HF 3201

4th Engrossment - 85th Legislature (2007 - 2008) Posted on 12/15/2009 12:00am

A bill for an act
relating to financing and operation of government in this state; making
policy, technical, administrative, payment, enforcement, collection, proceeds
distribution, refund, and other changes to income, franchise, property, state
and local sales and use, motor vehicle sales, minerals, estate, cigarette and
tobacco products, gasoline, liquor, insurance premiums, mortgage and deed,
healthcare gross revenues, and wheelage taxes, and other taxes and tax-related
provisions; conforming to certain changes in the Internal Revenue Code;
changing accelerated sales tax payments; providing for licensure of assessors;
changing provisions relating to the sustainable forest resource management
incentive program; providing for aids to local governments; providing for
state debt collection; changing border city allocation, tax increment financing,
and economic development, provisions, powers, and incentives; authorizing
purchase of forest lands; authorizing and validating trusts to pay certain public
postemployment benefits; providing for iron range higher education programs;
changing revenue recapture, local impact notes, and data practices provisions;
providing penalties; appropriating money; amending Minnesota Statutes 2006,
sections 3.987, subdivision 1; 3.988, subdivision 3; 3.989, subdivisions 2,
3; 16A.103, subdivision 2; 16D.04, subdivisions 1, 2; 16D.11, subdivisions
2, 7; 62I.06, subdivision 6; 71A.04, subdivision 1; 97A.061, subdivision 2;
118A.03, subdivision 3; 123B.61; 127A.48, subdivision 2; 270.071, subdivision
7; 270.072, subdivisions 2, 3, 6; 270.074, subdivision 3; 270.076, subdivision
1; 270.41, subdivisions 1, 2, 3, 5, by adding a subdivision; 270.44; 270.45;
270.46; 270.47; 270.48; 270.50; 270A.03, subdivision 2; 270A.10; 270C.306;
270C.34, subdivision 1; 270C.446, subdivision 2; 270C.56, subdivision 1;
270C.63, subdivision 9; 272.02, by adding subdivisions; 272.115, subdivision
1; 273.05, by adding a subdivision; 273.111, subdivision 3; 273.117; 273.121;
273.124, subdivision 13, by adding a subdivision; 273.125, subdivision 8;
273.128, subdivision 1; 273.13, subdivisions 22, 23, 25, by adding a subdivision;
273.1315; 273.1398, subdivision 4; 273.33, subdivision 2; 273.37, subdivision 2;
273.371, subdivision 1; 274.01, subdivision 1; 274.13, subdivision 1; 275.025,
subdivision 3; 275.065, subdivision 5a, by adding a subdivision; 275.066;
275.067; 275.61, subdivision 1; 276.04, subdivision 2, by adding a subdivision;
276A.01, subdivision 3; 276A.04; 277.01, subdivision 2; 278.05, subdivision
6; 279.01, subdivision 1; 279.37, subdivision 1a; 280.39; 287.22; 287.2205;
289A.02, subdivision 7; 289A.08, subdivision 11; 289A.09, subdivision 2;
289A.12, subdivisions 4, 14; 289A.18, subdivision 1; 289A.20, subdivision
4; 289A.38, subdivision 7; 289A.40, subdivision 2; 289A.56, by adding a
subdivision; 289A.60, subdivisions 8, 12, 15, 25, 27, by adding subdivisions;
290.01, subdivisions 19a, 19c, 19d; 290.06, subdivisions 2c, 33; 290.067,
subdivision 2b; 290.0671, subdivision 7; 290.0677, subdivision 1; 290.091,
subdivisions 2, 3; 290.0921, subdivision 3; 290.10; 290.17, subdivision 2;
290.191, subdivision 8; 290.92, by adding a subdivision; 290A.03, subdivision 7;
290B.03, subdivision 2; 290C.02, subdivision 3; 290C.04; 290C.05; 290C.07;
290C.11; 291.005, subdivision 1; 291.215, subdivision 1; 295.52, subdivisions
4, 4a; 295.54, subdivision 2; 296A.18, subdivision 4; 297A.61, subdivisions
3, 4, 7, 10, 24, by adding subdivisions; 297A.63, subdivision 1; 297A.665;
297A.668, by adding a subdivision; 297A.669, subdivisions 3, 13, 14, by adding
subdivisions; 297A.67, subdivisions 7, 8, 9; 297A.68, subdivisions 11, 16,
35; 297A.69, subdivision 2; 297A.70, subdivision 7, by adding a subdivision;
297A.72; 297A.90, subdivision 2; 297B.035, subdivision 1; 297F.06, subdivision
4; 297F.09, subdivision 10; 297F.21, subdivision 3; 297F.25, by adding a
subdivision; 297G.09, subdivision 9; 297I.06, subdivisions 1, 2; 297I.15, by
adding a subdivision; 297I.20, subdivision 2; 297I.40, subdivision 5; 298.22, by
adding a subdivision; 298.2214, subdivision 2; 298.24, subdivision 1; 298.25;
298.28, subdivisions 4, 5, by adding a subdivision; 298.282, subdivision 1;
298.292, subdivision 2; 298.296, subdivision 2; 298.2961, subdivisions 4, 5;
298.75, subdivisions 1, 3, 7, by adding a subdivision; 331A.05, subdivision
2; 360.031; 365A.02; 365A.04; 365A.08; 365A.095; 373.01, subdivision 3;
373.40, subdivision 4; 375B.09; 383B.117, subdivision 2; 383B.77, subdivisions
1, 2; 410.32; 412.301; 435.193; 453A.02, subdivision 3; 469.169, by adding a
subdivision; 469.1734, subdivision 6; 469.174, subdivisions 10, 10a; 469.175,
subdivisions 1, 3; 469.176, subdivisions 1, 2, 4l, 7; 469.1761, subdivision
1; 469.1763, subdivision 2; 469.177, subdivision 1; 469.178, subdivision 7;
469.1791, subdivision 3; 473.39, by adding subdivisions; 475.51, subdivision
4; 475.52, subdivision 6; 475.53, subdivision 1; 475.58, subdivisions 1, 3b;
477A.011, subdivision 36; 477A.013, subdivisions 8, 9; Minnesota Statutes
2007 Supplement, sections 270A.03, subdivision 5; 272.02, subdivision 64;
273.124, subdivision 14; 275.065, subdivision 3; 290.01, subdivisions 19, 19b,
31; 290A.03, subdivision 15; 424A.10, subdivision 3; Laws 1973, chapter 393,
section 1, as amended; Laws 1980, chapter 511, section 1, subdivision 2, as
amended; Laws 1988, chapter 645, section 3, as amended; Laws 1989, chapter
211, section 8, subdivision 4, as amended; Laws 1994, chapter 587, article 9,
section 14, subdivisions 1, 2, 3; Laws 1995, chapter 264, article 5, sections 44,
subdivision 4, as amended; 45, subdivision 1, as amended; Laws 2003, chapter
128, article 1, section 172, as amended; Laws 2005, First Special Session chapter
3, article 5, section 39; article 10, section 23, as amended; Laws 2006, chapter
259, article 11, section 3; proposing coding for new law in Minnesota Statutes,
chapters 270; 270C; 273; 274; 290C; 297A; 360; 471; 475; repealing Minnesota
Statutes 2006, sections 16A.1522; 163.051, subdivision 5; 270.073; 270.41,
subdivision 4; 270.43; 270.51; 270.52; 270.53; 295.60; 297A.61, subdivision
20; 297A.668, subdivision 6; 297A.67, subdivision 22; 469.174, subdivision 29;
Laws 1973, chapter 393, section 2; Laws 1994, chapter 587, article 9, section 8,
subdivision 1, as amended; Laws 1998, chapter 389, article 11, section 18.

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

ARTICLE 1

AIDS TO LOCAL GOVERNMENTS

Section 1.

Minnesota Statutes 2006, section 477A.011, subdivision 36, is amended to
read:

Subd. 36.

City aid base.

(a) Except as otherwise provided in this subdivision,
"city aid base" is zero.

(b) The city aid base for any city with a population less than 500 is increased by
$40,000 for aids payable in calendar year 1995 and thereafter, and the maximum amount
of total aid it may receive under section 477A.013, subdivision 9, paragraph (c), is also
increased by $40,000 for aids payable in calendar year 1995 only, provided that:

(i) the average total tax capacity rate for taxes payable in 1995 exceeds 200 percent;

(ii) the city portion of the tax capacity rate exceeds 100 percent; and

(iii) its city aid base is less than $60 per capita.

(c) The city aid base for a city is increased by $20,000 in 1998 and thereafter and
the maximum amount of total aid it may receive under section 477A.013, subdivision 9,
paragraph (c), is also increased by $20,000 in calendar year 1998 only, provided that:

(i) the city has a population in 1994 of 2,500 or more;

(ii) the city is located in a county, outside of the metropolitan area, which contains a
city of the first class;

(iii) the city's net tax capacity used in calculating its 1996 aid under section
477A.013 is less than $400 per capita; and

(iv) at least four percent of the total net tax capacity, for taxes payable in 1996, of
property located in the city is classified as railroad property.

(d) The city aid base for a city is increased by $200,000 in 1999 and thereafter and
the maximum amount of total aid it may receive under section 477A.013, subdivision 9,
paragraph (c), is also increased by $200,000 in calendar year 1999 only, provided that:

(i) the city was incorporated as a statutory city after December 1, 1993;

(ii) its city aid base does not exceed $5,600; and

(iii) the city had a population in 1996 of 5,000 or more.

(e) The city aid base for a city is increased by $450,000 in 1999 to 2008 and the
maximum amount of total aid it may receive under section 477A.013, subdivision 9,
paragraph (c), is also increased by $450,000 in calendar year 1999 only, provided that:

(i) the city had a population in 1996 of at least 50,000;

(ii) its population had increased by at least 40 percent in the ten-year period ending
in 1996; and

(iii) its city's net tax capacity for aids payable in 1998 is less than $700 per capita.

(f) The city aid base for a city is increased by $150,000 for aids payable in 2000 and
thereafter, and the maximum amount of total aid it may receive under section 477A.013,
subdivision 9, paragraph (c), is also increased by $150,000 in calendar year 2000 only,
provided that:

(1) the city has a population that is greater than 1,000 and less than 2,500;

(2) its commercial and industrial percentage for aids payable in 1999 is greater
than 45 percent; and

(3) the total market value of all commercial and industrial property in the city
for assessment year 1999 is at least 15 percent less than the total market value of all
commercial and industrial property in the city for assessment year 1998.

(g) The city aid base for a city is increased by $200,000 in 2000 and thereafter, and
the maximum amount of total aid it may receive under section 477A.013, subdivision 9,
paragraph (c), is also increased by $200,000 in calendar year 2000 only, provided that:

(1) the city had a population in 1997 of 2,500 or more;

(2) the net tax capacity of the city used in calculating its 1999 aid under section
477A.013 is less than $650 per capita;

(3) the pre-1940 housing percentage of the city used in calculating 1999 aid under
section 477A.013 is greater than 12 percent;

(4) the 1999 local government aid of the city under section 477A.013 is less than
20 percent of the amount that the formula aid of the city would have been if the need
increase percentage was 100 percent; and

(5) the city aid base of the city used in calculating aid under section 477A.013
is less than $7 per capita.

(h) The city aid base for a city is increased by $102,000 in 2000 and thereafter, and
the maximum amount of total aid it may receive under section 477A.013, subdivision 9,
paragraph (c), is also increased by $102,000 in calendar year 2000 only, provided that:

(1) the city has a population in 1997 of 2,000 or more;

(2) the net tax capacity of the city used in calculating its 1999 aid under section
477A.013 is less than $455 per capita;

(3) the net levy of the city used in calculating 1999 aid under section 477A.013 is
greater than $195 per capita; and

(4) the 1999 local government aid of the city under section 477A.013 is less than
38 percent of the amount that the formula aid of the city would have been if the need
increase percentage was 100 percent.

(i) The city aid base for a city is increased by $32,000 in 2001 and thereafter, and
the maximum amount of total aid it may receive under section 477A.013, subdivision 9,
paragraph (c), is also increased by $32,000 in calendar year 2001 only, provided that:

(1) the city has a population in 1998 that is greater than 200 but less than 500;

(2) the city's revenue need used in calculating aids payable in 2000 was greater
than $200 per capita;

(3) the city net tax capacity for the city used in calculating aids available in 2000
was equal to or less than $200 per capita;

(4) the city aid base of the city used in calculating aid under section 477A.013
is less than $65 per capita; and

(5) the city's formula aid for aids payable in 2000 was greater than zero.

(j) The city aid base for a city is increased by $7,200 in 2001 and thereafter, and
the maximum amount of total aid it may receive under section 477A.013, subdivision 9,
paragraph (c), is also increased by $7,200 in calendar year 2001 only, provided that:

(1) the city had a population in 1998 that is greater than 200 but less than 500;

(2) the city's commercial industrial percentage used in calculating aids payable in
2000 was less than ten percent;

(3) more than 25 percent of the city's population was 60 years old or older according
to the 1990 census;

(4) the city aid base of the city used in calculating aid under section 477A.013
is less than $15 per capita; and

(5) the city's formula aid for aids payable in 2000 was greater than zero.

(k) The city aid base for a city is increased by $45,000 in 2001 and thereafter and
by an additional $50,000 in calendar years 2002 to 2011, and the maximum amount of
total aid it may receive under section 477A.013, subdivision 9, paragraph (c), is also
increased by $45,000 in calendar year 2001 only, and by $50,000 in calendar year 2002
only, provided that:

(1) the net tax capacity of the city used in calculating its 2000 aid under section
477A.013 is less than $810 per capita;

(2) the population of the city declined more than two percent between 1988 and 1998;

(3) the net levy of the city used in calculating 2000 aid under section 477A.013 is
greater than $240 per capita; and

(4) the city received less than $36 per capita in aid under section 477A.013,
subdivision 9, for aids payable in 2000.

(l) The city aid base for a city with a population of 10,000 or more which is located
outside of the seven-county metropolitan area is increased in 2002 and thereafter, and the
maximum amount of total aid it may receive under section 477A.013, subdivision 9,
paragraph (b) or (c), is also increased in calendar year 2002 only, by an amount equal to
the lesser of:

(1)(i) the total population of the city, as determined by the United States Bureau of
the Census, in the 2000 census, (ii) minus 5,000, (iii) times 60; or

(2) $2,500,000.

(m) The city aid base is increased by $50,000 in 2002 and thereafter, and the
maximum amount of total aid it may receive under section 477A.013, subdivision 9,
paragraph (c), is also increased by $50,000 in calendar year 2002 only, provided that:

(1) the city is located in the seven-county metropolitan area;

(2) its population in 2000 is between 10,000 and 20,000; and

(3) its commercial industrial percentage, as calculated for city aid payable in 2001,
was greater than 25 percent.

(n) The city aid base for a city is increased by $150,000 in calendar years 2002 to
2011 new text begin and by an additional $75,000 in calendar years 2009 to 2014 new text end and the maximum
amount of total aid it may receive under section 477A.013, subdivision 9, paragraph (c), is
also increased by $150,000 in calendar year 2002 only new text begin and by $75,000 in calendar year
2009 only new text end , provided that:

(1) the city had a population of at least 3,000 but no more than 4,000 in 1999;

(2) its home county is located within the seven-county metropolitan area;

(3) its pre-1940 housing percentage is less than 15 percent; and

(4) its city net tax capacity per capita for taxes payable in 2000 is less than $900
per capita.

(o) The city aid base for a city is increased by $200,000 beginning in calendar
year 2003 and the maximum amount of total aid it may receive under section 477A.013,
subdivision 9, paragraph (c), is also increased by $200,000 in calendar year 2003 only,
provided that the city qualified for an increase in homestead and agricultural credit aid
under Laws 1995, chapter 264, article 8, section 18.

(p) The city aid base for a city is increased by $200,000 in 2004 only and the
maximum amount of total aid it may receive under section 477A.013, subdivision 9, is
also increased by $200,000 in calendar year 2004 only, if the city is the site of a nuclear
dry cask storage facility.

(q) The city aid base for a city is increased by $10,000 in 2004 and thereafter and the
maximum total aid it may receive under section 477A.013, subdivision 9, is also increased
by $10,000 in calendar year 2004 only, if the city was included in a federal major disaster
designation issued on April 1, 1998, and its pre-1940 housing stock was decreased by
more than 40 percent between 1990 and 2000.

(r) The city aid base for a city is increased by deleted text begin $25,000 deleted text end new text begin $30,000 new text end in deleted text begin 2006 only deleted text end
new text begin 2009 and thereafter new text end and the maximum total aid it may receive under section 477A.013,
subdivision 9, is also increased by $25,000 in calendar year 2006 only if the city had a
population in 2003 of at least 1,000 and has a state park for which the city provides rescue
services and which comprised at least 14 percent of the total geographic area included
within the city boundaries in 2000.

(s) The city aid base for a city with a population less than 5,000 is increased in
2006 and thereafter and the minimum and maximum amount of total aid it may receive
under this section is also increased in calendar year 2006 only by an amount equal to
$6 multiplied by its population.

(t) The city aid base for a city is increased by $80,000 in deleted text begin 2007 only deleted text end new text begin 2009 and
thereafter new text end and the minimum and maximum amount of total aid it may receive under section
477A.013, subdivision 9, is also increased by $80,000 in calendar year deleted text begin 2007 deleted text end new text begin 2009 new text end only, if:

(1) as of May 1, 2006, at least 25 percent of the tax capacity of the city is proposed
to be placed in trust status as tax-exempt Indian land;

(2) the placement of the land is being challenged administratively or in court; and

(3) due to the challenge, the land proposed to be placed in trust is still on the tax
rolls as of May 1, 2006.

(u) The city aid base for a city is increased by $100,000 in 2007 and thereafter and
the minimum and maximum total amount of aid it may receive under this section is also
increased in calendar year 2007 only, provided that:

(1) the city has a 2004 estimated population greater than 200 but less than 2,000;

(2) its city net tax capacity for aids payable in 2006 was less than $300 per capita;

(3) the ratio of its pay 2005 tax levy compared to its city net tax capacity for aids
payable in 2006 was greater than 110 percent; and

(4) it is located in a county where at least 15,000 acres of land are classified as
tax-exempt Indian reservations according to the 2004 abstract of tax-exempt property.

new text begin (v) The city aid base for a city is increased by $30,000 in 2009 only, and the
maximum total aid it may receive under section 477A.013, subdivision 9, is also increased
by $30,000 in calendar year 2009, only if the city had a population in 2005 of less than
3,000 and the city's boundaries as of 2007 were formed by the consolidation of two cities
and one township in 2002.
new text end

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for aids payable in calendar year
2009 and thereafter.
new text end

Sec. 2.

Minnesota Statutes 2006, section 477A.013, subdivision 8, is amended to read:

Subd. 8.

City formula aid.

In calendar year 2004 and subsequent years, the
formula aid for a city is equal to the need increase percentage multiplied by the difference
between (1) the city's revenue need multiplied by its population, and (2) the sum of the
city's net tax capacity multiplied by the tax effort rate deleted text begin ; the taconite aids under sections
298.28 and 298.282 to any city except a city directly impacted by a taconite mine or plant,
multiplied by the following percentages: deleted text end new text begin .
new text end

deleted text begin (i) zero percent for aids payable in 2004;
deleted text end

deleted text begin (ii) 25 percent for aids payable in 2005;
deleted text end

deleted text begin (iii) 50 percent for aids payable in 2006;
deleted text end

deleted text begin (iv) 75 percent for aids payable in 2007; and
deleted text end

deleted text begin (v) 100 percent for aids payable in 2008 and thereafter.
deleted text end

deleted text begin For purposes of this subdivision, "a city directly impacted by a taconite mine or
plant" means: (1) Babbit, (2) Eveleth, (3) Hibbing, (4) Keewatin, (5) Mountain Iron, (6)
Silver Bay, or (7) Virginia.
deleted text end

No city may have a formula aid amount less than zero. The need increase percentage
must be the same for all cities.

The applicable need increase percentage must be calculated by the Department of
Revenue so that the total of the aid under subdivision 9 equals the total amount available
for aid under section 477A.03 after the subtraction under section 477A.014, subdivisions
4 and 5.

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for aids payable in calendar year
2009 and thereafter.
new text end

Sec. 3.

Minnesota Statutes 2006, section 477A.013, subdivision 9, is amended to read:

Subd. 9.

City aid distribution.

(a) deleted text begin In calendar year 2002 and thereafter, each
city shall receive an aid distribution equal to the sum of (1) the city formula aid under
subdivision 8, and (2) its city aid base. deleted text end new text begin In calendar year 2009, each city shall receive an
aid distribution equal to the sum of (1) the city formula aid under subdivision 8, (2) its city
aid base, and (3) one-half of the difference between its total aid in the previous year under
this subdivision and its city aid base in the previous year.
new text end

new text begin (b) For aids payable in 2010 and thereafter, each city shall receive an aid distribution
equal to (1) the city aid formula under subdivision 8, (2) its city aid base, and (3) its
formula aid under subdivision 8 in the previous year, prior to any adjustments under
this subdivision.
new text end

deleted text begin (b) deleted text end new text begin (c) new text end For aids payable in deleted text begin 2005 deleted text end new text begin 2009 new text end and thereafter, the total aid for any city shall
not exceed the sum of (1) ten percent of the city's net levy for the year prior to the aid
distribution plus (2) its total aid in the previous year. For aids payable in deleted text begin 2005 deleted text end new text begin 2009 new text end and
thereafter, the total aid for any city with a population of 2,500 or more may not deleted text begin decrease
from deleted text end new text begin be less than new text end its total aid under this section in the previous year deleted text begin by an amount greater
than deleted text end new text begin minus the lesser of $15 multiplied by its population, or new text end ten percent of its net levy in
the year prior to the aid distribution.

deleted text begin (c) deleted text end deleted text begin For aids payable in 2004 only, the total aid for a city with a population less than
2,500 may not be less than the amount it was certified to receive in 2003 minus the greater
of (1) the reduction to this aid payment in 2003 under Laws 2003, First Special Session
chapter 21, article 5, or (2) five percent of its 2003 aid amount. deleted text end new text begin (d) new text end For aids payable in
deleted text begin 2005 deleted text end new text begin 2009 new text end and thereafter, the total aid for a city with a population less than 2,500 must not
be less than the amount it was certified to receive in the previous year minus new text begin the lesser of
$15 multiplied by its population, or new text end five percent of its 2003 certified aid amount.

deleted text begin (d) deleted text end new text begin (e) new text end If a city's net tax capacity used in calculating aid under this section has
decreased in any year by more than 25 percent from its net tax capacity in the previous
year due to property becoming tax-exempt Indian land, the city's maximum allowed aid
increase under paragraph deleted text begin (b) deleted text end new text begin (c) new text end shall be increased by an amount equal to (1) the city's tax
rate in the year of the aid calculation, multiplied by (2) the amount of its net tax capacity
decrease resulting from the property becoming tax exempt.

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for aids payable in calendar year
2009 and thereafter.
new text end

Sec. 4.

Laws 2006, chapter 259, article 11, section 3, is amended to read:

Sec. 3. MAHNOMEN COUNTY; COUNTY, CITY, SCHOOL DISTRICT,
PROPERTY TAX REIMBURSEMENT deleted text begin ; 2006 ONLY deleted text end .

Subdivision 1.

Aid appropriation.

$600,000 is appropriated new text begin annually new text end from the
general fund to the commissioner of revenue to be used to make payments to compensate
for the loss of property tax revenue deleted text begin due to the placement of land located in the city of
Mahnomen that was put in trust status by the United Stated Department of the Interior,
Bureau of Indian Affairs, during calendar year 2006 deleted text end new text begin related to the trust conversion
application of the Shooting Star Casino new text end . The commissioner shall pay the county of
Mahnomen, $450,000; the city of Mahnomen, $80,000; and Independent School District
No. 432, Mahnomen, $70,000. The payments shall be made on July 20, deleted text begin 2006 deleted text end new text begin of 2008
and each subsequent year new text end .

deleted text begin Subd. 2. deleted text end

deleted text begin School district tax base adjustments. deleted text end

deleted text begin The Department of Revenue
must reduce the referendum market value and the adjusted net tax capacity certified
for assessment year 2005 used to calculate school levies for taxes payable in 2007
for Independent School District No. 432, Mahnomen, by the amounts of any values
attributable to property that is no longer subject to property taxation because the land has
been placed in trust in calendar year 2006 through action of the United States Department
of Interior, Bureau of Indian Affairs. The Mahnomen County auditor must certify the
reductions in value to the Department of Revenue in the form and manner specified by the
Department of Revenue.
deleted text end

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for aids payable in calendar year
2008 and thereafter.
new text end

Sec. 5. new text begin MAHNOMEN COUNTY; CITY, COUNTY, AND SCHOOL DISTRICT
TAX BASE ADJUSTMENTS.
new text end

new text begin (a) The commissioner of revenue must reduce the referendum market value and
adjusted net tax capacity used to calculate school levies beginning with taxes payable in
2009 and subsequent years for Independent School District No. 432, Mahnomen, by
the amounts attributable to the Shooting Star Casino, which is pending placement into
trust status by the United States Department of the Interior, Bureau of Indian Affairs.
This adjustment shall be made for each assessment year that the property remains on
the tax rolls. The Mahnomen County auditor must certify the reductions in value to the
Department of Revenue in the form and manner specified by the commissioner of revenue.
new text end

new text begin (b) The commissioner of revenue must reduce the county and city net tax capacities
used to calculate aids under Minnesota Statutes, sections 477A.011 to 477A.03, beginning
with aids payable in 2009 for the county of Mahnomen and the city of Mahnomen, by the
amounts attributable to property that is pending placement into trust status by the United
States Department of the Interior, Bureau of Indian Affairs. This adjustment shall be made
for each assessment year that the property remains on the tax rolls.
new text end

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for aids and levies payable in 2009
and thereafter.
new text end

Sec. 6. new text begin UTILITY PROPERTY; TAX BASE ADJUSTMENTS FOR
CALCULATION OF SCHOOL DISTRICT AIDS AND LEVIES.
new text end

new text begin For purposes of calculating school levies and aids for fiscal years 2010 and 2011
only, the commissioner of revenue shall compute the adjusted net tax capacity and
referendum market value as if the tax base changes resulting from the amendments to
Minnesota Rules, chapter 8100, including the phase-in provisions of Minnesota Rules,
part 8100.0800, were effective one year earlier.
new text end

Sec. 7. new text begin UTILITY PROPERTY; TAX BASE ADJUSTMENTS FOR
CALCULATION OF COUNTY, CITY, AND TOWN AIDS.
new text end

new text begin For purposes of calculating aid for towns and cities under section 477A.013, and for
counties under section 477A.0124, for payment in 2009 and 2010 only, the commissioner
of revenue shall calculate the adjusted net tax capacity of cities and counties, as defined
in sections 477A.011 and 477A.0124, as if the tax base changes resulting from the
amendments to Minnesota Rules, chapter 8100, including the phase-in provisions of
Minnesota Rules, part 8100.0800, were effective one year earlier.
new text end

ARTICLE 2

PROPERTY TAXES

Section 1.

Minnesota Statutes 2006, section 97A.061, subdivision 2, is amended to
read:

Subd. 2.

Allocation.

(a) Except as provided in subdivision 3, the county treasurer
shall allocate the payment among the county, towns, and school districts on the same basis
as if the payments were taxes on the land received in the year. Payment of a town's or a
school district's allocation must be made by the county treasurer to the town or school
district within 30 days of receipt of the payment to the county. The county's share of the
payment shall be deposited in the county general revenue fund.

(b) The county treasurer of a county with a population over 39,000 but less than
42,000 in the 1950 federal census shall allocate the payment only among the towns and
school districts on the same basis as if the payments were taxes on the lands received
in the current year.

new text begin (c) If a town received a payment in calendar year 2006 or thereafter under this
subdivision, and subsequently incorporated as a city, the city will continue to receive any
future year's allocations that would have been made to the town had it not incorporated,
provided that the payments will terminate if the governing body of the city passes an
ordinance that prohibits hunting within the boundaries of the city.
new text end

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective retroactively for aid payments made
in 2007 and thereafter.
new text end

Sec. 2.

Minnesota Statutes 2006, section 127A.48, subdivision 2, is amended to read:

Subd. 2.

Methodology.

In making its annual assessment/sales ratio studies, the
Department of Revenue must use a methodology consistent with the most recent Standard
on Assessment Ratio Studies published by the assessment standards committee of the
International Association of Assessing Officers. The commissioner of revenue shall
supplement this general methodology with specific procedures necessary for execution of
the study in accordance with other Minnesota laws impacting the assessment/sales ratio
study. The commissioner shall document these specific procedures in writing and shall
publish the procedures in the State Register, but these procedures will not be considered
"rules" pursuant to the Minnesota Administrative Procedure Act. new text begin When property is
sold and the purchaser changes its use in a manner that would result in a change of
classification of the property, the assessment sales ratio study under this subdivision must
take into account that changed classification as soon as practicable. A change in status
from homestead to nonhomestead or from nonhomestead to homestead is not a change
under this subdivision. new text end For purposes of this section, sections 270.12, subdivision 2,
clause (8), and 278.05, subdivision 4, the commissioner of revenue shall exclude from
the assessment/sales ratio study the sale of any nonagricultural property which does not
contain an improvement, if (1) the statutory basis on which the property's taxable value
as most recently assessed is less than market value as defined in section 273.11, or (2)
the property has undergone significant physical change or a change of use since the most
recent assessment.

new text begin EFFECTIVE DATE. new text end

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

Sec. 3.

Minnesota Statutes 2006, section 272.02, is amended by adding a subdivision
to read:

new text begin Subd. 85. new text end

new text begin Modular homes used as models by dealers. new text end

new text begin (a) A modular home
is exempt if it:
new text end

new text begin (1) is owned by a modular home dealer and is located on land owned or leased
by that dealer;
new text end

new text begin (2) is a single-family model home;
new text end

new text begin (3) is not available for sale and is used exclusively as a model;
new text end

new text begin (4) is not permanently connected to any utilities except electricity; and
new text end

new text begin (5) is situated on a temporary foundation.
new text end

new text begin (b) The exemption under this subdivision is allowable for up to five assessment
years after the date it becomes located on the property, provided that the modular home
continues to meet all of the criteria under this subdivision each year. The owner of a
modular model home must notify the county assessor within 60 days that it has been
constructed or located on the property and must again notify the assessor if the modular
home ceases to meet any of the criteria. If more than one modular home is constructed or
situated on a property, the owner must notify the assessor within 60 days for each of the
models placed on the property.
new text end

new text begin (c) For purposes of this subdivision, a "modular home" means a building or
structural unit that has been in whole or substantial part manufactured or constructed at an
off-site location to be wholly or partially assembled on-site as a single family dwelling.
Construction of the modular home must comply with applicable standards adopted in
Minnesota Rules authorized under Minnesota Statutes, chapter 16B. A modular home does
not include a structure subject to the requirements of the National Manufactured Home
Construction and Safety Standards Act of 1974 or prefabricated buildings, as defined in
Minnesota Statutes, section 327.31, subdivision 6.
new text end

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for assessment year 2008 and
thereafter, for taxes payable in 2009 and thereafter. The five-year assessment time period
begins with the 2008 assessment for a modular model home currently situated provided
it meets all of the criteria and the county assessor is notified within 90 days of the day
following final enactment.
new text end

Sec. 4.

Minnesota Statutes 2006, section 272.02, is amended by adding a subdivision
to read:

new text begin Subd. 86. new text end

new text begin Apprenticeship training facilities. new text end

new text begin All or a portion of a building used
exclusively for a state-approved apprenticeship program through the Department of Labor
and Industry is exempt if (1) it is owned and operated by a nonprofit corporation, (2) the
program participants receive no compensation, and (3) it is located in the Minneapolis and
St. Paul standard metropolitan statistical area as determined by the 2000 federal census or
in a city outside the Minneapolis and St. Paul standard metropolitan statistical area that
has a population of 7,500 or greater according to the most recent federal census. This
exemption does not include land.
new text end

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for assessment year 2008 and
thereafter, for taxes payable in 2009 and thereafter.
new text end

Sec. 5.

Minnesota Statutes 2006, section 272.02, is amended by adding a subdivision
to read:

new text begin Subd. 87. new text end

new text begin Monosloped roofs for feedlots and manure storage areas. new text end

new text begin A
monosloped, single-pitched roof installed over a feedlot or manure storage area to prevent
runoff is exempt.
new text end

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for assessment year 2008 for property
taxes payable in 2009, and thereafter.
new text end

Sec. 6.

Minnesota Statutes 2006, section 272.115, subdivision 1, is amended to read:

Subdivision 1.

Requirement.

Except as otherwise provided in subdivision 5,
whenever any real estate is sold for a consideration in excess of $1,000, whether by
warranty deed, quitclaim deed, contract for deed or any other method of sale, the grantor,
grantee or the legal agent of either shall file a certificate of value with the county
auditor in the county in which the property is located when the deed or other document
is presented for recording. Contract for deeds are subject to recording under section
507.235, subdivision 1. Value shall, in the case of any deed not a gift, be the amount of
the full actual consideration thereof, paid or to be paid, including the amount of any lien
or liens assumed. The items and value of personal property transferred with the real
property must be listed and deducted from the sale price. The certificate of value shall
include the classification to which the property belongs for the purpose of determining
the fair market value of the property new text begin , and shall include any proposed change in use of the
property known to the person filing the certificate that could change the classification
of the property new text end . The certificate shall include financing terms and conditions of the sale
which are necessary to determine the actual, present value of the sale price for purposes
of the sales ratio study. new text begin If the property is being acquired as part of a like-kind exchange
under section 1031 of the Internal Revenue Code of 1986, as amended through December
31, 2006, that must be indicated on the certificate. new text end The commissioner of revenue shall
promulgate administrative rules specifying the financing terms and conditions which must
be included on the certificate. Pursuant to the authority of the commissioner of revenue in
section 270C.306, the certificate of value must include the Social Security number or the
federal employer identification number of the grantors and grantees. The identification
numbers of the grantors and grantees are private data on individuals or nonpublic data
as defined in section 13.02, subdivisions 9 and 12, but, notwithstanding that section, the
private or nonpublic data may be disclosed to the commissioner of revenue for purposes of
tax administration. The information required to be shown on the certificate of value is
limited to the information required as of the date of the acknowledgment on the deed or
other document to be recorded.

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for certificates filed after June 30,
2008.
new text end

Sec. 7.

Minnesota Statutes 2007 Supplement, section 273.124, subdivision 14, is
amended to read:

Subd. 14.

Agricultural homesteads; special provisions.

(a) Real estate of less than
ten acres that is the homestead of its owner must be classified as class 2a under section
273.13, subdivision 23, paragraph (a), if:

(1) the parcel on which the house is located is contiguous on at least two sides to (i)
agricultural land, (ii) land owned or administered by the United States Fish and Wildlife
Service, or (iii) land administered by the Department of Natural Resources on which in
lieu taxes are paid under sections 477A.11 to 477A.14;

(2) its owner also owns a noncontiguous parcel of agricultural land that is at least
20 acres;

(3) the noncontiguous land is located not farther than four townships or cities, or a
combination of townships or cities from the homestead; and

(4) the agricultural use value of the noncontiguous land and farm buildings is equal
to at least 50 percent of the market value of the house, garage, and one acre of land.

Homesteads initially classified as class 2a under the provisions of this paragraph shall
remain classified as class 2a, irrespective of subsequent changes in the use of adjoining
properties, as long as the homestead remains under the same ownership, the owner owns a
noncontiguous parcel of agricultural land that is at least 20 acres, and the agricultural use
value qualifies under clause (4). Homestead classification under this paragraph is limited
to property that qualified under this paragraph for the 1998 assessment.

(b)(i) Agricultural property deleted text begin consisting of at least 40 acres deleted text end shall be classified as the
owner's homestead, to the same extent as other agricultural homestead property, if all
of the following criteria are met:

new text begin (1) the property consists of at least 40 acres including undivided government lots
and correctional 40's;
new text end

deleted text begin (1) deleted text end new text begin (2) new text end the owner, the owner's spouse, the son or daughter of the owner or owner's
spouse, or the grandson or granddaughter of the owner or the owner's spouse, is actively
farming the agricultural property, either on the person's own behalf as an individual or
on behalf of a partnership operating a family farm, family farm corporation, joint family
farm venture, or limited liability company of which the person is a partner, shareholder, or
member;

deleted text begin (2) deleted text end new text begin (3) new text end both the owner of the agricultural property and the person who is actively
farming the agricultural property under clause deleted text begin (1) deleted text end new text begin (2) new text end , are Minnesota residents;

deleted text begin (3) deleted text end new text begin (4) new text end neither the owner nor the spouse of the owner claims another agricultural
homestead in Minnesota; and

deleted text begin (4) deleted text end new text begin (5) new text end neither the owner nor the person actively farming the property lives farther
than four townships or cities, or a combination of four townships or cities, from the
agricultural property, except that if the owner or the owner's spouse is required to live in
employer-provided housing, the owner or owner's spouse, whichever is actively farming
the agricultural property, may live more than four townships or cities, or combination of
four townships or cities from the agricultural property.

The relationship under this paragraph may be either by blood or marriage.

(ii) Real property held by a trustee under a trust is eligible for agricultural homestead
classification under this paragraph if the qualifications in clause (i) are met, except that
"owner" means the grantor of the trust.

(iii) Property containing the residence of an owner who owns qualified property
under clause (i) shall be classified as part of the owner's agricultural homestead, if that
property is also used for noncommercial storage or drying of agricultural crops.

(c) Noncontiguous land shall be included as part of a homestead under section
273.13, subdivision 23, paragraph (a), only if the homestead is classified as class 2a
and the detached land is located in the same township or city, or not farther than four
townships or cities or combination thereof from the homestead. Any taxpayer of these
noncontiguous lands must notify the county assessor that the noncontiguous land is part of
the taxpayer's homestead, and, if the homestead is located in another county, the taxpayer
must also notify the assessor of the other county.

(d) Agricultural land used for purposes of a homestead and actively farmed by a
person holding a vested remainder interest in it must be classified as a homestead under
section 273.13, subdivision 23, paragraph (a). If agricultural land is classified class 2a,
any other dwellings on the land used for purposes of a homestead by persons holding
vested remainder interests who are actively engaged in farming the property, and up to
one acre of the land surrounding each homestead and reasonably necessary for the use of
the dwelling as a home, must also be assessed class 2a.

(e) Agricultural land and buildings that were class 2a homestead property under
section 273.13, subdivision 23, paragraph (a), for the 1997 assessment shall remain
classified as agricultural homesteads for subsequent assessments if:

(1) the property owner abandoned the homestead dwelling located on the agricultural
homestead as a result of the April 1997 floods;

(2) the property is located in the county of Polk, Clay, Kittson, Marshall, Norman,
or Wilkin;

(3) the agricultural land and buildings remain under the same ownership for the
current assessment year as existed for the 1997 assessment year and continue to be used
for agricultural purposes;

(4) the dwelling occupied by the owner is located in Minnesota and is within 30
miles of one of the parcels of agricultural land that is owned by the taxpayer; and

(5) the owner notifies the county assessor that the relocation was due to the 1997
floods, and the owner furnishes the assessor any information deemed necessary by the
assessor in verifying the change in dwelling. Further notifications to the assessor are not
required if the property continues to meet all the requirements in this paragraph and any
dwellings on the agricultural land remain uninhabited.

(f) Agricultural land and buildings that were class 2a homestead property under
section 273.13, subdivision 23, paragraph (a), for the 1998 assessment shall remain
classified agricultural homesteads for subsequent assessments if:

(1) the property owner abandoned the homestead dwelling located on the agricultural
homestead as a result of damage caused by a March 29, 1998, tornado;

(2) the property is located in the county of Blue Earth, Brown, Cottonwood,
LeSueur, Nicollet, Nobles, or Rice;

(3) the agricultural land and buildings remain under the same ownership for the
current assessment year as existed for the 1998 assessment year;

(4) the dwelling occupied by the owner is located in this state and is within 50 miles
of one of the parcels of agricultural land that is owned by the taxpayer; and

(5) the owner notifies the county assessor that the relocation was due to a March 29,
1998, tornado, and the owner furnishes the assessor any information deemed necessary by
the assessor in verifying the change in homestead dwelling. For taxes payable in 1999, the
owner must notify the assessor by December 1, 1998. Further notifications to the assessor
are not required if the property continues to meet all the requirements in this paragraph
and any dwellings on the agricultural land remain uninhabited.

(g) Agricultural property deleted text begin consisting of at least 40 acres deleted text end of a family farm corporation,
joint family farm venture, family farm limited liability company, or partnership operating
a family farm as described under subdivision 8 shall be classified homestead, to the same
extent as other agricultural homestead property, if all of the following criteria are met:

new text begin (1) the property consists of at least 40 acres including undivided government lots
and correctional 40's;
new text end

deleted text begin (1) deleted text end new text begin (2) new text end a shareholder, member, or partner of that entity is actively farming the
agricultural property;

deleted text begin (2) deleted text end new text begin (3) new text end that shareholder, member, or partner who is actively farming the agricultural
property is a Minnesota resident;

deleted text begin (3) deleted text end new text begin (4) new text end neither that shareholder, member, or partner, nor the spouse of that
shareholder, member, or partner claims another agricultural homestead in Minnesota; and

deleted text begin (4) deleted text end new text begin (5) new text end that shareholder, member, or partner does not live farther than four townships
or cities, or a combination of four townships or cities, from the agricultural property.

Homestead treatment applies under this paragraph for property leased to a family
farm corporation, joint farm venture, limited liability company, or partnership operating a
family farm if legal title to the property is in the name of an individual who is a member,
shareholder, or partner in the entity.

(h) To be eligible for the special agricultural homestead under this subdivision, an
initial full application must be submitted to the county assessor where the property is
located. Owners and the persons who are actively farming the property shall be required
to complete only a one-page abbreviated version of the application in each subsequent
year provided that none of the following items have changed since the initial application:

(1) the day-to-day operation, administration, and financial risks remain the same;

(2) the owners and the persons actively farming the property continue to live within
the four townships or city criteria and are Minnesota residents;

(3) the same operator of the agricultural property is listed with the Farm Service
Agency;

(4) a Schedule F or equivalent income tax form was filed for the most recent year;

(5) the property's acreage is unchanged; and

(6) none of the property's acres have been enrolled in a federal or state farm program
since the initial application.

The owners and any persons who are actively farming the property must include
the appropriate Social Security numbers, and sign and date the application. If any of the
specified information has changed since the full application was filed, the owner must
notify the assessor, and must complete a new application to determine if the property
continues to qualify for the special agricultural homestead. The commissioner of revenue
shall prepare a standard reapplication form for use by the assessors.

(i) Agricultural land and buildings that were class 2a homestead property under
section 273.13, subdivision 23, paragraph (a), for the 2007 assessment shall remain
classified agricultural homesteads for subsequent assessments if:

(1) the property owner abandoned the homestead dwelling located on the agricultural
homestead as a result of damage caused by the August 2007 floods;

(2) the property is located in the county of Dodge, Fillmore, Houston, Olmsted,
Steele, Wabasha, or Winona;

(3) the agricultural land and buildings remain under the same ownership for the
current assessment year as existed for the 2007 assessment year;

(4) the dwelling occupied by the owner is located in this state and is within 50 miles
of one of the parcels of agricultural land that is owned by the taxpayer; and

(5) the owner notifies the county assessor that the relocation was due to the August
2007 floods, and the owner furnishes the assessor any information deemed necessary by
the assessor in verifying the change in homestead dwelling. For taxes payable in 2009, the
owner must notify the assessor by December 1, 2008. Further notifications to the assessor
are not required if the property continues to meet all the requirements in this paragraph
and any dwellings on the agricultural land remain uninhabited.

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for assessment year 2008, taxes
payable in 2009 and thereafter.
new text end

Sec. 8.

Minnesota Statutes 2006, section 273.124, is amended by adding a subdivision
to read:

new text begin Subd. 22. new text end

new text begin Annual registration of certain relative homesteads. new text end

new text begin If the owner of
property or the owner's relative who occupies property that is classified as a homestead
under subdivision 1, paragraph (c), receives compensation for allowing occupancy of any
part of that property for a period that exceeds 31 consecutive days during the calendar
year, the recipient of the compensation must register the property with the city in which
it is located no later than 60 days after the initial rental period began. This requirement
applies to property located in a city that has a population over 25,000. Each city must
maintain a file of these property registrations that is open to the public, and retain the
registrations for one year after the date of filing.
new text end

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective July 1, 2008.
new text end

Sec. 9.

Minnesota Statutes 2006, section 273.125, subdivision 8, is amended to read:

Subd. 8.

Manufactured homes; sectional structures.

(a) In this section,
"manufactured home" means a structure transportable in one or more sections, which is
built on a permanent chassis, and designed to be used as a dwelling with or without a
permanent foundation when connected to the required utilities, and contains the plumbing,
heating, air conditioning, and electrical systems in it. Manufactured home includes any
accessory structure that is an addition or supplement to the manufactured home and, when
installed, becomes a part of the manufactured home.

(b) Except as provided in paragraph (c), a manufactured home that meets each of the
following criteria must be valued and assessed as an improvement to real property, the
appropriate real property classification applies, and the valuation is subject to review and
the taxes payable in the manner provided for real property:

(1) the owner of the unit holds title to the land on which it is situated;

(2) the unit is affixed to the land by a permanent foundation or is installed at its
location in accordance with the Manufactured Home Building Code in sections 327.31
to 327.34, and rules adopted under those sections, or is affixed to the land like other real
property in the taxing district; and

(3) the unit is connected to public utilities, has a well and septic tank system, or is
serviced by water and sewer facilities comparable to other real property in the taxing
district.

(c) A manufactured home that meets each of the following criteria must be assessed
at the rate provided by the appropriate real property classification but must be treated as
personal property, and the valuation is subject to review and the taxes payable in the
manner provided in this section:

(1) the owner of the unit is a lessee of the land under the terms of a lease, or the unit
is located in a manufactured home park but is not the homestead of the park owner;

(2) the unit is affixed to the land by a permanent foundation or is installed at its
location in accordance with the Manufactured Home Building Code contained in sections
327.31 to 327.34, and the rules adopted under those sections, or is affixed to the land like
other real property in the taxing district; and

(3) the unit is connected to public utilities, has a well and septic tank system, or is
serviced by water and sewer facilities comparable to other real property in the taxing
district.

(d) Sectional structures must be valued and assessed as an improvement to real
property if the owner of the structure holds title to the land on which it is located or is a
qualifying lessee of the land under section 273.19. In this paragraph "sectional structure"
means a building or structural unit that has been in whole or substantial part manufactured
or constructed at an off-site location to be wholly or partially assembled on-site alone or
with other units and attached to a permanent foundation.

(e) The commissioner of revenue may adopt rules under the Administrative
Procedure Act to establish additional criteria for the classification of manufactured homes
and sectional structures under this subdivision.

(f) A storage shed, deck, or similar improvement constructed on property that is
leased or rented as a site for a manufactured home, sectional structure, park trailer, or
travel trailer is taxable as provided in this section. In the case of property that is leased or
rented as a site for a travel trailer, a storage shed, deck, or similar improvement on the
site that is considered personal property under this paragraph is taxable only if its total
estimated market value is over deleted text begin $500 deleted text end new text begin $1,000 new text end . The property is taxable as personal property
to the lessee of the site if it is not owned by the owner of the site. The property is taxable
as real estate if it is owned by the owner of the site. As a condition of permitting the owner
of the manufactured home, sectional structure, park trailer, or travel trailer to construct
improvements on the leased or rented site, the owner of the site must obtain the permanent
home address of the lessee or user of the site. The site owner must provide the name
and address to the assessor upon request.

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for assessment year 2008 and
thereafter, for taxes payable in 2009 and thereafter.
new text end

Sec. 10.

Minnesota Statutes 2006, section 273.128, subdivision 1, is amended to read:

Subdivision 1.

Requirement.

Low-income rental property classified as class 4d
under section 273.13, subdivision 25, is entitled to valuation under this section if at
least deleted text begin 75 deleted text end new text begin 20 new text end percent of the units in the rental housing property meet any of the following
qualifications:

(1) the units are subject to a housing assistance payments contract under Section 8
of the United States Housing Act of 1937, as amended;

(2) the units are rent-restricted and income-restricted units of a qualified low-income
housing project receiving tax credits under section 42(g) of the Internal Revenue Code of
1986, as amended;

(3) the units are financed by the Rural Housing Service of the United States
Department of Agriculture and receive payments under the rental assistance program
pursuant to section 521(a) of the Housing Act of 1949, as amended; or

(4) the units are subject to rent and income restrictions under the terms of financial
assistance provided to the rental housing property by the federal government or the
state of Minnesota new text begin , or a local unit of government, new text end as evidenced by a document recorded
against the property.

The restrictions must require assisted units to be occupied by residents whose
household income at the time of initial occupancy does not exceed 60 percent of the
greater of area or state median income, adjusted for family size, as determined by the
United States Department of Housing and Urban Development. The restriction must also
require the rents for assisted units to not exceed 30 percent of 60 percent of the greater of
area or state median income, adjusted for family size, as determined by the United States
Department of Housing and Urban Development.

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for property taxes payable in 2009,
and thereafter.
new text end

Sec. 11.

Minnesota Statutes 2006, 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 has a net class rate of
one percent of its market value; and the market value of class 1a property that exceeds
$500,000 has a class rate of 1.25 percent of its market value.

(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; or

(2) deleted text begin any person, hereinafter referred to as "veteran," who:
deleted text end

deleted text begin (i) served in the active military or naval service of the United States; and
deleted text end

deleted text begin (ii) is entitled to compensation under the laws and regulations of the United States
for permanent and total service-connected disability due to the loss, or loss of use, by
reason of amputation, ankylosis, progressive muscular dystrophies, or paralysis, of both
lower extremities, such as to preclude motion without the aid of braces, crutches, canes, or
a wheelchair; and
deleted text end

deleted text begin (iii) has acquired a special housing unit with special fixtures or movable facilities
made necessary by the nature of the veteran's disability, or the surviving spouse of the
deceased veteran for as long as the surviving spouse retains the special housing unit
as a homestead; or
deleted text end

deleted text begin (3) deleted text end any person who is permanently and totally disabled.

Property is classified and assessed under clause deleted text begin (3) deleted text end new text begin (2) new text end 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.

Property is classified and assessed deleted text begin pursuant to clause (1) deleted text end new text begin under paragraph (b) new text end only if
the commissioner of revenue deleted text begin certifies to the assessor deleted text end new text begin or the county assessor certifies new text end 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 deleted text begin $32,000 deleted text end new text begin $50,000 new text end market
value of class 1b property has a net class rate of .45 percent of its market value. The
remaining market value of class 1b property has a class rate using the rates for class 1a or
class 2a property, whichever is appropriate, of similar market value.

(c) Class 1c property is commercial use real new text begin and personal new text end property that abuts
deleted text begin a lakeshore line deleted text end new text begin public water as defined in section 103G.005, subdivision 15, new text end 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 clause, 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. new text begin 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. new text end 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 deleted text begin $500,000 deleted text end new text begin $600,000 new text end 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. The class rates for class 1c are: tier I, deleted text begin 0.55 deleted text end new text begin 0.50 new text end percent; tier II, 1.0 percent; and tier
III, 1.25 percent. deleted text begin If a class 1c resort property has any market value in tier III, the entire
property must meet the requirements of subdivision 25, paragraph (d), clause (1), to
qualify for class 1c treatment under this paragraph. deleted text end new text begin 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.
new text end

(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 class rates as class 1a property
under paragraph (a).

new text begin EFFECTIVE DATE. new text end

new text begin The amendments of this section to paragraph (b) are effective
for taxes payable in 2009 and thereafter. The rest of this section is effective for taxes
payable in 2010 and thereafter.
new text end

Sec. 12.

Minnesota Statutes 2006, section 273.13, subdivision 23, is amended to read:

Subd. 23.

Class 2.

(a) Class 2a property is agricultural land including any
improvements that is homesteaded. The market value of the house and garage and
immediately surrounding one acre of land has the same class rates as class 1a property
under subdivision 22. The value of the remaining land including improvements up to
the first tier valuation limit of agricultural homestead property has a net class rate of
0.55 percent of market value. The remaining property over the first tier has a class rate
of one percent of market value. 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 2b property is (1) real estate, rural in character and used exclusively for
growing trees for timber, lumber, and wood and wood products; (2) real estate that is not
improved with a structure and is used exclusively for growing trees for timber, lumber, and
wood and wood products, if the owner has participated or is participating in a cost-sharing
program for afforestation, reforestation, or timber stand improvement on that particular
property, administered or coordinated by the commissioner of natural resources; (3) real
estate that is nonhomestead agricultural land; or (4) a landing area or public access area of
a privately owned public use airport. Class 2b property has a net class rate of one percent
of market value new text begin , except that unplatted property described in clause (1) or (2) has a net
class rate of .65 percent if it consists of no less than ten and no more than 1,920 acres
and 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, provided that the owner of the property must apply to the assessor annually to
receive the reduced class rate and provide the information required by the assessor to
verify that the property qualifies for the reduced rate new text end .

(c) Agricultural land as used in this section means contiguous acreage of ten acres or
more, used during the preceding year for agricultural purposes. "Agricultural purposes" as
used in this section means the raising or cultivation of agricultural products. "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 if the property was classified as agricultural (i) under this subdivision for
the assessment year 2002 or (ii) in the year prior to its enrollment. Contiguous acreage
on the same parcel, or contiguous acreage on an immediately adjacent parcel under the
same ownership, may also qualify as agricultural land, but only if it is pasture, timber,
waste, unusable wild land, or land included in state or federal farm programs. Agricultural
classification for property shall be determined excluding the house, garage, and
immediately surrounding one acre of land, and shall not be based upon the market value of
any residential structures on the parcel or contiguous parcels under the same ownership.

(d) Real estate, excluding the house, garage, and immediately surrounding one acre
of land, of less than ten acres which is exclusively and intensively used for raising or
cultivating agricultural products, shall be considered as agricultural land.

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.

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.

(e) 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 if the boarding is done in conjunction with
raising or cultivating 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 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, 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.

(f) 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.

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.

(g) To qualify for classification under paragraph (b), clause (4), a privately owned
public use airport must be licensed as a public airport under section 360.018. For purposes
of paragraph (b), clause (4), "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 paragraph (b), clause (4), 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
paragraph (b), clause (4). For purposes of paragraph (b), clause (4), "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.

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for taxes payable in 2009 and
thereafter.
new text end

Sec. 13.

Minnesota Statutes 2006, 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. The
market value of class 4a property has a class rate of 1.25 percent.

(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.

The market value of class 4b property has a class rate of 1.25 percent.

(c) Class 4bb includes:

(1) nonhomestead residential real estate containing one unit, other than seasonal
residential recreational property; and

(2) a single family dwelling, garage, and surrounding one acre of property on a
nonhomestead farm classified under subdivision 23, paragraph (b).

Class 4bb property has the same class rates as class 1a property under subdivision 22.

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 4c property includes:

(1) except as provided in subdivision 22, paragraph (c), new text begin or subdivision 23, paragraph
(b), clause (1), new text end real new text begin and personal new text end property devoted to temporary and seasonal residential
occupancy for recreation purposes, including real new text begin and personal new text end property devoted to
temporary and seasonal residential occupancy for recreation purposes and not devoted to
commercial purposes for more than 250 days in the year preceding the year of assessment.
For purposes of this clause, 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. new text begin Class 4c 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
4c property must provide recreational activities such as renting 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. A camping
pad offered for rent by a property that otherwise qualifies for class 4c is also class 4c
regardless of the term of the rental agreement, as long as the use of the camping pad
does not exceed 250 days. new text end In order for a property to be classified as class 4c, seasonal
residential recreational for commercial purposes, 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 (i) 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 (ii) at least 20
percent of the annual gross receipts must be from charges for rental of fish houses, boats
and motors, snowmobiles, downhill or cross-country ski equipment, or charges for marina
services, launch services, and guide services, or the sale of bait and fishing tackle. For
purposes of this determination, a paid booking of five or more nights shall be counted as
two bookings. Class 4c also includes commercial use real property used exclusively
for recreational purposes in conjunction with class 4c property 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 4c property with which it is used. Owners of real new text begin and personal new text end property devoted to
temporary and seasonal residential occupancy for recreation purposes and all or a portion
of which was devoted to commercial purposes for not more than 250 days in the year
preceding the year of assessment desiring classification as class deleted text begin 1c or deleted text end 4c, 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 deleted text begin will deleted text end new text begin must new text end be
designated class deleted text begin 1c or deleted text end 4c 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 begin 1c or deleted text end 4c property must provide guest
registers or other records demonstrating that the units for which class deleted text begin 1c or deleted text end 4c 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,
new text begin (4) conference center or meeting room, new text end and deleted text begin (4) deleted text end new text begin (5) new text end other nonresidential facility operated
on a commercial basis not directly related to temporary and seasonal residential occupancy
for recreation purposes deleted text begin shall deleted text end new text begin does new text end not qualify for class deleted text begin 1c or deleted text end 4c;

(2) qualified property used as a golf course if:

(i) 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

(ii) 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 property;

(3) real property up to a maximum of deleted text begin one acre deleted text end new text begin three acres new text end of land owned new text begin and used
new text end by a nonprofit community service oriented organization deleted text begin ; provided that deleted text end new text begin and that is not used
for residential purposes on either a temporary or permanent basis, qualifies for class 4c
provided that it meets either of the following:
new text end

new text begin (i) 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 deleted text begin and the property is not used for
residential purposes on either a temporary or permanent basis deleted text end new text begin ; or
new text end

new text begin (ii) 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 new text end .

For purposes of this clause,

new text begin (A) "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;
new text end

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

new text begin (C) 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), (10), or (19) of the Internal Revenue
Code of 1986, as amended through December 31, 1990 deleted text begin . For purposes of this clause, deleted text end new text begin ; and
new text end

new text begin (D) 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 new text begin qualifying under item (i) new text end which is used for revenue-producing
activities for more than six days in the calendar year preceding the year of assessment
shall be assessed as 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 deleted text begin ; deleted text end new text begin .
new text end

new text begin 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 item (ii) 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 instructions;
new text end

(4) 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 campus;

(5) manufactured home parks as defined in section 327.14, subdivision 3;

(6) 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;

(7) a leased or privately owned noncommercial aircraft storage hangar not exempt
under section 272.01, subdivision 2, and the land on which it is located, provided that:

(i) the land is on an airport owned or operated by a city, town, county, Metropolitan
Airports Commission, or group thereof; and

(ii) the land lease, or any ordinance or signed agreement restricting the use of the
leased premise, prohibits commercial activity performed at the hangar.

If a hangar classified under this clause is sold after June 30, 2000, a bill of sale must
be filed by the new owner with the assessor of the county where the property is located
within 60 days of the sale;

(8) a privately owned noncommercial aircraft storage hangar not exempt under
section 272.01, subdivision 2, and the land on which it is located, provided that:

(i) the land abuts a public airport; and

(ii) 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 hangar; and

(9) 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:

(i) rooms are provided for rent to transient guests that generally stay for periods
of 14 or fewer days;

(ii) meals are provided to persons who rent rooms, the cost of which is incorporated
in the basic room rate;

(iii) 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

(iv) the owner is the operator of the property.

The market value subject to the 4c classification under this clause 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 22.

Class 4c property has a class rate of 1.5 percent of market value, except that (i) each
parcel of seasonal residential recreational property not used for commercial purposes has
the same class rates as class 4bb property, (ii) manufactured home parks assessed under
clause (5) have the same class rate as class 4b property, (iii) commercial-use seasonal
residential recreational property has a class 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 class rate of one percent, (v) the market value of
property described in clauses (2) and (6) has a class 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 class rate of 1.25 percent.

(e) 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.

Class 4d property has a class rate of 0.75 percent.

new text begin EFFECTIVE DATE. new text end

new text begin The part of this section relating to class 4c resorts in
paragraph (d), clause (1), is effective for assessment year 2009 and thereafter, for taxes
payable in 2010 and thereafter. The part of this section relating to nonprofit community
service oriented organizations is effective for assessment year 2008 and thereafter, for
taxes payable in 2009 and thereafter, except that the application date in paragraph (d),
clause (3), item (ii), for the 2008 assessment is extended to September 1, 2008.
new text end

Sec. 14.

Minnesota Statutes 2006, section 273.13, is amended by adding a subdivision
to read:

new text begin Subd. 34. new text end

new text begin Homestead of disabled veteran. new text end

new text begin (a) All or a portion of the market value
of property qualifying for homestead classification under subdivision 22 or 23 is excluded
in determining the property's taxable market value if it serves as the homestead of a
military veteran, as defined in section 197.447, who has a service-connected disability of
70 percent or more. To qualify for exclusion under this subdivision, the veteran must have
been honorably discharged from the United States armed forces, as indicated by United
States Government Form DD214 or other official military discharge papers, and must be
certified by the United States Veterans Administration as having a service-connected
disability.
new text end

new text begin (b)(1) For a disability rating of 70 percent or more, $150,000 of market value is
excluded, except as provided in clause (2); and
new text end

new text begin (2) for a total (100 percent) and permanent disability, $300,000 of market value is
excluded.
new text end

new text begin (c) If a disabled veteran qualifying for a valuation exclusion under paragraph (b),
clause (2), predeceases the veteran's spouse, and if upon the death of the veteran the
spouse holds the legal or beneficial title to the homestead and permanently resides there,
the exclusion shall carry over to the benefit of the veteran's spouse until such time as the
spouse sells, transfers, or otherwise disposes of the property.
new text end

new text begin (d) In the case of an agricultural homestead, only the portion of the property
consisting of the house and garage and immediately surrounding one acre of land qualifies
for the valuation exclusion under this subdivision.
new text end

new text begin (e) A property qualifying for a valuation exclusion under this subdivision is not
eligible for the credit under section 273.1384, subdivision 1.
new text end

new text begin (f) To qualify for a valuation exclusion under this subdivision a property owner must
apply to the assessor by July 1 of each assessment year, except that an annual reapplication
is not required once a property has been accepted for a valuation exclusion under paragraph
(b), clause (2), and the property continues to qualify until there is a change in ownership.
new text end

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for assessment year 2008 and
thereafter, for taxes payable in 2009 and thereafter.
new text end

Sec. 15.

Minnesota Statutes 2006, section 273.1315, is amended to read:

273.1315 CERTIFICATION OF new text begin CLASS new text end 1B PROPERTY.

new text begin Subdivision 1. new text end

new text begin Class 1b homestead declaration before 2009. new text end

Any property owner
seeking classification and assessment of the owner's homestead as class 1b property
pursuant to section 273.13, subdivision 22, paragraph (b), new text begin on or before October 1, 2008,
new text end shall file with the commissioner of revenue a 1b homestead declaration, on a form
prescribed by the commissioner. The declaration shall contain the following information:

(a) the information necessary to verify that on or before June 30 of the filing year,
the property owner or the owner's spouse satisfies the requirements of section 273.13,
subdivision 22, paragraph (b), for 1b classification; and

(b) any additional information prescribed by the commissioner.

The declaration must be filed on or before October 1 to be effective for property
taxes payable during the succeeding calendar year. The declaration and any supplementary
information received from the property owner pursuant to this deleted text begin section deleted text end new text begin subdivision new text end shall
be subject to chapter 270B. If approved by the commissioner, the declaration remains
in effect until the property no longer qualifies under section 273.13, subdivision 22,
paragraph (b). Failure to notify the commissioner within 30 days that the property no
longer qualifies under that paragraph because of a sale, change in occupancy, or change
in the status or condition of an occupant shall result in the penalty provided in section
273.124, subdivision 13, computed on the basis of the class 1b benefits for the property,
and the property shall lose its current class 1b classification.

The commissioner shall provide to the assessor on or before November 1 a listing
of the parcels of property qualifying for 1b classification.

new text begin Subd. 2. new text end

new text begin Class 1b homestead declaration 2009 and thereafter. new text end

new text begin (a) Any property
owner seeking classification and assessment of the owner's homestead as class 1b property
pursuant to section 273.13, subdivision 22, paragraph (b), after October 1, 2008, shall file
with the county assessor a class 1b homestead declaration, on a form prescribed by the
commissioner of revenue. The declaration must contain the following information:
new text end

new text begin (1) the information necessary to verify that, on or before June 30 of the filing year,
the property owner or the owner's spouse satisfies the requirements of section 273.13,
subdivision 22, paragraph (b), for class 1b classification; and
new text end

new text begin (2) any additional information prescribed by the commissioner.
new text end

new text begin (b) The declaration must be filed on or before October 1 to be effective for property
taxes payable during the succeeding calendar year. The Social Security numbers and
income and medical information received from the property owner pursuant to this
subdivision are private data on individuals as defined in section 13.02. If approved by
the assessor, the declaration remains in effect until the property no longer qualifies under
section 273.13, subdivision 22, paragraph (b). Failure to notify the assessor within 30
days that the property no longer qualifies under that paragraph because of a sale, change in
occupancy, or change in the status or condition of an occupant shall result in the penalty
provided in section 273.124, subdivision 13, computed on the basis of the class 1b benefits
for the property, and the property shall lose its current class 1b classification.
new text end

new text begin EFFECTIVE DATE. new text end

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

Sec. 16.

Minnesota Statutes 2006, section 275.025, subdivision 3, is amended to read:

Subd. 3.

Seasonal residential recreational tax capacity.

For the purposes of this
section, "seasonal residential recreational tax capacity" means the tax capacity of tier III of
class 1c under section 273.13, subdivision 22, and all class 4c(1) new text begin and 4c(3)(ii) new text end property
under section 273.13, subdivision 25, except that the first $76,000 of market value of each
noncommercial class 4c(1) property has a tax capacity for this purpose equal to 40 percent
of its tax capacity under section 273.13.

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for taxes payable in 2009 and
thereafter.
new text end

Sec. 17.

Minnesota Statutes 2006, section 275.065, is amended by adding a subdivision
to read:

new text begin Subd. 6c. new text end

new text begin Joint public hearing; nonmetropolitan county, cities, and school
districts. new text end

new text begin (a) Notwithstanding any other provision of law, the county board may hold a
joint hearing with the governing bodies of all taxing authorities located wholly or partially
within the county that are required to hold a public hearing under this section, excluding
special taxing districts. The primary purpose of the joint hearing is for taxpayer efficiency
by allowing taxpayers to come to a single public hearing to discuss the budgets and
proposed property tax levies of most taxing authorities that impact the taxes on their
property.
new text end

new text begin (b) This subdivision applies only to counties located outside the metropolitan area
as defined under section 473.121, subdivision 2. If a city or school district is located
partially within the metropolitan area, that taxing jurisdiction may participate in its
nonmetropolitan county's joint hearing, if it so chooses.
new text end

new text begin (c) Upon the adoption of a resolution by the county board to hold a joint public
hearing, the county shall notify each city with a population over 500 and each school
district located wholly or partially within the county of its intention to hold the joint
hearing and ask each of the taxing authorities if it would like to participate. Participation
is voluntary, and participation in the joint hearing is in lieu of the requirement for the
governing body to hold a separate public hearing under subdivision 6. If a participating
city or school district is located in more than one county, the hearing under this subdivision
is in lieu of the requirement to hold a separate public hearing if 75 percent or more
of that city or school district's previous year's net tax capacity is in the county where
the hearing is held.
new text end

new text begin (d) The initial joint hearing must be held on the first Thursday in December. The
county may hold an additional joint hearing on another date before December 20 if the
majority of the participating taxing authorities want an additional hearing.
new text end

new text begin The county board shall obtain a meeting space to hold the joint hearing, preferably
at a public building such as the courthouse, school, or community center. The location
shall be as centrally located within the county as possible. The meeting shall generally be
structured in the following general manner:
new text end

new text begin (1) 30 to 60 minutes must be devoted to discussion of the county's budget and levy;
new text end

new text begin (2) 30 to 60 minutes must be devoted to discussion of the city's budget and levy,
with each city's discussion held in a separate room, preferably in the same building;
new text end

new text begin (3) 30 to 60 minutes must be devoted to discussion of the school district's levy,
with each school district's discussion held in a separate room, preferably in the same
building; and
new text end

new text begin (4) during the last 30 minutes the governing bodies must reassemble in a joint
meeting to entertain any follow-up questions that have arisen from the separate discussions.
new text end

new text begin The county shall attempt to keep the total public hearing to within three hours.
new text end

new text begin (e) In lieu of the public advertisement requirement in subdivision 5a, the county shall
have a single advertisement listing the county, each city with a population of over 500, and
each school district participating in the joint public hearing listing. Any taxing authority
participating under this subdivision is exempt from the separate public advertisement
requirement under subdivision 5a. The cost of the joint hearing advertisement shall be
apportioned in the same manner provided in subdivision 4. The notice must be published
not less than two business days nor more than six business days before the hearing. The
newspaper selected must be one of general interest and readership in the county, and not
one of limited subject matter. The advertisement must appear in a newspaper that is
published at least once per week. The advertisement must be in the following form:
new text end

new text begin "NOTICE OF JOINT PUBLIC HEARING
new text end

new text begin PROPOSED TOTAL PROPERTY TAXES
new text end

new text begin FOR PARTICIPATING TAXING AUTHORITIES
new text end

new text begin The property tax amounts below compare that portion of the current budget levied in
property taxes in the county, cities, and school districts for (year) with the property
taxes the county, cities, and school districts propose to collect in (year) for those taxing
authorities participating in the joint public hearing.
new text end

new text begin Taxing Authority new text end	new text begin (Year) Property Taxes new text end	new text begin Proposed (Year) Property Taxes new text end	new text begin Change (Year) - (Year) new text end
new text begin $....... new text end	new text begin $....... new text end	new text begin $....... new text end	new text begin ...% new text end
new text begin $....... new text end	new text begin $....... new text end	new text begin $....... new text end	new text begin ...% new text end
new text begin $....... new text end	new text begin $....... new text end	new text begin $....... new text end	new text begin ...% new text end

new text begin ATTEND THE JOINT PUBLIC HEARING
new text end

new text begin All residents are invited to attend the joint public hearing of the county/cities/school
districts to express your opinions on the proposed amount of (year) property taxes. The
hearing will be held on:
new text end

new text begin (Month/Day/Year/Time)
new text end

new text begin (Location/Address)
new text end

new text begin If the discussion cannot be completed, and another hearing is scheduled, a time and place
for that hearing will be announced at this hearing. You are also invited to send your
written comments to the county auditor. If the comments relate to the city or school
district's levy, please identify that on the envelope so the county auditor can direct the
correspondence to the right jurisdiction."
new text end

new text begin The formal adoption of the taxing authority's levy must not be made at the joint
public hearing held under this subdivision. The formal adoption must be made at one of
the regularly scheduled meetings of the taxing authority's governing body. However, the
property tax levy amount that is subsequently adopted cannot exceed the amount shown to
taxpayers at the joint public hearing.
new text end

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for hearings held in 2008 and
thereafter.
new text end

Sec. 18.

Minnesota Statutes 2006, section 275.066, is amended to read:

275.066 SPECIAL TAXING DISTRICTS; DEFINITION.

For the purposes of property taxation and property tax state aids, the term "special
taxing districts" includes the following entities:

(1) watershed districts under chapter 103D;

(2) sanitary districts under sections 115.18 to 115.37;

(3) regional sanitary sewer districts under sections 115.61 to 115.67;

(4) regional public library districts under section 134.201;

(5) park districts under chapter 398;

(6) regional railroad authorities under chapter 398A;

(7) hospital districts under sections 447.31 to 447.38;

(8) St. Cloud Metropolitan Transit Commission under sections 458A.01 to 458A.15;

(9) Duluth Transit Authority under sections 458A.21 to 458A.37;

(10) regional development commissions under sections 462.381 to 462.398;

(11) housing and redevelopment authorities under sections 469.001 to 469.047;

(12) port authorities under sections 469.048 to 469.068;

(13) economic development authorities under sections 469.090 to 469.1081;

(14) Metropolitan Council under sections 473.123 to 473.549;

(15) Metropolitan Airports Commission under sections 473.601 to 473.680;

(16) Metropolitan Mosquito Control Commission under sections 473.701 to 473.716;

(17) Morrison County Rural Development Financing Authority under Laws 1982,
chapter 437, section 1;

(18) Croft Historical Park District under Laws 1984, chapter 502, article 13, section
6;

(19) East Lake County Medical Clinic District under Laws 1989, chapter 211,
sections 1 to 6;

(20) Floodwood Area Ambulance District under Laws 1993, chapter 375, article
5, section 39;

(21) Middle Mississippi River Watershed Management Organization under sections
103B.211 and 103B.241;

(22) emergency medical services special taxing districts under section 144F.01;

(23) a county levying under the authority of section 103B.241, 103B.245, or
103B.251;

(24) Southern St. Louis County Special Taxing District; Chris Jensen Nursing Home
under Laws 2003, First Special Session chapter 21, article 4, section 12; deleted text begin and
deleted text end

(25) new text begin an airport authority created under section 360.0426; and
new text end

new text begin (26) new text end any other political subdivision of the state of Minnesota, excluding counties,
school districts, cities, and towns, that has the power to adopt and certify a property tax
levy to the county auditor, as determined by the commissioner of revenue.

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for taxes payable in 2009, and
thereafter.
new text end

Sec. 19.

Minnesota Statutes 2006, section 276.04, subdivision 2, is amended to read:

Subd. 2.

Contents of tax statements.

(a) The treasurer shall provide for the
printing of the tax statements. The commissioner of revenue shall prescribe the form
of the property tax statement and its contents. The statement must contain a tabulated
statement of the dollar amount due to each taxing authority and the amount of the state
tax from the parcel of real property for which a particular tax statement is prepared. The
dollar amounts attributable to the county, the state tax, the voter approved school tax, the
other local school tax, the township or municipality, and the total of the metropolitan
special taxing districts as defined in section 275.065, subdivision 3, paragraph (i), must
be separately stated. The amounts due all other special taxing districts, if any, may be
aggregated except that any levies made by the regional rail authorities in the county of
Anoka, Carver, Dakota, Hennepin, Ramsey, Scott, or Washington under chapter 398A
shall be listed on a separate line directly under the appropriate county's levy. If the county
levy under this paragraph includes an amount for a lake improvement district as defined
under sections 103B.501 to 103B.581, the amount attributable for that purpose must be
separately stated from the remaining county levy amount. In the case of Ramsey County,
if the county levy under this paragraph includes an amount for public library service
under section 134.07, the amount attributable for that purpose may be separated from the
remaining county levy amount. The amount of the tax on homesteads qualifying under the
senior citizens' property tax deferral program under chapter 290B is the total amount of
property tax before subtraction of the deferred property tax amount. The amount of the
tax on contamination value imposed under sections 270.91 to 270.98, if any, must also
be separately stated. The dollar amounts, including the dollar amount of any special
assessments, may be rounded to the nearest even whole dollar. For purposes of this section
whole odd-numbered dollars may be adjusted to the next higher even-numbered dollar.
The amount of market value excluded under section 273.11, subdivision 16, if any, must
also be listed on the tax statement.

(b) The property tax statements for manufactured homes and sectional structures
taxed as personal property shall contain the same information that is required on the
tax statements for real property.

(c) Real and personal property tax statements must contain the following information
in the order given in this paragraph. The information must contain the current year tax
information in the right column with the corresponding information for the previous year
in a column on the left:

(1) the property's estimated market value under section 273.11, subdivision 1;

(2) the property's taxable market value after reductions under section 273.11,
subdivisions 1a and 16;

(3) the property's gross tax, deleted text begin calculated by adding the property's total property tax to
the sum of the aids enumerated in clause (4) deleted text end new text begin before credits new text end ;

deleted text begin (4) a total of the following aids:
deleted text end

deleted text begin (i) education aids payable under chapters 122A, 123A, 123B, 124D, 125A, 126C,
and 127A;
deleted text end

deleted text begin (ii) local government aids for cities, towns, and counties under sections to
; and
deleted text end

deleted text begin (iii) disparity reduction aid under section ;
deleted text end

deleted text begin (5) deleted text end new text begin (4) new text end for homestead residential and agricultural properties, the credits under
section 273.1384;

deleted text begin (6) deleted text end new text begin (5) new text end any credits received under sections 273.119; 273.123; 273.135; 273.1391;
273.1398, subdivision 4; 469.171; and 473H.10, except that the amount of credit received
under section 273.135 must be separately stated and identified as "taconite tax relief"; and

deleted text begin (7) deleted text end new text begin (6) new text end the net tax payable in the manner required in paragraph (a).

(d) If the county uses envelopes for mailing property tax statements and if the county
agrees, a taxing district may include a notice with the property tax statement notifying
taxpayers when the taxing district will begin its budget deliberations for the current
year, and encouraging taxpayers to attend the hearings. If the county allows notices to
be included in the envelope containing the property tax statement, and if more than
one taxing district relative to a given property decides to include a notice with the tax
statement, the county treasurer or auditor must coordinate the process and may combine
the information on a single announcement.

deleted text begin The commissioner of revenue shall certify to the county auditor the actual or
estimated aids enumerated in paragraph (c), clause (4), that local governments will receive
in the following year. The commissioner must certify this amount by January 1 of each
year.
deleted text end

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for property tax statements for
property taxes payable in 2009 and thereafter.
new text end

Sec. 20.

Minnesota Statutes 2006, section 278.05, subdivision 6, is amended to read:

Subd. 6.

Dismissal of petition; exclusion of certain evidence.

(a) new text begin In cases where
the petitioner contests the valuation of income-producing property, new text end information, including
income and expense figures new text begin in the form of (1) year-end financial statements for the
year prior to the assessment date, (2) year-end financial statements for the year of the
assessment date, and (3) rent rolls on the assessment date including tenant name, lease start
and end dates, option terms, base rent, square footage leased and vacant space new text end , verified net
rentable areas new text begin in the form of net rentable square footage of the building or buildings new text end , and
anticipated income and expenses new text begin in the form of proposed budgets for the year subsequent
to the year of the assessment date new text end , deleted text begin for income-producing property deleted text end must be provided to
the county assessor no later than 60 days after the applicable filing deadline contained
in section 278.01, subdivision 1 or 4. Failure to provide the information required in this
paragraph shall result in the dismissal of the petition, unless (1) the failure to provide it was
due to the unavailability of the evidence at the time that the information was due, or (2)
the petitioner was not aware of or informed of the requirement to provide the information.

If the petitioner proves that the requirements under clause (2) are met, the petitioner has
an additional 30 days to provide the information from the time the petitioner became
aware of or was informed of the requirement to provide the information, otherwise the
petition shall be dismissed.

(b) Provided that the information as contained in paragraph (a) is timely submitted to
the county assessor, the county assessor shall furnish the petitioner at least five days before
the hearing under this chapter with the property's appraisal, if any, which will be presented
to the court at the hearing. The petitioner shall furnish to the county assessor at least five
days before the hearing under this chapter with the property's appraisal, if any, which
will be presented to the court at the hearing. An appraisal of the petitioner's property
done by or for the county shall not be admissible as evidence if the county assessor does
not comply with the provisions in this paragraph. The petition shall be dismissed if the
petitioner does not comply with the provisions in this paragraph.

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for petitions filed on or after July
1, 2008.
new text end

Sec. 21.

Minnesota Statutes 2006, section 279.37, subdivision 1a, is amended to read:

Subd. 1a.

Class 3a property.

(a) The delinquent taxes upon a parcel of property
which was classified class 3a, for the previous year's assessment and had a total market
value of deleted text begin $200,000 deleted text end new text begin $500,000 new text end or less for that same assessment shall be eligible to be
composed into a confession of judgment. Property qualifying under this subdivision
shall be subject to the same provisions as provided in this section except as provided
in paragraphs (b) to (d).

(b) Current year taxes and penalty due at the time the confession of judgment
is entered must be paid.

(c) The down payment must include all special assessments due in the current tax
year, all delinquent special assessments, and 20 percent of the ad valorem tax, penalties,
and interest accrued against the parcel. The balance remaining is payable in four equal
annual installments.

(d) The amounts entered in judgment bear interest at the rate provided in section
279.03, subdivision 1a, commencing with the date the judgment is entered. The interest
rate is subject to change each year on the unpaid balance in the manner provided in section
279.03, subdivision 1a.

new text begin EFFECTIVE DATE. new text end

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

Sec. 22.

Minnesota Statutes 2006, section 280.39, is amended to read:

280.39 DELINQUENT TAXES MAY BE PAID IN INVERSE ORDER.

In any case where taxes for two or more years are delinquent against a parcel of
land, deleted text begin such taxes for one or more deleted text end deleted text begin entire deleted text end deleted text begin years deleted text end new text begin the taxes, or a portion of them new text end , if held by
the state, may be paid in the inverse order to that in which the taxes were levied, with
accrued penalties, interest, and costs upon the taxes so paid, without payment of the
taxes for the first of such years; provided, that such payment shall not affect the lien of
any unpaid taxes or tax judgment.

new text begin EFFECTIVE DATE. new text end

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

Sec. 23.

Minnesota Statutes 2006, section 290C.07, is amended to read:

290C.07 CALCULATION OF INCENTIVE PAYMENT.

An approved claimant under the sustainable forest incentive program is eligible to
receive an annual payment. The payment shall equal the greater of:

(1) the difference between the property tax that would be paid on the land using the
previous year's statewide average total township tax rate and the class rate for class 2b
timberland under section 273.13, subdivision 23, paragraph (b), if the land were valued
at (i) the average statewide timberland market value per acre calculated under section
290C.06, and (ii) the average statewide timberland current use value per acre calculated
under section 290C.02, subdivision 5; new text begin or
new text end

(2) two-thirds of the property tax amount determined by using the previous year's
statewide average total township tax rate, the estimated market value per acre as calculated
in section 290C.06, and the class rate for 2b timberland under section 273.13, subdivision
23, paragraph (b) deleted text begin ; or deleted text end

deleted text begin (3) $1.50 deleted text end new text begin , provided that the payment shall be no less than $7 new text end per acre for each acre
enrolled in the sustainable forest incentive program.

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for payments made after June 30,
2008.
new text end

Sec. 24.

Minnesota Statutes 2006, section 360.031, is amended to read:

360.031 DEFINITION OF MUNICIPALITY.

For the purposes of sections 360.031 to 360.045, deleted text begin inclusive deleted text end (except section 360.042),
deleted text begin only, deleted text end "municipality" means any county, city, deleted text begin or deleted text end town new text begin , or airport authority new text end of this state.

Sec. 25.

new text begin [360.0425] GENERAL POWERS OF AUTHORITY.
new text end

new text begin An airport authority created under section 360.0426 has all the powers granted a
municipality under sections 360.032 to 360.046.
new text end

Sec. 26.

new text begin [360.0426] CREATION OF AN AIRPORT AUTHORITY;
DISSOLUTION.
new text end

new text begin Subdivision 1. new text end

new text begin Members; definition. new text end

new text begin A city together with another city, county,
town, or an Indian tribe may create an airport authority. For purposes of this chapter,
"airport authority" means a governmental entity created pursuant to this section for the
purpose of acquiring, establishing, constructing, maintaining, improving, and operating
airports and other air navigation facilities.
new text end

new text begin Subd. 2. new text end

new text begin Process to establish authority. new text end

new text begin A city that owns an airport by joint
resolution together with other willing governmental units may create an airport authority
that is authorized to exercise its functions upon passage of a joint resolution by each of
their governing bodies, including a proposed date for the first meeting of the authority.
new text end

new text begin Subd. 3. new text end

new text begin Airport authority commission. new text end

new text begin The powers of the airport authority shall
be vested in the airport authority commissioners. The commission shall consist of at
least five commissioners. Each governmental unit that is a member of the authority shall
be represented by at least one commissioner. If fewer than five governmental units are
members of the authority, there must be two commissioners appointed from each member
unit of government. The terms of each commissioner are three years, provided that the
length of the initial appointments must be staggered so that the terms of approximately
one-third of the commissioners expire each calendar year.
new text end

new text begin Subd. 4. new text end

new text begin Appointment of commissioners. new text end

new text begin The governmental body of each member
governmental unit shall appoint a resident of that governmental unit to be a commissioner
of the airport authority. Upon vacancy of a commissioner prior to the end of a normal term,
the appropriate governmental body shall appoint a commissioner to fill the unexpired term.
new text end

new text begin Subd. 5. new text end

new text begin Compensation; meetings; officers. new text end

new text begin Commissioners shall receive no
compensation for services, but are entitled to payment for necessary expenses, including
travel expenses, incurred in the discharge of the commissioners' duties.
new text end

new text begin The commission shall establish a regular meeting schedule. A majority of the
commissioners of the authority constitutes a quorum for purposes of conducting business
of the authority. Action may be taken by the majority vote of not less than a majority of
the commissioners present, providing there is a quorum.
new text end

new text begin The commission shall elect a chair, a vice-chair, a secretary, and a treasurer at its
organizational meeting. The authority may hire an executive director, a legal advisor,
technical experts, and other employees, permanent and temporary, as it may require.
new text end

new text begin Subd. 6. new text end

new text begin Process to increase size of authority. new text end

new text begin An airport authority may be
increased in size by adding additional governmental entities if each of the additional
entities and each of the governmental entities currently included in the existing authority
adopt a resolution agreeing to the size increase.
new text end

new text begin Subd. 7. new text end

new text begin Process to decrease size of authority. new text end

new text begin An airport authority may be
decreased in size if each of the governmental entities that are members of the authority
and the current commissioners consent to change and make provisions for the retention
or disposition of its assets and liabilities.
new text end

new text begin Subd. 8. new text end

new text begin Process to dissolve authority. new text end

new text begin An airport authority may be dissolved after
payment of all debts and adoption of a joint resolution of the governing bodies of all of
the participating units of government. Before dissolution, the property of the airport
authority must be sold, transferred, or distributed as agreed to by the participating units
of government. Any remaining funds must be distributed to the general funds of the
participating units of government in proportion to their relative shares of the most recent
levy under section 360.0427.
new text end

Sec. 27.

new text begin [360.0427] TAX LEVY MAY BE CERTIFIED BY AN AIRPORT
AUTHORITY.
new text end

new text begin In any year in which it imposes a property tax levy under sections 275.065 to
275.07, which requires an affirmative vote of at least two-thirds of the members of the
authority, an airport authority must submit its proposed levy to the governing body of the
municipality that contains the airport. The municipal governing body may approve or
modify the amount of the levy, and, when it has determined the amount, the authority must
certify to the auditor of the county where the airport is located the amount to be levied on
all taxable property within the boundaries of the airport authority.
new text end

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for taxes payable in 2009, and
thereafter.
new text end

Sec. 28.

Minnesota Statutes 2006, section 435.193, is amended to read:

435.193 HARDSHIP ASSESSMENT DEFERRAL FOR SENIORS deleted text begin OR deleted text end new text begin , new text end
DISABLED new text begin , OR MILITARY PERSONS new text end .

new text begin (a) new text end Notwithstanding the provisions of any law to the contrary, any county, statutory
or home rule charter city, or town, making a special assessment may, at its discretion, defer
the payment of that assessment for any homestead property new text begin :
new text end

new text begin (1) new text end owned by a person 65 years of age or older or retired by virtue of a permanent
and total disability for whom it would be a hardship to make the payments new text begin ; or
new text end

new text begin (2) owned by a person who is a member of the Minnesota National Guard or other
military reserves who is ordered into active military service, as defined in section 190.05,
subdivision 5b or 5c, as stated in the person's military orders, for whom it would be a
hardship to make the payments new text end .

new text begin (b) new text end Any county, statutory or home rule charter city, or town electing to defer
special assessments shall adopt an ordinance or resolution establishing standards and
guidelines for determining the existence of a hardship and for determining the existence of
a disability, but nothing herein shall be construed to prohibit the determination of hardship
on the basis of exceptional and unusual circumstances not covered by the standards and
guidelines where the determination is made in a nondiscriminatory manner and does not
give the applicant an unreasonable preference or advantage over other applicants.

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective the day following final enactment,
and applies to any special assessment for which payment is due on or after that date.
new text end

Sec. 29.

Laws 1973, chapter 393, section 1, as amended by Laws 1974, chapter 153,
section 1, is amended to read:

Section 1. MINNEAPOLIS, CITY OF; STREET MAINTENANCE AND
LIGHTING.

Notwithstanding the provisions of any statute or the charter of the city of
Minneapolis to the contrary, the city council of said city may provide that all new text begin or part of the
new text end costs of new text begin construction, operation, and new text end maintenance of streets and street lighting within the
city may hereafter be paid from the general revenues of the city of Minneapolis; provided
that the portion of the costs assessable against nongovernmental real property exempt from
ad valorem taxation may be levied as a special assessment against the property.

Sec. 30.

Laws 1988, chapter 645, section 3, as amended by Laws 1999, chapter 243,
article 6, section 9, and Laws 2000, chapter 490, article 6, section 15, is amended to read:

Sec. 3. TAX; PAYMENT OF EXPENSES.

(a) The tax levied by the hospital district under Minnesota Statutes, section 447.34,
must not be levied at a rate that exceeds deleted text begin 0.063 percent of taxable market value deleted text end new text begin the amount
authorized to be levied under that section. The proceeds of the tax may be used for all
purposes of the hospital district, except as provided in paragraph (b) new text end .

(b) deleted text begin 0.048 percent of taxable market value of tax in paragraph (a) may be used only
for acquisition, betterment, and maintenance of the district's hospital and nursing home
facilities and equipment, and not for administrative or salary expenses.
deleted text end

deleted text begin (c) deleted text end 0.015 percent of taxable market value of the tax in paragraph (a) may be used
solely for the purpose of capital expenditures as it relates to ambulance acquisitions for
the Cook ambulance service and the Orr ambulance service and not for administrative
or salary expenses.

The part of the levy referred to in paragraph deleted text begin (c) deleted text end new text begin (b) new text end must be administered by the
Cook Hospital and passed on directly to the Cook area ambulance service board and the
city of Orr to be held in trust until funding for a new ambulance is needed by either the
Cook ambulance service or the Orr ambulance service.

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective upon compliance with Minnesota
Statutes, section 645.021, subdivision 3, by the governing body of the Cook-Orr Hospital
District.
new text end

Sec. 31.

Laws 1989, chapter 211, section 8, subdivision 4, as amended by Laws 2002,
chapter 390, section 24, and Laws 2003, chapter 127, article 2, section 22, subdivision 4,
is amended to read:

Subd. 4.

Tax levy.

The tax levied under Minnesota Statutes, section 447.34, shall
not exceed deleted text begin $300,000 for taxes levied in 2002. For taxes levied in 2003 and subsequent
years, the tax must not exceed the lesser of:
deleted text end

deleted text begin (1) the product of the hospital district's property tax levy limitation for the previous
year determined under this subdivision, multiplied by 103 percent; or
deleted text end

deleted text begin (2) the product of the hospital district's property tax levy limitation for the previous
year determined under this subdivision multiplied by the ratio of the most recent available
annual medical care expenditure category of the revised Consumer Price Index, U.S.
citywide average, for all urban consumers prepared by the United States Department of
Labor to the same annual index for the previous year deleted text end new text begin the amount authorized to be levied
under that section new text end .

The proceeds of the tax may be used for all purposes of the hospital district.

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective upon compliance with Minnesota
Statutes, section 645.021, subdivision 3, by the governing body of the Cook County
Hospital District.
new text end

Sec. 32. new text begin LAKEVIEW CEMETERY ASSOCIATION.
new text end

new text begin Subdivision 1. new text end

new text begin Authorized. new text end

new text begin Any two or more of the following cities and towns in
Itasca County may enter into a joint powers agreement under Minnesota Statutes, section
471.59, to establish the Lakeview Cemetery Association with the powers and duties of a
cemetery association under Minnesota Statutes, chapter 306: the cities of Bovey, Calumet,
Coleraine, Marble, and Taconite, and the towns of Greenway, Iron Range, Lawrence,
and Trout Lake.
new text end

new text begin Subd. 2. new text end

new text begin Additions; withdrawals. new text end

new text begin (a) A city or town listed in subdivision 1 that
does not join the association at the time of the initial agreement may join as provided in
the joint powers agreement, or if the joint powers agreement does not provide for later
additions, by providing the association a copy of the adopted resolution to join. If the
joint powers agreement does not provide for adding members, a city or town that joins
after the initial agreement is effective, may join prior to July 1 of the levy year, for taxes
payable in the following year.
new text end

new text begin (b) A city or town may withdraw from the association as otherwise provided in the
joint powers agreement, or providing to the association a copy of the adopted resolution of
the city or town, prior to July 1 of the levy year for taxes payable in the following year.
new text end

new text begin Subd. 3. new text end

new text begin Operation; tax levy. new text end

new text begin The joint powers agreement for the association may
provide for a uniform tax rate to be levied against all taxable properties located within each
participating city or town. The maximum amount that may be levied by all participating
cities and towns combined shall not exceed a total of $200,000 per year. If levied, the
tax is in addition to all other taxes permitted to be levied on the property, including taxes
permitted to be levied for cemetery purposes by a participating city or town. The levy
under this section must be disregarded in the calculation of all other rate or per capita levy
limitations imposed by law. One of the cities or towns within the association, chosen by
the members of the association, shall certify a tax levy to the Itasca County auditor. When
collected, the Itasca County auditor shall pay the Lakeview Cemetery Association directly.
new text end

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for taxes payable in 2009 and
thereafter.
new text end

Sec. 33. new text begin REPEALER.
new text end

new text begin (a) new text end new text begin Laws 1973, chapter 393, section 2, new text end new text begin is repealed.
new text end

new text begin (b) new text end new text begin Laws 1994, chapter 587, article 9, section 8, subdivision 1, as amended by Laws
2005, First Special Session chapter 3, article 1, section 36, new text end new text begin is repealed, effective for the
same levy year in which the association initially levies under section 32.
new text end

new text begin (c) new text end new text begin Minnesota Statutes 2006, section 163.051, subdivision 5, new text end new text begin is repealed, effective
for taxes payable in 2007 and thereafter.
new text end

ARTICLE 3

INCOME TAXES

Section 1.

Minnesota Statutes 2006, section 289A.12, subdivision 4, is amended to
read:

Subd. 4.

Returns by persons, corporations, cooperatives, governmental entities,
or school districts.

new text begin (a) new text end The commissioner may by notice and demand require to the
extent required by section 6041 of the Internal Revenue Code, a person, corporation,
or cooperative, the state of Minnesota and its political subdivisions, and a city, county,
and school district in Minnesota, making payments in the regular course of a trade or
business during the taxable year to any person or corporation of $600 or more on account
of rents or royalties, or of $10 or more on account of interest, or $10 or more on account
of dividends or patronage dividends, or $600 or more on account of either wages, salaries,
commissions, fees, prizes, awards, pensions, annuities, or any other fixed or determinable
gains, profits or income, not otherwise reportable under section 289A.09, subdivision 2, or
on account of earnings of $10 or more distributed to its members by savings associations
or credit unions chartered under the laws of this state or the United States, (1) to file with
the commissioner a return (except in cases where a valid agreement to participate in the
combined federal and state information reporting system has been entered into, and the
return is filed only with the commissioner of internal revenue under the applicable filing
and informational reporting requirements of the Internal Revenue Code) with respect to
the payments in excess of the amounts named, giving the names and addresses of the
persons to whom the payments were made, the amounts paid to each, and (2) to make
a return with respect to the total number of payments and total amount of payments,
for each category of income named, which were in excess of the amounts named. This
subdivision does not apply to the payment of interest or dividends to a person who was a
nonresident of Minnesota for the entire year.

new text begin (b) For payments for which a return is covered by paragraph (a), regardless of
whether the commissioner has required filing under paragraph (a), the payor must file a
copy of the return with the commissioner if:
new text end

new text begin (i) the return is for a payment made to a Minnesota resident, to a recipient with a
Minnesota address, or for activity occurring in the state of Minnesota; and
new text end

new text begin (ii) the payment is for wages, salaries, or other compensation for services provided.
The commissioner may require this information to be filed in electronic or another form
that the commissioner determines is appropriate, notwithstanding the provisions of
paragraph (c).
new text end

new text begin (c) new text end A person, corporation, or cooperative required to file returns under this
subdivision must file the returns on magnetic media if magnetic media was used to satisfy
the federal reporting requirement under section 6011(e) of the Internal Revenue Code,
unless the person establishes to the satisfaction of the commissioner that compliance with
this requirement would be an undue hardship.

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for forms required to be filed by
federal law after December 31, 2009.
new text end

Sec. 2.

Minnesota Statutes 2006, section 290.01, subdivision 19a, is amended to read:

Subd. 19a.

Additions to federal taxable income.

For individuals, estates, and
trusts, there shall be added to federal taxable income:

(1)(i) interest income on obligations of any state other than Minnesota or a political
or governmental subdivision, municipality, or governmental agency or instrumentality
of any state other than Minnesota exempt from federal income taxes under the Internal
Revenue Code or any other federal statute; and

(ii) exempt-interest dividends as defined in section 852(b)(5) of the Internal Revenue
Code, except the portion of the exempt-interest dividends derived from interest income
on obligations of the state of Minnesota or its political or governmental subdivisions,
municipalities, governmental agencies or instrumentalities, but only if the portion of the
exempt-interest dividends from such Minnesota sources paid to all shareholders represents
95 percent or more of the exempt-interest dividends that are paid by the regulated
investment company as defined in section 851(a) of the Internal Revenue Code, or the
fund of the regulated investment company as defined in section 851(g) of the Internal
Revenue Code, making the payment; and

(iii) for the purposes of items (i) and (ii), interest on obligations of an Indian tribal
government described in section 7871(c) of the Internal Revenue Code shall be treated as
interest income on obligations of the state in which the tribe is located;

(2) the amount of income or sales and use taxes paid or accrued within the taxable
year under this chapter and the amount of taxes based on net income paid or sales and use
taxes paid to any other state or to any province or territory of Canada, to the extent allowed
as a deduction under section 63(d) of the Internal Revenue Code, but the addition may not
be more than the amount by which the itemized deductions as allowed under section 63(d)
of the Internal Revenue Code exceeds the amount of the standard deduction as defined
in section 63(c) of the Internal Revenue Code. For the purpose of this paragraph, the
disallowance of itemized deductions under section 68 of the Internal Revenue Code of
1986, income or sales and use tax is the last itemized deduction disallowed;

(3) the capital gain amount of a lump sum distribution to which the special tax under
section 1122(h)(3)(B)(ii) of the Tax Reform Act of 1986, Public Law 99-514, applies;

(4) the amount of income taxes paid or accrued within the taxable year under this
chapter and taxes based on net income paid to any other state or any province or territory
of Canada, to the extent allowed as a deduction in determining federal adjusted gross
income. For the purpose of this paragraph, income taxes do not include the taxes imposed
by sections 290.0922, subdivision 1, paragraph (b), 290.9727, 290.9728, and 290.9729;

(5) the amount of expense, interest, or taxes disallowed pursuant to section 290.10
other than expenses or interest used in computing net interest income for the subtraction
allowed under subdivision 19b, clause (1);

(6) the amount of a partner's pro rata share of net income which does not flow
through to the partner because the partnership elected to pay the tax on the income under
section 6242(a)(2) of the Internal Revenue Code;

(7) 80 percent of the depreciation deduction allowed under section 168(k) of the
Internal Revenue Code. For purposes of this clause, if the taxpayer has an activity that
in the taxable year generates a deduction for depreciation under section 168(k) and the
activity generates a loss for the taxable year that the taxpayer is not allowed to claim for
the taxable year, "the depreciation allowed under section 168(k)" for the taxable year is
limited to excess of the depreciation claimed by the activity under section 168(k) over the
amount of the loss from the activity that is not allowed in the taxable year. In succeeding
taxable years when the losses not allowed in the taxable year are allowed, the depreciation
under section 168(k) is allowed;

(8) 80 percent of the amount by which the deduction allowed by section 179 of the
Internal Revenue Code exceeds the deduction allowable by section 179 of the Internal
Revenue Code of 1986, as amended through December 31, 2003;

(9) to the extent deducted in computing federal taxable income, the amount of the
deduction allowable under section 199 of the Internal Revenue Code; deleted text begin and
deleted text end

(10) the exclusion allowed under section 139A of the Internal Revenue Code for
federal subsidies for prescription drug plans new text begin ; and
new text end

new text begin (11) the amount of expenses disallowed under section 290.10, subdivision 2 new text end .

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for taxable years beginning after
December 31, 2007, for disallowed expenses assessed after the date of final enactment
of this act.
new text end

Sec. 3.

Minnesota Statutes 2007 Supplement, section 290.01, subdivision 19b, is
amended to read:

Subd. 19b.

Subtractions from federal taxable income.

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

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

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

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

(4) income as provided under section 290.0802;

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

(6) to the extent not deducted or not deductible pursuant to section 408(d)(8)(E)
of the Internal Revenue Code in determining federal taxable income by an individual
who does not itemize deductions for federal income tax purposes for the taxable year, an
amount equal to 50 percent of the excess of charitable contributions over $500 allowable
as a deduction for the taxable year under section 170(a) of the Internal Revenue Code and
under the provisions of Public Law 109-1;

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

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

(9) in each of the five tax years immediately following the tax year in which an
addition is required under subdivision 19a, clause (7), or 19c, clause (15), in the case
of a shareholder of a corporation that is an S corporation, an amount equal to one-fifth
of the delayed depreciation. For purposes of this clause, "delayed depreciation" means
the amount of the addition made by the taxpayer under subdivision 19a, clause (7), or
subdivision 19c, clause (15), in the case of a shareholder of an S corporation, minus the
positive value of any net operating loss under section 172 of the Internal Revenue Code
generated for the tax year of the addition. The resulting delayed depreciation cannot be
less than zero;

(10) job opportunity building zone income as provided under section 469.316;

(11) new text begin to the extent included in federal taxable income, new text end the amount of compensation
paid to members of the Minnesota National Guard or other reserve components of the
United States military for active service performed in Minnesota, excluding compensation
for services performed under the Active Guard Reserve (AGR) program. For purposes of
this clause, "active service" means (i) state active service as defined in section 190.05,
subdivision 5a, clause (1); (ii) federally funded state active service as defined in section
190.05, subdivision 5b; or (iii) federal active service as defined in section 190.05,
subdivision 5c, but "active service" excludes services performed exclusively for purposes
of basic combat training, advanced individual training, annual training, and periodic
inactive duty training; special training periodically made available to reserve members;
and service performed in accordance with section 190.08, subdivision 3;

(12) new text begin to the extent included in federal taxable income, new text end the amount of compensation
paid to Minnesota residents who are members of the armed forces of the United States or
United Nations for active duty performed outside Minnesota new text begin under United States Code,
title 10, section 101(d); United States Code, title 32, section 101(12); or the authority of
the United Nations new text end ;

(13) an amount, not to exceed $10,000, equal to qualified expenses related to a
qualified donor's donation, while living, of one or more of the qualified donor's organs
to another person for human organ transplantation. For purposes of this clause, "organ"
means all or part of an individual's liver, pancreas, kidney, intestine, lung, or bone marrow;
"human organ transplantation" means the medical procedure by which transfer of a human
organ is made from the body of one person to the body of another person; "qualified
expenses" means unreimbursed expenses for both the individual and the qualified donor
for (i) travel, (ii) lodging, and (iii) lost wages net of sick pay, except that such expenses
may be subtracted under this clause only once; and "qualified donor" means the individual
or the individual's dependent, as defined in section 152 of the Internal Revenue Code. An
individual may claim the subtraction in this clause for each instance of organ donation for
transplantation during the taxable year in which the qualified expenses occur;

(14) in each of the five tax years immediately following the tax year in which an
addition is required under subdivision 19a, clause (8), or 19c, clause (16), in the case of a
shareholder of a corporation that is an S corporation, an amount equal to one-fifth of the
addition made by the taxpayer under subdivision 19a, clause (8), or 19c, clause (16), in the
case of a shareholder of a corporation that is an S corporation, minus the positive value of
any net operating loss under section 172 of the Internal Revenue Code generated for the
tax year of the addition. If the net operating loss exceeds the addition for the tax year, a
subtraction is not allowed under this clause;

(15) to the extent included in federal taxable income, compensation paid to a
nonresident who is a service member as defined in United States Code, title 10, section
101(a)(5), for military service as defined in the Service Member Civil Relief Act, Public
Law 108-189, section 101(2); and

(16) international economic development zone income as provided under section
469.325.

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for tax years beginning after
December 31, 2007.
new text end

Sec. 4.

Minnesota Statutes 2006, section 290.01, subdivision 19c, is amended to read:

Subd. 19c.

Corporations; additions to federal taxable income.

For corporations,
there shall be added to federal taxable income:

(1) the amount of any deduction taken for federal income tax purposes for income,
excise, or franchise taxes based on net income or related minimum taxes, including but not
limited to the tax imposed under section 290.0922, paid by the corporation to Minnesota,
another state, a political subdivision of another state, the District of Columbia, or any
foreign country or possession of the United States;

(2) interest not subject to federal tax upon obligations of: the United States, its
possessions, its agencies, or its instrumentalities; the state of Minnesota or any other
state, any of its political or governmental subdivisions, any of its municipalities, or any
of its governmental agencies or instrumentalities; the District of Columbia; or Indian
tribal governments;

(3) exempt-interest dividends received as defined in section 852(b)(5) of the Internal
Revenue Code;

(4) the amount of any net operating loss deduction taken for federal income tax
purposes under section 172 or 832(c)(10) of the Internal Revenue Code or operations loss
deduction under section 810 of the Internal Revenue Code;

(5) the amount of any special deductions taken for federal income tax purposes
under sections 241 to 247 and 965 of the Internal Revenue Code;

(6) losses from the business of mining, as defined in section 290.05, subdivision 1,
clause (a), that are not subject to Minnesota income tax;

(7) the amount of any capital losses deducted for federal income tax purposes under
sections 1211 and 1212 of the Internal Revenue Code;

(8) the exempt foreign trade income of a foreign sales corporation under sections
921(a) and 291 of the Internal Revenue Code;

(9) the amount of percentage depletion deducted under sections 611 through 614 and
291 of the Internal Revenue Code;

(10) for certified pollution control facilities placed in service in a taxable year
beginning before December 31, 1986, and for which amortization deductions were elected
under section 169 of the Internal Revenue Code of 1954, as amended through December
31, 1985, the amount of the amortization deduction allowed in computing federal taxable
income for those facilities;

(11) the amount of any deemed dividend from a foreign operating corporation
determined pursuant to section 290.17, subdivision 4, paragraph (g);

(12) the amount of a partner's pro rata share of net income which does not flow
through to the partner because the partnership elected to pay the tax on the income under
section 6242(a)(2) of the Internal Revenue Code;

(13) the amount of net income excluded under section 114 of the Internal Revenue
Code;

(14) any increase in subpart F income, as defined in section 952(a) of the Internal
Revenue Code, for the taxable year when subpart F income is calculated without regard
to the provisions of section 103 of Public Law 109-222;

(15) 80 percent of the depreciation deduction allowed under section 168(k)(1)(A)
and (k)(4)(A) of the Internal Revenue Code. For purposes of this clause, if the taxpayer
has an activity that in the taxable year generates a deduction for depreciation under
section 168(k)(1)(A) and (k)(4)(A) and the activity generates a loss for the taxable year
that the taxpayer is not allowed to claim for the taxable year, "the depreciation allowed
under section 168(k)(1)(A) and (k)(4)(A)" for the taxable year is limited to excess of the
depreciation claimed by the activity under section 168(k)(1)(A) and (k)(4)(A) over the
amount of the loss from the activity that is not allowed in the taxable year. In succeeding
taxable years when the losses not allowed in the taxable year are allowed, the depreciation
under section 168(k)(1)(A) and (k)(4)(A) is allowed;

(16) 80 percent of the amount by which the deduction allowed by section 179 of the
Internal Revenue Code exceeds the deduction allowable by section 179 of the Internal
Revenue Code of 1986, as amended through December 31, 2003;

(17) to the extent deducted in computing federal taxable income, the amount of the
deduction allowable under section 199 of the Internal Revenue Code; deleted text begin and
deleted text end

(18) the exclusion allowed under section 139A of the Internal Revenue Code for
federal subsidies for prescription drug plans deleted text begin . deleted text end new text begin ; and
new text end

new text begin (19) the amount of expenses disallowed under section 290.10, subdivision 2.
new text end

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for taxable years beginning after
December 31, 2007, for disallowed expenses assessed after the date of final enactment
of this act.
new text end

Sec. 5.

Minnesota Statutes 2006, section 290.0677, subdivision 1, is amended to read:

Subdivision 1.

Credit allowed.

(a) An individual is allowed a credit against the tax
due under this chapter equal to $59 for each month or portion thereof that the individual
was in active military service in a designated area after September 11, 2001, while a
Minnesota domiciliary.

(b) For active service performed after September 11, 2001, and before December 31,
2006, the individual may claim the credit in the taxable year beginning after December 31,
2005, and before January 1, 2007.

(c) For active service performed after December 31, 2006, the individual may claim
the credit for the taxable year in which the active service was performed.

(d) If deleted text begin a Minnesota domiciliary is killed while performing active military service in a
designated area, the individual's surviving spouse or dependent child may take the credit
in the taxable year of the death. If a Minnesota domiciliary was killed while performing
active military service in a designated area between September 11, 2001, and December
31, 2006, the individual's surviving spouse or dependent child may claim this credit in
the taxable year beginning after December 31, 2005, and before January 1, 2007 deleted text end new text begin an
individual entitled to the credit died prior to January 1, 2006, the individual's estate or
heirs at law, if the individual's probate estate has closed or the estate was not probated,
may claim the credit new text end .

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective retroactively for tax years beginning
after December 31, 2005.
new text end

Sec. 6.

Minnesota Statutes 2006, section 290.10, is amended to read:

290.10 NONDEDUCTIBLE ITEMS.

new text begin Subdivision 1. new text end

new text begin Expenses, interest, and taxes. new text end

Except as provided in section 290.17,
subdivision 4, paragraph (i), in computing the net income of a taxpayer no deduction
shall in any case be allowed for expenses, interest and taxes connected with or allocable
against the production or receipt of all income not included in the measure of the tax
imposed by this chapter, except that for corporations engaged in the business of mining
or producing iron ore, the mining of which is subject to the occupation tax imposed by
section 298.01, subdivision 4, this shall not prevent the deduction of expenses and other
items to the extent that the expenses and other items are allowable under this chapter and
are not deductible, capitalizable, retainable in basis, or taken into account by allowance
or otherwise in computing the occupation tax and do not exceed the amounts taken for
federal income tax purposes for that year. Occupation taxes imposed under chapter 298,
royalty taxes imposed under chapter 299, or depletion expenses may not be deducted
under this deleted text begin clause deleted text end new text begin subdivision new text end .

new text begin Subd. 2. new text end

new text begin Fines, fees, and penalties. new text end

new text begin (a) Except as provided in this subdivision, no
deduction from taxable income for a trade or business expense under section 162(a) of
the Internal Revenue Code shall be allowed for any amount paid or incurred, whether by
suit, agreement, or otherwise, to, or at the direction of, a government or entity described in
paragraph (d) in relation to the violation of any law or the investigation or inquiry by such
government or entity into the potential violation of any law.
new text end

new text begin (b) Exception for amounts constituting restitution or paid to come into compliance
with the law. Paragraph (a) does not apply to any amount which:
new text end

new text begin (1) the taxpayer establishes:
new text end

new text begin (i) constitutes restitution, including remediation of property for damage or harm
caused by or which may be caused by the violation of any law or the potential violation
of any law; or
new text end

new text begin (ii) is paid to come into compliance with any law which was violated or involved in
the investigation or inquiry; and
new text end

new text begin (2) is identified as restitution or as an amount paid to come into compliance with the
law, as the case may be, in the court order or settlement agreement.
new text end

new text begin This paragraph does not apply to any amount paid or incurred as reimbursement to
the government or entity for the costs of any investigation or litigation.
new text end

new text begin (c) Paragraph (a) does not apply to any amount paid or incurred by order of a court
in a suit in which no government or entity described in paragraph (d) is a party.
new text end

new text begin (d) An entity is described in this paragraph if it is:
new text end

new text begin (1) a nongovernmental entity which exercises self-regulatory powers, including
imposing sanctions, in connection with a qualified board or exchange, as defined in section
1256(g)(7) of the Internal Revenue Code, or;
new text end

new text begin (2) to the extent provided in federal regulations, a nongovernmental entity which
exercises self-regulatory powers, including imposing sanctions, as part of performing an
essential governmental function.
new text end

new text begin (e) Paragraph (a) does not apply to any amount paid or incurred as taxes due.
new text end

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for taxable years beginning after
December 31, 2007, and for fines, fees, and penalties assessed after the date of enactment.
new text end

Sec. 7.

Minnesota Statutes 2006, section 290.17, subdivision 2, is amended to read:

Subd. 2.

Income not derived from conduct of a trade or business.

The income of
a taxpayer subject to the allocation rules that is not derived from the conduct of a trade or
business must be assigned in accordance with paragraphs (a) to (f):

(a)(1) Subject to paragraphs (a)(2) deleted text begin , deleted text end new text begin and new text end (a)(3), deleted text begin and (a)(4), deleted text end income from wages as
defined in section 3401(a) and (f) of the Internal Revenue Code is assigned to this state if,
and to the extent that, the work of the employee is performed within it; all other income
from such sources is treated as income from sources without this state.

Severance pay shall be considered income from labor or personal or professional
services.

(2) In the case of an individual who is a nonresident of Minnesota and who is an
athlete or entertainer, income from compensation for labor or personal services performed
within this state shall be determined in the following manner:

(i) The amount of income to be assigned to Minnesota for an individual who is a
nonresident salaried athletic team employee shall be determined by using a fraction in
which the denominator contains the total number of days in which the individual is under
a duty to perform for the employer, and the numerator is the total number of those days
spent in Minnesota. For purposes of this paragraph, off-season training activities, unless
conducted at the team's facilities as part of a team imposed program, are not included in
the total number of duty days. Bonuses earned as a result of play during the regular season
or for participation in championship, play-off, or all-star games must be allocated under
the formula. Signing bonuses are not subject to allocation under the formula if they are
not conditional on playing any games for the team, are payable separately from any other
compensation, and are nonrefundable; and

(ii) The amount of income to be assigned to Minnesota for an individual who is a
nonresident, and who is an athlete or entertainer not listed in clause (i), for that person's
athletic or entertainment performance in Minnesota shall be determined by assigning to
this state all income from performances or athletic contests in this state.

(3) For purposes of this section, amounts received by a nonresident as "retirement
income" as defined in section (b)(1) of the State Income Taxation of Pension Income
Act, Public Law 104-95, are not considered income derived from carrying on a trade
or business or from wages or other compensation for work an employee performed in
Minnesota, and are not taxable under this chapter.

deleted text begin (4) Wages, otherwise assigned to this state under clause (1) and not qualifying under
clause (3), are not taxable under this chapter if the following conditions are met:
deleted text end

deleted text begin (i) the recipient was not a resident of this state for any part of the taxable year in
which the wages were received; and
deleted text end

deleted text begin (ii) the wages are for work performed while the recipient was a resident of this state.
deleted text end

(b) Income or gains from tangible property located in this state that is not employed
in the business of the recipient of the income or gains must be assigned to this state.

(c) Income or gains from intangible personal property not employed in the business
of the recipient of the income or gains must be assigned to this state if the recipient of the
income or gains is a resident of this state or is a resident trust or estate.

Gain on the sale of a partnership interest is allocable to this state in the ratio of the
original cost of partnership tangible property in this state to the original cost of partnership
tangible property everywhere, determined at the time of the sale. If more than 50 percent
of the value of the partnership's assets consists of intangibles, gain or loss from the sale
of the partnership interest is allocated to this state in accordance with the sales factor of
the partnership for its first full tax period immediately preceding the tax period of the
partnership during which the partnership interest was sold.

Gain on the sale of goodwill or income from a covenant not to compete that is
connected with a business operating all or partially in Minnesota is allocated to this state
to the extent that the income from the business in the year preceding the year of sale was
assignable to Minnesota under subdivision 3.

When an employer pays an employee for a covenant not to compete, the income
allocated to this state is in the ratio of the employee's service in Minnesota in the calendar
year preceding leaving the employment of the employer over the total services performed
by the employee for the employer in that year.

(d) Income from winnings on a bet made by an individual while in Minnesota is
assigned to this state. In this paragraph, "bet" has the meaning given in section 609.75,
subdivision 2, as limited by section 609.75, subdivision 3, clauses (1), (2), and (3).

(e) All items of gross income not covered in paragraphs (a) to (d) and not part of the
taxpayer's income from a trade or business shall be assigned to the taxpayer's domicile.

(f) For the purposes of this section, working as an employee shall not be considered
to be conducting a trade or business.

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for taxable years beginning
after December 31, 2007, except that to the extent this section impacts an employer's
requirement to withhold Minnesota tax, the requirement to withhold is effective for wages
paid after April 1, 2008.
new text end

Sec. 8.

Minnesota Statutes 2006, section 290.92, is amended by adding a subdivision
to read:

new text begin Subd. 31. new text end

new text begin Payments to persons who are not employees. new text end

new text begin (a) For purposes of this
subdivision, "contractor" means a person carrying on a trade or business described in
industry code numbers 23 through 238990 of the North American Industry Classification
System.
new text end

new text begin (b) A contractor or a third-party bulk filer acting on behalf of a contractor, who
makes payments to an individual, carrying on a trade or business described in paragraph
(a) as a sole proprietorship, must deduct and withhold two percent of the payment as
Minnesota withholding tax when the amount the contractor paid to that individual during
the calendar year exceeds $600.
new text end

new text begin (c) A payment subject to withholding under this subdivision must be treated as if
the payment were a wage paid by an employer to an employee. The requirements in the
definitions of "employee" and "employer" in subdivision 1 relating to geographic location
apply in determining whether withholding tax applies under this subdivision, but without
regard to whether the contractor or the individual otherwise satisfy the definition of an
employer or an employee. Each recipient of a payment subject to withholding under this
subdivision must furnish the contractor with a statement of the recipient's name, address,
and Social Security account number.
new text end

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for payments made after December
31, 2008.
new text end

Sec. 9. new text begin AUDIT AND REPORT TO LEGISLATURE.
new text end

new text begin The commissioner must conduct a random sample audit of withholdings under
Minnesota Statutes, section 290.92, subdivision 31, and returns associated with those
withholdings. The commissioner must report on the findings of the audit to the committees
of the senate and house of representatives with jurisdiction over taxes, in compliance with
Minnesota Statutes, sections 3.195 and 3.197, no later than February 1, 2011. The report
must also include information on the number and amount of payments received, and on
the types of contractors making payments, grouped by specialty skills definitions provided
in the North American Industry Classification System.
new text end

ARTICLE 4

FEDERAL UPDATE

Section 1.

Minnesota Statutes 2006, section 289A.02, subdivision 7, is amended to
read:

Subd. 7.

Internal Revenue Code.

Unless specifically defined otherwise, "Internal
Revenue Code" means the Internal Revenue Code of 1986, as amended through deleted text begin May 18,
2006 deleted text end new text begin February 13, 2008 new text end .

new text begin EFFECTIVE DATE. new text end

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

Sec. 2.

Minnesota Statutes 2007 Supplement, section 290.01, subdivision 19, is
amended to read:

Subd. 19.

Net income.

The term "net income" means the federal taxable income,
as defined in section 63 of the Internal Revenue Code of 1986, as amended through the
date named in this subdivision, incorporating the federal effective dates of changes to the
Internal Revenue Code and any elections made by the taxpayer in accordance with the
Internal Revenue Code in determining federal taxable income for federal income tax
purposes, and with the modifications provided in subdivisions 19a to 19f.

In the case of a regulated investment company or a fund thereof, as defined in section
851(a) or 851(g) of the Internal Revenue Code, federal taxable income means investment
company taxable income as defined in section 852(b)(2) of the Internal Revenue Code,
except that:

(1) the exclusion of net capital gain provided in section 852(b)(2)(A) of the Internal
Revenue Code does not apply;

(2) the deduction for dividends paid under section 852(b)(2)(D) of the Internal
Revenue Code must be applied by allowing a deduction for capital gain dividends and
exempt-interest dividends as defined in sections 852(b)(3)(C) and 852(b)(5) of the Internal
Revenue Code; and

(3) the deduction for dividends paid must also be applied in the amount of any
undistributed capital gains which the regulated investment company elects to have treated
as provided in section 852(b)(3)(D) of the Internal Revenue Code.

The net income of a real estate investment trust as defined and limited by section
856(a), (b), and (c) of the Internal Revenue Code means the real estate investment trust
taxable income as defined in section 857(b)(2) of the Internal Revenue Code.

The net income of a designated settlement fund as defined in section 468B(d) of
the Internal Revenue Code means the gross income as defined in section 468B(b) of the
Internal Revenue Code.

The Internal Revenue Code of 1986, as amended through deleted text begin May 18, 2006 deleted text end new text begin February
13, 2008 new text end , shall be in effect for taxable years beginning after December 31, 1996 deleted text begin , and
before January 1, 2006, and for taxable years beginning after December 31, 2006. The
Internal Revenue Code of 1986, as amended through December 31, 2006, is in effect for
taxable years beginning after December 31, 2005, and before January 1, 2007 deleted text end .

Except as otherwise provided, references to the Internal Revenue Code in
subdivisions 19 to 19f mean the code in effect for purposes of determining net income for
the applicable year.

new text begin EFFECTIVE DATE. new text end

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

Sec. 3.

Minnesota Statutes 2006, section 290.01, subdivision 19a, is amended to read:

Subd. 19a.

Additions to federal taxable income.

For individuals, estates, and
trusts, there shall be added to federal taxable income:

(1)(i) interest income on obligations of any state other than Minnesota or a political
or governmental subdivision, municipality, or governmental agency or instrumentality
of any state other than Minnesota exempt from federal income taxes under the Internal
Revenue Code or any other federal statute; and

(ii) exempt-interest dividends as defined in section 852(b)(5) of the Internal Revenue
Code, except the portion of the exempt-interest dividends derived from interest income
on obligations of the state of Minnesota or its political or governmental subdivisions,
municipalities, governmental agencies or instrumentalities, but only if the portion of the
exempt-interest dividends from such Minnesota sources paid to all shareholders represents
95 percent or more of the exempt-interest dividends that are paid by the regulated
investment company as defined in section 851(a) of the Internal Revenue Code, or the
fund of the regulated investment company as defined in section 851(g) of the Internal
Revenue Code, making the payment; and

(iii) for the purposes of items (i) and (ii), interest on obligations of an Indian tribal
government described in section 7871(c) of the Internal Revenue Code shall be treated as
interest income on obligations of the state in which the tribe is located;

(2) the amount of income or sales and use taxes paid or accrued within the taxable
year under this chapter and the amount of taxes based on net income paid or sales and use
taxes paid to any other state or to any province or territory of Canada, to the extent allowed
as a deduction under section 63(d) of the Internal Revenue Code, but the addition may not
be more than the amount by which the itemized deductions as allowed under section 63(d)
of the Internal Revenue Code exceeds the amount of the standard deduction as defined
in section 63(c) of the Internal Revenue Code. For the purpose of this paragraph, the
disallowance of itemized deductions under section 68 of the Internal Revenue Code of
1986, income or sales and use tax is the last itemized deduction disallowed;

(3) the capital gain amount of a lump sum distribution to which the special tax under
section 1122(h)(3)(B)(ii) of the Tax Reform Act of 1986, Public Law 99-514, applies;

(4) the amount of income taxes paid or accrued within the taxable year under this
chapter and taxes based on net income paid to any other state or any province or territory
of Canada, to the extent allowed as a deduction in determining federal adjusted gross
income. For the purpose of this paragraph, income taxes do not include the taxes imposed
by sections 290.0922, subdivision 1, paragraph (b), 290.9727, 290.9728, and 290.9729;

(5) the amount of expense, interest, or taxes disallowed pursuant to section 290.10
other than expenses or interest used in computing net interest income for the subtraction
allowed under subdivision 19b, clause (1);

(6) the amount of a partner's pro rata share of net income which does not flow
through to the partner because the partnership elected to pay the tax on the income under
section 6242(a)(2) of the Internal Revenue Code;

(7) 80 percent of the depreciation deduction allowed under section 168(k) of the
Internal Revenue Code. For purposes of this clause, if the taxpayer has an activity that
in the taxable year generates a deduction for depreciation under section 168(k) and the
activity generates a loss for the taxable year that the taxpayer is not allowed to claim for
the taxable year, "the depreciation allowed under section 168(k)" for the taxable year is
limited to excess of the depreciation claimed by the activity under section 168(k) over the
amount of the loss from the activity that is not allowed in the taxable year. In succeeding
taxable years when the losses not allowed in the taxable year are allowed, the depreciation
under section 168(k) is allowed;

(8) 80 percent of the amount by which the deduction allowed by section 179 of the
Internal Revenue Code exceeds the deduction allowable by section 179 of the Internal
Revenue Code of 1986, as amended through December 31, 2003;

(9) to the extent deducted in computing federal taxable income, the amount of the
deduction allowable under section 199 of the Internal Revenue Code; deleted text begin and
deleted text end

(10) the exclusion allowed under section 139A of the Internal Revenue Code for
federal subsidies for prescription drug plans deleted text begin . deleted text end new text begin ;
new text end

new text begin (11) for taxable years beginning after December 31, 2006, and before January 1,
2008, the amount deducted for qualified tuition and related expenses under section 222 of
the Internal Revenue Code, to the extent deducted from gross income; and
new text end

new text begin (12) for taxable years beginning after December 31, 2006, and before January 1,
2008, the amount deducted for certain expenses of elementary and secondary school
teachers under section 62(a)(2)(D) of the Internal Revenue Code, to the extent deducted
from gross income.
new text end

new text begin EFFECTIVE DATE. new text end

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

Sec. 4.

Minnesota Statutes 2006, section 290.01, subdivision 19c, is amended to read:

Subd. 19c.

Corporations; additions to federal taxable income.

For corporations,
there shall be added to federal taxable income:

(1) the amount of any deduction taken for federal income tax purposes for income,
excise, or franchise taxes based on net income or related minimum taxes, including but not
limited to the tax imposed under section 290.0922, paid by the corporation to Minnesota,
another state, a political subdivision of another state, the District of Columbia, or any
foreign country or possession of the United States;

(2) interest not subject to federal tax upon obligations of: the United States, its
possessions, its agencies, or its instrumentalities; the state of Minnesota or any other
state, any of its political or governmental subdivisions, any of its municipalities, or any
of its governmental agencies or instrumentalities; the District of Columbia; or Indian
tribal governments;

(3) exempt-interest dividends received as defined in section 852(b)(5) of the Internal
Revenue Code;

(4) the amount of any net operating loss deduction taken for federal income tax
purposes under section 172 or 832(c)(10) of the Internal Revenue Code or operations loss
deduction under section 810 of the Internal Revenue Code;

(5) the amount of any special deductions taken for federal income tax purposes
under sections 241 to 247 and 965 of the Internal Revenue Code;

(6) losses from the business of mining, as defined in section 290.05, subdivision 1,
clause (a), that are not subject to Minnesota income tax;

(7) the amount of any capital losses deducted for federal income tax purposes under
sections 1211 and 1212 of the Internal Revenue Code;

(8) the exempt foreign trade income of a foreign sales corporation under sections
921(a) and 291 of the Internal Revenue Code;

(9) the amount of percentage depletion deducted under sections 611 through 614 and
291 of the Internal Revenue Code;

(10) for certified pollution control facilities placed in service in a taxable year
beginning before December 31, 1986, and for which amortization deductions were elected
under section 169 of the Internal Revenue Code of 1954, as amended through December
31, 1985, the amount of the amortization deduction allowed in computing federal taxable
income for those facilities;

(11) the amount of any deemed dividend from a foreign operating corporation
determined pursuant to section 290.17, subdivision 4, paragraph (g);

(12) the amount of a partner's pro rata share of net income which does not flow
through to the partner because the partnership elected to pay the tax on the income under
section 6242(a)(2) of the Internal Revenue Code;

(13) the amount of net income excluded under section 114 of the Internal Revenue
Code;

(14) any increase in subpart F income, as defined in section 952(a) of the Internal
Revenue Code, for the taxable year when subpart F income is calculated without regard
to the provisions of section 103 of Public Law 109-222;

(15) 80 percent of the depreciation deduction allowed under section 168(k)(1)(A)
and (k)(4)(A) of the Internal Revenue Code. For purposes of this clause, if the taxpayer
has an activity that in the taxable year generates a deduction for depreciation under
section 168(k)(1)(A) and (k)(4)(A) and the activity generates a loss for the taxable year
that the taxpayer is not allowed to claim for the taxable year, "the depreciation allowed
under section 168(k)(1)(A) and (k)(4)(A)" for the taxable year is limited to excess of the
depreciation claimed by the activity under section 168(k)(1)(A) and (k)(4)(A) over the
amount of the loss from the activity that is not allowed in the taxable year. In succeeding
taxable years when the losses not allowed in the taxable year are allowed, the depreciation
under section 168(k)(1)(A) and (k)(4)(A) is allowed;

(16) 80 percent of the amount by which the deduction allowed by section 179 of the
Internal Revenue Code exceeds the deduction allowable by section 179 of the Internal
Revenue Code of 1986, as amended through December 31, 2003;

(17) to the extent deducted in computing federal taxable income, the amount of the
deduction allowable under section 199 of the Internal Revenue Code; deleted text begin and
deleted text end

(18) the exclusion allowed under section 139A of the Internal Revenue Code for
federal subsidies for prescription drug plans deleted text begin . deleted text end new text begin ; and
new text end

new text begin (19) for taxable years beginning after December 31, 2006, and before January 1,
2008, the additional amount allowed as a deduction for donation of computer technology
and equipment under section 170(e)(6) of the Internal Revenue Code, to the extent
deducted from taxable income.
new text end

new text begin EFFECTIVE DATE. new text end

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

Sec. 5.

Minnesota Statutes 2007 Supplement, section 290.01, subdivision 31, is
amended to read:

Subd. 31.

Internal Revenue Code.

Unless specifically defined otherwise, deleted text begin for
taxable years beginning before January 1, 2006, and after December 31, 2006, deleted text end "Internal
Revenue Code" means the Internal Revenue Code of 1986, as amended through deleted text begin May 18,
2006; and for taxable years beginning after December 31, 2005, and before January 1,
2007, "Internal Revenue Code" means the Internal Revenue Code of 1986, as amended
through December 31, 2006 deleted text end new text begin February 13, 2008 new text end .

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective the day following final enactment
except the changes incorporated by federal changes are effective at the same time as the
changes were effective for federal purposes.
new text end

Sec. 6.

Minnesota Statutes 2006, section 290.06, subdivision 2c, is amended to read:

Subd. 2c.

Schedules of rates for individuals, estates, and trusts.

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

(1) the numerator is the individual's Minnesota source federal adjusted gross income
as defined in section 62 of the Internal Revenue Code and increased by the additions
required under section 290.01, subdivision 19a, clauses (1), (5), (6), (7), (8), deleted text begin and deleted text end (9),
new text begin (11), and (12) new text end and reduced by the Minnesota assignable portion of the subtraction for
United States government interest under section 290.01, subdivision 19b, clause (1),
and the subtractions under section 290.01, subdivision 19b, clauses (9), (10), (14), (15),
and (16), after applying the allocation and assignability provisions of section 290.081,
clause (a), or 290.17; and

(2) the denominator is the individual's federal adjusted gross income as defined in
section 62 of the Internal Revenue Code of 1986, increased by the amounts specified in
section 290.01, subdivision 19a, clauses (1), (5), (6), (7), (8), deleted text begin and deleted text end (9), new text begin (11), and (12) new text end and
reduced by the amounts specified in section 290.01, subdivision 19b, clauses (1), (9),
(10), (14), (15), and (16).

new text begin EFFECTIVE DATE. new text end

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

Sec. 7.

Minnesota Statutes 2006, section 290.091, subdivision 2, is amended to read:

Subd. 2.

Definitions.

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

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

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

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

(i) the charitable contribution deduction under section 170 of the Internal Revenue
Code:

(A) for taxable years beginning before January 1, 2006, to the extent that the
deduction exceeds 1.0 percent of adjusted gross income;

(B) for taxable years beginning after December 31, 2005, to the full extent of the
deduction.

For purposes of this clause, "adjusted gross income" has the meaning given in
section 62 of the Internal Revenue Code;

(ii) the medical expense deduction;

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

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

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

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

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

(6) the amount of addition required by section 290.01, subdivision 19a, clauses
(7) deleted text begin , (8), and deleted text end new text begin to new text end (9) new text begin , (11), and (12) new text end ;

less the sum of the amounts determined under the following:

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

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

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

(4) amounts subtracted from federal taxable income as provided by section 290.01,
subdivision 19b, clauses (9) to (16).

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

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

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

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

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

new text begin EFFECTIVE DATE. new text end

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

Sec. 8.

Minnesota Statutes 2007 Supplement, section 290A.03, subdivision 15, is
amended to read:

Subd. 15.

Internal Revenue Code.

deleted text begin For taxable years beginning before January 1,
2006, and after December 31, 2006, deleted text end "Internal Revenue Code" means the Internal Revenue
Code of 1986, as amended through deleted text begin May 18, 2006; and for taxable years beginning after
December 31, 2005, and before January 1, 2007, "Internal Revenue Code" means the
Internal Revenue Code of 1986, as amended through December 31, 2006 deleted text end new text begin February 13,
2008 new text end .

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for property tax refunds based on
property taxes payable on or after December 31, 2007, and rent paid on or after December
31, 2006.
new text end

Sec. 9.

Minnesota Statutes 2006, section 291.005, subdivision 1, is amended to read:

Subdivision 1.

Scope.

Unless the context otherwise clearly requires, the following
terms used in this chapter shall have the following meanings:

(1) "Federal gross estate" means the gross estate of a decedent as valued and
otherwise determined for federal estate tax purposes by federal taxing authorities pursuant
to the provisions of the Internal Revenue Code.

(2) "Minnesota gross estate" means the federal gross estate of a decedent after (a)
excluding therefrom any property included therein which has its situs outside Minnesota,
and (b) including therein any property omitted from the federal gross estate which is
includable therein, has its situs in Minnesota, and was not disclosed to federal taxing
authorities.

(3) "Personal representative" means the executor, administrator or other person
appointed by the court to administer and dispose of the property of the decedent. If there
is no executor, administrator or other person appointed, qualified, and acting within this
state, then any person in actual or constructive possession of any property having a situs in
this state which is included in the federal gross estate of the decedent shall be deemed
to be a personal representative to the extent of the property and the Minnesota estate tax
due with respect to the property.

(4) "Resident decedent" means an individual whose domicile at the time of death
was in Minnesota.

(5) "Nonresident decedent" means an individual whose domicile at the time of
death was not in Minnesota.

(6) "Situs of property" means, with respect to real property, the state or country in
which it is located; with respect to tangible personal property, the state or country in which
it was normally kept or located at the time of the decedent's death; and with respect to
intangible personal property, the state or country in which the decedent was domiciled
at death.

(7) "Commissioner" means the commissioner of revenue or any person to whom the
commissioner has delegated functions under this chapter.

(8) "Internal Revenue Code" means the United States Internal Revenue Code of
1986, as amended through deleted text begin May 18, 2006 deleted text end new text begin February 13, 2008 new text end .

(9) "Minnesota adjusted taxable estate" means federal adjusted taxable estate as
defined by section 2011(b)(3) of the Internal Revenue Code, increased by the amount of
deduction for state death taxes allowed under section 2058 of the Internal Revenue Code.

new text begin EFFECTIVE DATE. new text end

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

ARTICLE 5

SALES AND USE TAX

Section 1.

Minnesota Statutes 2006, section 297A.668, is amended by adding a
subdivision to read:

new text begin Subd. 8. new text end

new text begin Manufactured and modular housing. new text end

new text begin (a) Notwithstanding other
subdivisions of this section, a sale of a manufactured or modular home shall be sourced to
the site where the housing is first set up or installed.
new text end

new text begin (b) For purposes of this section, "manufactured home" has the meaning given
in section 327.31, subdivision 6. For purposes of this section, "modular home" means
a building or structural unit that has been substantially manufactured or constructed,
in whole or in part, at an off-site location, with the final assembly occurring on-site
alone or with other units and attached to a permanent foundation site and occupied
as a single-family dwelling. Modular home construction must comply with applicable
standards adopted in Minnesota Rules authorized under chapter 16B. A modular home
does not include a structure subject to the requirements of the National Manufactured
Home Construction and Safety Standards Act of 1974 or a manufactured home.
new text end

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for sales and purchases made after
June 30, 2008.
new text end

Sec. 2.

Laws 1980, chapter 511, section 1, subdivision 2, as amended by Laws 1991,
chapter 291, article 8, section 22, and Laws 1998, chapter 389, article 8, section 25, and
Laws 2003, First Special Session chapter 21, article 8, section 11, is amended to read:

Subd. 2.

Notwithstanding Minnesota Statutes, Section 477A.016, or any other law,
ordinance, or city charter provision to the contrary, the city of Duluth may, by ordinance,
impose an additional sales tax of up to deleted text begin one and one-half deleted text end new text begin two and one-quarter new text end percent on
sales transactions which are described in Minnesota Statutes 2000, Section 297A.01,
Subdivision 3, Clause (c). When the city council determines that the taxes imposed
under this subdivision and under new text begin Laws 1998, chapter 389, article 8, new text end section 26 new text begin , new text end at a rate
of one-half of one percent have produced revenue sufficient to pay (1) the debt service
on bonds in a principal amount of $8,000,000 issued for capital improvements to the
Duluth Entertainment and Convention Center, and (2) debt service on outstanding bonds
originally issued in the principal amount of $4,970,000 to finance capital improvements
to the Great Lakes Aquarium since the imposition of the taxes at the rate of one and
one-half percent, the rate of the tax under this subdivision is reduced deleted text begin to deleted text end new text begin by one-half of new text end
one percent. The imposition of this tax shall not be subject to voter referendum under
either state law or city charter provisions. new text begin When the city council determines that the taxes
imposed under this subdivision at a rate of three-quarters of one percent and other sources
of revenue produce revenue sufficient to pay debt service on bonds in the principal amount
of $40,285,000 plus issuance and discount costs, issued for capital improvements at the
Duluth Entertainment and Convention Center, which include a new arena, the rate of tax
under this subdivision must be reduced by three-quarters of one percent.
new text end

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective the day after the governing body of
the city of Duluth and its chief clerical officer comply with Minnesota Statutes, section
645.021, subdivisions 2 and 3.
new text end

Sec. 3.

Laws 2005, First Special Session chapter 3, article 5, section 39, is amended to
read:

Sec. 39. CITY OF BEMIDJI.

Subdivision 1.

Sales and use tax authorized.

Notwithstanding Minnesota Statutes,
section 477A.016, or any other provision of law, ordinance, or city charter, pursuant to the
approval of the city voters at the general election held on November 5, 2002, new text begin and at the
general election held November 7, 2006, new text end the city of Bemidji may impose by ordinance
a sales and use tax of one-half of one percent for the purposes specified in subdivision
2. The provisions of Minnesota Statutes, section 297A.99, govern the imposition,
administration, collection, and enforcement of the tax authorized under this subdivision.

Subd. 2.

Use of revenues.

Revenues received from the tax authorized by
subdivision 1 must be used for the cost of collecting and administering the tax and to pay
new text begin for the projects listed in this subdivision:
new text end

new text begin (1) To pay new text end all or part of the capital or administrative costs of the acquisition,
construction, and improvement of parks and trails within the city, as provided for in the
city of Bemidji's parks, open space, and trail system plan, adopted by the Bemidji City
Council on November 21, 2001. Authorized expenses include, but are not limited to,
acquiring property, paying construction expenses related to the development of these
facilities and improvements, and securing and paying debt service on bonds or other
obligations issued to finance acquisition, construction, improvement, or development of
parks and trails within the city of Bemidji.

new text begin (2) To pay all or part of the city's share of costs, not to exceed $44,000,000, for
acquisition, design, and construction of a regional event center, plus any associated
bond costs. Authorized expenses include, but are not limited to, acquiring property,
paying demolition and construction expenses, improving associated infrastructure, and
purchasing furniture, fixtures, and equipment for the regional event center, and securing
and paying debt service on bonds or other obligations issued to finance the regional event
center project.
new text end

Subd. 3.

Bonds.

new text begin (a) new text end Pursuant to the approval of the city voters at the general
election held on November 5, 2002, the city of Bemidji may issue, without an additional
election, general obligation bonds of the city in an amount not to exceed $9,826,000 to
pay capital and administrative expenses for the acquisition, construction, improvement,
and development of parks and trails as specified in subdivision 2. The debt represented by
the bonds must not be included in computing any debt limitations applicable to the city,
and the levy of taxes required by Minnesota Statutes, section 475.61, to pay the principal
of any interest on the bonds must not be subject to any levy limitations or be included in
computing or applying any levy limitation applicable to the city.

new text begin (b) Pursuant to the approval of the city voters at the general election held on
November 7, 2006, the city of Bemidji may issue, without an additional election, general
obligation bonds of the city in an amount not to exceed $44,000,000 to pay capital and
administrative expenses for the construction of the regional event center specified in
subdivision 2. The debt represented by the bonds must not be included in computing
any debt limitations applicable to the city, and the levy of taxes required by Minnesota
Statutes, section , to pay the principal of any interest on the bonds must not be
subject to any levy limitations or be included in computing or applying any levy limitation
applicable to the city.
new text end

Subd. 4.

Termination of tax.

The tax imposed under subdivision 1 expires
when the Bemidji City Council determines that the amount described in subdivision 3 new text begin ,
paragraph (a), new text end has been received from the tax to finance the capital and administrative
costs for acquisition, construction, improvement, and development of parks and trails and
to repay or retire at maturity the principal, interest, and premium due on any bonds issued
for the park and trail improvements under subdivision 3 new text begin , paragraph (a), plus the earlier of
(1) 30 years after the tax extension to pay for the project in subdivision 2, clause (2), is
first imposed, or (2) when the city council first determines that the additional revenues
received from the extension of the tax equals or exceeds the amount authorized to be spent
for the regional event center under subdivision 2, clause (2) new text end . Any funds remaining after
completion of the deleted text begin park and trail improvements deleted text end new text begin authorized projects new text end and retirement or
redemption of the bonds may be placed in the general fund of the city. The tax imposed
under subdivision 1 may expire at an earlier time if the city so determines by ordinance.

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective the day after compliance by the
governing body of the city of Bemidji and its chief clerical officer with Minnesota
Statutes, section 645.021, subdivisions 2 and 3.
new text end

ARTICLE 6

JUNE ACCELERATED TAX PAYMENTS

Section 1.

Minnesota Statutes 2006, section 289A.20, subdivision 4, is amended to
read:

Subd. 4.

Sales and use tax.

(a) The taxes imposed by chapter 297A are due and
payable to the commissioner monthly on or before the 20th day of the month following the
month in which the taxable event occurred, or following another reporting period as the
commissioner prescribes or as allowed under section 289A.18, subdivision 4, paragraph
(f) or (g), except that use taxes due on an annual use tax return as provided under section
289A.11, subdivision 1, are payable by April 15 following the close of the calendar year.

(b) A vendor having a liability of $120,000 or more during a fiscal year ending June
30 must remit the June liability for the next year in the following manner:

(1) Two business days before June 30 of the year, the vendor must remit deleted text begin 78 deleted text end new text begin 80
new text end percent of the estimated June liability to the commissioner.

(2) On or before August 20 of the year, the vendor must pay any additional amount
of tax not remitted in June.

(c) A vendor having a liability of:

(1) $20,000 or more in the fiscal year ending June 30, 2005; or

(2) $10,000 or more in the fiscal year ending June 30, 2006, and fiscal years
thereafter,

must remit all liabilities on returns due for periods beginning in the subsequent calendar
year by electronic means on or before the 20th day of the month following the month in
which the taxable event occurred, or on or before the 20th day of the month following the
month in which the sale is reported under section 289A.18, subdivision 4, except for deleted text begin 78 deleted text end new text begin 80 new text end
percent of the estimated June liability, which is due two business days before June 30. The
remaining amount of the June liability is due on August 20.

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective beginning with June 2009 tax
liabilities.
new text end

Sec. 2.

Minnesota Statutes 2006, section 289A.60, subdivision 15, is amended to read:

Subd. 15.

Accelerated payment of June sales tax liability; penalty for
underpayment.

For payments made after December 31, 2006, if a vendor is required by
law to submit an estimation of June sales tax liabilities and deleted text begin 78 deleted text end new text begin 80 new text end percent payment by a
certain date, the vendor shall pay a penalty equal to ten percent of the amount of actual
June liability required to be paid in June less the amount remitted in June. The penalty
must not be imposed, however, if the amount remitted in June equals the lesser of deleted text begin 78 deleted text end new text begin 80
new text end percent of the preceding May's liability or deleted text begin 78 deleted text end new text begin 80 new text end percent of the average monthly liability
for the previous calendar year.

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective beginning with June 2009 tax
liabilities.
new text end

Sec. 3.

Minnesota Statutes 2006, section 297F.09, subdivision 10, is amended to read:

Subd. 10.

Accelerated tax payment; cigarette or tobacco products distributor.

A cigarette or tobacco products distributor having a liability of $120,000 or more during a
fiscal year ending June 30, shall remit the June liability for the next year in the following
manner:

(a) Two business days before June 30 of the year, the distributor shall remit the
actual May liability and deleted text begin 78 deleted text end new text begin 80 new text end percent of the estimated June liability to the commissioner
and file the return in the form and manner prescribed by the commissioner.

(b) On or before August 18 of the year, the distributor shall submit a return showing
the actual June liability and pay any additional amount of tax not remitted in June. A
penalty is imposed equal to ten percent of the amount of June liability required to be paid
in June, less the amount remitted in June. However, the penalty is not imposed if the
amount remitted in June equals the lesser of:

(1) deleted text begin 78 deleted text end new text begin 80 new text end percent of the actual June liability; or

(2) deleted text begin 78 deleted text end new text begin 80 new text end percent of the preceding May's liability.

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective beginning with June 2009 tax
liabilities.
new text end

Sec. 4.

Minnesota Statutes 2006, section 297G.09, subdivision 9, is amended to read:

Subd. 9.

Accelerated tax payment; penalty.

A person liable for tax under this
chapter having a liability of $120,000 or more during a fiscal year ending June 30, shall
remit the June liability for the next year in the following manner:

(a) Two business days before June 30 of the year, the taxpayer shall remit the actual
May liability and deleted text begin 78 deleted text end new text begin 80 new text end percent of the estimated June liability to the commissioner and file
the return in the form and manner prescribed by the commissioner.

(b) On or before August 18 of the year, the taxpayer shall submit a return showing
the actual June liability and pay any additional amount of tax not remitted in June. A
penalty is imposed equal to ten percent of the amount of June liability required to be paid
in June less the amount remitted in June. However, the penalty is not imposed if the
amount remitted in June equals the lesser of:

(1) deleted text begin 78 deleted text end new text begin 80 new text end percent of the actual June liability; or

(2) deleted text begin 78 deleted text end new text begin 80 new text end percent of the preceding May liability.

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective beginning with June 2009 tax
liabilities.
new text end

ARTICLE 7

SPECIAL TAXES

Section 1.

Minnesota Statutes 2006, section 291.215, subdivision 1, is amended to read:

Subdivision 1.

Determination.

All property includable in the Minnesota gross estate
of a decedent shall be valued in accordance with the provisions of sections 2031 or 2032
and, if applicable, 2032A, of the Internal Revenue Code and any elections made in valuing
the federal gross estate shall be applicable in valuing the Minnesota gross estate. deleted text begin Values
for purposes of the estate tax on both probate and nonprobate assets shall be the same as
those finally determined for purposes of the federal estate tax on a decedent's estate. deleted text end new text begin
The value of all property includable in the Minnesota gross estate of a decedent may be
independently determined under those sections for Minnesota estate tax purposes except:
new text end

new text begin (1) as otherwise provided in section 291.075; or
new text end

new text begin (2) if the Internal Revenue Service, after receiving the estate's federal estate tax
return, either conducts a separate appraisal of an asset reported on the return or proposes
a change in the reported valuation of an asset in the estate, in which case the federal
final determination of the value controls.
new text end

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective retroactively for estates of decedents
dying after December 31, 2006.
new text end

Sec. 2.

Minnesota Statutes 2006, section 296A.18, subdivision 4, is amended to read:

Subd. 4.

All-terrain vehicle.

Approximately deleted text begin 0.15 deleted text end new text begin 0.27 new text end of one percent of all gasoline
received in or produced or brought into this state, except gasoline used for aviation
purposes, is being used for the operation of all-terrain vehicles in this state, and of the total
revenue derived from the imposition of the gasoline fuel tax, deleted text begin 0.15 deleted text end new text begin 0.27 new text end of one percent is
the amount of tax on fuel used in all-terrain vehicles operated in this state.

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for revenue received after June
30, 2008.
new text end

Sec. 3.

Minnesota Statutes 2006, section 297F.21, subdivision 3, is amended to read:

Subd. 3.

Inventory; judicial determination; appeal; disposition of seized
property.

(a) Within ten days after the seizure of any alleged contraband, the person
making the seizure shall serve by certified mail an inventory of the property seized on the
person from whom the seizure was made, if known, and on any person known or believed
to have any right, title, interest, or lien in the property, at the last known address, and file
a copy with the commissioner. The notice must include an explanation of the right to
demand a judicial forfeiture determination.

(b) Within 60 days after the date of service of the inventory, which is the date of
mailing, the person from whom the property was seized or any person claiming an interest
in the property may file a demand for a judicial determination of the question as to whether
the property was lawfully subject to seizure and forfeiture. The demand must be in the
form of a civil complaint and must be filed with the court administrator in the county in
which the seizure occurred, together with proof of service of a copy of the complaint
on the commissioner of revenue, and the standard filing fee for civil actions unless the
petitioner has the right to sue in forma pauperis under section 563.01. If the value of the
seized property is $7,500 or less, the claimant may file an action in conciliation court for
recovery of the property. If the value of the seized property is less than $500, the claimant
does not have to pay the conciliation court filing fee.

(c) The complaint must be captioned in the name of the claimant as plaintiff and
the seized property as defendant, and must state with specificity the grounds on which
the claimant alleges the property was improperly seized and the plaintiff's interest in the
property seized. No responsive pleading is required of the commissioner, and no court
fees may be charged for the commissioner's appearance in the matter. The proceedings
are governed by the Rules of Civil Procedure. Notwithstanding any law to the contrary,
an action for the return of property seized under this section may not be maintained by
or on behalf of any person who has been served with an inventory unless the person has
complied with this subdivision. The court shall decide whether the alleged contraband is
contraband, as defined in subdivision 1. The court shall hear the action without a jury and
shall try and determine the issues of fact and law involved.

(d) When a judgment of forfeiture is entered, deleted text begin the commissioner may, deleted text end unless the
judgment is stayed pending an appeal, deleted text begin either deleted text end new text begin the commissioner new text end :

(1) deleted text begin deliver the forfeited cigarette packages or tobacco products to the commissioner
of human services for use by patients in state institutions deleted text end new text begin may authorize the forfeited
property to be used for the purpose of enforcing a criminal provision of state or federal law new text end ;

(2) new text begin shall new text end cause deleted text begin the property in clause (1) deleted text end new text begin forfeited cigarette packages or tobacco
products not used under clause (1) new text end to be destroyed deleted text begin ; or deleted text end new text begin and products used under clause (1)
to be destroyed upon the completion of use; and
new text end

(3) new text begin may new text end cause the forfeited property new text begin , other than forfeited cigarette packages or
tobacco products, new text end to be sold at public auction as provided by law.

The person making a sale, after deducting the expense of keeping the property, the fee
for seizure, and the costs of the sale, shall pay all liens according to their priority, which
are established as being bona fide and as existing without the lienor having any notice
or knowledge that the property was being used or was intended to be used for or in
connection with the violation. The balance of the proceeds must be paid 75 percent to the
Department of Revenue for deposit as a supplement to its operating fund or similar fund
for official use, and 25 percent to the county attorney or other prosecuting agency that
handled the court proceeding, if there is one, for deposit as a supplement to its operating
fund or similar fund for prosecutorial purposes. If there is no prosecuting authority
involved in the forfeiture, the 25 percent of the proceeds otherwise designated for the
prosecuting authority must be deposited into the general fund.

(e) If no demand for judicial determination is made, the property seized is considered
forfeited to the state by operation of law and may be disposed of by the commissioner as
provided in the case of a judgment of forfeiture.

new text begin EFFECTIVE DATE. new text end

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

Sec. 4.

Minnesota Statutes 2006, section 297I.15, is amended by adding a subdivision
to read:

new text begin Subd. 11. new text end

new text begin Premiums paid to certain foreign insurance companies. new text end

new text begin With respect
to the state employees group insurance program established under sections 43A.23 to
43A.31, premiums paid for life insurance and accidental death and dismemberment
insurance for eligible employees and dependents, including premiums paid by employees
or dependents for optional coverage, are exempt from the taxes imposed under this chapter
to the extent the premiums are paid to a foreign insurance company domiciled in a state
that exempts its state employee group life insurance program from premium taxes.
new text end

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for premiums paid after December
31, 2007.
new text end

Sec. 5.

Laws 2003, chapter 128, article 1, section 172, as amended by Laws 2005, First
Special Session chapter 1, article 4, section 118, is amended to read:

Sec. 172. TEMPORARY PETROFUND FEE EXEMPTION FOR
MINNESOTA COMMERCIAL AIRLINES.

(a) A commercial airline providing regularly scheduled jet service and with its
corporate headquarters in Minnesota is exempt from the fee established in Minnesota
Statutes, section 115C.08, subdivision 3, until July 1, deleted text begin 2007 deleted text end new text begin 2009 new text end , provided the airline
develops a plan approved by the commissioner of commerce demonstrating that the
savings from this exemption will go towards minimizing job losses in Minnesota, and to
support the airline's efforts to deleted text begin avoid filing for deleted text end new text begin resolve new text end federal bankruptcy deleted text begin protections deleted text end new text begin
proceedings new text end .

(b) A commercial airline exempted from the fee is ineligible to receive
reimbursement under Minnesota Statutes, chapter 115C, until July 1, deleted text begin 2007 deleted text end new text begin 2009 new text end . A
commercial airline that has a release during the fee exemption period is ineligible to
receive reimbursement under Minnesota Statutes, chapter 115C, for the costs incurred in
response to that release.

new text begin EFFECTIVE DATE. new text end

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

ARTICLE 8

MINERALS

Section 1.

Minnesota Statutes 2006, section 276A.01, subdivision 3, is amended to
read:

Subd. 3.

Commercial-industrial property.

"Commercial-industrial property"
means the following categories of property, as defined in section 273.13, excluding that
portion of the property (i) that may, by law, constitute the tax base for a tax increment
pledged pursuant to section 469.042 or 469.162 or sections 469.174 to 469.178,
certification of which was requested prior to May 1, 1996, to the extent and while the tax
increment is so pledged; or (ii) that is exempt from taxation under section 272.02:

(1) that portion of class 5 property consisting of unmined iron ore and low-grade
iron-bearing formations as defined in section 273.14, tools, implements, and machinery,
except the portion of high voltage transmission lines, the value of which is deducted from
net tax capacity under section 273.425; and

(2) that portion of class 3 and class 5 property which is either used or zoned for use
for any commercial or industrial purpose, new text begin including property that becomes taxable under
section 6, new text end except for such property which is, or, in the case of property under construction,
will when completed be used exclusively for residential occupancy and the provision of
services to residential occupants thereof. Property must be considered as used exclusively
for residential occupancy only if each of not less than 80 percent of its occupied residential
units is, or, in the case of property under construction, will when completed be occupied
under an oral or written agreement for occupancy over a continuous period of not less
than 30 days.

If the classification of property prescribed by section 273.13 is modified by
legislative amendment, the references in this subdivision are to the successor class or
classes of property, or portions thereof, that include the kinds of property designated
in this subdivision.

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for the 2008 assessment and
thereafter.
new text end

Sec. 2.

Minnesota Statutes 2006, section 276A.04, is amended to read:

276A.04 INCREASE IN NET TAX CAPACITY.

By July 15 of 1997 and each subsequent year, the auditor of each county in the
area shall determine the amount, if any, by which the net tax capacity determined in the
preceding year pursuant to section 276A.03, of commercial-industrial property subject to
taxation within each municipality in the county exceeds the net tax capacity in 1995 of
commercial-industrial property subject to taxation within that municipality new text begin , including the
total net tax capacity of property that becomes taxable under section 6 new text end . If a municipality is
located in two or more counties within the area, the auditors of those counties shall certify
the data required by section 276A.03 to the county auditor responsible for allocating
the levies of that municipality between or among the affected counties. That county
auditor shall determine the amount of the net excess, if any, for the municipality under
this section, and certify that amount under section 276A.05. The increase in total net tax
capacity determined by this section must be reduced by the amount of any decreases in
the net tax capacity of commercial-industrial property resulting from any court decisions,
court-related stipulation agreements, or abatements for a prior year, and only in the
amount of such decreases made during the 12-month period ending on May 1 of the
current assessment year, where the decreases, if originally reflected in the determination of
a prior year's net tax capacity under section 276A.03, would have resulted in a smaller
contribution from the municipality in that year. An adjustment for the decreases shall be
made only if the municipality made a contribution in a prior year based on the higher net
tax capacity of the commercial-industrial property.

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for the 2008 assessment and
thereafter.
new text end

Sec. 3.

Minnesota Statutes 2006, section 298.22, is amended by adding a subdivision
to read:

new text begin Subd. 5a. new text end

new text begin Forest trust. new text end

new text begin The commissioner, upon the affirmative vote of a majority
of the members of the board, may purchase forest lands in the taconite assistance area
defined in under section 273.1341 with funds specifically authorized for the purchase. The
acquired forest lands must be held in trust for the benefit of the citizens of the taconite
assistance area as the Iron Range Miners' Memorial Forest. The forest trust lands shall be
managed and developed for recreation and economic development purposes. Proceeds
derived from the management of the lands and from the sale of timber or removal of
gravel or other minerals from these forest lands shall be deposited into an Iron Range
Miners' Memorial Forest account that is established within the state financial accounts.
Funds may be expended from the account upon approval of a majority of the members of
the board to purchase, manage, administer, convey interests in, and improve the forest
lands. By majority vote of the members of the board, money in the Iron Range Miners'
Memorial Forest account may be transferred into the corpus of the Douglas J. Johnson
economic protection trust fund established under sections 298.291 to 298.294. The
property acquired under the authority granted by this subdivision and income derived from
the property or the operation or management of the property are exempt from taxation
by the state or its political subdivisions.
new text end

new text begin EFFECTIVE DATE. new text end

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

Sec. 4.

Minnesota Statutes 2006, section 298.2214, subdivision 2, is amended to read:

Subd. 2.

new text begin Iron Range Higher Education Committee; new text end membership.

The members
of the committee shall consist of:

(1) one member appointed by the governor;

(2) one member appointed by the president of the University of Minnesota;

(3) deleted text begin two deleted text end new text begin four new text end members deleted text begin appointed by the commissioner deleted text end of new text begin the new text end Iron Range Resources
and Rehabilitation new text begin Board appointed by the chair new text end ; deleted text begin and
deleted text end

(4) the commissioner of Iron Range resources and rehabilitation new text begin ; and
new text end

new text begin (5) the president of the Northeast Higher Education District or its successor new text end .

Sec. 5.

Minnesota Statutes 2006, section 298.24, subdivision 1, is amended to read:

Subdivision 1.

Imposed; calculation.

(a) For concentrate produced in 2001, 2002,
and 2003, there is imposed upon taconite and iron sulphides, and upon the mining and
quarrying thereof, and upon the production of iron ore concentrate therefrom, and upon
the concentrate so produced, a tax of $2.103 per gross ton of merchantable iron ore
concentrate produced therefrom. For concentrates produced in 2005, the tax rate is the
same rate imposed for concentrates produced in 2004.

(b) For concentrates produced in 2006 and subsequent years, the tax rate shall be
equal to the preceding year's tax rate plus an amount equal to the preceding year's tax rate
multiplied by the percentage increase in the implicit price deflator from the fourth quarter
of the second preceding year to the fourth quarter of the preceding year. "Implicit price
deflator" means the implicit price deflator for the gross domestic product prepared by the
Bureau of Economic Analysis of the United States Department of Commerce.

(c) On concentrates produced in 1997 and thereafter, an additional tax is imposed
equal to three cents per gross ton of merchantable iron ore concentrate for each one
percent that the iron content of the product exceeds 72 percent, when dried at 212 degrees
Fahrenheit.

(d) The tax shall be imposed on the average of the production for the current year
and the previous two years. The rate of the tax imposed will be the current year's tax rate.
This clause shall not apply in the case of the closing of a taconite facility if the property
taxes on the facility would be higher if this clause and section 298.25 were not applicable.

(e) If the tax or any part of the tax imposed by this subdivision is held to be
unconstitutional, a tax of $2.103 per gross ton of merchantable iron ore concentrate
produced shall be imposed.

(f) Consistent with the intent of this subdivision to impose a tax based upon the
weight of merchantable iron ore concentrate, the commissioner of revenue may indirectly
determine the weight of merchantable iron ore concentrate included in fluxed pellets by
subtracting the weight of the limestone, dolomite, or olivine derivatives or other basic
flux additives included in the pellets from the weight of the pellets. For purposes of this
paragraph, "fluxed pellets" are pellets produced in a process in which limestone, dolomite,
olivine, or other basic flux additives are combined with merchantable iron ore concentrate.
No subtraction from the weight of the pellets shall be allowed for binders, mineral and
chemical additives other than basic flux additives, or moisture.

(g)(1) Notwithstanding any other provision of this subdivision, for the first two years
of a plant's commercial production of direct reduced ore, no tax is imposed under this
section. As used in this paragraph, "commercial production" is production of more than
50,000 tons of direct reduced ore in the current year or in any prior year, "noncommercial
production" is production of 50,000 tons or less of direct reduced ore in any year, and
"direct reduced ore" is ore that results in a product that has an iron content of at least 75
percent. For the third year of a plant's commercial production of direct reduced ore, the
rate to be applied to direct reduced ore is 25 percent of the rate otherwise determined
under this subdivision. For the fourth commercial production year, the rate is 50 percent of
the rate otherwise determined under this subdivision; for the fifth commercial production
year, the rate is 75 percent of the rate otherwise determined under this subdivision; and for
all subsequent commercial production years, the full rate is imposed.

(2) Subject to clause (1), production of direct reduced ore in this state is subject to
the tax imposed by this section, but if that production is not produced by a producer
of taconite or iron sulfides, the production of taconite or iron sulfides consumed in the
production of direct reduced iron in this state is not subject to the tax imposed by this
section on taconite or iron sulfides.

(3) Notwithstanding any other provision of this subdivision, no tax is imposed
on direct reduced ore under this section during the facility's noncommercial production
of direct reduced ore. The taconite or iron sulphides consumed in the noncommercial
production of direct reduced ore is subject to the tax imposed by this section on taconite
and iron sulphides. Three-year average production of direct reduced ore does not
include production of direct reduced ore in any noncommercial year. Three-year average
production for a direct reduced ore facility that has noncommercial production is the
average of the commercial production of direct reduced ore for the current year and the
previous two commercial years.

new text begin (4) This paragraph applies only to plants for which all environmental permits have
been obtained and construction has begun before July 1, 2008.
new text end

new text begin EFFECTIVE DATE. new text end

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

Sec. 6.

Minnesota Statutes 2006, section 298.25, is amended to read:

298.25 TAXES ADDITIONAL TO OCCUPATION TAX; IN LIEU OF OTHER
TAXES.

The taxes imposed under section 298.24 shall be in addition to the occupation tax
imposed upon the business of mining and producing iron ore. Except as herein otherwise
provided, such taxes shall be in lieu of all other taxes upon such taconite, iron sulphides,
and direct reduced ore or the lands in which they are contained, or upon the mining or
quarrying thereof, or the production of concentrate or direct reduced ore therefrom, or
upon the concentrate or direct reduced ore produced, or upon the machinery, equipment,
tools, supplies and buildings used in such mining, quarrying or production, or upon the
lands occupied by, or used in connection with, such mining, quarrying or production
facilities. If electric or steam power for the mining, transportation or concentration of
such taconite, concentrates or direct reduced ore produced therefrom is generated in
plants principally devoted to the generation of power for such purposes, the plants in
which such power is generated and all machinery, equipment, tools, supplies, transmission
and distribution lines used in the generation and distribution of such power, shall new text begin not new text end be
considered to be machinery, equipment, tools, supplies and buildings used in the mining,
quarrying, or production of taconite, taconite concentrates or direct reduced ore within
the meaning of this section new text begin , and shall be subject to general property taxation new text end . deleted text begin If part
of the power generated in such a plant is used for purposes other than the mining or
concentration of taconite or direct reduced ore or the transportation or loading of taconite,
the concentrates thereof or direct reduced ore, a proportionate share of the value of such
generating facilities, equal to the proportion that the power used for such other purpose
bears to the generating capacity of the plant, shall be subject to the general property tax
in the same manner as other property; provided, power generated in such a plant and
exchanged for an equivalent amount of power which is used for the mining, transportation,
or concentration of such taconite, concentrates or direct reduced ore produced therefrom,
shall be considered as used for such purposes within the meaning of this section. deleted text end Nothing
herein shall prevent the assessment and taxation of the surface of reserve land containing
taconite and not occupied by such facilities or used in connection therewith at the value
thereof without regard to the taconite or iron sulphides therein, nor the assessment and
taxation of merchantable iron ore or other minerals, or iron-bearing materials other than
taconite or iron sulphides in such lands in the manner provided by law, nor the assessment
and taxation of facilities used in producing sulphur or sulphur products from iron sulphide
concentrates, or in refining such sulphur products, under the general property tax laws.
Nothing herein shall except from general taxation or from taxation as provided by other
laws any property used for residential or townsite purposes, including utility services
thereto. new text begin This section does not provide an exemption from general property taxation for ore
docks even if located at the site of a taconite production facility. new text end

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for taxes levied in 2008, payable
in 2009, and thereafter.
new text end

Sec. 7.

Minnesota Statutes 2006, section 298.28, subdivision 4, is amended to read:

Subd. 4.

School districts.

(a) cents per taxable ton new text begin , new text end plus the increase
provided in paragraph (d) must be allocated to qualifying school districts to be distributed,
based upon the certification of the commissioner of revenue, under paragraphs (b) deleted text begin and deleted text end new text begin , new text end
(c), deleted text begin except as otherwise provided in paragraph deleted text end new text begin and new text end (f).

(b) new text begin (i) new text end 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.

new text begin (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:
new text end

new text begin (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;
new text end

new text begin (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;
new text end

new text begin (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;
new text end

new text begin (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
new text end

new text begin (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.
new text end

new text begin 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.
new text end

(c)(i) new text begin 15.72 new text end 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 net tax capacity 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 net tax capacity 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; 298.23 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).

(d) 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 the second previous year.

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 or for outcome-based
learning programs that enhance the academic quality of the district's curriculum. The
outcome-based learning programs must be approved by the commissioner of education.

(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) deleted text begin Effective for the distribution in 2003 only, five percent of the distributions to
school districts under paragraphs (b), (c), and (e); subdivision 6, paragraph (c); subdivision
11; and section 298.225, shall be distributed to the general fund. The remainder less any
portion distributed to cities and towns under section 126C.48, subdivision 8, paragraph
(5), shall be distributed to the Douglas J. Johnson economic protection trust fund created
in section 298.292. Fifty percent of the amount distributed to the Douglas J. Johnson
economic protection trust fund shall be made available for expenditure under section
298.293 as governed by section 298.296. Effective in 2003 only, 100 percent of the
distributions to school districts under section 477A.15 less any portion distributed to cities
and towns under section 126C.48, subdivision 8, paragraph (5), shall be distributed to the
general fund. deleted text end new text begin Four cents per taxable ton must be distributed to qualifying school districts
according to the distribution specified in paragraph (b), clause (ii), and two 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.
new text end

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for distributions in 2009 and
thereafter.
new text end

Sec. 8.

Minnesota Statutes 2006, section 298.28, subdivision 5, is amended to read:

Subd. 5.

Counties.

(a) 26.05 cents per taxable ton is allocated to counties to be
distributed, based upon certification by the commissioner of revenue, under paragraphs
(b) to (d).

(b) deleted text begin 20.525 deleted text end new text begin 15.525 new text end cents per taxable ton shall be distributed to the county in which
the taconite is mined or quarried or in which the concentrate is produced, less any
amount which is to be distributed pursuant to paragraph (c). The apportionment formula
prescribed in subdivision 2 is the basis for the distribution.

(c) If an electric power plant owned by and providing the primary source of power
for a taxpayer mining and concentrating taconite is located in a county other than the
county in which the mining and the concentrating processes are conducted, one cent per
taxable ton of the tax distributed to the counties pursuant to paragraph (b) and imposed
on and collected from such taxpayer shall be paid to the county in which the power plant
is located.

(d) deleted text begin 5.525 deleted text end new text begin 10.525 new text end cents per taxable ton shall be paid to the county from which the
taconite was mined, quarried or concentrated to be deposited in the county road and
bridge fund. If the mining, quarrying and concentrating, or separate steps in any of those
processes are carried on in more than one county, the commissioner shall follow the
apportionment formula prescribed in subdivision 2.

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for distributions in 2009 and
thereafter.
new text end

Sec. 9.

Minnesota Statutes 2006, section 298.28, is amended by adding a subdivision
to read:

new text begin Subd. 9d. new text end

new text begin Iron Range higher education account. new text end

new text begin Two cents per taxable ton must
be allocated to the Iron Range Resources and Rehabilitation Board to be deposited in
an Iron Range higher education account that is hereby created, to be used for higher
education programs conducted at educational institutions in the taconite assistance area
defined in section 273.1341. The Iron Range Higher Education committee under section
298.2214 and the Iron Range Resources and Rehabilitation Board must approve all
expenditures from the account.
new text end

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for production in 2007, distributions
in 2008, and thereafter.
new text end

Sec. 10.

Minnesota Statutes 2006, section 298.282, subdivision 1, is amended to read:

Subdivision 1.

Distribution of taconite municipal aid account.

The amount
deposited with the county as provided in section 298.28, subdivision 3, must be distributed
as provided by this section among new text begin : (1) new text end the municipalities comprising a tax relief area
under section 273.134, paragraph (b) deleted text begin , deleted text end new text begin ; (2) a township that contains a state park consisting
primarily of an underground iron ore mine; and (3) a city located within five miles of that
state park, new text end each being referred to in this section as a qualifying municipality.

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for distributions in 2008 and
thereafter.
new text end

Sec. 11.

Minnesota Statutes 2006, section 298.292, subdivision 2, is amended to read:

Subd. 2.

Use of money.

Money in the Douglas J. Johnson economic protection trust
fund may be used for the following purposes:

(1) to provide loans, loan guarantees, interest buy-downs and other forms of
participation with private sources of financing, but a loan to a private enterprise shall be
for a principal amount not to exceed one-half of the cost of the project for which financing
is sought, and the rate of interest on a loan to a private enterprise shall be no less than the
lesser of eight percent or an interest rate three percentage points less than a full faith
and credit obligation of the United States government of comparable maturity, at the
time that the loan is approved;

(2) to fund reserve accounts established to secure the payment when due of the
principal of and interest on bonds issued pursuant to section 298.2211;

(3) to pay in periodic payments or in a lump sum payment any or all of the interest
on bonds issued pursuant to chapter 474 for the purpose of constructing, converting,
or retrofitting heating facilities in connection with district heating systems or systems
utilizing alternative energy sources; deleted text begin and
deleted text end

(4) to invest in a venture capital fund or enterprise that will provide capital to other
entities that are engaging in, or that will engage in, projects or programs that have the
purposes set forth in subdivision 1. No investments may be made in a venture capital fund
or enterprise unless at least two other unrelated investors make investments of at least
$500,000 in the venture capital fund or enterprise, and the investment by the Douglas
J. Johnson economic protection trust fund may not exceed the amount of the largest
investment by an unrelated investor in the venture capital fund or enterprise. For purposes
of this subdivision, an "unrelated investor" is a person or entity that is not related to
the entity in which the investment is made or to any individual who owns more than 40
percent of the value of the entity, in any of the following relationships: spouse, parent,
child, sibling, employee, or owner of an interest in the entity that exceeds ten percent of
the value of all interests in it. For purposes of determining the limitations under this
clause, the amount of investments made by an investor other than the Douglas J. Johnson
economic protection trust fund is the sum of all investments made in the venture capital
fund or enterprise during the period beginning one year before the date of the investment
by the Douglas J. Johnson economic protection trust fund new text begin ; and
new text end

new text begin (5) to purchase forest land in the taconite assistance area defined in section 273.1341
to be held and managed as a public trust for the benefit of the area for the purposes
authorized in section 298.22, subdivision 5a new text end .

Money from the trust fund shall be expended only in or for the benefit of the taconite
assistance area defined in section 273.1341.

new text begin EFFECTIVE DATE. new text end

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

Sec. 12.

Minnesota Statutes 2006, section 298.296, subdivision 2, is amended to read:

Subd. 2.

Expenditure of funds.

(a) Before January 1, 2028, funds may be expended
on projects and for administration of the trust fund only from the net interest, earnings,
and dividends arising from the investment of the trust at any time, including net interest,
earnings, and dividends that have arisen prior to July 13, 1982, plus $10,000,000 made
available for use in fiscal year 1983, except that any amount required to be paid out of the
trust fund to provide the property tax relief specified in Laws 1977, chapter 423, article
X, section 4, and to make school bond payments and payments to recipients of taconite
production tax proceeds pursuant to section 298.225, may be taken from the corpus of
the trust.

(b) Additionally, upon recommendation by the board, up to $13,000,000 from the
corpus of the trust may be made available for use as provided in subdivision 4, and up to
$10,000,000 from the corpus of the trust may be made available for use as provided in
section 298.2961.

(c) Additionally, an amount equal to 20 percent of the value of the corpus of the trust
on May 18, 2002, not including the funds authorized in paragraph (b), plus the amounts
made available under section 298.28, subdivision 4, and Laws 2002, chapter 377, article
8, section 17, may be expended on projects. Funds may be expended for projects under
this paragraph only if the project:

(1) is for the purposes established under section 298.292, subdivision 1, clause
(1) or (2); and

(2) is approved by the board upon an affirmative vote of at least ten of its members.

No money made available under this paragraph or paragraph (d) can be used for
administrative or operating expenses of the Iron Range Resources and Rehabilitation
Board or expenses relating to any facilities owned or operated by the board on May 18,
2002.

(d) Upon recommendation by a unanimous vote of all members of the board,
amounts in addition to those authorized under paragraphs (a), (b), and (c) may be
expended on projects described in section 298.292, subdivision 1.

(e) Annual administrative costs, not including detailed engineering expenses for the
projects, shall not exceed five percent of the net interest, dividends, and earnings arising
from the trust in the preceding fiscal year.

(f) Principal and interest received in repayment of loans made pursuant to this
section, and earnings on other investments made under section 298.292, subdivision 2,
clause (4), shall be deposited in the state treasury and credited to the trust. These receipts
are appropriated to the board for the purposes of sections 298.291 to 298.298.

new text begin (g) Additionally, notwithstanding section 298.293, upon affirmative vote of a
majority of the members of the board, money from the corpus of the trust may be expanded
to purchase forest lands within the taconite assistance area as provided in sections 298.22,
subdivision 5a, and 298.292, subdivision 2, clause (5).
new text end

new text begin EFFECTIVE DATE. new text end

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

Sec. 13.

Minnesota Statutes 2006, section 298.2961, subdivision 4, is amended to read:

Subd. 4.

Grant and loan fund.

(a) A fund is established to receive distributions
under section 298.28, subdivision 9b, and to make grants or loans as provided in this
subdivision. Any grant or loan made under this subdivision must be approved by
a majority of the members of the Iron Range Resources and Rehabilitation Board,
established under section 298.22.

(b) Distributions received in calendar year 2005 are allocated to the city of Virginia
for improvements and repairs to the city's steam heating system.

(c) Distributions received in calendar year 2006 are allocated to a project of the
public utilities commissions of the cities of Hibbing and Virginia to convert their electrical
generating plants to the use of biomass products, such as wood.

(d) Distributions received in calendar year 2007 must be paid to the city of Tower to
be used for the East Two Rivers project in or near the city of Tower.

(e) For distributions received in 2008, the first $2,000,000 of the 2008 distribution
must be paid to St. Louis County for deposit in its county road and bridge fund to be
used for relocation of St. Louis County Road 715, commonly referred to as Pike River
Road. The remainder of the 2008 distribution deleted text begin and the full amount of the distributions deleted text end new text begin
must be paid to St. Louis County for a grant to the city of Virginia for connecting sewer
and water lines to the St. Louis County maintenance garage on Highway 135, further
extending the lines to interconnect with the city of Gilbert's sewer and water lines. All
distributions received new text end in 2009 and subsequent years deleted text begin is deleted text end new text begin are new text end allocated for projects under
section 298.223, subdivision 1.

new text begin EFFECTIVE DATE. new text end

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

Sec. 14.

Minnesota Statutes 2006, section 298.2961, subdivision 5, is amended to read:

Subd. 5.

Public works and local economic development fund.

For distributions in
2007 only, a special fund is established to receive 38.4 cents per ton that otherwise would
be allocated under section 298.28, subdivision 6. The following amounts are allocated to
St. Louis County acting as the fiscal agent for the recipients for the specific purposes:

(1) 13.4 cents per ton for the Central Iron Range Sanitary Sewer District for
construction of a combined wastewater facility new text begin and notwithstanding section 298.28,
subdivision 11, paragraph (a), or any other law, interest accrued on this money while held
by St. Louis County shall also be distributed to the recipient new text end ;

(2) six cents per ton to the city of Eveleth to redesign and design and construct
improvements to renovate its water treatment facility;

(3) one cent per ton for the East Range Joint Powers Board to acquire land for and to
design a central wastewater collection and treatment system;

(4) 0.5 cents per ton to the city of Hoyt Lakes to repair Leeds Road;

(5) 0.7 cents per ton to the city of Virginia to extend Eighth Street South;

(6) 0.7 cents per ton to the city of Mountain Iron to repair Hoover Road;

(7) 0.9 cents per ton to the city of Gilbert for alley repairs between Michigan and
Indiana Avenues and for repayment of a loan to the Minnesota Department of Employment
and Economic Development;

(8) 0.4 cents per ton to the city of Keewatin for a new city well;

(9) 0.3 cents per ton to the city of Grand Rapids for planning for a fire and hazardous
materials center;

(10) 0.9 cents per ton to Aitkin County Growth for an economic development
project for peat harvesting;

(11) 0.4 cents per ton to the city of Nashwauk to develop a comprehensive city plan;

(12) 0.4 cents per ton to the city of Taconite for development of a city comprehensive
plan;

(13) 0.3 cents per ton to the city of Marble for water and sewer infrastructure;

(14) 0.8 cents per ton to Aitkin County for improvements to the Long Lake
Environmental Learning Center;

(15) 0.3 cents per ton to the city of Coleraine for the Coleraine Technology Center;

(16) 0.5 cents per ton to the Economic Development Authority of the city of Grand
Rapids for planning for the North Central Research and Technology Laboratory;

(17) 0.6 cents per ton to the city of Bovey for sewer and water extension;

(18) 0.3 cents per ton to the city of Calumet for infrastructure improvements; and

(19) ten cents per ton to deleted text begin an economic development authority in a city through which
State Highway 1 passes, or a city in Independent School District No. 2142 that has an
active mine, deleted text end new text begin the commissioner of Iron Range Resources and Rehabilitation for deposit
in a Highway 1 Corridor Account established by the commissioner, to be distributed by
the commissioner to any of the cities of Babbitt, Cook, Ely, or Tower, new text end for deleted text begin an deleted text end economic
development deleted text begin project deleted text end new text begin projects new text end approved by the Iron Range Resources and Rehabilitation
Board new text begin ; notwithstanding section 298.28, subdivision 11, paragraph (a), or any other law,
interest accrued on this money while held by St. Louis County or the commissioner
shall also be distributed to the recipient new text end .

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for distributions made in 2008 and
thereafter.
new text end

Sec. 15.

Minnesota Statutes 2006, section 298.75, subdivision 1, is amended to read:

Subdivision 1.

Definitions.

Except as may otherwise be provided, the following
words, when used in this section, shall have the meanings herein ascribed to them.

deleted text begin (1) deleted text end new text begin (a) new text end "Aggregate material" deleted text begin shall mean deleted text end new text begin means:
new text end

new text begin (1) new text end nonmetallic natural mineral aggregate including, but not limited to sand, silica
sand, gravel, crushed rock, limestone, granite, and borrow, but only if the borrow is
transported on a public road, street, or highway deleted text begin . deleted text end new text begin , provided that nonmetallic new text end aggregate
material deleted text begin shall deleted text end new text begin does new text end not include dimension stone and dimension granite new text begin ; and
new text end

new text begin (2) taconite tailings, crushed rock, and architectural or dimension stone and
dimension granite removed from a taconite mine or the site of a previously operated
taconite mine new text end .

Aggregate material must be measured or weighed after it has been extracted from
the pit, quarry, or deposit.

deleted text begin (2) deleted text end new text begin (b) new text end "Person" deleted text begin shall mean deleted text end new text begin means new text end any individual, firm, partnership, corporation,
organization, trustee, association, or other entity.

deleted text begin (3) deleted text end new text begin (c) new text end "Operator" deleted text begin shall mean deleted text end new text begin means new text end any person engaged in the business of removing
aggregate material from the surface or subsurface of the soil, for the purpose of sale,
either directly or indirectly, through the use of the aggregate material in a marketable
product or service.

deleted text begin (4) deleted text end new text begin (d) new text end "Extraction site" deleted text begin shall mean deleted text end new text begin means new text end a pit, quarry, or deposit containing
aggregate material and any contiguous property to the pit, quarry, or deposit which is used
by the operator for stockpiling the aggregate material.

deleted text begin (5) deleted text end new text begin (e) new text end "Importer" deleted text begin shall mean deleted text end new text begin means new text end any person who buys aggregate material
produced from a county not listed in paragraph deleted text begin (6) deleted text end new text begin (f) new text end or another state and causes the
aggregate material to be imported into a county in this state which imposes a tax on
aggregate material.

deleted text begin (6) deleted text end new text begin (f) new text end "County" deleted text begin shall mean deleted text end new text begin means new text end the counties of Pope, Stearns, Benton, Sherburne,
Carver, Scott, Dakota, Le Sueur, Kittson, Marshall, Pennington, Red Lake, Polk, Norman,
Mahnomen, Clay, Becker, Carlton, St. Louis, Rock, Murray, Wilkin, Big Stone, Sibley,
Hennepin, Washington, Chisago, and Ramsey. County also means any other county whose
board has voted after a public hearing to impose the tax under this section and has notified
the commissioner of revenue of the imposition of the tax.

deleted text begin (7) deleted text end new text begin (g) new text end "Borrow" deleted text begin shall mean deleted text end new text begin means new text end granular borrow, consisting of durable particles
of gravel and sand, crushed quarry or mine rock, crushed gravel or stone, or any
combination thereof, the ratio of the portion passing the (#200) sieve divided by the
portion passing the (1 inch) sieve may not exceed 20 percent by mass.

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for aggregate material removed
beginning June 1, 2008.
new text end

Sec. 16.

Minnesota Statutes 2006, section 298.75, subdivision 3, is amended to read:

Subd. 3.

Report and remittance.

new text begin (a) new text end By the 14th day following the last day of each
calendar quarter, every operator or importer shall make and file with the county auditor of
the county in which the aggregate material is removed or imported, a correct report under
oath, in such form and containing such information as the auditor shall require relative to
the quantity of aggregate material removed or imported during the preceding calendar
quarter. The report shall be accompanied by a remittance of the amount of tax due.

new text begin (b) new text end If any of the proceeds of the tax is to be apportioned as provided in subdivision
2, the operator or importer shall also include on the report any relevant information
concerning the amount of aggregate material transported, the tax and the county of
destination. The county auditor shall notify the county treasurer of the amount of such
tax and the county to which it is due. The county treasurer shall remit the tax to the
appropriate county within 30 days new text begin , except as provided in paragraph (c) new text end .

new text begin (c) The proceeds of the tax on aggregate material as defined in subdivision 1,
paragraph (a), clause (2), must be remitted to the commissioner of iron range resources
and rehabilitation to be deposited in the taconite area environmental protection fund under
section 298.223, and used for the purposes of that fund.
new text end

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for aggregate material removed
beginning June 1, 2008.
new text end

Sec. 17.

Minnesota Statutes 2006, section 298.75, subdivision 7, is amended to read:

Subd. 7.

Proceeds of taxes.

All money collected as taxes under this section new text begin on
aggregate material as defined in subdivision 1, paragraph (a), clause (1), new text end shall be deposited
in the county treasury and credited as follows, for expenditure by the county board:

(a) Sixty percent to the county road and bridge fund for expenditure for the
maintenance, construction and reconstruction of roads, highways and bridges;

(b) Thirty percent to the road and bridge fund of those towns as determined by the
county board and to the general fund or other designated fund of those cities as determined
by the county board, to be expended for maintenance, construction and reconstruction of
roads, highways and bridges; and

(c) Ten percent to a special reserve fund which is hereby established, for expenditure
for the restoration of abandoned pits, quarries, or deposits located upon public and tax
forfeited lands within the county.

If there are no abandoned pits, quarries or deposits located upon public or tax
forfeited lands within the county, this portion of the tax shall be deposited in the county
road and bridge fund for expenditure for the maintenance, construction and reconstruction
of roads, highways and bridges.

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for aggregate material removed
beginning June 1, 2008.
new text end

Sec. 18. new text begin IRON RANGE RESOURCES AND REHABILITATION BOARD;
APPROPRIATION; RETIRE BONDS.
new text end

new text begin Commencing with taxes payable in 2008 there is annually appropriated from
the distribution of the taconite production tax revenues to the taconite environmental
protection fund under Minnesota Statutes, section 298.28, subdivision 11, and to the
Douglas J. Johnson economic protection trust fund under Minnesota Statutes, section
298.28, subdivisions 9 and 11, in equal shares, an amount of $500,000 per year.
new text end

new text begin The revenue received under this section shall be used only to retire Mesabi East
School District No. 2711 bonds in the amount of $9,000,000 issued September 1, 2006,
and in the amount of $6,250,000 issued March 1, 2007. The payments shall continue
for a period of ten years ending with taxes payable in 2017. Payments to the school
district shall be made annually on March 1, except that the initial annual payment shall
be made by September 1, 2008.
new text end

new text begin EFFECTIVE DATE. new text end

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

ARTICLE 9

ECONOMIC DEVELOPMENT

Section 1.

Minnesota Statutes 2006, section 469.169, is amended by adding a
subdivision to read:

new text begin Subd. 18. new text end

new text begin Additional border city allocations; 2008. new text end

new text begin (a) In addition to tax
reductions authorized in subdivisions 7 to 17, the commissioner shall allocate $352,500
for tax reductions to border city enterprise zones in cities located on the western border
of the state. The commissioner shall make allocations to zones in cities on the western
border on a per capita basis. Allocations made under this subdivision may be used for
tax reductions as provided in section 469.171, or for other offsets of taxes imposed on
or remitted by businesses located in the enterprise zone, but only if the municipality
determines that the granting of the tax reduction or offset is necessary in order to retain a
business within or attract a business to the zone. The city alternatively may elect to use
any portion of the allocation provided in this paragraph for tax reductions under section
469.1732 or 469.1734.
new text end

new text begin (b) The commissioner shall allocate $352,500 for tax reductions under section
469.1732 or 469.1734 to cities with border city enterprise zones located on the western
border of the state. The commissioner shall allocate this amount among the cities on a per
capita basis. The city alternatively may elect to use any portion of the allocation provided
in this paragraph for tax reductions as provided in section 469.171.
new text end

new text begin EFFECTIVE DATE. new text end

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

Sec. 2.

Minnesota Statutes 2006, section 469.174, subdivision 10, is amended to read:

Subd. 10.

Redevelopment district.

(a) "Redevelopment district" means a type of
tax increment financing district consisting of a project, or portions of a project, within
which the authority finds by resolution that one or more of the following conditions,
reasonably distributed throughout the district, exists:

(1) parcels consisting of 70 percent of the area of the district are occupied by
buildings, streets, utilities, paved or gravel parking lots, or other similar structures
and more than 50 percent of the buildings, not including outbuildings, are structurally
substandard to a degree requiring substantial renovation or clearance;

(2) the property consists of vacant, unused, underused, inappropriately used,
or infrequently used railyards, rail storage facilities, or excessive or vacated railroad
rights-of-way;

(3) tank facilities, or property whose immediately previous use was for tank
facilities, as defined in section 115C.02, subdivision 15, if the tank facilities:

(i) have or had a capacity of more than 1,000,000 gallons;

(ii) are located adjacent to rail facilities; and

(iii) have been removed or are unused, underused, inappropriately used, or
infrequently used; or

(4) a qualifying disaster area, as defined in subdivision 10b.

(b) For purposes of this subdivision, "structurally substandard" shall mean
containing defects in structural elements or a combination of deficiencies in essential
utilities and facilities, light and ventilation, fire protection including adequate egress,
layout and condition of interior partitions, or similar factors, which defects or deficiencies
are of sufficient total significance to justify substantial renovation or clearance.

(c) A building is not structurally substandard if it is in compliance with the building
code applicable to new buildings or could be modified to satisfy the building code at
a cost of less than 15 percent of the cost of constructing a new structure of the same
square footage and type on the site. The municipality may find that a building is not
disqualified as structurally substandard under the preceding sentence on the basis of
reasonably available evidence, such as the size, type, and age of the building, the average
cost of plumbing, electrical, or structural repairs, or other similar reliable evidence. The
municipality may not make such a determination without an interior inspection of the
property, but need not have an independent, expert appraisal prepared of the cost of repair
and rehabilitation of the building. An interior inspection of the property is not required,
if the municipality finds that (1) the municipality or authority is unable to gain access to
the property after using its best efforts to obtain permission from the party that owns or
controls the property; and (2) the evidence otherwise supports a reasonable conclusion that
the building is structurally substandard. Items of evidence that support such a conclusion
include recent fire or police inspections, on-site property tax appraisals or housing
inspections, exterior evidence of deterioration, or other similar reliable evidence. Written
documentation of the findings and reasons why an interior inspection was not conducted
must be made and retained under section 469.175, subdivision 3, clause (1). Failure of a
building to be disqualified under the provisions of this paragraph is a necessary, but not a
sufficient, condition to determining that the building is substandard.

(d) A parcel is deemed to be occupied by a structurally substandard building
for purposes of the finding under paragraph (a) new text begin or by the improvements described in
paragraph (e) new text end if all of the following conditions are met:

(1) the parcel was occupied by a substandard building new text begin or met the requirements
of paragraph (e), as the case may be, new text end within three years of the filing of the request for
certification of the parcel as part of the district with the county auditor;

(2) the substandard building deleted text begin was deleted text end new text begin or the improvements described in paragraph (e)
were new text end demolished or removed by the authority or the demolition or removal was financed
by the authority or was done by a developer under a development agreement with the
authority;

(3) the authority found by resolution before the demolition or removal that the
parcel was occupied by a structurally substandard building new text begin or met the requirements of
paragraph (e) new text end and that after demolition and clearance the authority intended to include
the parcel within a district; and

(4) upon filing the request for certification of the tax capacity of the parcel as part
of a district, the authority notifies the county auditor that the original tax capacity of the
parcel must be adjusted as provided by section 469.177, subdivision 1, paragraph (f).

(e) For purposes of this subdivision, a parcel is not occupied by buildings, streets,
utilities, paved or gravel parking lots, or other similar structures unless 15 percent of the
area of the parcel contains buildings, streets, utilities, paved or gravel parking lots, or
other similar structures.

(f) For districts consisting of two or more noncontiguous areas, each area must
qualify as a redevelopment district under paragraph (a) to be included in the district, and
the entire area of the district must satisfy paragraph (a).

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for requests for certification made
after June 30, 2008.
new text end

Sec. 3.

Minnesota Statutes 2006, section 469.174, subdivision 10a, is amended to read:

Subd. 10a.

Renewal and renovation district.

(a) "Renewal and renovation district"
means a type of tax increment financing district consisting of a project, or portions of a
project, within which the authority finds by resolution that:

(1)(i) parcels consisting of 70 percent of the area of the district are occupied by
buildings, streets, utilities, paved or gravel parking lots, or other similar structures; (ii)
20 percent of the buildings are structurally substandard; and (iii) 30 percent of the other
buildings require substantial renovation or clearance to remove existing conditions such
as: inadequate street layout, incompatible uses or land use relationships, overcrowding of
buildings on the land, excessive dwelling unit density, obsolete buildings not suitable for
improvement or conversion, or other identified hazards to the health, safety, and general
well-being of the community; and

(2) the conditions described in clause (1) are reasonably distributed throughout the
geographic area of the district.

(b) For purposes of determining whether a building is structurally substandard,
whether parcels are occupied by buildings, streets, utilities, paved or gravel parking lots,
or other similar structures, or whether noncontiguous areas qualify, the provisions of
subdivision 10, paragraphs deleted text begin (c), (e), and deleted text end new text begin (b) through new text end (f) apply.

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for requests for certification made
after June 30, 2008.
new text end

Sec. 4.

Minnesota Statutes 2006, section 469.175, subdivision 1, is amended to read:

Subdivision 1.

Tax increment financing plan.

new text begin (a) new text end A tax increment financing plan
shall contain:

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

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

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

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

(5) estimates of the following:

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

(ii) amount of bonded indebtedness to be incurred;

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

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

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

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

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

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

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

new text begin (b) The authority may specify in the tax increment financing plan the first year in
which it elects to receive increment, up to four years following the year of approval of the
district. This paragraph does not apply to an economic development district.
new text end

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for districts for which the request for
certification is made after June 30, 2008.
new text end

Sec. 5.

Minnesota Statutes 2006, section 469.175, subdivision 3, is amended to read:

Subd. 3.

Municipality approval.

(a) A county auditor shall not certify the original
net tax capacity of a tax increment financing district until the tax increment financing plan
proposed for that district has been approved by the municipality in which the district
is located. If an authority that proposes to establish a tax increment financing district
and the municipality are not the same, the authority shall apply to the municipality in
which the district is proposed to be located and shall obtain the approval of its tax
increment financing plan by the municipality before the authority may use tax increment
financing. The municipality shall approve the tax increment financing plan only after a
public hearing thereon after published notice in a newspaper of general circulation in the
municipality at least once not less than ten days nor more than 30 days prior to the date
of the hearing. The published notice must include a map of the area of the district from
which increments may be collected and, if the project area includes additional area, a map
of the project area in which the increments may be expended. The hearing may be held
before or after the approval or creation of the project or it may be held in conjunction with
a hearing to approve the project.

(b) Before or at the time of approval of the tax increment financing plan, the
municipality shall make the following findings, and shall set forth in writing the reasons
and supporting facts for each determination:

(1) that the proposed tax increment financing district is a redevelopment district, a