as introduced - 80th Legislature (1997 - 1998) Posted on 12/15/2009 12:00am
1.1 A bill for an act 1.2 relating to property taxation; modifying class rates 1.3 for certain types of property; modifying the education 1.4 homestead credit; providing for a reduction in the 1.5 general education levy; appropriating money; amending 1.6 Minnesota Statutes 1997 Supplement, sections 273.127, 1.7 subdivisions 3 and 4; 273.13, subdivisions 24, 25, as 1.8 amended, and 31; and 273.1382, subdivision 1. 1.9 BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA: 1.10 Section 1. Minnesota Statutes 1997 Supplement, section 1.11 273.127, subdivision 3, is amended to read: 1.12 Subd. 3. [CLASS 4C PROPERTIES.] For the market value of 1.13 properties that meet the criteria of subdivision 2, paragraph 1.14 (a), and which no longer qualify as a result of the eligibility 1.15 criteria specified in section 273.126, a class rate of 2.4 1.16 percent applies for taxes payable in 1999
and a class rate of1.17 2.6 percent applies for taxes payable in 2000. 1.18 Sec. 2. Minnesota Statutes 1997 Supplement, section 1.19 273.127, subdivision 4, is amended to read: 1.20 Subd. 4. [CLASS 4D PROPERTIES.] For the market value of 1.21 properties that meet the criteria of subdivision 2, paragraph 1.22 (a), and which no longer qualify as a result of the eligibility 1.23 criteria specified in section 273.126, a class rate of 2.2 1.24 percent applies for taxes payable in 1999 and a class rate of1.25 2.5 applies for taxes payable in 2000. 1.26 Sec. 3. Minnesota Statutes 1997 Supplement, section 1.27 273.13, subdivision 24, is amended to read: 2.1 Subd. 24. [CLASS 3.] (a) Commercial and industrial 2.2 property and utility real and personal property, except class 5 2.3 property as identified in subdivision 31, clause (1), is class 2.4 3a. Each parcel has a class rate of 2.7 percent of the first 2.5 tier of market value, and 4.0 percent of the remaining market 2.6 value for taxes payable in 1998, and 3.5 percent of the 2.7 remaining market value for taxes payable in 1999 and thereafter, 2.8 except that in the case of contiguous parcels of commercial and 2.9 industrial property owned by the same person or entity, only the 2.10 value equal to the first-tier value of the contiguous parcels 2.11 qualifies for the reduced class rate. For the purposes of this 2.12 subdivision, the first tier means the first $150,000 of market 2.13 value. In the case of utility property owned by one person or 2.14 entity, only one parcel in each county has a reduced class rate 2.15 on the first tier of market value. 2.16 For purposes of this paragraph, parcels are considered to 2.17 be contiguous even if they are separated from each other by a 2.18 road, street, vacant lot, waterway, or other similar intervening 2.19 type of property. 2.20 (b) Employment property defined in section 469.166, during 2.21 the period provided in section 469.170, shall constitute class 2.22 3b and has a class rate of 2.3 percent of the first $50,000 of 2.23 market value and 3.6 percent of the remainder for taxes payable 2.24 in 1998, and 3.5 percent of the remainder for taxes payable in 2.25 1999 and thereafter, except that for employment property located 2.26 in a border city enterprise zone designated pursuant to section 2.27 469.168, subdivision 4, paragraph (c), the class rate of the 2.28 first tier of market value and the class rate of the remainder 2.29 is determined under paragraph (a), unless the governing body of 2.30 the city designated as an enterprise zone determines that a 2.31 specific parcel shall be assessed pursuant to the first clause 2.32 of this sentence. The governing body may provide for assessment 2.33 under the first clause of the preceding sentence only for 2.34 property which is located in an area which has been designated 2.35 by the governing body for the receipt of tax reductions 2.36 authorized by section 469.171, subdivision 1. 3.1 (c) Structures which are (i) located on property classified 3.2 as class 3a, (ii) constructed under an initial building permit 3.3 issued after January 2, 1996, (iii) located in a transit zone as 3.4 defined under section 473.3915, subdivision 3, (iv) located 3.5 within the boundaries of a school district, and (v) not 3.6 primarily used for retail or transient lodging purposes, shall 3.7 have a class rate equal to 85 percent of the class rate of the 3.8 second tier of the commercial property rate under paragraph (a) 3.9 on any portion of the market value that does not qualify for the 3.10 first tier class rate under paragraph (a). As used in item (v), 3.11 a structure is primarily used for retail or transient lodging 3.12 purposes if over 50 percent of its square footage is used for 3.13 those purposes. The four percent rateA class rate equal to 85 3.14 percent of the class rate of the second tier of the commercial 3.15 property rate under paragraph (a) shall also apply to 3.16 improvements to existing structures that meet the requirements 3.17 of items (i) to (v) if the improvements are constructed under an 3.18 initial building permit issued after January 2, 1996, even if 3.19 the remainder of the structure was constructed prior to January 3.20 2, 1996. For the purposes of this paragraph, a structure shall 3.21 be considered to be located in a transit zone if any portion of 3.22 the structure lies within the zone. If any property once 3.23 eligible for treatment under this paragraph ceases to remain 3.24 eligible due to revisions in transit zone boundaries, the 3.25 property shall continue to receive treatment under this 3.26 paragraph for a period of three years. 3.27 Sec. 4. Minnesota Statutes 1997 Supplement, section 3.28 273.13, subdivision 25, as amended by Laws 1997, Third Special 3.29 Session chapter 3, section 28, is amended to read: 3.30 Subd. 25. [CLASS 4.] (a) Class 4a is residential real 3.31 estate containing four or more units and used or held for use by 3.32 the owner or by the tenants or lessees of the owner as a 3.33 residence for rental periods of 30 days or more. Class 4a also 3.34 includes hospitals licensed under sections 144.50 to 144.56, 3.35 other than hospitals exempt under section 272.02, and contiguous 3.36 property used for hospital purposes, without regard to whether 4.1 the property has been platted or subdivided. Class 4a property 4.2 in a city with a population of 5,000 or less, that is (1) 4.3 located outside of the metropolitan area, as defined in section 4.4 473.121, subdivision 2, or outside any county contiguous to the 4.5 metropolitan area, and (2) whose city boundary is at least 15 4.6 miles from the boundary of any city with a population greater 4.7 than 5,000 has a class rate of 2.3 percent of market value. All 4.8 other class 4a property has a class rate of 2.9 percent of 4.9 market value for taxes payable in 1998, and 2.5 percent of 4.10 market value for taxes payable in 1999 and thereafter. For 4.11 purposes of this paragraph, population has the same meaning 4.12 given in section 477A.011, subdivision 3. 4.13 (b) Class 4b includes: 4.14 (1) residential real estate containing less than four units 4.15 that does not qualify as class 4bb, other than seasonal 4.16 residential, and recreational; 4.17 (2) manufactured homes not classified under any other 4.18 provision; 4.19 (3) a dwelling, garage, and surrounding one acre of 4.20 property on a nonhomestead farm classified under subdivision 23, 4.21 paragraph (b) containing two or three units; 4.22 (4) unimproved property that is classified residential as 4.23 determined under section 273.13, subdivision 33. 4.24 Class 4b property has a class rate of 2.1 percent of market 4.25 value. 4.26 (c) Class 4bb includes: 4.27 (1) nonhomestead residential real estate containing one 4.28 unit, other than seasonal residential, and recreational; and 4.29 (2) a single family dwelling, garage, and surrounding one 4.30 acre of property on a nonhomestead farm classified under 4.31 subdivision 23, paragraph (b). 4.32 Class 4bb has a class rate of 1.9 percent for taxes payable 4.33 in 1998, and 1.25 percent for taxes payable in 1999 and 4.34 thereafter on the first $75,000 of market value, and a class 4.35 rate of 2.1 percent for taxes payable in 1998, and 1.85 percent 4.36 for taxes payable in 1999 and thereafter of its market value 5.1 that exceeds $75,000. 5.2 Property that has been classified as seasonal recreational 5.3 residential property at any time during which it has been owned 5.4 by the current owner or spouse of the current owner does not 5.5 qualify for class 4bb. 5.6 (d) Class 4c property includes: 5.7 (1) except as provided in subdivision 22, paragraph (c), 5.8 real property devoted to temporary and seasonal residential 5.9 occupancy for recreation purposes, including real property 5.10 devoted to temporary and seasonal residential occupancy for 5.11 recreation purposes and not devoted to commercial purposes for 5.12 more than 250 days in the year preceding the year of 5.13 assessment. For purposes of this clause, property is devoted to 5.14 a commercial purpose on a specific day if any portion of the 5.15 property is used for residential occupancy, and a fee is charged 5.16 for residential occupancy. In order for a property to be 5.17 classified as class 4c, seasonal recreational residential for 5.18 commercial purposes, at least 40 percent of the annual gross 5.19 lodging receipts related to the property must be from business 5.20 conducted between Memorial Day weekend and Labor Day weekend and 5.21 at least 60 percent of all bookings by lodging guests during the 5.22 year must be for periods of at least two consecutive nights. 5.23 Class 4c also includes commercial use real property used 5.24 exclusively for recreational purposes in conjunction with class 5.25 4c property devoted to temporary and seasonal residential 5.26 occupancy for recreational purposes, up to a total of two acres, 5.27 provided the property is not devoted to commercial recreational 5.28 use for more than 250 days in the year preceding the year of 5.29 assessment and is located within two miles of the class 4c 5.30 property with which it is used. Class 4c property classified in 5.31 this clause also includes the remainder of class 1c resorts. 5.32 Owners of real property devoted to temporary and seasonal 5.33 residential occupancy for recreation purposes and all or a 5.34 portion of which was devoted to commercial purposes for not more 5.35 than 250 days in the year preceding the year of assessment 5.36 desiring classification as class 1c or 4c, must submit a 6.1 declaration to the assessor designating the cabins or units 6.2 occupied for 250 days or less in the year preceding the year of 6.3 assessment by January 15 of the assessment year. Those cabins 6.4 or units and a proportionate share of the land on which they are 6.5 located will be designated class 1c or 4c as otherwise 6.6 provided. The remainder of the cabins or units and a 6.7 proportionate share of the land on which they are located will 6.8 be designated as class 3a. The owner of property desiring 6.9 designation as class 1c or 4c property must provide guest 6.10 registers or other records demonstrating that the units for 6.11 which class 1c or 4c designation is sought were not occupied for 6.12 more than 250 days in the year preceding the assessment if so 6.13 requested. The portion of a property operated as a (1) 6.14 restaurant, (2) bar, (3) gift shop, and (4) other nonresidential 6.15 facility operated on a commercial basis not directly related to 6.16 temporary and seasonal residential occupancy for recreation 6.17 purposes shall not qualify for class 1c or 4c; 6.18 (2) qualified property used as a golf course if: 6.19 (i) any portion of the property is located within a county 6.20 that has a population of less than 50,000, or within a county 6.21 containing a golf course owned by a municipality, the county, or 6.22 a special taxing district; 6.23 (ii) it is open to the public on a daily fee basis. It may 6.24 charge membership fees or dues, but a membership fee may not be 6.25 required in order to use the property for golfing, and its green 6.26 fees for golfing must be comparable to green fees typically 6.27 charged by municipal courses; and 6.28 (iii) it meets the requirements of section 273.112, 6.29 subdivision 3, paragraph (d). 6.30 A structure used as a clubhouse, restaurant, or place of 6.31 refreshment in conjunction with the golf course is classified as 6.32 class 3a property. 6.33 (3) real property up to a maximum of one acre of land owned 6.34 by a nonprofit community service oriented organization; provided 6.35 that the property is not used for a revenue-producing activity 6.36 for more than six days in the calendar year preceding the year 7.1 of assessment and the property is not used for residential 7.2 purposes on either a temporary or permanent basis. For purposes 7.3 of this clause, a "nonprofit community service oriented 7.4 organization" means any corporation, society, association, 7.5 foundation, or institution organized and operated exclusively 7.6 for charitable, religious, fraternal, civic, or educational 7.7 purposes, and which is exempt from federal income taxation 7.8 pursuant to section 501(c)(3), (10), or (19) of the Internal 7.9 Revenue Code of 1986, as amended through December 31, 1990. For 7.10 purposes of this clause, "revenue-producing activities" shall 7.11 include but not be limited to property or that portion of the 7.12 property that is used as an on-sale intoxicating liquor or 3.2 7.13 percent malt liquor establishment licensed under chapter 340A, a 7.14 restaurant open to the public, bowling alley, a retail store, 7.15 gambling conducted by organizations licensed under chapter 349, 7.16 an insurance business, or office or other space leased or rented 7.17 to a lessee who conducts a for-profit enterprise on the 7.18 premises. Any portion of the property which is used for 7.19 revenue-producing activities for more than six days in the 7.20 calendar year preceding the year of assessment shall be assessed 7.21 as class 3a. The use of the property for social events open 7.22 exclusively to members and their guests for periods of less than 7.23 24 hours, when an admission is not charged nor any revenues are 7.24 received by the organization shall not be considered a 7.25 revenue-producing activity; 7.26 (4) post-secondary student housing of not more than one 7.27 acre of land that is owned by a nonprofit corporation organized 7.28 under chapter 317A and is used exclusively by a student 7.29 cooperative, sorority, or fraternity for on-campus housing or 7.30 housing located within two miles of the border of a college 7.31 campus; and 7.32 (5) manufactured home parks as defined in section 327.14, 7.33 subdivision 3. 7.34 Class 4c property has a class rate of 2.1 percent of market 7.35 value, except that (i) for each parcel of seasonal residential 7.36 recreational property not used for commercial purposes the first 8.1 $75,000 of market value has a class rate of 1.4 percent, and the 8.2 market value that exceeds $75,000 has a class rate of 2.5 8.3 percent, and (ii) manufactured home parks assessed under clause 8.4 (5) have a class rate of two percent. 8.5 (e) Class 4d property is qualifying low-income rental 8.6 housing certified to the assessor by the housing finance agency 8.7 under sections 273.126 and 462A.071. Class 4d includes land in 8.8 proportion to the total market value of the building that is 8.9 qualifying low-income rental housing. For all properties 8.10 qualifying as class 4d, the market value determined by the 8.11 assessor must be based on the normal approach to value using 8.12 normal unrestricted rents. 8.13 Class 4d property has a class rate of one percent of market 8.14 value. 8.15 (f) Class 4e property consists of the residential portion 8.16 of any structure located within a city that was converted from 8.17 nonresidential use to residential use, provided that: 8.18 (1) the structure had formerly been used as a warehouse; 8.19 (2) the structure was originally constructed prior to 1940; 8.20 (3) the conversion was done after December 31, 1995, but 8.21 before January 1, 2003; and 8.22 (4) the conversion involved an investment of at least 8.23 $25,000 per residential unit. 8.24 Class 4e property has a class rate of 2.3 percent, provided 8.25 that a structure is eligible for class 4e classification only in 8.26 the 12 assessment years immediately following the conversion. 8.27 Sec. 5. Minnesota Statutes 1997 Supplement, section 8.28 273.13, subdivision 31, is amended to read: 8.29 Subd. 31. [CLASS 5.] Class 5 property includes: 8.30 (1) tools, implements, and machinery of an electric 8.31 generating, transmission, or distribution system or a pipeline 8.32 system transporting or distributing water, gas, crude oil, or 8.33 petroleum products or mains and pipes used in the distribution 8.34 of steam or hot or chilled water for heating or cooling 8.35 buildings, which are fixtures; 8.36 (2) unmined iron ore and low-grade iron-bearing formations 9.1 as defined in section 273.14; and 9.2 (3) all other property not otherwise classified. 9.3 Class 5 property has a class rate of 4.0 percent of market 9.4 value for taxes payable in 1998, and 3.5 percent of market value 9.5 for taxes payable in 1999 and thereafter. 9.6 Sec. 6. Minnesota Statutes 1997 Supplement, section 9.7 273.1382, subdivision 1, is amended to read: 9.8 Subdivision 1. [EDUCATION HOMESTEAD CREDIT.] Each year, 9.9 beginning with property taxes payable in 1998, the respective 9.10 county auditors shall determine the initial tax rate for each 9.11 school district for the general education levy certified under 9.12 section 124A.23, subdivision 2 or 3. That rate plus the school 9.13 district's education homestead credit tax rate adjustment under 9.14 section 275.08, subdivision 1e, shall be the general education 9.15 homestead credit local tax rate for the district. The auditor 9.16 shall then determine a general education homestead credit for 9.17 each homestead within the county equal to 32 percent for taxes 9.18 payable in 1998, and 45 percent for taxes payable in 1999 and 9.19 thereafter of the general education homestead credit local tax 9.20 rate times the net tax capacity of the homestead for the taxes 9.21 payable year. The amount of general education homestead credit 9.22 for a homestead may not exceed $225 for taxes payable in 1998, 9.23 and $400 for taxes payable in 1999 and thereafter. In the case 9.24 of an agricultural homestead, only the net tax capacity of the 9.25 house, garage, and surrounding one acre of land shall be used in 9.26 determining the property's education homestead credit. 9.27 Sec. 7. [APPROPRIATIONS.] 9.28 (a) [SHIFT RECOGNITION APPROPRIATION.] In addition to any 9.29 amounts appropriated by other law, $7,000,000 is appropriated to 9.30 the commissioner of children, families, and learning in fiscal 9.31 year 1999 to fund early recognition of education aid. 9.32 (b) [EDUCATION LEVY REDUCTION APPROPRIATION.] In addition 9.33 to any amount appropriated by other law, $100,000,000 is 9.34 appropriated to the commissioner of children, families, and 9.35 learning in fiscal year 2000 and thereafter to fund a reduction 9.36 in the statewide general education property tax levy. 10.1 Sec. 8. [EFFECTIVE DATE.] 10.2 Sections 1 to 6 are effective for taxes payable in 1999 and 10.3 thereafter.