auditor by the aid received under section 273.1398,327.13subdivision 3.If a city, town, county, school district, or 327.14 special district fails to certify its levy by that date, its 327.15 levy shall be the amount levied by it for the preceding year. 327.16 (b)(i) The taxes voted by counties under sections 103B.241, 327.17 103B.245, and 103B.251 shall be separately certified by the 327.18 county to the county auditor on or before five working days 327.19 after December 20 in each year. The taxes certified shall not 327.20 be reduced by the county auditor by the aid received under 327.21 section 273.1398, subdivisions 2 and 3. If a county fails to 327.22 certify its levy by that date, its levy shall be the amount 327.23 levied by it for the preceding year. 327.24 (ii) For purposes of the proposed property tax notice under 327.25 section 275.065 and the property tax statement under section 327.26 276.04, for the first year in which the county implements the 327.27 provisions of this paragraph, the county auditor shall reduce 327.28 the county's levy for the preceding year to reflect any amount 327.29 levied for water management purposes under clause (i) included 327.30 in the county's levy. 327.31[EFFECTIVE DATE.] This section is effective the day 327.32 following final enactment. 327.33 Sec. 16. Minnesota Statutes 2002, section 275.07, 327.34 subdivision 4, is amended to read: 327.35 Subd. 4. [REPORT TO COMMISSIONER.] (a) On or before 327.36 October 8 of each year, the county auditor shall report to the 328.1 commissioner of revenue the proposed levy certified by local 328.2 units of government under section 275.065, subdivision 1. If 328.3 any taxing authorities have notified the county auditor that 328.4 they are in the process of negotiating an agreement for sharing, 328.5 merging, or consolidating services but that when the proposed 328.6 levy was certified under section 275.065, subdivision 1c, the 328.7 agreement was not yet finalized, the county auditor shall supply 328.8 that information to the commissioner when filing the report 328.9 under this section and shall recertify the affected levies as 328.10 soon as practical after October 10. 328.11 (b) On or before January 15 of each year, the county 328.12 auditor shall report to the commissioner of revenue the final 328.13 levy certified by local units of government under subdivision 1. 328.14 (c) The levies must be reported in the manner prescribed by 328.15 the commissioner.The reports must show a total levy and the328.16amount of each special levy.328.17[EFFECTIVE DATE.] This section is effective the day 328.18 following final enactment. 328.19 Sec. 17. Minnesota Statutes 2003 Supplement, section 328.20 276.112, is amended to read: 328.21 276.112 [STATE PROPERTY TAXES; COUNTY TREASURER.] 328.22 On or before January 25 each year, for the period ending 328.23 December 31 of the prior year, and on or before two business 328.24 days before June2930 each year, for the period ending on the 328.25 most recent settlement day determined in section 276.09, and on 328.26 or before December 2 each year, for the period ending November 328.27 20, the county treasurer must make full settlement with the 328.28 county auditor according to sections 276.09, 276.10, and 276.111 328.29 for all receipts of state property taxes levied under section 328.30 275.025, and must transmit those receipts to the commissioner of 328.31 revenue by electronic means. 328.32[EFFECTIVE DATE.] This section is effective the day 328.33 following final enactment. 328.34 Sec. 18. Minnesota Statutes 2002, section 282.016, is 328.35 amended to read: 328.36 282.016 [PROHIBITED PURCHASERS.] 329.1No(a) A county auditor, county treasurer, court 329.2 administrator of the district court,orcounty assessoror, 329.3 supervisor of assessments,ordeputy or clerk or an employee of 329.4 such officer,and noa commissioner for tax-forfeited lands or 329.5 an assistant to such commissionermay, must not become a 329.6 purchaser, either personally or as an agent or attorney for 329.7 another person, of the properties offered for sale under the 329.8 provisions of this chapter, either personally, or as agent or329.9attorney for any other person, except thatin the county for 329.10 which the person performs duties. 329.11 (b) Notwithstanding paragraph (a), such officer, deputy, 329.12court administratorclerk, or employee or commissioner for 329.13 tax-forfeited lands or assistant to such commissioner may (1) 329.14 purchase lands owned by that official at the time the state 329.15 became the absolute owner thereof or (2) bid upon and purchase 329.16 forfeited property offered for sale under the alternate sale 329.17 procedure described in section 282.01, subdivision 7a. 329.18[EFFECTIVE DATE.] This section is effective the day 329.19 following final enactment. 329.20 Sec. 19. Minnesota Statutes 2002, section 282.21, is 329.21 amended to read: 329.22 282.21 [FORM OF CONVEYANCE.] 329.23 When any sale has been made under sections 282.14 to 329.24 282.22, upon payment in full of the purchase price, appropriate 329.25 conveyance in fee in such form as may be prescribed by the 329.26 attorney general shall be issued by the commissioner of finance 329.27 to the purchaser or the purchaser's assigns and this conveyance 329.28 shall have the force and effect of a patent from the state. 329.29[EFFECTIVE DATE.] This section is effective the day 329.30 following final enactment. 329.31 Sec. 20. Minnesota Statutes 2002, section 282.224, is 329.32 amended to read: 329.33 282.224 [FORM OF CONVEYANCE.] 329.34 When any sale has been made under sections 282.221 to 329.35 282.226, upon payment in full of the purchase price, appropriate 329.36 conveyance in fee, in such form as may be prescribed by the 330.1 attorney general, shall be issued by the commissioner of natural 330.2 resources to the purchaser or the purchaser's assignee, and the 330.3 conveyance shall have the force and effect of a patent from the 330.4 state. 330.5[EFFECTIVE DATE.] This section is effective the day 330.6 following final enactment. 330.7 Sec. 21. Minnesota Statutes 2002, section 282.301, is 330.8 amended to read: 330.9 282.301 [RECEIPTS FOR PAYMENTS.] 330.10 When any sale has been made under sections 282.012 and 330.11 282.241 to 282.324, the purchaser shall receive from the county 330.12 auditor at the time of repurchase a receipt, in such form as may 330.13 be prescribed by the attorney general. When the purchase price 330.14 of a parcel of land shall be paid in full, the following facts 330.15 shall be certified by the county auditor to the commissioner of 330.16 revenue of the state of Minnesota: the description of land, the 330.17 date of sale, the name of the purchaser or the purchaser's 330.18 assignee, and the date when the final installment of the 330.19 purchase price was paid. Upon payment in full of the purchase 330.20 price, the purchaser or the assignee shall receive a quitclaim 330.21 deed from the state, to be executed by the commissioner of 330.22 revenue. The deed must be sent to the county auditor who shall 330.23 have it recorded before it is forwarded to the purchaser. 330.24 Failure to make any payment herein required shall constitute 330.25 default and upon such default and cancellation in accord with 330.26 section 282.40, the right, title and interest of the purchaser 330.27 or the purchaser's heirs, representatives, or assigns in such 330.28 parcel shall terminate. 330.29[EFFECTIVE DATE.] This section is effective the day 330.30 following final enactment. 330.31 Sec. 22. Minnesota Statutes 2003 Supplement, section 330.32 477A.03, subdivision 2b, is amended to read: 330.33 Subd. 2b. [COUNTIES.] (a) For aids payable in calendar 330.34 year 2005 and thereafter, the total aids paid to counties under 330.35 section 477A.0124, subdivision 3, are limited to $100,500,000. 330.36 Each calendar year, $500,000 shall be retained by the 331.1 commissioner of revenue to make reimbursements to the 331.2 commissioner of finance for payments made under section 611.27. 331.3 For calendar year 2004,the amount shall be$500,000 is 331.4 appropriated from the general fund for this purpose in addition 331.5 to the payments authorized under section 477A.0124, subdivision 331.6 1. For calendar year 2005 and subsequent years, the amount 331.7 shall be deducted from the appropriationunder this paragraph331.8 for section 477A.0124, subdivision 1. The reimbursements shall 331.9 be to defray the additional costs associated with court-ordered 331.10 counsel under section 611.27. Any retained amounts not used for 331.11 reimbursement in a year shall be included in the next 331.12 distribution of county need aid that is certified to the county 331.13 auditors for the purpose of property tax reduction for the next 331.14 taxes payable year. 331.15 (b) For aids payable in 2005 and thereafter, the total aids 331.16 under section 477A.0124, subdivision 4, are limited to 331.17 $105,000,000. The commissioner of finance shall bill the 331.18 commissioner of revenue for the cost of preparation of local 331.19 impact notes as required by section 3.987, not to exceed 331.20 $207,000 in fiscal year 2004 and thereafter. The commissioner 331.21 of education shall bill the commissioner of revenue for the cost 331.22 of preparation of local impact notes for school districts as 331.23 required by section 3.987, not to exceed $7,000 in fiscal year 331.24 2004 and thereafter. For aids payable in 2004, $214,000 is 331.25 appropriated from the general fund for this purpose. For aids 331.26 payable in 2005 and thereafter, the commissioner of revenue 331.27 shall deduct the amounts billed under this paragraph from the 331.28 appropriation under thisparagraphsection for section 331.29 477A.0124, subdivision 4. The amounts deducted are appropriated 331.30 to the commissioner of finance and the commissioner of education 331.31 for the preparation of local impact notes. 331.32[EFFECTIVE DATE.] This section is effective for aids 331.33 payable in 2004 and thereafter. 331.34 Sec. 23. Laws 2003, First Special Session chapter 21, 331.35 article 6, section 9, is amended to read: 331.36 Sec. 9. [DEFINITIONS.] 332.1 (a) For purposes of sections 9 to 15, the following terms 332.2 have the meanings given them in this section. 332.3 (b) The 2003 and 2004 "levy plus aid revenue base" for a 332.4 county is the sum of that county's certified property tax levy 332.5 for taxes payable in 2003, plus the sum of the amounts the 332.6 county was certified to receive in the designated calendar year 332.7 as: 332.8 (1) homestead and agricultural credit aid under Minnesota 332.9 Statutes, section 273.1398, subdivision 2, plus any additional 332.10 aid under section 16, minus the amount calculated under section 332.11 273.1398, subdivision 4a, paragraph (b), for counties in 332.12 judicial districts one, three, six, and ten, and 25 percent of 332.13 the amount calculated under section 273.1398, subdivision 4a, 332.14 paragraph (b), for counties in judicial districts two and four; 332.15 (2) the amount of county manufactured home homestead and 332.16 agricultural credit aid computed for the county for payment in 332.17 2003 under section 273.166; 332.18 (3) criminal justice aid under Minnesota Statutes, section 332.19 477A.0121; 332.20 (4) family preservation aid under Minnesota Statutes, 332.21 section 477A.0122; 332.22 (5) taconite aids under Minnesota Statutes, sections 298.28 332.23 and 298.282, including any aid which was required to be placed 332.24 in a special fund for expenditure in the next succeeding year; 332.25 and 332.26 (6) county program aid under section 477A.0124, exclusive 332.27 of the attached machinery aid component. 332.28[EFFECTIVE DATE.] This section is effective for aids 332.29 payable in 2004. 332.30 Sec. 24. [REPEALER.] 332.31 Minnesota Statutes 2002, sections 273.19, subdivision 5; 332.32 274.05; 275.15; and 283.07, are repealed effective the day 332.33 following final enactment. 332.34 ARTICLE 14 332.35 MISCELLANEOUS 332.36 DEPARTMENT OF REVENUE TECHNICAL CHANGES 333.1 Section 1. Minnesota Statutes 2002, section 270.65, is 333.2 amended to read: 333.3 270.65 [DATE OF ASSESSMENT; DEFINITION.] 333.4 For purposes of taxes administered by the commissioner, the 333.5 term "date of assessment" means the date a liability reported on 333.6 a return was entered into the records of the commissioner or the 333.7 date a return should have been filed, whichever is later; or, in 333.8 the case of taxes determined by the commissioner, "date of 333.9 assessment" means the date of the order assessing taxes or date 333.10 of the return made by the commissioner; or, in the case of an 333.11 amended return filed by the taxpayer, the assessment date is the 333.12 date additional liability reported on the return, if any, was 333.13 entered into the records of the commissioner; or, in the case of 333.14 a consent agreement signed by the taxpayer under section 270.67, 333.15 subdivision 3, the assessment date is the notice date shown on 333.16 the agreement; or, in the case of a check from a taxpayer that 333.17 is dishonored and results in an erroneous refund being given to 333.18 the taxpayer, remittance of the check is deemed to be an 333.19 assessment and the "date of assessment" is the date the check 333.20 was received by the commissioner. 333.21[EFFECTIVE DATE.] This section is effective the day 333.22 following final enactment. 333.23 Sec. 2. Minnesota Statutes 2003 Supplement, section 333.24 289A.19, subdivision 4, is amended to read: 333.25 Subd. 4. [ESTATE TAX RETURNS.]When in the commissioner's333.26judgment good cause exists, the commissioner may extend the time333.27for filing an estate tax return for not more than six months.333.28 When an extension to file the federal estate tax return has been 333.29 granted under section 6081 of the Internal Revenue Code, the 333.30 time for filing the estate tax return is extended for that 333.31 period. If the estate requests an extension to file an estate 333.32 tax return within the time provided in section 289A.18, 333.33 subdivision 3, the commissioner shall extend the time for filing 333.34 the estate tax return for six months. 333.35[EFFECTIVE DATE.] This section is effective for estates of 333.36 decedents dying after December 31, 2003. 334.1 Sec. 3. Minnesota Statutes 2002, section 289A.37, 334.2 subdivision 5, is amended to read: 334.3 Subd. 5. [SUFFICIENCY OF NOTICE.] An order of assessment, 334.4 sent postage prepaid by United States mail to the taxpayer at 334.5 the taxpayer's last known address, or sent by electronic mail to 334.6 the taxpayer's last known electronic mailing address as provided 334.7 for in section 325L.08, is sufficient even if the taxpayer is 334.8 deceased or is under a legal disability, or, in the case of a 334.9 corporation, has terminated its existence, unless the department 334.10 has been provided with a new address by a party authorized to 334.11 receive notices of assessment. 334.12[EFFECTIVE DATE.] This section is effective the day 334.13 following final enactment. 334.14 Sec. 4. Minnesota Statutes 2002, section 289A.60, 334.15 subdivision 6, is amended to read: 334.16 Subd. 6. [PENALTY FOR FAILURE TO FILE, FALSE OR FRAUDULENT 334.17 RETURN, EVASION.] If a person, with intent to evade or defeat a 334.18 tax or payment of tax, fails to file a return, files a false or 334.19 fraudulent return, or attempts in any other manner to evade or 334.20 defeat a tax or payment of tax, there is imposed on the person a 334.21 penalty equal to 50 percent of the tax, less amounts paid by the 334.22 person on the basis of the false or fraudulent return, if any, 334.23 due for the period to which the return related. 334.24[EFFECTIVE DATE.] This section is effective the day 334.25 following final enactment. 334.26 Sec. 5. Minnesota Statutes 2003 Supplement, section 334.27 290.01, subdivision 19a, is amended to read: 334.28 Subd. 19a. [ADDITIONS TO FEDERAL TAXABLE INCOME.] For 334.29 individuals, estates, and trusts, there shall be added to 334.30 federal taxable income: 334.31 (1)(i) interest income on obligations of any state other 334.32 than Minnesota or a political or governmental subdivision, 334.33 municipality, or governmental agency or instrumentality of any 334.34 state other than Minnesota exempt from federal income taxes 334.35 under the Internal Revenue Code or any other federal statute; 334.36 and 335.1 (ii) exempt-interest dividends as defined in section 335.2 852(b)(5) of the Internal Revenue Code, except the portion of 335.3 the exempt-interest dividends derived from interest income on 335.4 obligations of the state of Minnesota or its political or 335.5 governmental subdivisions, municipalities, governmental agencies 335.6 or instrumentalities, but only if the portion of the 335.7 exempt-interest dividends from such Minnesota sources paid to 335.8 all shareholders represents 95 percent or more of the 335.9 exempt-interest dividends that are paid by the regulated 335.10 investment company as defined in section 851(a) of the Internal 335.11 Revenue Code, or the fund of the regulated investment company as 335.12 defined in section 851(g) of the Internal Revenue Code, making 335.13 the payment; and 335.14 (iii) for the purposes of items (i) and (ii), interest on 335.15 obligations of an Indian tribal government described in section 335.16 7871(c) of the Internal Revenue Code shall be treated as 335.17 interest income on obligations of the state in which the tribe 335.18 is located; 335.19 (2) the amount of income taxes paid or accrued within the 335.20 taxable year under this chapter andincomethe amount of taxes 335.21 based on net income paid to any other state or to any province 335.22 or territory of Canada, to the extent allowed as a deduction 335.23 under section 63(d) of the Internal Revenue Code, but the 335.24 addition may not be more than the amount by which the itemized 335.25 deductions as allowed under section 63(d) of the Internal 335.26 Revenue Code exceeds the amount of the standard deduction as 335.27 defined in section 63(c) of the Internal Revenue Code. For the 335.28 purpose of this paragraph, the disallowance of itemized 335.29 deductions under section 68 of the Internal Revenue Code of 335.30 1986, income tax is the last itemized deduction disallowed; 335.31 (3) the capital gain amount of a lump sum distribution to 335.32 which the special tax under section 1122(h)(3)(B)(ii) of the Tax 335.33 Reform Act of 1986, Public Law 99-514, applies; 335.34 (4) the amount of income taxes paid or accrued within the 335.35 taxable year under this chapter andincometaxes based on net 335.36 income paid to any other state or any province or territory of 336.1 Canada, to the extent allowed as a deduction in determining 336.2 federal adjusted gross income. For the purpose of this 336.3 paragraph, income taxes do not include the taxes imposed by 336.4 sections 290.0922, subdivision 1, paragraph (b), 290.9727, 336.5 290.9728, and 290.9729; 336.6 (5) the amount of expense, interest, or taxes disallowed 336.7 pursuant to section 290.10; 336.8 (6) the amount of a partner's pro rata share of net income 336.9 which does not flow through to the partner because the 336.10 partnership elected to pay the tax on the income under section 336.11 6242(a)(2) of the Internal Revenue Code; and 336.12 (7) 80 percent of the depreciation deduction allowed under 336.13 section 168(k) of the Internal Revenue Code. For purposes of 336.14 this clause, if the taxpayer has an activity that in the taxable 336.15 year generates a deduction for depreciation under section 168(k) 336.16 and the activity generates a loss for the taxable year that the 336.17 taxpayer is not allowed to claim for the taxable year, "the 336.18 depreciation allowed under section 168(k)" for the taxable year 336.19 is limited to excess of the depreciation claimed by the activity 336.20 under section 168(k) over the amount of the loss from the 336.21 activity that is not allowed in the taxable year. In succeeding 336.22 taxable years when the losses not allowed in the taxable year 336.23 are allowed, the depreciation under section 168(k) is allowed. 336.24[EFFECTIVE DATE.] This section is effective for tax years 336.25 beginning after December 31, 2003. 336.26 Sec. 6. Minnesota Statutes 2002, section 290.06, 336.27 subdivision 22, is amended to read: 336.28 Subd. 22. [CREDIT FOR TAXES PAID TO ANOTHER STATE.] (a) A 336.29 taxpayer who is liable for taxes based onor measured bynet 336.30 income to another state, as provided in paragraphs (b) through 336.31 (f), upon income allocated or apportioned to Minnesota, is 336.32 entitled to a credit for the tax paid to another state if the 336.33 tax is actually paid in the taxable year or a subsequent taxable 336.34 year. A taxpayer who is a resident of this state pursuant to 336.35 section 290.01, subdivision 7,clause (2)paragraph (b), and who 336.36 is subject to income tax as a resident in the state of the 337.1 individual's domicile is not allowed this credit unless the 337.2 state of domicile does not allow a similar credit. 337.3 (b) For an individual, estate, or trust, the credit is 337.4 determined by multiplying the tax payable under this chapter by 337.5 the ratio derived by dividing the income subject to tax in the 337.6 other state that is also subject to tax in Minnesota while a 337.7 resident of Minnesota by the taxpayer's federal adjusted gross 337.8 income, as defined in section 62 of the Internal Revenue Code, 337.9 modified by the addition required by section 290.01, subdivision 337.10 19a, clause (1), and the subtraction allowed by section 290.01, 337.11 subdivision 19b, clause (1), to the extent the income is 337.12 allocated or assigned to Minnesota under sections 290.081 and 337.13 290.17. 337.14 (c) If the taxpayer is an athletic team that apportions all 337.15 of its income under section 290.17, subdivision 5, the credit is 337.16 determined by multiplying the tax payable under this chapter by 337.17 the ratio derived from dividing the total net income subject to 337.18 tax in the other state by the taxpayer's Minnesota taxable 337.19 income. 337.20 (d) The credit determined under paragraph (b) or (c) shall 337.21 not exceed the amount of tax so paid to the other state on the 337.22 gross income earned within the other state subject to tax under 337.23 this chapter, nor shall the allowance of the credit reduce the 337.24 taxes paid under this chapter to an amount less than what would 337.25 be assessed if such income amount was excluded from taxable net 337.26 income. 337.27 (e) In the case of the tax assessed on a lump sum 337.28 distribution under section 290.032, the credit allowed under 337.29 paragraph (a) is the tax assessed by the other state on the lump 337.30 sum distribution that is also subject to tax under section 337.31 290.032, and shall not exceed the tax assessed under section 337.32 290.032. To the extent the total lump sum distribution defined 337.33 in section 290.032, subdivision 1, includes lump sum 337.34 distributions received in prior years or is all or in part an 337.35 annuity contract, the reduction to the tax on the lump sum 337.36 distribution allowed under section 290.032, subdivision 2, 338.1 includes tax paid to another state that is properly apportioned 338.2 to that distribution. 338.3 (f) If a Minnesota resident reported an item of income to 338.4 Minnesota and is assessed tax in such other state on that same 338.5 income after the Minnesota statute of limitations has expired, 338.6 the taxpayer shall receive a credit for that year under 338.7 paragraph (a), notwithstanding any statute of limitations to the 338.8 contrary. The claim for the credit must be submitted within one 338.9 year from the date the taxes were paid to the other state. The 338.10 taxpayer must submit sufficient proof to show entitlement to a 338.11 credit. 338.12 (g) For the purposes of this subdivision, a resident 338.13 shareholder of a corporation treated as an "S" corporation under 338.14 section 290.9725, must be considered to have paid a tax imposed 338.15 on the shareholder in an amount equal to the shareholder's pro 338.16 rata share of any net income tax paid by the S corporation to 338.17 another state. For the purposes of the preceding sentence, the 338.18 term "net income tax" means any tax imposed on or measured by a 338.19 corporation's net income. 338.20 (h) For the purposes of this subdivision, a resident 338.21 partner of an entity taxed as a partnership under the Internal 338.22 Revenue Code must be considered to have paid a tax imposed on 338.23 the partner in an amount equal to the partner's pro rata share 338.24 of any net income tax paid by the partnership to another state. 338.25 For purposes of the preceding sentence, the term "net income" 338.26 tax means any tax imposed on or measured by a partnership's net 338.27 income. 338.28 (i) For the purposes of this subdivision, "another state": 338.29 (1) includes: 338.30 (i) the District of Columbia; and 338.31 (ii) a province or territory of Canada; but 338.32 (2) excludes Puerto Rico and the several territories 338.33 organized by Congress. 338.34 (j) The limitations on the credit in paragraphs (b), (c), 338.35 and (d), are imposed on a state by state basis. 338.36 (k) For a tax imposed by a province or territory of Canada, 339.1 the tax for purposes of this subdivision is the excess of the 339.2 tax over the amount of the foreign tax credit allowed under 339.3 section 27 of the Internal Revenue Code. In determining the 339.4 amount of the foreign tax credit allowed, the net income taxes 339.5 imposed by Canada on the income are deducted first. Any 339.6 remaining amount of the allowable foreign tax credit reduces the 339.7 provincial or territorial tax that qualifies for the credit 339.8 under this subdivision. 339.9[EFFECTIVE DATE.] This section is effective for tax years 339.10 beginning after December 31, 2003. 339.11 Sec. 7. Minnesota Statutes 2003 Supplement, section 339.12 290.0674, subdivision 1, is amended to read: 339.13 Subdivision 1. [CREDIT ALLOWED.] An individual is allowed 339.14 a credit against the tax imposed by this chapter in an amount 339.15 equal to 75 percent of the amount paid for education-related 339.16 expenses for a qualifying child in kindergarten through grade 339.17 12. For purposes of this section, "education-related expenses" 339.18 means: 339.19 (1) fees or tuition for instruction by an instructor under 339.20 section 120A.22, subdivision 10, clause (1), (2), (3), (4), or 339.21 (5), or a member of the Minnesota Music Teachers Association, 339.22 and who is not a lineal ancestor or sibling of the dependent for 339.23 instruction outside the regular school day or school year, 339.24 including tutoring, driver's education offered as part of school 339.25 curriculum, regardless of whether it is taken from a public or 339.26 private entity or summer camps, in grade or age appropriate 339.27 curricula that supplement curricula and instruction available 339.28 during the regular school year, that assists a dependent to 339.29 improve knowledge of core curriculum areas or to expand 339.30 knowledge and skills under thegraduation rule under section339.31120B.02, paragraph (e), clauses (1) to (7), (9), and (10)339.32 required academic standards under section 120B.021, subdivision 339.33 1, and the elective standard under section 120B.022, subdivision 339.34 1, clause (3), and that do not include the teaching of religious 339.35 tenets, doctrines, or worship, the purpose of which is to 339.36 instill such tenets, doctrines, or worship; 340.1 (2) expenses for textbooks, including books and other 340.2 instructional materials and equipment purchased or leased for 340.3 use in elementary and secondary schools in teaching only those 340.4 subjects legally and commonly taught in public elementary and 340.5 secondary schools in this state. "Textbooks" does not include 340.6 instructional books and materials used in the teaching of 340.7 religious tenets, doctrines, or worship, the purpose of which is 340.8 to instill such tenets, doctrines, or worship, nor does it 340.9 include books or materials for extracurricular activities 340.10 including sporting events, musical or dramatic events, speech 340.11 activities, driver's education, or similar programs; 340.12 (3) a maximum expense of $200 per family for personal 340.13 computer hardware, excluding single purpose processors, and 340.14 educational software that assists a dependent to improve 340.15 knowledge of core curriculum areas or to expand knowledge and 340.16 skills under thegraduation rule under section 120B.02required 340.17 academic standards under section 120B.021, subdivision 1, and 340.18 the elective standard under section 120B.022, subdivision 1, 340.19 clause (3), purchased for use in the taxpayer's home and not 340.20 used in a trade or business regardless of whether the computer 340.21 is required by the dependent's school; and 340.22 (4) the amount paid to others for transportation of a 340.23 qualifying child attending an elementary or secondary school 340.24 situated in Minnesota, North Dakota, South Dakota, Iowa, or 340.25 Wisconsin, wherein a resident of this state may legally fulfill 340.26 the state's compulsory attendance laws, which is not operated 340.27 for profit, and which adheres to the provisions of the Civil 340.28 Rights Act of 1964 and chapter 363A. 340.29 For purposes of this section, "qualifying child" has the 340.30 meaning given in section 32(c)(3) of the Internal Revenue Code. 340.31[EFFECTIVE DATE.] This section is effective for tax years 340.32 beginning after December 31, 2003. 340.33 Sec. 8. Minnesota Statutes 2002, section 290.92, 340.34 subdivision 1, is amended to read: 340.35 Subdivision 1. [DEFINITIONS.] (1) [WAGES.] For purposes 340.36 of this section, the term "wages" means the same as that term is 341.1 defined in section 3401(a) and (f) of the Internal Revenue Code. 341.2 (2) [PAYROLL PERIOD.] For purposes of this section the 341.3 term "payroll period" means a period for which a payment of 341.4 wages is ordinarily made to the employee by the employee's 341.5 employer, and the term "miscellaneous payroll period" means a 341.6 payroll period other than a daily, weekly, biweekly, 341.7 semimonthly, monthly, quarterly, semiannual, or annual payroll 341.8 period. 341.9 (3) [EMPLOYEE.] For purposes of this section the term 341.10 "employee" means any resident individual performing services for 341.11 an employer, either within or without, or both within and 341.12 without the state of Minnesota, and every nonresident individual 341.13 performing services within the state of Minnesota, the 341.14 performance of which services constitute, establish, and 341.15 determine the relationship between the parties as that of 341.16 employer and employee. As used in the preceding sentence, the 341.17 term "employee" includes an officer of a corporation, and an 341.18 officer, employee, or elected official of the United States, a 341.19 state, or any political subdivision thereof, or the District of 341.20 Columbia, or any agency or instrumentality of any one or more of 341.21 the foregoing. 341.22 (4) [EMPLOYER.] For purposes of this section the term 341.23 "employer" means any person, including individuals, fiduciaries, 341.24 estates, trusts, partnerships, limited liability companies, and 341.25 corporations transacting business in or deriving any income from 341.26 sources within the state of Minnesota for whom an individual 341.27 performs or performed any service, of whatever nature, as the 341.28 employee of such person, except that if the person for whom the 341.29 individual performs or performed the services does not have 341.30legalcontrol of the payment of the wages for such services, the 341.31 term "employer," except for purposes of paragraph (1), means the 341.32 person havinglegalcontrol of the payment of such wages. As 341.33 used in the preceding sentence, the term "employer" includes any 341.34 corporation, individual, estate, trust, or organization which is 341.35 exempt from taxation under section 290.05 and further includes, 341.36 but is not limited to, officers of corporations who havelegal342.1 control, either individually or jointly with another or others, 342.2 of the payment of the wages. 342.3 (5) [NUMBER OF WITHHOLDING EXEMPTIONS CLAIMED.] For 342.4 purposes of this section, the term "number of withholding 342.5 exemptions claimed" means the number of withholding exemptions 342.6 claimed in a withholding exemption certificate in effect under 342.7 subdivision 5, except that if no such certificate is in effect, 342.8 the number of withholding exemptions claimed shall be considered 342.9 to be zero. 342.10[EFFECTIVE DATE.] This section is effective the day 342.11 following final enactment. 342.12 Sec. 9. Minnesota Statutes 2002, section 290C.05, is 342.13 amended to read: 342.14 290C.05 [ANNUAL CERTIFICATION.] 342.15 On or before July 1 of each year, beginning with the year 342.16 after the claimant has received an approved application, the 342.17 commissioner shall send each claimant enrolled under the 342.18 sustainable forest incentive program a certification form. The 342.19 claimant must sign the certification, attesting that the 342.20 requirements and conditions for continued enrollment in the 342.21 program are currently being met, and must return the signed 342.22 certification form to the commissioner by August 15 of that same 342.23 year.Failure toIf the claimant does not return an annual 342.24 certification form by the due dateshall result in removal of342.25the lands from the provisions of the sustainable forest342.26incentive program, and the imposition of any applicable removal342.27penalty, the provisions in section 290C.11 apply.The claimant342.28may appeal the removal and any associated penalty according to342.29the procedures and within the time allowed under this chapter.342.30[EFFECTIVE DATE.] This section is effective the day 342.31 following final enactment. 342.32 Sec. 10. [290C.055] [LENGTH OF COVENANT.] 342.33 The covenant remains in effect for a minimum of eight 342.34 years. If land is removed from the program after it has been 342.35 enrolled for less than four years, the covenant remains in 342.36 effect for eight years from the date recorded. 343.1 In the case of land that has been enrolled for more than 343.2 four years and is removed from the program for any reason, there 343.3 is a four-year waiting period to end the covenant. The covenant 343.4 remains in effect until January 1 of the fifth calendar year 343.5 that begins after the date that: 343.6 (1) the commissioner receives notification from the 343.7 claimant that the claimant wishes to be removed from the program 343.8 under section 290C.10, or 343.9 (2) the date that land is removed from the program under 343.10 section 290C.11. 343.11 Notwithstanding the other provisions of this section, the 343.12 covenant is terminated at the same time that land is removed 343.13 from the program due to acquisition of title or possession for a 343.14 public purpose under section 290C.10. 343.15[EFFECTIVE DATE.] This section is effective the day 343.16 following final enactment. 343.17 Sec. 11. Minnesota Statutes 2002, section 325D.33, 343.18 subdivision 6, is amended to read: 343.19 Subd. 6. [VIOLATIONS.] If the commissioner determines that 343.20 a distributor is violating any provision of this chapter, the 343.21 commissioner must give the distributor a written warning 343.22 explaining the violation and an explanation of what must be done 343.23 to comply with this chapter. Within ten days of issuance of the 343.24 warning, the distributor must notify the commissioner that the 343.25 distributor has complied with the commissioner's recommendation 343.26 or request that the commissioner set the issue for a hearing 343.27 pursuant to chapter 14. If a hearing is requested, the hearing 343.28 shall be scheduled within 20 days of the request and the 343.29 recommendation of the administrative law judge shall be issued 343.30 within five working days of the close of the hearing. The 343.31 commissioner's final determination shall be issued within five 343.32 working days of the receipt of the administrative law judge's 343.33 recommendation. If the commissioner's final determination is 343.34 adverse to the distributor and the distributor does not comply 343.35 within ten days of receipt of the commissioner's final 343.36 determination, the commissioner may order the distributor to 344.1 immediately cease the stamping of cigarettes. As soon as 344.2 practicable after the order, the commissioner must remove the 344.3 meter and any unapplied cigarette stamps from the premises of 344.4 the distributor. 344.5 If within ten days of issuance of the written warning the 344.6 distributor has not complied with the commissioner's 344.7 recommendation or requested a hearing, the commissioner may 344.8 order the distributor to immediately cease the stamping of 344.9 cigarettes and remove the meter and unapplied stamps from the 344.10 distributor's premises. 344.11If, within any 12-month period, the commissioner has issued344.12three written warnings to any distributor, even if the344.13distributor has complied within ten days, the commissioner shall344.14notify the distributor of the commissioner's intent to revoke344.15the distributor's license for a continuing course of conduct344.16contrary to this chapter. For purposes of this paragraph, a344.17written warning that was ultimately resolved by removal of the344.18warning by the commissioner is not deemed to be a warning. The344.19commissioner must notify the distributor of the date and time of344.20a hearing pursuant to chapter 14 at least 20 days before the344.21hearing is held. The hearing must provide an opportunity for344.22the distributor to show cause why the license should not be344.23revoked. If the commissioner revokes a distributor's license,344.24the commissioner shall not issue a new license to that344.25distributor for 180 days.344.26[EFFECTIVE DATE.] This section is effective the day 344.27 following final enactment. 344.28 Sec. 12. Minnesota Statutes 2003 Supplement, section 344.29 349.12, subdivision 25, is amended to read: 344.30 Subd. 25. [LAWFUL PURPOSE.] (a) "Lawful purpose" means one 344.31 or more of the following: 344.32 (1) any expenditure by or contribution to a 501(c)(3) or 344.33 festival organization, as defined in subdivision 15a, provided 344.34 that the organization and expenditure or contribution are in 344.35 conformity with standards prescribed by the board under section 344.36 349.154, which standards must apply to both types of 345.1 organizations in the same manner and to the same extent; 345.2 (2) a contribution to an individual or family suffering 345.3 from poverty, homelessness, or physical or mental disability, 345.4 which is used to relieve the effects of that poverty, 345.5 homelessness, or disability; 345.6 (3) a contribution to an individual for treatment for 345.7 delayed posttraumatic stress syndrome or a contribution to a 345.8 program recognized by the Minnesota Department of Human Services 345.9 for the education, prevention, or treatment of compulsive 345.10 gambling; 345.11 (4) a contribution to or expenditure on a public or private 345.12 nonprofit educational institution registered with or accredited 345.13 by this state or any other state; 345.14 (5) a contribution to a scholarship fund for defraying the 345.15 cost of education to individuals where the funds are awarded 345.16 through an open and fair selection process; 345.17 (6) activities by an organization or a government entity 345.18 which recognize humanitarian or military service to the United 345.19 States, the state of Minnesota, or a community, subject to rules 345.20 of the board, provided that the rules must not include mileage 345.21 reimbursements in the computation of the per diem reimbursement 345.22 limit and must impose no aggregate annual limit on the amount of 345.23 reasonable and necessary expenditures made to support: 345.24 (i) members of a military marching or color guard unit for 345.25 activities conducted within the state; 345.26 (ii) members of an organization solely for services 345.27 performed by the members at funeral services; or 345.28 (iii) members of military marching, color guard, or honor 345.29 guard units may be reimbursed for participating in color guard, 345.30 honor guard, or marching unit events within the state or states 345.31 contiguous to Minnesota at a per participant rate of up to $35 345.32 per diem; 345.33 (7) recreational, community, and athletic facilities and 345.34 activities intended primarily for persons under age 21, provided 345.35 that such facilities and activities do not discriminate on the 345.36 basis of gender and the organization complies with section 346.1 349.154; 346.2 (8) payment of local taxes authorized under this chapter, 346.3 taxes imposed by the United States on receipts from lawful 346.4 gambling, the taxes imposed by section 297E.02, subdivisions 1, 346.5 4, 5, and 6, and the tax imposed on unrelated business income by 346.6 section 290.05, subdivision 3; 346.7 (9) payment of real estate taxes and assessments on 346.8 permitted gambling premiseswhollyowned by the licensed 346.9 organization paying the taxes, or wholly leased by a licensed 346.10 veterans organization under a national charter recognized under 346.11 section 501(c)(19) of the Internal Revenue Code, not to exceed: 346.12 (i) for premises used for bingo, the amount that an 346.13 organization may expend under board rules on rent for bingo; and 346.14 (ii) $35,000 per year for premises used for other forms of 346.15 lawful gambling; 346.16 (10) a contribution to the United States, this state or any 346.17 of its political subdivisions, or any agency or instrumentality 346.18 thereof other than a direct contribution to a law enforcement or 346.19 prosecutorial agency; 346.20 (11) a contribution to or expenditure by a nonprofit 346.21 organization which is a church or body of communicants gathered 346.22 in common membership for mutual support and edification in 346.23 piety, worship, or religious observances; 346.24 (12) payment of the reasonable costs of an audit required 346.25 in section 297E.06, subdivision 4, provided the annual audit is 346.26 filed in a timely manner with the Department of Revenue; 346.27 (13) a contribution to or expenditure on a wildlife 346.28 management project that benefits the public at-large, provided 346.29 that the state agency with authority over that wildlife 346.30 management project approves the project before the contribution 346.31 or expenditure is made; 346.32 (14) expenditures, approved by the commissioner of natural 346.33 resources, by an organization for grooming and maintaining 346.34 snowmobile trails and all-terrain vehicle trails that are (1) 346.35 grant-in-aid trails established under section 85.019, or (2) 346.36 other trails open to public use, including purchase or lease of 347.1 equipment for this purpose; 347.2 (15) conducting nutritional programs, food shelves, and 347.3 congregate dining programs primarily for persons who are age 62 347.4 or older or disabled; 347.5 (16) a contribution to a community arts organization, or an 347.6 expenditure to sponsor arts programs in the community, including 347.7 but not limited to visual, literary, performing, or musical 347.8 arts; 347.9 (17) an expenditure by a licensed veterans organization for 347.10 payment of water, fuel for heating, electricity, and sewer costs 347.11 for a building wholly owned or wholly leased by and used as the 347.12 primary headquarters of the licensed veterans organization; 347.13 (18) expenditure by a licensed veterans organization of up 347.14 to $5,000 in a calendar year in net costs to the organization 347.15 for meals and other membership events, limited to members and 347.16 spouses, held in recognition of military service. No more than 347.17 $5,000 can be expended in total per calendar year under this 347.18 clause by all licensed veterans organizations sharing the same 347.19 veterans post home; or 347.20 (19) payment of fees authorized under this chapter imposed 347.21 by the state of Minnesota to conduct lawful gambling in 347.22 Minnesota. 347.23 (b) Notwithstanding paragraph (a), "lawful purpose" does 347.24 not include: 347.25 (1) any expenditure made or incurred for the purpose of 347.26 influencing the nomination or election of a candidate for public 347.27 office or for the purpose of promoting or defeating a ballot 347.28 question; 347.29 (2) any activity intended to influence an election or a 347.30 governmental decision-making process; 347.31 (3) the erection, acquisition, improvement, expansion, 347.32 repair, or maintenance of real property or capital assets owned 347.33 or leased by an organization, unless the board has first 347.34 specifically authorized the expenditures after finding that (i) 347.35 the real property or capital assets will be used exclusively for 347.36 one or more of the purposes in paragraph (a); (ii) with respect 348.1 to expenditures for repair or maintenance only, that the 348.2 property is or will be used extensively as a meeting place or 348.3 event location by other nonprofit organizations or community or 348.4 service groups and that no rental fee is charged for the use; 348.5 (iii) with respect to expenditures, including a mortgage payment 348.6 or other debt service payment, for erection or acquisition only, 348.7 that the erection or acquisition is necessary to replace with a 348.8 comparable building, a building owned by the organization and 348.9 destroyed or made uninhabitable by fire or natural disaster, 348.10 provided that the expenditure may be only for that part of the 348.11 replacement cost not reimbursed by insurance; (iv) with respect 348.12 to expenditures, including a mortgage payment or other debt 348.13 service payment, for erection or acquisition only, that the 348.14 erection or acquisition is necessary to replace with a 348.15 comparable building a building owned by the organization that 348.16 was acquired from the organization by eminent domain or sold by 348.17 the organization to a purchaser that the organization reasonably 348.18 believed would otherwise have acquired the building by eminent 348.19 domain, provided that the expenditure may be only for that part 348.20 of the replacement cost that exceeds the compensation received 348.21 by the organization for the building being replaced; or (v) with 348.22 respect to an expenditure to bring an existing building into 348.23 compliance with the Americans with Disabilities Act under item 348.24 (ii), an organization has the option to apply the amount of the 348.25 board-approved expenditure to the erection or acquisition of a 348.26 replacement building that is in compliance with the Americans 348.27 with Disabilities Act; 348.28 (4) an expenditure by an organization which is a 348.29 contribution to a parent organization, foundation, or affiliate 348.30 of the contributing organization, if the parent organization, 348.31 foundation, or affiliate has provided to the contributing 348.32 organization within one year of the contribution any money, 348.33 grants, property, or other thing of value; 348.34 (5) a contribution by a licensed organization to another 348.35 licensed organization unless the board has specifically 348.36 authorized the contribution. The board must authorize such a 349.1 contribution when requested to do so by the contributing 349.2 organization unless it makes an affirmative finding that the 349.3 contribution will not be used by the recipient organization for 349.4 one or more of the purposes in paragraph (a); or 349.5 (6) a contribution to a statutory or home rule charter 349.6 city, county, or town by a licensed organization with the 349.7 knowledge that the governmental unit intends to use the 349.8 contribution for a pension or retirement fund. 349.9[EFFECTIVE DATE.] This section is effective for taxes 349.10 payable in 2004 and thereafter. 349.11 Sec. 13. Minnesota Statutes 2002, section 473.843, 349.12 subdivision 5, is amended to read: 349.13 Subd. 5. [PENALTIES; ENFORCEMENT.] The audit, penalty, and 349.14 enforcement provisions applicable to corporate franchise taxes 349.15 imposed under chapter 290 apply to the fees imposed under this 349.16 section. The commissioner of revenue shall administer the 349.17 provisions. 349.18[EFFECTIVE DATE.] This section is effective the day 349.19 following final enactment. 349.20 Sec. 14. [APPROPRIATION REDUCTION.] 349.21 Notwithstanding any other law to the contrary, if 349.22 amendments to this act adopted on April 29, 2004, result in an 349.23 increase to the deficit for the 2004-2005 biennium as reflected 349.24 in the February 2004 state general fund budget forecast, the 349.25 amount of the appropriation under article 3, section 52, is 349.26 reduced by an amount equal to the increase in the deficit. If 349.27 amendments to this act adopted on April 29, 2004, result in an 349.28 increase to the deficit for the 2006-2007 biennium as reflected 349.29 in the February 2004 state general fund budget forecast, the 349.30 distribution under article 2, section 51, is reduced by an 349.31 amount equal to the increase in the deficit. 349.32 Sec. 15. [REPEALER.] 349.33 Minnesota Rules, parts 8093.2000 and 8093.3000, are 349.34 repealed. 349.35[EFFECTIVE DATE.] This section is effective the day 349.36 following final enactment.