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Minnesota Legislature

Office of the Revisor of Statutes

HF 2770

as introduced - 90th Legislature (2017 - 2018) Posted on 02/20/2018 10:12am

KEY: stricken = removed, old language.
underscored = added, new language.

Current Version - as introduced

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A bill for an act
relating to taxation; property; converting Minnesota's property tax system to a
basis of assessed values and mill rates; amending Minnesota Statutes 2016, sections
122A.415, subdivision 5; 123B.53, subdivision 4; 123B.63, subdivision 3;
124D.135, subdivision 6a; 124D.20, subdivision 5; 126C.01, subdivision 3;
126C.10, subdivision 13a; 126C.13, subdivision 3a; 126C.41, subdivisions 4, 5;
126C.63, subdivision 8; 126C.69, subdivisions 2, 9; 128D.11, subdivisions 3, 8;
134.34, subdivision 1; 134.355, subdivision 6; 161.082, subdivision 2a; 270C.921;
273.124, subdivision 3a; 273.13, subdivisions 21b, 22, 23, 24, 25, by adding a
subdivision; 273.1325, subdivision 1; 275.08, subdivisions 1, 1a, 1d; 275.28,
subdivision 1; 276A.01, subdivisions 4, 15; 276A.06, subdivision 9; 298.28,
subdivision 4; 383D.41, subdivision 7; 469.177, subdivision 1e; 473F.02,
subdivisions 4, 23; 473F.08, subdivision 8a; 473H.10, subdivision 3; 477A.0124,
subdivision 4.

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

ARTICLE 1

ASSESSED VALUE

Section 1.

Minnesota Statutes 2016, section 273.13, subdivision 21b, is amended to read:


Subd. 21b.

deleted text beginNet tax capacitydeleted text endnew text begin Assessed valuenew text end.

deleted text begin"Net tax capacity"deleted text endnew text begin "Assessed value"new text end
means the product of the appropriate deleted text beginclassification ratesdeleted text endnew text begin assessment ratiosnew text end in this section
and taxable market values.

Sec. 2.

Minnesota Statutes 2016, section 273.13, is amended by adding a subdivision to
read:


new text begin Subd. 21c. new text end

new text begin Conversions. new text end

new text begin For any property tax calculation referencing an assessed value
for an assessment year prior to 2018, the assessed value shall be obtained by multiplying
the net tax capacity by a factor of 50. For any property tax calculation referencing a tax rate
for a taxes payable year prior to 2019, the tax rate shall be obtained by multiplying the net
tax capacity tax rate percentage by a factor of 0.2 mills.
new text end

Sec. 3.

Minnesota Statutes 2016, section 273.13, subdivision 22, is amended to read:


Subd. 22.

Class 1.

(a) Except as provided in subdivision 23 and in paragraphs (b) and
(c), real estate which is residential and used for homestead purposes is class 1a. In the case
of a duplex or triplex in which one of the units is used for homestead purposes, the entire
property is deemed to be used for homestead purposes. The market value of class 1a property
must be determined based upon the value of the house, garage, and land.

The first $500,000 of market value of class 1a property deleted text beginhas a net classification rate of
one
deleted text endnew text begin is assessed at 50new text end percent deleted text beginof its market valuedeleted text end; and the market value of class 1a property
that exceeds $500,000 deleted text beginhas a classification rate of 1.25deleted text endnew text begin is assessed at 62.5new text end percent deleted text beginof its
market value
deleted text end.

(b) Class 1b property includes homestead real estate or homestead manufactured homes
used for the purposes of a homestead by:

(1) any person who is blind as defined in section 256D.35, or the blind person and the
blind person's spouse;

(2) any person who is permanently and totally disabled or by the disabled person and
the disabled person's spouse; or

(3) the surviving spouse of a permanently and totally disabled veteran homesteading a
property classified under this paragraph for taxes payable in 2008.

Property is classified and assessed under clause (2) only if the government agency or
income-providing source certifies, upon the request of the homestead occupant, that the
homestead occupant satisfies the disability requirements of this paragraph, and that the
property is not eligible for the valuation exclusion under subdivision 34.

Property is classified and assessed under paragraph (b) only if the commissioner of
revenue or the county assessor certifies that the homestead occupant satisfies the requirements
of this paragraph.

Permanently and totally disabled for the purpose of this subdivision means a condition
which is permanent in nature and totally incapacitates the person from working at an
occupation which brings the person an income. The first $50,000 market value of class 1b
property deleted text beginhas a net classification rate of .45deleted text endnew text begin is assessed at 22.5new text end percent deleted text beginof its market valuedeleted text end.
The remaining market value of class 1b property deleted text beginhas a classification rate usingdeleted text endnew text begin is assessed
at
new text end the rates for class 1a or class 2a property, whichever is appropriate, of similar market
value.

(c) Class 1c property is commercial use real and personal property that abuts public
water as defined in section 103G.005, subdivision 15, and is devoted to temporary and
seasonal residential occupancy for recreational purposes but not devoted to commercial
purposes for more than 250 days in the year preceding the year of assessment, and that
includes a portion used as a homestead by the owner, which includes a dwelling occupied
as a homestead by a shareholder of a corporation that owns the resort, a partner in a
partnership that owns the resort, or a member of a limited liability company that owns the
resort even if the title to the homestead is held by the corporation, partnership, or limited
liability company. For purposes of this paragraph, property is devoted to a commercial
purpose on a specific day if any portion of the property, excluding the portion used
exclusively as a homestead, is used for residential occupancy and a fee is charged for
residential occupancy. Class 1c property must contain three or more rental units. A "rental
unit" is defined as a cabin, condominium, townhouse, sleeping room, or individual camping
site equipped with water and electrical hookups for recreational vehicles. Class 1c property
must provide recreational activities such as the rental of ice fishing houses, boats and motors,
snowmobiles, downhill or cross-country ski equipment; provide marina services, launch
services, or guide services; or sell bait and fishing tackle. Any unit in which the right to use
the property is transferred to an individual or entity by deeded interest, or the sale of shares
or stock, no longer qualifies for class 1c even though it may remain available for rent. A
camping pad offered for rent by a property that otherwise qualifies for class 1c is also class
1c, regardless of the term of the rental agreement, as long as the use of the camping pad
does not exceed 250 days. If the same owner owns two separate parcels that are located in
the same township, and one of those properties is classified as a class 1c property and the
other would be eligible to be classified as a class 1c property if it was used as the homestead
of the owner, both properties will be assessed as a single class 1c property; for purposes of
this sentence, properties are deemed to be owned by the same owner if each of them is
owned by a limited liability company, and both limited liability companies have the same
membership. The portion of the property used as a homestead is class 1a property under
paragraph (a). The remainder of the property is classified as follows: the first $600,000 of
market value is tier I, the next $1,700,000 of market value is tier II, and any remaining
market value is tier III. deleted text beginThe classification rates for class 1c are:deleted text end Tier Ideleted text begin, 0.50deleted text endnew text begin of class 1c is
assessed at 25
new text end percentnew text begin of market valuenew text end; tier IIdeleted text begin, 1.0deleted text endnew text begin of class 1c is assessed at 50new text end percentnew text begin of
market value
new text end; and tier IIIdeleted text begin, 1.25deleted text endnew text begin of class 1c is assessed at 62.5new text end percentnew text begin of market valuenew text end. Owners
of real and personal property devoted to temporary and seasonal residential occupancy for
recreation purposes in which all or a portion of the property was devoted to commercial
purposes for not more than 250 days in the year preceding the year of assessment desiring
classification as class 1c, must submit a declaration to the assessor designating the cabins
or units occupied for 250 days or less in the year preceding the year of assessment by January
15 of the assessment year. Those cabins or units and a proportionate share of the land on
which they are located must be designated as class 1c as otherwise provided. The remainder
of the cabins or units and a proportionate share of the land on which they are located must
be designated as class 3a commercial. The owner of property desiring designation as class
1c property must provide guest registers or other records demonstrating that the units for
which class 1c designation is sought were not occupied for more than 250 days in the year
preceding the assessment if so requested. The portion of a property operated as a (1)
restaurant, (2) bar, (3) gift shop, (4) conference center or meeting room, and (5) other
nonresidential facility operated on a commercial basis not directly related to temporary and
seasonal residential occupancy for recreation purposes does not qualify for class 1c.

(d) Class 1d property includes structures that meet all of the following criteria:

(1) the structure is located on property that is classified as agricultural property under
section 273.13, subdivision 23;

(2) the structure is occupied exclusively by seasonal farm workers during the time when
they work on that farm, and the occupants are not charged rent for the privilege of occupying
the property, provided that use of the structure for storage of farm equipment and produce
does not disqualify the property from classification under this paragraph;

(3) the structure meets all applicable health and safety requirements for the appropriate
season; and

(4) the structure is not salable as residential property because it does not comply with
local ordinances relating to location in relation to streets or roads.

The market value of class 1d property has the same deleted text beginclassification ratesdeleted text endnew text begin assessment ratiosnew text end
as class 1a property under paragraph (a).

Sec. 4.

Minnesota Statutes 2016, section 273.13, subdivision 23, is amended to read:


Subd. 23.

Class 2.

(a) An agricultural homestead consists of class 2a agricultural land
that is homesteaded, along with any class 2b rural vacant land that is contiguous to the class
2a land under the same ownership. The market value of the house and garage and immediately
surrounding one acre of land has the same deleted text beginclassification ratesdeleted text endnew text begin assessment ratiosnew text end as class 1a
or 1b property under subdivision 22. The value of the remaining land including improvements
up to the first tier valuation limit of agricultural homestead property deleted text beginhas a classification rate
of 0.5
deleted text endnew text begin is assessed at 25new text end percent deleted text beginof market valuedeleted text end. The remaining deleted text beginpropertydeleted text endnew text begin market valuenew text end over
the first tier deleted text beginhas a classification rate of onedeleted text endnew text begin is assessed at 50new text end percent deleted text beginof market valuedeleted text end. For
purposes of this subdivision, the "first tier valuation limit of agricultural homestead property"
and "first tier" means the limit certified under section 273.11, subdivision 23.

(b) Class 2a agricultural land consists of parcels of property, or portions thereof, that
are agricultural land and buildings. Class 2a property deleted text beginhas a classification rate of onedeleted text endnew text begin is
assessed at 50
new text end percent of market value, unless it is part of an agricultural homestead under
paragraph (a). Class 2a property must also include any property that would otherwise be
classified as 2b, but is interspersed with class 2a property, including but not limited to
sloughs, wooded wind shelters, acreage abutting ditches, ravines, rock piles, land subject
to a setback requirement, and other similar land that is impractical for the assessor to value
separately from the rest of the property or that is unlikely to be able to be sold separately
from the rest of the property.

An assessor may classify the part of a parcel described in this subdivision that is used
for agricultural purposes as class 2a and the remainder in the class appropriate to its use.

(c) Class 2b rural vacant land consists of parcels of property, or portions thereof, that
are unplatted real estate, rural in character and not used for agricultural purposes, including
land used for growing trees for timber, lumber, and wood and wood products, that is not
improved with a structure. The presence of a minor, ancillary nonresidential structure as
defined by the commissioner of revenue does not disqualify the property from classification
under this paragraph. Any parcel of 20 acres or more improved with a structure that is not
a minor, ancillary nonresidential structure must be split-classified, and ten acres must be
assigned to the split parcel containing the structure. Class 2b property deleted text beginhas a classification
rate of one
deleted text endnew text begin is assessed at 50new text end percent of market value unless it is part of an agricultural
homestead under paragraph (a), or qualifies as class 2c under paragraph (d).

(d) Class 2c managed forest land consists of no less than 20 and no more than 1,920
acres statewide per taxpayer that is being managed under a forest management plan that
meets the requirements of chapter 290C, but is not enrolled in the sustainable forest resource
management incentive program. It deleted text beginhas a classification rate of .65deleted text endnew text begin is assessed at 32.5new text end percentnew text begin
of market value
new text end, provided that the owner of the property must apply to the assessor in order
for the property to initially qualify for the reduced rate and provide the information required
by the assessor to verify that the property qualifies for the reduced rate. If the assessor
receives the application and information before May 1 in an assessment year, the property
qualifies beginning with that assessment year. If the assessor receives the application and
information after April 30 in an assessment year, the property may not qualify until the next
assessment year. The commissioner of natural resources must concur that the land is qualified.
The commissioner of natural resources shall annually provide county assessors verification
information on a timely basis. The presence of a minor, ancillary nonresidential structure
as defined by the commissioner of revenue does not disqualify the property from
classification under this paragraph.

(e) Agricultural land as used in this section means:

(1) contiguous acreage of ten acres or more, used during the preceding year for
agricultural purposes; or

(2) contiguous acreage used during the preceding year for an intensive livestock or
poultry confinement operation, provided that land used only for pasturing or grazing does
not qualify under this clause.

"Agricultural purposes" as used in this section means the raising, cultivation, drying, or
storage of agricultural products for sale, or the storage of machinery or equipment used in
support of agricultural production by the same farm entity. For a property to be classified
as agricultural based only on the drying or storage of agricultural products, the products
being dried or stored must have been produced by the same farm entity as the entity operating
the drying or storage facility. "Agricultural purposes" also includes enrollment in the Reinvest
in Minnesota program under sections 103F.501 to 103F.535 or the federal Conservation
Reserve Program as contained in Public Law 99-198 or a similar state or federal conservation
program if the property was classified as agricultural (i) under this subdivision for taxes
payable in 2003 because of its enrollment in a qualifying program and the land remains
enrolled or (ii) in the year prior to its enrollment. Agricultural classification shall not be
based upon the market value of any residential structures on the parcel or contiguous parcels
under the same ownership.

"Contiguous acreage," for purposes of this paragraph, means all of, or a contiguous
portion of, a tax parcel as described in section 272.193, or all of, or a contiguous portion
of, a set of contiguous tax parcels under that section that are owned by the same person.

(f) Agricultural land under this section also includes:

(1) contiguous acreage that is less than ten acres in size and exclusively used in the
preceding year for raising or cultivating agricultural products; or

(2) contiguous acreage that contains a residence and is less than 11 acres in size, if the
contiguous acreage exclusive of the house, garage, and surrounding one acre of land was
used in the preceding year for one or more of the following three uses:

(i) for an intensive grain drying or storage operation, or for intensive machinery or
equipment storage activities used to support agricultural activities on other parcels of property
operated by the same farming entity;

(ii) as a nursery, provided that only those acres used intensively to produce nursery stock
are considered agricultural land; or

(iii) for intensive market farming; for purposes of this paragraph, "market farming"
means the cultivation of one or more fruits or vegetables or production of animal or other
agricultural products for sale to local markets by the farmer or an organization with which
the farmer is affiliated.

"Contiguous acreage," for purposes of this paragraph, means all of a tax parcel as
described in section 272.193, or all of a set of contiguous tax parcels under that section that
are owned by the same person.

(g) Land shall be classified as agricultural even if all or a portion of the agricultural use
of that property is the leasing to, or use by another person for agricultural purposes.

Classification under this subdivision is not determinative for qualifying under section
273.111.

(h) The property classification under this section supersedes, for property tax purposes
only, any locally administered agricultural policies or land use restrictions that define
minimum or maximum farm acreage.

(i) The term "agricultural products" as used in this subdivision includes production for
sale of:

(1) livestock, dairy animals, dairy products, poultry and poultry products, fur-bearing
animals, horticultural and nursery stock, fruit of all kinds, vegetables, forage, grains, bees,
and apiary products by the owner;

(2) fish bred for sale and consumption if the fish breeding occurs on land zoned for
agricultural use;

(3) the commercial boarding of horses, which may include related horse training and
riding instruction, if the boarding is done on property that is also used for raising pasture
to graze horses or raising or cultivating other agricultural products as defined in clause (1);

(4) property which is owned and operated by nonprofit organizations used for equestrian
activities, excluding racing;

(5) game birds and waterfowl bred and raised (i) on a game farm licensed under section
97A.105, provided that the annual licensing report to the Department of Natural Resources,
which must be submitted annually by March 30 to the assessor, indicates that at least 500
birds were raised or used for breeding stock on the property during the preceding year and
that the owner provides a copy of the owner's most recent schedule F; or (ii) for use on a
shooting preserve licensed under section 97A.115;

(6) insects primarily bred to be used as food for animals;

(7) trees, grown for sale as a crop, including short rotation woody crops, and not sold
for timber, lumber, wood, or wood products; and

(8) maple syrup taken from trees grown by a person licensed by the Minnesota
Department of Agriculture under chapter 28A as a food processor.

(j) If a parcel used for agricultural purposes is also used for commercial or industrial
purposes, including but not limited to:

(1) wholesale and retail sales;

(2) processing of raw agricultural products or other goods;

(3) warehousing or storage of processed goods; and

(4) office facilities for the support of the activities enumerated in clauses (1), (2), and
(3),

the assessor shall classify the part of the parcel used for agricultural purposes as class 1b,
2a, or 2b, whichever is appropriate, and the remainder in the class appropriate to its use.
The grading, sorting, and packaging of raw agricultural products for first sale is considered
an agricultural purpose. A greenhouse or other building where horticultural or nursery
products are grown that is also used for the conduct of retail sales must be classified as
agricultural if it is primarily used for the growing of horticultural or nursery products from
seed, cuttings, or roots and occasionally as a showroom for the retail sale of those products.
Use of a greenhouse or building only for the display of already grown horticultural or nursery
products does not qualify as an agricultural purpose.

(k) The assessor shall determine and list separately on the records the market value of
the homestead dwelling and the one acre of land on which that dwelling is located. If any
farm buildings or structures are located on this homesteaded acre of land, their market value
shall not be included in this separate determination.

(l) Class 2d airport landing area consists of a landing area or public access area of a
privately owned public use airport. It deleted text beginhas a classification rate of onedeleted text endnew text begin is assessed at 50new text end percent
of market value. To qualify for classification under this paragraph, a privately owned public
use airport must be licensed as a public airport under section 360.018. For purposes of this
paragraph, "landing area" means that part of a privately owned public use airport properly
cleared, regularly maintained, and made available to the public for use by aircraft and
includes runways, taxiways, aprons, and sites upon which are situated landing or navigational
aids. A landing area also includes land underlying both the primary surface and the approach
surfaces that comply with all of the following:

(i) the land is properly cleared and regularly maintained for the primary purposes of the
landing, taking off, and taxiing of aircraft; but that portion of the land that contains facilities
for servicing, repair, or maintenance of aircraft is not included as a landing area;

(ii) the land is part of the airport property; and

(iii) the land is not used for commercial or residential purposes.

The land contained in a landing area under this paragraph must be described and certified
by the commissioner of transportation. The certification is effective until it is modified, or
until the airport or landing area no longer meets the requirements of this paragraph. For
purposes of this paragraph, "public access area" means property used as an aircraft parking
ramp, apron, or storage hangar, or an arrival and departure building in connection with the
airport.

(m) Class 2e consists of land with a commercial aggregate deposit that is not actively
being mined and is not otherwise classified as class 2a or 2b, provided that the land is not
located in a county that has elected to opt-out of the aggregate preservation program as
provided in section 273.1115, subdivision 6. It deleted text beginhas a classification rate of onedeleted text endnew text begin is assessed
at 50
new text end percent of market value. To qualify for classification under this paragraph, the property
must be at least ten contiguous acres in size and the owner of the property must record with
the county recorder of the county in which the property is located an affidavit containing:

(1) a legal description of the property;

(2) a disclosure that the property contains a commercial aggregate deposit that is not
actively being mined but is present on the entire parcel enrolled;

(3) documentation that the conditional use under the county or local zoning ordinance
of this property is for mining; and

(4) documentation that a permit has been issued by the local unit of government or the
mining activity is allowed under local ordinance. The disclosure must include a statement
from a registered professional geologist, engineer, or soil scientist delineating the deposit
and certifying that it is a commercial aggregate deposit.

For purposes of this section and section 273.1115, "commercial aggregate deposit"
means a deposit that will yield crushed stone or sand and gravel that is suitable for use as
a construction aggregate; and "actively mined" means the removal of top soil and overburden
in preparation for excavation or excavation of a commercial deposit.

(n) When any portion of the property under this subdivision or subdivision 22 begins to
be actively mined, the owner must file a supplemental affidavit within 60 days from the
day any aggregate is removed stating the number of acres of the property that is actively
being mined. The acres actively being mined must be (1) valued and classified under
subdivision 24 in the next subsequent assessment year, and (2) removed from the aggregate
resource preservation property tax program under section 273.1115, if the land was enrolled
in that program. Copies of the original affidavit and all supplemental affidavits must be
filed with the county assessor, the local zoning administrator, and the Department of Natural
Resources, Division of Land and Minerals. A supplemental affidavit must be filed each
time a subsequent portion of the property is actively mined, provided that the minimum
acreage change is five acres, even if the actual mining activity constitutes less than five
acres.

(o) The definitions prescribed by the commissioner under paragraphs (c) and (d) are not
rules and are exempt from the rulemaking provisions of chapter 14, and the provisions in
section 14.386 concerning exempt rules do not apply.

Sec. 5.

Minnesota Statutes 2016, section 273.13, subdivision 24, is amended to read:


Subd. 24.

Class 3.

Commercial and industrial property and utility real and personal
property is class 3a.

(1) Except as otherwise provided, new text beginthe first tier of market value of new text endeach parcel of
commercial, industrial, or utility real property deleted text beginhas a classification rate of 1.5 percent of the
first tier of market value
deleted text endnew text begin is assessed at 75 percentnew text end, and deleted text begin2.0 percent ofdeleted text end the remaining market
valuenew text begin is assessed at 100 percentnew text end. In the case of contiguous parcels of property owned by the
same person or entity, only the value equal to the first-tier value of the contiguous parcels
qualifies for the reduced deleted text beginclassification ratedeleted text endnew text begin assessment rationew text end, except that contiguous parcels
owned by the same person or entity shall be eligible for the first-tier value deleted text beginclassification
rate
deleted text endnew text begin assessment rationew text end on each separate business operated by the owner of the property,
provided the business is housed in a separate structure. For the purposes of this subdivision,
the first tier means the first $150,000 of market value. Real property owned in fee by a
utility for transmission line right-of-way shall be deleted text beginclassifieddeleted text endnew text begin assessednew text end at the deleted text beginclassification
rate
deleted text endnew text begin rationew text end for the higher tier.

For purposes of this subdivision, parcels are considered to be contiguous even if they
are separated from each other by a road, street, waterway, or other similar intervening type
of property. Connections between parcels that consist of power lines or pipelines do not
cause the parcels to be contiguous. Property owners who have contiguous parcels of property
that constitute separate businesses that may qualify for the first-tier deleted text beginclassification ratedeleted text endnew text begin
assessment ratio
new text end shall notify the assessor by July 1, for treatment beginning in the following
taxes payable year.

(2) All personal property that is: (i) part of an electric generation, transmission, or
distribution system; or (ii) part of a pipeline system transporting or distributing water, gas,
crude oil, or petroleum products; and (iii) not described in clause (3), and all railroad
operating property has deleted text begina classification ratedeleted text endnew text begin an assessment rationew text end as provided under clause (1)
for the first tier of market value and the remaining market value. In the case of multiple
parcels in one county that are owned by one person or entity, only one first tier amount is
eligible for the reduced rate.

(3) The entire market value of personal property that is: (i) tools, implements, and
machinery of an electric generation, transmission, or distribution system; (ii) tools,
implements, and machinery of a pipeline system transporting or distributing water, gas,
crude oil, or petroleum products; or (iii) the mains and pipes used in the distribution of
steam or hot or chilled water for heating or cooling buildings, has deleted text begina classification ratedeleted text endnew text begin an
assessment ratio
new text end as provided under clause (1) for the remaining market value in excess of
the first tier.

Sec. 6.

Minnesota Statutes 2016, section 273.13, subdivision 25, is amended to read:


Subd. 25.

Class 4.

(a) Class 4a is residential real estate containing four or more units
and used or held for use by the owner or by the tenants or lessees of the owner as a residence
for rental periods of 30 days or more, excluding property qualifying for class 4d. Class 4a
also includes hospitals licensed under sections 144.50 to 144.56, other than hospitals exempt
under section 272.02, and contiguous property used for hospital purposes, without regard
to whether the property has been platted or subdivided. deleted text beginThe market value ofdeleted text end Class 4a property
deleted text begin has a classification rate of 1.25deleted text endnew text begin is assessed at 62.5new text end percentnew text begin of market valuenew text end.

(b) Class 4b includes:

(1) residential real estate containing less than four units that does not qualify as class
4bb, other than seasonal residential recreational property;

(2) manufactured homes not classified under any other provision;

(3) a dwelling, garage, and surrounding one acre of property on a nonhomestead farm
classified under subdivision 23, paragraph (b) containing two or three units; and

(4) unimproved property that is classified residential as determined under subdivision
33.

deleted text begin The market value ofdeleted text end Class 4b property deleted text beginhas a classification rate of 1.25deleted text endnew text begin is assessed at
62.5
new text end percentnew text begin of market valuenew text end.

(c) Class 4bb includes nonhomestead residential real estate containing one unit, other
than seasonal residential recreational property, and a single family dwelling, garage, and
surrounding one acre of property on a nonhomestead farm classified under subdivision 23,
paragraph (b).

new text begin The first $500,000 of new text endclass 4bb property deleted text beginhas the same classification rates as class 1a
property under subdivision 22
deleted text endnew text begin is assessed at 50 percent, and the remaining market value is
assessed at 62.5 percent
new text end.

Property that has been classified as seasonal residential recreational property at any time
during which it has been owned by the current owner or spouse of the current owner does
not qualify for class 4bb.

(d) Class deleted text begin4cdeleted text endnew text begin 4c1new text end property deleted text beginincludes:
deleted text end

deleted text begin (1) except as provided in subdivision 22, paragraph (c),deleted text endnew text begin isnew text end real and personal property
devoted to commercial temporary and seasonal residential occupancy for recreation purposes,
for not more than 250 days in the year preceding the year of assessmentnew text begin, except as provided
in subdivision 22, paragraph (c)
new text end. For purposes of this deleted text beginclausedeleted text endnew text begin paragraphnew text end, property is devoted
to a commercial purpose on a specific day if any portion of the property is used for residential
occupancy, and a fee is charged for residential occupancy. Class deleted text begin4cdeleted text endnew text begin 4c1new text end property under this
deleted text begin clausedeleted text endnew text begin paragraphnew text end must contain three or more rental units. A "rental unit" is defined as a
cabin, condominium, townhouse, sleeping room, or individual camping site equipped with
water and electrical hookups for recreational vehicles. A camping pad offered for rent by
a property that otherwise qualifies for class deleted text begin4cdeleted text endnew text begin 4c1new text end under this deleted text beginclausedeleted text endnew text begin paragraphnew text end is also class
deleted text begin 4cdeleted text endnew text begin 4c1new text end under this deleted text beginclausedeleted text endnew text begin paragraphnew text end regardless of the term of the rental agreement, as long
as the use of the camping pad does not exceed 250 days. In order for a property to be
classified under this deleted text beginclausedeleted text endnew text begin paragraphnew text end, either deleted text begin(i)deleted text endnew text begin (1)new text end the business located on the property
must provide recreational activities, at least 40 percent of the annual gross lodging receipts
related to the property must be from business conducted during 90 consecutive days, and
either deleted text begin(A)deleted text endnew text begin (i)new text end at least 60 percent of all paid bookings by lodging guests during the year must
be for periods of at least two consecutive nights; or deleted text begin(B)deleted text endnew text begin (ii)new text end at least 20 percent of the annual
gross receipts must be from charges for providing recreational activities, or deleted text begin(ii)deleted text endnew text begin (2)new text end the
business must contain 20 or fewer rental units, and must be located in a township or a city
with a population of 2,500 or less located outside the metropolitan area, as defined under
section 473.121, subdivision 2, that contains a portion of a state trail administered by the
Department of Natural Resources. For purposes of item deleted text begin(i)(A)deleted text endnew text begin (1)(i)new text end, a paid booking of five
or more nights shall be counted as two bookings. Class deleted text begin4cdeleted text endnew text begin 4c1new text end property also includes
commercial use real property used exclusively for recreational purposes in conjunction with
other class deleted text begin4cdeleted text endnew text begin 4c1new text end property classified under this deleted text beginclausedeleted text endnew text begin paragraphnew text end and devoted to temporary
and seasonal residential occupancy for recreational purposes, up to a total of two acres,
provided the property is not devoted to commercial recreational use for more than 250 days
in the year preceding the year of assessment and is located within two miles of the class deleted text begin4cdeleted text endnew text begin
4c1
new text end property with which it is used. In order for a property to qualify for classification under
this deleted text beginclausedeleted text endnew text begin paragraphnew text end, the owner must submit a declaration to the assessor designating the
cabins or units occupied for 250 days or less in the year preceding the year of assessment
by January 15 of the assessment year. Those cabins or units and a proportionate share of
the land on which they are located must be designated class deleted text begin4cdeleted text endnew text begin 4c1new text end under this deleted text beginclausedeleted text endnew text begin
paragraph
new text end as otherwise provided. The remainder of the cabins or units and a proportionate
share of the land on which they are located will be designated as class 3a. The owner of
property desiring designation as class deleted text begin4cdeleted text endnew text begin 4c1new text end property under this deleted text beginclausedeleted text endnew text begin paragraphnew text end must
provide guest registers or other records demonstrating that the units for which class deleted text begin4cdeleted text endnew text begin 4c1new text end
designation is sought were not occupied for more than 250 days in the year preceding the
assessment if so requested. The portion of a property operated as a (1) restaurant, (2) bar,
(3) gift shop, (4) conference center or meeting room, and (5) other nonresidential facility
operated on a commercial basis not directly related to temporary and seasonal residential
occupancy for recreation purposes does not qualify for class deleted text begin4cdeleted text endnew text begin 4c1new text end. For the purposes of
this paragraph, "recreational activities" means renting ice fishing houses, boats and motors,
snowmobiles, downhill or cross-country ski equipment; providing marina services, launch
services, or guide services; or selling bait and fishing tackledeleted text begin;deleted text endnew text begin. The first $500,000 of market
value of class 4c1 property is assessed at 50 percent, and the remaining market value is
assessed at 62.5 percent.
new text end

deleted text begin (2)deleted text endnew text begin (e) Class 4c2 isnew text end qualified property used as a golf course if:

deleted text begin (i)deleted text endnew text begin (1)new text end it is open to the public on a daily fee basis. It may charge membership fees or
dues, but a membership fee may not be required in order to use the property for golfing,
and its green fees for golfing must be comparable to green fees typically charged by
municipal courses; and

deleted text begin (ii)deleted text endnew text begin (2)new text end it meets the requirements of section 273.112, subdivision 3, paragraph (d).

A structure used as a clubhouse, restaurant, or place of refreshment in conjunction with
the golf course is classified as class 3a propertydeleted text begin;deleted text endnew text begin. Class 4c2 property is assessed at 62.5
percent of market value.
new text end

deleted text begin (3)deleted text endnew text begin (f) Class 4c3 isnew text end real property up to a maximum of three acres of land owned and used
by a nonprofit community service oriented organization and not used for residential purposes
on either a temporary or permanent basis, provided that:

deleted text begin (i)deleted text endnew text begin (1)new text end the property is not used for a revenue-producing activity for more than six days
in the calendar year preceding the year of assessment; or

deleted text begin (ii)deleted text endnew text begin (2)new text end the organization makes annual charitable contributions and donations at least
equal to the property's previous year's property taxes and the property is allowed to be used
for public and community meetings or events for no charge, as appropriate to the size of
the facility.

For purposes of this deleted text beginclausedeleted text endnew text begin paragraphnew text end:

deleted text begin (A)deleted text endnew text begin (i)new text end "charitable contributions and donations" has the same meaning as lawful gambling
purposes under section 349.12, subdivision 25, excluding those purposes relating to the
payment of taxes, assessments, fees, auditing costs, and utility payments;

deleted text begin (B)deleted text endnew text begin (ii)new text end "property taxes" excludes the state general tax;

deleted text begin (C)deleted text endnew text begin (iii)new text end a "nonprofit community service oriented organization" means any corporation,
society, association, foundation, or institution organized and operated exclusively for
charitable, religious, fraternal, civic, or educational purposes, and which is exempt from
federal income taxation pursuant to section 501(c)(3), (8), (10), or (19) of the Internal
Revenue Code; and

deleted text begin (D)deleted text endnew text begin (iv)new text end "revenue-producing activities" shall include but not be limited to property or
that portion of the property that is used as an on-sale intoxicating liquor or 3.2 percent malt
liquor establishment licensed under chapter 340A, a restaurant open to the public, bowling
alley, a retail store, gambling conducted by organizations licensed under chapter 349, an
insurance business, or office or other space leased or rented to a lessee who conducts a
for-profit enterprise on the premises.

Any portion of the property not qualifying under either deleted text beginitem (i) or (ii)deleted text endnew text begin clause (1) or (2)new text end
is class 3a. The use of the property for social events open exclusively to members and their
guests for periods of less than 24 hours, when an admission is not charged nor any revenues
are received by the organization shall not be considered a revenue-producing activity.

The organization shall maintain records of its charitable contributions and donations
and of public meetings and events held on the property and make them available upon
request any time to the assessor to ensure eligibility. An organization meeting the requirement
under deleted text beginitem (ii)deleted text endnew text begin clause (2)new text end must file an application by May 1 with the assessor for eligibility
for the current year's assessment. The commissioner shall prescribe a uniform application
form and instructionsdeleted text begin;deleted text endnew text begin. Class 4c3 property is assessed at 75 percent of market value.
new text end

deleted text begin (4)deleted text endnew text begin (g) Class 4c4 isnew text end postsecondary student housing of not more than one acre of land
that is owned by a nonprofit corporation organized under chapter 317A and is used
exclusively by a student cooperative, sorority, or fraternity for on-campus housing or housing
located within two miles of the border of a college campusdeleted text begin;deleted text endnew text begin. Class 4c4 property is assessed
at 50 percent of market value.
new text end

deleted text begin (5)(i)deleted text end new text begin(h) Class 4c5 property is: (1) new text endmanufactured home parks as defined in section
327.14, subdivision 3, excluding manufactured home parks described in section 273.124,
subdivision 3a
, and deleted text begin(ii)deleted text endnew text begin (2)new text end manufactured home parks as defined in section 327.14,
subdivision 3
, that are described in section 273.124, subdivision 3adeleted text begin;deleted text endnew text begin. Class 4c5(1) property
is assessed at 62.5 percent of market value. Class 4c5(2) property is assessed at 37.5 percent
if more than 50 percent of the lots in the park are occupied by shareholders in the cooperative
corporation or association, or 50 percent if 50 percent or less of the lots are so occupied.
new text end

deleted text begin (6)deleted text endnew text begin (i) Class 4c6 isnew text end real property that is actively and exclusively devoted to indoor fitness,
health, social, recreational, and related uses, is owned and operated by a not-for-profit
corporation, and is located within the metropolitan area as defined in section 473.121,
subdivision 2
deleted text begin;deleted text endnew text begin. Class 4c6 is assessed at 62.5 percent of market value.
new text end

deleted text begin (7) adeleted text endnew text begin (j) Class 4c7 isnew text end leased or privately owned noncommercial aircraft storage deleted text beginhangardeleted text endnew text begin
hangars
new text end not exempt under section 272.01, subdivision 2, and the land on which deleted text beginit isdeleted text endnew text begin they
are
new text end located, provided that:

deleted text begin (i)deleted text endnew text begin (1)new text end the land is on an airport owned or operated by a city, town, county, Metropolitan
Airports Commission, or group thereof; and

deleted text begin (ii)deleted text endnew text begin (2)new text end the land lease, or any ordinance or signed agreement restricting the use of the
leased premise, prohibits commercial activity performed at the hangar.

deleted text begin Ifdeleted text endnew text begin Whennew text end a hangar classified under this deleted text beginclausedeleted text endnew text begin paragraphnew text end is sold deleted text beginafter June 30, 2000deleted text end, a
bill of sale must be filed by the new owner with the assessor deleted text beginof the county where the property
is located
deleted text end within 60 days of the saledeleted text begin;deleted text endnew text begin. Class 4c7 property is assessed at 75 percent of market
value.
new text end

deleted text begin (8) adeleted text endnew text begin (k) Class 4c8 isnew text end privately owned noncommercial aircraft storage deleted text beginhangardeleted text endnew text begin hangarsnew text end
not exempt under section 272.01, subdivision 2, and the land on which deleted text beginit isdeleted text endnew text begin they arenew text end located,
provided that:

deleted text begin (i)deleted text endnew text begin (1)new text end the land abuts a public airport; and

deleted text begin (ii)deleted text endnew text begin (2)new text end the owner of the aircraft storage hangar provides the assessor with a signed
agreement restricting the use of the premises, prohibiting commercial use or activity
performed at the hangardeleted text begin; anddeleted text endnew text begin. Class 4c8 property is assessed at 75 percent of market value.
new text end

deleted text begin (9)deleted text endnew text begin (l) Class 4c9 isnew text end residential real estate, a portion of which is used by the owner for
homestead purposes, and that is also a place of lodging, if all of the following criteria are
met:

deleted text begin (i)deleted text endnew text begin (1)new text end rooms are provided for rent to transient guests that generally stay for periods of
14 or fewer days;

deleted text begin (ii)deleted text endnew text begin (2)new text end meals are provided to persons who rent rooms, the cost of which is incorporated
in the basic room rate;

deleted text begin (iii)deleted text endnew text begin (3)new text end meals are not provided to the general public except for special events on fewer
than seven days in the calendar year preceding the year of the assessment; and

deleted text begin (iv)deleted text endnew text begin (4)new text end the owner is the operator of the property.

The market value subject to deleted text beginthe 4cdeleted text end classification under this deleted text beginclausedeleted text endnew text begin paragraphnew text end is limited
to five rental units. Any rental units on the property in excess of five, must be valued and
assessed as class 3a. The portion of the property used for purposes of a homestead by the
owner must be classified as class 1a property under subdivision 22deleted text begin;deleted text endnew text begin. Class 4c9 property is
assessed at 62.5 percent of market value.
new text end

deleted text begin (10)deleted text endnew text begin (m) Class 4c10 isnew text end real property up to a maximum of three acres and operated as a
restaurant as defined under section 157.15, subdivision 12, provided it: deleted text begin(i)deleted text endnew text begin (1)new text end is located on
a lake as defined under section 103G.005, subdivision 15, paragraph (a), clause (3); and deleted text begin(ii)deleted text endnew text begin
(2)
new text end is either devoted to commercial purposes for not more than 250 consecutive days, or
receives at least 60 percent of its annual gross receipts from business conducted during four
consecutive months. Gross receipts from the sale of alcoholic beverages must be included
in determining the property's qualification under item deleted text begin(ii)deleted text endnew text begin (2)new text end. The property's primary business
must be as a restaurant and not as a bar. Gross receipts from gift shop sales located on the
premises must be excluded. Owners of real property desiring deleted text begin4cdeleted text end classification under this
deleted text begin clausedeleted text endnew text begin paragraphnew text end must submit an annual declaration to the assessor by February 1 of the
current assessment year, based on the property's relevant information for the preceding
assessment yeardeleted text begin;deleted text endnew text begin. Class 4c10 property is assessed at 62.5 percent of market value.
new text end

deleted text begin (11)deleted text endnew text begin (n) Class 4c11 isnew text end lakeshore and riparian property and adjacent land, not to exceed
six acres, used as a marina, as defined in section 86A.20, subdivision 5, which is made
accessible to the public and devoted to recreational use for marina services. The marina
owner must annually provide evidence to the assessor that it provides services, including
lake or river access to the public by means of an access ramp or other facility that is either
located on the property of the marina or at a publicly owned site that abuts the property of
the marina. No more than 800 feet of lakeshore may be included in this classification.
Buildings used in conjunction with a marina for marina services, including but not limited
to buildings used to provide food and beverage services, fuel, boat repairs, or the sale of
bait or fishing tackle, are classified as class 3a propertydeleted text begin; anddeleted text endnew text begin. The first $500,000 of market
value of class 4c11 property is assessed at 50 percent, and the remaining market value is
assessed at 62.5 percent.
new text end

deleted text begin (12)deleted text endnew text begin (o) Class 4c12 isnew text end real and personal property devoted to noncommercial temporary
and seasonal residential occupancy for recreation purposes.new text begin The first $500,000 of market
value of class 4c12 property is assessed at 50 percent, and the remaining market value is
assessed at 62.5 percent.
new text end

deleted text begin Class 4c property has a classification rate of 1.5 percent of market value, except that (i)
each parcel of noncommercial seasonal residential recreational property under clause (12)
has the same classification rates as class 4bb property, (ii) manufactured home parks assessed
under clause (5), item (i), have the same classification rate as class 4b property, and the
market value of manufactured home parks assessed under clause (5), item (ii), has a
classification rate of 0.75
deleted text end deleted text begin percent if more than 50 percent of the lots in the park are occupied
by shareholders in the cooperative corporation or association and a classification rate of
one percent if 50 percent or less of the lots are so occupied, (iii) commercial-use seasonal
residential recreational property and marina recreational land as described in clause (11),
has a classification rate of one percent for the first $500,000 of market value, and 1.25
percent for the remaining market value, (iv) the market value of property described in clause
(4) has a classification rate of one percent, (v) the market value of property described in
clauses (2), (6), and (10) has a classification rate of 1.25 percent, and (vi) that portion of
the market value of property in clause (9) qualifying for class 4c property has a classification
rate of 1.25 percent.
deleted text end

deleted text begin (e)deleted text endnew text begin (p)new text end Class 4d property is qualifying low-income rental housing certified to the assessor
by the Housing Finance Agency under section 273.128, subdivision 3. If only a portion of
the units in the building qualify as low-income rental housing units as certified under section
273.128, subdivision 3, only the proportion of qualifying units to the total number of units
in the building qualify for class 4d. The remaining portion of the building shall be classified
by the assessor based upon its use. Class 4d also includes the same proportion of land as
the qualifying low-income rental housing units are to the total units in the building. For all
properties qualifying as class 4d, the market value determined by the assessor must be based
on the normal approach to value using normal unrestricted rents.

deleted text begin (f)deleted text endnew text begin (q)new text end The first tier of market value of class 4d property deleted text beginhas a classification rate of 0.75deleted text endnew text begin
is assessed at 37.5
new text end percent. The remaining value of class 4d property deleted text beginhas a classification
rate of 0.25
deleted text endnew text begin is assessed at 12.5new text end percent. For the purposes of this paragraph, the "first tier of
market value of class 4d property" means the market value of each housing unit up to the
first tier limit. For the purposes of this paragraph, all class 4d property value must be assigned
to individual housing units. The first tier limit is $100,000 for assessment year 2014. For
subsequent years, the limit is adjusted each year by the average statewide change in estimated
market value of property classified as class 4a and 4d under this section for the previous
assessment year, excluding valuation change due to new construction, rounded to the nearest
$1,000, provided, however, that the limit may never be less than $100,000. Beginning with
assessment year 2015, the commissioner of revenue must certify the limit for each assessment
year by November 1 of the previous year.

Sec. 7.

Minnesota Statutes 2016, section 275.08, subdivision 1, is amended to read:


Subdivision 1.

Generally.

The rate deleted text beginpercentdeleted text end of all taxes, except the state tax and taxes
the rate of which may be fixed by law, shall be calculated and fixed by the county auditor
new text begin and denominated in mills new text endaccording to the limitations in this chapter hereinafter prescribed;
provided, that if any county, city, town, or school district shall return a greater amount than
the prescribed rates will raise, the auditor shall extend only such amount of tax as the limited
rate will produce.

Sec. 8.

Minnesota Statutes 2016, section 275.08, subdivision 1a, is amended to read:


Subd. 1a.

Computation of deleted text begintax capacitydeleted text endnew text begin assessed valuenew text end.

The county auditor shall
compute the deleted text beginnet tax capacitydeleted text endnew text begin assessed valuenew text end for each parcel new text beginof property new text endaccording to the
deleted text begin classification ratesdeleted text endnew text begin assessment ratiosnew text end specified in section 273.13. The deleted text beginnet tax capacity will
be
deleted text endnew text begin assessed value isnew text end the appropriate deleted text beginclassification ratedeleted text endnew text begin assessment rationew text end multiplied by the
parcel's new text begintaxable new text endmarket value.

Sec. 9. new text beginREVISOR'S INSTRUCTION.
new text end

new text begin The revisor of statutes shall change the terms "net tax capacity" and "tax capacity" to
"assessed value" wherever the terms appear in Minnesota Statutes. The revisor of statutes
shall change the terms "net tax capacities" and "tax capacities" to "assessed values" wherever
the terms appear in Minnesota Statutes.
new text end

Sec. 10. new text beginEFFECTIVE DATE.
new text end

new text begin Sections 1 to 9 are effective beginning with assessment year 2018 for taxes payable in
2019.
new text end

ARTICLE 2

CONVERSIONS

Section 1.

Minnesota Statutes 2016, section 122A.415, subdivision 5, is amended to read:


Subd. 5.

Alternative teacher compensation levy.

The alternative teacher compensation
levy for a district receiving basic alternative teacher compensation aid equals the product
of (1) the difference between the district's alternative teacher compensation revenue and
the district's basic alternative teacher compensation aid, times (2) the lesser of one or the
ratio of the district's adjusted deleted text beginnet tax capacitydeleted text endnew text begin assessed valuenew text end per adjusted pupil unit to deleted text begin$6,100deleted text endnew text begin
$30,500
new text end.

Sec. 2.

Minnesota Statutes 2016, section 123B.53, subdivision 4, is amended to read:


Subd. 4.

Debt service equalization revenue.

(a) The debt service equalization revenue
of a district equals the sum of the first tier debt service equalization revenue and the second
tier debt service equalization revenue.

(b) The first tier debt service equalization revenue of a district equals the greater of zero
or the eligible debt service revenue minus the amount raised by a levy of deleted text begin15.74 percentdeleted text endnew text begin
3.158 mills
new text end times the adjusted deleted text beginnet tax capacitydeleted text endnew text begin assessed valuenew text end of the district minus the second
tier debt service equalization revenue of the district.

(c) The second tier debt service equalization revenue of a district equals the greater of
zero or the eligible debt service revenue, minus the amount raised by a levy of deleted text begin26.24 percentdeleted text endnew text begin
5.24 mills
new text end times the adjusted deleted text beginnet tax capacitydeleted text endnew text begin assessed valuenew text end of the district.

Sec. 3.

Minnesota Statutes 2016, section 123B.63, subdivision 3, is amended to read:


Subd. 3.

Capital project levy referendum.

(a) A district may levy the local tax rate
approved by a majority of the electors voting on the question to provide funds for an approved
project. The election must take place no more than five years before the estimated date of
commencement of the project. The referendum must be held on a date set by the board. A
district must meet the requirements of section 123B.71 for projects funded under this section.
If a review and comment is required under section 123B.71, subdivision 8, a referendum
for a project not receiving a positive review and comment by the commissioner must be
approved by at least 60 percent of the voters at the election.

(b) The referendum may be called by the school board and may be held:

(1) separately, before an election for the issuance of obligations for the project under
chapter 475; or

(2) in conjunction with an election for the issuance of obligations for the project under
chapter 475; or

(3) notwithstanding section 475.59, as a conjunctive question authorizing both the capital
project levy and the issuance of obligations for the project under chapter 475. Any obligations
authorized for a project may be issued within five years of the date of the election.

(c) The ballot must provide a general description of the proposed project, state the
estimated total cost of the project, state whether the project has received a positive or negative
review and comment from the commissioner, state the maximum amount of the capital
project levy as a deleted text beginpercentage of net tax capacitydeleted text endnew text begin mill ratenew text end, state the amount that will be raised
by that local tax rate in the first year it is to be levied, and state the maximum number of
years that the levy authorization will apply.

The ballot must contain a textual portion with the information required in this section
and a question stating substantially the following:

"Shall the capital project levy proposed by the board of .......... School District No. ..........
be approved?"

If approved, the amount provided by the approved local tax rate applied to the deleted text beginnet tax
capacity
deleted text endnew text begin assessed valuenew text end for the year preceding the year the levy is certified may be certified
for the number of years, not to exceed ten, approved.

(d) If the district proposes a new capital project to begin at the time the existing capital
project expires and at the same maximum tax rate, the general description on the ballot may
state that the capital project levy is being renewed and that the tax rate is not being increased
from the previous year's rate. An election to renew authority under this paragraph may be
called at any time that is otherwise authorized by this subdivision. The ballot notice required
under section 275.60 may be modified to read:

"BY VOTING YES ON THIS BALLOT QUESTION, YOU ARE VOTING TO RENEW
AN EXISTING CAPITAL PROJECTS REFERENDUM THAT IS SCHEDULED TO
EXPIRE."

(e) In the event a conjunctive question proposes to authorize both the capital project
levy and the issuance of obligations for the project, appropriate language authorizing the
issuance of obligations must also be included in the question.

(f) The district must notify the commissioner of the results of the referendum.

Sec. 4.

Minnesota Statutes 2016, section 124D.135, subdivision 6a, is amended to read:


Subd. 6a.

Home visiting levy.

To obtain home visiting revenue, a district may levy an
amount not more than the product of its home visiting revenue for the fiscal year times the
lesser of one or the ratio of its adjusted deleted text beginnet tax capacitydeleted text endnew text begin assessed valuenew text end per adjusted pupil
unit to the home visiting equalizing factor. The home visiting equalizing factor equals
deleted text begin $17,250deleted text endnew text begin $862,500new text end for fiscal year 2018 and later.

Sec. 5.

Minnesota Statutes 2016, section 124D.20, subdivision 5, is amended to read:


Subd. 5.

Total community education levy.

To obtain total community education revenue,
a district may levy the amount raised by a maximum tax rate of deleted text begin0.94 percentdeleted text endnew text begin 0.188 millsnew text end
times the adjusted deleted text beginnet tax capacitydeleted text endnew text begin assessed valuenew text end of the district. If the amount of the total
community education levy would exceed the total community education revenue, the total
community education levy shall be determined according to subdivision 6.

Sec. 6.

Minnesota Statutes 2016, section 126C.01, subdivision 3, is amended to read:


Subd. 3.

Referendum market value.

"Referendum market value" means the market
value of all taxable property, excluding property classified as class 2, deleted text begin4c(4)deleted text endnew text begin 4c4new text end, or deleted text begin4c(12)deleted text endnew text begin
4c12
new text end under section 273.13. The portion of class 2a property consisting of the house, garage,
and surrounding one acre of land of an agricultural homestead is included in referendum
market value. For the purposes of this subdivision, in the case of class 1a, 1b, or 2a property,
"market value" means the value prior to the exclusion under section 273.13, subdivision
35
. Any class of property, or any portion of a class of property, that is included in the
definition of referendum market value and that has deleted text begina classification ratedeleted text endnew text begin an assessment rationew text end
of less than deleted text beginonedeleted text endnew text begin 50new text end percent under section 273.13 shall have a referendum market value equal
to deleted text beginits market valuedeleted text endnew text begin twonew text end times its deleted text beginclassification rate, multiplied by 100deleted text endnew text begin assessed valuenew text end.

Sec. 7.

Minnesota Statutes 2016, section 126C.10, subdivision 13a, is amended to read:


Subd. 13a.

Operating capital levy.

To obtain operating capital revenue, a district may
levy an amount not more than the product of its operating capital revenue for the fiscal year
times the lesser of one or the ratio of its adjusted deleted text beginnet tax capacitydeleted text endnew text begin assessed valuenew text end per adjusted
pupil unit to the operating capital equalizing factor. The operating capital equalizing factor
equals deleted text begin$15,740deleted text endnew text begin $787,000new text end for fiscal year 2017, deleted text begin$19,972deleted text endnew text begin $998,600new text end for fiscal year 2018, and
deleted text begin $22,912deleted text endnew text begin $1,145,600new text end for fiscal year 2019 and later.

Sec. 8.

Minnesota Statutes 2016, section 126C.13, subdivision 3a, is amended to read:


Subd. 3a.

Student achievement rate.

The commissioner must establish the student
achievement rate by September 30 of each year for levies payable in the following year.
The student achievement rate must be a rate, rounded up to the nearest deleted text beginhundredthdeleted text endnew text begin thousandthnew text end
of a deleted text beginpercentdeleted text endnew text begin millnew text end, that, when applied to the adjusted deleted text beginnet tax capacitydeleted text endnew text begin assessed valuenew text end for all
districts, raises the amount specified in this subdivision. The student achievement rate must
be the rate that raises $20,000,000 for fiscal year 2015, 2016, and 2017 and $10,000,000
for fiscal year 2018. The student achievement rate may not be changed due to changes or
corrections made to a district's adjusted deleted text beginnet tax capacitydeleted text endnew text begin assessed valuenew text end after the rate has
been established.

Sec. 9.

Minnesota Statutes 2016, section 126C.41, subdivision 4, is amended to read:


Subd. 4.

Minneapolis health insurance subsidy.

Each year Special School District No.
1, Minneapolis, may make an additional levy not to exceed the amount raised by a net tax
rate of deleted text begin.10 percentdeleted text endnew text begin .02 millsnew text end times the adjusted deleted text beginnet tax capacity for taxes payable in 1991
and thereafter of the property in
deleted text endnew text begin assessed value ofnew text end the district for the preceding year. The
proceeds may be used only to subsidize health insurance costs for eligible teachers as
provided in this section.

"Eligible teacher" means a retired teacher who is a retired member of the Teachers
Retirement Association, who was a basic member of the former Minneapolis Teachers
Retirement Fund Association, who retired before May 1, 1974, or who had 20 or more years
of basic member service in the former Minneapolis Teachers Retirement Fund Association
and retired before June 30, 1983, and who is not eligible to receive the hospital insurance
benefits of the federal Medicare program of the Social Security Act without payment of a
monthly premium. The district must notify eligible teachers that a subsidy is available. To
obtain a subsidy, an eligible teacher must submit to the school district a copy of receipts
for health insurance premiums paid. The district must disburse the health insurance premium
subsidy to each eligible teacher according to a schedule determined by the district, but at
least annually. An eligible teacher may receive a subsidy up to an amount equal to the lesser
of 90 percent of the cost of the eligible teacher's health insurance or up to 90 percent of the
cost of the number two qualified plan of health coverage for individual policies made
available by the Minnesota comprehensive health association under chapter 62E.

If funds remaining from the previous year's health insurance subsidy levy, minus the
previous year's required subsidy amount, are sufficient to pay the estimated current year
subsidy, the levy must be discontinued until the remaining funds are estimated by the school
board to be insufficient to pay the subsidy.

This subdivision does not extend benefits to teachers who retire after June 30, 1983, and
does not create a contractual right or claim for altering the benefits in this subdivision. This
subdivision does not restrict the district's right to modify or terminate coverage under this
subdivision.

Sec. 10.

Minnesota Statutes 2016, section 126C.41, subdivision 5, is amended to read:


Subd. 5.

St. Paul severance levy.

The school board of Independent School District No.
625, St. Paul, for the purpose of providing moneys for the payment of its severance pay
obligations under a plan approved by resolution of the district, in addition to all other powers
possessed by the school district and in addition to and in excess of any existing limitation
upon the amount it is otherwise authorized by law to levy as taxes, is authorized to levy
taxes annually not exceeding in any one year an amount equal to a deleted text beginnetdeleted text end tax deleted text begincapacitydeleted text end rate of
deleted text begin 0.36 percent for taxes payable in 2002 and thereafterdeleted text endnew text begin .072 millsnew text end upon new text beginthe assessed value of
new text end all taxable property within the school district which taxes as levied shall be spread upon the
tax rolls, and all corrections thereof shall be held by the school district, and allocated therefor
to be disbursed and expended by the school district in payment of any public school severance
pay obligations and for no other purpose. Disbursements and expenditures previously
authorized on behalf of the school district for payment of severance pay obligations shall
not be deemed to constitute any part of the cost of the operation and maintenance of the
school district within the meaning of any statutory limitation of any school district
expenditures.

The amount of such severance pay allowable or to become payable in respect of any
such employment or to any such employee shall not exceed the amount permitted by section
465.72.

Sec. 11.

Minnesota Statutes 2016, section 126C.63, subdivision 8, is amended to read:


Subd. 8.

Maximum effort debt service levy.

(a) "Maximum effort debt service levy"
means the lesser of:

(1) a levy in whichever of the following amounts is applicable:

(i) in any district receiving a debt service loan for a debt service levy payable in 2002
and thereafter, or granted a capital loan after January 1, 2002, a levy in total dollar amount
computed at a rate of deleted text begin33.59 percent ofdeleted text endnew text begin 6.718 mills timesnew text end adjusted deleted text beginnet tax capacitydeleted text endnew text begin assessed
value
new text end for taxes payable in 2002 and thereafter;

(ii) in any district receiving a debt service loan for a debt service levy payable in 2001
or earlier, or granted a capital loan before January 2, 2002, a levy in a total dollar amount
computed at a rate of deleted text begin29.39 percent ofdeleted text endnew text begin 5.878 mills timesnew text end adjusted deleted text beginnet tax capacitydeleted text endnew text begin assessed
value
new text end for taxes payable in 2002 and thereafter; or

(2) a levy in any district for which a capital loan was approved prior to August 1, 1981,
a levy in a total dollar amount equal to the sum of the amount of the required debt service
levy and an amount which when levied annually will in the opinion of the commissioner
be sufficient to retire the remaining interest and principal on any outstanding loans from
the state within 30 years of the original date when the capital loan was granted.

(b) The board in any district affected by the provisions of paragraph (a), clause (2), may
elect instead to determine the amount of its levy according to the provisions of paragraph
(a), clause (1). If a district's capital loan is not paid within 30 years because it elects to
determine the amount of its levy according to the provisions of paragraph (a), clause (2),
the liability of the district for the amount of the difference between the amount it levied
under paragraph (a), clause (2), and the amount it would have levied under paragraph (a),
clause (1), and for interest on the amount of that difference, must not be satisfied and
discharged pursuant to Minnesota Statutes 1988, or an earlier edition of Minnesota Statutes
if applicable, section 124.43, subdivision 4.

Sec. 12.

Minnesota Statutes 2016, section 126C.69, subdivision 2, is amended to read:


Subd. 2.

Capital loans eligibility.

Beginning July 1, 1999, a district is not eligible for
a capital loan unless the district's estimated net debt tax rate as computed by the commissioner
after debt service equalization aid would be more than deleted text begin41.98 percent ofdeleted text endnew text begin 8.396 mills timesnew text end
adjusted deleted text beginnet tax capacitydeleted text endnew text begin assessed valuenew text end. The estimate must assume a 20-year maturity
schedule for new debt.

Sec. 13.

Minnesota Statutes 2016, section 126C.69, subdivision 9, is amended to read:


Subd. 9.

Loan amount limits.

(a) A loan must not be recommended for approval for a
district exceeding an amount computed as follows:

(1) the amount requested by the district under subdivision 6;

(2) plus the aggregate principal amount of general obligation bonds of the district
outstanding on June 30 of the year following the year the application was received, not
exceeding the limitation on net debt of the district in section 475.53, subdivision 4, or 637
percent of its adjusted net tax capacity as most recently determined, whichever is less;

(3) less the maximum net debt permissible for the district on December 1 of the year
the application is received, under the limitation in section 475.53, subdivision 4, or deleted text begin637
percent of
deleted text endnew text begin 127.4 mills timesnew text end its adjusted deleted text beginnet tax capacitydeleted text endnew text begin assessed valuenew text end as most recently
determined, whichever is less;

(4) less any amount by which the amount voted exceeds the total cost of the facilities
for which the loan is granted.

(b) The loan may be approved in an amount computed as provided in paragraph (a),
clauses (1) to (3), subject to later reduction according to paragraph (a), clause (4).

Sec. 14.

Minnesota Statutes 2016, section 128D.11, subdivision 3, is amended to read:


Subd. 3.

No election.

Subject to the provisions of subdivisions 7 to 10, the school district
may also by a two-thirds majority vote of all the members of its board of education and
without any election by the voters of the district, issue and sell in each calendar year general
obligation bonds of the district in an amount not to exceed deleted text begin5-1/10 per cent ofdeleted text endnew text begin 1.02 mills
times
new text end the deleted text beginnet tax capacitydeleted text endnew text begin assessed valuenew text end of the taxable property in the district (plusdeleted text begin, for
calendar years 1990 to 2003, an amount not to exceed $7,500,000, and for calendar year
2004 and later,
deleted text end an amount not to exceed $15,000,000; with an additional provision that any
amount of bonds so authorized for sale in a specific year and not sold can be carried forward
and sold in the year immediately following).

Sec. 15.

Minnesota Statutes 2016, section 128D.11, subdivision 8, is amended to read:


Subd. 8.

Net debt limit.

The school district shall not be subject to a net debt in excess
of deleted text begin144 percent ofdeleted text endnew text begin 28.8 mills timesnew text end the deleted text beginnet tax capacitydeleted text endnew text begin assessed valuenew text end of all taxable property
therein.

Sec. 16.

Minnesota Statutes 2016, section 134.34, subdivision 1, is amended to read:


Subdivision 1.

Local support levels.

(a) Regional library basic system support aid shall
be provided to any regional public library system where there are at least three participating
counties and where each participating city and county is providing for public library service
support the lesser of (a) an amount equivalent to .82 percent of the average of the adjusted
deleted text begin net tax capacitydeleted text endnew text begin assessed valuenew text end of the taxable property of that city or county, as determined
by the commissioner of revenue for the second, third, and fourth year preceding that calendar
year or (b) a per capita amount calculated under the provisions of this subdivision. The per
capita amount is established for calendar year 1993 as deleted text begin$7.62deleted text endnew text begin $381new text end. In succeeding calendar
years, the per capita amount shall be increased by a percentage equal to one-half of the
percentage by which the total state adjusted net tax capacity of property as determined by
the commissioner of revenue for the second year preceding that calendar year increases
over that total adjusted net tax capacity for the third year preceding that calendar year.

(b) The minimum level of support specified under this subdivision or subdivision 4 shall
be certified annually to the participating cities and counties by the Department of Education.
If a city or county chooses to reduce its local support in accordance with subdivision 4,
paragraph (b) or (c), it shall notify its regional public library system. The regional public
library system shall notify the Department of Education that a revised certification is required.
The revised minimum level of support shall be certified to the city or county by the
Department of Education.

(c) A city which is a part of a regional public library system shall not be required to
provide this level of support if the property of that city is already taxable by the county for
the support of that regional public library system. In no event shall the Department of
Education require any city or county to provide a higher level of support than the level of
support specified in this section in order for a system to qualify for regional library basic
system support aid. This section shall not be construed to prohibit a city or county from
providing a higher level of support for public libraries than the level of support specified
in this section.

Sec. 17.

Minnesota Statutes 2016, section 134.355, subdivision 6, is amended to read:


Subd. 6.

Adjusted deleted text beginnet tax capacitydeleted text endnew text begin assessed valuenew text end per capita distribution.

Twenty-five
percent of the available aid funds shall be distributed to regional public library systems
based upon the adjusted deleted text beginnet tax capacitydeleted text endnew text begin assessed valuenew text end per capita for each member county
or participating portion of a county as calculated for the second year preceding the fiscal
year for which aid is provided. Each system's entitlement shall be calculated as follows:

(a) Multiply the adjusted deleted text beginnet tax capacitydeleted text endnew text begin assessed valuenew text end per capita for each county or
participating portion of a county by .0082.

(b) Add sufficient aid funds that are available under this subdivision to raise the amount
of the county or participating portion of a county with the lowest value calculated according
to paragraph (a) to the amount of the county or participating portion of a county with the
next highest value calculated according to paragraph (a). Multiply the amount of the
additional aid funds by the population of the county or participating portion of a county.

(c) Continue the process described in paragraph (b) by adding sufficient aid funds that
are available under this subdivision to the amount of a county or participating portion of a
county with the next highest value calculated in paragraph (a) to raise it and the amount of
counties and participating portions of counties with lower values calculated in paragraph
(a) up to the amount of the county or participating portion of a county with the next highest
value, until reaching an amount where funds available under this subdivision are no longer
sufficient to raise the amount of a county or participating portion of a county and the amount
of counties and participating portions of counties with lower values up to the amount of the
next highest county or participating portion of a county.

(d) If the point is reached using the process in paragraphs (b) and (c) at which the
remaining aid funds under this subdivision are not adequate for raising the amount of a
county or participating portion of a county and all counties and participating portions of
counties with amounts of lower value to the amount of the county or participating portion
of a county with the next highest value, those funds are to be divided on a per capita basis
for all counties or participating portions of counties that received aid funds under the
calculation in paragraphs (b) and (c).

Sec. 18.

Minnesota Statutes 2016, section 161.082, subdivision 2a, is amended to read:


Subd. 2a.

Town bridges and culverts; town road account.

(a) Money in the town
bridge account must be expended on town road bridge structures that are ten feet or more
in length and on town road culverts that replace existing town road bridges. In addition, if
the present bridge structure is less than ten feet in length but a hydrological survey indicates
that the replacement bridge structure or culvert must be ten feet or more in length, then the
bridge or culvert is eligible for replacement funds.

(b) The town bridge account may be used to pay the costs to abandon an existing bridge
that is deficient and in need of replacement, but where no replacement will be made. It may
also be used to pay the costs to construct a road or street to facilitate the abandonment of
an existing bridge determined by the commissioner to be deficient, if the commissioner
determines that construction of the road or street is more cost-efficient than replacing the
existing bridge.

(c) When bridge approach construction work exceeds $10,000 in costs, or when the
county engineer determines that the cost of the replacement culverts alone will not exceed
$20,000, or engineering costs exceed $10,000, the town shall be eligible for financial
assistance from the town bridge account. Financial assistance shall be requested by resolution
of the county board and shall be limited to:

(1) 100 percent of the cost of the bridge approach work that is in excess of $10,000;

(2) 100 percent of the cost of the replacement culverts when the cost does not exceed
$20,000 and the town board agrees to be responsible for all the other costs, which may
include costs for structural removal, installation, and permitting. The replacement structure
design and costs shall be approved and certified by the county engineer, but need not be
subsequently approved by the Department of Transportation; or

(3) 100 percent of all related engineering costs that exceed $10,000, or in the case of
towns with deleted text begina net tax capacitydeleted text endnew text begin an assessed valuenew text end of less than deleted text begin$300,000deleted text endnew text begin $15,000,000new text end, 100
percent of the engineering costs.

(d) Money in the town road account must be distributed as provided in section 162.081.

Sec. 19.

Minnesota Statutes 2016, section 270C.921, is amended to read:


270C.921 MUNICIPALITY MAY BE PARTY TO TAX HEARING.

Any city, town, school district, or county (all of which governmental subdivisions shall
be embraced in the word "municipality" as used in sections 270C.921 to 270C.928) may
appear at and become a party to any proceedings before the commissioner under section
270C.92 held for the purpose of equalizing or assessing any real or personal property in the
municipality, or reducing the deleted text beginnet tax capacitydeleted text endnew text begin assessed valuenew text end of any such property. For that
purpose the municipality may employ counsel and disburse money for other expenses in
connection with the proceedings, on duly itemized, verified claims, which shall be audited
and allowed as now provided by law for the allowance of claims against a municipality. It
shall be the duty of the commissioner, at the time of a hearing, to grant the municipality, at
its request, any further reasonable time as may be necessary for the municipality to prepare
for further hearing. Before granting any reduction in deleted text beginnet tax capacitydeleted text endnew text begin estimated market valuenew text end
exceeding $100,000, it shall be the duty of the commissioner, when any taxpayer or property
owner has applied to the commissioner after June 30, 1983, for a reduction of the deleted text beginnet tax
capacity
deleted text endnew text begin estimated market valuenew text end of any real or personal property in an amount exceeding
$100,000, to give written notice to the officials of the municipality where the property is
located and to permit the municipality to have reasonable opportunity to be heard at any
proceedings concerning such reduction.

Sec. 20.

Minnesota Statutes 2016, section 273.1325, subdivision 1, is amended to read:


Subdivision 1.

Computation.

The Department of Revenue must annually conduct an
assessment/sales ratio study of the taxable property in each county, city, town, and school
district in accordance with the procedures in subdivisions 2 and 3. Based upon the results
of this assessment/sales ratio study, the Department of Revenue must determine an equalized
deleted text begin net tax capacitydeleted text endnew text begin assessed valuenew text end for the various classes of taxable property in each taxing
district, the aggregate of which is designated as the adjusted deleted text beginnet tax capacitydeleted text endnew text begin assessed valuenew text end.
The adjusted deleted text beginnet tax capacitydeleted text endnew text begin assessed valuenew text end must be reduced by the captured deleted text begintax capacitydeleted text endnew text begin
assessed value
new text end of tax increment districts under section 469.177, subdivision 2, fiscal
disparities contribution deleted text begintax capacitiesdeleted text endnew text begin assessed valuesnew text end under sections 276A.06 and 473F.08,
and the deleted text begintax capacitydeleted text endnew text begin assessed valuenew text end of transmission lines required to be subtracted from the
local tax base under section 273.425; and increased by fiscal disparities distribution deleted text begintax
capacities
deleted text endnew text begin assessed valuesnew text end under sections 276A.06 and 473F.08. The adjusted deleted text beginnet tax
capacities
deleted text endnew text begin assessed valuesnew text end shall be determined using the deleted text beginnet tax capacity percentagesdeleted text endnew text begin
assessment ratios
new text end in effect for the assessment year following the assessment year of the
study. The Department of Revenue must make whatever estimates are necessary to account
for changes in the classification system. The Department of Revenue may incur the expense
necessary to make the determinations. The commissioner of revenue may reimburse any
county or governmental official for requested services performed in ascertaining the adjusted
deleted text begin net tax capacitydeleted text endnew text begin assessed valuenew text end. On or before March 15 annually, the Department of Revenue
shall file with the chair of the Tax Committee of the house of representatives and the chair
of the Committee on Taxes and Tax laws of the senate a report of adjusted deleted text beginnet tax capacitiesdeleted text endnew text begin
assessed values
new text end for school districts. On or before June 30 annually, the Department of
Revenue shall file its final report on the adjusted deleted text beginnet tax capacitiesdeleted text endnew text begin assessed valuesnew text end for school
districts established by the previous year's assessments and the current year's deleted text beginnet tax capacity
percentages
deleted text endnew text begin assessment ratiosnew text end with the commissioner of education and each county auditor
for those school districts for which the auditor has the responsibility for determination of
local tax rates. A copy of the report so filed shall be mailed to the clerk of each school
district involved and to the county assessor or supervisor of assessments of the county or
counties in which each school district is located.

Sec. 21.

Minnesota Statutes 2016, section 275.08, subdivision 1d, is amended to read:


Subd. 1d.

Additional adjustment.

If, after computing each local government's adjusted
local tax rate within a unique taxing jurisdiction pursuant to subdivision 1c, the auditor finds
that the total adjusted local tax rate of all local governments combined is deleted text begin90 percent of net
tax capacity
deleted text endnew text begin less than 18 millsnew text end, the auditor shall increase each local government's adjusted
local tax rate proportionately so the total adjusted local tax rate of all local governments
combined equals deleted text begin90 percentdeleted text endnew text begin 18 millsnew text end. The total amount of the increase in tax resulting from
the increased local tax rates must not exceed the amount of disparity aid allocated to the
unique taxing district under section 273.1398. The auditor shall certify to the Department
of Revenue the difference between the disparity aid originally allocated under section
273.1398, subdivision 3, and the amount necessary to reduce the total adjusted local tax
rate of all local governments combined to deleted text begin90 percentdeleted text endnew text begin 18 millsnew text end. Each local government's
disparity reduction aid payment under section 273.1398, subdivision 6, must be reduced
accordingly.

Sec. 22.

Minnesota Statutes 2016, section 275.28, subdivision 1, is amended to read:


Subdivision 1.

Auditor to make.

The county auditor shall make out the tax lists according
to the prescribed form, and to correspond with the assessment districts. The rate deleted text beginpercent
deleted text end necessary to raise the required amount of the various taxes shall be calculated on the deleted text beginnet
tax capacity of property
deleted text endnew text begin assessed valuenew text end as determined by the state Board of Equalization,
but, in calculating such rates, no rate shall be used resulting in a fraction other than a decimal
fraction, or less than deleted text begina gross local tax rate of .01 percent ordeleted text end a net local tax rate of deleted text begin.01 percentdeleted text endnew text begin
.002 mills
new text end; and, in extending any tax, whenever it amounts to the fractional part of a cent,
it shall be made one cent. The tax lists shall also be made out to correspond with the
assessment books in reference to ownership and description of property, with columns for
the valuation and for the various items of tax included in the total amount of all taxes set
down opposite each description. The auditor shall enter both the state tax determined under
sections 275.02 and 275.025, and the local tax determined under section 275.08, on the tax
lists. The total ad valorem property tax for each description of property before credits is the
sum of the amounts of the various local taxes that apply to the parcel plus the amount of
any applicable state tax. Opposite each description which has been sold for taxes, and which
is subject to redemption, but not redeemed, shall be placed the words "sold for taxes." The
amount of all special taxes shall be entered in the proper columns, but the general taxes
may be shown by entering the rate deleted text beginpercentdeleted text end of each tax at the head of the proper columns,
without extending the same, in which case a schedule of the rates deleted text beginpercentdeleted text end of such taxes shall
be made on the first page of each tax list. If the auditor fails to enter on any such list before
its delivery to the treasurer any tax levied, the tax may be subsequently entered. The tax
lists shall be deemed completed, and all taxes extended thereon, as of January 1 annually.

Sec. 23.

Minnesota Statutes 2016, section 276A.01, subdivision 15, is amended to read:


Subd. 15.

deleted text beginNet tax capacitydeleted text endnew text begin Assessed valuenew text end.

deleted text begin"Net tax capacity"deleted text endnew text begin "Assessed value"new text end means
the taxable market value of real and personal property multiplied by deleted text beginits net tax capacity
rates
deleted text endnew text begin the appropriate assessment ratiosnew text end in section 273.13.

Sec. 24.

Minnesota Statutes 2016, section 276A.06, subdivision 9, is amended to read:


Subd. 9.

Fiscal disparities adjustment.

In any year in which the highest deleted text beginclassification
rate
deleted text endnew text begin assessment rationew text end for class 3a property changes from the rate in the previous year, the
following adjustments shall be made to the procedures described in sections 276A.04 to
276A.06:

(1) An initial contribution deleted text begintax capacitydeleted text endnew text begin assessed valuenew text end shall be determined for each
municipality based on the previous year's deleted text beginclassification ratesdeleted text endnew text begin assessment ratiosnew text end.

(2) Each jurisdiction's distribution deleted text begintax capacitydeleted text endnew text begin assessed valuenew text end shall be determined based
upon the areawide tax base determined by summing the deleted text begintax capacitiesdeleted text endnew text begin assessed valuesnew text end
computed under clause (1) for all municipalities and apportioning the resulting sum pursuant
to section 276A.05, subdivision 5.

(3) Each jurisdiction's distribution levy shall be determined by applying the procedures
described in subdivision 3, clause (1), to the distribution deleted text begintax capacitydeleted text endnew text begin assessed valuenew text end
determined pursuant to clause (2).

(4) Each municipality's final contribution deleted text begintax capacitydeleted text endnew text begin assessed valuenew text end shall be determined
equal to its initial contribution deleted text begintax capacitydeleted text endnew text begin assessed valuenew text end multiplied by the ratio of the new
highest deleted text beginclassification ratedeleted text endnew text begin assessment rationew text end for class 3a property to the previous year's highest
deleted text begin classification ratedeleted text endnew text begin assessment rationew text end for class 3a property.

(5) For the purposes of computing education aids and any other state aids requiring the
addition of the fiscal disparities distribution deleted text begintax capacitydeleted text endnew text begin assessed valuenew text end to the local deleted text begintax
capacity
deleted text endnew text begin assessed valuenew text end, each municipality's final distribution deleted text begintax capacitydeleted text endnew text begin assessed valuenew text end
shall be determined equal to its initial distribution deleted text begintax capacitydeleted text endnew text begin assessed valuenew text end multiplied
by the ratio of the new highest deleted text beginclassification ratedeleted text endnew text begin assessment rationew text end for class 3a property to
the previous year's highest deleted text beginclassification ratedeleted text endnew text begin assessment rationew text end for class 3a property.

(6) The areawide tax rate shall be determined by dividing the sum of the amounts
determined in clause (3) by the sum of the values determined in clause (4).

(7) The final contribution deleted text begintax capacitydeleted text endnew text begin assessed valuenew text end determined in clause (4) shall also
be used to determine the portion of each commercial-industrial property's deleted text begintax capacitydeleted text endnew text begin
assessed value
new text end subject to the areawide tax rate pursuant to subdivision 7.

Sec. 25.

Minnesota Statutes 2016, section 298.28, subdivision 4, is amended to read:


Subd. 4.

School districts.

(a) 32.15 cents per taxable ton, plus the increase provided in
paragraph (d), less the amount that would have been computed under Minnesota Statutes
2008, section 126C.21, subdivision 4, for the current year for that district, must be allocated
to qualifying school districts to be distributed, based upon the certification of the
commissioner of revenue, under paragraphs (b), (c), and (f).

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

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

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

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

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

(4) proceeds from the Northshore Mining Company or its successor are distributed to
Independent School Districts Nos. 2142, St. Louis County, and 381, Lake Superior, or their
successor districts; and

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

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

(c)(i) 24.72 cents per taxable ton, less any amount distributed under paragraph (e), shall
be distributed to a group of school districts comprised of those school districts which qualify
as a tax relief area under section 273.134, paragraph (b), or in which there is a qualifying
municipality as defined by section 273.134, paragraph (a), in direct proportion to school
district indexes as follows: for each school district, its pupil units determined under section
126C.05 for the prior school year shall be multiplied by the ratio of the average adjusted
deleted text begin net tax capacitydeleted text endnew text begin assessed valuenew text end per pupil unit for school districts receiving aid under this
clause as calculated pursuant to chapters 122A, 126C, and 127A for the school year ending
prior to distribution to the adjusted deleted text beginnet tax capacitydeleted text endnew text begin assessed valuenew text end per pupil unit of the
district. Each district shall receive that portion of the distribution which its index bears to
the sum of the indices for all school districts that receive the distributions.

(ii) Notwithstanding clause (i), each school district that receives a distribution under
sections 298.018; 298.24; and 298.25 to 298.28, exclusive of any amount received under
this clause; 298.34 to 298.39; 298.391 to 298.396; 298.405; or any law imposing a tax on
severed mineral values after reduction for any portion distributed to cities and towns under
section 126C.48, subdivision 8, paragraph (5), that is less than the amount of its levy
reduction under section 126C.48, subdivision 8, for the second year prior to the year of the
distribution shall receive a distribution equal to the difference; the amount necessary to
make this payment shall be derived from proportionate reductions in the initial distribution
to other school districts under clause (i). If there are insufficient tax proceeds to make the
distribution provided under this paragraph in any year, money must be transferred from the
taconite property tax relief account in subdivision 6, to the extent of the shortfall in the
distribution.

(d)(1) Any school district described in paragraph (c) where a levy increase pursuant to
section 126C.17, subdivision 9, was authorized by referendum for taxes payable in 2001,
shall receive a distribution of 21.3 cents per ton. Each district shall receive $175 times the
pupil units identified in section 126C.05, subdivision 1, enrolled in the second previous
year or the 1983-1984 school year, whichever is greater, less the product of 1.8 percent
times the district's taxable net tax capacity in 2011.

(2) Districts qualifying under paragraph (c) must receive additional taconite aid each
year equal to 22.5 percent of the amount obtained by subtracting:

(i) 1.8 percent of the district's net tax capacity for 2011, from:

(ii) the district's weighted average daily membership for fiscal year 2012, multiplied by
the sum of:

(A) $415, plus

(B) the district's referendum revenue allowance for fiscal year 2013.

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

Each district receiving money according to this paragraph shall reserve the lesser of the
amount received under this paragraph or $25 times the number of pupil units served in the
district. It may use the money for early childhood programs.

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

(f) Four cents per taxable ton must be distributed to qualifying school districts according
to the distribution specified in paragraph (b), clause (ii), and 11 cents per taxable ton must
be distributed according to the distribution specified in paragraph (c). These amounts are
not subject to section 126C.48, subdivision 8.

Sec. 26.

Minnesota Statutes 2016, section 383D.41, subdivision 7, is amended to read:


Subd. 7.

Dakota County Community Development Agency.

(a) After December 31,
1999, the Dakota County Housing and Redevelopment Authority shall be known as the
Dakota County Community Development Agency. In addition to the other powers granted
in this section, the Dakota County Community Development Agency shall have the powers
of an economic development authority under sections 469.090 to 469.1081 that are granted
to the agency by resolution adopted by the Dakota County Board of Commissioners, except
as provided in paragraph (b). The enabling resolution may impose the limits upon the actions
of the agency that are listed in paragraph (c). The agency may exercise any of the powers
granted to it under sections 469.001 to 469.047 and any of the powers of an economic
development authority granted to it by the Dakota County Board of Commissioners for the
purposes described in these sections.

(b) The Dakota County Community Development Agency may not levy the tax described
in section 469.107, but with the approval of the Dakota County Board may increase its levy
of the special tax described in section 469.033, subdivision 6, to an amount not exceeding
deleted text begin 0.01813 percent of net tax capacitydeleted text endnew text begin 0.0036 mills times assessed valuenew text end, or any higher limit
authorized under section 469.107 or 469.033, subdivision 6.

(c) The enabling resolution may impose the limits upon the actions of the authority as
may be imposed by a municipality under section 469.092, except that the resolution adopted
under paragraph (a) may not impose any limitations on the authority's exercise of its powers
under sections 469.001 to 469.047.

Sec. 27.

Minnesota Statutes 2016, section 469.177, subdivision 1e, is amended to read:


Subd. 1e.

Adjustments; qualifying districts.

(a) For any tax increment financing district
that satisfies the requirements of paragraph (b), the original deleted text beginnet tax capacitydeleted text endnew text begin assessed valuenew text end
must be reduced by the full amount of the original deleted text beginnet tax capacitydeleted text endnew text begin assessed valuenew text end or deleted text begin$20,000deleted text endnew text begin
$1,000,000
new text end, whichever is less.

(b) A tax increment financing district qualifies under this subdivision if it satisfies the
following conditions:

(1) the district was certified after January 1, 2011, and before January 1, 2012;

(2) for assessment year 2012, at least 75 percent of the tax capacity of the district is class
4d property; and

(3) for assessment year 2012, the average estimated market value is over $115,000 per
housing unit for the portion of the property that is class 4d.

(c) An authority or a property owner within a tax increment financing district must notify
the county assessor of a district that qualifies under this subdivision by July 1, 2013.

(d) This subdivision expires on December 31, 2021.

Sec. 28.

Minnesota Statutes 2016, section 473F.02, subdivision 23, is amended to read:


Subd. 23.

deleted text beginNet tax capacitydeleted text endnew text begin Assessed valuenew text end.

deleted text begin"Net tax capacity"deleted text endnew text begin "Assessed value"new text end means
the taxable market value of real and personal property multiplied by deleted text beginits net tax capacity
rates
deleted text endnew text begin the appropriate assessment ratiosnew text end in section 273.13.

Sec. 29.

Minnesota Statutes 2016, section 473F.08, subdivision 8a, is amended to read:


Subd. 8a.

Fiscal disparities adjustment.

In any year in which the highest deleted text beginclassification
rate
deleted text endnew text begin assessment rationew text end for class 3a property changes from the deleted text beginratedeleted text endnew text begin rationew text end in the previous year,
the following adjustments shall be made to the procedures described in sections 473F.06
to 473F.08.

(1) An initial contribution deleted text begintax capacitydeleted text endnew text begin assessed valuenew text end shall be determined for each
municipality based on the previous year's deleted text beginclassification ratesdeleted text endnew text begin assessment ratiosnew text end.

(2) Each jurisdiction's distribution deleted text begintax capacitydeleted text endnew text begin assessed valuenew text end shall be determined based
upon the areawide tax base determined by summing the deleted text begintax capacitiesdeleted text endnew text begin assessed valuesnew text end
computed under clause (1) for all municipalities and apportioning the resulting sum pursuant
to section 473F.07, subdivision 5.

(3) Each jurisdiction's distribution levy shall be determined by applying the procedures
described in subdivision 3, clause (a), to the distribution deleted text begintax capacitydeleted text endnew text begin assessed valuenew text end
determined pursuant to clause (2).

(4) Each municipality's final contribution deleted text begintax capacitydeleted text endnew text begin assessed valuenew text end shall be determined
equal to its initial contribution deleted text begintax capacitydeleted text endnew text begin assessed valuenew text end multiplied by the ratio of the new
highest deleted text beginclassification ratedeleted text endnew text begin assessment rationew text end for class 3a property to the previous year's highest
deleted text begin classification ratedeleted text endnew text begin assessment rationew text end for class 3a property.

(5) For the purposes of computing education aids and any other state aids requiring the
addition of the fiscal disparities distribution deleted text begintax capacitydeleted text endnew text begin assessed valuenew text end to the local deleted text begintax
capacity
deleted text endnew text begin assessed valuenew text end, each municipality's final distribution deleted text begintax capacitydeleted text endnew text begin assessed valuenew text end
shall be determined equal to its initial distribution deleted text begintax capacitydeleted text endnew text begin assessed valuenew text end multiplied
by the ratio of the new highest deleted text beginclassification ratedeleted text endnew text begin assessment rationew text end for class 3a property to
the previous year's highest deleted text beginclassification ratedeleted text endnew text begin assessment rationew text end for class 3a property.

(6) The areawide tax rate shall be determined by dividing the sum of the amounts
determined in clause (3) by the sum of the values determined in clause (4).

(7) The final contribution deleted text begintax capacitydeleted text endnew text begin assessed valuenew text end determined in clause (4) shall also
be used to determined the portion of each commercial/industrial property's deleted text begintax capacitydeleted text endnew text begin
assessed value
new text end subject to the areawide tax rate pursuant to subdivision 6.

Sec. 30.

Minnesota Statutes 2016, section 473H.10, subdivision 3, is amended to read:


Subd. 3.

Computation of tax; state reimbursement.

(a) After having determined the
market value of all land valued according to subdivision 2, the assessor shall compute the
deleted text begin net tax capacitydeleted text endnew text begin assessed valuenew text end of those properties by applying the appropriate deleted text beginclassification
rates
deleted text endnew text begin assessment ratiosnew text end. When computing the rate of tax pursuant to section 275.08, the
county auditor shall include the deleted text beginnet tax capacitydeleted text endnew text begin assessed valuenew text end of land as provided in this
paragraph.

(b) The county auditor shall compute the tax on lands valued according to subdivision
2 and nonresidential buildings by multiplying the deleted text beginnet tax capacitydeleted text endnew text begin assessed valuenew text end times the
total local tax rate for all purposes as provided in paragraph (a).

(c) The county auditor shall then compute the tax on lands valued according to subdivision
2 and nonresidential buildings by multiplying the deleted text beginnet tax capacitydeleted text endnew text begin assessed valuenew text end times the
total local tax rate for all purposes as provided in paragraph (a), subtracting $1.50 per acre
of land in the preserve.

(d) The county auditor shall then compute the maximum ad valorem property tax on
lands valued according to subdivision 2 and nonresidential buildings by multiplying the deleted text beginnet
tax capacity times
deleted text endnew text begin assessed value bynew text end 105 percent of the previous year's statewide average
local tax rate levied on property located within townships for all purposes.

(e) The tax due and payable by the owner of preserve land valued according to subdivision
2 and nonresidential buildings will be the amount determined in paragraph (c) or (d),
whichever is less. The state shall reimburse the taxing jurisdictions for the amount of the
difference between the net tax determined under this paragraph and the gross tax in paragraph
(b). Residential buildings shall continue to be valued and classified according to the
provisions of sections 273.11 and 273.13, as they would be in the absence of this section,
and the tax on those buildings shall not be subject to the limitation contained in this
paragraph.

The county may transfer money from the county conservation account created in section
40A.152 to the county revenue fund to reimburse the fund for the tax lost as a result of this
subdivision or to pay taxing jurisdictions within the county for the tax lost. The county
auditor shall certify to the commissioner of revenue on or before June 1 the total amount
of tax lost to the county and taxing jurisdictions located within the county as a result of this
subdivision and the extent that the tax lost exceeds funds available in the county conservation
account. Payment shall be made by the state on December 26 to each of the affected taxing
jurisdictions, other than school districts, in the same proportion that the ad valorem tax is
distributed if the county conservation account is insufficient to make the reimbursement.
There is annually appropriated from the Minnesota conservation fund under section 40A.151
to the commissioner of revenue an amount sufficient to make the reimbursement provided
in this subdivision. If the amount available in the Minnesota conservation fund is insufficient,
the balance that is needed is appropriated from the general fund.

Sec. 31.

Minnesota Statutes 2016, section 477A.0124, subdivision 4, is amended to read:


Subd. 4.

County tax-base equalization aid.

(a) For 2006 and subsequent years, the
money appropriated to county tax-base equalization aid each calendar year, after the payment
under paragraph (f), shall be apportioned among the counties according to each county's
tax-base equalization aid factor.

(b) A county's tax-base equalization aid factor is equal to the amount by which (i) $185
times the county's population, exceeds (ii) deleted text begin9.45 percent ofdeleted text endnew text begin 1.89 mills timesnew text end the county's deleted text beginnet
tax capacity
deleted text endnew text begin adjusted assessed valuenew text end.

(c) In the case of a county with a population less than 10,000, the factor determined in
paragraph (b) shall be multiplied by a factor of three.

(d) In the case of a county with a population greater than or equal to 10,000, but less
than 12,500, the factor determined in paragraph (b) shall be multiplied by a factor of two.

(e) In the case of a county with a population greater than 500,000, the factor determined
in paragraph (b) shall be multiplied by a factor of 0.25.

(f) Before the money appropriated to county base equalization aid is apportioned among
the counties as provided in paragraph (a), an amount up to $73,259 is allocated annually to
Anoka County and up to $59,664 is annually allocated to Washington County for the county
to pay postretirement costs of health insurance premiums for court employees. The allocation
under this paragraph is in addition to the allocations under paragraphs (a) to (e).

Sec. 32. new text beginEFFECTIVE DATE.
new text end

new text begin Sections 1 to 31 are effective beginning with assessment year 2018 for taxes payable in
2019.
new text end

ARTICLE 3

CONFORMING CHANGES

Section 1.

Minnesota Statutes 2016, section 273.124, subdivision 3a, is amended to read:


Subd. 3a.

Manufactured home park cooperative.

(a) When a manufactured home park
is owned by a corporation or association organized under chapter 308A or 308B, and each
person who owns a share or shares in the corporation or association is entitled to occupy a
lot within the park, the corporation or association may claim homestead treatment for the
park. Each lot must be designated by legal description or number, and each lot is limited to
not more than one-half acre of land.

(b) The manufactured home park shall be entitled to homestead treatment if all of the
following criteria are met:

(1) the occupant or the cooperative corporation or association is paying the ad valorem
property taxes and any special assessments levied against the land and structure either
directly, or indirectly through dues to the corporation or association; and

(2) the corporation or association organized under chapter 308A or 308B is wholly
owned by persons having a right to occupy a lot owned by the corporation or association.

(c) A charitable corporation, organized under the laws of Minnesota with no outstanding
stock, and granted a ruling by the Internal Revenue Service for 501(c)(3) tax-exempt status,
qualifies for homestead treatment with respect to a manufactured home park if its members
hold residential participation warrants entitling them to occupy a lot in the manufactured
home park.

(d) "Homestead treatment" under this subdivision means the classification rate provided
for class 4c property classified under section 273.13, subdivision 25, paragraph deleted text begin(d), clause
(5), item (ii)
deleted text endnew text begin (h), clause (2)new text end. The homestead market value exclusion under section 273.13,
subdivision 35, does not apply and the property taxes assessed against the park shall not be
included in the determination of taxes payable for rent paid under section 290A.03.

Sec. 2.

Minnesota Statutes 2016, section 276A.01, subdivision 4, is amended to read:


Subd. 4.

Residential property.

"Residential property" means the following categories
of property, as defined in section 273.13, excluding that portion of the property that is
exempt from taxation pursuant to section 272.02:

(1) class 1a, 1b, deleted text beginanddeleted text end 2a deleted text beginpropertydeleted text end, limited to the homestead dwelling, a garage, and the
one acre of land on which the dwelling is locatednew text begin, 4a, 4b, 4bb, 4c4, 4c5, and 4d propertynew text end;

(2) that portion of class 3 property used exclusively for residential occupancy; and

(3) property valued and assessed under section 273.13, subdivision 25, except for hospitals
and property valued and assessed under section 273.13, subdivision 25, deleted text beginparagraph (d),
clauses (1) and (3)
deleted text endnew text begin paragraphs (d) and (f)new text end.

Sec. 3.

Minnesota Statutes 2016, section 473F.02, subdivision 4, is amended to read:


Subd. 4.

Residential property.

"Residential property" means the following categories
of property, as defined in section 273.13, excluding that portion of such property exempt
from taxation pursuant to section 272.02:

(a) class 1, 1b, 2a, new text beginlimited to the homestead dwelling, a garage, and the one acre of land
on which the dwelling is located,
new text end4a, 4b, deleted text begin4cdeleted text endnew text begin 4bb, 4c4, 4c5new text end, and 4d property except resorts
and property classified under section 273.13, subdivision 25, paragraph deleted text begin(d), clause (3)deleted text endnew text begin (f)new text end;
and

(b) that portion of class 3a, 3b, and 5 property used exclusively for residential occupancy.