SF 1268

as introduced - 88th Legislature (2013 - 2014) Posted on 03/12/2013 09:00am

A bill for an act
relating to taxation; property; repealing the Iron Range fiscal disparities program;
correcting cross-references; amending Minnesota Statutes 2012, sections
134.34, subdivision 4; 270C.89, subdivision 2; 275.011, subdivision 1; 275.025,
subdivisions 1, 2; 275.065, subdivision 3; 278.14, subdivision 1; 428A.05;
465.82, subdivision 2; 469.175, subdivision 6; 469.177, subdivision 3; 469.1813,
subdivision 2; 477A.011, subdivisions 20, 27, 32, 35; repealing Minnesota
Statutes 2012, sections 276A.01; 276A.02; 276A.03; 276A.04; 276A.05;
276A.06; 276A.07; 276A.08; 276A.09.

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

Section 1.

Minnesota Statutes 2012, section 134.34, subdivision 4, is amended to read:

Subd. 4.

Limitation.

(a) For calendar year 2010 and later, a regional library
basic system support grant shall not be made to a regional public library system for a
participating city or county which decreases the dollar amount provided for support for
operating purposes of public library service below the amount provided by it for the
second, or third preceding year, whichever is less. For purposes of this subdivision and
subdivision 1, any funds provided under section 473.757, subdivision 2, for extending
library hours of operation shall not be considered amounts provided by a city or county for
support for operating purposes of public library service. This subdivision shall not apply
to participating cities or counties where the adjusted net tax capacity of that city or county
has decreased, if the dollar amount of the reduction in support is not greater than the dollar
amount by which support would be decreased if the reduction in support were made in
direct proportion to the decrease in adjusted net tax capacity.

(b) For calendar year 2009 and later, in any calendar year in which a city's or
county's aid under sections 477A.011 to 477A.014 or credit reimbursement under section
273.1384 is reduced after the city or county has certified its levy payable in that year, it
may reduce its local support by the lesser of:

(1) ten percent; or

(2) a percent equal to the ratio of the aid and credit reimbursement reductions to the
city's or county's revenue base, based on aids certified for the current calendar year. For
calendar year 2009 only, the reduction under this paragraph shall be based on 2008 aid and
credit reimbursement reductions under the December 2008 unallotment, as well as any
aid and credit reimbursement reductions in calendar year 2009. For pay 2009 only, the
commissioner of revenue will calculate the reductions under this paragraph and certify
them to the commissioner of education within 15 days of May 17, 2009.

(c) For taxes payable in 2010 and later, in any payable year in which the total
amounts certified for city or county aids under sections 477A.011 to 477A.014 are less
than the total amounts paid under those sections in the previous calendar year, a city or
county may reduce its local support by the lesser of:

(1) ten percent; or

(2) a percent equal to the ratio of:

(i) the difference between (A) the sum of the aid it was paid under sections
477A.011 to 477A.014 and the credit reimbursement it received under section 273.1384
in the previous calendar year and (B) the sum of the aid it is certified to be paid in the
current calendar year under sections 477A.011 to 477A.014 and the credit reimbursement
estimated to be paid under section 273.1384; to

(ii) its revenue base for the previous year, based on aids actually paid in the previous
calendar year. The commissioner of revenue shall calculate the percent aid cut for each
county and city under this paragraph and certify the percentage cuts to the commissioner
of education by August 1 of the year prior to the year in which the reduced aids and
credit reimbursements are to be paid. The percentage of reduction related to reductions
to credit reimbursements under section 273.1384 shall be based on the best estimation
available as of July 30.

(d) Notwithstanding paragraph (a), (b), or (c), no city or county shall reduce its
support for public libraries below the minimum level specified in subdivision 1.

(e) For purposes of this subdivision, "revenue base" means the sum of:

(1) its levy for taxes payable in the current calendar year, including the levy on
the fiscal disparities distribution under section deleted text begin 276A.06, subdivision 3, paragraph (a),
or deleted text end 473F.08, subdivision 3, paragraph (a);

(2) its aid under sections 477A.011 to 477A.014 in the current calendar year; and

(3) its taconite aid in the current calendar year under sections 298.28 and 298.282.

Sec. 2.

Minnesota Statutes 2012, section 270C.89, subdivision 2, is amended to read:

Subd. 2.

Final report.

The final abstract of assessments after adjustments by the
State Board of Equalization and inclusion of any omitted property shall be submitted to
the commissioner on or before September 1 of each calendar year. The final abstract
must separately report the captured tax capacity of tax increment financing districts
under section 469.177, subdivision 2, the areawide net tax capacity contribution values
determined under deleted text begin sections 276A.05, subdivision 1, and deleted text end new text begin section new text end 473F.07, subdivision 1,
and the value subject to the power line credit under section 273.42.

Sec. 3.

Minnesota Statutes 2012, section 275.011, subdivision 1, is amended to read:

Subdivision 1.

Determination of levy limit.

The property tax levied for any
purpose under a special law that is not codified in Minnesota Statutes or a city charter
provision and that is subject to a mill rate limitation imposed by the special law or city
charter provision, excluding levies subject to mill rate limitations that use adjusted
assessed values determined by the commissioner of revenue under section 124.2131, must
not exceed the following amount for the years specified:

(a) for taxes payable in 1988, the product of the applicable mill rate limitation
imposed by special law or city charter provision multiplied by the total assessed valuation
of all taxable property subject to the tax as adjusted by the provisions of Minnesota
Statutes 1986, sections 272.64; 273.13, subdivision 7a; and 275.49;

(b) for taxes payable in 1989, the product of (1) the property tax levy limitation for
the taxes payable year 1988 determined under clause (a) multiplied by (2) an index for
market valuation changes equal to the assessment year 1988 total market valuation of all
taxable property subject to the tax divided by the assessment year 1987 total market
valuation of all taxable property subject to the tax; and

(c) for taxes payable in 1990 and subsequent years, the product of (1) the property
tax levy limitation for the previous year determined pursuant to this subdivision multiplied
by (2) an index for market valuation changes equal to the total market valuation of all
taxable property subject to the tax for the current assessment year divided by the total
market valuation of all taxable property subject to the tax for the previous assessment year.

For the purpose of determining the property tax levy limitation for the taxes payable
year 1988 and subsequent years under this subdivision, "total market valuation" means
the total market valuation of all taxable property subject to the tax without valuation
adjustments for fiscal disparities ( deleted text begin chapters 276A and deleted text end new text begin chapter new text end 473F), tax increment
financing (sections 469.174 to 469.179), or powerline credit (section 273.425).

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new text begin This section is effective for taxes payable in 2014 and
thereafter.
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Sec. 4.

Minnesota Statutes 2012, section 275.025, subdivision 1, is amended to read:

Subdivision 1.

Levy amount.

The state general levy is levied against
commercial-industrial property and seasonal residential recreational property, as defined
in this section. The state general levy base amount is $592,000,000 for taxes payable in
2002. For taxes payable in subsequent years, the levy base amount is increased each year
by multiplying the levy base amount for the prior year by the sum of one plus the rate of
increase, if any, in the implicit price deflator for government consumption expenditures
and gross investment for state and local governments prepared by the Bureau of Economic
Analysts of the United States Department of Commerce for the 12-month period ending
March 31 of the year prior to the year the taxes are payable. The tax under this section is
not treated as a local tax rate under section 469.177 and is not the levy of a governmental
unit under deleted text begin chapters 276A and deleted text end new text begin chapter new text end 473F.

The commissioner shall increase or decrease the preliminary or final rate for a year
as necessary to account for errors and tax base changes that affected a preliminary or final
rate for either of the two preceding years. Adjustments are allowed to the extent that the
necessary information is available to the commissioner at the time the rates for a year must
be certified, and for the following reasons:

(1) an erroneous report of taxable value by a local official;

(2) an erroneous calculation by the commissioner; and

(3) an increase or decrease in taxable value for commercial-industrial or seasonal
residential recreational property reported on the abstracts of tax lists submitted under
section 275.29 that was not reported on the abstracts of assessment submitted under
section 270C.89 for the same year.

The commissioner may, but need not, make adjustments if the total difference in the tax
levied for the year would be less than $100,000.

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new text begin This section is effective for taxes payable in 2014 and
thereafter.
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Sec. 5.

Minnesota Statutes 2012, section 275.025, subdivision 2, is amended to read:

Subd. 2.

Commercial-industrial tax capacity.

For the purposes of this section,
"commercial-industrial tax capacity" means the tax capacity of all taxable property
classified as class 3 or class 5(1) under section 273.13, except for electric generation
attached machinery under class 3 and property described in section 473.625. County
commercial-industrial tax capacity amounts are not adjusted for the captured net tax
capacity of a tax increment financing district under section 469.177, subdivision 2, the
net tax capacity of transmission lines deducted from a local government's total net tax
capacity under section 273.425, or fiscal disparities contribution and distribution net
tax capacities under chapter deleted text begin 276A or deleted text end 473F.

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for taxes payable in 2014 and
thereafter.
new text end

Sec. 6.

Minnesota Statutes 2012, section 275.065, subdivision 3, is amended to read:

Subd. 3.

Notice of proposed property taxes.

(a) The county auditor shall prepare
and the county treasurer shall deliver after November 10 and on or before November 24
each year, by first class mail to each taxpayer at the address listed on the county's current
year's assessment roll, a notice of proposed property taxes. Upon written request by
the taxpayer, the treasurer may send the notice in electronic form or by electronic mail
instead of on paper or by ordinary mail.

(b) The commissioner of revenue shall prescribe the form of the notice.

(c) The notice must inform taxpayers that it contains the amount of property taxes
each taxing authority proposes to collect for taxes payable the following year. In the case of
a town, or in the case of the state general tax, the final tax amount will be its proposed tax.
The notice must clearly state for each city that has a population over 500, county, school
district, regional library authority established under section 134.201, and metropolitan
taxing districts as defined in paragraph (i), the time and place of a meeting for each taxing
authority in which the budget and levy will be discussed and public input allowed, prior to
the final budget and levy determination. The taxing authorities must provide the county
auditor with the information to be included in the notice on or before the time it certifies
its proposed levy under subdivision 1. The public must be allowed to speak at that
meeting, which must occur after November 24 and must not be held before 6:00 p.m. It
must provide a telephone number for the taxing authority that taxpayers may call if they
have questions related to the notice and an address where comments will be received by
mail, except that no notice required under this section shall be interpreted as requiring the
printing of a personal telephone number or address as the contact information for a taxing
authority. If a taxing authority does not maintain public offices where telephone calls can
be received by the authority, the authority may inform the county of the lack of a public
telephone number and the county shall not list a telephone number for that taxing authority.

(d) The notice must state for each parcel:

(1) the market value of the property as determined under section 273.11, and used
for computing property taxes payable in the following year and for taxes payable in the
current year as each appears in the records of the county assessor on November 1 of the
current year; and, in the case of residential property, whether the property is classified as
homestead or nonhomestead. The notice must clearly inform taxpayers of the years to
which the market values apply and that the values are final values;

(2) the items listed below, shown separately by county, city or town, and state general
tax, net of the residential and agricultural homestead credit under section 273.1384, voter
approved school levy, other local school levy, and the sum of the special taxing districts,
and as a total of all taxing authorities:

(i) the actual tax for taxes payable in the current year; and

(ii) the proposed tax amount.

If the county levy under clause (2) 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 a town or the state general tax, the final tax shall also be its proposed
tax unless the town changes its levy at a special town meeting under section 365.52. If a
school district has certified under section 126C.17, subdivision 9, that a referendum will
be held in the school district at the November general election, the county auditor must
note next to the school district's proposed amount that a referendum is pending and that, if
approved by the voters, the tax amount may be higher than shown on the notice. In the
case of the city of Minneapolis, the levy for Minneapolis Park and Recreation shall be
listed separately from the remaining amount of the city's levy. In the case of the city of
St. Paul, the levy for the St. Paul Library Agency must be listed separately from the
remaining amount of the city's levy. In the case of Ramsey County, any amount levied
under section 134.07 may be listed separately from the remaining amount of the county's
levy. In the case of a parcel where tax increment or the fiscal disparities areawide tax
under chapter deleted text begin 276A or deleted text end 473F applies, the proposed tax levy on the captured value or the
proposed tax levy on the tax capacity subject to the areawide tax must each be stated
separately and not included in the sum of the special taxing districts; and

(3) the increase or decrease between the total taxes payable in the current year and
the total proposed taxes, expressed as a percentage.

For purposes of this section, 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.

(e) The notice must clearly state that the proposed or final taxes do not include
the following:

(1) special assessments;

(2) levies approved by the voters after the date the proposed taxes are certified,
including bond referenda and school district levy referenda;

(3) a levy limit increase approved by the voters by the first Tuesday after the first
Monday in November of the levy year as provided under section 275.73;

(4) amounts necessary to pay cleanup or other costs due to a natural disaster
occurring after the date the proposed taxes are certified;

(5) amounts necessary to pay tort judgments against the taxing authority that become
final after the date the proposed taxes are certified; and

(6) the contamination tax imposed on properties which received market value
reductions for contamination.

(f) Except as provided in subdivision 7, failure of the county auditor to prepare or
the county treasurer to deliver the notice as required in this section does not invalidate the
proposed or final tax levy or the taxes payable pursuant to the tax levy.

(g) If the notice the taxpayer receives under this section lists the property as
nonhomestead, and satisfactory documentation is provided to the county assessor by the
applicable deadline, and the property qualifies for the homestead classification in that
assessment year, the assessor shall reclassify the property to homestead for taxes payable
in the following year.

(h) In the case of class 4 residential property used as a residence for lease or rental
periods of 30 days or more, the taxpayer must either:

(1) mail or deliver a copy of the notice of proposed property taxes to each tenant,
renter, or lessee; or

(2) post a copy of the notice in a conspicuous place on the premises of the property.

The notice must be mailed or posted by the taxpayer by November 27 or within
three days of receipt of the notice, whichever is later. A taxpayer may notify the county
treasurer of the address of the taxpayer, agent, caretaker, or manager of the premises to
which the notice must be mailed in order to fulfill the requirements of this paragraph.

(i) For purposes of this subdivision and subdivision 6, "metropolitan special taxing
districts" means the following taxing districts in the seven-county metropolitan area that
levy a property tax for any of the specified purposes listed below:

(1) Metropolitan Council under section 473.132, 473.167, 473.249, 473.325,
473.446, 473.521, 473.547, or 473.834;

(2) Metropolitan Airports Commission under section 473.667, 473.671, or 473.672;
and

(3) Metropolitan Mosquito Control Commission under section 473.711.

For purposes of this section, 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 included with the appropriate county's levy.

(j) The governing body of a county, city, or school district may, with the consent
of the county board, include supplemental information with the statement of proposed
property taxes about the impact of state aid increases or decreases on property tax
increases or decreases and on the level of services provided in the affected jurisdiction.
This supplemental information may include information for the following year, the current
year, and for as many consecutive preceding years as deemed appropriate by the governing
body of the county, city, or school district. It may include only information regarding:

(1) the impact of inflation as measured by the implicit price deflator for state and
local government purchases;

(2) population growth and decline;

(3) state or federal government action; and

(4) other financial factors that affect the level of property taxation and local services
that the governing body of the county, city, or school district may deem appropriate to
include.

The information may be presented using tables, written narrative, and graphic
representations and may contain instruction toward further sources of information or
opportunity for comment.

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new text begin This section is effective for taxes payable in 2014 and
thereafter.
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Sec. 7.

Minnesota Statutes 2012, section 278.14, subdivision 1, is amended to read:

Subdivision 1.

Applicability.

A county must pay a refund of a mistakenly billed
tax as provided in this section. As used in this section, "mistakenly billed tax" means an
amount of property tax that was billed, to the extent the amount billed exceeds the accurate
tax amount due to a misclassification of the owner's property under section 273.13 or a
mathematical error in the calculation of the tax on the owner's property, together with
any penalty or interest paid on that amount. This section applies only to taxes payable
in the current year and the two prior years. As used in this section, "mathematical error"
is limited to an error in:

(1) converting the market value of a property to tax capacity or to a referendum
market value;

(2) application of the tax rate as computed by the auditor under sections 275.08,
subdivisions 1b, 1c, and 1d; deleted text begin 276A.06, subdivisions 4 and 5; deleted text end and 473F.07, subdivisions 4
and 5, to the property's tax capacity or referendum market value; or

(3) calculation of or eligibility for a credit.

The remedy provided under this section does not apply to a misclassification under
section 273.13 that is due to the failure of the property owner to apply for the correct
classification as required by law.

Sec. 8.

Minnesota Statutes 2012, section 428A.05, is amended to read:

428A.05 COLLECTION OF SERVICE CHARGES.

Service charges may be imposed on the basis of the net tax capacity of the property
on which the service charge is imposed but must be spread only upon the net tax capacity
of the taxable property located in the geographic area described in the ordinance. Service
charges based on net tax capacity may be payable and collected at the same time and in
the same manner as provided for payment and collection of ad valorem taxes. When made
payable in the same manner as ad valorem taxes, service charges not paid on or before the
applicable due date shall be subject to the same penalty and interest as in the case of ad
valorem tax amounts not paid by the respective due date. The due date for a service charge
payable in the same manner as ad valorem taxes is the due date given in law for the real or
personal property tax for the property on which the service charge is imposed. Service
charges imposed on net tax capacity which are to become payable in the following year
must be certified to the county auditor by the date provided in section 429.061, subdivision
3, for the annual certification of special assessment installments. Other service charges
imposed must be collected as provided by ordinance. Service charges based on net tax
capacity collected under sections 428A.01 to 428A.10 are not included in computations
under section 469.177, chapter deleted text begin 276A or deleted text end 473F, or any other law that applies to general ad
valorem levies. For the purpose of this section, "net tax capacity" means the net tax capacity
most recently determined at the time that tax rates are determined under section 275.08.

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for taxes payable in 2014 and
thereafter.
new text end

Sec. 9.

Minnesota Statutes 2012, section 465.82, subdivision 2, is amended to read:

Subd. 2.

Contents of plan.

The plan must state:

(1) the specific cooperative activities the units will engage in during the first two
years of the venture;

(2) the steps to be taken to effect the merger of the governmental units, with
completion no later than four years after the process begins;

(3) the steps by which a single governing body will be created or, when the entire
territory of a unit will be apportioned between or among two or more units contiguous
to the unit that is to be apportioned, the steps to be taken by the governing bodies of the
remaining units to provide for representation of the residents of the apportioned unit;

(4) changes in services provided, facilities used, and administrative operations and
staffing required to effect the preliminary cooperative activities and the final merger, and
a two-, five-, and ten-year projection of expenditures for each unit if it combined and
if it remained separate;

(5) treatment of employees of the merging governmental units, specifically including
provisions for reassigning employees, dealing with exclusive representatives, and
providing financial incentives to encourage early retirements;

(6) financial arrangements for the merger, specifically including responsibility for
debt service on outstanding obligations of the merging units;

(7) one- and two-year impact analyses, prepared by the granting state agency at the
request of the local government unit, of major state aid revenues received for each unit
if it combined and if it remained separate, including an impact analysis, prepared by the
Department of Revenue, of any property tax revenue implications associated with tax
increment financing districts and fiscal disparities under chapter deleted text begin 276A or deleted text end 473F resulting
from the merger;

(8) procedures for a referendum to be held before the proposed combination to
approve combining the local government units, specifically stating whether a majority of
those voting in each district proposed for combination or a majority of those voting on the
question in the entire area proposed for combination is needed to pass the referendum; and

(9) a time schedule for implementation.

Notwithstanding clause (3) or any other law to the contrary, all current members of
the governing bodies of the local government units that propose to combine under sections
465.81 to 465.86 may serve on the initial governing body of the combined unit until a
gradual reduction in membership is achieved by foregoing election of new members when
terms expire until the number permitted by other law is reached.

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new text begin This section is effective for taxes payable in 2014 and
thereafter.
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Sec. 10.

Minnesota Statutes 2012, section 469.175, subdivision 6, is amended to read:

Subd. 6.

Annual financial reporting.

(a) The state auditor shall develop a uniform
system of accounting and financial reporting for tax increment financing districts. The
system of accounting and financial reporting shall, as nearly as possible:

(1) provide for full disclosure of the sources and uses of tax increments of the district;

(2) permit comparison and reconciliation with the affected local government's
accounts and financial reports;

(3) permit auditing of the funds expended on behalf of a district, including a single
district that is part of a multidistrict project or that is funded in part or whole through
the use of a development account funded with tax increments from other districts or
with other public money;

(4) be consistent with generally accepted accounting principles.

(b) The authority must annually submit to the state auditor a financial report
in compliance with paragraph (a). Copies of the report must also be provided to the
county auditor and to the governing body of the municipality, if the authority is not
the municipality. To the extent necessary to permit compliance with the requirement
of financial reporting, the county and any other appropriate local government unit or
private entity must provide the necessary records or information to the authority or the
state auditor as provided by the system of accounting and financial reporting developed
pursuant to paragraph (a). The authority must submit the annual report for a year on or
before August 1 of the next year.

(c) The annual financial report must also include the following items:

(1) the original net tax capacity of the district and any subdistrict under section
469.177, subdivision 1;

(2) the net tax capacity for the reporting period of the district and any subdistrict;

(3) the captured net tax capacity of the district;

(4) any fiscal disparity deduction from the captured net tax capacity under section
469.177, subdivision 3;

(5) the captured net tax capacity retained for tax increment financing under section
469.177, subdivision 2, paragraph (a), clause (1);

(6) any captured net tax capacity distributed among affected taxing districts under
section 469.177, subdivision 2, paragraph (a), clause (2);

(7) the type of district;

(8) the date the municipality approved the tax increment financing plan and the
date of approval of any modification of the tax increment financing plan, the approval of
which requires notice, discussion, a public hearing, and findings under subdivision 4,
paragraph (a);

(9) the date the authority first requested certification of the original net tax capacity
of the district and the date of the request for certification regarding any parcel added
to the district;

(10) the date the county auditor first certified the original net tax capacity of the
district and the date of certification of the original net tax capacity of any parcel added
to the district;

(11) the month and year in which the authority has received or anticipates it will
receive the first increment from the district;

(12) the date the district must be decertified;

(13) for the reporting period and prior years of the district, the actual amount
received from, at least, the following categories:

(i) tax increments paid by the captured net tax capacity retained for tax increment
financing under section 469.177, subdivision 2, paragraph (a), clause (1), but excluding
any excess taxes;

(ii) tax increments that are interest or other investment earnings on or from tax
increments;

(iii) tax increments that are proceeds from the sale or lease of property, tangible or
intangible, purchased by the authority with tax increments;

(iv) tax increments that are repayments of loans or other advances made by the
authority with tax increments;

(v) bond proceeds; and

(vi) the market value homestead credit paid to the authority under section 273.1384;

(14) for the reporting period and for the prior years of the district, the actual amount
expended for, at least, the following categories:

(i) acquisition of land and buildings through condemnation or purchase;

(ii) site improvements or preparation costs;

(iii) installation of public utilities, parking facilities, streets, roads, sidewalks, or
other similar public improvements;

(iv) administrative costs, including the allocated cost of the authority; and

(v) for housing districts, construction of affordable housing;

(15) the amount of any payments for activities and improvements located outside of
the district that are paid for or financed with tax increments;

(16) the amount of payments of principal and interest that are made during the
reporting period on any nondefeased:

(i) general obligation tax increment financing bonds; and

(ii) other tax increment financing bonds, including pay-as-you-go contracts and notes;

(17) the principal amount, at the end of the reporting period, of any nondefeased:

(i) general obligation tax increment financing bonds; and

(ii) other tax increment financing bonds, including pay-as-you-go contracts and notes;

(18) the amount of principal and interest payments that are due for the current
calendar year on any nondefeased:

(i) general obligation tax increment financing bonds; and

(ii) other tax increment financing bonds, including pay-as-you-go contracts and notes;

(19) if the fiscal disparities contribution under chapter deleted text begin 276A or deleted text end 473F for the district
is computed under section 469.177, subdivision 3, paragraph (a), the amount of total
increased property taxes to be paid from outside the tax increment financing district; and

(20) any additional information the state auditor may require.

(d) The reporting requirements imposed by this subdivision apply to districts
certified before, on, and after August 1, 1979.

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new text begin This section is effective for taxes payable in 2014 and
thereafter.
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Sec. 11.

Minnesota Statutes 2012, section 469.177, subdivision 3, is amended to read:

Subd. 3.

Tax increment, relationship to deleted text begin chapters 276A and deleted text end new text begin chapter new text end 473F.

(a)
Unless the governing body elects pursuant to paragraph (b) the following method of
computation shall apply to a district other than an economic development district for
which the request for certification was made after June 30, 1997:

(1) The original net tax capacity and the current net tax capacity shall be determined
before the application of the fiscal disparity provisions of chapter deleted text begin 276A or deleted text end 473F. Where
the original net tax capacity is equal to or greater than the current net tax capacity, there is
no captured net tax capacity and no tax increment determination. Where the original net
tax capacity is less than the current net tax capacity, the difference between the original
net tax capacity and the current net tax capacity is the captured net tax capacity. This
amount less any portion thereof which the authority has designated, in its tax increment
financing plan, to share with the local taxing districts is the retained captured net tax
capacity of the authority.

(2) The county auditor shall exclude the retained captured net tax capacity of the
authority from the net tax capacity of the local taxing districts in determining local taxing
district tax rates. The local tax rates so determined are to be extended against the retained
captured net tax capacity of the authority as well as the net tax capacity of the local taxing
districts. The tax generated by the extension of the lesser of (A) the local taxing district
tax rates or (B) the original local tax rate to the retained captured net tax capacity of the
authority is the tax increment of the authority.

(b) The following method of computation applies to any economic development
district for which the request for certification was made after June 30, 1997, and to any
other district for which the governing body, by resolution approving the tax increment
financing plan pursuant to section 469.175, subdivision 3, elects:

(1) The original net tax capacity shall be determined before the application of the
fiscal disparity provisions of chapter deleted text begin 276A or deleted text end 473F. The current net tax capacity shall
exclude any fiscal disparity commercial-industrial net tax capacity increase between
the original year and the current year multiplied by the fiscal disparity ratio determined
pursuant to section deleted text begin 276A.06, subdivision 7, or deleted text end 473F.08, subdivision 6. Where the original
net tax capacity is equal to or greater than the current net tax capacity, there is no captured
net tax capacity and no tax increment determination. Where the original net tax capacity is
less than the current net tax capacity, the difference between the original net tax capacity
and the current net tax capacity is the captured net tax capacity. This amount less any
portion thereof which the authority has designated, in its tax increment financing plan, to
share with the local taxing districts is the retained captured net tax capacity of the authority.

(2) The county auditor shall exclude the retained captured net tax capacity of the
authority from the net tax capacity of the local taxing districts in determining local taxing
district tax rates. The local tax rates so determined are to be extended against the retained
captured net tax capacity of the authority as well as the net tax capacity of the local taxing
districts. The tax generated by the extension of the lesser of (A) the local taxing district
tax rates or (B) the original local tax rate to the retained captured net tax capacity of the
authority is the tax increment of the authority.

(3) An election by the governing body pursuant to paragraph (b) shall be submitted
to the county auditor by the authority at the time of the request for certification pursuant to
subdivision 1.

(c) The method of computation of tax increment applied to a district pursuant to
paragraph (a) or (b) shall remain the same for the duration of the district, except that
the governing body may elect to change its election from the method of computation in
paragraph (a) to the method in paragraph (b).

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for taxes payable in 2014 and
thereafter.
new text end

Sec. 12.

Minnesota Statutes 2012, section 469.1813, subdivision 2, is amended to read:

Subd. 2.

Abatement resolution.

(a) The governing body of a political subdivision
may grant an abatement only by adopting an abatement resolution, specifying the terms
of the abatement. In the case of a town, the board of supervisors may approve the
abatement resolution. The resolution must also include a specific statement as to the
nature and extent of the public benefits which the governing body expects to result from
the agreement. The resolution may provide that the political subdivision will retain or
transfer to another political subdivision the abatement to pay for all or part of the cost of
acquisition or improvement of public infrastructure, whether or not located on or adjacent
to the parcel for which the tax is abated. The abatement may reduce all or part of the
property tax amount for the political subdivision on the parcel. A political subdivision's
maximum annual amount for a parcel equals its total local tax rate multiplied by the
total net tax capacity of the parcel.

(b) The political subdivision may limit the abatement:

(1) to a specific dollar amount per year or in total;

(2) to the increase in property taxes resulting from improvement of the property;

(3) to the increases in property taxes resulting from increases in the market value
or tax capacity of the property;

(4) in any other manner the governing body of the subdivision determines is
appropriate; or

(5) to the interest and penalty that would otherwise be due on taxes that are deferred.

(c) The political subdivision may not abate tax attributable to the areawide tax under
chapter deleted text begin 276A or deleted text end 473F, except as provided in this subdivision.

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for taxes payable in 2014 and
thereafter.
new text end

Sec. 13.

Minnesota Statutes 2012, section 477A.011, subdivision 20, is amended to read:

Subd. 20.

City net tax capacity.

"City net tax capacity" means (1) the net tax
capacity computed using the net tax capacity rates in section 273.13 for taxes payable
in the year of the aid distribution, and the market values, after the exclusion in section
273.13, subdivision 35, for taxes payable in the year prior to the aid distribution plus (2)
a city's fiscal disparities distribution tax capacity under section deleted text begin 276A.06, subdivision 2,
paragraph (b), or deleted text end 473F.08, subdivision 2, paragraph (b), for taxes payable in the year prior
to that for which aids are being calculated. The market value utilized in computing city
net tax capacity shall be reduced by the sum of (1) a city's market value of commercial
industrial property as defined in section deleted text begin 276A.01, subdivision 3, or deleted text end 473F.02, subdivision 3,
multiplied by the ratio determined pursuant to section deleted text begin 276A.06, subdivision 2, paragraph
(a), or deleted text end 473F.08, subdivision 2, paragraph (a), (2) the market value of the captured value
of tax increment financing districts as defined in section 469.177, subdivision 2, and (3)
the market value of transmission lines deducted from a city's total net tax capacity under
section 273.425. The city net tax capacity will be computed using equalized market values.

Sec. 14.

Minnesota Statutes 2012, section 477A.011, subdivision 27, is amended to read:

Subd. 27.

Revenue base.

"Revenue base" means the amount levied for taxes
payable in the previous year, including the levy on the fiscal disparity distribution under
section deleted text begin 276A.06, subdivision 3, paragraph (a), or deleted text end 473F.08, subdivision 3, paragraph (a);
plus the originally certified local government aid in the previous year under sections
477A.011 and 477A.013; and the taconite aids received in the previous year under sections
298.28 and 298.282.

Sec. 15.

Minnesota Statutes 2012, section 477A.011, subdivision 32, is amended to read:

Subd. 32.

Commercial industrial percentage.

"Commercial industrial percentage"
for a city is 100 times the sum of the estimated market values of all real property in the city
classified as class 3 under section 273.13, subdivision 24, excluding public utility property,
to the total market value of all taxable real and personal property in the city. The market
values are the amounts computed before any adjustments for fiscal disparities under
section deleted text begin 276A.06 or deleted text end 473F.08. The market values used for this subdivision are not equalized.

Sec. 16.

Minnesota Statutes 2012, section 477A.011, subdivision 35, is amended to read:

Subd. 35.

Tax effort rate.

"Tax effort rate" means the net levy for all cities divided
by the sum of the city net tax capacity for all cities. For purposes of this section, "net
levy" means the city levy, after all adjustments, used for calculating the local tax rate
under section 275.08 for taxes payable in the year prior to the aid distribution. The fiscal
disparity distribution levy under chapter deleted text begin 276A or deleted text end 473F is included in net levy.

Sec. 17. new text begin REPEALER.
new text end

new text begin Minnesota Statutes 2012, sections 276A.01; 276A.02; 276A.03; 276A.04; 276A.05;
276A.06; 276A.07; 276A.08; and 276A.09, new text end new text begin are repealed.
new text end