SF 386

1st Engrossment - 86th Legislature (2009 - 2010) Posted on 02/09/2010 02:12am

A bill for an act
relating to taxation; reinstating previous law provisions relating to green acres
treatment and agricultural property classification; amending Minnesota Statutes
2008, sections 273.111, subdivisions 3, 4, 8, 9, 11, 11a; 273.13, subdivision 23;
Laws 2008, chapter 366, article 6, section 52; repealing Minnesota Statutes
2008, section 273.111, subdivision 3a.

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

Section 1.

Minnesota Statutes 2008, section 273.111, subdivision 3, is amended to read:

Subd. 3.

Requirements.

(a) Real estate consisting of ten acres or more or a nursery
or greenhouse, and qualifying for classification as class 2a new text begin or 2b new text end under section 273.13,
shall be entitled to valuation and tax deferment under this section if it is primarily devoted
to agricultural use, new text begin and meets the requirements in subdivision 6, new text end and either:

(1) is the homestead of the owner, or of a surviving spouse, child, or sibling of the
owner or is real estate which is farmed with the real estate which contains the homestead
property; or

(2) has been in possession of the applicant, the applicant's spouse, parent, or sibling,
or any combination thereof, for a period of at least seven years prior to application for
benefits under the provisions of this section, or is real estate which is farmed with the
real estate which qualifies under this clause and is within four townships or cities or
combination thereof from the qualifying real estate; or

(3) is the homestead of an individual who is part of an entity described in paragraph
(b), clause (1), (2), or (3); or

(4) is in the possession of a nursery or greenhouse or an entity owned by a proprietor,
partnership, or corporation which also owns the nursery or greenhouse operations on the
parcel or parcels, provided that only the acres used to produce nursery stock qualify
for treatment under this section.

(b) Valuation of real estate under this section is limited to parcels owned by
individuals except for:

(1) a family farm entity or authorized farm entity regulated under section 500.24;

(2) a poultry entity other than a limited liability entity in which the majority of the
members, partners, or shareholders are related and at least one of the members, partners,
or shareholders either resides on the land or actively operates the land; and

(3) corporations that derive 80 percent or more of their gross receipts from the
wholesale or retail sale of horticultural or nursery stock.

The terms in this paragraph have the meanings given in section 500.24, where
applicable.

(c) Land that previously qualified for tax deferment under this section and no longer
qualifies because it is not primarily used for agricultural purposes but would otherwise
qualify under deleted text begin Minnesota Statutes 2006, section 273.111, subdivision deleted text end new text begin subdivisions new text end 3 new text begin and 6 new text end ,
for a period of at least three years will not be required to make payment of the previously
deferred taxes, notwithstanding the provisions of subdivision 9. Sale of the land prior to
the expiration of the three-year period requires payment of deferred taxes as follows: sale
in the year the land no longer qualifies requires payment of the current year's deferred
taxes plus payment of deferred taxes for the two prior years; sale during the second year
the land no longer qualifies requires payment of the current year's deferred taxes plus
payment of the deferred taxes for the prior year; and sale during the third year the land
no longer qualifies requires payment of the current year's deferred taxes. Deferred taxes
shall be paid even if the land qualifies pursuant to subdivision 11a. When such property is
sold or no longer qualifies under this paragraph, or at the end of the three-year period,
whichever comes first, all deferred special assessments plus interest are payable in equal
installments spread over the time remaining until the last maturity date of the bonds issued
to finance the improvement for which the assessments were levied. If the bonds have
matured, the deferred special assessments plus interest are payable within 90 days. The
provisions of section 429.061, subdivision 2, apply to the collection of these installments.
Penalties are not imposed on any such special assessments if timely paid.

deleted text begin (d) Land that is enrolled in the reinvest in Minnesota program under sections
103F.501 to 103F.535, the federal Conservation Reserve Program as contained in Public
Law 99-198, or a similar state or federal conservation program does not qualify for
valuation and assessment deferral under this section. This paragraph applies to land that
has not qualified under this section for taxes payable in 2009 or previous years.
deleted 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 2008, section 273.111, subdivision 4, is amended to read:

Subd. 4.

Determination of value.

deleted text begin (a) deleted text end The value of any real estate described
in subdivision 3 shall upon timely application by the owner, in the manner provided
in subdivision 8, be determined solely with reference to its appropriate agricultural
classification and value notwithstanding sections 272.03, subdivision 8, and 273.11.
Furthermore, the assessor shall not consider any added values resulting from
nonagricultural factors. In order to account for the presence of nonagricultural influences
that may affect the value of agricultural land, the commissioner of revenue shall develop a
fair and uniform method of determining agricultural values for each county in the state
that are consistent with this subdivision. The commissioner shall annually assign the
resulting values to each county, and these values shall be used as the basis for determining
the agricultural value for all properties in the county qualifying for tax deferment under
this section.

deleted text begin (b) In the case of property qualifying for tax deferment only under subdivision 3a,
the value shall be based on the value in effect for assessment year 2008, multiplied by
the ratio of the total taxable market value of all property in the county for the current
assessment year divided by the total taxable market value of all property in the county
for assessment year 2008.
deleted text end

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for assessment year 2009 and
thereafter.
new text end

Sec. 3.

Minnesota Statutes 2008, section 273.111, subdivision 8, is amended to read:

Subd. 8.

Application.

Application for deferment of taxes and assessment under this
section shall be filed by May 1 of the year prior to the year in which the taxes are payable.
Any application filed hereunder and granted shall continue in effect for subsequent years
until the property no longer qualifies. The application must be filed with the assessor of
the taxing district in which the real property is located on the form prescribed by the
commissioner of revenue. The assessor may require proof by affidavit or otherwise
that the property qualifies under deleted text begin subdivision deleted text end new text begin subdivisions new text end 3 new text begin and 6 new text end and may require the
applicant to provide a copy of the appropriate schedule or form showing farm income that
is attested to by the applicant as having been included in the most recently filed federal
income tax return of the applicant.

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 2008, section 273.111, subdivision 9, is amended to read:

Subd. 9.

Additional taxes.

When real property which is being, or has been valued
and assessed under this section no longer qualifies under deleted text begin subdivision deleted text end new text begin subdivisions new text end 3 new text begin and 6 new text end ,
the portion no longer qualifying shall be subject to additional taxes, in the amount equal to
the difference between the taxes determined in accordance with subdivision 4, and the
amount determined under subdivision 5. Provided, however, that the amount determined
under subdivision 5 shall not be greater than it would have been had the actual bona fide
sale price of the real property at an arm's-length transaction been used in lieu of the market
value determined under subdivision 5. Such additional taxes shall be extended against
the property on the tax list for the current year, provided, however, that no interest or
penalties shall be levied on such additional taxes if timely paid, and provided further, that
such additional taxes shall only be levied with respect to the last three years that the said
property has been valued and assessed under this section.

new text begin EFFECTIVE DATE. new text end

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

Sec. 5.

Minnesota Statutes 2008, section 273.111, subdivision 11, is amended to read:

Subd. 11.

Special local assessments.

The payment of special local assessments
levied after June 1, 1967, for improvements made to any real property described in
subdivision 3 together with the interest thereon shall, on timely application as provided
in subdivision 8, be deferred as long as such property meets the conditions contained in
deleted text begin subdivision deleted text end new text begin subdivisions new text end 3 deleted text begin or 3a deleted text end new text begin and 6 new text end or is transferred to an agricultural preserve under
sections 473H.02 to 473H.17. If special assessments against the property have been
deferred pursuant to this subdivision, the governmental unit shall file with the county
recorder in the county in which the property is located a certificate containing the legal
description of the affected property and of the amount deferred. When such property
no longer qualifies under deleted text begin subdivision deleted text end new text begin subdivisions new text end 3 deleted text begin or 3a deleted text end new text begin and 6 new text end , all deferred special
assessments plus interest shall be payable in equal installments spread over the time
remaining until the last maturity date of the bonds issued to finance the improvement
for which the assessments were levied. If the bonds have matured, the deferred special
assessments plus interest shall be payable within 90 days. The provisions of section
429.061, subdivision 2, apply to the collection of these installments. Penalty shall not be
levied on any such special assessments if timely paid.

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 2008, section 273.111, subdivision 11a, is amended to read:

Subd. 11a.

Continuation of tax treatment upon sale.

new text begin (a) new text end When real property
qualifying under deleted text begin subdivision deleted text end new text begin subdivisions new text end 3 new text begin and 6 new text end is sold, no additional taxes or deferred
special assessments plus interest shall be extended against the property provided the
property continues to qualify pursuant to deleted text begin subdivision deleted text end new text begin subdivisions new text end 3 new text begin and 6 new text end , and provided
the new owner files an application for continued deferment within 30 days after the sale.

new text begin (b) For purposes of meeting the income requirements of subdivision 6, the property
purchased shall be considered in conjunction with other qualifying property owned by
the purchaser.
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. 7.

Minnesota Statutes 2008, section 273.13, subdivision 23, is amended to read:

Subd. 23.

Class 2.

(a) deleted text begin An agricultural homestead consists of class 2a agricultural
land deleted text end new text begin Class 2a property is agricultural land, including any improvements new text end that is
homesteaded deleted text begin , along with any class 2b rural vacant land that is contiguous to the class
2a land under the same ownership deleted text end . The market value of the house and garage and
immediately surrounding one acre of land has the same class rates as class 1a deleted text begin or 1b deleted text end
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 0.5 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) deleted text begin Class 2a agricultural land consists of parcels of property, or portions thereof, that
are agricultural land and buildings. Class 2a property has a net class rate of one percent of
market value, unless it is part of an agricultural homestead under paragraph (a). Class 2a
property may contain property that would otherwise be classified as 2b, including but not
limited to sloughs, wooded wind shelters, acreage abutting ditches, and other similar land
impractical for the assessor to value separately from the rest of the property.
deleted text end

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

deleted text begin (c) deleted text end Class 2b deleted text begin rural vacant land consists of parcels of property, or portions thereof, that
are unplatted deleted text end new text begin property is (1) new text end real estate, rural in character and deleted text begin not used for agricultural
purposes, including land deleted text end used new text begin exclusively new text end for growing trees for timber, lumber, and
wood and wood products new text begin ; (2) real estate new text end deleted text begin , deleted text end that is not improved with a structure new text begin 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; or (3) real estate that is
nonhomestead agricultural land new text end . deleted text begin The presence of a minor, ancillary nonresidential
structure as defined by the commissioner of revenue does not disqualify the property from
classification under this paragraph. Any parcel of 20 acres or more improved with a
structure that is not a minor, ancillary nonresidential structure must be split-classified, and
ten acres must be assigned to the split parcel containing the structure. deleted text end Class 2b property has
a net class rate of one percent of market value deleted text begin unless it is part of an agricultural homestead
under paragraph (a), or qualifies as class 2c under paragraph (d). deleted text end new text begin , except that unplatted
property described in clause (1) or (2) has a net class rate of .65 percent if it consists
new text end

deleted text begin (d) Class 2c managed forest land consists deleted text end of no less than deleted text begin 20 deleted text end new text begin ten new text end and no more than
1,920 acres deleted text begin statewide per taxpayer that deleted text end new text begin and new text end 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 deleted text begin . It has a class rate of .65 percent deleted text end , provided
that the owner of the property must apply to the assessor new text begin annually new text end to receive the reduced
class rate and provide the information required by the assessor to verify that the property
qualifies for the reduced rate. deleted text begin The commissioner of natural resources must concur that the
land is qualified. The commissioner of natural resources shall annually provide county
assessors verification information on a timely basis.
deleted text end

deleted text begin (e) deleted text end new text begin (c) new text end 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 deleted text begin , deleted text end new text begin or new text end cultivation deleted text begin , drying, or storage deleted text end of
agricultural products deleted text begin for sale, or the storage of machinery or equipment used in support
of agricultural production by the same farm entity. For a property to be classified as
agricultural based only on the drying or storage of agricultural products, the products
being dried or stored must have been produced by the same farm entity as the entity
operating the drying or storage facility deleted text end . "Agricultural purposes" also includes enrollment
in the Reinvest in Minnesota program under sections 103F.501 to 103F.535 or the federal
Conservation Reserve Program as contained in Public Law 99-198 or a similar state
or federal conservation program if the property was classified as agricultural (i) under
this subdivision for the assessment year 2002 or (ii) in the year prior to its enrollment.
new text begin 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. new text end Agricultural classification new text begin for property shall be determined excluding the
house, garage, and immediately surrounding one acre of land, and new text end shall not be based
upon the market value of any residential structures on the parcel or contiguous parcels
under the same ownership.

deleted text begin (f) deleted text end new text begin (d) new text end Real estate deleted text begin of less than ten acres deleted text end new text begin excluding the house, garage, and immediately
surrounding one acre of land, of less than ten acres new text end , which is exclusively deleted text begin or deleted text end new text begin and new text end intensively
used for raising or cultivating agricultural products, shall be considered as agricultural
land. deleted text begin To qualify under this paragraph, property that includes a residential structure must
be used intensively for one of the following purposes:
deleted text end

deleted text begin (i) for drying or storage of grain or storage of machinery or equipment used to
support agricultural activities on other parcels of property operated by the same farming
entity;
deleted text end

deleted text begin (ii) as a nursery, provided that only those acres used to produce nursery stock are
considered agricultural land;
deleted text end

deleted text begin (iii) for livestock or poultry confinement, provided that land that is used only for
pasturing and grazing does not qualify; or
deleted text end

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

deleted text begin (g) deleted text end 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.

deleted text begin (h) deleted text end 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.

deleted text begin (i) deleted text end new text begin (e) new text end 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, including short rotation woody crops, and not
sold for timber, lumber, wood, or wood products; and

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

deleted text begin (j) deleted text end new text begin (f) new text end 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.

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

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

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

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

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

deleted text begin (l) deleted text end new text begin (h) new text end Class 2e consists of land with a commercial aggregate deposit that is not
actively being mined and is not otherwise classified as class 2a or 2b. It has a class rate of
one percent of market value. To qualify for classification under this paragraph, the property
must be at least ten contiguous acres in size and the owner of the property must record with
the county recorder of the county in which the property is located an affidavit containing:

(1) a legal description of the property;

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

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

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

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

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

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for taxes levied in 2009, payable
in 2010, and thereafter.
new text end

Sec. 8.

Laws 2008, chapter 366, article 6, section 52, is amended to read:

Sec. 52. REPEALER.

(a) Minnesota Statutes 2006, section 272.027, subdivision 3, is repealed.

(b) Minnesota Statutes 2006, section 273.11, subdivision 14, is repealed.

deleted text begin (c) deleted text end deleted text begin Minnesota Statutes 2006, section 273.111, subdivision 6, deleted text end deleted text begin is repealed.
deleted 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. 9. new text begin LAND REMOVED FROM PROGRAM.
new text end

new text begin Any land that had been enrolled in the Minnesota Agricultural Property Tax Law
under Minnesota Statutes 2008, section 273.111, and that was removed from the program
between May 21, 2008, and the effective date of this section, must be reinstated to the
program at the request of the owner provided that the eligibility requirements under
Minnesota Statutes 2008, section 273.111, subdivisions 3 and 6, are met.
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. 10. new text begin REPEALER.
new text end

new text begin Minnesota Statutes 2008, section 273.111, subdivision 3a, new text end new text begin is repealed.
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