SF 1124

1st Engrossment - 81st Legislature (1999 - 2000) Posted on 12/15/2009 12:00am

  1.1                          A bill for an act 
  1.2             relating to taxation; changing the taxation of 
  1.3             agricultural property; providing for homestead 
  1.4             classification of agricultural property in certain 
  1.5             instances; amending Minnesota Statutes 1998, sections 
  1.6             273.124, subdivisions 8 and 14; 273.13, subdivision 
  1.7             23; and 273.1398, subdivision 1a. 
  1.8   BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA: 
  1.9      Section 1.  Minnesota Statutes 1998, section 273.124, 
  1.10  subdivision 8, is amended to read: 
  1.11     Subd. 8.  [HOMESTEAD OWNED BY FAMILY FARM CORPORATION OR 
  1.12  PARTNERSHIP.] (a) Each family farm corporation and each 
  1.13  partnership operating a family farm is entitled to class 1b 
  1.14  under section 273.13, subdivision 22, paragraph (b), or class 2a 
  1.15  assessment for one homestead occupied by a shareholder or 
  1.16  partner thereof who is residing on the land and actively engaged 
  1.17  in farming of the land owned by the corporation or partnership.  
  1.18  Homestead treatment applies even if legal title to the property 
  1.19  is in the name of the corporation or partnership and not in the 
  1.20  name of the person residing on it.  "Family farm corporation" 
  1.21  and "family farm" have the meanings given in section 500.24, 
  1.22  except that the number of allowable shareholders or partners 
  1.23  under this subdivision shall not exceed 12. 
  1.24     (b) In addition to property specified in paragraph (a), any 
  1.25  other residences owned by corporations or partnerships described 
  1.26  in paragraph (a) which are located on agricultural land and 
  2.1   occupied as homesteads by shareholders or partners who are 
  2.2   actively engaged in farming on behalf of the corporation or 
  2.3   partnership must also be assessed as class 2a property or as 
  2.4   class 1b property under section 273.13, subdivision 22, 
  2.5   paragraph (b), but the property eligible is limited to the 
  2.6   residence itself and as much of the land surrounding the 
  2.7   homestead, not exceeding one acre, as is reasonably necessary 
  2.8   for the use of the dwelling as a home, and does not include any 
  2.9   other structures that may be located on it. 
  2.10     Sec. 2.  Minnesota Statutes 1998, section 273.124, 
  2.11  subdivision 14, is amended to read: 
  2.12     Subd. 14.  [AGRICULTURAL HOMESTEADS; SPECIAL PROVISIONS.] 
  2.13  (a) Real estate of less than ten acres that is the homestead of 
  2.14  its owner must be classified as class 2a under section 273.13, 
  2.15  subdivision 23, paragraph (a), if:  
  2.16     (1) the parcel on which the house is located is contiguous 
  2.17  on at least two sides to (i) agricultural land, (ii) land owned 
  2.18  or administered by the United States Fish and Wildlife Service, 
  2.19  or (iii) land administered by the department of natural 
  2.20  resources on which in lieu taxes are paid under sections 477A.11 
  2.21  to 477A.14; 
  2.22     (2) its owner also owns a noncontiguous parcel of 
  2.23  agricultural land that is at least 20 acres; and 
  2.24     (3) the noncontiguous land is located not farther than four 
  2.25  townships or cities, or a combination of townships or cities 
  2.26  from the homestead; and 
  2.27     (4) the agricultural use value of the noncontiguous land 
  2.28  and farm buildings is equal to at least 50 percent of the market 
  2.29  value of the house, garage, and one acre of land. 
  2.30     Homesteads initially classified as class 2a under the 
  2.31  provisions of this paragraph shall remain classified as class 
  2.32  2a, irrespective of subsequent changes in the use of adjoining 
  2.33  properties, as long as the homestead remains under the same 
  2.34  ownership, the owner owns a noncontiguous parcel of agricultural 
  2.35  land that is at least 20 acres, and the agricultural use value 
  2.36  qualifies under clause (4) (3). 
  3.1      (b) Except as provided in paragraph (d), Noncontiguous land 
  3.2   shall be included as part of a homestead under section 273.13, 
  3.3   subdivision 23, paragraph (a), only if the homestead is 
  3.4   classified as class 2a and the detached land is located in the 
  3.5   same township or city, or not farther than four townships or 
  3.6   cities or combination thereof from the homestead.  Any taxpayer 
  3.7   of these noncontiguous lands must notify the county assessor 
  3.8   that the noncontiguous land is part of the taxpayer's homestead, 
  3.9   and, if the homestead is located in another county, the taxpayer 
  3.10  must also notify the assessor of the other county. 
  3.11     (c) Agricultural land used for purposes of a homestead and 
  3.12  actively farmed by a person holding a vested remainder interest 
  3.13  in it must be classified as a homestead under section 273.13, 
  3.14  subdivision 23, paragraph (a).  If agricultural land is 
  3.15  classified class 2a, any other dwellings on the land used for 
  3.16  purposes of a homestead by persons holding vested remainder 
  3.17  interests who are actively engaged in farming the property, and 
  3.18  up to one acre of the land surrounding each homestead and 
  3.19  reasonably necessary for the use of the dwelling as a home, must 
  3.20  also be assessed class 2a. 
  3.21     (d) Agricultural land and buildings that were class 2a 
  3.22  homestead property under section 273.13, subdivision 23, 
  3.23  paragraph (a), for the 1997 assessment shall remain classified 
  3.24  as agricultural homesteads for subsequent assessments if:  
  3.25     (1) the property owner abandoned the homestead dwelling 
  3.26  located on the agricultural homestead as a result of the April 
  3.27  1997 floods; 
  3.28     (2) the property is located in the county of Polk, Clay, 
  3.29  Kittson, Marshall, Norman, or Wilkin; 
  3.30     (3) the agricultural land and buildings remain under the 
  3.31  same ownership for the current assessment year as existed for 
  3.32  the 1997 assessment year and continue to be used for 
  3.33  agricultural purposes; 
  3.34     (4) the dwelling occupied by the owner is located in 
  3.35  Minnesota and is within 30 miles of one of the parcels of 
  3.36  agricultural land that is owned by the taxpayer; and 
  4.1      (5) the owner notifies the county assessor that the 
  4.2   relocation was due to the 1997 floods, and the owner furnishes 
  4.3   the assessor any information deemed necessary by the assessor in 
  4.4   verifying the change in dwelling.  Further notifications to the 
  4.5   assessor are not required if the property continues to meet all 
  4.6   the requirements in this paragraph and any dwellings on the 
  4.7   agricultural land remain uninhabited. 
  4.8      (e) Agricultural land and buildings that were class 2a 
  4.9   homestead property under section 273.13, subdivision 23, 
  4.10  paragraph (a), for the 1998 assessment shall remain classified 
  4.11  agricultural homesteads for subsequent assessments if: 
  4.12     (1) the property owner abandoned the homestead dwelling 
  4.13  located on the agricultural homestead as a result of damage 
  4.14  caused by a March 29, 1998, tornado; 
  4.15     (2) the property is located in the county of Blue Earth, 
  4.16  Brown, Cottonwood, LeSueur, Nicollet, Nobles, or Rice; 
  4.17     (3) the agricultural land and buildings remain under the 
  4.18  same ownership for the current assessment year as existed for 
  4.19  the 1998 assessment year; 
  4.20     (4) the dwelling occupied by the owner is located in this 
  4.21  state and is within 50 miles of one of the parcels of 
  4.22  agricultural land that is owned by the taxpayer; and 
  4.23     (5) the owner notifies the county assessor that the 
  4.24  relocation was due to a March 29, 1998, tornado, and the owner 
  4.25  furnishes the assessor any information deemed necessary by the 
  4.26  assessor in verifying the change in homestead dwelling.  For 
  4.27  taxes payable in 1999, the owner must notify the assessor by 
  4.28  December 1, 1998.  Further notifications to the assessor are not 
  4.29  required if the property continues to meet all the requirements 
  4.30  in this paragraph and any dwellings on the agricultural land 
  4.31  remain uninhabited. 
  4.32     Sec. 3.  Minnesota Statutes 1998, section 273.13, 
  4.33  subdivision 23, is amended to read: 
  4.34     Subd. 23.  [CLASS 2.] (a) Class 2a property is agricultural 
  4.35  land including any improvements that is homesteaded.  The market 
  4.36  value of the house and garage and immediately surrounding one 
  5.1   acre of land has the same class rates as class 1a property under 
  5.2   subdivision 22.  The value of the remaining land including 
  5.3   improvements up to $115,000 $250,000 has a net class rate of 
  5.4   0.35 percent of market value.  The remaining value of class 2a 
  5.5   property over $115,000 $250,000 and up to $500,000 of market 
  5.6   value that does not exceed 320 acres has a net class rate of 0.8 
  5.7   0.7 percent of market value.  The remaining property 
  5.8   over $115,000 $500,000 of market value in excess of 320 acres 
  5.9   has a class rate of 1.25 1.0 percent of market value. 
  5.10     (b) Class 2b property is (1) real estate, rural in 
  5.11  character and used exclusively for growing trees for timber, 
  5.12  lumber, and wood and wood products; (2) real estate that is not 
  5.13  improved with a structure and is used exclusively for growing 
  5.14  trees for timber, lumber, and wood and wood products, if the 
  5.15  owner has participated or is participating in a cost-sharing 
  5.16  program for afforestation, reforestation, or timber stand 
  5.17  improvement on that particular property, administered or 
  5.18  coordinated by the commissioner of natural resources; (3) real 
  5.19  estate that is nonhomestead agricultural land; or (4) a landing 
  5.20  area or public access area of a privately owned public use 
  5.21  airport.  Class 2b property has a net class rate of 1.25 1.0 
  5.22  percent of market value. 
  5.23     (c) Agricultural land as used in this section means 
  5.24  contiguous acreage of ten acres or more, used during the 
  5.25  preceding year for agricultural purposes.  "Agricultural 
  5.26  purposes" as used in this section means the raising or 
  5.27  cultivation of agricultural products or enrollment in the 
  5.28  Reinvest in Minnesota program under sections 103F.501 to 
  5.29  103F.535 or the federal Conservation Reserve Program as 
  5.30  contained in Public Law Number 99-198.  Contiguous acreage on 
  5.31  the same parcel, or contiguous acreage on an immediately 
  5.32  adjacent parcel under the same ownership, may also qualify as 
  5.33  agricultural land, but only if it is pasture, timber, waste, 
  5.34  unusable wild land, or land included in state or federal farm 
  5.35  programs.  Agricultural classification for property shall be 
  5.36  determined excluding the house, garage, and immediately 
  6.1   surrounding one acre of land, and shall not be based upon the 
  6.2   market value of any residential structures on the parcel or 
  6.3   contiguous parcels under the same ownership. 
  6.4      (d) Real estate, excluding the house, garage, and 
  6.5   immediately surrounding one acre of land, of less than ten acres 
  6.6   which is exclusively and intensively used for raising or 
  6.7   cultivating agricultural products, shall be considered as 
  6.8   agricultural land.  
  6.9      Land shall be classified as agricultural even if all or a 
  6.10  portion of the agricultural use of that property is the leasing 
  6.11  to, or use by another person for agricultural purposes. 
  6.12     Classification under this subdivision is not determinative 
  6.13  for qualifying under section 273.111. 
  6.14     The property classification under this section supersedes, 
  6.15  for property tax purposes only, any locally administered 
  6.16  agricultural policies or land use restrictions that define 
  6.17  minimum or maximum farm acreage. 
  6.18     (e) The term "agricultural products" as used in this 
  6.19  subdivision includes production for sale of:  
  6.20     (1) livestock, dairy animals, dairy products, poultry and 
  6.21  poultry products, fur-bearing animals, horticultural and nursery 
  6.22  stock described in sections 18.44 to 18.61, fruit of all kinds, 
  6.23  vegetables, forage, grains, bees, and apiary products by the 
  6.24  owner; 
  6.25     (2) fish bred for sale and consumption if the fish breeding 
  6.26  occurs on land zoned for agricultural use; 
  6.27     (3) the commercial boarding of horses if the boarding is 
  6.28  done in conjunction with raising or cultivating agricultural 
  6.29  products as defined in clause (1); 
  6.30     (4) property which is owned and operated by nonprofit 
  6.31  organizations used for equestrian activities, excluding racing; 
  6.32  and 
  6.33     (5) game birds and waterfowl bred and raised for use on a 
  6.34  shooting preserve licensed under section 97A.115.  
  6.35     (f) If a parcel used for agricultural purposes is also used 
  6.36  for commercial or industrial purposes, including but not limited 
  7.1   to:  
  7.2      (1) wholesale and retail sales; 
  7.3      (2) processing of raw agricultural products or other goods; 
  7.4      (3) warehousing or storage of processed goods; and 
  7.5      (4) office facilities for the support of the activities 
  7.6   enumerated in clauses (1), (2), and (3), 
  7.7   the assessor shall classify the part of the parcel used for 
  7.8   agricultural purposes as class 1b, 2a, or 2b, whichever is 
  7.9   appropriate, and the remainder in the class appropriate to its 
  7.10  use.  The grading, sorting, and packaging of raw agricultural 
  7.11  products for first sale is considered an agricultural purpose.  
  7.12  A greenhouse or other building where horticultural or nursery 
  7.13  products are grown that is also used for the conduct of retail 
  7.14  sales must be classified as agricultural if it is primarily used 
  7.15  for the growing of horticultural or nursery products from seed, 
  7.16  cuttings, or roots and occasionally as a showroom for the retail 
  7.17  sale of those products.  Use of a greenhouse or building only 
  7.18  for the display of already grown horticultural or nursery 
  7.19  products does not qualify as an agricultural purpose.  
  7.20     The assessor shall determine and list separately on the 
  7.21  records the market value of the homestead dwelling and the one 
  7.22  acre of land on which that dwelling is located.  If any farm 
  7.23  buildings or structures are located on this homesteaded acre of 
  7.24  land, their market value shall not be included in this separate 
  7.25  determination.  
  7.26     (g) To qualify for classification under paragraph (b), 
  7.27  clause (4), a privately owned public use airport must be 
  7.28  licensed as a public airport under section 360.018.  For 
  7.29  purposes of paragraph (b), clause (4), "landing area" means that 
  7.30  part of a privately owned public use airport properly cleared, 
  7.31  regularly maintained, and made available to the public for use 
  7.32  by aircraft and includes runways, taxiways, aprons, and sites 
  7.33  upon which are situated landing or navigational aids.  A landing 
  7.34  area also includes land underlying both the primary surface and 
  7.35  the approach surfaces that comply with all of the following:  
  7.36     (i) the land is properly cleared and regularly maintained 
  8.1   for the primary purposes of the landing, taking off, and taxiing 
  8.2   of aircraft; but that portion of the land that contains 
  8.3   facilities for servicing, repair, or maintenance of aircraft is 
  8.4   not included as a landing area; 
  8.5      (ii) the land is part of the airport property; and 
  8.6      (iii) the land is not used for commercial or residential 
  8.7   purposes. 
  8.8   The land contained in a landing area under paragraph (b), clause 
  8.9   (4), must be described and certified by the commissioner of 
  8.10  transportation.  The certification is effective until it is 
  8.11  modified, or until the airport or landing area no longer meets 
  8.12  the requirements of paragraph (b), clause (4).  For purposes of 
  8.13  paragraph (b), clause (4), "public access area" means property 
  8.14  used as an aircraft parking ramp, apron, or storage hangar, or 
  8.15  an arrival and departure building in connection with the airport.
  8.16     Sec. 4.  Minnesota Statutes 1998, section 273.1398, 
  8.17  subdivision 1a, is amended to read: 
  8.18     Subd. 1a.  [TAX BASE DIFFERENTIAL.] (a) For aids payable in 
  8.19  2000, the tax base differential is (1) the following percentages 
  8.20  of the assessment year 1998 taxable market value of class 2a 
  8.21  agricultural homestead property, excluding the house, garage, 
  8.22  and surrounding one acre of land:  between $115,000 and $250,000 
  8.23  and less than 320 acres, .45 percent; between $115,000 and 
  8.24  $250,000 and over 320 acres, .9 percent; over $250,000 up to 
  8.25  $500,000 and less than 320 acres, 0.1 percent; over $250,000 up 
  8.26  to $500,000 and over 320 acres, 0.55 percent; and the market 
  8.27  value that exceeds $500,000, .25 percent, plus (2) for purposes 
  8.28  of computing the fiscal disparity adjustment only, the tax base 
  8.29  differential is 0.2 percent of the assessment year 1998 taxable 
  8.30  market value of class 3 commercial-industrial property over 
  8.31  $150,000. 
  8.32     (b) For the purposes of the distribution of homestead and 
  8.33  agricultural credit aid for aids payable in 2000, the 
  8.34  commissioner of revenue shall use the best information available 
  8.35  as of June 30, 1999, to make an estimate of the value described 
  8.36  in paragraph (a), clause (1).  The commissioner shall adjust the 
  9.1   distribution of homestead and agricultural credit aid for aids 
  9.2   payable in 2001 and subsequent years if new information 
  9.3   regarding the value described in paragraph (a), clause (1), 
  9.4   becomes available after June 30, 1999. 
  9.5      Sec. 5.  [EFFECTIVE DATE.] 
  9.6      Sections 1 to 3 are effective for taxes levied in 1999 and 
  9.7   thereafter, payable in 2000, and thereafter.  Section 4 is 
  9.8   effective for aids payable in 2000, and thereafter.