HF 3782

as introduced - 81st Legislature (1999 - 2000) Posted on 12/15/2009 12:00am

  1.1                          A bill for an act 
  1.2             relating to taxation; providing a property tax 
  1.3             exemption for leased land on which private 
  1.4             noncommercial aircraft storage hangars are located; 
  1.5             providing for property tax classification of the 
  1.6             noncommercial aircraft storage hangars; amending 
  1.7             Minnesota Statutes 1998, sections 272.01, subdivision 
  1.8             2; and 273.19, subdivision 1; Minnesota Statutes 1999 
  1.9             Supplement, section 273.13, subdivision 24. 
  1.10  BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA: 
  1.11     Section 1.  Minnesota Statutes 1998, section 272.01, 
  1.12  subdivision 2, is amended to read: 
  1.13     Subd. 2.  (a) When any real or personal property which is 
  1.14  exempt from ad valorem taxes, and taxes in lieu thereof, is 
  1.15  leased, loaned, or otherwise made available and used by a 
  1.16  private individual, association, or corporation in connection 
  1.17  with a business conducted for profit, there shall be imposed a 
  1.18  tax, for the privilege of so using or possessing such real or 
  1.19  personal property, in the same amount and to the same extent as 
  1.20  though the lessee or user was the owner of such property. 
  1.21     (b) The tax imposed by this subdivision shall not apply to: 
  1.22     (1) property leased or used as a concession in or relative 
  1.23  to the use in whole or part of a public park, market, 
  1.24  fairgrounds, port authority, economic development authority 
  1.25  established under chapter 469, municipal auditorium, municipal 
  1.26  parking facility, municipal museum, or municipal stadium; 
  1.27     (2) property of an airport owned by a city, town, county, 
  2.1   or group thereof which is:  
  2.2      (i) leased to or used by any person or entity including a 
  2.3   fixed base operator; and 
  2.4      (ii) used as a hangar for the storage or repair of aircraft 
  2.5   or to provide aviation goods, services, or facilities to the 
  2.6   airport or general public; 
  2.7      (3) the exception from taxation provided in this clause (2) 
  2.8   does not apply to: 
  2.9      (i) property located at an airport owned or operated by the 
  2.10  metropolitan airports commission or by a city of over 50,000 
  2.11  population according to the most recent federal census or such a 
  2.12  city's airport authority; 
  2.13     (ii) hangars leased by a private individual, association, 
  2.14  or corporation in connection with a business conducted for 
  2.15  profit other than an aviation-related business; or 
  2.16     (iii) facilities leased by a private individual, 
  2.17  association, or corporation in connection with a business for 
  2.18  profit, that consists of a major jet engine repair facility 
  2.19  financed, in whole or part, with the proceeds of state bonds and 
  2.20  located in a tax increment financing district; 
  2.21     (4) leased land on an airport owned by a city, town, 
  2.22  county, metropolitan airports commission, or group thereof, if 
  2.23  (i) the land contains a leased or privately owned noncommercial 
  2.24  aircraft storage hangar, (ii) no commercial activity is 
  2.25  performed at the hangar, and (iii) the lease represents fair 
  2.26  market rent; 
  2.27     (3) (5) property constituting or used as a public 
  2.28  pedestrian ramp or concourse in connection with a public 
  2.29  airport; or 
  2.30     (4) (6) property constituting or used as a passenger 
  2.31  check-in area or ticket sale counter, boarding area, or luggage 
  2.32  claim area in connection with a public airport but not the 
  2.33  airports owned or operated by the metropolitan airports 
  2.34  commission or cities of over 50,000 population or an airport 
  2.35  authority therein.  Real estate owned by a municipality in 
  2.36  connection with the operation of a public airport and leased or 
  3.1   used for agricultural purposes is not exempt. 
  3.2      (c) Taxes imposed by this subdivision are payable as in the 
  3.3   case of personal property taxes and shall be assessed to the 
  3.4   lessees or users of real or personal property in the same manner 
  3.5   as taxes assessed to owners of real or personal property, except 
  3.6   that such taxes shall not become a lien against the property.  
  3.7   When due, the taxes shall constitute a debt due from the lessee 
  3.8   or user to the state, township, city, county, and school 
  3.9   district for which the taxes were assessed and shall be 
  3.10  collected in the same manner as personal property taxes.  If 
  3.11  property subject to the tax imposed by this subdivision is 
  3.12  leased or used jointly by two or more persons, each lessee or 
  3.13  user shall be jointly and severally liable for payment of the 
  3.14  tax. 
  3.15     (d) The tax on real property of the state or any of its 
  3.16  political subdivisions that is leased by a private individual, 
  3.17  association, or corporation and becomes taxable under this 
  3.18  subdivision or other provision of law must be assessed and 
  3.19  collected as a personal property assessment.  The taxes do not 
  3.20  become a lien against the real property. 
  3.21     Sec. 2.  Minnesota Statutes 1999 Supplement, section 
  3.22  273.13, subdivision 24, is amended to read: 
  3.23     Subd. 24.  [CLASS 3.] (a) Commercial and industrial 
  3.24  property and utility real and personal property is class 3a.  
  3.25  Each parcel of real property has a class rate of 2.4 percent of 
  3.26  the first tier of market value, and 3.4 percent of the remaining 
  3.27  market value, except that in the case of contiguous parcels of 
  3.28  property owned by the same person or entity, only the value 
  3.29  equal to the first-tier value of the contiguous parcels 
  3.30  qualifies for the reduced class rate.  For the purposes of this 
  3.31  subdivision, the first tier means the first $150,000 of market 
  3.32  value.  Real property owned in fee by a utility for transmission 
  3.33  line right-of-way shall be classified at the class rate for the 
  3.34  higher tier.  All personal property shall be classified at the 
  3.35  class rate for the higher tier.  For purposes of this 
  3.36  subdivision "personal property" means tools, implements, and 
  4.1   machinery of an electric generating, transmission, or 
  4.2   distribution system, or a pipeline system transporting or 
  4.3   distributing water, gas, crude oil, or petroleum products or 
  4.4   mains and pipes used in the distribution of steam or hot or 
  4.5   chilled water for heating or cooling buildings, which are 
  4.6   fixtures. 
  4.7      For purposes of this paragraph, parcels are considered to 
  4.8   be contiguous even if they are separated from each other by a 
  4.9   road, street, vacant lot, waterway, or other similar intervening 
  4.10  type of property. 
  4.11     (b) Employment property defined in section 469.166, during 
  4.12  the period provided in section 469.170, shall constitute class 
  4.13  3b.  The class rates for class 3b property are determined under 
  4.14  paragraph (a). 
  4.15     (c)(1) Subject to the limitations of clause (2), structures 
  4.16  which are (i) located on property classified as class 3a, (ii) 
  4.17  constructed under an initial building permit issued after 
  4.18  January 2, 1996, (iii) located in a transit zone as defined 
  4.19  under section 473.3915, subdivision 3, (iv) located within the 
  4.20  boundaries of a school district, and (v) not primarily used for 
  4.21  retail or transient lodging purposes, shall have a class rate 
  4.22  equal to the lesser of 2.975 percent or the class rate of the 
  4.23  second tier of the commercial property rate under paragraph (a) 
  4.24  on any portion of the market value that does not qualify for the 
  4.25  first tier class rate under paragraph (a).  As used in item (v), 
  4.26  a structure is primarily used for retail or transient lodging 
  4.27  purposes if over 50 percent of its square footage is used for 
  4.28  those purposes.  A class rate equal to the lesser of 2.975 
  4.29  percent or the class rate of the second tier of the commercial 
  4.30  property class rate under paragraph (a) shall also apply to 
  4.31  improvements to existing structures that meet the requirements 
  4.32  of items (i) to (v) if the improvements are constructed under an 
  4.33  initial building permit issued after January 2, 1996, even if 
  4.34  the remainder of the structure was constructed prior to January 
  4.35  2, 1996.  For the purposes of this paragraph, a structure shall 
  4.36  be considered to be located in a transit zone if any portion of 
  5.1   the structure lies within the zone.  If any property once 
  5.2   eligible for treatment under this paragraph ceases to remain 
  5.3   eligible due to revisions in transit zone boundaries, the 
  5.4   property shall continue to receive treatment under this 
  5.5   paragraph for a period of three years. 
  5.6      (2) This clause applies to any structure qualifying for the 
  5.7   transit zone reduced class rate under clause (1) on January 2, 
  5.8   1999, or any structure meeting any of the qualification criteria 
  5.9   in item (i) and otherwise qualifying for the transit zone 
  5.10  reduced class rate under clause (1).  Such a structure continues 
  5.11  to receive the transit zone reduced class rate until the 
  5.12  occurrence of one of the events in item (ii).  Property 
  5.13  qualifying under item (i)(D), that is located outside of a city 
  5.14  of the first class, qualifies for the transit zone reduced class 
  5.15  rate as provided in that item.  Property qualifying under item 
  5.16  (i)(E) qualifies for the transit zone reduced class rate as 
  5.17  provided in that item. 
  5.18     (i) A structure qualifies for the rate in this clause if it 
  5.19  is: 
  5.20     (A) property for which a building permit was issued before 
  5.21  December 31, 1998; or 
  5.22     (B) property for which a building permit was issued before 
  5.23  June 30, 2001, if: 
  5.24     (I) at least 50 percent of the land on which the structure 
  5.25  is to be built has been acquired or is the subject of signed 
  5.26  purchase agreements or signed options as of March 15, 1998, by 
  5.27  the entity that proposes construction of the project or an 
  5.28  affiliate of the entity; 
  5.29     (II) signed agreements have been entered into with one 
  5.30  entity or with affiliated entities to lease for the account of 
  5.31  the entity or affiliated entities at least 50 percent of the 
  5.32  square footage of the structure or the owner of the structure 
  5.33  will occupy at least 50 percent of the square footage of the 
  5.34  structure; and 
  5.35     (III) one of the following requirements is met: 
  5.36     the project proposer has submitted the completed data 
  6.1   portions of an environmental assessment worksheet by December 
  6.2   31, 1998; or 
  6.3      a notice of determination of adequacy of an environmental 
  6.4   impact statement has been published by April 1, 1999; or 
  6.5      an alternative urban areawide review has been completed by 
  6.6   April 1, 1999; or 
  6.7      (C) property for which a building permit is issued before 
  6.8   July 30, 1999, if: 
  6.9      (I) at least 50 percent of the land on which the structure 
  6.10  is to be built has been acquired or is the subject of signed 
  6.11  purchase agreements as of March 31, 1998, by the entity that 
  6.12  proposes construction of the project or an affiliate of the 
  6.13  entity; 
  6.14     (II) a signed agreement has been entered into between the 
  6.15  building developer and a tenant to lease for its own account at 
  6.16  least 200,000 square feet of space in the building; 
  6.17     (III) a signed letter of intent is entered into by July 1, 
  6.18  1998, between the building developer and the tenant to lease the 
  6.19  space for its own account; and 
  6.20     (IV) the environmental review process required by state law 
  6.21  was commenced by December 31, 1998; 
  6.22     (D) property for which an irrevocable letter of credit with 
  6.23  a housing and redevelopment authority was signed before December 
  6.24  31, 1998.  The structure shall receive the transit zone reduced 
  6.25  class rate during construction and for the duration of time that 
  6.26  the original tenants remain in the building.  Any unoccupied net 
  6.27  leasable square footage that is not leased within 36 months 
  6.28  after the certificate of occupancy has been issued for the 
  6.29  building shall not be eligible to receive the reduced class 
  6.30  rate.  This reduced class rate applies only if the entity that 
  6.31  constructed the structure continues to own the property; 
  6.32     (E) property, located in a city of the first class, and for 
  6.33  which the building permits for the excavation, the parking ramp, 
  6.34  and the office tower were issued prior to April 1, 1999, shall 
  6.35  receive the reduced class rate during construction and for the 
  6.36  first five assessment years immediately following its initial 
  7.1   occupancy provided that, when completed, at least 25 percent of 
  7.2   the net leasable square footage must be occupied by the entity 
  7.3   or the parent entity constructing the structure each year during 
  7.4   this time period.  In order to receive the reduced class rate on 
  7.5   the structure in any subsequent assessment years, at least 50 
  7.6   percent of the rentable square footage must be occupied by the 
  7.7   entity or the parent entity that constructed the structure.  
  7.8   This reduced class rate applies only if the entity or the parent 
  7.9   entity that constructed the structure continues to own the 
  7.10  property. 
  7.11     (ii) A structure specified by this clause, other than a 
  7.12  structure qualifying under clause (i)(D) or (E), shall continue 
  7.13  to receive the transit zone reduced class rate until the 
  7.14  occurrence of one of the following events: 
  7.15     (A) if the structure upon initial occupancy will be owner 
  7.16  occupied by the entity initially constructing the structure or 
  7.17  an affiliated entity, the structure receives the reduced class 
  7.18  rate until the structure ceases to be at least 50 percent 
  7.19  occupied by the entity or an affiliated entity, provided, if the 
  7.20  portion of the structure occupied by that entity or an affiliate 
  7.21  of the entity is less than 85 percent, the transit zone class 
  7.22  rate reduction for the portion of structure not so occupied 
  7.23  terminates upon the leasing of such space to any nonaffiliated 
  7.24  entity; or 
  7.25     (B) if the structure is leased by a single entity or 
  7.26  affiliated entity at the time of initial occupancy, the 
  7.27  structure shall receive the reduced class rate until the 
  7.28  structure ceases to be at least 50 percent occupied by the 
  7.29  entity or an affiliated entity, provided, if the portion of the 
  7.30  structure occupied by that entity or an affiliate of the entity 
  7.31  is less than 85 percent, the transit zone class rate reduction 
  7.32  for the portion of structure not so occupied shall terminate 
  7.33  upon the leasing of such space to any nonaffiliated entity; or 
  7.34     (C) if the structure meets the criteria in item (i)(C), the 
  7.35  structure shall receive the reduced class rate until the 
  7.36  expiration of the initial lease term of the applicable tenants. 
  8.1      Percentages occupied or leased shall be determined based 
  8.2   upon net leasable square footage in the structure.  The assessor 
  8.3   shall allocate the value of the structure in the same fashion as 
  8.4   provided in the general law for portions of any structure 
  8.5   receiving and not receiving the transit tax class reduction as a 
  8.6   result of this clause. 
  8.7      (d) a leased or privately owned aircraft storage hangar in 
  8.8   which no commercial activity is performed is class 3a, except 
  8.9   that the entire market value is subject to the first tier class 
  8.10  rate. 
  8.11     Sec. 3.  Minnesota Statutes 1998, section 273.19, 
  8.12  subdivision 1, is amended to read: 
  8.13     Subdivision 1.  Except as provided in subdivision 3 or 4, 
  8.14  tax-exempt property held under a lease for a term of at least 
  8.15  one year, and not taxable under section 272.01, subdivision 2, 
  8.16  or under a contract for the purchase thereof, shall be 
  8.17  considered, for all purposes of taxation, as the property of the 
  8.18  person holding it.  In this subdivision, "tax-exempt property" 
  8.19  means property owned by the United States, the state, a school, 
  8.20  or any religious, scientific, or benevolent society or 
  8.21  institution, incorporated or unincorporated, or any corporation 
  8.22  whose property is not taxed in the same manner as other 
  8.23  property.  This subdivision does not apply to property exempt 
  8.24  from taxation under section 272.01, subdivision 2, paragraph 
  8.25  (b), clauses (2), (3), and (4), (5), and (6). 
  8.26     Sec. 4.  [EFFECTIVE DATE.] 
  8.27     Sections 1 to 3 are effective for the 2000 assessment, 
  8.28  taxes payable in 2001, and thereafter.